July 3rd (Business Spectator) – Fortescue Metals Group Ltd has not confirmed whether it is considering a spin-off of its iron ore assets to meet its expansion targets, according to the Australian Financial Review newspaper.

The paper reported the group’s planned iron ore expansion was being restricted in terms of pace and scale due to the restrictive terms of its $2.7 billion bond raising, which was struck in August 2006.

“We have an enormously strong market, we have demonstrated our ability to construct a project and to get it up in record time at the cheapest going capital dollars and we’re determined to stay in there with the market as strong as it is,” said executive director Graeme Rowley.

“Therefore, in the interests of our shareholders, we have to be examining all the potential options that relate to expansion and as soon as we’ve settled on one, on the circumstances that are appropriate at that time, we’ll obviously make an announcement,” said Mr Rowley.

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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.”

June 6th (Steel Guru) – Bloomberg reported that Eurasian Natural Resources Corp, the Kazakh producer of ferrochrome, iron ore and aluminum is down for a fourth day in London trading on speculation that Kazakhmys Plc will sell its stake in the company.

Ms Elly Williamson spokeswoman for ENRC said Kazakhmys the nation’s biggest copper producer was unable to sell the 14.6% stake for 180 days from ENRC’s entry to the London Stock Exchange on December 12 following an initial public offering. While Mr David Simonson spokesman for Kazakhmys said the stake isn’t a long term holding a quick decision won’t be made.

Mr Sam Catalano an analyst at Macquarie Bank Ltd in London said. “It’s a sensible move, though, because the market will not fully value the minority ENRC stake as part of Kazakhmys. He said that the market is concerned that there would be a large amount of stock suddenly available.”

London-based ENRC fell 48 pence or 3.5% to 1,319 pence at the close in London the lowest since May 9th 2008. The stock dropped 5.3%.

May 29 (Reuters) – Brazil’s mining giant Vale (VALE5.SA: Quote, Profile, Research)(RIO.N: Quote, Profile, Research) decided to sell its stake in Usiminas (USIM3.SA: Quote, Profile, Research) because it opposed the steel maker’s expansion into iron ore mining and slow growth in its core steel business, its top executive said on Wednesday.

Vale Chief Executive, Roger Agnelli, cited “strategic divergence” as the reason for selling the 5.89 percent voting stake in Usiminas, which makes up 2.9 percent of its overall capital. Vale first announced the decision to quit Usiminas said on Monday, but provided no explanations.

 

“Usiminas should be spearheading growth in Brazil’s steel industry. I think, in a way, it was a bit slow in its strategy,” Agnelli told reporters.

 

Agnelli, who heads the world’s biggest producer of iron ore also criticized Usiminas’ decision to invest in iron ore, which he said came to the detriment of steel output growth.

 

“I don’t think it’s a positive strategy for Usiminas … to deviate its focus from steel to mining even though they were never short of iron ore.”

 

Usiminas bought three local iron ore companies — J. Mendes, Somisa and Global Minercao — for around $1 billion in February.

 

Brazilian steel companies like Companhia Siderurgica Nacional (CSN) CSNA3.SAi(SID.N: Quote, Profile, Research), Usiminas and the local unit of ArcelorMittal (ISPA.AS: Quote, Profile, Research) are investing to develop reserves and boost exports of the raw material, lured by its high international prices and steel capacity growth.

 

Usiminas plans to start exporting iron ore this year in small quantities, reaching 7 million tonnes in 2013. But it has also said it will boost steel output to 15 million tonnes in 2013 from 9 million tonnes now.

 

Usiminas officials were not immediately available for comment on Agnelli’s remarks.

Agnelli said Vale would use the money from the sale of its stake to maintain its investment in other steel companies.

 

Other Usiminas shareholders include Nippon Steel Corp (5401.T: Quote, Profile, Research) with a 24.7 percent voting stake, and a group formed by Brazilian conglomerates Votorantim and Camargo Correa. That group has a 23.1 percent voting stake.

 

Vale’s partners can use preferential rights in acquiring the stake, but Agnelli said none of them has manifested interest so far.

 

Usiminas ordinary shares jumped 5.46 percent on Wednesday to 91.8 reais, while Vale rose 2.03 percent to 55.8 reais. The broader market rose 3 percent.