World's biggest miner BHP sets sights on £2bn Ferrous bid

By Rupert Steiner for the Daily Mail
Updated: 14:57 EDT, 16 October 2011

The world’s biggest miner is mulling a £2billion bid for Brazilian rival Ferrous Resources.

Anglo-Australian giant BHP Billiton has been eyeing Ferrous since the South American iron ore miner pulled its London float last year due to volatile market conditions.

The listing would have valued it at around £2.5billion. Ferrous was then effectively put on the block.

Rivals: The world's biggest miner is mulling a £2billion bid for Brazilian rival Ferrous Resources

BHP chief executive Marius Kloppers is understood to have been in negotiations since the beginning of the year. These could now be about to come to a head.

Ferrous would be a desirable bolt-on acquisition.

It raised more than £632million from private investors three years ago and spent the funds on five iron ore projects in the so-called ‘iron quadrangle’ of Minas Gerais, the largest iron ore producing region in Brazil.

It also has a mine in Bahia state. When it embarked on its float process it said it planned to mine 25m tonnes of iron ore a year by the end of 2013, rising to 65m tonnes by 2016.

While iron ore prices have weakened recently due to the slowdown in manufacturing in many countries it has proven to be more resilient than other metals.

This is mainly due to robust consumption in China, a large consumer accounting for 59 per cent of global imports in 2010.

Kloppers has been keen to use cash from the recent commodities boom to snap up rival minnows around the world to make BHP even bigger.

One other option being considered is for BHP to take a stake in Ferrous Resources rather than launching a full takeover. BHP declined to comment last night.

Miners dig up dividends

Dividends from British companies were boosted by mining firms to top £20billion in the third quarter for the first time since 2008, according to a survey by registrar Capita.

Its latest dividend monitor shows that from January to September the £55billionn given to shareholders was just shy of the total for all of 2010, rising 15.9 per cent year on year.

Growth in the third quarter lead Capita to increase its forecast for 2011 by £1billion to £67billion, £10.6billion more than 2010, or an increase of 18 per cent, making the highest annual total since 2008.

Glencore’s arrival on the London Stock Exchange provided £224million for its shareholders, but other miners paid an additional £200million between them, making miners one of the best performing sectors.