Xstrata enters nickel with C$2bn stake in Falconbridge
Xstrata has long been looking to add another commodity to its product range, and it said either iron ore or platinum would be preferred. In the event, it has gone for nickel by taking a stake in Falconbridge, the Canadian company which is the world’s fourth largest producer of the stainless steel alloying material.
The Swiss-based mining group has paid just over C$2bn (US$1.7bn) for the 19.9% Falconbridge holding that Brascan Corp has been trying to sell for several months. China’s Minmetals held lengthy talks on acquiring the stake, but eventually walked away.
For Xstrata – which recently tried to acquire Australian nickel producer WMC, but lost out to BHP Billiton – the Falconbridge stake is an important diversification. Falco produced 56,800 tonnes of refined nickel in the first half of this year, up 14% from last year.
Falco’s copper and zinc businesses will add volume to Xstrata’s existing activities in these commodities, while its aluminium operations (formerly operated by Noranda, which merged with Falco earlier this year) take the group into another new area. Xstrata currently produces chromium, vanadium, coal, copper and zinc.
The Swiss company is stressing that the deal does not oblige it to make an offer for the rest of Falco’s shares. But equally it is not ruling out a full-scale takeover bid, and observers believe this will come sooner or later.
The Swiss-based mining group has paid just over C$2bn (US$1.7bn) for the 19.9% Falconbridge holding that Brascan Corp has been trying to sell for several months. China’s Minmetals held lengthy talks on acquiring the stake, but eventually walked away.
For Xstrata – which recently tried to acquire Australian nickel producer WMC, but lost out to BHP Billiton – the Falconbridge stake is an important diversification. Falco produced 56,800 tonnes of refined nickel in the first half of this year, up 14% from last year.
Falco’s copper and zinc businesses will add volume to Xstrata’s existing activities in these commodities, while its aluminium operations (formerly operated by Noranda, which merged with Falco earlier this year) take the group into another new area. Xstrata currently produces chromium, vanadium, coal, copper and zinc.
The Swiss company is stressing that the deal does not oblige it to make an offer for the rest of Falco’s shares. But equally it is not ruling out a full-scale takeover bid, and observers believe this will come sooner or later.