Phelps Dodge merger creates one of largest mining companiesadmin
If successful, a $56 billion merger between Phelps Dodge and two other mining companies will create one of the world’s largest mining companies.
Phelps Dodge has entered into an agreement with Inco Limited and Falconbridge Limited to combine the three companies. Inco is a primary metals company that has been in business for 100 years. It is one of Canada’s largest exporters and employs 12,000 people around the world.
Falconbridge is a leading copper and nickel company with investments in zinc and aluminum assets. The company’s primary focus is the identification and development of world-class copper and nickel ore bodies. It employs about 14,500 people and has operations and offices in 18 countries.
Inco Limited will be acquiring Falconbridge, and Phelps Dodge will acquire Inco, resulting in a new company. The new company will be named Phelps Dodge Inco Corporation.
If the Inco-Falconbridge merger clears antitrust laws, it is expected to finalize in July.
The Inco-Phelps Dodge merger must still undergo regulatory review and approval from company shareholders. Timelines project the deal’s closure in September.
“The combination of Inco and Phelps Dodge will create the preeminent North American mining company,” Phelps Dodge spokesman Peter Faur said. “It will make our operations more efficient overall, as well as create a stronger company.”
Some of the key drivers of cost savings include optimization of product flow, shared business services and application of the best practices across the portfolio.
The new company will also use Phelps Dodge’s North America One Mine and Quest for Zero programs. The North America One Mine program, which is in use at Phelps Dodge’s operations, will make use the most effective techniques across all of the company’s operations. Quest for Zero is Phelps Dodge’s program to create a safe working environment.
Company executives also see the merger as an opportunity to manage the market cycles and stabilize earnings.
“The combined company has one of the industry’s most exciting portfolios of development projects and the scale and management expertise to pursue development (of the projects) successfully,” Phelps Dodge Chairman and Chief Executive Officer J. Steven Whisler said. “The creation of this new company gives us the scales and diversification to manage cyclicality, stabilize earnings and increase shareholder returns.”
Phelps Dodge Inco will be the world’s leading nickel producer, the world’s largest publicly traded copper producer and a leading producer of molybdenum and cobalt.
Phelps Dodge Inco will have operations in more than 40 countries and employ approximately 40,000 people globally.
The company will be listed on the New York Stock Exchange and will apply for a listing on the Toronto Stock Exchange.
The new company’s copper mining headquarters will remain in Phoenix, and the nickel mining headquarters will be located in Toronto, Canada, which will ensure a continued presence in and commitment to that country.
According to a press release from Phelps Dodge, Phelps Dodge Inco will maintain all community and educational programs currently in place in local communities.