Kennecott Utah Copper Parent Companies

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Kennecott Copper Corporation

April 29, 1915
Kennecott Copper Corporation was incorporated in New York on April 29, 1915, to acquire all of the properties and assets of Kennecott Mines Company, which physical property lay at the Kennecott mine three miles from Kennecott, Alaska, and the Beatson mine on Latouche Island, Prince William Sound, Alaska. (Moody's Manual Of Railroads And Corporation Securities, Twenty-Third Annual Number, Industrial Section, Volume II, K to Z, 1922, page 1322) (Moody's Analysis Of Investments for 1917, page 1337, gives the date as May 4, 1915)

November 18, 1915
Guggenheim Exploration Company sold its 404,504 shares of Utah Copper Company to Kennecott Copper Corporation, payment being made in Kennecott stock on the basis of 1-1/4 shares of Kennecott for each share of Utah Copper. Guggenheim Exploration was to be dissolved in the near future, and this is how Kennecott, owned and controlled by the Guggenheim interests, started its majority interest and ownership in Utah Copper. (New York Times, November 18, 1915)

December 4, 1915
Kennecott Copper Corporation acquired 404,504 shares (24.9 percent) of Utah Copper Company, by purchase from Guggenheim Exploration Company. On December 31, 1916, Kennecott owned 435,404 shares of Utah Copper's 1,624,490 outstanding stock (26.7 percent). (Moody's Analysis Of Investments, Part II, Public Utilities and Industrials, 1917, page 1337)

March 16, 1916
Guggenheim Exploration was dissolved and its remaining interests merged with M. Guggenheim Sons. The new merged company become Guggenheim Brothers. (The Guggenheims: An American Epic, John H. Davis, 1989, page 120)

March 22, 1917
Kennecott purchased 200,000 shares of Utah Copper Company on the open market "in the last few months," at a reported cost of $20 million. This was in addition to the 404,504 shares acquired from Guggenheim Exploration prior to that company being dissolved. The total of 600,000 shares owned by Kennecott was not an actual majority, but gives practical control. (New York Times, March 22, 1917)

1922
The Moody's Manual for 1922 reported that on December 31, 1921, in addition to the properties in Alaska, and the Copper River & Northwestern Railway, Kennecott Copper also owned 38 percent of Utah Copper Company. Of that 38 percent, Kennecott had purchased an initial 25 percent of Utah Copper from Guggenheim Exploration in return for a similar value of stock in Kennecott Copper Corporation. The additional 13 percent of Utah Copper was purchased between 1915 and the end of 1921. (Moody's Manual Of Railroads And Corporation Securities, Twenty-Third Annual Number, Industrial Section, Volume II, K to Z, 1922, page 1324)

February 3, 1933
Kennecott Copper Corporation owned 98-1/2 percent of Utah Copper Company. After the distribution of Nevada Consolidated Copper to Utah Copper stockholders (in other words, Kennecott) on or before February 14, 1933, Kennecott would own and control 87 percent of Nevada Consolidated Copper Company, which in-turn owned Ray Consolidated and Chino Copper. One year before, at the end of 1931, Utah Copper held 31 percent of Nevada Consolidated. (New York Times, February 5, 1933)

November 9, 1936
The stockholders of Utah Copper Company approved the merger of the company with "Copper Corporation of Utah." Shares of Utah Copper Company would be traded on the basis of one share of the old company for three shares of the new company. Ninety-nine percent of Utah Copper Company was owned by Kennecott Copper Corporation. (New York Times, November 10, 1936, "yesterday") (The article also references a "Utah Copper Corporation")

November 10, 1936
Kennecott Copper Corporation took full ownership of Utah Copper Company, having 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 and Hansen, The Richest Hole on Earth, A History of the Bingham Copper Mine, Utah State University, Volume XI, Number 1, October 1963. p. 68, citing Kennecott's 1936 Annual Report)

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

1946
Utah Copper Company was dissolved. The company was organized in 1936 to take over Kennecott Copper Corporation's operations in Utah. (New York Times, March 7, 1947)

