To date, Asarco (NYSE) has spent nearly $1 billion in an effort to move the thrust of its operations away from custom smelting and refining, and more towards copper and lead production.
The money was used to buy new properties, augment reserves at existing properties and modify facilities at the company’s U.S. operations. In a press release, the company suggested that its current strategy is aimed at ensuring that operations be able to respond quickly to changes in the price of copper, lead and zinc. For example, it said a 1 cents change in the price of copper can affect corporate earnings by 13 cents. Similarly, a 1 cents change in the price of lead can affect earnings by 4.7 cents per share and a 1 cents change in the price of zinc can affect earnings by 2.9 cents. Meanwhile, the company has improved the value of some of its foreign assets. In Mexico, an investment in a privately owned company has been transformed into a 23.6% interest in the publicly traded company Grupo Mexico. The market value of that investment has risen to US$511 million from a book value of US$299 million.
Asarco also holds a 15.5% interest in MIM Holdings, a major Australian producer of lead, zinc and copper. The company maintains that its investment, estimated to be worth US$460 million, is undervalued and has considerable upside potential.
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