Doubts over Tara Mines, Inmet deal

A mining analyst has cast doubt on the likelihood of Canadian mining company, Inmet, acquiring Tara Mines. The analyst, who did not wish to be named, told The Irish Times Inmet had expressed an interest in Tara during recent negotiations with Tara's Finnish owner, Outokumpu, to acquire the Pyhasalmi copper and zinc operation in Finland.

This deal was completed earlier this month and the acquisition of Tara was set aside, the analyst said. "Inmet took a close look at Tara and they weren't interested," he said.

He added that he would be "surprised" if negotiations had reopened, but did not rule out such a possibility, particularly in light of the progress which had been made in Tara's acquisition of neighbouring zinc deposits from Bula.

It was reported over the weekend that Inmet was in talks to buy Tara in a deal which would be valued at more than €100 million. The Canadian analyst said that, on the basis of the almost €80 million that Inmet paid for Pyhasalmi, such a price would be unexpectedly high.

"For Tara I'm pretty sure that they would pay less," he said, noting high costs and a difficult labour situation at the Meath mine.

Outokumpu executives declined to comment on the possibility of a deal with Inmet yesterday, but a spokesman did say that the company was discussing the sale of Tara with "different buyer candidates".

Outokumpu indicated last year that it planned to exit base metals mining by selling off Pyhasalmi, Tara and the Black Swan nickel mine in Australia.

Tara, Europe's biggest zinc mine, was closed in November last year because of weak zinc prices, but reopened earlier this month after Outokumpu approved a new investment programme. Production at the mine is set to recommence in June.

Almost 700 employees were placed on temporary redundancy when the mine closed and all are due to be re-employed on a phased basis in coming months in line with an agreement between the company and trade union, SIPTU.

SIPTU Meath branch secretary, Mr Christy McQuillan, said yesterday that, while he was unaware of any current negotiations on the sale of Tara, the union had acknowledged for some time that a sale was part of the "strategic plan for the long-term development of the company". Mr McQuillan said that the union's latest partnership agreement with Tara's owners was legally-binding until December, 2003.