takeover target/afr article, page-5

re: takeover target/mineweb I should be asleep, however,


Xstrata’s WMCR success could mobilise Glencore
By: Peter Gonnella
Posted: '03-NOV-04 11:00' GMT © Mineweb 1997-2004



PERTH (Mineweb.com) -- An Xstrata merger with WMC Resources may trigger the acquisition of Minara Resources [ASX:MRE] by major Xstrata shareholder, Switzerland-based commodities trader Glencore International.

There are some intriguing interrelationships between the four groups and – in the event Xstrata does manage to pull off the WMCR deal – they could ultimately lead to further consolidation in the Aussie mining industry.

Glencore has both a 49.65 percent stake in Perth-based Minara (formerly Anaconda Nickel) and a direct 40 percent interest in the Murrin Murrin laterite nickel operation, in which Minara holds the balance of ownership.

Since Xstrata’s proposed A$6.35 per share takeover offer for WMCR was confirmed last week, Minara’s shares have climbed more than 15 percent on market speculation.

While Minara and Murrin Murrin have not been among Glencore’s greatest investments, a combined Xstrata-WMCR could provide the privately-owned Swiss trader with an opportunity to crystallise some value out of these positions at the top of the commodities price cycle and as cash rich and debt free Minara is showing signs of having recovered from a horror few years that saw the company almost go under.

Some Aussie analysts are suggesting Glencore may look at buying the other half of Minara and then vending Murrin Murrin into Xstrata’s stable of assets in order to focus on handling Xstrata’s swelling nickel and other metals marketing requirements.

Murrin Murrin is currently running at the annualised output rate of about 32,000 tonnes of nickel and is not far from WMCR’s Western Australian nickel operations. Under one owner they not only have the potential to deliver significant cost savings and economies of scale but would also turn Xstrata into a leading global nickel supplier and add considerable weight to its coking and thermal coal, copper, zinc, ferrochrome and vanadium portfolio.

Perhaps it is not the first time the possible acquisition of Minara has been discussed, with three Glencore directors on Xstrata’s board and Glencore and Xstrata chairman Willy Strothotte and Glencore CEO and Xstrata director Ivan Glasenberg on Minara’s board. However, should Xstrata succeed in its bid to purchase WMCR, the Minara mop-up might make more strategic sense.

Another part of the connections between the parties is Minara’s managing director of the past three years, Peter Johnston, who was instrumental in rescuing and reviving Minara. He was previously an executive general manager of WMC’s nickel as well as copper businesses and, presumably having worked closely with Glencore during his time at Minara, may be able to offer some invaluable insight into potential synergistic benefits.

Shares in Minara edged up today (Wednesday) to A$2.48, which translates into a market capitalisation of about A$1.15 billion.

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