With mining company Anglo American’s successful sale of a contentious $5.4 billion stake in Las Bronces copper mine in Chile, they may have won the point but lost the game, as relations with the Chilean government and wider public have sharply soured during the dispute.  During the transaction in question, the state-owned copper interest Codelco had decided to exercise its legally granted call option in order to purchase 49% of the Las Bronces share, but was blocked from doing so when Anglo moved forward to sell 24.5% of its Chilean company to Japan’s Mitsubishi.  But this week, the Chilean government went ahead and announced on Monday that they would officially take over the full 49% of Anglo American Sur, including the half of the stake sold to the Japanese.

According to a number of financial and political risk analysts interview by The Financial Times, the aggressive and “arrogant” moves by Anglo have prompted a certain level of “unquantifiable risk” that the company may have unleashed in their handling of the dispute with an unusually business-friendly like Chile.  The question remains:  was it worth $5.4 billion in value in terms of the heightened risk their operations will now face?

Institutional investors are also in favour of the sale on value grounds. “Nearly $6bn for a 25 per cent stake is a very big number,” says one investment executive. Chief executive Cynthia Carroll, another top investor adds, “is doing the right thing by her shareholders by trying to extract higher value; Mitsubishi is offering a 100 per cent premium”.

However, executives at rival mining companies have taken an opposite view that has little to do with valuation models.

Two senior executives have described Anglo’s move as “arrogant” in that it antagonises a powerful state company.

“[The mining industry’s] reputation through the 1980s was of arrogance, of doing whatever one liked with the resources under the ground,” says one executive at a leading multinational miner. “The whole industry has moved a lot since then to be more engaged with communities and politicians.”

“The problem now is that this stirs up all the worst memories of the mining industry at exactly the time when resource nationalism is on the rise,” he adds. “So, if next year we face more calls for tax increases, more strident labour demands, we cannot be surprised.”

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