NEVADA & THE WESTERN STATES — Copper takes toll on BHP

With copper prices still languishing well below US$1 per lb., many of the mines acquired by Broken Hill Proprietary (BHP-N) in its 1995 takeover of Magma Copper are losing money and facing possible closure.

The Australian giant took over Magma, then the world’s eighth-largest copper producer, to gain access to the American market. The US$2-billion deal included the San Manuel mine and smelter complex, north of Tucson, Ariz., as well as the Pinto Valley operation, east of Phoenix, and the Robinson mine, in eastern Nevada.

In May 1998, however, low prices forced BHP to write down nearly US$1 billion of the value of the former Magma properties. Later in that year, a management shakeup saw Paul Anderson appointed president of BHP, the first American to occupy that post.

Since the time of Anderson’s appointment, the price of copper has fallen to as low as US62 cents per lb.

Among the casualties has been the San Manuel smelter, which BHP shut down for maintenance in May of this year. The facility, which, at capacity, processes 1.8 million tonnes of concentrates per year, is expected to resume operations later this month.

BHP is currently pulling 55,000 tonnes per day from the Lower Kalamazoo deposit at the San Manuel underground mine. In addition, the company produces 680,000 tonnes of electrowon copper annually from heap and in situ leaching at the mine. (Cash costs for BHP’s operations remain unavailable.)

At the Robinson open-pit mine, near Ely, Nev., BHP sends more than 40,000 tonnes to the flotation circuit on a daily basis. Concentrates are then shipped by rail to San Manuel.

However, the persistently low copper prices are rendering vulnerable all of BHP’s North American operations. In April, management sent a letter to all employees of BHP Copper North America, stating that the company was considering selling some or all of its assets; other options include mergers or additional shutdowns.