January 1, 1947
Utah Copper Company became the Utah Copper Division of Kennecott Copper Corporation. (Kennecott Historical Index)

"Commencing January 1, 1947, Utah Copper operations are to be conducted under the name Kennecott Copper Corporation, Utah Copper Division. This is a change in name only. There will be no change in operating personnel, and the change will simplify accounting." ("Important Events In the History of the Bingham Mining District" document kept by Kennecott Engineering Department staff, citing "Mills Annual Report 1947, page 12")

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)

June 7, 1977
Kennecott Copper Corporation's sale of Peabody Coal Company was made final on June 7, 1977. The initial announcement of Kennecott's purchase of Peabody was made in July 1966, and the final purchase completed in March 1968. The sale was opposed by the Federal Trade Commission, which in May 1974 issued a order for Kennecott Copper to divest Peabody Coal. The forced sale was completed on June 7, 1977. (part from New York Times, June 8, 1977)

Kennecott Ownership of Peabody Coal Company

July 15, 1966 -- The boards of directors for both Kennecott Copper Corporation, and Peabody Coal Company announced that they had approved an preliminary agreement for Kennecott to purchase Peabody. At the time, Peabody was second largest producer of soft coal in the nation, at $208 million in 1966 revenues, and Kennecott was the largest producer of copper in the nation, at $666.2 million in 1966 revenues. (New York Times, July 16, 1966, "yesterday")

March 17, 1967 -- The boards of directors for both Kennecott Copper Corporation, and Peabody Coal Company announced that they had reached a final agreement for Kennecott to purchase Peabody. Kennecott had just recently sold its interests in Kaiser Aluminum, and had reached a final settlement for the sale of 51 percent of its interests at Braden, Chile, to the Chilean government. (New York Times, March 18, 1967, "yesterday")

March 29, 1968 -- Kennecott's purchase of Peabody was made final. (New York Times, March 21, 1968, announced on March 20) The sale was reported as having a final figure of $285 million in cash, and the assumption of $36.5 million in liabilities. (New York Times, March 20, 1970)

May 12, 1971 -- The Federal Trade Commission issued an order and decision that Kennecott's purchase of Peabody violated federal antitrust laws, putting too much control of the nation's coal reserves in the hands of a single company. Kennecott was ordered to divest itself of all interests in Peabody. (New York Times, June 8, 1971)

April 1, 1974 -- The federal Supreme Court declined to review the decision of the U. S. Court of Appeals that upheld the FTC's order that Kennecott divest itself of Peabody. (New York Times, April 2, 1974)

October 15, 1976
Kennecott accepted a $1.2 billion offer to sell its interest in Peabody Coal Company. The buyer was Peabody Holding Company, a consortium that included Newmont Mining Corporation, the Williams Companies, Bechtel Corporation, Fluor Coproration, and Equitable Life Assurance. (Baltimore Sun, October 15, 1976)

June 7, 1977 -- The Federal Trade Commission approved Kennecott's sale of Peabody Coal to Peabody Holding Company, a consortium made up of Newmont Mining Company (27.5 percent), Williams Companies (27.5 percent), Bechtel Corporation (15 percent), Boeing Company (15 percent), Fluor Corporation (10 percent), and Equitable Life Insurance Company (5 percent). The purchase price was reported to be $1.2 billion. Included in the sale was $100 million from Dampier Mining Company, a subsidiary of Broken Hill Properties, for Peabody's assets in Australia. Kennecott announced that proceeds of the sale would be used to enhance their copper business, and to diversify to reduce their dependence on the cycles of the copper business. (New York Times, June 8, 1977)

Name Change to Kennecott Corporation

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 reorganized its major business units. The mining operations and mineral interests were organized as Kennecott Minerals Company. A second unit was called Kennecott Engineered Systems Company, and a third unit was called Kennecott Development Company, which was sold to Kennecott's subsidiary Carborundum Company in September 1980. (part from New York Times, May 16, 1980 and September 10, 1980)

(The earliest reference to Kennecott Minerals Company in agreements and contracts was in July 1979.)

