China Minmetals In Bid To Buy Canada's Noranda
Aluminum Unit
China Minmetals, a Chinese state-owned company, is in
talks to buy Noranda's aluminum business. Noranda is Canada's
biggest mining company.
The Chinese company is willing to pay a small premium
over Noranda's market price to get ownership. Noranda
closed at C$22.14 on the Toronto stock exchange, down
C 46 cents, valuing the company at C$6.56 billion.
Noranda shares have risen more than 57% over the past
year on strong demand for base metals, including zinc,
aluminum and copper.
If the deal goes through, Noranda shareholders would
get shares in a new company. The new company's assets
would include a smelter, four rolling mills in the US
and a wheel manufacturing plant.
Brascan Corp. is Noranda's largest shareholder with a
42% stake. They favor the deal because they want to get
out of the metal business, which they see as too cyclical,
so that they can focus on power generation and real estate,
which are more predictable.
While the Chinese government has been working to cool
down the economy, commodity prices have not fallen, and
have continued to rise. Retail, auto sales and real estate
have slowed because of the measures. Some high-profile,
capital-intensive large projects have also been scaled
back.
China's surging need for commodities has driven up prices
in world markets, and Chinese companies have been especially
aggressive over the past year in their search for reliable
sources. Most of the Chinese commodity-importing companies
are state-owned.
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