Brazils CVRD wins Canadas Inco to create top world nickel miner

Brazils CVRD wins Canadas Inco to create top world nickel miner

Brazilian mining giant CVRD said it had won control of Canadian group Inco, creating the world’s second-biggest mining concern and the biggest nickel miner in a 15.8-billion-dollar deal.

The announcement appeared to seal CVRD’s bid for Inco and came as big mining companies seek fresh supplies in a global contest over precious metals.

Companhia Vale do Rio Doce (CVRD) said it had acquired 75.66 percent of Inco’s shares at 86 Canadian dollars (76.90 US dollars) per share under the terms of its offer.

In addition, CVRD “intends to take steps to acquire the remaining Inco common shares,” it said in a statement.

In September, Inco Limited, the world’s second-biggest nickel mining company, pulled out of a plan to merge with US mining behemoth Phelps Dodge so it could continue talks with CVRD.

On August 14, CVRD made a hostile bid for Inco worth about 17.5 billion Canadian dollars (15.8 billion US), after Vancouver-based Teck Cominco abandoned its bid for Inco, and Inco lost a tussle with Anglo-Swiss firm Xstrata for Canadian rival Falconbridge in July.

The 104-year-old Inco had planned earlier this year to merge with Falconbridge and Phelps Dodge to forge the world’s largest nickel and copper producer.

Inco chief executive Scott Hand welcomed the merger Tuesday, saying in a statement that Inco’s board and management believe the combination “presents a great opportunity to create value.”

“We plan to assist CVRD in every way we can to ensure a smooth integration of our two companies, to create a new global leader in the metals and mining industry,” Hand said.

CVRD noted in its statement that it would extend the expiration date for its offer until midnight on November 3 “in order to provide Inco security holders who have not yet accepted the offer with the opportunity to analyze and accept the offer.”

It added that it will “seek to reconstitute the Inco board of directors and to de-list the shares from the
New York Stock Exchange as promptly as practicable, and, upon meeting the relevant requirements, from the Toronto Stock Exchange.”

Inco reported its highest-ever earnings earlier this month, with earnings on an adjusted basis for the third quarter amounting to more than four times those for the third quarter of 2005.

CVRD promised to boost investments in exploration, research and development in Canada over three years in order to help reinforce CVRD Inco’s position as a leader on the nickel market.

It also vowed to adhere to the strictest environmental standards.

One of the greatest challenges CVRD faces will be to launch production at the major Goro nickel mine starting next year. The 2.15-billion-dollar mine will be capable of producing some 60,000 tonnes of nickel a year, representing 4.5 percent of the world’s projected production for 2006.

Share this post