January 28, 1981
After a three-year battle in corporate boardrooms and federal district courtrooms, a hostile takeover of Kennecott Copper Corporation by Curtiss-Wright Corporation failed. On January 28, 1981 both companies jointly announced that neither would attempt to take over the other for the next 10 years. (New York Times, January 29, 1981)

Curtiss-Wright Hostile Takeover Attempt

January 12, 1978 -- Kennecott Corporation completed its purchase of Carborundum Corporation, which upset several of Kennecott's larger shareholders who threatened suing the corporation for wasting corporate assets. Kennecott was cash-rich due to its forced divestiture of Peabody Coal Company in June 1977, at a reported price of $1.2 billion. Frank Milliken, Kennecott's president since 1961, became Kennecott's Chairman and CEO, while William Wendel, Carborundum's president for 15 years, became Kennecott's president. Both were reported as planning to retire at the end of 1979.

(Milliken had started with Kennecott in the New York City office in 1952 as vice president in charge of mining operations. In 1958, he was promoted to executive vice president, and became a director of the company. In 1961, he was promoted to president and chief executive, and the title of chairman was added in 1978. He retired in 1979, and died on December 4, 1991. -- New York Times, December 15, 1991)

In 1977 Kennecott had paid $567 million in cash for Carborundum Corporation, in a move that upset several shareholders. Kennecott had 7,400 employees in Utah and was the nation's largest producer of copper. (New York Times, November 17, 1977; March 21, 1978, "eight days ago")

March 13, 1978 -- Curtiss-Wright Corporation began its unsuccessful hostile takeover of Kennecott Corporation by purchasing the legal limit of 9.9 percent, and notifying the Securities and Exchange Commission of its intention to purchase additional shares. Curtiss-Wright also announced its intention that upon control of Kennecott, it would divide the company into pieces and sell them off for profit. Kennecott had 7,400 employees in Utah and was the nation's largest producer of copper. (New York Times, March 21, 1978, "eight days ago")

The takeover bid was settled on December 16, 1978 by Kennecott allowing Curtiss-Wright to control seven of the 18 seats on Kennecott's board of directors. The result of Curtiss-Wright's control of Kennecott was that Frank R. Milliken, president and CEO of Kennecott from 1961, was forced to accept retirement in 1979. It was Milliken's purchase of Carborundum Corporation that had started the difficulties between Kennecott shareholders and Kennecott management, as well as opening the door for the attempted takeover by Curtiss-Wright. (New York Times, December 16, 1978, "today")

In November 1980, Kennecott announced a planned takeover of Curtiss-Wright Corporation in retaliation of a rumored second takeover attempt by Curtiss-Wright upon expiration in May 1981 of the two-year agreement, ending the initial Curtiss-Wright takeover bid. (New York Times, November 22 and November 30, 1980)

January 8, 1981 -- Kennecott formally withdrew its bid to buy 49 percent of Curtis-Wright. (New York Times, January 9, 1981)

On January 28, 1981, both companies jointly announced that neither would attempt to take over the other for the next 10 years. (New York Times, January 29, 1981)

Curtiss-Wright exchanged its 4,751,500 shares in Kennecott, which was 14.3 percent of Kennecott's shares. "The New Jersey aerospace company, in turn, got back a huge block of stock that Kennecott owned, plus $168 million in cash." (New York Times, March 13, 1981)

Sohio and British Petroleum

March 1981
Kennecott was in a weakened financial state, and needed cash to modernize its operations. Its management had been distracted after the 1977 forced sale of Peabody Coal, and using the proceeds of that sale in 1978 to buy Carborundum Corporation, rather than using the money to start a modernization program for its copper mines. The facilities at the Bingham canyon mine needed to be upgraded to take advantage of a recently discovered high-grade body known as the North Ore Shoot Extension. Kennecott had been seeking to develop this new ore body through a joint venture with Fluor Corporation. "Kennecott has suffered from the neglect of its facilities. Over the last decade and a half [since 1966], management energy and cash flow was devoted to acquisition battles and to the protection of Peabody Coal, which they had to give up." The sale to Sohio gave Kennecott the cash to modernize. For Sohio, the Kennecott purchase gave the oil company a natural resource with a longer life span, and an outlet for the large amount of cash generated by its Prudhoe Bay reserves in Alaska. As of December 31, 1980, Sohio had cash reserves and marketable securities totaling $3.82 billion. (New York Times, March 14, 1981)

