Anglo American (LON:AAL) and Chilean state-owned miner Codelco have reached an agreement to jointly develop their adjacent Los Bronces and Andina copper operations. The partnership is expected to yield an additional 2.7 million tonnes of copper over 21 years beginning in 2030. The deal is projected to generate a net present value pre-tax benefit of at least $5 billion, which will be equally shared between the two companies.

Despite the collaboration, Anglo American and Codelco will maintain full ownership of their respective assets. Each company will continue to operate independently, retaining control over mining concessions, processing plants, and ancillary facilities. The agreement focuses on optimizing the district’s resources without merging ownership structures.

Codelco’s Andina division includes the Rio Blanco and Sur Sur mines, which produced 164,500 tonnes of copper in 2023. Meanwhile, Anglo American’s Los Bronces operation yielded 215,000 tonnes of copper during the same period. Codelco already holds a 20% stake in Anglo American Sur, the entity responsible for Los Bronces, El Soldado, and the Chagres smelter.

Anglo American has been undergoing a strategic shift, prioritizing copper and iron ore after successfully defending against a $49 billion takeover bid from BHP last year. The company has outlined a long-term goal of exceeding 1 million tonnes of annual copper production by the early 2030s, marking a 30% increase from current levels.

Codelco has maintained a long history of private-sector partnerships, holding a 49% interest in El Abra alongside Freeport-McMoRan and a 42.3% stake in the Agua de la Falda copper project in partnership with Rio Tinto. In 2023, Codelco acquired a 10% interest in Teck’s Quebrada Blanca copper mine, which is expected to contribute 25,000 to 30,000 tonnes of copper annually. The company is actively seeking additional partnerships as it works to recover from declining production and increasing debt levels.

The mining industry has seen an increasing number of collaborative efforts globally as companies look to mitigate rising costs, supply-chain disruptions, inflationary pressures, and stringent permitting requirements. These challenges have made large-scale projects more complex and expensive, pushing firms to explore joint ventures as a means of ensuring long-term operational sustainability.

The announcement of the agreement between Anglo American and Codelco coincided with a surge in Anglo’s share price. The company’s stock climbed over 5% in London following the news and remained 4.6% higher than the previous day’s close, reaching 2,479 pence per share by mid-afternoon. This raised Anglo American’s market capitalization to approximately £33.2 billion ($42 billion), marking a 44% increase in share value over the past year.

However, the positive momentum was partially offset by another substantial write-down in Anglo American’s De Beers diamond business. The company reduced De Beers’ book value by an additional $2.9 billion, following a prior write-down of $1.6 billion last year, bringing the unit’s valuation to $7.6 billion. This latest impairment contributed to Anglo American recording total net impairments of $3.8 billion for 2024.

As a result, the company reported a net loss of $3.07 billion for the year, significantly exceeding analyst expectations, which had projected a $116.9 million loss. The latest figures contrast sharply with the company’s 2023 performance, when it posted a net profit of $283 million.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.