PRESENTED BY MEER BASARAT ALI IPSHITA ACHARYA SUCHISMITA NAYAK SANTOSH MOHARANA

INTRODUCTION

 El Teniente ("The Lieutenant") is an underground copper mine in

the Chilean commune of Machali in Cachapoal Province, Libertador General Bernardo O Higgins Region, near the town of Sewell, 2,300 m (7,500 ft) above mean sea level in the Andes. Mining at El Teniente is reported to have started as early as 1819. Kennecott Copper Corporation ran the mine through a subsidiary company up until the Chillean nationalization of copper and the formation of the state owned copper mining company Codelco who currently operates the mine. In 1967 the Chilean government bought a 51% stake in the mine and founded Sociedad Minera El Teniente, and under this agreement a new concentrator was built, and the mine expanded its production to 63,000 t (69,000 short tons) per day. Braden became a subsidiary company of Kennecott Copper Corporation and on July 11, 1971 with the Chilean nationalization of Copper under President Salvador Allende and the formation of the Corporacin Nacional del Cobre de Chile (known as Codelco), El Teniente became a state owned operation. The Chilean government was to pay Kennecott $92.9-million for the property.

SUMMARY

 In the 1960s Kennecott, a U.S. company, was about to enter into

renegotiation over its contract with the government of Chile concerning its El Teniente copper mine. Chiles BATNA appeared overwhelmingly strong as the government was possessed of a strong pro sovereignty stance towards foreign management of its natural resources. The government of Chile was politically positioned to establish their own tough financial terms or had the option of declining to renegotiate by simply ejecting Kennecott from their involvement altogether by expropriating the mine. Kennecott executives did an extraordinary work and thought of a deal that weakened Chiles BATNA and leveraged their own BATNA by creating value for both.

THE OFFER

 The deal consisted of Kennecott offering to sell a majority equity interest

in the mining operation to the Chilean government. Realising that Chile would not particularly care to divest the funds of the sale into U.S. banks, Kennecott offered to use the funds, combined with an outside loan, to finance the mines expansion. This allowed Chile to preserve its nationalistic interests and have greater financial gain from future profits. They were able to renegotiate and establish a partnership which was mutually acceptable to both parties. Next, Kennecott then persuaded the Chilean government to guarantee the loan and have this guarantee subject to the law of the state of New York. Then, as many of the company's mining assets as possible were insured with U.S. backed guarantees, against the potential expropriation threat. Kennecott then negotiated that the copper output derived from the expansion would be sold exclusively to clients in Europe and North America. Lastly, the rights to collect from these new contracts would be sold to a consortium of financial institutions based in Japan, the United States and Europe.

BATNA

 The course of action that will be taken by a party engaged

in negotiations if the talks fail and no agreement can be reached. The term BATNA was coined by negotiation researchers Roger Fisher and William Ury in their 1981 bestseller "Getting to Yes: Negotiating Agreement Without Giving In." A party's BATNA refers to what they can fall back on if a negotiation proves unsuccessful. Fisher and Ury have outlined a simple three-step process for determining it: Develop a list of actions to take if no agreement is reached; convert the more promising ideas into practical options; and tentatively select the option that seems best.

CONT
BATNA of Chile Strong pro sovereignty stance towards foreign management of its(Chile) natural resources. Chile had its own experts who could manage and operate the mine, perform the processing and could readily market these very useful natural resource. BATNA of Kennecott To offer a deal to the Chilean government that they couldnt reject. To safeguard their interest by this deal.

CONCLUSION
Translate your BATNA to fully understand its

implications for the negotiation at hand. To shape your strategy, think through the other partys BATNA as carefully and objectively as you do your own. Incorporate the likely BATNA of the individual with whom you are negotiating, as well as the BATNA of his/her company.