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MiningIndustryOverviewBoyiXie
March5,2012
MichaelPorter’sFiveForces
Outline• Products• Suppliers/Customers
• IndustryCompe?tors
• Cost• Revenue&profit• Overalltrends• Otherfactors
Products• Aluminum• Copper• Lead• Zinc• Gold• Silver• Uraniumoxide• Diamonds
• StainlessSteelMaterials
• IronOre• Coal
Aluminum
Zinc
Copper
Ironore
Gold
Diamond
Marketing&Customers• Marke?ngcentersofminingcompanies• Sellproductsatthemostadvantageouspricetomakethemostoftheirintrinsicvalue
• Actasasourceofspecialistexper?se• Iden?fyvalueopportuni?es
• Customerservice:• Technicalassistance• Transporta?on,e.g.BHPShipping,RioTintoMarine
• Customers• Jewelrymakers.E.g.gold,silveranddiamonds• Manufacturing/construc?oncompanies.
• E.gHyundaiSteel• Government• Otherretailers
BHPBilliton• BHPBillitonisaglobalmining,oilandgascompanyheadquarteredinMelbourne,AustraliaandwithamajormanagementofficeinLondon,UK.Itistheworld’slargestminingcompanymeasuredbyrevenue.
• BHPBillitonwascreatedin2001throughthemergeroftheAustralianBrokenHillProprietaryCompanyLimited(BHP)andtheAnglo‐DutchBillitonplc.(Billitonoriginsstretchbackto1860)
• Itisnowadual‐listedcompanyinAustralianSecuri?esExchangeandLondonStockExchange.
• Itoperatesawidevarietyofminingandprocessingopera?onsin25countries,employingapproximately41,000people.
• Ithasopera?onson:aluminum,diamonds,ironore,petroleum,stainlesssteel,uranium,etc.
• Minesin:Algeria,Australia,Brazil,Canada,SouthAfrica,USA
RioTinto• RioTinto,nowheadquarteredinLondon,UK(andBrisbane,Australia),wasfoundedin1873,whenamul?na?onalconsor?umofinvestorspurchasedaminecomplexontheRioTintoriver,inHuelva,Spain.
• Itisnowadual‐listedcompanyinAustralianSecuri?esExchangeandLondonStockExchange.
• Itisonetheworldleadersintheproduc?onofaluminum,ironore,copper,uranium,coalanddiamonds.
• Italsohassignificantopera?onsinrefining,par?cularlyforrefiningbauxiteandironore.
• Ithasopera?onsonsixcon?nentsbutismainlyconcentratedinAustraliaandCanada.
Vale• ValeisaBrazilianmul?na?onaldiversifiedmetalsandminingcorpora?onandoneofthelargestlogis?csoperatorsinBrazil.
• It’sthelargestproducersofironore,pellets,andsecondlargestnickel;otherproductsincludemanganese,ferroalloys,copper,bauxite,aluminum.
• It’slistedonstockexchangesofSaoPaulo,NewYork,Paris,HongKongandMadrid.
• It’salsothecorpora?onwiththemost“contemptfortheenvironmentandhumanrights”andwasnamedworld’smostevilcompany.
GlobalIndices
!"#$!"#$%&'($%#')%*#'+&$,%%%%!
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
1%#/+)*,-(%,2#3@8+8+&%*1(9'+8$)%#'.$%*1+08+2$,%01%1209$/31/(%0#$%1.$/'44%('/;$06%')%*1+)2($/%)$*01/)%,$9$+,'+0%1+%,$('+,%3/1(%,$.$419$,%$*1+1(8$)%)0/2&&4$,%01%/$*1.$/:%A#84$%0#$%8+,2)0/5%?')%#80%#'/,%75%0#$%&417'4%*"."3!.,)3'!%!%8)7!"!"2)3174."!+%)0.9+),+#)&0+)'+&$'")'+,%&1+$%7$51+,:%
Global indices (February 1989=1)
0
1
2
3
4
5
6
7
8
9
201120092007200520032001199919971995199319911989
Source: Bloomberg.
