Bloomberg News

Esteves-Agnelli Venture Targets Copper as Timing Perfect

October 24, 2012

B&A Mineracao SA, the mining venture between Andre Esteves’s BTG Pactual SA and former Vale SA (VALE3) Chief Executive Officer Roger Agnelli, said it’s seeking to raise its stake in a Latin American copper explorer as a slump in metals prices makes it a “perfect” time for acquisitions.

B&A wants to gain control of Cuprum Resources Corp., a closely held company with assets in Chile, by year-end, CEO Eduardo Ledsham said in an interview. B&A is undergoing five other due diligence processes for potential acquisitions as it seeks to expand in metals, fertilizers and logistics, he said.

“We have the advantage of looking for opportunities at a moment when those in the development phase are lacking resources,” Ledsham, 50, said yesterday from Sao Paulo. “We have a strong acquisition drive in advanced projects.”

Acquisitions of Latin American mining companies worth $3.77 billion have been announced this year, less than half the $8.03 billion of deals in the same year-ago period, according to data compiled by Bloomberg. The average deal size shrank to $85.7 million from $109 million after global metal prices fell for the first time in three years last year, the data show. The pace has picked up in the past three months with 26 deals worth a combined $2.45 billion announced compared with 14 totaling $318 million in the prior three months, the data show.

Tough Conditions

Manabi SA, backed by Ontario Teachers’ Pension Plan, canceled in August plans to become the first Brazilian iron-ore company to go public since 2006, citing “economic uncertainties” in the international and domestic markets.

Mining asset prices have declined as exploration and pre- operational companies face tougher conditions to access financing amid the European debt crisis and declining metal prices, said Ledsham, a former executive director at Vale.

Prices are now “much more” reasonable than six months ago, he said. “The crisis brought assets prices back to reality.”

Prices of iron ore, Brazil’s main export, slid 16 percent in the past year and reached a three-year low on Sept. 5 as economic growth slowed in China, the world’s biggest consumer. Nickel prices declined about 18 percent in the same period.

‘Scanning Brazil’

B&A was started in July to invest as much as $520 million in projects including copper, iron ore, phosphate and titanium in Latin America and Africa. BTG Pactual, the investment bank controlled by Brazilian billionaire Esteves that went public this year, and AGN Agroindustrial, Projetos & Participacoes Ltda, a company controlled by Agnelli, each hold 50 percent.

Cuprum, in which B&A has a 30 percent stake, is expected to start production in December 2013 at an annual rate of about 15,000 metric tons of copper, Ledsham said. The company plans to add neighboring mines to take output to 200,000 tons “in the mid term,” he said.

“We are looking at a way to have control of the company this year,” Ledsham said. “We are analyzing all the opportunities, we are scanning Brazil as a whole,” he said, describing conditions for acquiring assets as “perfect.”

Canada Buys

B&A said Sept. 13 that it bought 11.5 percent of Toronto- based MBAC Fertilizer Corp. (MBC), which has phosphate, potash and rare-earth projects in Brazil. That follows the purchase of 29.8 percent of Rio Verde Minerals Development Corp. (RVD), also based in Toronto, which is developing a potash project in the Brazilian state of Sergipe.

The company is studying “the best strategies” for these investments, Ledsham said when asked if B&A could boost its stakes in the Canadian companies.

About 60 percent of B&A’s 20-person workforce are former officials of Rio de Janeiro-based Vale, the world’s largest iron-ore producer, Ledsham said.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net


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