Canadian Mining Journal

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MERGER FALLOUT – Xstrata sheds aluminum, nickel assets; buys coal

SWITZERLAND - Having beat out the competition last year for control of Falconbridge, XSTRATA has begun the process ...


SWITZERLAND – Having beat out the competition last year for control of Falconbridge, XSTRATA has begun the process of rationalizing its holdings. In recent days, the company has announced that it will shed projects from its aluminum and nickel portfolios meanwhile boosting its coal holdings.

Xstrata is selling its aluminum business for US$1.15 billion. The business unit, bearing the name NORANDA ALUMINUM, includes a primary smelter in Tennessee and three rolling mills in the United States. The buyer is U.S.-based APOLLO MANAGEMENT, a private equity and capital markets investment firm.

The deal between Vancouver-based BLACKSTONE VENTURES and Xstrata resulted in the sale of the latters nickel projects in Norway for US$15.5. Blackstone will now own 100% of seven properties, including former producers, in the southern part of the country. Xstrata retains the right of first refusal to purchase any concentrate or product from Blackstones Norwegian properties.

In New South Wales, Australia, Xstrata has its sights set on GLOUCESTER COAL, a coking and thermal coal producer. Xstrata has offered to buy all the outstanding shares of Gloucester at a 33.3% premium over the one-month weighted price. The deal is worth A$391 million. The coal companys board is recommending the offer to its shareholders. The deal should close in July 2007.

These latest moves are in addition to Xstratas US$4.0-billion offer for LIONORE MINING INTERNATIONAL. (See CMJ Net News for March 28, 2007.)


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