Chile Codelco: tough to match 2011 output in 2012

SANTIAGO Feb 5 (Reuters) - The world's No.1 copper producer, Chilean state giant Codelco, will struggle this year to match record 2011 copper output of 1.735 million tonnes, CEO Diego Hernandez said in the El Mercurio newspaper's Sunday edition.

Codelco will invest $4.5 billion this year in its Ministro Hales and Nuevo Nivel Mina el Teniente projects as well as works at its massive Chuquicamata deposit, as it seeks to counter lower ore grades and boost output to 2.1 million tonnes by 2020.

"We had record output of 1.735 million tonnes (in 2011)," Hernandez said. "This year is complex production-wise. It will be hard to match 2011."

Hernandez said Codelco has had contacts with Anglo American amid a bitter legal dispute over assets in the south of the country. The dispute could grind on for years and Hernandez said there were no serious negotiations.

Anglo American blind-sided markets with a pre-emptive sale of a 24.5 percent stake in its southern Chilean properties in November, weeks after Codelco announced it planned to exercise a long-standing option to buy a 49 percent stake.

Codelco accuses Anglo of acting in bad faith and selling a stake from under it while Anglo argues it was entitled to sell a share in the assets to Japan's Mitsubishi before Codelco's window to exercise the option in January.

"We have spoken with them during this period," Hernandez said. "But there is nothing on the table worth starting serious negotiations about."

Hernandez said Anglo American had offered it between $700 million and $1 billion to buy out its option, depending on the price of copper, which was billions of dollars shy of the $5.4 billion it charged Mitsubishi for its 24.5 percent stake.