Rio Tinto Averts Takeover Bid From Glencore but For How Long?
Rio Tinto has dodged a bullet.
The UK-based company rejected a $160 billion offer to merge with Glencore, declining to form the industry’s largest mining company.
“The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto’s shareholders,” the company said in a statement.
According to Business Review Australia, the company engaged with Macquarie Group to lead the defense against the potential takeover.
“The partnership is geared towards helping Rio Tinto defend against merger talks, as sources close to the company believe a “merger of equals proposal” greatly undervalues the mining company, and that there is no support within Rio’s management for the proposal.”
The deal, which would have been the biggest in mining history, would have surpassed BHP Billiton in terms of coal, iron ore and copper production. But the timing of Glencore’s takeover bid is no coincidence.
Rio, which gets about 80 percent of its sales from iron ore mines in Western Australia, is now left struggling with declining prices for the metal. Iron ore accounts for roughly 64 percent of the company’s net value.
“The pressure is on Rio now,” Chris LaFemina, a mining analyst at Jefferies LLC, said in a report. “If Rio management does not deliver material capital returns to shareholders, as promised, or if the iron ore price sharply falls next year, Rio could become much more vulnerable.”
Glencore’s chief executive Ivan Glasenberg will have to continue salivating over the possible mega-merger as the Swiss-based commodities trader will have to wait at least six months before pursuing a deal under UK takeover law.
Unmanned train to allow Vale to reopen iron ore plant
Brazilian miner Vale SA will be able to resume operations at its Timbopeba iron ore dry processing plant in up to two months thanks to the use of an unmanned train, the company said in a statement this week.
Vale - Timbopeba iro ore plant
With the train, Timbopeba will be able to operate at least at 80% of its capacity of 33,000 tonnes of iron ore “fines” per day, reports Reuters.
Vale was forced to shut down the plant in the Alegria mine complex recently after labor authorities in Minas Gerais state banned activities close to the Xingu dam due to concerns of a risk of collapse.
Vale said access by workers and vehicles continues to be suspended in the flood zone of the dam due to the ban even though it remains at emergency level 2, which means there no imminent risk of rupture.
But some workers are allowed entry under strict security precautions and they will get the unmanned train going once it has been tested, which would take between one and two months, the company said.
The unmanned train will travel automatically along 16 kilometers (10 miles) of track operated by a system that can control the speed and activate the brakes, Vale said.
Vale announces first ore at Voisey’s Bay mine extension
Vale has reached the milestone of first ore production at the Reid Brook deposit at the Voisey’s Bay mine expansion project in Northern Labrador, Canada - recognised as the safest mine in Canada.