Iron ore giant Rio Tinto recently announced that it plans to acquire Australia's coke coal producer Riversdale Mining Ltd. (RML) for A$3.9 billion (RMB 25.7 billion) at a price of AU$16 per share. RML has abundant coking coal resources in Mozambique, Africa. In addition to Rio Tinto, many other international mining giants have expressed interest in acquiring RML. Although China’s WISCO has already begun plans to invest in RML, it is likely to fail in the face of many powerful enemies. Some people in the steel industry are worried that multinational companies such as Rio Tinto will launch a coal mining war in the context of China's rapid growth in coking coal imports, which will aggravate the monopoly trend in the international coking coal market. Coking coal will become another bottleneck restricting the development of China's steel industry after iron ore.
Competing for international giants to buy coking coal
RML has two coal mine projects in Benedict and Zambisi in Mozambique, with a total of 13 billion tons of coking coal and thermal coal reserves.
As early as December 6, RML had announced that Rio Tinto had offered the company a price of about 15 Australian dollars per share, with a total purchase price of A$3.5 billion. After the announcement of the news, the outside world believes that the offer is low, and does not rule out the possibility that other bidders will increase bidding. Sure enough, in less than 20 days, Rio Tinto gave a new offer, an increase of 6.67%.
According to industry analysts, Rio Tinto raised its offer price to A$16 per share in a short period of time, indicating that its acquisition determination and confidence are sufficient.
Rio Tinto said the offer has a 46% premium to RML's one-month weighted average share price as of November 3, and a 24% premium to the one-month weighted average share price as of December 3. Amplitude.
But Rio Tinto's acquisition of RML is not without resistance. It is understood that in order to reach a final acquisition, Rio Tinto needs to be recognized by half of the shareholders of RML.
The RML Board of Directors has decided to recommend this takeover offer to shareholders. Riversdale's major shareholders are Indian steel giant Tata Group, Brazilian steel company CSN and US fund Passport Capital, holding 24%, 16% and 16% respectively. This means that to reach a definitive agreement, at least one of the three major shareholders is required to support the sale of RML to Rio Tinto. Some media reports said that the Tata Group has indicated that it will support the international giants to acquire RML, but has not yet indicated whether to participate in the bidding.
Industry insiders said that Rio Tinto may need to continue to raise the offer. Rio Tinto's current offer is equivalent to the average price of the Australian coal industry merger this year, and there is room for price increases. Tata Group may not be able to participate in the bid due to excessive debt, but the US fund Passport Capital may also be a potential seller, but Its target price may be approximately AU$20 per share.
It is reported that Rio Tinto is also facing a lot of strong bidders. According to foreign media reports, in addition to Rio Tinto, many international mining giants have expressed interest in acquisitions, such as the world's largest steel company ArcelorMittal, Xstrata Mining Group, Anglo American and Brazil Vale.
India's state-owned enterprise International Coal Mine Investment Co., Ltd. is one of the most highly sought-after bidders. The company consists of five state-owned companies, including the Indian Steel Authority Ltd., the Indian National Thermal Power Company and the Indian National Mining Corporation. It is quite strong and aims to develop overseas resources to secure coal supply in India. It is reported that the company has hired Citibank as a financial advisor, and Citi will decide whether to bid after completing the due diligence.
Bottleneck domestic coking coal supply suffers multiple threats
Coking coal is mainly used for the production of coke, coke and iron ore and is listed as the two major raw materials for steelmaking. It is understood that coking coal accounts for less than 10% of China's total coal resources reserves. In recent years, China's coking coal supply has been affected by factors such as resource integration and safety production requirements, and import demand is increasing. The reporter learned that China's coking coal imports increased by 402% last year, reaching 34.4 million tons, becoming a net importer.
It is worth noting that the current monopoly trend in the global coking coal market is already very obvious. BHP Billiton, Rio Tinto, Xstrata Mining Group, Anglo American and Turk Resources, the world's top five coking coal suppliers, have accounted for more than half of the international coking coal market. Some analysts pointed out that Rio Tinto or other mining giants will undoubtedly aggravate this monopoly once they successfully acquire RML. Coking coal will become another bottleneck restricting the development of China's steel industry after iron ore.