Dow JonesFTSEHSBC Global Mining Index
BCDC%)'?%/$'4%0$+)81+%8+%0#$%('/;$0%')%&/1?0#%/$712+,$,6%133)$0%75%'%+2(7$/%13%8+*8,$+0)%0#'0%;$90%*'2081+%'+,%/8);%1+%0#$%'&$+,':%<($/&8+&%*12+0/8$)%*1+08+2$,%01%)01/(%'#$',6%?80#%,$('+,%31/%/$)12/*$)%#'!9+"):()%&'1"2);<=)2'1/&08)!"3,$#!"2)3,1%+)&1)>?@)&/1?0#%8+%E#8+':%
"#$)$%/$)240)%?$/$%'*#8$.$,%'&'8+)0%'%7'*;,/19%13%+'02/'4%#!%.%&+'%8)!"3,$#!"2)&0+)A0!,+.")+.'&0B$.C+)."#)D11#%)!")F2)0/'48':%G14808*'4%9/$))2/$%8+*/$')$,%?80#%/$.8$?)%13%
• Miningcompanieshavecon?nuedtooutperformtheoverallmarket.
• Whiletheindustrywashithardbytheglobalfinancialcrisis,miningcompanieshaveledthereturnandgonebeyond.
GlobalIndices• Emergingcountriescon?nuedtostormahead,withdemandforresources
drivenbystrongGDPgrowth,includingcloseto10%growthinChina.
• Miningmarketcapitaliza?oncon?nuedtoreboundin2010,withmanyplayersrecoveringtheremainingmarketcapitaliza?onlostduringtheglobalfinancialcrisisandsurpassingthelevelseenattheendof2007.
• Thetotalyearendmarketcapitaliza?onofthetop40companiesincreasedby26%,withlargergainsgenerallyachievedbythesmallercompanies.
!"#$!"#$%&'($%#')%*#'+&$,%%%%!
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1%#/+)*,-(%,2#3@8+8+&%*1(9'+8$)%#'.$%*1+08+2$,%01%1209$/31/(%0#$%1.$/'44%('/;$06%')%*1+)2($/%)$*01/)%,$9$+,'+0%1+%,$('+,%3/1(%,$.$419$,%$*1+1(8$)%)0/2&&4$,%01%/$*1.$/:%A#84$%0#$%8+,2)0/5%?')%#80%#'/,%75%0#$%&417'4%*"."3!.,)3'!%!%8)7!"!"2)3174."!+%)0.9+),+#)&0+)'+&$'")'+,%&1+$%7$51+,:%
Global indices (February 1989=1)
0
1
2
3
4
5
6
7
8
9
201120092007200520032001199919971995199319911989
Source: Bloomberg.
Dow JonesFTSEHSBC Global Mining Index
BCDC%)'?%/$'4%0$+)81+%8+%0#$%('/;$0%')%&/1?0#%/$712+,$,6%133)$0%75%'%+2(7$/%13%8+*8,$+0)%0#'0%;$90%*'2081+%'+,%/8);%1+%0#$%'&$+,':%<($/&8+&%*12+0/8$)%*1+08+2$,%01%)01/(%'#$',6%?80#%,$('+,%31/%/$)12/*$)%#'!9+"):()%&'1"2);<=)2'1/&08)!"3,$#!"2)3,1%+)&1)>?@)&/1?0#%8+%E#8+':%
"#$)$%/$)240)%?$/$%'*#8$.$,%'&'8+)0%'%7'*;,/19%13%+'02/'4%#!%.%&+'%8)!"3,$#!"2)&0+)A0!,+.")+.'&0B$.C+)."#)D11#%)!")F2)0/'48':%G14808*'4%9/$))2/$%8+*/$')$,%?80#%/$.8$?)%13%
Top10MiningCompanies
!!!!!!"#
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*+%&%,-.,#$/&0123%4"#$!)#&,,$*%$!-./!'0*0*%!).'1&*0$(!0*!&!/$(2/%$*3!'&/4$3!0(!3.!+$'.*(3/&3$!3#&3!3#$5!'&+$!3#$!/0%#3!)#.0)$(!!"#$%&'()*'+%,%-$,.'-#$/$/',%!'(),('()*0',#*',1.*'(2'(,3*'&+6&*3&%$!.-!3#$!21(0+$!1.3$*30&,!.-!3#$!0*+2(3/57!8.2/95$&/!".3&,!:#&/$#.,+$/!;$32/*!<":;=!+&3&!3#/.2%#!>?@?!(#.A(!'.(3,5!0'1/$((06$B!&,3#.2%#!2*$6$*B!/$32/*(!-/.'!3#$!($)3./7!
