Fluor, Homestake to Merge Mining Operations
Fluor Corp. said Friday that it agreed to merge its giant but troubled lead-mining operations with those of Homestake Mining Co. to form a new company that will control 40% of the nation’s lead production.
The joint venture, named Doe Run Co., will be 57.5% owned by Fluor’s St. Joe Minerals Corp. subsidiary and 42.5% owned by Homestake. Jeffrey L. Zelms, formerly president of St. Joe’s domestic lead operations, was named president of the new venture.
The companies declined to place a value on the merger.
John A. Wright, president of Irvine-based Fluor, said the merger will “create a more flexible, cost-efficient operation . . . (that) will be competitive in today’s lead market.”
The joint venture will form the nation’s largest lead mining operation, with the capability of producing 225,000 tons of lead a year.
Richard Stumbo Jr., vice president of finance and chief financial officer for Homestake Mining Co., said the company’s lead mining and production operations have been money losers. The U.S. lead industry has suffered from low-cost foreign competition and declining demand for lead, he said.
Last year Homestake sustained a $4.1-million operating loss from its lead operation and in the first nine months of this calendar year lost $5.9 million, which includes the cost of shutting down the mine and smelter.
Fluor does not report financial results of its subsidiary operations, but a spokesman said the lead operation has been losing money. Last year St. Joe produced about 178,000 tons of lead, 238,000 tons of lead concentrates and 23,000 tons of zinc concentrates.
The Buick, Mo., lead-mining operation which Homestake brings to the joint venture produced 132,000 tons of lead metal, 196,000 tons of lead concentrates and 48,000 tons of zinc concentrates. Homestake also brings a smelter in Boss, Mo., to the joint venture.
St. Joe contributed its smelter in Herculaneum, Mo., as well as five mines and three mills in the Viburnum, Mo., area.
Homestake Mining is one of the largest gold producers in the Western world outside of South Africa. It also has interests in silver and uranium mining and in oil and natural gas exploration, development and production through its wholly owned Felmont Oil Corp. subsidiary.
