The cooper mines are Zambia's largest employer

Konkola is Zambia's biggest mining operation, accounting for 67% of the country's metal exports, its main source of foreign currency.

Zambia wants up to $200m in exit payments from Anglo, including short-term financing, and an agreement to keep its management team at Konkola for at least 12 months.

Price slump

Anglo purchased a 51% stake in Konkola's owner Zambia Copper Investments (ZCI), from the Zambian government in March 2000, promising to turn the loss-making business around.

But a steep fall in global copper prices has pushed Anglo's losses to $108m since taking the stake.

On Wednesday, Mopani Copper Mines (MCM), which produces 30% of Zambia's metal exports, cuts its copper production forecast for 2002 to reflect a weak global market.

The Anglo talks, taking place in London, are also aimed at settling how the mines will be divided between the remaining shareholders after the company pulls out.

The principal remaining shareholders are the Zambian government , the World Bank's International Finance Corp (IFC) and the Commonwealth Development Corp (CDC).

Anderson Mazoka, a former chief executive of Anglo's Zambian operations told the BBC's World Business Report he believed the company's priorities changed when it moved to the London Stock Exchange a few years ago.

"I think that Anglo would like to see itself as a first world company rather than a company based in the third world where the risks are high," he said.

Simon Thompson, chief executive of Anglo's base metals division denied this was why Anglo was pulling out of Zambia.

"We look at all our investment opportunities on the basis of the investment not on the basis of the geography," he said.

New partners

The Zambian authorities have said they want to find a strategic partner to manage Konkola, but foreign firms are more likely to be interested in cherry-picking specific assets.

Canada's First Quantum Minerals, which runs the Mopani mines, said on Monday it was interested in Konkola's low-cost, open-cut operations.

"Our main focus is the open-pit and oxide production. We're much less interested in the underground mines," First Quantum President Clive Newall said.

First Quantum Minerals said production of primary copper from Mopani this year would come in 30% below original forecasts at 101,000 tonnes, but still above than the 83,162 mined last year.

First Quantum also operates the Bwana Mkubwa copper mine in Zambia and another Bwana Mkubwa mine at Lonshi, just inside the Democratic Republic of Congo.

Zambian Treasury officials said South Africa's Anglovaal Mining (Avmin) was another possible strategic partner.