Canada may feel the impact of mining mergers
Two potential mega mergers involving four of the world's biggest mining companies could trigger shifts in the Canadian mining landscape, particularly in the nickel hub of Sudbury and the burgeoning northern diamond industry.
Brazilian mining giant Vale said on Monday it has held takeover talks with Anglo-Swiss rival Xstrata on a deal analysts said could be worth $100 billion.
This follows world No 1 miner BHP Billiton's offer for Rio Tinto.
If Vale does succeed in a takeover of Xstrata, it would trigger a consolidation of nickel assets in Sudbury, Ontario, which has been a stated goal of both companies since their 2006 acquisitions of Canadian nickel miners Inco and Falconbridge, respectively.
Combining the two operations, which in some areas of the historic Sudbury camp physically overlap each other, would unlock hundreds of millions of dollars of savings, and could also involve smaller player FNX Mining, which operates former Inco mines and processes ore at Vale smelters.
While Xstrata said last year it had hoped to have a deal done by the end of 2007, nothing has been announced, and some analysts say Vale's appetite for an agreement has been overstated.
If a takeover does happen, some analysts think a combined Vale-Xstrata might even consider packaging the Sudbury nickel operations off as a separate pure-play nickel company.
For BHP and Rio, there is not such an obvious operational overlap in Canada, but a combination could trigger a smaller shake-up of Canada's diamond industry, as Rio's 60 percent interest in the Diavik mine would be combined with BHP's Ekati mine.
Diavik produced nearly 10 million carats in 2006, while Ekati yields about 4 million carats per year.
Analysts say the operations, which are seen as non-core for the base-metals focused companies, would be likely cast-offs should BHP need to raise funds following a takeover.
Agencies
(China Daily 01/23/2008 page16)
