Xstrata lines up bid for Australian coal miner

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The Independent Online

Xstrata, the acquisitive Anglo-Swiss resources group, looks set to launch a bid for Australian miner Macarthur Coal, which has already rejected two offers of A$3.5bn.

Macarthur said yesterday that Xstrata had sounded out a number of its shareholders. The group also postponed a shareholders’ meeting where it had hoped to get approval for its own bid for Gloucester Coal, giving investors the opportunity to consider bids from Peabody, the US coal mining giant, and local rival New Hope.

“Macarthur advises that it has become aware that an investment bank representing Xstrata has approached one of the substantial shareholders in Macarthur,” the company said in a statement. “Macarthur understands that this discussion was ‘preliminary and highly conceptual’. Macarthur has no further information about the context or content of that discussion, nor whether Xstrata has any substantive interest in Macarthur or any of its assets.” Xstrata refused to comment.

The Queensland-based group is the world’s biggest producer of pulverized coal, known as PCI, which is a cleaner coal favoured by steelmakers for use in blast furnaces. Steelmakers have increased orders for PCI in recent months as demand for steel has rebounded after the financial downturn.

Xstrata has grown dramatically over the decade, largely through acquisitions. It now has a market capitalisation of more than £36bn. Last year it failed in an attempt to merger with Anglo American, which managed to rebut Xstrata’s claims, led by chief executive Mick Davis, that a combined company could be more run efficiently and have more diverse assets.