C*!>?@?B!3#$/$!A$/$!&!*2'D$/!.-!1,&5$/(!3#&3!%/$&3,5!1*%*+(*!'4#25'62.,($.$(0'$%'-2552!$(0'5,#3*(/7'%2(,1.0').11$/!&*+!(0,6$/B!A03#!).'1&*0$(!,04$!:0,6$/!E#$&3.*!/)28$%&',%'$59#*//$6*':;<='2%*'0*,#'>?@A
"#$!+0--$/$*)$!0*!/$32/*(!D$3A$$*!$'$/%0*%!'&/4$3!1/.+2)$/(!&*+!3#.($!-/.'!3/&+030.*&,!).2*3/0$(!A0+$*$+!0*!>?@?7!"#$!-.2/!5$&/!":;!-./!$'$/%0*%!'&/4$3!1,&5$/(!'./$!3#&*!+.2D,$+!3#$!/$32/*(!.-!).'1&*0$(!-/.'!3/&+030.*&,!'0*0*%!).2*3/0$(7!"#0(!.231$/-./'&*)$!,0*4(!3.!3#$!A0+$/!$).*.'0)!(3./5!.-!-&(3$/!%/.A3#!0*!$'$/%0*%!'&/4$3(7!F6$*!3#.2%#!).'1&*0$(!-/.'!3/&+030.*&,!'0*0*%!).2*3/0$(!#.,+!&(($3(!&/.2*+!3#$!A./,+B!$'$/%0*%!'&/4$3!1,&5$/(!#&6$!(30,,!.231$/-./'$+7
Top 40 TSR 2007–2010
0%
50%
100%
150%
200%
250%
Traditional marketEmerging market
Source: Bloomberg and PwC analysis.
5%6&7.16%28"#$!".1!G?!-./!>?@?!(&A!-.2/!).'1&*0$(!/$H.0*!3#$!,0(3!,%!'()#**'+#/('($5*'*%(#,%(/A'>)*'%*8.0'.$/(*!'B2,.'C%!$,'A&(!3#$!,&/%$(3!*$A!$*3/&*3B!-.,,.A0*%!03(!CIJ!0*!J)3.D$/!>?@?7!"#$/$!#&(!D$$*!,$((!6.,&30,035!0*!>?@?B!A03#!.*,5!3A.!).'1&*0$(!'./$!3#&*!+.2D,0*%!3#$0/!'&/4$3!)&103&,0(&30.*!&*+!H2(3!-.2/!+$)/$&(0*%K!3#$!,&/%$(3!!*-#*,/*'1*$%&'DE='10'FGHBA'C%(*#*/($%&.0',..'42"#'24'3#$!+$)/$&($(!A$/$!C*+0&*!./!L#0*$($!).'1&*0$(7
M,$*)./$!#&(!/$)$*3,5!).'1,$3$+!03(!,0(30*%!0*!N.*+.*!&*+!O.*%!P.*%B!)/$&30*%!'&*5!#$&+,0*$(!0*!3#$!1/.)$((7!"#$!'.6$!D5!3/&+$/(B!(3$$,!).'1&*0$(!&*+!.3#$/(!3.!&)Q20/$!'0*0*%!&(($3(!'&4$(!03!'./$!)#&,,$*%0*%!$&)#!5$&/!3.!+$3$/'0*$!A#.!3#$!".1!G?!'0*0*%!).'1&*0$(!&/$7
Top 10 market capitalisation ($ billion)—31 December 2010
Source: Capital IQ.
