Anglo American to pore over BHP and Rio’s iron ore assets

June 30, 2008

June 30th (Telegraph) – Anglo American has set up teams to study the iron ore assets of Rio Tinto and BHP Billiton should the mining giants be told to divest operations as a requirement of allowing the latter’s hostile takeover to progress.

Anglo is understood to be keen on picking up iron ore projects in Australia – seen by many as the most likely assets to be sold if regulators force disposals on BHP.

The company has significant iron ore projects in Brazil and plans to boost capital expenditure on its assets to take advantage of soaring prices that have seen Chinese steel makers recently agree to almost double the price they pay suppliers such as Rio Tinto and Brazil’s Vale.

However, buying assets in Australia would give the group a far stronger position.

Xstrata, which recently ceased takeover talks with Vale, is also studying Rio and BHP assets in the region.

The European Commission is due to announce within the next few weeks whether it will block the BHP takeover, clear it, or take its investigation to a more detailed phase. Most in the industry, including BHP itself, believe the latter outcome to be the most likely.

John Meyer, an analyst with investment bank Fairfax, said: “I think it will be a very big issue with the EU. I would be extremely surprised if there wasn’t a divestment required. At the end of the day, the EU is not going to want to see so much Australian iron ore concentrated in single hands.”

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