Anglo May Pay $5.5 Billion for MMX Iron-Ore Assets

Anglo May Pay $5.5 Billion for MMX Iron-Ore Assets

Jan. 17 (Bloomberg) -- Anglo American Plc, the world's second-largest mining company, may pay $5.5 billion for assets from Brazilian iron-ore producer MMX Mineracao e Metalicos SA to help it supply the needs of China's booming economy.

Anglo is in discussions with Eike Batista, the controlling shareholder in Rio de Janeiro-based MMX, Anglo said today in a statement distributed by the Regulatory News Service. A new company, in which Batista currently has a 64 percent stake, will be demerged from MMX and acquired by Anglo for $361.25 a share, London-based Anglo said.

The acquisition underscores Anglo's strategy to cut its dependence on precious metals and focus on industrial commodities needed by China, the world's fastest-growing major economy. Cynthia Carroll, who became Anglo's chief executive officer in March, has sold gold, steel and paper assets and expanded in copper and iron ore to better compete with BHP Billiton Ltd., the world's largest miner.

``With resource companies making acquisitions at the top of the cycle it's very hard not to overpay,'' said Wayne McCurrie, who helps manage the equivalent of $12 billion at Momentum Group Ltd. in Johannesburg including Anglo shares. ``We are at the very top.''

In April, Anglo paid MMX and Centennial Asset Mining Fund LLC, a London-based investor, $1.15 billion for 49 percent of the Minas-Rio iron-ore project. Minas-Rio's $2.35 billion first phase will yield 26.5 million metric tons a year from the end of 2009.

Prices Triple

Contract iron-ore prices have tripled in the past five years on increased demand from China and may rise by 50 percent next year, Lehman Brothers Holdings Inc. said last month. China is the largest consumer of the steelmaking raw material. Anglo owns 65 percent of Kumba Iron Ore Ltd., Africa's largest iron- ore producer.

Anglo agreed in August to spend $1.43 billion to develop the Pebble copper deposit in Alaska in a venture with Northern Dynasty Minerals Ltd. In November, it announced a $1.7 billion expansion of its Los Bronces copper mine in Chile, and in June paid $400 million for the right to develop the Michiquillay copper deposit in Peru.

BLOOMBERG