Codelco buys Enami's Quebrada Blanca share for US$520mn

Chilean state miner Codelco, the world's top copper producer, will buy the 10% stake fellow state company Enami holds in Quebrada Blanca in northern Tarapacá region for US$520mn.

With the agreement, Codelco will add 25,000-30,000t/y to its copper production, which reached 1.32Mt in 2023 from its own mines. That is, 2% of its current volume.

Given Enami's precarious financial situation, the deal “will allow it to partially clear up the debt that has been dragging on for years, since it is reduced from US$740mn to US$250mn,” Enami CEO Ivan Mlynarz said in a statement.

Quebrada Blanca is 60% owned by Canada's Teck Resources and 30% by Japan's Sumitomo.

Enami's shares will be transferred immediately after a payment of US$182mn, while the rest will be disbursed within 120 days, Codelco said in a statement.

In addition to receiving the rights to preferred shares and dividends, Codelco will be able to appoint two of the company's 11 directors.

Enami, on the other hand, gains some breathing space to maintain its role as a promoter of small and medium-sized mining.

However, some industry players believe the deal is damaging because Enami lost a valuable asset amid optimistic copper price projections.

Recently, a government committee involved in the preparation of the 2025 budget raised its price estimates to US$4.09/lb compared to US$3.86/lb this year.

Quebrada Blanca is among the 20 biggest copper operations globally. Some US$8.2bn was invested in the phase II (QB2) project, which is currently being implemented and expected to help reach annual production of 280,000-310,000t in the next three years.

Last year, QB was the sixth largest producer in Chile after Escondida, Collahuasi, El Teniente, Radomiro Tomic and Los Pelambres.

CRITICISM

Industry group Sonami, which represents private sector companies, opposed the deal.

“We'll ask for this [purchase] to be thoroughly reviewed by the State's control bodies to ensure that it is done at a fair value, without damage to Enami and with the transparency required for this type of analysis,” Sonami president Jorge Riesco said in a video shared with BNamericas.

In July, Sonami sent a letter to President Gabriel Boric warning that such a deal would leave Enami without its most valuable asset and a future source of income.

In response, Boric instructed the mining ministry to meet with Sonami representatives and discuss the problem, but that meeting has been scheduled for the end of September.