Last December the world's largest oil company, the Exxon Corp., announced its intention to invest $1 billion over the next several years in Chile's La Disputada copper mine.
Two weeks ago Superior Oil co. acquired Hecla Mining Co., one of the 10 largest U.S. copper producers.
These were not isolated investments.
In the winter of 1976-77, the Atlantic Richfield oil company brought Anaconda, the nation's fourth-largest copper company.
Over the last 15 years, the major oil companies have quietly been using part of their profits from rising oil prices to acquire an imposing share of the world copper industry.
According to the financial weekly Barrons, the oil companies now control 40 percent of the domestic copper industry.
From Cities Service's first copper acquisition in 1963 to Superior Oil's Hecla Mining takeover two weeks ago, oil companies have brought outright or acquired an interest in six of the 13 largest domestic copper companies.
Oil companies such as Exxon, Gulf and Standard of Indiana have spun off subsidiaries to manage their widening worldwide movement into copper and other nonferrous metal such as zinc.
Still other oil companies such as Continental, Getty and Occidental Petroleum have been exploring for copper deposits in the United States to be held for that future when world copper prices, which are now depressed, turn up again.
These low copper prices are one the reasons the oil companies have been moving into copper in recent times. Copper prices are now at their lowest since the 1930s, copper company stocks are depressed accordingly, and those companies are regarded as good buys.
In any case, it is possible to imagine a future when the larger oil companies have as much market power in copper as they do in oil.
Their copper and other nonferrous investments are to some extent an embarrassment to the oil companies, which have been pleading with the Carter administration and Congress for higher oil prices they say they need to increase exploration for oil. To some extent, as with Mobil's acquisition of Marcor, the corporation that owns Montgomery Ward, several years ago, the oil companies are using their profits instead of diversify.
If the oil industry is embarrassed, however, it is not deterred. "We will be looking for places to park our money," said a senior executive of one large oil company now in the copper business, "and copper is one of the best after oil."
One respected Wall Street metals industry analyst, William Seidenberg of Smith Barney Harris Upham & Co., sums up the oil-to-copper trend saying, "The oil companies have a big stake in copper today - what they are looking at is the other side of the valley, they are patient and can buy right."
The oil companies' investments in copper are large by almost any standards. Atlantic Richfield paid $700 million for Anaconda last year; that was 28 percent of its total capital outlay of $2.5 billion for the year. The $1 billion Exxon plans to spend on the La Disputada mine is one-twelfth of the $24 billion it has budgeted for all capital spending over the next four years.
The oil industry's pread into copper is not unique.
Oil companies have billions of dollars in holdings in coal and uranium as well. The American Petroleum Institute says that oil companies control more than 43.7 percent of the nation's uranium reserves, and 20.6 percent of existing domestic coal production, in addition to more than 40 percent of the minable coal under private leases.
Today's depressed copper prices are, to some extent, in the oil companies' favor, Seidenberg says.
"There is an excess [estimated at 1 million tons] of inventories putting tremendous downward pressure on copper prices. As far as the oil companies are concerned, that is just dandy - its like a game of dominoes. You tip over one and they all tip over," he said.
The dominoes, in this case, are the old-line domestic copper companies such as ASARCO Inc. that trace their origins to entrepreneurs who won their fortunes in the freebooting 19th century mining industry.
Sitting in his New York Office, ASARCO Vice Chairman Simon D. Strauss ticks off the list of oil-copper acquisitions. Strauss then cites the 12-fold increase of the copper industry's debt since 1964, from a quarter of a billion dollars to over $3.3 billion today.
"The question is that with all the domestic-based copper companies facing such problems, can we hang on long enough - That's why we are all plums on the tree," Strauss said, adding that his company and others "have had a lot of nibbles."
A few years of ASARCO beat back a merger with Pennzoil, and only recently broke off closed-door talks about a takeover by Ashland Oil Co. (Undeterred, Pennzoil, one of the nation's middle-sized oil concerns went on to pick up Duval Corp., the country's fifth-largest copper producer.)
