RTZ of Britain, which this week announced it will purchase BP Minerals America including Kennecott Utah Copper, will boost its position as the world's leading mining group through a deal that will give it the minerals business of oil giant British Petroleum.
RTZ Corp. Plc will expand its output of copper, precious metals, uranium, tin and molybdenum, and operate in 40 countries under the agreement to pay British Petroleum Co. Plc 2.4 billion pounds ($4.3 billion) for its minerals businesses other than those of subsidiary BP Canada Inc.An RTZ spokesman said it will compete with Phelps Dodge Corp. as the West's second copper producer, behind state-run Corporacion del Cobre de Chile, and it will be the West's third largest gold producer outside South Africa.
"The BP deal significantly improves our minerals portfolio," the spokesman added. "We have also been able to satisfy one of our strategic requirements, which was to strengthen our precious metals business."
The group has its origins in copper mines in Spain and lead and zinc mines in Australia.
London-based Rio Tinto was formed in 1872 by British industrialist Sir Hugh Matheson to reopen copper mines in Spain as a world economic expansion gathered pace toward the end of the 19th century. By 1900 it mined a 10th of world copper.
Another company, Zinc Corporation, was formed early this century to treat waste from the Broken Hill lead and zinc mines in Australia. While Rio Tinto expanded into uranium, Zinc Corporation changed its name to Consolidated Zinc Co. and moved into bauxite.
The two merged in the 1960s and RTZ has since expanded strongly. It is now led by Sir Alastair Frame, 58, a leading industrialist and chairman of the International Mining Congress, a body which represents the world mining industry.
Market capitalization of around 3.7 billion pounds ($6.6 billion) including convertible unsecured loan stock makes RTZ bigger than other mining firms such as Consolidated Gold Fields of Britain or South African-based Anglo American Corp. and De Beers Consolidated Mines, its spokesman said.
A group called Minerals and Resources Corp. (Minorco), the 60 percent-owned overseas investment arm of Harry Oppenheimer's Anglo American-De Beers empire, last September launched a takeover bid for for Cons Gold. But this lapsed after the British government referred it to its Monopolies and Mergers Commission watchdog body.
RTZ's acquisition of BP's Bingham Canyon in Utah, one of the world's largest open pit copper and gold mines, and new output from the Neves Corvo project in Portugal and from Escondida in Chile should boost its share of world copper output to 6.5 percent from 4 percent, its spokesman said.
RTZ has 49 percent of Sociedade Mineira de Neves-Corvo (Somincor) which is developing the Portuguese mine and has a 30 percent stake in the Escondida project in Northern Chile.
The BP deal will increase RTZ's gold output to around 1 million ounces, which puts it third outside South Africa behind Newmont Mining Corp. and Placer Dome.
It will also raise its share of the West's silver output to just under 5 percent while acquisition of BP's Brazilian tin interests will boost its share of tin to around 5 percent.
It will obtain a new source of uranium through the Olympic Dam project in Australia, in which BP has a stake of 49 percent, and will boost its output of molybdenum, used in steel alloys.
The purchase of QIT of Canada will give RTZ 42 percent of the West's titanium feedstock output. Titanium dioxide is used for white pigments. The BP deal will also give it 20 percent of Western output of zircon, used in the nuclear industry.