20092010
0
50
100
150
200
250
Coa
lIn
dia
Pot
ashC
orp
Bar
rick
Gol
d
Free
port
-M
cMoR
an
Ang
loA
mer
ican
Xstr
ata
Chi
naS
henh
uaRio
Tint
o
Vale
BH
PB
illito
n
9%.#1:.%&7%2;-201$<%:3/.*%!+$'&*+!#&(!'&+$!>?@?!&!(3&*+!.23!5$&/!-./!3#$!'0*0*%!0*+2(3/57!R)/.((!3#$!".1!G?!3#$/$!A&(!&!-"5".,($6*'DE='$%-#*,/*'$%'#*6*%"*/7','IE='$%-#*,/*'$%',!J"/(*!'KLC>HM',%!',':N;='$%-#*,/*'$%'%*('9#2+(A'
S2)#!.-!3#$!0*+2(3/5T(!%..+!*$A(!#&(!D$$*!&)#0$6$+!3#/.2%#!&!).'D0*&30.*!.-!).''.+035!1/0)$!&*+!1/.+2)30.*!0*)/$&($(7!S&*5!&*&,5(3(!A.2,+!&/%2$!3#&3!0*!>?@?!3#$!".1!G?!A$/$!(0'1,5!0*!3#$!/0%#3!'&/4$3!&3!3#$!/0%#3!30'$7!O.A$6$/B!0-!03!0(!,2)4B!-./32*$!#&(!'.(3!%/$&3,5!/$A&/+$+!3#.($!A#.!0*6$(3$+!3#/.2%#!3#$!)5),$B!&(!3#$!6&,2$!-/.'!,&/%$!)&103&,!(1$*+!D5!3#$($!).'1&*0$(!0(!/$&10*%!/$A&/+(7!
80*&*)0&,!+0()01,0*$!&*+!'&*&%$'$*3!.-!).(3(!A0,,!D$!0'1./3&*3!0*!>?@@B!A#0,$!).'1&*0$(!).*30*2$!3.!+/06$!3#$0/!.1$/&30.*(!3.!'&U0'0($!1/.+2)30.*!&*+!/$32/*(7
• Acrossthetopcompanies,therewasacumula?ve32%increaseinrevenue,a72%increaseinadjustedEBITDAanda156%increaseinnetprofit.
• Newentrant:CoalIndia.FollowingitsIPOinOctober2010,it’sthelargestnewentrant.
• Thebiggetbigger.Theyarealsodiversifyinginotherdirec?ons.Forinstance,somehavebegunexploringthebenefitsofver?calintegra?oninananempttocontroltheen?recommodityvaluechain–fromcoalminingtosteelproduc?ontopowergenera?on.
Note:EBITDA:earningsbeforeinterests,taxes,deprecia?on,andamor?za?on
TheSuperMajorsStepOut
!"#$!"#$%&'($%#')%*#'+&$,%%%%!
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Top 3 market capitalisation ($ billion)—31 December
Source: Capital IQ.
0
50
100
150
200
250
Rio TintoValeBHP Billiton
200520062007
200820092010
"#$%/)01$%2-)%3)-4.#L5/$+&5#$+0+&%,$('+,%A6/%7/0('/B%/$)6./*$)=%7/$,6(0+'+5<B%A/6(%$($/&0+&%$*6+6(0$)=%#')%E$$+%5#$%E0&%)56/B%A6/%1232C%M+,%.)$/%+$$,%A6/%(0+$/'<)%)#64)%+6%9*3$(:;(-#88*$3(%<'(#9<#+*&--=(3*1#$(8"#(8&23#8#,(>0(?@A(&/645#%0+*<.,$,%0+%H#0+'I)%/$*$+5<B%/$<$')$,%315#%N0J$%B#&2(A-&$6(C"#(<-&$(*$+-%,#,(9*3$*D+&$8(*$;2&982%+8%2#()7$+,=%).*#%')%5#$%*6+)5/.*506+%6A%O2=222%D(%6A%+$4%/'0<4'B%<0+$C