A person from a steel mill admitted to the reporter that half of the ton of iron in one ton of iron is coke, and that of coke from 1.4 to 1.6 tons can be converted into one ton of coke. In addition to the shortage of iron ore, the shortage of coking coal resources has begun to worry them, especially high-quality coking coal, which is likely to become the next resource bottleneck restricting the development of China's steel industry after iron ore.
Xu Xiangchun, director of information on steel mesh, told reporters that with the acceleration of the large-scale blast furnace in steel mills, it is necessary to increase the demand for high-quality coking coal. Although China has abundant coal resources, the quality of coking is very different. Except for some high-quality coking coal in Shanxi, China's high-quality main coking coal and fat coal resources are still relatively scarce.
“The import of coking coal last year was more than 30 million tons, and this year has reached nearly 50 million tons.†Xu Xiangchun said that among the sources of coking coal imported from China, Australia, which also has rich iron ore resources, is the most important supplier.
Compared with the iron ore situation, the international coking coal pricing model has also shifted from annual pricing to quarterly pricing, with the increasing role of international giant monopoly and market demand driving price increases. The reporter learned that Australian coking coal supplier BHP Billiton Mitsubishi Alliance has just reached an agreement with Japanese steel mills. The contract price of high quality hard coking coal in the first quarter of 2011 was US$225/tonne (FOB), compared with US$209/ton in the fourth quarter of this year (FOB). ) It was raised by US$16/ton, an increase of nearly 8%.
In addition, the competition from India in the coking coal market cannot be ignored. It is expected that with the rapid development of the Indian steel industry, India's coking coal imports are expected to reach 40 million tons in 2011. International coking coal prices may rise by 20%, supported by strong demand in countries such as China and India.
Xu Xiangchun told reporters that despite the rapid growth of coking coal imports and the trend of further growth, it should be objectively observed that China's coking coal import dependence is still less than 10%, and there is still a big gap compared with iron ore import dependence of 70%. Imported high quality coking coal only serves as a supplement. As long as the Chinese steel mills have long-term plans and calmly responded, in the short term, they will not blindly invest in overseas investment and procurement, and coke supply will not follow the iron ore supply.
Countermeasures Domestic steel enterprises need to speed up the allocation of overseas resources
"The space for the price increase of coking coal is still very large." An industry insider who did not want to be named told the "Economic Information Daily" reporter that on the one hand, the increase in China's coking coal import demand is bound to promote the international coking coal price increase, plus coking coal. The monopoly is intensifying, and coking coal will also appear as easy to rise and fall like iron ore. On the other hand, the rise in international prices will also boost domestic coking coal prices, further increasing the cost pressure on steel mills.
Xu Xiangchun believes that in order to guarantee the coking coal supply of Chinese steel companies, China should speed up the development of high-quality coking coal in Shanxi and other places, and the steel industry should also carry out upstream expansion of coal resources in addition to restructuring.
It is understood that some domestic steel companies have recognized the importance of securing coking coal supply, and also saw the value of high-quality coking coal, and began to cooperate with coking coal enterprises. Shanxi Coking Coal has jointly established Shanxi Coal and Steel Energy Development Co., Ltd. with Taigang Group. In addition, Chinalco and Rio Tinto established a joint venture exploration company on December 3, and the two parties will jointly carry out mineral exploration business in China, and copper and coking coal resources will become the first choice.
In June this year, WISCO and RML signed a non-binding memorandum of understanding. WISCO will acquire an 8% stake in RML at a price of AUD 10 per share, while WISCO will also own a 40% stake in Zambezi Coal Mine. The right to buy at least 10% of the coking coal reserves of the Benxi Coal Mine owned by RML, with a total investment of 800 million US dollars.
It is understood that in the second week of Rio Tinto's proposed acquisition, WISCO sent people to RML for face-to-face communication, hoping to continue the previous agreement with RML. However, WISCO's offer of about 10 Australian dollars per share is very different from Rio Tinto's offer, and the cost of continuing to participate in the auction will be high. It is very difficult for WISCO's acquisition to achieve ultimate success.
