Anglo American to Give Up Zambian Copper Mines (Update1)
(Adds total cost of Zambian venture in first paragraph,
investor quote in third.)
Lusaka, Zambia, Aug. 19 (Bloomberg) -- Anglo American Plc
said it will cede ownership of its Zambian copper mines to the
government and mineworkers, ending a $384 million venture intended
to cut its dependence on precious metals and stones.
The acquisition of the mines by the world's second-biggest
Mining company in 2000 was its biggest step to broaden its profits
away from gold, platinum and diamond mines, and make it more like
its rivals Rio Tinto Group and BHP Billiton Group. Falling metal
prices kept production costs above the price copper sold for.
``I was rather shocked with the figure they spent to keep it
going,'' said Abrie du Plessis, a fund manager at Gryphon Asset
Management, which holds Anglo shares. ``It's bigger than they led
us to believe.''
Anglo now has no interest in an industry that its founder,
Ernest Oppenheimer, helped create and which it ran before their
nationalization in the 1970s. The mines account for about 60
percent of the foreign exchange earnings of Zambia, where the
average citizen earns 82 U.S. cents a day.
``With this signing Anglo is now totally out of the
picture,'' said Emmanuel Kasonde, Zambia's minister of Finance and
National Planning, at a press conference in the Zambian capital,
Lusaka.
Anglo will contribute $30 million to the government and lend
it up to $26.5 million to help keep the mines running. Anglo will
also pay a further $50.8 million to buy out its partners, the CDC
Group Plc and the International Monetary Fund.
Total losses including this settlement amount to $384
million, said Simon Thompson, chief executive of Anglo Base
Metals, on a telephone conference call with analysts and
reporters.
The mines will now be 42 percent owned by the state with 48
percent held by a trust, that will use any profits to help Zambia
diversify its economy away from mining. The rest will be owned by
the mines' 10,000 workers.
The extra costs Anglo has incurred ``are to help the
government's objective and effectively buy time for Zambia to
diversify its economy,'' Thompson said. ``Anglo can take some
pride in exiting from Zambia in a responsible manner.''
Zambia is trying to boost agricultural production including
roses for sale to Europe and coffee.
Zambia has hired London-based bank, Standard Chartered Plc,
to help it find a new buyer for the mines and plans to send
prospectuses to potential investors, Kasonde said.
Anglo shares rose 16 pence, or 2.1 percent, to 778p in
London.
--Antony Sguazzin in the Johannesburg bureau (27 11) 286 1934, or
asguazzin@bloomberg.net, with reporting by Dylan Griffiths in
Johannesburg and Anthony Mukwita in Lusaka. Editor:
Coulter,Foroohar |
