To Move A Mountain

Kennecott Utah Copper Parent Companies

This page last updated on December 31, 2011.

Index for this page

Kennecott Copper Corporation
Sohio and British Petroleum
Rio Tinto

Kennecott Copper Corporation

(click here to read the excellent history, written in 1999, by the International Directory of Company Histories)

November 10, 1936
Utah Copper Company was sold to Kennecott Copper Corporation. Kennecott had organized a new Utah Copper Company in Delaware, as a subsidiary, on November 6, 1936 for the purpose. The original Utah Copper Company had been organized in New Jersey in 1904. On April 29, 1915, Kennecott Copper Corporation had been organized in New York to acquire the worldwide Guggenheim copper interests, including all of the interests of Kennecott Mines Company in Alaska (including its Copper River & Northwestern Railroad) and 25 percent interest in Utah Copper Company in Utah, along with 96 percent interest in Braden Copper Company in Chile. In 1923 Kennecott Copper Corporation acquired 77 percent control of Utah Copper Company and by 1925 Kennecott had acquired 95 percent interest in Utah Copper. (Arrington: Richest Hole, p. 68; Kennecott Historical Index)

May 1937
Kennecott chairman Stephen Birch, remarked that 17-cent copper was too high and uneconomic, adding that 12.5-cent copper is better for both the producers of copper, and the users of copper. (New York Times, May 5, 1937)

1938
The original Kennicott copper mine in Alasaka was closed. The profits from this mine in Alaska between 1911 and 1938 were reported as the reason the Kennecott Copper Coproration took full ownership of the Utah Copper Company, making it the Utah Copper Division of Kennecott Copper Corporation. (Deseret News, June 8, 1998)

June 29, 1968
Kennecott Copper Corporation purchased Peabody Coal Company. In 1963, Kennecott had purchased the Knight Ideal Coal Company in Utah. This small property was purchased so as to gain coal reserves which would provide a hedge against rising natural gas costs, both which serve as fuel for Kennecott's Central Power Station at Magna, Utah. Kennecott's experience managing this coal company and an involvement with the coal industry would later be the basis for Kennecott's purchase of Peabody. (Kennecott Copper Corporation Vs. Federal Trade Commission, Docket 71-1371, United States Court of Appeals, Tenth Circuit, September 15, 1972; F.T.C. 467 F.2d 67, 1972)

May 6, 1980
Kennecott Copper Corporation changed its name to Kennecott Corporation at its 65th annual stockholder's meeting. (Deseret News, May 7, 1980; Salt Lake Tribune, May 7, 1980)

At the same time, Kennecott organized Kennecott Minerals Company for its mining operations.

March 1981
Standard Oil Company (Ohio), which was 53 percent owned by the British Petroleum Company, reached a definitive agreement to acquire all of Kennecott Corporation's approximately 28.5 million outstanding shares for $62 cash per share. The transaction was subject to approval of Kennecott shareholders and certain other conditions. (New York Times, May 5, 1981)

May 1981
The Kennecott Corporation, the nation's largest producer of copper, said that net income in the first quarter of 1981 plunged 43.7 percent, to $34.6 million, from $61.5 million, in the first quarter of 1980. Sales fell 15.1 percent, to $547.9 million, from $645.2 million. (New York Times, May 5, 1981)

June 4, 1981
Standard Oil Company of Ohio (SOHIO) bought Kennecott Minerals Company (KMC) (source not recorded)

1983
Kennecott Minerals Company became Kennecott (an operating company of SOHIO) (source not recorded)

In an MSHA decision dated September 16, 1985, the company was referred to as "Kennecott Minerals Company, Utah Copper Division." (Federal Mine Safety & Health Review Commission)

September 24, 1987
BP America announced the formation of BP Minerals America, combining the assets of Kennecott Corporation, headquartered in Salt Lake City, and Denver-based Amselco Minerals. (BP America news release, dated September 24, 1987, "today")

June 1989
World-wide mineral interests of British Petroleum (including the Kennecott Utah Copper unit of BP Minerals America) were sold to RTZ Corporation for $4.4 billion. The name of BP Minerals America, Kennecott Utah Copper was changed to Kennecott Corporation on or about July 5, 1989. (Salt Lake Tribune, July 6, 1989)

March 1992
Kennecott Utah Copper Corporation (KUCC) became a unit of RTZ Corporation (England). (Wall Street Journal, March 12, 1992)

June 1993
Four years after purchasing BP Minerals America, RTZ Corporation announced the division of Kennecott Corporation into three separate operations: Kennecott Utah Copper, Kennecott Minerals Company, and Kennecott Energy Company.

