Vale and Anglo closer to tie-up

Production and Markets

Publishing Date: 19 Jun 2009 4:57pm GMT
Author: Mining Journal

Vale SA, the world’s biggest iron-ore producer, and Anglo American plc, the company that controls the largest platinum producer, may be “closer” to a tie-up than expected by some investors, Liberum Capital Ltd said.

A combination would make Anglo less reliant on mining in South Africa, Michael Rawlinson, an analyst at Liberum in London, wrote today in a research note. It also would allow Vale, located in Rio de Janeiro, to diversify beyond iron ore and increase its coal and copper production, he wrote.

Anglo “is possibly the biggest transformational deal Vale could deliver now at a time it is cashed up and keen to move,” Mr Rawlinson wrote. The Brazilian company had US$12.6 billion of cash at end-2008, according to annual results released this year.

Anglo spokesman James Wyatt-Tilby declined to comment. A Vale official who couldn’t be named because of company policy also declined to comment.

Owners of Anglo’s stock want chief executive Cynthia Carroll to consider a merger with Xstrata Plc, the UK’s Times newspaper reported last week. A combination of London-based Anglo and Xstrata makes financial and strategic sense, Citigroup Inc said yesterday.