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)

The New York Times of March 13, 1981 reported that the first contact came on February 27th, with Sohio's chairman contacting Kennecott's chairman about the possibility of a friendly deal. First indication of the sale came on Wednesday March 12, when the New York Stock Exchange halted trading of both companies. At the time, Sohio was the 14th largest American oil company. Sohio was headquartered in Cleveland, Ohio, and Kennecott was headquartered in Stamford, Connecticut. (New York Times, March 13, 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. If not for the sale of one-third interest in its Chino operations to Mitsubishi Corporation, for a reported $42.1 million, Kennecott would have had a loss of $7.5 million. (New York Times, May 5, 1981)

June 2, 1981
Federal Trade Commission approved the merger of Sohio and Kennecott on June 2, 1981. The four-person commission voted 3-to-1 to reject a staff recommendation to sue Sohio on anti-trust grounds, due to concerns that the sale would result in a Sohio monopoly in the production of molybdenum. An agreement was signed between BP, which held 53 percent of Sohio, and the FTC for BP to sell, within 30 months, its 6.8 percent ownership of Amax, Kennecott's competitor in the production and sale of molybdenum. (New York Times, June 3, 1981, "yesterday"; Salt Lake Tribune, June 3, 1981)

June 4, 1981
Standard Oil Company of Ohio (Sohio) bought Kennecott Corporation and its Kennecott Minerals Company (KMC) subsidiary; 53 percent of Sohio was owned by British Petroleum (BP), which was 25 percent owned by the British government and 20 percent owned by Bank of England. (Salt Lake Tribune, September 24, 1981)

$1.77 billion takeover of Kennecott by Sohio. (Salt Lake Tribune, March 27, 1981)
Sohio made announcement of takeover on Thursday March 12, 1981. (New York Times, March 13, 1981, "yesterday"; Salt Lake Tribune, March 15, 1981)
Sohio's bid of $62 per share was 2.5 times the current Kennecott share price of $27. (New York Times, March 13, 1981; Salt Lake Tribune, September 20, 1981)
Notice of proposed merger of Sohio and Kennecott was filed with the Anti-Trust Division of the U.S. Justice Department on March 18, 1981. (Salt Lake Tribune, March 26, 1981)
Sohio traded 25 percent of itself for BP's Alaska North Slope holdings in 1969. By 1980 BP had purchased 53 percent interest in Sohio. (Salt Lake Tribune, March 17, 1981)
Sohio was largest producer of crude oil in United States, at 9 percent of all U.S. production - more than half of the Alaska North Slope. Kennecott shareholders voted to accept the merger on May 5, 1981. (Salt Lake Tribune, May 2, 1981)
Kennecott shareholders approved the sale. Sale and merger not final until reviewed by Federal Trade Commission. (Salt Lake Tribune, May 6, 1981)
Sohio formally acquired Kennecott on June 4, 1981, after approval by Kennecott shareholders and Federal Trade Commission. (Salt Lake Tribune, July 31, 1981)

January 1, 1982
Kennecott's Carborundum Corporation subsidiary, which consisted of six separate business units, was reorganized as Sohio Industrial Products. The new company also included the former Kennecott subsidiaries Chase Brass, Dorr-Oliver, and Panghorn. (Sohio News, Volume 36, Number 2, March 1982, page 5)