Industry experts suggest that Chinese steel companies should also accelerate the overseas distribution of coking coal resources. In the process of overseas acquisitions, we should also use capital operation methods, cooperate with banks and resource importers to establish a comprehensive trading company, and at the same time choose a good time and quality team to operate, avoiding the experience in the bidding process, because of experience Insufficient makes other mining giants “organic to take advantage ofâ€. (Reporter Wang Wei Yang Wei)
Competing for international giants to buy coking coal
RML has two coal mine projects in Benedict and Zambisi in Mozambique, with a total of 13 billion tons of coking coal and thermal coal reserves.
As early as December 6, RML had announced that Rio Tinto had offered the company a price of about 15 Australian dollars per share, with a total purchase price of A$3.5 billion. After the announcement of the news, the outside world believes that the offer is low, and does not rule out the possibility that other bidders will increase bidding. Sure enough, in less than 20 days, Rio Tinto gave a new offer, an increase of 6.67%.
According to industry analysts, Rio Tinto raised its offer price to A$16 per share in a short period of time, indicating that its acquisition determination and confidence are sufficient.
Rio Tinto said the offer has a 46% premium to RML's one-month weighted average share price as of November 3, and a 24% premium to the one-month weighted average share price as of December 3. Amplitude.
But Rio Tinto's acquisition of RML is not without resistance. It is understood that in order to reach a final acquisition, Rio Tinto needs to be recognized by half of the shareholders of RML.
The RML Board of Directors has decided to recommend this takeover offer to shareholders. Riversdale's major shareholders are Indian steel giant Tata Group, Brazilian steel company CSN and US fund Passport Capital, holding 24%, 16% and 16% respectively. This means that to reach a definitive agreement, at least one of the three major shareholders is required to support the sale of RML to Rio Tinto. Some media reports said that the Tata Group has indicated that it will support the international giants to acquire RML, but has not yet indicated whether to participate in the bidding.
Industry insiders said that Rio Tinto may need to continue to raise the offer. Rio Tinto's current offer is equivalent to the average price of the Australian coal industry merger this year, and there is room for price increases. Tata Group may not be able to participate in the bid due to excessive debt, but the US fund Passport Capital may also be a potential seller, but Its target price may be approximately AU$20 per share.
It is reported that Rio Tinto is also facing a lot of strong bidders. According to foreign media reports, in addition to Rio Tinto, many international mining giants have expressed interest in acquisitions, such as the world's largest steel company ArcelorMittal, Xstrata Mining Group, Anglo American and Brazil Vale.
India's state-owned enterprise International Coal Mine Investment Co., Ltd. is one of the most highly sought-after bidders. The company consists of five state-owned companies, including the Indian Steel Authority Ltd., the Indian National Thermal Power Company and the Indian National Mining Corporation. It is quite strong and aims to develop overseas resources to secure coal supply in India. It is reported that the company has hired Citibank as a financial advisor, and Citi will decide whether to bid after completing the due diligence.
Bottleneck domestic coking coal supply suffers multiple threats
Coking coal is mainly used for the production of coke, coke and iron ore and is listed as the two major raw materials for steelmaking. It is understood that coking coal accounts for less than 10% of China's total coal resources reserves. In recent years, China's coking coal supply has been affected by factors such as resource integration and safety production requirements, and import demand is increasing. The reporter learned that China's coking coal imports increased by 402% last year, reaching 34.4 million tons, becoming a net importer.
It is worth noting that the current monopoly trend in the global coking coal market is already very obvious. BHP Billiton, Rio Tinto, Xstrata Mining Group, Anglo American and Turk Resources, the world's top five coking coal suppliers, have accounted for more than half of the international coking coal market. Some analysts pointed out that Rio Tinto or other mining giants will undoubtedly aggravate this monopoly once they successfully acquire RML. Coking coal will become another bottleneck restricting the development of China's steel industry after iron ore.
A person from a steel mill admitted to the reporter that half of the ton of iron in one ton of iron is coke, and that of coke from 1.4 to 1.6 tons can be converted into one ton of coke. In addition to the shortage of iron ore, the shortage of coking coal resources has begun to worry them, especially high-quality coking coal, which is likely to become the next resource bottleneck restricting the development of China's steel industry after iron ore.
