Kafue consortium shrinks by half — And then there were two.

Majors Noranda (NOR-T) and Phelps Dodge (PD-N) have withdrawn from the Kafue consortium; only South Africa’s Avmin and Britain’s Commonwealth Development remain.

Over the past 15 months, the consortium has been attempting to acquire 94% interests in the Nkana and Nchanga divisions of Zambia Consolidated Copper Mines (ZCCM).

Both departing companies state that the rejection of the consortium’s latest offer of US$1.1 billion prompted them to quit Kafue. That bid followed a US$700-million offer, made last April, that was similarly rejected.

The latest bid included an initial cash payment to ZCCM of US$131 million, along with in an immediate infusion of US$76 million in working capital and another US$706 million in capital investments over a 5-year period. As well, US$35 million of ZCCM’s estimated long-term debt of US$600 million would have been absorbed by the consortium.

In a joint news release, the North American producers conveyed their disappointment in the failure of the two sides to come to a mutual agreement.

Noranda Vice-President Michael Knuckey also noted that several new company projects, such as Antamina in Peru, have arisen since talks began, necessitating a relocation of Noranda’s capital and people. Similarly, Timothy Snider, vice-president of Phelps Dodge, said his company “could no longer keep key resources tied up in a drawn-out negotiation with no end in sight.”

Nkana and Nchanga are the largest of 10 divisions of ZCCM formed in the early 1990s for the purpose of privatization. Together, they comprise six mines, one smelter, several refineries and two concentrators and account for half of ZCCM’s yearly copper output.

The state continues to hold a 60.3% interest in ZCCM and South African-based Anglo American holds 27%.

Though reportedly disappointed with their partners’ decisions, Avmin and Commonwealth Development are continuing to negotiate. Both companies also have investments in Zambia independent of the consortium.