Mining round-up: Glencore resumes talks to buy Rio Tinto’s stake in Iron Ore Co.

on Dec 9, 2013
Updated: Oct 21, 2019
Listen, Monday, December 9: Glencore Xstrata (LON:GLEN) has resumed talks with Rio Tinto (LON:RIO) over the potential sale of Rio’s Canadian iron-ore operations, Bloomberg has reported. The 59 percent interest in Iron Ore Co. is among assets that Rio Tinto is trying to dispose of in order to focus on its most profitable operations. According to analysts at Credit Suisse, the majority stake may be valued at as much as $3.5 billion (£2.1 billion).

Rio has hired Credit Suisse and Canadian Imperial Bank of Commerce to sell the whole stake or a part of it. China Minmetals Corp., the country’s largest state-owned metals trader, was reported in October as being likely to abandon bidding for the stake because it considered the price asked by London-based Rio as too high. Canada’s largest producer of base metals, Teck Resources, was also reported in October as considering abandoning its bid because of a wide valuation gap.

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About a quarter of Iron Ore Co.’s output is supplied to steel mills in the Asia-Pacific region and the Middle East.
**As of 13:22 UTC buy Glencore shares at 308.60p**
**As of 13:22 UTC buy Glencore shares at 308.50p**
**As of 13:20 UTC buy Rio Tinto shares at 3,280.00p**
**As of 13:20 UTC buy Rio Tinto shares at 3,279.00p**
**Kazakhmys to sell two power producers to honour loan obligations**

Kazakhmys (LON:KAZ) has agreed to sell two power producers to Kazakhstan’s sovereign wealth fund for a total of $1.3 billion (£794 million) to protect loan accords. The sale of Kazakmys’ remaining 50 percent interest in Ekibastuz LLP, Kazakhstan’s largest power station, and 100 percent of Kazhydro, a company set up to develop hydropower plants in Kazakhstan, will boost finances of the the London-listed copper miner as it develops the Bozshakol and Aktogay copper mines at a cost of about $4 billion (£2.4 billion), targeting 500,000 tons of annual copper output by 2017.

Kazakhmys has been a major power supplier in Kazakhstan, accounting for more than a fifth of the country’s total power supply, but it has refocused on its core copper mining business in recent years. Kazakhmys bought Ekibastuz in 2008 and sold a 50 percent stake to Kazakhstan’s sovereign wealth fund, Samruk-Kazyna, for $681 million in 2010.

The company, Kazakhstan’s largest copper miner, said in a statement today that the sale of Ekibastuz LLP and Kazhydro, which will generate net cash proceeds of about $1.25 billion (£763 million) will bolster Kazakhmys’ financial position and remove any risk that the company may breach covenants on loans.
In a separate statement the company said China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. had been appointed as a second contractor for the Bozshakol project to ensure the mine starts production in 2015. The company added that it anticipates that the $1.9 billion (£1.16 billion) budgeted cost of Bozshakol will rise by $350 million (£213 million). Kazakhmys gave no reason for the cost overrun.
**As of 13:15 UTC buy Kazakhmys shares at 213.30p**
**As of 13:15 UTC buy Kazakhmys shares at 212.80p**
**Anglo American CEO to update investors on turnaround plan on December 12**
Anglo American (LON:AAL) CEO Mark Cutifani will update investors on December 12 with his blueprint to reinvigorate one of the world’s largest mining companies. He is expected to release further details of plans he announced in July for a $1.3 billion (£794 million) cash flow increase by 2016, a minimum 15 percent return on capital employed and cost cuts.
Analysts have said they were not expecting immediate results whilst large-scale restructuring announcements would be kept to a minimum.
“We see the … investor day as a second step towards outlining the elements of the plan rather than the complete answer, which may disappoint some investors,” Goldman Sachs said in a report last week.
**As of 13:15 UTC buy Anglo American shares at 1,319.50p**
**As of 13:15 UTC buy Anglo American shares at 1,319.00p**


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