Ostensibly the UBS bid process is simply for 25% of Guelb and is concerned with finding a partner to replace Quatar Steel. However, the strong possibility exists that negotiations may exceed the original UBS brief.
Chinese ambitions especially, may dictate a fresh approach and I think this is what robworld was alluding to. So, whilst we have a project buy-in progesssing, a company buy-out is not out of the question.
The latter scenario hinges on the bigger picture of world ore pricing and control thereof. The Chinese expecially, have been paying top prices for too many years and maybe enough is enough?
With a strong economy, massive urbanisation & infrastructure projects in the pipeline, it would make sense for China to secure ore independently of BHP/RIO and Vale, if only to give them more leverage at the annual contract negotiations.
RIO's Chinalco snub followed by BHP and RIO's plans to combine their Pilbara operations will have contributed to thoughts of greater direct involvement. A strategic play now for SPH cannot be dismissed.
SPH Price at posting:
$1.10 Sentiment: Buy Disclosure: Held
