Opinion ID: 305731
Heading Depth: 1
Heading Rank: 4

Heading: kennecott copper corporation

Text: 13 Kennecott was shown to have been formed in 1915 and has been engaged in the mining of copper and associated metals since. It is the largest copper producer in the United States accounting for approximately 33 percent of the 1,372,000 tons shown to have been produced in 1966. It also produces molybdenum, silver, gold, lead and zinc. It owns and operates mines in the United States under the direction of its Western Mining Divisions. One of these is in Utah, another in Nevada, one in Arizona and one in New Mexico. A fifth mine is located in Chile, but in 1967 it was forced to sell 51 percent of its interest in this mine in Chile to the government. 14 Prior to the acquisition of Peabody, Kennecott devoted itself to the mining and production of copper and its byproducts. In its process it uses a tremendous amount of electricity, and for the most part has its own generating plants and, of course, consumes a great amount of fuel, both natural gas and coal. It sometimes sells some of this electrical energy. 15 Its total assets are well over a billion dollars, and its income is substantial. It is rated 55th among United States industrial corporations in terms of assets and 111th in terms of sales. 16 The evidence established that Kennecott entered the coal business basically because of the fact that its copper reserves were dwindling. It concluded that it had a limited future in the mining and production of copper because of the limited sources within the United States and that it is thus engaged in a liquidating process. Its cash reserves were increasing and it foresaw that these would reach about one billion dollars in 1980 and so diversification was essential. 17 It first explored the possibility of getting into the oil busines, and during the years 1963 and 1964 made a careful inquiry, looking to the acquisition of a going oil concern. After studying this possibility, it abandoned this oil quest and turned to the coal business. Meanwhile, in 1963, it had purchased the Knight Ideal Coal Company in Utah. Although this company had considerable reserves it was a small concern and its production was very limited. This property was shown to have been purchased so as to gain reserves which would provide a hedge against rising natural gas costs, but also with the thought in mind, according to the evidence and the finding (of the examiner), of engaging at least to some extent in the coal business. 2 18 It was the interest in coal which started with the Knight Ideal purchase that led to the focus on Peabody. Undoubtedly it was the difficulties in starting from scratch which led to this decision. A very careful study preceded the step, it having been previously determined that the Knight Ideal property was not a satisfactory base for getting into the coal business. Peabody was not only a going concern but the very largest coal producer with extensive reserves which were well located, and also with transportation facilities. The acquisition was finally completed on March 29, 1968, on which date Kennecott, through its subsidiary, acquired the business and substantially all of the assets of Peabody.