Bloomberg News

Glencore Said to Be Favored by Exxaro in Zinc Mine Talks

November 29, 2011

(Updates with valuation in fifth paragraph, share prices in last.)

Nov. 25 (Bloomberg) -- Glencore International Plc, the largest publicly traded commodities company, is emerging as the preferred bidder for the 50.04 percent stake in Namibia’s Rosh Pinah Zinc mine held by Exxaro Resources Ltd.’s, a person familiar with the negotiations said.

The offer by Baar, Switzerland-based Glencore is favored over one from London-based Vedanta Resources Plc, the person said, declining to be identified because the talks haven’t been made public. Exxaro spokesman Hilton Atkinson said in an e-mail today that the company “is in discussions with preferred bidders.” Exxaro reported in July that Vedanta had held discussions about the mine.

Glencore Chief Executive Officer Ivan Glasenberg, who led the company to a $10 billion initial public offering in May, said in August the commodities trader is “aggressively” seeking mergers and acquisitions as market valuations slide. Exxaro is aiming to sell the mine in southern Namibia as it exits the zinc industry to focus on its coal and mineral sands operations. Charles Watenphul, a spokesman for Glencore, declined to comment today.

Exxaro said in July it will close its Zincor zinc refinery in South Africa and the company said in August that it planned to sell its Rosh Pinah stake by the end of 2011. Rosh Pinah produces about 70,000 metric tons of zinc a year and 28,000 tons of lead.

Market Conditions

The company’s stake in Rosh Pinah may be worth 471 million rand ($55.5 million), Johannesburg-based Macquarie First South, part of Australia’s Macquarie Group Ltd., said in a research report on Sept. 26. Economic conditions have since deteriorated which may lower the valuation, the company said in an e-mailed response to questions today. The price of zinc on the London Metal Exchange has fallen 23 percent this year to $1,897 a ton.

Vedanta spokesman Pavan Kaushik declined to comment when called by Bloomberg. In December, Vedanta paid $707 million for Anglo American Plc’s Skorpion zinc mine, which is close to Rosh Pinah and can produce about 150,000 tons of zinc a year.

Exxaro shares rose 25 cents, or 0.2 percent, in Johannesburg to close trade at 170.25 rand, giving the company a market value of 61 billion rand. Glencore fell 1.4 percent to 377 pence as of 4 p.m. in London.

--With assistance from Carli Lourens in Johannesburg. Editors: Antony Sguazzin, John Viljoen

To contact the reporters on this story: Chamwe Kaira in Windhoek at ckaira@bloomberg.net; Firat Kayakiran in London at fkayakiran@bloomberg.net; Jana Marais in Johannesburg at jmarais@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net; Antony Sguazzin at asguazzin@bloomberg.net


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