June 2, 1997
RTZ Corporation changed its name to Rio Tinto.

Rio Tinto's Kennecott group of companies in North America include: Kennecott Utah Copper (Bingham Copper Mine); Kennecott Minerals Company (U.S. gold, silver, copper, and base metal operations); Kennecott Exploration Company (North American exploration activies); and Kennecott Energy Company (U.S. coal operations). Each company operates as a separate entity.

Sohio and British Petroleum

Keeping in mind that Sohio purchased control of Kennecott Corporation in June 1981, and BP took full control of Sohio in June 1987, the following information about Sohio and BP is presented.

On June 2, 1969, Sohio announced a merger with British Petroleum. Various news reports provided more details, including the general statement that BP wanted retail outlets for the newly discovered oil reserves that it controlled on Alaska's North Slope at Prudhoe Bay. An overly simplified description of the merger indicates that BP would furnish the crude oil from Prudhoe Bay, by way of the soon-to-be completed Alaska pipeline, and Sohio would furnish the refinery capacity, as well as the wholesale and retail distribution networks. (New York Times, June 3, 1969)

The merger of Sohio and BP took effect on January 1, 1970 after the companies agreed to a settlement that satisfied the concerns of the U.S. Department of Justice. (Wall Street Journal, January 2, 1970)

The announced merger would be between Standard Oil Company of Ohio (Sohio) and BP Oil Corporation, the principal U.S. subsidiary of the British Petroleum Company, Limited. At the beginning, the merger agreement allowed BP an immediate non-dividend bearing 25 per cent control of Sohio. The initial interest would convert to full dividend Sohio common stock after BP began shipping a minimum of 200,000 barrels per day from its Prudhoe Bay properties, or on January 1, 1975, whichever came first. BP's percentage of common stock interest in Sohio would be allowed to increase from the intital 25 percent, at 200,000 barrels per day, to 54 per cent if BP shipped a sustained 600,000 barrels per day before January 1, 1978.

BP had discovered its first oil at Prudhoe Bay on March 13, 1969, from a well located adjacent to the pioneering Atlantic Richfield well, which was discovered on March 12, 1968. Sustained production for BP depended on the completion of the Alaska pipeline. Although expected to be complete during mid 1972, the Alaska pipeline did not begin full operation until June 1977. Sohio would acquire the marketing, refining and pipeline properties of BP Oil Corporation, which consisted of the former Sinclair properties purchased by BP from Atlantic Richfield earlier in 1969 at the time of the merger of Atlantic Richfield and Sinclair Oil Corporation. These former Sinclair properties were located in 16 eastern states, and included wholesale and retail outlets, along with two refineries. Sohio would receive its Prudhoe Bay crude oil from BP Alaska, another BP subsidiary not related to the U.S. company involved in the merger. While BP Alaska controlled the oil leases and production, Sohio would be responsible for the costs of development, and for BP's share of ownership in the Alaska pipeline. (Sohio news release dated June 2, 1969) (ARCO on Wikipedia; BP on Wikipedia; Sohio on Wikipedia)

BP's interest in Sohio rose from 52 per cent to its maximum of 53.1 per cent on December 31, 1978, after the deliveries from Prudhoe Bay reserves reached 600,000 barrels per day. (New York Times, October 11, 1979)

ARCO was created by the 1966 merger between Atlantic Refining Company in the East, and Richfield Oil Company in the West, creating the Atlantic Richfield Company (ARCO). The merger included oil leases in Alaska owned by Richfield. British Petroleum also owned Alaskan oil leases, and both ARCO and BP were successful in the initial discoveries of the largest oil reserves in North America; ARCO in March 1968 and BP in March 1969. When oil started flowing from Alaska in mid 1977, with the completion of the Alaska pipeline, both companies found themselves suddenly "cash rich" and soon went looking for ways to spend their rapidly growing financial resources. Wanting to diversify into other mineral resources, ARCO found Anaconda Copper Company, which was financially weak following a series of setbacks, including the nationalization in 1971 of its mines in Mexico, and in Chile, which made up two-thirds of its proven reserves. ARCO bought Anaconda for $700 million in 1977. In 1981, Sohio bought Kennecott Copper Corporation, paying $1.7 billion for the largest copper producer in North America. At the time, Kennecott was recovering from its four-year fight to prevent a hostile takeover by Curtiss-Wright.

