In a transformative move for the global copper market, Anglo American has signed a significant agreement with the National Copper Corporation of Chile (Codelco) to merge operations at the Los Bronces and Andina copper mines. This collaboration positions the combined sites among the top five largest copper mining operations worldwide and is expected to generate up to $5 billion in value.
According to the announcement made on September 16, the joint mine plan aims to unlock an additional 2.7 million metric tons of copper production over a 21-year period, pending the necessary permits, which are anticipated by 2030. The expected output increase translates to around 120,000 metric tons of copper annually, shared equally between the companies. The collaboration is set to achieve approximately 15% lower unit costs compared to operating the mines independently, while maintaining minimal additional capital expenditures.
Strategic Collaboration Details
A new operating company will be created, co-owned by Anglo American’s subsidiary, Anglo American Sur (AAS), which holds a 50.1% stake, and Codelco. This entity will oversee the execution of the joint plan and optimize processing capabilities across both mining sites. Notably, each party will retain full ownership of its respective assets, including mining concessions and infrastructure, and will continue to operate their concessions independently.
The memorandum of understanding between AAS and Codelco was initially announced in February. It is important to highlight that Japan’s Mitsubishi Corporation possesses a 20.4% stake in AAS, while the Codelco/Mitsui joint venture Becrux owns the remaining 29.5%.
Anglo American’s 2024 results indicate that the Los Bronces mine has approximately 8 million metric tons of copper ore reserves. However, its annual production has declined by 20% year-on-year, dropping from 215,500 metric tons to 172,400 metric tons. This reduction is largely attributed to one mine site being on care and maintenance since July 2024 and expectations of lower ore grades.
In contrast, Codelco reported in a 2016 document that the Andina mine contains reserves equivalent to 36.8 million metric tons with an average ore grade of 0.78%.
Market Implications and Future Outlook
The copper market is currently facing predictions of a potential deficit by the end of the decade. Industry experts cite a shortage of new projects and increasing demand for copper, particularly in the energy transition sector relating to battery technology. A report by Reuters on September 8 referenced findings from EY, indicating that battery electric vehicles are projected to make up over 50% of new light vehicle sales in Europe by 2032, surpassing hybrid vehicle sales by 2030.
On the London Metal Exchange, the price of copper for three-month delivery stood at $9,964 per metric ton on September 17, reflecting a decline of 1.78% from $10,145 earlier that day. Nevertheless, this price is still 47% higher compared to $6,737.50 reported on the same date in 2020.
The announcement of the operational tie-up comes just a week after Anglo American revealed its agreement to merge with Canadian firm Teck Resources. This transaction is poised to create a major player in the critical minerals sector, with over 70% exposure to copper. According to the company, the new entity, named “Anglo Teck,” will emerge as one of the largest copper producers globally, benefitting from high-quality copper resources and a mix of brownfield and greenfield projects in established mining regions.
Anglo stated that the merger is expected to yield $800 million in synergies, with Anglo American shareholders projected to hold around 62.4% of the new company, while Teck Resources shareholders will account for the remaining 37.6%.
In addition to its copper assets, Anglo American operates several iron ore mines in South Africa and has significant manganese production sites. Teck Resources, on the other hand, holds a 22.5% stake in the Antamina zinc-copper deposit and owns the Carmen de Andacollo and Quebrada Blanca copper projects in Chile, which are ramping up production.
Industry analysts have praised the merger between Anglo American and Teck Resources, emphasizing the potential to keep vital assets out of the hands of major competitors. Observers point to synergies between the operations, particularly between Teck’s Quebrada Blanca and Anglo’s Collahuasi mine, which could lead to shared infrastructure and operational efficiencies.
This strategic collaboration between Anglo American and Codelco marks a pivotal moment in the copper industry, with significant implications for global supply dynamics as demand for this essential metal continues to rise.
