KGHM is one of the largest copper producers in the world Courtesy of KGHM

Poland’s Treasury Ministry will take a closer look at state-controlled copper miner KGHM’s plans to buy Canadian miner Quadra FNX, ministry spokesperson Magdalena Kobos told the media last week.

The announcement prompt-ed speculation that the government could move to block the planned zł.10 billion deal. Blocking the Quadra takeover, the thinking goes, could ensure healthier dividend payments for the state further down the line due to more money being available to the firm for this purpose.

The ministry, which controls KGHM through a 32 percent stake, blocked management’s plans for a zł.3 billion share buyback earlier this month. Less money spent on a share buyback means more that can be paid out to shareholders – including the Treasury – in dividends. The government has also passed a new tax on companies that extract minerals, which will also hit KGHM hard and could bring in as much as zł.1.8 billion to the budget in 2012.

Explaining the Treasury Ministry’s decision to analyze the Quadra takeover, Ms Kobos said that the Quadra takeover was an “interesting project, which doesn’t mean it shouldn’t be thoroughly analyzed, as is [usually] done in transactions of such a caliber.”

Ms Kobos told WBJ that the market should not “read between the lines” when it comes to the Treasury’s analysis of the takeover. She said current Treasury Minister Mikolaj Budzanowski had assumed his position four days after KGHM’s board agreed to the deal, and wanted to use the analysis to understand the specifics of the transaction.

A representative of KGHM told WBJ that the copper firm “does not require any additional approval from the Polish side (government or shareholder) for the Quadra transaction to be concluded,” that the agreement signed by the two parties is a “binding offer,” and that KGHM therefore has “clear contractual obligations related to the agreement signed, to which it remains fully committed.”

If the transaction were to go through, it would be the biggest foreign takeover by a Polish firm in post-World War II Poland.

President stays

Ms Kobos also denied rumors that KGHM’s president, Herbert Wirth, could be on his way out. Over the past few weeks, KGHM shareholders have replaced half of the firm’s supervisory board. Some analysts saw this as a move by Mr Budzanowski to reassert the state’s influence over the company and eventually replace Mr Wirth.

But Deputy Treasury Minister Zdzisław Gawlik echoed Ms Kobos’s message, telling journalists last Wednesday that the president of KGHM “has achieved much success,” and that he didn’t see why the board “would make any decision about a management change at KGHM.”