It is reported that takeover deals in the BC coal sector could heat up as demand for steelmaking coal in Asia continues and flooding in Australia puts millions of tonnes of production out of commission.
In an analyst report, Scotia Capital said that Chinese company Winsway Coking Coal Limited and Japanese trading house Marubeni Corporation, which recently inked a USD 1 billion deal for Grande Cache Coal, as well as others may be on the hunt.
Przybylowski and Tkachuk Tremblay wrote in a note to clients that "We expect that one or more of these large producers will look to increase reserves and production from the region. We would also consider steel producers or other global trading houses as potential acquirers."
Teck Resources is already 20% owned by a Chinese investment fund. Teck operates a number of mines in BC and is a key supplier to the Asian steel industry. Marubeni has said that the USD 1 billion deal to buy Grande Cache Coal could be used by the Japanese company as a platform to develop a future coal business in Canada.
Scotia Capital said that in addition to Winsway and Marubeni, likely buyers include Anglo American, Xstrata and Canadian Dehua. The bank also identified several junior coal companies as possible targets including Colonial Coal, Cardero Resource and Fortune Minerals.
Cardero signed a deal with to acquire the Trefi metallurgical coal project, located approximately 30 kilometers southeast of Chetwynd, BC, from Anglo Pacific Group PLC.
Under the deal, Cardero will pay USD 3.5 million in cash, 500,000 shares and warrants to buy another one million shares at a price of USD 1.40 per share for 18 months after closing in exchange for an option for a 50% stake in Trefi.
The company will pay an additional USD 5 million and one million shares for the remaining stake once a bankable feasibility study is complete and Cardero decides to go ahead with the project.
In its outlook for commodities, TD Bank said that despite growing fears of a dramatic slowdown in China's growth rate, the bank expects Chinese authorities will manage to pull off a soft landing, with growth to remain at 8% in 2012.
(Sourced from www.theglobeandmail.com)
