BHP, Vale May Lead New Wave of Acquisitions, Citigroup Says By...

BHP, Vale May Lead New Wave of Acquisitions, Citigroup Says
By Rebecca Keenan

March 25 (Bloomberg) -- BHP Billiton Ltd., Vale SA and Newmont Mining Corp. are among companies that may make acquisitions this year as revived metal prices buoy finances, Citigroup Inc. said.

With replenished balance sheets, burgeoning cash stockpiles, limited growth options and rising capex costs we believe another wave of mergers and acquisitions activity is upon the mining sector, Citigroup analysts led by Craig Sainsbury said in a report dated yesterday.

The value of mining mergers and acquisitions may more than double this year, as China and India seek to secure supplies of raw materials, Mike Elliot, mining and metals leader at Ernst & Young LLP said in a Feb. 16 interview. Metal prices rose 43 percent in the second half of last year and companies can resume spending, Citigroup said.

Mining companies may have $91.3 billion of surplus cash, after paying dividends and capital expenditure, by 2012, according to Citigroup.

The most likely companies to be targeted by acquisitions include Medusa Mining Ltd., Riversdale Mining Ltd., Kumba Iron Ore Ltd., Cliffs Natural Resources Inc. and Whitehaven Coal Ltd., Citigroup said.

Xstrata Plc. and Anglo American Plc. may be susceptible to bids from one of the large mining companies, it said.

Fushan International Energy Group Ltd., Hidili Industry International Development Ltd., Vale, Barrick Gold Corp., Newmont and BHP are the most likely to make an acquisition, it said.

In the past decade there were 605 mining deals valued at $515 billion, Citigroup said.



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