Vallar eyes acquisitions to follow Asian deal

The Business of Mining - thebusinessofmining.com | January 5, 2011 | 11:35 am Energy Coal 

“Vallar, the London-listed cash shell founded by financier Nat Rothschild, is looking at acquisitions of coal assets in North America and Australia worth up to $1bn (£646m) as it seeks to bolster its aspirations to join the FTSE 100. Vallar is set to be transformed this month under a complex deal that will see it become a vehicle for Indonesia’s powerful Bakrie and Roeslani families in order to list their interests in London.


Vallar is currently looking at a coal mine in Mongolia as well as coal assets in Australia and North America, although the latter two regions are seen as more probable targets. ‘[Vallar] is in the market for a $1bn business in a western economy so Australia and America is more likely [than Mongolia],’ said the person.”

Source: Financial Times, January 3 2011

Observations:

  • Shortly after setting up Vallar Rothschild and Campbell, a former Anglo American coal executive, managed to combine the forces of two major Indonesian coal mining companies into Bumi plc, in which Vallar holds a 32% share.
  • The North American coal market is experiencing a wave of consolidation, with small and medium sized miners either merging or being acquired by larger firms that hope to realize synergies in management, transportation, and taxes.

Implications:

  • Vallar arises as the key challenger of Xstrata as the world’s primary western coal miner. Its founders manage to manoeuver the international financial and political arena smartly, aligning the interests of Chinese financiers, producers with Vallar’s ambitions. However, success of the venture will depend on the ability of the team to improve the performance of the Indonesian assets enough to justify the price paid.

©2011 | Wilfred Visser | thebusinessofmining.com

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