Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
A meagre 0.6% of private capital raised in 2015 for natural resource investment is destined for mining projects. Just two funds closed on $400 million in private investments for metals and mining last year according to data by industry tracker Preqin.
Investors aren’t necessarily staying away from mining assets because of a weak outlook. Of the $63 billion raised for natural resources more than 90% were going into oil and gas opportunities, which arguably have even worse fundamentals.
It’s not as if there isn’t enough quality and sizeable assets on sale from top names including Anglo American, Vale, Glencore and others.
The elephant in the room – Mick Davis’ X2 Resources – is still sitting on a $5.6 billion war chest stocked nearly two years ago now.
There’s been regular rumours about Canadian copper or Australian coal investments by X2 doing the rounds.
On Thursday, Bloomberg reported on another possible target for X2. This time its niobium and phosphate mines in Brazil put on the chopping block by Anglo.
“Anglo hired Goldman Sachs Group Inc. and Morgan Stanley to sell the assets as a package valued at $1 billion, and is expecting to receive bids next week, the people said, asking not to be identified because discussions are private.
“Anglo American, X2, Goldman Sachs and Morgan Stanley declined to comment.”
Niobium, a refractory metal used in alloys for jet engines and pipelines, was also the first investment made by Magris Resources, a private equity firm put together by former Barrick Gold CEO Aaron Regent. Magris picked up Iamgold’s Niobec operation in Quebec for $530 million a year ago.
Comments
Dowtfl
Eh? U must be kidding?