See also - Information on the new proposal for Beverley. 482 Phelps Dodge Corporation
Phelps and son-in-law Dodge, founded a metals trading company in 1834 in New York which became the largest mercantile company in the land. It did not, however, make its first investments in copper until purchasing the Morenci mine in Arizona in 1881. It acquired another copper mine in Mexico 13 years later and built its first smelter in Arizona in 1901 (1). During the '20s the company became one of the largest American suppliers of wire and cable; it prospered for obvious reasons in the war years, and in the immediate post-war period was (along with Anaconda and Kennecott) supplying 80% of all US production (2).
By the early 1950s the company was expanding abroad, particularly into Peru (where it owns 16.25% of South Peru Copper Corp while Asarco owns 53%) (3), mining copper at Toquepala, Quellareco and Cuajone.
Diversification followed into aluminium and uranium when it acquired Western Nuclear, with mines and a mill in Wyoming, and later in Washington, New Mexico and Australia.
The company sold its 40% interest (4) in Conalco/Consolidated Aluminium Corp in 1981 (5). Its major non-US interests include a multimineral JV (44.6%) at Black Mountain in Namaqualand, South Africa, with GFSA (55.4%); a one-third interest in the huge Woodlawn open-pit zinc-lead-copper-silver mine in New South Wales (with St Joe Minerals, the Fluor subsidiary, holding one-third and CRA the rest) (3).
It has 64.3% of the Compania Minera Ojos del Salada in Chile (a copper-gold-silver mine); operates a fluorspar mine and mill in the Western Transvaal, South Africa (3); has a prospect in the Philippines (Atlas Corp of the Philippines holding 27.4% of Phelps Dodge Philippines) (6). The company also had a JV with Getty Oil in the early '80s, drilling a molybdenum deposit at Pine Grove, southern Utah (6). Its explorations in recent years have taken in the USA, Chile, Australia, Spain, and Turkey (6), South Africa, Mexico, and Botswana (where it started mining gold in 1989) (34).
However, Phelps Dodge is still primarily a copper-bottomed proposition. Despite its position as one of the lowest-cost producers, and its attempts to cut back on certain assets while diversifying into other minerals (7), Phelps Dodge hardly prospered before the '80s. In early 1980, it was expressing qualified optimism (8) following expansion of refining facilities (9), while its uranium subsidiary Western Nuclear began reporting profits, after losses in 1978 (10) and 1979 (11).
The company also boosted its earnings in 1981 (12). This was only thanks to the performance of its 49%-owned South African subsidiary Black Mountain (13), and a good performance by Western Nuclear (14). By Spring 1982, its problems were "mounting" (15) and, on April 17th, it announced the closure of all its US copper mines and concentrators and its three Arizona smelters (16).
Only with the so-called "climb" out of recession at the turn of the year was the company able to report some recovery (17) when it reopened its big Ajo mine in Arizona. However, despite a small reported profit in mid-1983, the company fell back into the red by the autumn (18) and, when 1984 came, it was "in a solid losing position" (19). George Munroe, the company's chairman, puts forward several reasons for the decline: reduction in copper consumption, "overproduction" by nationalised industries (especially in Chile, Zambia and Zaire) for "political, employment and foreign exchange reasons" (20,21), and new environmental legislation resulting in higher costs (20).
Certainly Phelps Dodge has every reason to be worried about foreign competition (it was among 11 US copper producers who in 1983 petitioned the US International Trade Commission to stop imports harmful to US trade) (3). It has also been among the leading protestors against pollution controls and the restriction on mining in federal and public lands (22). Although Reagan's chief environmental bulldozer, James Watt, announced new legislation to open up previously protected lands to mining companies in 1982 (16), Watt himself was later sacked, and implementation was held up. In December 1982, the Arizona Department of Health announced new measures to control sulphur dioxide emissions from the state's seven copper smelters, of which Phelps Dodge owned three: combined new emissions would be limited to about 35,000 lb of SO2 an hour. Phelps Dodge was then quoted by the leading US mining magazine Engineering and Mining Journal as "... in particular ... lobbying for new amendments to the new Clean Air Act to give certain smelters more breathing room" (and the rest of us more acid rain) (23).
Phelps Dodge has been more reticent about the other factor in its declining prospects: a series of major strikes at its mines and smelters which had occurred every three years since 1959 (24), but reached an unusual intensity in 1983 and 1984.
The labour protests stemmed from the copper industry's renegotiations of contracts in mid-1980, which directly affected Phelps Dodge's copper mines in Arizona and the El Paso refinery. This refinery was closed from July 1 st to October 8th 1980 ((;). Strikes the following year again brought down profits and production in Arizona and Texas (13). And, when mining was halted in April 1982, 3800 workers were laid off at the company's four operations in the two states; 4750 salaried workers also had their pay cut.
A long hot summer of strikes occurred in 1983, as the company refused (unlike other major US copper producers) to accept wage freezes. "We're not going to give up the gains our forefathers died for on the picket lines," US Steel representative Jacob Mergado was quoted as declaring, when a brief 24-hour truce occurred at the Morenci plant after strikers, armed with clubs and bats, blocked entrances to the mine (24). The confrontation was caused when Phelps Dodge drafted in non-union workers to reopen the mines "because it ... could not afford to close them" (25).
