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Potential in SA prompts mine deal
Source: Bloomberg News |
December 13, 2012, Thursday
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Print Edition
Print Edition
HEBEI Iron and Steel Group, China's biggest steelmaker, will lead a group to buy Rio Tinto Group's Palabora Mining Co in South Africa for about US$476 million.
Rio will sell 57.7 percent for US$373 million to the group, which includes Industrial Development Corp of South Africa, the London-based mine operator has said. Anglo American Plc will divest a 16.8 percent holding for 893 million rand (US$103 million), it said separately.
The agreement amounts to a purchase price of 110 rand a share, Hebei Steel said.
Palabora's main asset is a copper mine in South Africa's Limpopo province that also produces vermiculite and magnetite. China, the world's biggest consumer of base metals, has added mining interests in Africa as it seeks resources to feed its expanding construction and auto industries.
"Steelmakers are diversifying to mining as they are struggling to make profits in the steel business," said Sarah Wang, a Shanghai-based analyst at Masterlink Securities Corp.
Hebei Iron and Steel Co, the publicly traded unit of Hebei Iron and Steel Group, swung to a 26.1 million yuan loss in the third quarter as local overcapacity and weak demand cut prices. The listed unit rose 0.8 percent to 2.51 yuan (40 US cents) in Shenzhen trading yesterday.
"South Africa offers significant long-term investment opportunities," Hebei Steel Chairman Wang Yifang said in a statement released in Johannesburg.
South African and Chinese regulatory approval for the deal is expected to take four to six months, Anglo American said.
Hebei Steel makes up 35 percent of the group of acquirers. General Nice Development Ltd, a closely held Chinese trader, has 25 percent, Industrial Corp of South Africa 20 percent, and China's Tewoo Group another 20 percent.
Palabora Mining has magnetite resources used in making steel, according to Mandla Mpangase, a spokesman for Industrial Development Corp.
Rio will sell 57.7 percent for US$373 million to the group, which includes Industrial Development Corp of South Africa, the London-based mine operator has said. Anglo American Plc will divest a 16.8 percent holding for 893 million rand (US$103 million), it said separately.
The agreement amounts to a purchase price of 110 rand a share, Hebei Steel said.
Palabora's main asset is a copper mine in South Africa's Limpopo province that also produces vermiculite and magnetite. China, the world's biggest consumer of base metals, has added mining interests in Africa as it seeks resources to feed its expanding construction and auto industries.
"Steelmakers are diversifying to mining as they are struggling to make profits in the steel business," said Sarah Wang, a Shanghai-based analyst at Masterlink Securities Corp.
Hebei Iron and Steel Co, the publicly traded unit of Hebei Iron and Steel Group, swung to a 26.1 million yuan loss in the third quarter as local overcapacity and weak demand cut prices. The listed unit rose 0.8 percent to 2.51 yuan (40 US cents) in Shenzhen trading yesterday.
"South Africa offers significant long-term investment opportunities," Hebei Steel Chairman Wang Yifang said in a statement released in Johannesburg.
South African and Chinese regulatory approval for the deal is expected to take four to six months, Anglo American said.
Hebei Steel makes up 35 percent of the group of acquirers. General Nice Development Ltd, a closely held Chinese trader, has 25 percent, Industrial Corp of South Africa 20 percent, and China's Tewoo Group another 20 percent.
Palabora Mining has magnetite resources used in making steel, according to Mandla Mpangase, a spokesman for Industrial Development Corp.
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