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.
Bloomberg reports the London Metal Exchange which handles some 80% of global trade in industrial metals futures, told members it may get a takeover offer after multiple approaches from potential bidders.
The 134-year-old exchange is owned by the trading houses and banks like Barclays and JP Morgan that trade on the market which keeps fees low. Despite talk of an $1.2 billion offer as far back as 2008, it is unclear how receptive they would be to selling out after a senior executive of the exchange told Reuters in March it had no plans to change its independent status despite increasing competition, particularly in Asia.
Bloomberg reports the LME is facing increased competition from other exchanges. Trading in contracts such as copper, aluminum and gold on the Shanghai Futures Exchange climbed 43 percent last year compared with the 7.4 percent jump on the LME. The LME started so-called mini-contracts in copper, aluminum and zinc in Singapore in February to take advantage of more demand in Asia.
Reuters has a list of recent mergers with the February acquisition by Deutsche Boerse AG of NYSE Euronext in a deal worth $9 billion the biggest of the year, although it still has to be finalized. Chicago Mercantile Exchange Holdings is the world’s largest publicly traded exchange by market capitalization and the world’s largest derivatives exchange. It bought Chicago rival CBOT for more than $11 billion in 2007.