February 8, 1982
In a reorganization of Sohio entire corporate structure, Kennecott Minerals Company became part of the new Sohio Metals Mining Group, with Joklik as its head, with responsibility for Sohio's interests in copper, gold, silver, molybdenum, lead and zinc. The other groups included the Sohio Oil and Gas Group, the Downstream Petroleum Group, the Chemical and Industrial Products Group. (Sohio News, Volume 36, Number 2, March 1982, page 1, 10)

March 1982
"British Petroleum gets a new name -- 'The British Petroleum Company Limited' has a new name. From now on, it will be known as 'The British Petroleum Company p.l.c.' The initials 'p.l.c.' stand for public limited company. The British government requires the new nomenclature under a Companies Act." (Sohio News, Volume 36, Number 2, March 1982, page 4)

In an MSHA decision dated September 16, 1985, the company was referred to as "Kennecott Minerals Company, Utah Copper Division."

May 13, 1987
British Petroleum took full control of its Standard Oil subsidiary. (Crain's Cleveland Business, April 3, 2000) (Standard Oil had its headquarters in Cleveland, Ohio)

The above article, by Jim Mario, examined events of Sohio's purchase of Kennecott and the Bingham mine. The following highlights come from the article.

The size of the hole you dig for yourself often determines whether you can crawl back out or if you get buried right there. Standard Oil got buried in 1987 - or, at least partially entombed -- in a hole 2-1/2 miles wide and a half-mile deep.

It was the Bingham Canyon Mine, near Salt Lake City, Utah, part of Standard Oil's Kennecott copper holdings of the early 1980s. The mine represents one of the largest private employers in Utah, as well as the world's largest open pit copper mine, and the largest excavation project in history.

At the time of the copper mine's purchase by Standard Oil (Sohio), the oil company was partially owned by British Petroleum. London-based BP had taken a hands-off policy on Standard Oil's day-to-day management. But that policy was about to change. Kennecott was a big reason why.

Standard Oil bought the mine in 1981 during years when a seemingly inexhaustible flow of cash from the oil pouring out of Prudhoe Bay, Alaska, swelled its corporate coffers and sent the company into a virtual diversification frenzy. Analysts and old-timers inside Standard Oil looked on in wonder. The moves obviously sounded good to much of Standard Oil's management. The call to diversify proved to be a siren song.

Losses mounted, writedowns began on investments; it all began to look as if the billions of dollars Standard Oil was making from its Prudhoe Bay oil was being squandered in risky, poorly thought-out ventures.

British Petroleum had acquired a formidable interest in Standard Oil back in 1970 in exchange for some of BP's Prudhoe Bay oil rights and East Coast marketing operations. But by the mid-1980s, Sohio's diversification efforts and its failed oil exploration moves had cost billions of dollars and created great alarm in the stately London halls of its Britannic House headquarters.

While BP had held majority ownership in Standard Oil since 1978, it chose not to exercise its managerial prerogative for fear of both stockholder and political backlash. The minority of London directors on the Sohio board also weren't particularly engaged in the company's management. It is said BP's management wasn't even informed of Standard Oil's foray into copper production until the Kennecott deal was all but done.

And so the copper purchase was made as part of an estimated $1.5 billion step-out by Standard Oil into mineral company acquisitions. It was a bad move - a very bad move.

If there had been a proverbial roof over the vast open pit mine, it would have fallen in. Almost immediately after its purchase, a team of Standard Oil analysts evaluated the mine's material handling and found it both antiquated and labor-intensive.

If that wasn't enough bad news, there was labor unrest among the Kennecott work force. The same scenario repeated itself in 1982. It wasn't until 1983 — for the first time since 1962 - that a new three-year labor accord was reached without a strike. The new accord called for a reduction in the average hourly wage (by $3.22, to $10.52), the elimination of cost-of-living escalators, concessions on benefits and substantial work rule modifications.

No sooner did that difficulty pass when operations again fell victim - this time to economics and radical changes in the world's copper industry.

South American and African producers working in government-controlled mines with cheap labor and high ore grades flooded world markets with copper. In the United States, copper production costs soared due to new environmental regulations and the cost of maintaining old equipment. Copper markets shrank in the world recession of the early 1980s, dropping copper prices from $1.40 a pound in 1980 to 61 cents in 1985.