P5%5#$%)'($%50($=%5#$/$%0)%5#$%*#'<<$+&$%6A%,$*<0+0+&%$G5/'*506+%&/',$)=%(6/$%&$6&/'7#0*'<<B%/$(65$%'+,Q6/%76<050*'<<B%*#'<<$+&0+&%/$&06+)%'+,%5#$%0+*/$')0+&%)*'<$%6A%7/6K$*5)%/$R.0/$,%56%&$+$/'5$%$*6+6(0*%/$5./+)C%!%<<-=*$3(9%;D+*#$8(2#9:%2+#9(8:(E##8(8"#(32:)*$3(,$('+,%0)%'%D$B%*#'<<$+&$%A6/%5#$%0+,.)5/BC
"#$%46/<,%*6+50+.$)%56%+$$,%/'4%('5$/0'<)%'+,%%(0+0+&%*6(7'+0$)I%/$).<5)%)#64%5#0)C%:64$J$/=%405#%7/$))./$)%A/6(%'%&/640+&%+.(E$/%6A%)5'D$#6<,$/)%6+%":)(8:(,*982*F%8#(8"#(F#$#D89'(E*$#29("&1#(8"#(+"&--#$3#(6A%,$<0J$/0+&%6+%5#$0/%)6*0'<%*6((05($+5)%'+,%$+)./0+&%5#$0/%*6+5/0E.506+)%'/$%E65#%'77/67/0'5$%'+,%7/67$/<B%.+,$/)566,C
• During2010wesawthetopthreeminers(BHPBilliton,ValeandRioTinto)stepclearoftherestoftheindustry.
• Atthetop,BHPBilliton’smarketcapitaliza?onfurtherstrengthened,pupngitclearlyabovetherest.
• Themarketcapitaliza?onofthirdplaceRioTintoisdoublethesizeofthenextlargestplayer,ChinaShenhua,whichdeclined25%invalueduring2010.
• Priceandproduc?onincreasesinironoreweremajordriversofthegrowthbythetopthree.
ProductionandRevenue
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#$%$&'$()*(+,--,./0*
Share of revenue by commodity
Source: PwC analysis.
20092010
0%
5%
10%
15%
20%
25%
30%
Oth
erm
etal
s
Dia
mon
ds
Zinc
Pla
tinum
Nic
kel
Fert
ilize
r
Bau
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Gol
d
Iron
ore
Cop
per
Coa
l
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S0'(9+,)%E*'-':)F DH EDF
K+*-$')$)%0+%;-9,/*:09+%'*-9))%:#$%19'-,%'-$%$.0,$+*$,%'19.$G%T0:#%9+82%*9;;$-%'+,%,0'(9+,)%)#9T0+&%,$*80+$)6%
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
Total production(Using Copper equivalent tonnes—2010 closing spot)
Source: PwC Analysis.
55
56
57
58
59
60
2010CopperOtherBauxiteIron ore2009
1.8
1.0
0.5 (0.3)
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
Z$%#'.$%*'8*/8':$,%:#$%-$('0+0+&%(0+$%80<$%9<%:#$%"9;%HC%/)0+&%-$)$-.$)%'+,%BCDC%;-9,/*:09+%,':'6%Z#$+%*9+.$-:$,%0+:9%*9;;$-%$[/0.'8$+:%/+0:)%':%:#$%$+,%9<%BCDCG%:#$%"9;%HC%#',%'%-$('0+0+&%(0+$%80<$%9<%45%2$'-)6%"#0)%(0+$%80<$%#')%,$*-$')$,%12%:T9%2$'-)%<-9(%BCCI%')%'%-$)/8:%9<%;-9,/*:09+%0+*-$')0+&%12%(9-$%:#'+%:#$%',,0:09+)%:9%-$)$-.$)6
!"#$!"#$%&'($%#')%*#'+&$,%%%%!"
#$%$&'$()*(+,--,./0*
Share of revenue by commodity
Source: PwC analysis.
