Bonanza of mining deals
Evidence that the consolidation of the mining sector continues on was seen in three announced deals his week.
The first one is purchase of US-based Meridian Gold by Canada-based Yamana Gold in a $3.6 billion dollar deal. The agreement ends a yearlong pursuit of Meridian by Yamana. Meridian has mines in the US, Argentina, Chile, Mexico, and Peru/ Yamana's mines are in Brazil and in other countries in Central and South America. In 2006, Yamana acquired Canadian-based gold miners RNC Gold and Desert Sun Mining.
The second deal was in iron ore mining: Australia-based Gindalbie Metals announced it would buy Australia-based Sundance Resources for $1.4 billion. Sundance's mines are primarily in Africa (Cameroon), while Gindalbie's are in Australia. Chinas-based Anshan Steel has a major investment in Gindalbie. See it as an attempt by Anshan to get supplies from another source the oligopoly of iron mining, namely CVRD, Rio Tinto, and BHP Billiton. Both iron and gold have seen significant price movement in the last few years.
The third deal catching our attention is in mining equipment. Australia-based Orica, the #1 company worldwide in making explosives (generally for mining) announced it would buy Excel Mining Systems, a US-based maker of mining support equipment used worldwide. Excel is the #1 company in its market in the US, with over 45% market share. The deal is for $670 million.
Orica has made other recent acquisitions, including UK-based specialty chemicals group Minova, which made products for the mining industry, and parts of Dyno Nobel, the #2 maker of explosives in the world.
Mining had shown amazing worldwide concentration over the past decade, in both precious metals and in staple products like iron ore and coal. In every product, there are fewer and fewer suppliers, and the reduction in competition has gone hand-in-hand with increasing prices. And the increased profits are being poured back into even further concentration.
9:36:31 PM 
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