The share of ferrous ores should on the other hand down from 74 to 56

After the recent resumption of Falconbridge by Xstrata, second great Canadian consolidation in base metals came to an end. Yesterday, the world leader of iron ore, the Brazilian Companhia Vale do Rio Doce (CVRD), has acquired 75,66 of the capital of the number two of the nickel, the Canadian Inco, corresponding to 174,62 million shares.

Once again, a generous and all cash offer met shareholders wishing to draw substantial profits in their shareholdings in mining groups. The transaction, which values the target to nearly 19 billion Canadian dollars (US $ 16.9 billion), has been extended until November 3 at midnight (Toronto time), to complete the collection of Inco shares.

Thus the proposal of CVRD 86 Canadian dollars by action of Inco has resulted, and without ongoing changes in road, less than two and a half months after his announcement, on 11 August. The speed of its success is both the failure of the three alternative combinations tempted by the management of the Canadian company first with only Falconbridge, a second with Falconbridge and American Phelps Dodge and a final with Phelps Dodge alone and strong industrial rationality of the regroupement initiated by CVRD. With Inco, the group led by Roger Agnelli, forty-seven years, is the richest proven and probable of nickel reserves in the world.

Quality of the purchased assets justifies granted price, said October 16 pattern of CVRD in New York, at a conference organized by the Nyse. "The return on investment, even by adopting a conservative point of view, should exceed the cost of capital," he added. Inco presents the Fed project portfolio in nickel, with including projects very advanced or already operational, but likely to extensions, Goro, in the South of New Caledonia, Voisley's Bay, the Canada and Pomalaa, Indonesia. Inco, States CVRD, is one of the producers of nickel to the cash the lowest costs (incorporating inputs of derivatives). The Brazilian the estimated $ 2.35 the book this year, withdrawal of 11.3 from one year to another.

To minimize risks and maximize synergies, CVRD recently submitted to Xstrata a proposal of collaboration in the Canadian mining basin of Sudbury. According to Roger Agnelli, the takeover of Inco causes positive consequences for the cost of capital because it allows a better diversification of the activities of CVRD as well in terms "of products, markets and geographical distribution of the assets." Which transposed in terms of the finances of the group, leads to a decrease in the risk and, there, financing costs.

Redistribution of assets

Will nickel have now for the fifth about income of CVRD and copper will be represented at 5. The share of ferrous ores, should on the other hand, down from 74 to 56.

The assets, now located at 98 at the Brazil, will be better distributed: 27 in North America, 5 Asian, 3 in Europe and 60 still in the Brazil. Through the acquisition of Inco, CVRD finally assumed a diversified mining group profile. However, the level of diversification of its portfolio of assets is not yet comparable to those of its direct competitors BHP Billiton, Rio Tinto and Xstrata. But the Brazilian is firmly committed to strengthening its global leadership position. It has the means.