Mining Week 43/’11: Uncertainty in Indonesia
October 23, 2011
Top Stories of the Week:
- Freeport McMoran faces strikes in Indonesia
- Rio Tinto sells aluminium, buys uranium
- Rio Tinto plans to spin off 13 of its smaller aluminium assets for an estimated $8bln. The company wants to focus its attention on top tier assets.
- Sources: Rio Tinto press release; Wall Street Journal; Financial Times
- Rio Tinto buys Hathor Exploration, a uranium exploration business active in Canada, for over $500mln. Key asset of Hathor is Saskatchewan’s Roughrider deposit.
- Sources: Rio Tinto press release; Wall Street Journal; Bloomberg BusinessWeek
- BHP shops for iron ore in Brazil
Trends & Implications:
- Freeport’s social troubles in Indonesia are the latest labor issue in a rise of labor unrest in the latest year after years of relatively peace in the industry. The unrest mainly affects copper producers, which have seen profits rise with high copper prices, but did not want to increase worker’s compensation too much to secure long term competitiveness.
- The large diversified miners are increasingly focusing their attention on a limited number of extremely large operations, divesting smaller operations. With the spending power of the ‘mining supermajors’ a divide seems to open between the few operators of the world’s key supply areas and the many operators of a range of smaller operations.
- Rio Tinto might face challenges selling the unwanted aluminium assets in one package. Very few companies are able to do acquisitions worth over $7bln, and many of the companies that have the spending power might face antitrust limitations.
©2011 | Wilfred Visser | thebusinessofmining.com