Another Canadian mining company to be sold
The mining buying frenzy goes on unabated. This year we've already seen Brazil's CVRD buy Canada's Inco and Swiss-based Xstrata buyout of Canada's Falconbridge.
Now it's the turn of Aur Resources, yet another Canada-based mining company, which Teck Cominco announced it plans to buy. But this time it is the sale of one Canadian company to another. The deal is worth $3.9 billion (US).
The biggest impact will be in copper mining, where both companies are mid-sized. The buyout, should boost Teck Cominco's copper output by over 40% immediately, putting it among the top five producers worldwide.
Teck Cominco also mines zinc (#2 in the world in that metal after XStrata), molybdenum, gold, and coal, and has a share in oil sands deposits in Canada.
Aur's holdings, almost all copper and zinc, along with some gold and silver, are in Chile, Panama, and in Canada,
Of course, this may be just the first bid. UK company London- based Antofagasta Plc, which also has major holdings in Chilean copper mines, is likely to make a counterbid. Any of the other top copper producers, including Freeport, BHP Billiton, Rio Tinto, Anglo American, and Xstrata, is a likely bidder.
The price of copper has quadrupled over the past four years, with especially strong demand from China and India. Copper reserves, and Aur has considerable ones, are far more valuable than they were a few years ago. And companies like Teck are loaded with cash as higher copper prices have entailed no increase in costs.
Remaining Canadian mining companies (Hudbay Mining, Inmet, Breakwater, Meridian, First Quantum, FNX Mining) are seeing their stocks boosted as they represent the remaining few cards in the deck. Even Teck may be a target.
In any case, the mergers and acqusitions will surely keep coming. Bloomberg ( "Teck Cominco to Buy Aur Resources for $3.77 Billion". 7/3/07) reports that "There have been 352 mergers and acquisitions in the mining industry this year valued at $80 billion, compared with 337 deals worth about $65 billion a year earlier,"
