Anglo to buy more mine assets

LONDON – The world’s third biggest mining group, Anglo American, will expand production and buy more assets to meet strong demand for raw materials from China and India, its chairman said on Monday.

Anglo, traditionally more conservative than sector peers such as Xstrata, said that in a rapidly consolidating mining sector, it would be a buyer rather than one of the companies that are bought. “I see us as an acquirer of things,” Mark Moody-Stuart told Reuters.”We will continue to selectively acquire.It’s not easy to find things which are value-adding at present stock prices.”Anglo had recently beaten off stiff competition to win the concession for a copper project in Peru and had agreed to spend $1,15 billion on a Brazilian iron ore project.Earlier this month, the firm said it planned to inject $3.5 billion of new investment into Africa in the next five years.Recent market talk has put Anglo in the sights of acquisitive Brazilian miner CVRD, but Moody-Stuart said the company had received no offers from prospective buyers.Consolidation should not itself contribute to high prices for what miners produced, he said.”Prices come from very strong demand growth.Consolidation should if anything allow efficiencies which should allow more rapid expansion,” he told Reuters on the sidelines of a conference about the role of business in society.”It is true strongly consolidated markets tend to have more stable prices, but I don’t think the regulator would allow consolidation beyond a reasonable point, for example in iron ore.You couldn’t see consolidation between any of the big players, it wouldn’t be allowed.”CVRD, BHP Billiton and Rio Tinto dominate the seaborne iron ore market.Anglo was in fourth place, Moody-Stuart said, and was trying to grow.The firm was continuing with its strategy of concentrating on its core mining operations, he said.Market talk has identified building materials firm Tarmac as one of the businesses it may look to sell.”Our chief executive is on record as saying she thinks there is significant work to be done in Tarmac that can add value,” Moody-Stuart said.”Then it will be looked at in the framework of all our businesses, what else we’re doing and what else we might be acquiring.”Anglo American would also continue to sell its stake in gold miner AngloGold Ashanti.Last year, it raised $1 billion by cutting its stake to 42 from 51 per cent as part of a phased exit strategy.”We are selling down,” he said.”We don’t have a target of retaining something.”Recent jitters in global financial markets caused by fears of rising interest rates had not dented the underlying strength of commodities prices, he said.”They are relatively short-term disturbances.If there were more major setbacks in the US it could have a spin-off effect on China, but we are still very positive on growth in China and India and other developing countries.”At its current price of around $7 500 per tonne, benchmark industrial metal copper is more than $1 000 below the peak it hit last year, but still in excess of double its price two years ago.”I think we are going to see quite strong prices for the next couple of years or so,” Moody-Stuart said.”The challenge for the mining industry is always, ‘what are your long-term price assumptions?’.”Miners would be unwise to assume metals prices would stay around recent levels indefinitely.”Clearly long-term price assumptions are well below current price assumptions.The cost of investing at the moment – construction costs, contracting costs – are very high.You don’t want to build in unnecessarily high costs.It’s a question of efficiency of investment.”Nampa-Reuters”I see us as an acquirer of things,” Mark Moody-Stuart told Reuters.”We will continue to selectively acquire.It’s not easy to find things which are value-adding at present stock prices.”Anglo had recently beaten off stiff competition to win the concession for a copper project in Peru and had agreed to spend $1,15 billion on a Brazilian iron ore project.Earlier this month, the firm said it planned to inject $3.5 billion of new investment into Africa in the next five years.Recent market talk has put Anglo in the sights of acquisitive Brazilian miner CVRD, but Moody-Stuart said the company had received no offers from prospective buyers.Consolidation should not itself contribute to high prices for what miners produced, he said.”Prices come from very strong demand growth.Consolidation should if anything allow efficiencies which should allow more rapid expansion,” he told Reuters on the sidelines of a conference about the role of business in society.”It is true strongly consolidated markets tend to have more stable prices, but I don’t think the regulator would allow consolidation beyond a reasonable point, for example in iron ore.You couldn’t see consolidation between any of the big players, it wouldn’t be allowed.”CVRD, BHP Billiton and Rio Tinto dominate the seaborne iron ore market.Anglo was in fourth place, Moody-Stuart said, and was trying to grow.The firm was continuing with its strategy of concentrating on its core mining operations, he said.Market talk has identified building materials firm Tarmac as one of the businesses it may look to sell.”Our chief executive is on record as saying she thinks there is significant work to be done in Tarmac that can add value,” Moody-Stuart said.”Then it will be looked at in the framework of all our businesses, what else we’re doing and what else we might be acquiring.”Anglo American would also continue to sell its stake in gold miner AngloGold Ashanti.Last year, it raised $1 billion by cutting its stake to 42 from 51 per cent as part of a phased exit strategy.”We are selling down,” he said.”We don’t have a target of retaining something.”Recent jitters in global financial markets caused by fears of rising interest rates had not dented the underlying strength of commodities prices, he said.”They are relatively short-term disturbances.If there were more major setbacks in the US it could have a spin-off effect on China, but we are still very positive on growth in China and India and other developing countries.”At its current price of around $7 500 per tonne, benchmark industrial metal copper is more than $1 000 below the peak it hit last year, but still in excess of double its price two years ago.”I think we are going to see quite strong prices for the next couple of years or so,” Moody-Stuart said.”The challenge for the mining industry is always, ‘what are your long-term price assumptions?’.”Miners would be unwise to assume metals prices would stay around recent levels indefinitely.”Clearly long-term price assumptions are well below current price assumptions.The cost of investing at the moment – construction costs, contracting costs – are very high.You don’t want to build in unnecessarily high costs.It’s a question of efficiency of investment.”Nampa-Reuters