January 19, 2012 / 11:43 AM / in 6 years

UPDATE 1-KGHM owners reject $885 mln buyback, shares drop

* Shareholders reject KGHM’s PLN 3 bln shr buyback plan

* State-controlled KGHM aimed to buy up to 10 pct

* Shares fall as much as 8 pct (Adds background, updates shares)

LUBIN, Poland, Jan 19 (Reuters) - Shareholders at Europe’s No.2 cooper producer KGHM rejected a proposed 3 billion zloty ($884.7 million) share buyback, defying expectations that Poland, which controls the company, would back it as it previously indicated.

The state-controlled miner wanted to buy up to 10 percent of its shares at less than 190 zlotys per share. In November, the treasury ministry said it supported the buyback, but would not reduce its 32-percent holding.

KGHM shares fell as much as 8 percent after the vote and were down around 3.2 percent to 126.50 zlotys at 1107 GMT.

Chief Executive Herbert Wirth told Reuters last month the company might decide to delay launching the buyback because of a mining tax proposed by the government and a C$3 billion ($2.96 billion) deal to buy Canadian rival Quadra FNX.

Poland expects the mining levy to bring 1.8 billion zlotys to the state coffers this year.

KGHM expects to earn a record net profit of 11.2 billion zlotys in 2011 thanks to high copper prices and sales of telecom assets. ($1 = 3.3910 Polish zlotys) ($1 = 1.0139 Canadian dollars) (Reporting by Wojciech Zurawski; writing by Adrian Krajewski. Editing by Jane Merriman)

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