Having just completed a second visit to China in the last month, I can state that demand for commodities does not seem to be slowing. The mining industry remains in great shape, although it is fair to say that smaller miners are probably finding it tougher to raise debt and equity than would have been the case twelve months ago. This aside, all systems are go.
The start of consolidation amongst the major miners has been the most talked about item. BHP Billiton formalised a takeover bid for Rio Tinto; however, it has many regulatory hurdles to negotiate before it will really be “live”. Already the acquisition of a 9% stake in Rio by Chinalco and Alcoa highlights that there will probably be many twists and turns in this potentially industry-transforming transaction. The other big potential deal was going to be between Vale and Xstrata, however, this seems to be dead, at least for the moment.
These events provided a perfect backdrop for the release of our inaugural Mining Deals publication. This document, which is the subject of the first story in this newsletter, examines the deals announced and completed in 2007 and compares them to 2006 and 2005. It will be no surprise that 2007 saw a record number of deals and a record value for deals. Indeed we also saw the largest ever transaction when Rio Tinto bought Alcan. The outlook for 2008 is even brighter, and there is every reason to believe that the records set in 2007 will be surpassed.
In the Performance Improvement corner, we examine Cascading KPIs and, in particular, how they can assist in pinpointing assets that are not performing to expectations.
We recently released our TSX Ventures Junior Mine* report which outlines the performance of companies listed on that exchange. An outline of that publication is set out below. It is the second of our 2008 junior mine series, following the AIM report we released earlier in the year. The trilogy will be complete in the next month with the release of Aussie Mine*. We are also in the process of preparing Mine* which looks at the performance of the Global Top 40 miners. More will be said on these two publications in the next Global Mine* Bulletin.
Finally in our geographic spotlight, we look at how events are unfolding in Indonesia and Papua New Guinea. Both locations have seen little investment in exploration over the last decade, but are changing rapidly.
I trust you find this newsletter of interest. We welcome any feedback on this issue or thoughts for future items to be covered.
Tim Goldsmith
Global Mining Leader
