Fluor Wins Contract for Big Copper Mine

Fluor Corp., which sold most of its mining operations over the last six years, announced Thursday that it was jumping back into the industry in a big way.

The Irvine-based company announced that it received a $300-million engineering and construction management contract for the world’s newest copper mine and that it acquired a Canadian firm that specializes in designing mining operations.

The contract, with BHP Utah International, a subsidiary of the Australian mining giant Broken Hill Proprietary Ltd., calls for Fluor to assist the 35,000-tons-per-day mining and processing Escondida complex in Chile.

When it begins operating in 1991, Escondida will be the third-largest copper mine in the Western world, said Fluor spokesman Rick Maslin. The mining complex is being developed by Broken Hill with Japanese and British partners.

The contract is the biggest Fluor has received this year and will likely represent about 6% of the company’s revenue for the year. It should not add many people to Fluor’s payroll, however, Maslin said.

Fluor’s acquisition of privately owned Wright Engineers Ltd. of Vancouver will give the company a preliminary design and engineering capability it now lacks. “Wright takes the bare ground” and comes up with a plan for laying out the mine and the materials handling systems, Maslin said, while Fluor’s expertise is in detailed engineering of those systems and in managing the overall construction project.

Some Involvement

Barry Needham, a senior vice president with Wright, said the two companies have been negotiating since April and that the prospect of the merger helped Fluor win the Escondida contract.

He said Wright expects to “have some involvement” in the engineering of the new mining facility.

Terms of the purchase were not revealed.

Wright, which has 300 employees and branch offices in Toronto, Madrid and Sydney, Australia, has specialized in engineering for mineral processing facilities since its formation in 1947, Needham said.

Fluor, founded in 1912, also has a long history in the mining business, including a disastrous fling as owner of a major mining company, St. Joe Minerals, which it acquired in 1981 for $2.2 billion just as the bottom fell out of the metals market. The St. Joe acquisition plunged Fluor into debt and the collapse of the market led the company into a three-year spiral of losses. Fluor sold off St. Joe in pieces beginning in 1982, completing the process in 1987 with the divestiture of its gold and zinc mining operations.

The company still retains a sizeable coal mining operation, however, and has continued bidding on engineering and construction management contracts for mining and other projects. “We have never tried to get away from the engineering and construction end of the industry,” Maslin said. The Escondida contract and Wright acquisition, he said, “put us back in there in a major way.”

Mining on Rebound

Peter Ingersoll, a metals and mining analyst with Shearson Lehman Hutton, said the Escondida contract should be a big plus for Fluor.

Mining “has come back in spades” since the collapse of the industry in the early 1980s, he said, and winning a big piece of “the only big new copper mine that is being planned in the Western world . . . should help Fluor get more business.”

Ingersoll said the mining industry has turned around because the demand for such metals as copper, aluminum and nickel is increasing. Also, he said, the huge inventories that were on hand when demand slumped in 1980 and 1981 have largely been depleted.

Herb Hart, an analyst with S. G. Warburg, said the $300-million contract “isn’t like some of the old mega-deals of $1 billion or more, but by today’s standards it’s still a pretty big one.”