Standard Oil's response to the copper calamity came in March 1985. It would close its Kennecott operations altogether and keep them closed for 15 months. At the same time, it would pour more money into its copper operations and the Bingham Canyon hole. Almost $400 million more.

The goal was to modernize the Bingham Canyon operation with new ore crushers, a five-mile-long conveyor belt system, a new ore-grinding complex, and more. It would take 3-1/2 years to complete the job.

To the accompaniment of much fanfare, the modernization project was finally completed in October 1988. Kennecott and its mine were set to become one of the lowest-cost copper producers in the country. But the change came almost two years too late to save the hides of senior Standard Oil management.

By then, Sohio's fate had been sealed. It seemed that enough had finally become enough for majority owner BP.

Standard Oil chairman Al Whitehouse and president John Miller had been unceremoniously ousted from their jobs by British Petroleum in early 1986, and a BP-led team of managers, headed by new chairman Robert B. Horton and his right-hand man, E. John P. Browne, took control of Sohio. Then, on March 26, 1987, BP announced its offer for the 45% of Standard Oil's shares it didn't already own. Finally, BP took total control of Standard Oil on May 13, 1987.

And what was among the first steps of the new owner? The sale of Kennecott and the Bingham Canyon Mine.

To the great surprise of many onlookers, BP announced in December 1988 --just three months after completing its $400 million modernization project in Utah -- its intention to sell its minerals business. Included were Kennecott and Bingham Canyon. The buyer was Britain's RTZ Corp.

Fall 1987
In late June 1987, after buying the remaining 45 percent of Sohio that it did not own, giving it full ownership of Sohio, British Petroleum Company (BP) merged its other interests in North America with those of Sohio to form BP America.

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

(In its fall 1987 issue, the BP employee's magazine "BP America Scene" reported that BP had purchased the remaining 45 percent in June 1987.)

History of Sohio and BP

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 finial 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, through 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 management of a very large international company with plenty of mining experience across the globe.

(Read the articles in the February 1989 issue of BP America Journal, the BP employee's magazine)

Sale To RTZ

December 14, 1988
British Petroleum (BP) confirmed rumors that it was negotiating the sale of its mineral and mining interests (BP Minerals America) to RTZ Corporation. Prior to the recently completed $400 million modernization, Kennecott's Bingham mine was one of Kennecott's most expensive operations. The modernization made it one of the most competitive copper mining operations in the world, producing 240,000 tons of copper annually. (Salt Lake Tribune, December 24, 1988; New York Times, December 15, 1988, citing a Reuters story)

In mid December 1988, there had been reports that the sale of Kennecott by BP Minerals America to RTZ was "signed, sealed and delivered," and that the BP board of directors would likely approve the sale on either December 14 or 15. The Wall Street Journal of December 13 carried a news item that BP was seeking to sell Kennecott to RTZ. (Deseret News, December 14, 1988; December 15, 1988)

January 3, 1989
British Petroleum Company, Britain's largest company, announced that it had agreed to sell it mineral interests to the international mining group RTZ Corporation Plc for a reported $4.4 billion. BP's managing director, Patrick Gilliam, said that the sale would allow BP to move away from its international mining activities, and focus on its core business of oil and petroleum production. The Utah copper and gold mines were managed as part of BP Minerals America, with BP as its parent company, and included mines in Utah, Nevada, South Carolina, Alaska and Montana. Besides BP Minerals America, the sale included BP's mining activities in Canada, Brazil, Norway, Zimbabwe, South Africa, Australia, Indonesia and New Guinea. (Deseret News, January 3, 1989)

At the same time as the RTZ announcement, in a separate $3.56 billion deal, BP announced that it would buy back 790 million of its own shares from the Kuwait Investment Office, reducing the government of Kuwait's stake in the company from 21.6 per cent to 9.9 per cent. The sale of Kuwait interests had been ordered by the British government to address concerns of the government's Monopolies and Mergers Commission that the large percentage posed a threat to British interests. (Deseret News, January 3, 1989)

