INDABA: Glencore, Xstrata Merger Could Spur W Africa Iron Ore M&A-Standard Bank
February 06 2012 - 11:50AM
Dow Jones News
A merger between Anglo-Swiss miner Xstrata PLC (XTA.LN) and
commodities titan Glencore International (GLEN.LN) could be the
catalyst for more merger and acquisition activity in the west
African iron ore space, says Standard Bank's head of mining and
metals Monday.
Glencore and Xstrata both have significant assets across Africa
but a tie-up between the two would still leave them deficient in
iron ore overall.
"They won't have a huge presence in iron ore, so they might try
to do something in iron ore in west Africa," Rajat Kohli told Dow
Jones Newswires on the sidelines of the mining Indaba here. He
added that the deal would also generally put more focus on Africa
where its "geological postcode is relatively underdeveloped."
There has been a recent rise in deals with mid-tier iron ore
developers in west and central Africa. In January, South African
diversified mining company Exxaro Resources Ltd. (EXX.JO) said it
would pay up to A$338 million (US$348 million) in cash for African
Iron Ltd. (AKI.AU), an Australian-listed company developing an
iron-ore mine in the Republic of Congo.
The three major iron ore producers Vale, Rio Tinto and BHP all
are developing assets in west Africa as well as steel titan
ArcelorMittal (MT). Glencore already has an offtake agreement with
London Mining PLC (LOND.LN) which is mining iron ore in Sierra
Leone.
The merged entity wouldn't reach the scale or size of the top
three iron ore producers but it could incrementally build up
capacity by picking up west African assets, Kohli said.
-By Devon Maylie, Dow Jones Newswires; +27 11 783 7848,
devon.maylie@dowjones.com
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