Bloomberg reported that Minmetals Resources Limited, backed by China's biggest metals trader, is transforming companies from Mirabela Nickel Limited to Alumina Limited into takeover targets as it eyes USD 7 billion of nickel, bauxite and alumina deals.

According to data compiled by Bloomberg, Minmetals, which agreed a month ago to buy copper producer Anvil Mining Limited after losing a bidding contest for Equinox Minerals Limited, is planning more takeovers. The Hong Kong listed mining company is turning to deal making with its own stock selling for less relative to earnings than any raw material producer in the world.

Mirabela, which controls the Santa Rita nickel mine in Brazil, and Alumina, which is an owner of the world’s biggest producer of the raw material, may attract interest from Minmetals. With the company’s earnings set to peak this year and the Anvil deal facing increased scrutiny from the Democratic Republic of Congo, Minmetals needs acquisitions to extend the life of its mines and boost valuations, according to Credit Suisse Group AG.

Mr John Stephenson, who helps manage USD 2.7 billion at First Asset Investment Management Inc, said that "Consummating a few of these would go a long way to closing that valuation gap. Minmetals' mines have relatively short mine lives. They definitely would be an acquirer and it would certainly help."

Source:Steelguru