Xu Xiangchun, director of information on steel mesh, told reporters that with the acceleration of the large-scale blast furnace in steel mills, it is necessary to increase the demand for high-quality coking coal. Although China has abundant coal resources, the quality of coking is very different. Except for some high-quality coking coal in Shanxi, China's high-quality main coking coal and fat coal resources are still relatively scarce.
“The import of coking coal last year was more than 30 million tons, and this year has reached nearly 50 million tons.†Xu Xiangchun said that among the sources of coking coal imported from China, Australia, which also has rich iron ore resources, is the most important supplier.
Compared with the iron ore situation, the international coking coal pricing model has also shifted from annual pricing to quarterly pricing, with the increasing role of international giant monopoly and market demand driving price increases. The reporter learned that Australian coking coal supplier BHP Billiton Mitsubishi Alliance has just reached an agreement with Japanese steel mills. The contract price of high quality hard coking coal in the first quarter of 2011 was US$225/tonne (FOB), compared with US$209/ton in the fourth quarter of this year (FOB). ) It was raised by US$16/ton, an increase of nearly 8%.
In addition, the competition from India in the coking coal market cannot be ignored. It is expected that with the rapid development of the Indian steel industry, India's coking coal imports are expected to reach 40 million tons in 2011. International coking coal prices may rise by 20%, supported by strong demand in countries such as China and India.
Xu Xiangchun told reporters that despite the rapid growth of coking coal imports and the trend of further growth, it should be objectively observed that China's coking coal import dependence is still less than 10%, and there is still a big gap compared with iron ore import dependence of 70%. Imported high quality coking coal only serves as a supplement. As long as the Chinese steel mills have long-term plans and calmly responded, in the short term, they will not blindly invest in overseas investment and procurement, and coke supply will not follow the iron ore supply.
Countermeasures Domestic steel enterprises need to speed up the allocation of overseas resources
"The space for the price increase of coking coal is still very large." An industry insider who did not want to be named told the "Economic Information Daily" reporter that on the one hand, the increase in China's coking coal import demand is bound to promote the international coking coal price increase, plus coking coal. The monopoly is intensifying, and coking coal will also appear as easy to rise and fall like iron ore. On the other hand, the rise in international prices will also boost domestic coking coal prices, further increasing the cost pressure on steel mills.
Xu Xiangchun believes that in order to guarantee the coking coal supply of Chinese steel companies, China should speed up the development of high-quality coking coal in Shanxi and other places, and the steel industry should also carry out upstream expansion of coal resources in addition to restructuring.
It is understood that some domestic steel companies have recognized the importance of securing coking coal supply, and also saw the value of high-quality coking coal, and began to cooperate with coking coal enterprises. Shanxi Coking Coal has jointly established Shanxi Coal and Steel Energy Development Co., Ltd. with Taigang Group. In addition, Chinalco and Rio Tinto established a joint venture exploration company on December 3, and the two parties will jointly carry out mineral exploration business in China, and copper and coking coal resources will become the first choice.
In June this year, WISCO and RML signed a non-binding memorandum of understanding. WISCO will acquire an 8% stake in RML at a price of AUD 10 per share, while WISCO will also own a 40% stake in Zambezi Coal Mine. The right to buy at least 10% of the coking coal reserves of the Benxi Coal Mine owned by RML, with a total investment of 800 million US dollars.
It is understood that in the second week of Rio Tinto's proposed acquisition, WISCO sent people to RML for face-to-face communication, hoping to continue the previous agreement with RML. However, WISCO's offer of about 10 Australian dollars per share is very different from Rio Tinto's offer, and the cost of continuing to participate in the auction will be high. It is very difficult for WISCO's acquisition to achieve ultimate success.
Industry experts suggest that Chinese steel companies should also accelerate the overseas distribution of coking coal resources. In the process of overseas acquisitions, we should also use capital operation methods, cooperate with banks and resource importers to establish a comprehensive trading company, and at the same time choose a good time and quality team to operate, avoiding the experience in the bidding process, because of experience Insufficient makes other mining giants “organic to take advantage ofâ€. (Reporter Wang Wei Yang Wei)
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