Industrial action continued well into 1984, when the National Guard was called in by the company to accompany non-union "scab" workers into the pits.
A group of strikers described the action:
"A scab drove back and forth by the crowd outside the clinic with his gun pulled out, aimed at the people. The DPS (state police) did nothing, and the people were angry and started throwing rocks at the police cars. We have lived for months with harassment, beatings and jailings by the DPS.While busy deploring American workers' violation of "the law", the company has not been above illegal activities itself."Over by Shannon Hill, where the strikers were yelling at the scabs, the DPS started pushing people around, harassing people. The crowd there got angry too, and when they started throwing rocks, the police fired tear gas into the crowd. Then they came in and arrested eight people - just whoever they felt like picking up. Cesar Chavez's attorney was there and he was stunned at the violations of people's rights.
"It was then that Governor Babbitt called in the National Guard again. They were patrolling everywhere with machine guns, just like when they were here last year. It seems like it's war, with soldiers coming into your area. "The National Guard has left, and Babbitt has said he won't call them in again. But we have learned that they have been placed on alert for the whole next month, and that there is a recruitment campaign to get more men in.
"They are expecting trouble because PD is planning to evict families from the company-owned employee housing. Their rent has been paid, but PD says they can't live there because they are not employees. At the same time, the unemployment office tells the strikers they don't qualify for benefits because they're not unemployed!
"Time[s] are very rough, and if it weren't for our hatred for the company, we would have capitulated long ago. It's graduation time at the high school, and we can barely pay for the caps and gowns of our children. But we hope that more and more people are learning about our strike, and will help support our stand for working people's rights" (26).
Together with five other companies, it was cited in the Philadelphia Federal Court in 1983, for violating anti-trust legislation by fixing prices of copper tubing between 1975 and mid-1981 (27).
The WPPS/Washington Public Power Supply System (WOOPS!) also initiated an anti-trust suit against Phelps Dodge and other uranium producers in 1982, for their participation in the uranium cartel which upped the price of uranium and, according to WPPS, made it impossible for contracts to be honoured. Phelps Dodge earmarked US$4.1M to cover the suit (28) and countered with a claim which resulted in WPPS having to pay the copper company US$25M in 1984 (29).
But, in the final analysis, the biggest claim on Phelps Dodge - if any justice is to be done must come from Native Americans, in particular the Papago on whose land the huge southern Arizona copper belt (of which Phelps Dodge is the major exploiter) lies. In the 1980s the US Congress passed legislation that took the land from the "Indians" at one fell swoop. But some of the Papago remain - and they do not forget (30).
As of 1984, Phelps Dodge was - in the candid words of its chairperson Munroe - "in a solid losing position", having sustained a "whopping US$25.2M loss" for the first quarter of the year (31), and despite credit gained from settlement of litigation with WPPS over cancellation of a uranium supply contract. Phelps Dodge had now started divesting itself of some of its assets - notably its power cable subsidiary.
Not to be outdone, Munroe returned to his theme at the 1984 AGM, when he claimed that the World Bank and IMF were doing enormous damage to the copper industry, by financing high cost copper production in "less developed countries", the US taxpayer footing about 20% of the bill (32).
Earlier, the company blamed nationalisation of mines in Africa and South America for flooding the import market with cheap copper.
In 1984, Phelps Dodge started moving back into uranium in an attempt to diversify its production and cut its paper losses - namely forming a JV to develop a uranium mine in Texas (33).
But its heart was always in copper. By 1987, this heart was looking pretty ticky. In a late 1984 cover story, Business Week wrote the company off as dead (35).
Within three years, however, Phelps Dodge had adopted a Lazarus position. It updated its technology in Arizona, acquired two-thirds of Kennecott's Chino mine, mill and smelter, relocated to Phoenix to be closer to its operations, and managed to raise some handsome new money (36).
The following year it was expanding - especially in New Mexico and Chile (37) - and diversifying.
By the turn of the decade, Phelps Dodge had one billion dollars invested in non-copper businesses (including Phelps Dodge Industries, PG Magnetic Wire Co, and Colombus Chemicals) (38).
Apart from its open-pit mines in New Mexico, it now holds two underground mines in Chile (with a third deposit, at La Candelaria in the indigenous Atacama region, under consideration with Sumitomo) (39), and it continues to mine fluorspar in the western Transvaal of South Africa, as well as lead, silver and zinc from the Black Angel mine in Cape Province. Production is expected soon from its Santa Gertrudis gold mine in Mexico (40).
Phelps Dodge now produces around 7% of the western world's copper - ranking it second only to Codelco - and it delivers about one-third of US production (40, 41).
Contact: International Indian Treaty Council, 777 UN Plaza, New York, NY 10017, USA.
Morenci Miners Women's Auxiliary, 1113 3rd Avenue, Safford, Arizona 85546, USA.
SOURCE: "The Gulliver File - Mines, people and land: a global battleground" by Roger Moody.
Published in 1992 by Minewatch, 218 Liverpool Road, London Nl ILE, UK, and WISE-Glen Aplin, Po Box 87, Glen Aplin Q 4381, Australia.
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