Copper price edges down to two-week low amid demand uncertainty
The metal headed for a third daily decline, with copper miners also under pressure as a risk-off mood took hold in broader equity markets.
London-based Anglo American (LSE:AAL) and Chile’s state-owned Codelco have set this Friday as the deadline to resolve a dispute over billions of dollars in copper assets in the South American country that has had the parties engaged in a legal confrontation for months.
Mexican financial newspaper,El Financiero reports investors are closely watching this case to see if the parties can finally achieve a deal before the self-imposed deadline expires, if not then they will go back to court and extend the dispute for years.
The world’s largest copper producer and Anglo are fighting over contracts affecting the diversified miner’s division in the South of Chile, home for the world’s fifth largest copper mine.
In late May, the parties agreed to put their legal battle on hold until June 22 to explore the chance of reaching an agreement. A day after this announcement, Codelco CEO Diego Hernandez resigned claiming “personal reasons,” which gave room for speculations.
The clash between Anglo American and Codelco goes back to November last year, when the copper giant decided to exercise an option and Anglo American responded by selling a 24.5% stake in its southern Chilean division to Japan’s Mitsubishi Corp. for $5.39 billion. By doing this, Anglo undermined Codelco plans to exercise its option, something that the copper miner could only have done in January.
A failed attempt by Codelco to force Mitsubishi to hand over the particulars of the deal in December drove the Chilean company back to the courts by formally informing Anglo American that it was “exercising its legal option” to buy the contested 49% in Anglo Sur.
If an agreement is not possible, then Chilean courts will have to settle the conflict.
Anglo American is one of Chile’s largest foreign investors.
