Workers at troubled Tara Mines, Co Meath, have been assured the €736 million acquisition of Finnish parent Outokumpu by Sweden's Boliden does not jeopardise the operation's future.
Tara managing director Mr Eero Laatio said the low price of zinc rather than a change of ownership remains the biggest threat to its survival.
Describing the takeover as a "consolidation" of Boliden's mining and exploration interests, Mr Laatio said he did not envisage any change in the day-to-day running of Tara, which employs around 600.
"This will not have any impact on Tara. It will not affect the size of the workforce," he said. "Our major concern will continue to be the state of the zinc market."
But unions at Tara expressed unease about the takeover. SIPTU has sought a meeting with management to discuss the consequences of the move, said Mr Mike Jennings, regional secretary for the midlands and south east. But he said the deal would help "dispel the air of uncertainty" over the future of the mine.
Historical over-production has caused zinc prices to tumble in recent years. The falling price last year was among the reasons that workers were laid off at Tara. Since then there has been some recovery, but the price is still considered low. With no real signs of recovery in the world economy, zinc prices are not expected to rise much over the next six months.
Outokumpu suspended production at Tara in November 2001, due to the price, but also because of the mine's poor productivity.
In a complex deal, Boliden - whose activities include mining, smelting and exploration - will finance the acquisition through the issue of new stock, some of which will be bought by Outokumpu to give it a 49 per cent stake in the enlarged firm.
"The transaction is industrially logical and is fully justified in view of the continuing consolidation of the global mining and smelting industry," said Boliden chief executive Mr Jan Johansson.
Under the deal, Boliden will take over Tara, zinc and copper smelters in Finland and Norway plus a Dutch unit. It will make Boliden a major sector firm, especially in zinc.
Analysts welcomed the deal, which will also allow Outokumpu focus on its core stainless steel business and lighten the Finnish firm's debt burden.
Along with the share issue to Outokumpu, Boliden is planning a €150 million rights issue at a 25 per cent premium to its closing level on Friday. Outokumpu will take part in the issue.
Boliden will take a €373 million bank loan and make a €56 million subordinated loan to Outokumpu.
To streamline operations, Boliden will sell its fabrication and technology sales units which had 2002 sales of €270 million to Outokumpu. In return Boliden will take a 2.8 per cent stake, valued at some €49 million.
Analysts said the move made strategic sense. "This is positive news in the longer term. Outokumpu will be able to concentrate on the stainless and more advanced products and get rid of businesses that they have been trying to sell for a long time," said Conventum Securities analyst Ms Kaisa Ojainmaa.
