oxiana zinifex eyes bhp assets

Oxiana-Zinifex eyes BHP assets
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Zinifex-Oxiana reborn as OZ Minerals
AdvertisementJune 16, 2008 - 5:39PM

The head of newly combined miners Zinifex and Oxiana said today he would look at any assets BHP Billiton may need to sell to satisfy anti-trust regulators in its bid to acquire Rio Tinto.

Andrew Michelmore also said he was interested in acquisitions in coal, gas, hydro power and bulk commodities in pursuit of diversification from its base metals operations.

"There will be some very good assets that just don't fit the size,'' Andrew Michelmore told a media conference, referring to a merged BHP and Rio. "We want to be in the place to review those, there could be some very good opportunities.''

BHP chief executive Marius Kloppers late last week said he does not see a need to dispose of any assets to meet antitrust concerns. Companies generally do not offer any asset sales until later in the review process.

Zinifex shareholders earlier approved the $4.3 billion takeover by Oxiana, which will create Australia's third largest diversified mining group after BHP and Rio, and will be named OZ Minerals Ltd.

BHP this month filed with the European Commission for clearance to take over Rio in a $180 billion deal and said recently it expected the EC review to go to a second phase, which could last till October or later.

It filed with the Australian regulator last week.

The combined Oxiana and Zinifex, to be called OZ Minerals, said they would be better placed to seek fresh acquisitions after their merger, as they seek to grab a bigger share of booming world mineral demand.

Mergers and acquisitions activity in the resources sector has picked up in the past twelve months as strong demand for raw materials from fast-growing China and India sent metals prices soaring, triggering a land grab among key industry players.

Mr Michelmore said OZ Minerals wanted to diversify to be less subject to market fluctuations, and to help offset its own energy costs.

"We would like to have some longer-term contract prices where you don't get that volatility and fluctuation that you get on the LME.''

The group's portfolio mainly comprises of London Metal Exchange-traded base metals such as zinc and copper.

"That's why we would like to get into energy and bulk commodities.''

He said it was also important to have energy ``locked up'' as part of the group's portfolio to help offset energy costs, which make up about 25% of total operating costs.

Oxiana is offering 3.2 of its shares for each Zinifex share.

Oxiana shares have fallen 31% in value since the deal was announced as prices of some of the commodities it sells including copper declined.

Reuters