Xstrata May Change From ‘Hunted’To ‘Hunter’

Swiss-based company Xstrata Plc may bid for mining companies including First Quantum Minerals Ltd. and Alumina Ltd., said Citigroup Inc. The bank said that Xstrata may also consider acquiring ``smaller'' mining companies such as Albidon Ltd., Copperco Ltd. and Riverdale Mining Inc., Xstrata will find it easier to ``be the hunter than the hunted,'' London-based analyst Craig Sainsbury said in a note. ``We believe the market will continue to look for Xstrata to do the mega deal,'' Sainsbury said. Freeport-McMoRan Copper & Gold Inc., Alcoa Inc., Lonmin Plc and Anglo American Plc ``could all come into the frame,'' he said. Brazilian iron-ore producer Cia. Vale do Rio Doce said March 25 that negotiations to buy Xstrata broke down as they couldn’t agree on demand terms that from Glencore International AG, Xstrata 's 34 percent shareholder. A takeover would have created a company larger than BHP Billiton Ltd., the world's biggest miner. Mining-company mergers and acquisitions rose to a record of $158.9 billion in 2007, according to PricewaterhouseCoopers LLP. First Quantum has increased 16 percent last year in Toronto trading, valuing the company at $5.7 billion. Australia's Alumina, which supplies the raw material of alumina to aluminum smelters, has a market value of $5.8 billion. Xstrata could save as much as $2 billion a year from a merger with Anglo, mainly from the coal and copper units, Citigroup said. ``There are also other options for Xstrata such as to go it alone and wait for the commodity/equity markets to stabilize and Vale to return with another bid in six months,'' Sainsbury said.