MAC: Mines and Communities

Anglo American Eyes Miner As Edmonds Abandons Bid

Published by MAC on 2007-09-10
Source: The Sunday Times ()

Anglo American eyes miner as Edmonds abandons bid

Ben Laurance, Sunday Times

10th September 2007

ANGLO AMERICAN, the minerals conglomerate, is emerging as a likely buyer of mining group Katanga after former England cricketer Phil Edmonds dropped his bid for the group, according to sources close to the situation.

Edmonds's company, Camec, abandoned its bid last week after its main mining licence in the Democratic Republic of Congo (DRC) was withdrawn by the Kinshasa government.

Camec's share price immediately slumped.

When Camec first mooted its bid for Katanga it valued the copper and cobalt producer at more than £700m.

Once Camec signalled its intention to bid, Katanga in effect invited offers from other companies. As a result, a number of groups have since looked at its books.

And now, despite the withdrawal of Camec's offer, Katanga is continuing to press ahead with plans for a possible sale.

Anglo American, headed for the past six months by American Cynthia Carroll, has emerged as the frontrunner to buy Katanga, and is understood to be carrying out due diligence.

People within Katanga believe that a deal could be concluded by the end of this month.

It is likely to be in the form of a full takeover or a deal under which an outsider takes a stake in the company's huge copper and cobalt mining project in the southern DRC, due to come on stream at the end of this year.

Among the other mining groups understood to be looking at Katanga is BHP Billiton, which already has large mining interests in the DRC and is seen as a strong contender.

Sources close to Xstrata, the Swiss-based mining group, have indicated that the company is too busy with new projects in the Philippines, Peru and Papua New Guinea to bid for Katanga, while Rio Tinto is currently in the throes of a £15 billion takeover of Alcan of Canada.

Katanga has also opened its books to Nikanor, which operates a mine near the Katanga project. RP Capital, a fund that owns 13% of Nikanor, also has a stake in Katanga and is keen to engineer a merger of the two businesses.

Copper deposits in central and west Africa are seen as highly attractive to mining companies because they are of a far higher grade than those in most other parts of the world.

But investment in the DRC has been seen as risky because of the constant threat of political upheaval.

Camec's mining licences were revoked after the DRC's attorney-general said there were "serious irregularities in the original issuing of the licences".

The DRC concessions have until now accounted for most of Camec's income.

In July, when Camec first said it would bid for Katanga, the company's share price peaked at 76p. It closed on Friday at 28p. Camec said it would appeal against the withdrawal of its licences.

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