The sale of Kennecott by BP to RTZ would allow BP to buy back the 22 per cent interest in BP held by the government of Kuwait. The reported figure for both transactions was $4.3 billion. The government of Kuwait, through its Kuwait Investment Office, purchased over a period of a few months, 21.6 per cent of BP, which was a portion of the 31.5 per cent of BP that was sold by the British government in October 1987 as part of Margaret Thatcher's move to privatize companies in which the government held a financial interest (the sale raised $12 billion for the British government). Concerns were soon raised by BP management and British politicians about foreign ownership of a British company, and in October 1988, Kuwait was allowed three years to reduce its ownership of BP, a total of 1.3 billion shares. (New York Times, October 5, 1988; January 4, 1989)

February 1989
British Petroleum went through a worldwide corporate image change, with new company names for most of the former Standard Oil of Ohio (Sohio) business units having their Sohio names replaced by a simi liar BP name.

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)

June 30, 1989
The sale of BP Minerals America to RTZ was expected to close on June 30, 1989, following the approval of the sale by RTZ, Corp., shareholders in London on June 16, 1989. (Deseret News, June 16, 1989)

The sale was for all of BP's mineral assets worldwide, including Australia, Europe, and South Africa, as well as the holdings in the United States.

July 5, 1989
The name of BP Minerals America was changed to Kennecott Corporation on or about July 5, 1989. (Deseret News, July 5, 1989; Salt Lake Tribune, July 6, 1989) (Kennecott Minerals Company was a business unit of BP Minerals America, and remained a business unit of Kennecott Corporation.)

The following comes from an earlier Rio Tinto company history web page, now no longer available:

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].

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.

(According to the May 2, 2006 issue of The News-Record of Gillette, Wyoming, where the company had its headquarters, Kennecott Energy Company was changed to Rio Tinto Energy America on May 1, 2006.)

October 9, 1995
RTZ Corporation, Kennecott's parent company based in London, announced that it would merge with CRA Ltd., an Australian company based in Melbourne. RTZ already owned 49 per cent of CRA. The merged companies will have operations in North America, Australia, South America, Asia, Europe and South Africa, embracing a broad range of products, principally copper, aluminum, coal, iron ore and gold, as well as other minerals and commodities. (Deseret News, October 10, 1995)

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.

February 1997
In an news item about the retirement of Bob E. Cooper, who had served as CEO and president of Kennecott Corporation since 1993, it was shown that Kennecott Corporation had three subsidiary companies as part of its North American operations: Kennecott Utah Copper Corporation; Kennecott Minerals Company; and Kennecott Energy Company. (Salt Lake Tribune, February 7, 1997)

March 1997
RTZ closed its offices in downtown Salt Lake City as part of its global restructuring to reorganize the company along product lines - copper, iron ore, gold, aluminum - rather than along geographical lines that saw the North American group (the former BP Minerals America) manage of copper and coal properties, and the Australia group also manage copper and coal properties. Kennecott Utah Copper Corporation would report directly to RTZ in London, instead of Kennecott Corporation (the former BP Minerals America) in Salt Lake City. All parties in the RTZ copper group, including its mines in Brazil and Chile in South America, would also report directly to RTZ in London. The coal group would report to offices in Melbourne in Australia. The change meant that the 75 employees of Kennecott Corporation would no longer have jobs. The change would have no effect on the operations of Kennecott Utah Copper, which had its offices in Magna. (Deseret News, March 19, 1997)

(Kennecott had occupied the top six floors of the 18-floor office building owned by Zion Securities on the southeast corner of Main Street and South Temple Street in Salt Lake City. When the building was completed in 1965, it used copper panels as part of its exterior design, and was officially known as the Kennecott Building. After Kennecott vacated the building in 1997, the copper panels were painted over and the building was renamed as the Zions Bank Building.)