Within a very few short years, BP and ARCO both learned an important lesson that making money from one natural resource (oil) does not transfer to making money in a completely different natural resource (copper). The costs of any successful mining operation are high, and the payback is over a much longer period than most corporations are prepared to accept. After buying Anaconda in 1977, ARCO suffered almost immediately due to falling copper prices in 1979, and the sustained environmental costs stemming from the 1972 closing of Anaconda's smelter at Tooele. Together with its lack of experience in hard-rock mining, the financial losses soon began to increase. By 1983, the copper mine at Butte was closed, forcing the closure of the smelter at Anaconda, with the associated costs of environmental cleanup for that site. In 1974, Anaconda had begun developing its copper reserves at Carr Fork in Bingham Canyon, and ARCO continued in those efforts. Mounting costs across the board for ARCO in all its markets and corporate interests forced the company to close the Carr Fork operation in 1981. In 1985, Kennecott purchased all of ARCO's copper mining interests in and near Bingham Canyon.

BP, though its Sohio subsidiary, also learned the same valuable lesson. Kennecott's battle with Curtiss-Wright had diverted its management's attention away from needed modernization and improvements in its copper mining, milling and smelting processes. After buying Kennecott in 1981, Sohio became aware that it was sitting on outdated facilities, and to stay competitive on the world copper market, expensive modernization was needed right away. Radical changes to cut labor and other costs came in 1983, and modernization started in 1985. Although completed in the third quarter of 1988, the modernization had cost money that BP's financial observers and shareholders were not happy with. After taking full control of Sohio in mid 1987, and with the projected cost of the Kennecott modernization coming due, BP began looking for a suitable buyer of its mining and mineral interests, which it had consolidated under the name of BP Minerals America. In late 1988 it was announced that RTZ Corporation of London, would purchase BP Minerals America, at a reported $4.4 billion. The sale was finalized in June 1989, bringing Kennecott back under the manangement of a very large international company with plenty of mining experience across the globe.

Other BP information:

Extreme progressive viewpoint (the evils of multinational corporations):
http://multinationalmonitor.org/hyper/issues/1992/11/mm1192_11.html

Rio Tinto

May 25, 1989
RTZ Corporation of London announced that it had completed the terms of its purchase of the mineral assets of BP, for a reported $4.3 billion. (New York Times, May 25, 1989)

The following comes from an earlier Rio Tinto web page, now no longer available (http://www.riotinto.com/about/companyhistory.asp).

RTZ Corporation had its roots in the Rio Tinto Company organized in 1873 to mine the ancient copper works at Rio Tinto, Spain. In 1962 the Rio Tinto Company merged with The Consolidated Zinc Corporation, which had been organized in 1905 to treat zinc bearing tailings at Broken Hill in New South Wales, Australia. Rio Tinto had previously disposed of two-thirds of its Spanish interests in 1954, and the remainder was also disposed, making the zinc interests in Australia the focus of the new Rio Tinto-Zinc Corporation's activities. Following the 1962 merger, RTZ developed a number of major projects in South Africa, Namibia, and Portugal. It also grew through acquisitions, including the Borax group in 1968.

Between 1968 and 1985 significant interests in cement, chemicals, oil and gas and manufactured products were also developed. A major review of corporate strategy between 1987 and 1988 led to a series of disposals and acquisitions which refocused the company on mining and related activities. Between 1988 and 1994 non mining businesses were sold as going concerns, and interests in mining acquired. These included the 1989 acquisition of the major part of British Petroleum's international minerals businesses [including Kennecott's Bingham Canyon copper mine], and the 1993 acquisition of the Nerco and Cordero coal mining businesses in the US [in Wyoming's Powder River Basin].

December 1995
The RTZ Corporation PLC (of Britain) and CRA Limited (of Australia) were unified under common management.

CRA Limited was originally known as Conzinc Riotinto of Australia. Prior to the 1995 merger with RTZ, CRA had grown through the development of several important mineral discoveries, including Hamersley (iron ore) in Australia, Bougainville (copper) in Papua New Guinea, Comalco (bauxite, alumna refining and aluminum smelting) in Australia and New Zealand, Argyle (diamonds) and Blair Athol and Tarong (coal) in Australia, and Kelian (gold) and Kaltim Prima (coal) in Indonesia.

June 2, 1997
RTZ Corporation PLC became Rio Tinto PLC (of Britain), and CRA Limited became Rio Tinto Limited (of Australia).

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