The chairman of another leading domestic copper company is less sanguine about oil's outreach.
"The oil industry has such enormous financial power, that when they have gone into new lines of business - such as fertilizer where they expanded capacity and forced prices down - it doesn't always help the industry they enter," he said.
One copper executive who is encouraged by the entry of oil companies into the group of nonferrous metal producers is Myles Jacob, the retiring producers of Inspiration Consolidated Copper Co.
"When you are exploring you continually bump into oil people - I believe it is all to the good, the copper industry needs capital and the oilmen have it," Jacob said.
He and other copper executives such as Phelps Dodge Chairman George Munroe are quick to call stiff environmental regulations and overproduction by the major foreign copper exporters - Chile, Peru, Zambia, and Zaire - the major source of problems for the distressed domestic copper industry.
Because of sagging prices, the 12 largest U.S. producers have filed a petition with the International Trade Commission asking that it recommend to the White House and Treasury Department a quota on imported copper.
Not suprisingly, as large blocks of stock in the nation's largest copper producer, Kennecott Copper Corp., were being traded a few weeks ago, Wall Street was abuzz with speculation that one of the major oil companies was moving in to acquire the copper giant.
Later when Curtis Wright announced its takeover move - now embroiled in a court battle - senior oil officials said in private that most oilmen believed a Kennecott takeover from the petroleum industry would have raised antitrust problems with the Justice Department.
In the meantime, as one senior executive with a large oil company in the copper business said, "When you look at some of those companies and the potential for sound investments your mouth starts to water." He said most of the domestic copper companies' stock is selling at about 50 percent of replacement value.
The mining and oil industries are a natural mix.
Both require exploration and resource management skills, along with millions and often billion of dollars of cash flow.
Mining operations also earn hefty depletion allowances - though not on the scale the domestic oil industry had before the 1976 Tax Reform Act - and offer still larger profits when prices are high from integrated operations that link mining, smeltering, and processing operations.
All of these factors add up to what one Wall Street banker specializing in financing international mining operations calls, "the oil companies' comfort index."
Exxon and other companies take a long-range view.
Asked about the future of Exxon's Chilean venture, Dr. John Frost said, "We are not really that concerned about the next four or five years." Frost, who headed Exxon's Chilean acquisition effort, says the substantial production from the $1 billion La Disputad mine will come onstream in 1984. By then, he says, today's large copper inventories "will be worked off and there will be substantial demand for copper again."
Chile's long-term prospects as a copper producer and what one oilman called the Santiago military government's "politically stable investment climate" bolster Exxon's faith in copper's future.
Oilmen and copper executives, as well as securities analysts, say that the current state of the world copper market, and the relative weakness of the foreign producers, is reminiscent of the international oil market before the quadrupling of prices that began in 1973.
In copper prices double or triple in the mid-1980s, as oilmen say they probably will, the surviving companies stand to make millions and perhaps billions of dollars in profits from copper holdings.
While the oil industry's so-called "horizontal integration" into competing energy sources has resulted in legislative attempts to force it to divest coal and uranium holdings - or to curtail further growth - the industry's stretch into copper has attacted little attention.
The Federal Trade Commission has filed proceedings questioning Atlantic Richfield's merger with Anaconda Co. - still pending in the courts -
And the Justice Department's antitrust division says it is watching the oil-copper trend closely. The department concluded a grand jury proceeding last year into price-fixing allegations, though no indictments were handed down.
The department says, however, that it considers grass-roots entry into copper business desirable, arguing that it adds to competition by enlarging the field.
Peter Ingersoll, a Wall Street metals analyst, summarizes the outlook this way: "In five to eight years you will make a ton of money, in the meantime you have to be willing to put up money."
The old-line copper companies are holding out hopes that the price turn around will come sooner.
"Copper has a good profit potential for the survivors," says Inspiration Consolidated's Jacob.
Asked who the likely survivors will be, he said, "Just look at the balance sheets, the oil industry is in the best position to ride out the storm."