Thursday, July 20, 2006


It's been a record-setting year for both M&A transactions and commodity prices, including copper. As often mentioned, at current prices the value of the copper used in a penny exceeds one cent. Naturally, these forces are meeting among the mining companies, where transactions are stacking up and the bidding is fierce.

The best melee going on right now revolves around Canada's Falconbridge: Nickel miner Inco made a friendly overture to acquire Falconbridge, but this has now been trumped by a quasi-hostile bid from Britain's Xstrata. Adding to the amusement is that the Inco proposal is a three-way deal under which both Inco and Falconbridge would be swallowed up into copper giant Phelps Dodge.

With the Falconbridge deal slipping away to Xstrata, other suitors are now swirling around Inco, threatening the Phelps Dodge takeover. Inco has already received a hostile bid from zinc miner Teck Cominco - and more are sure to come. A lot of people are betting that this is the run that will put the lie to the conventional wisdom that mining is a boom-and-bust industry. Time will tell . . .

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