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.
China’s SDIC Mining Investment Co. is in advanced talks for a significant minority stake in Asia Pacific Potash Corp., according to people familiar with the matter.
SDIC aims to acquire up to 49% of the company, which has exploration and production rights in northeast Thailand, from Italian-Thai Development Pcl, the people said, asking not to be identified discussing confidential information.
A deal could be worth at least $400 million and might be announced as soon as the coming weeks, the people said. No agreement has been finalized and talks could still fall apart, they said.
ITD, as Italian-Thai Development is known, Asia Pacific Potash and SDIC didn’t respond to requests for comment.
ITD shares jumped as much as 11%, the biggest gain in three weeks.
Bloomberg News reported in February that ITD was considering selling its 90% stake in Asia Pacific Potash and talking with potential buyers, including from China. In April, ITD’s executive vice president reaffirmed that talks were ongoing and asset sales would accelerate as the builder tries to repay debts.
While ITD is still one of Thailand’s biggest construction firms, its market value has tumbled to a little over $100 million from more than $1.5 billion less than 10 years ago. Net income for the first quarter was about 122 million baht ($3.4 million), down 60% from a year earlier, the company said last week.
After reporting a fourth-straight annual loss in March, ITD said it expected to get new loans and sell non-core assets to continue operations and address a liquidity crunch. Bondholders also approved two-year extensions of redemption dates in January. ITD’s total liabilities were 107 billion baht as of Dec. 31.
ITD acquired Asia Pacific Potash in 2006, giving it access to high-grade potash deposits in Thailand’s Udon Thani province, where it has annual production capacity of 2 million tons, according to its website.
SDIC Mining is a subsidiary of China’s State Development and Investment Corp., which invests in non-coal mineral resources and related industries.
(By Dong Cao, Elffie Chew and Anuchit Nguyen)
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