Weekend fire to have little impact

Diversified Australian miner WMC (WMC-N) says that a fire that broke out on Sunday in the solvent extraction area of its processing plant at the Olympic Dam copper-uranium mine in South Australia will have a minimal impact on copper and uranium oxide production over the next twelve months.

WMC expects lost copper production during the period to tally to less than 10,000 tonnes. Uranium oxide production is expected to slip by about 1,500 tonnes. There is also expected to be little impact on customer deliveries. Gold and silver production will remain unaffected.

Subject to deductibles, the loss will be covered by insurance.

The fire occurred in the same area as another blaze about two years ago. That fire resulted in about $9 million worth of damage.

The company has begun a full investigation into the cause of the recent fire.

The Olympic Dam mine turned in a strong performance during the first half of 2001, generating an operating profit of A$85.3 million, against A$38.5 million in the first half of 2000. Refined copper production during the period exceeded nameplate capacity at 103,889 tonnes. Uranium production hit 2,292 tonnes, with record gold and silver production of 59,000 oz. and 460,000 oz., respectively.

An optimization expansion to boost refined copper production at Olympic Dam to 235,000 tonnes annually is slated for completion in mid-2002. The cost of the expansion is A$85 million.

Last week, WMC announced that talks are underway with a number of parties, including U.S. aluminum company Alcoa (AA-N), which may lead to an offer being made to acquire all the ordinary shares in WMC or to a restructuring of WMC.

The company said in a prepared statement, “The board is uncertain when the discussions will be concluded and what the outcome of the discussions will be.”

Takeover talk have surrounded the Australian miner for more than a year. Most of it has centred on the possibility that Alcoa would buy out WMC’s minority interest in Alcoa World Alumina & Chemicals for cash, and that a large international mining group such as BHP Billiton (BHP-N), Anglo American AAUK-Q) or Rio Tinto (RTP-N) would follow up with a bid for the company’s nickel, copper and uranium assets.