(Rewrites throughout to add executive’s comments and other details)
By Anthony Esposito and Fabian Cambero
SANTIAGO, April 16 (Reuters) - Anglo American Plc is weighing its options to resolve a water shortage at Los Bronces copper mine in central Chile that has hit production, and testing market appetite for two of its copper deposits, a top executive said.
An eight-year drought has dried up reservoirs and rivers, sucking into the water table, proving a growing challenge for industry and residents alike.
The impact on production from the water shortages at Los Bronces has been factored into Anglo’s overall 2015 guidance of 720,000 to 750,000 tonnes copper production, Hennie Faul, the head of Anglo’s copper business, told Reuters on Wednesday in an interview during the CESCO/CRU conference in Santiago.
“We’ve been putting mitigation measures in place anticipating that you’re going to get some drier years, some wetter years, and certainly this has been the driest that we’ve seen Chile in decades and we factored that into our budget,” said Faul.
London-listed Anglo is exploring using industrial water with suppliers or building or syndicating a desalination plant as part of a long-term strategy for Los Bronces, though it has not made an investment decision yet, he said.
After an assets review in 2013, Anglo American decided to divest assets that did not meet its return criteria. They included the Mantos Blancos and Mantoverde mines, its 50.1 percent stake in the El Soldado mine and the Chagres smelter, all in Chile.
The global miner is already testing the market with the sale of Mantoverde and Mantos Blancos and prospective buyers “from all over” have shown interest, according to Faul.
“We’re just in the first round. There is quite good interest. But this is very early days. We haven’t yet closed the bids,” Faul said.
Anglo is discussing the “disposal process” of the Chagres smelter and its interest in El Soldado mine with its partners and expects a decision in the second or third quarter of 2015, Faul said.
Commodity group Glencore and X2, a company set up by former Xstrata boss Mick Davis, are among those that have been named as potential suitors for the assets.
Chilean newspaper La Tercera reported on Tuesday that Anglo was in talks with state-owned copper producer Codelco to sell its stake in Los Bronces. Faul said Anglo would remain in Chile and “we have no intention to sell our stake in Los Bronces.”
Codelco said it was not considering buying new assets as all its resources were in a five-year $25 billion investment plan. (Editing by Grant McCool)