June 2, 1997
RTZ Corporation changed its name to Rio Tinto. (Rio Tinto press release dated June 2, 1997)

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

(The term "plc" is an abbreviation of "public limited company," a type of publicly held, limited liability company in the United Kingdom, whose shares are freely sold and traded to the public. Directors must be British or European Union citizens)

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 activities)

Kennecott Energy Company (U.S. coal operations) (changed to Rio Tinto Energy America on May 1, 2006)

Each company operates as a separate entity

Current Developments

Wikipedia entry for Rio Tinto Group

KCC or KMC or KUC

The Kennecott Minerals Co. (KMC) name was in place from mid 1979 through mid 1989, and any locomotives delivered in that time period likely had the Kennecott Minerals Company name applied to them. Several were locally painted with KMC letters. The wide-cab MP15ACs (120-122) and the SD40-2s (101-107) were delivered in 1978 lettered as Kennecott Copper Corporation. The standard MP15ACs (701, 704) were delivered in late 1978, also with KCC lettering.

One of the formal name changes came at the end of 1986, when an Agreement for Transfer of Assets was signed on December 31, 1986, transferring certain assets from Kennecott Corporation (a Delaware corporation) to Kennecott Minerals Corporation (a New York corporation). (Surface Transportation Board Recordation 12242A, dated May 30, 1987)

Railroad operations were severely cut back with the mine modernization of 1985-1986. Most of the ore haulage in the mine was replaced by a conveyor belt to the new mill at Copperton, and a slurry pipeline to the Garfield smelter. Railroad operations were only used as backup for when the slurry pipeline was out of service.

When the 900-series locomotives (the green units) were relettered in the mid 1980s, they received KMC letters, "KMC, Utah Copper Division." When 123, 910 and 911 were transferred in 1983-1984, they were repainted as green units, and lettered as just "Kennecott," not as KMC. Only the two red smelter units were delivered in 1981 lettered as Kennecott Minerals Company.

The last train of ore was loaded in the mine in March 2000, with the ore being moved by train to the North Complex (Bonneville crusher and Magna mill), supplementing the Copperton mill. The North Complex was shut down in 2001, and all railroad operations between the mine and the smelter ended in June 2001. In December 2001, Kennecott shut down its railroad operations in the vicinity of the refinery and smelter at Garfield, and the operations have been contracted out since that time.

KCC

Utah Copper Company was sold to Kennecott Copper Corporation in November 10, 1936. 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.

Utah Copper Company became the Utah Copper Division of Kennecott Copper Corporation on January 1, 1947.

KMC

Kennecott Minerals Company (KMC) name was first used in mid 1979. In May 1980 Kennecott Copper Corporation changed its name to Kennecott Corporation, and the worldwide mining operations were formally placed under control of KMC.

In February 1982, a SOHIO news release stated that Kennecott Minerals Company became part of the new Sohio Metals Mining Group, with responsibility for Sohio's interests in copper, gold, silver, molybdenum, lead and zinc. The other groups included the Sohio Oil and Gas Group, the Downstream Petroleum Group, the Chemical and Industrial Products Group. Other references from 1985 show the Utah copper mine as Kennecott Minerals Company, Utah Copper Division.

The mine shut down in April 1985, and the mills and smelter were shut down in August 1985. The mine reopened in September 1986, and the mills restarted in December 1986. The new smelter at Garfield produced its first copper in July 1987. In late 1986, Kennecott sold its operations in New Mexico and Arizona. (Nevada had been shut down in September 1978.)

In September 1987 Sohio was changed to BP America, with KMC still as a subsidiary.

KUC

In July 1989, BP sold the Kennecott business to RTZ (later Rio Tinto), and March 1992 the Utah copper mine (and its railroad operations) became Kennecot Utah Copper, a subsidiary of RTZ of England. Although there was still a Kennecott Minerals Company, it did not include any of the metal mines, and specifically did not include the Utah railroad operations.

More Information

Kennecott Corporation History -- A 1999 history of Kennecott Corporation, lifted from International Directory of Company Histories. (identical text used by Answers.com)

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