Shell set to auction off mine stake

ROYAL Dutch/Shell Group, the oil giant, is considering a worldwide auction of its stake in one of the world's biggest copper mines, located in Chile.

The move is part of the group's planned dollars 1bn ( pounds 671m) disposal of Billiton, its metals and mining arm, which has been the subject of year-long disposal talks with Gencor, the South African group.

Billiton's prime assets include a one-third stake in the dollars 500m Collahausi copper mine in Chile. Although Gencor is keen to buy Shell's stake, it is being thwarted because of pre- emption rights of the mine's co- owner, Minorco, which is controlled by Gencor's South African rival, Anglo American, and Falconbridge, the cash- strapped Canadian group.

However, Shell is thought to be considering putting its stake on the open market to maximise proceeds and help break the stalemate between Gencor and the co-owners.

The expected auction will almost certainly spark huge interest from the world's mining giants, including Britain's RTZ Corporation, BHP of Australia and Kennecott of the US.

But with an estimated cash pile of dollars 800m, Minorco is thought to be determined to match any rival offers to clinch a majority stake in Collahausi, which contains ore reserves of about 1.6 billion tonnes.

Despite the hold-up, Shell and Gencor are understood to have made considerable progress over Billiton in the past few weeks.

After much delay, the South African group is thought to be close to securing long- term finance for the acquisition.

In addition, the talks have gained fresh impetus from the recent successful elections in South Africa. As a result there is growing confidence that the two could clinch an agreement before June.

Billiton incurred an almost doubled net loss of dollars 142m last year, stemming partly from heavy restructuring charges.

On Wednesday Shell is expected by some City analysts to report a dip in first-quarter profits due to the impact of weak oil prices. David Stedman of Daiwa Research is forecasting net income of pounds 900m for the period to 30 March against pounds 971m last year.

However, the recent rally in oil prices and a strong first- quarter result from British Petroleum pushed Shell's shares 10p higher to 732p last Friday.

John Jennings, chairman of Shell Transport and Trading, the UK co-owner of Royal Dutch/Shell, said world energy demand could grow by 70 per cent over the next 30 years.