m&a's in commodity sector in 2006.

VANCOUVER -- After a year of mining mega-deals, there is no reason to expect a lull.

Strong commodity prices, a dearth of advanced development projects and the shuffling that follows a consolidation binge mean the mining scene is apt to be just as active in 2006.

This year, Barrick Gold Corp. snagged Placer Dome Inc. and no challengers have emerged to threaten Inco Ltd.'s friendly takeover of one-time rival Falconbridge Ltd.

There will be more to come. Take the gold sector, which stands to be reshaped if Barrick completes its $10.4-billion (U.S.) takeover of Placer -- a result much more likely now that Barrick has sweetened its bid and Placer's board has endorsed the deal.

The Placer takeover will reorder the top end of the industry, putting the combined company ahead of Denver-based Newmont Mining Corp. in terms of annual production.

But it will also have a ripple effect among the mid-sized and junior producers, especially if gold prices maintain their momentum.

"Placer has been a big participant on Canadian capital markets, and with them removed, presumably gold investors are going to look for other places to invest," says Tye Burt, chief executive officer of Toronto-based Kinross Gold Corp. "And we hope some of that investment demand will reflect itself in our stock."

Kinross is emerging from a lengthy accounting review that has weighed on its shares.

It will be trying to position itself to appeal to institutional investors looking to get gold exposure in their portfolio. Junior producers are also jostling for position, some striking mergers to boost production and others hunting for partners.

On the base metals side, next year could see Inco digesting its $12.5-billion takeover of Falconbridge. That bid, announced Oct. 11 and originally scheduled to close in December, has been extended to Jan. 27 to provide more time for regulatory approvals.

That still allows time for Swiss-headquartered miner Xstrata PLC to spoil the party. Xstrata, which acquired 19.9 per cent of Falconbridge in August for $2-billion, was believed to be angling for all of Falconbridge, especially as Xstrata CEO Mick Davis said in August that his company had no intention of remaining a long-term minority shareholder.

Since Inco and Falconbridge hatched their plan to create the world's biggest producer, there has been widespread speculation Xstrata would mount a rival offer for Falconbridge. To date, however, it has not done so. Some observers believe Xstrata could bide its time and bid for the merged company.

That would be a big bite -- a combined Inco-Falconbridge would have a market value of more than $20-billion -- but not an inconceivable one, given the outlook for metals and the push by major firms to lock down future supplies.

The story of rising metal prices over the past two years has primarily been a story about China, where rapid industrialization and an emerging middle class has created a market that's gobbling up copper and nickel.

That market isn't going away, and India isn't far behind.

"The hundreds of millions of Chinese and Indian new middle-class members coming in the next two decades need steel, copper, nickel, aluminum, lead and zinc to achieve their dreams," Donald Coxe, Bank of Montreal global portfolio strategist, wrote in a December report.

"It is this sustained, non-cyclical growth in metal demand that has already become a major factor in global metal pricing and will be the dominant factor in coming decades."

An average car contains about 25 kilograms of copper, Mr. Coxe added. An average house has 180 kg.

Meanwhile, copper supplies are limited and many proposed new projects are years away from production. In a Dec. 21 report, the Asia Pacific-Australia research team for Credit Suisse First Boston described the outlook for base metals as "effervescent," noting in particular that "the global copper market is facing a significant supply constraint that seems to be unlikely to be resolved in the near term."

Copper, the workhorse of the metals market, may be a leading economic indicator and, for the next few years at least, a cash cow for the companies that produce it.

Lesser-known metals are also shining. Prices for zinc, long the market's ugly ducking, are improving. Vancouver-based Teck Cominco Ltd., which last year used some of its cash to invest in the oil sands, is getting a boost from indium, used in coating flat-screen televisions. Uranium prices are soaring, thanks to limited supply and hopes of a nuclear building boom.

The next year will also see miners struggling with rising costs for fuel and materials, which hit many producers last year, and an industry-wide labour crunch.

