Commodities | Jun 12 2007
By Greg Peel
Amidst a recent flurry of BHP Billiton (BHP) and/or Rio Tinto (RIO) takeover speculation, Bell Potter put the cat amongst the pigeons last week by suggesting that if anyone was going to buy BHP it could well be the Chinese government. With its US$237bn trading fund and a need to shore up commodity supply it is no great leap of logic to assume mining company acquisitions are on the agenda.
And so it seems they are – trading fund or no trading fund.
Yesterday Vancouver-based Peru Copper agreed to a US$792m takeover by the state-owned Chinese aluminium giant Chinalco. Chinalco is the world’s second biggest producer of aluminium with a 9.2% share of global supply, MarketWatch.com notes. Alcoa is the largest with a 10.9% share. The offer represented a 21% premium to 20-day VWAP.
Chinalco is also a copper player, but at a much smaller level. Last year China consumed 22% of the world’s copper, up from 10% a decade ago. Peru Copper has agreements to develop copper mines in that country’s Toromocho region. While not recognised as one of the world’s seriously large copper miners, Peru Copper is nevertheless one of the remaining “independents”. It does not have various cross-ownerships in other copper companies that make takeovers more problematic.
And in a message for the future of the global mining industry, Chinalco’s president Yaqing Xiao is reported by MarketWatch as commenting:
“This is an important step in our strategic growth outside China. We look forward to identifying investment opportunities in Peru and around the world.”