VANCOUVER -- After a year of mining mega-deals, there is no reason to expect a lull.

Strong commodity prices, a dearth of advanced development projects and the shuffling that follows a consolidation binge mean the mining scene is apt to be just as active in 2006.

This year, Barrick Gold Corp. snagged Placer Dome Inc. and no challengers have emerged to threaten Inco Ltd.'s friendly takeover of one-time rival Falconbridge Ltd.

There will be more to come. Take the gold sector, which stands to be reshaped if Barrick completes its $10.4-billion (U.S.) takeover of Placer -- a result much more likely now that Barrick has sweetened its bid and Placer's board has endorsed the deal.

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The Placer takeover will reorder the top end of the industry, putting the combined company ahead of Denver-based Newmont Mining Corp. in terms of annual production.

But it will also have a ripple effect among the mid-sized and junior producers, especially if gold prices maintain their momentum.

"Placer has been a big participant on Canadian capital markets, and with them removed, presumably gold investors are going to look for other places to invest," says Tye Burt, chief executive officer of Toronto-based Kinross Gold Corp. "And we hope some of that investment demand will reflect itself in our stock."

Kinross is emerging from a lengthy accounting review that has weighed on its shares.

It will be trying to position itself to appeal to institutional investors looking to get gold exposure in their portfolio. Junior producers are also jostling for position, some striking mergers to boost production and others hunting for partners.

On the base metals side, next year could see Inco digesting its $12.5-billion takeover of Falconbridge. That bid, announced Oct. 11 and originally scheduled to close in December, has been extended to Jan. 27 to provide more time for regulatory approvals.

That still allows time for Swiss-headquartered miner Xstrata PLC to spoil the party. Xstrata, which acquired 19.9 per cent of Falconbridge in August for $2-billion, was believed to be angling for all of Falconbridge, especially as Xstrata CEO Mick Davis said in August that his company had no intention of remaining a long-term minority shareholder.

Since Inco and Falconbridge hatched their plan to create the world's biggest producer, there has been widespread speculation Xstrata would mount a rival offer for Falconbridge. To date, however, it has not done so. Some observers believe Xstrata could bide its time and bid for the merged company.

That would be a big bite -- a combined Inco-Falconbridge would have a market value of more than $20-billion -- but not an inconceivable one, given the outlook for metals and the push by major firms to lock down future supplies.

The story of rising metal prices over the past two years has primarily been a story about China, where rapid industrialization and an emerging middle class has created a market that's gobbling up copper and nickel.

That market isn't going away, and India isn't far behind.

"The hundreds of millions of Chinese and Indian new middle-class members coming in the next two decades need steel, copper, nickel, aluminum, lead and zinc to achieve their dreams," Donald Coxe, Bank of Montreal global portfolio strategist, wrote in a December report.

"It is this sustained, non-cyclical growth in metal demand that has already become a major factor in global metal pricing and will be the dominant factor in coming decades."

An average car contains about 25 kilograms of copper, Mr. Coxe added. An average house has 180 kg.

Meanwhile, copper supplies are limited and many proposed new projects are years away from production. In a Dec. 21 report, the Asia Pacific-Australia research team for Credit Suisse First Boston described the outlook for base metals as "effervescent," noting in particular that "the global copper market is facing a significant supply constraint that seems to be unlikely to be resolved in the near term."

Copper, the workhorse of the metals market, may be a leading economic indicator and, for the next few years at least, a cash cow for the companies that produce it.

Lesser-known metals are also shining. Prices for zinc, long the market's ugly ducking, are improving. Vancouver-based Teck Cominco Ltd., which last year used some of its cash to invest in the oil sands, is getting a boost from indium, used in coating flat-screen televisions. Uranium prices are soaring, thanks to limited supply and hopes of a nuclear building boom.

The next year will also see miners struggling with rising costs for fuel and materials, which hit many producers last year, and an industry-wide labour crunch.