20092010
0%
5%
10%
15%
20%
25%
30%
Oth
erm
etal
s
Dia
mon
ds
Zinc
Pla
tinum
Nic
kel
Fert
ilize
r
Bau
xite
Gol
d
Iron
ore
Cop
per
Coa
l
!"#$%&'"(()*&#+,&-*"+&"*)&#''".+/&0"*&123&"0&4"(&56&*)7)+.)&8966:&;&163<&=)+)*#/),&/>-?&@)#*A&B*"+&"*)&-$.$+/$)%0+*-$')$,%12%34567%108809+%0+%:#$%2$'-%'+,%*)(*)?)+/),&963&"0&/"/#$&*)7)+.)?%&.(&0*"C&DE3&-+&/>)&;-09-%2$'-6%"#$%-0)$%0)%,/$%:9%#0&#$-%;-0*$)%'+,%0+*-$')$,%(*",.'/-"+&7"$.C)?%&F-/>&(*",.'/-"+&.(&D13&"+&/>)&G#'H&9<%$=;'+)09+%;-9>$*:)%'+,%:#$%-$:/-+%:9%</88%*';'*0:2%12%?'8$6%@9'8A)%)#'-$%9<%:#$%:9:'8%,$*80+$,%0+%BCDC%,/$%:9%:#$%):-$+&:#%9<%0-9+%9-$6
!121(34,.'+0/,&
5,--,./0*%E($')/-$F
6,7(81(74,.'+0/,&(
E(08809+F
59:&;$(<4,-(09$(74/,4(*$:4(
83<
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M98,%E:9++$)F 4H B
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O9:')#%E:9++$)F D4 4C
P0*Q$8%E:9++$)F D H
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R0+*%E:9++$)F 4 C
S0'(9+,)%E*'-':)F DH EDF
K+*-$')$)%0+%;-9,/*:09+%'*-9))%:#$%19'-,%'-$%$.0,$+*$,%'19.$G%T0:#%9+82%*9;;$-%'+,%,0'(9+,)%)#9T0+&%,$*80+$)6%
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
Total production(Using Copper equivalent tonnes—2010 closing spot)
Source: PwC Analysis.
55
56
57
58
59
60
2010CopperOtherBauxiteIron ore2009
1.8
1.0
0.5 (0.3)
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
Z$%#'.$%*'8*/8':$,%:#$%-$('0+0+&%(0+$%80<$%9<%:#$%"9;%HC%/)0+&%-$)$-.$)%'+,%BCDC%;-9,/*:09+%,':'6%Z#$+%*9+.$-:$,%0+:9%*9;;$-%$[/0.'8$+:%/+0:)%':%:#$%$+,%9<%BCDCG%:#$%"9;%HC%#',%'%-$('0+0+&%(0+$%80<$%9<%45%2$'-)6%"#0)%(0+$%80<$%#')%,$*-$')$,%12%:T9%2$'-)%<-9(%BCCI%')%'%-$)/8:%9<%;-9,/*:09+%0+*-$')0+&%12%(9-$%:#'+%:#$%',,0:09+)%:9%-$)$-.$)6
• A5%increaseinoverallproduc?on• Theincreaseinproduc?onisledbyironore.• Morethanglobaleconomicgrowthbutlessthantheeconomicgrowthinthedevelopingcountries• Developingcountriesaretheprimarydriversforhigherdemand
Cost• Costsaregoingupacrosstheboard• Bumperprofitshavefuelledlaborunrest
• Newandreplacementequipment
• Haultruck?resalonehadtripled• Newtaxesandroyal?esispushingupregulatorycompliancecosts
Cost• Educa?on,suchasminingmajor
• Long‐terminfrastructureinvestment,includingrailways,ports,communityhousingandschools
• Highcommoditypricesaredrivingshortagesinequipment,laborandotherkeyinputs,pushingcostsup.Thismeansminingcompaniesmustwalka?ghtropebetweenrampingupvolumestomeetdemandandcontainingtheircosts.
MergersandAcquisitions
PwC !
!"#$%"&'()()*&+,-&./%"&0#"1'/2&%).&0%"1/2&3%""4&
.13()*&56&78559&:#"%;("/&<%=(;%"&'%3>/;2&?(""&
=3#'=;&./%"'%>/32&;#&=3#<//.&<%1;(#12"49
!""#$%&'"()*+,"-./01"2&#"34++4.5"-)/)"*55.657)("(6/458"01)"&
9/,0",4:";.501,".<"=>##?"@)*+"A.+6;),"*5("*88/)8*0)"A*+6),"
-)/)"#>B"*5("=CB"1481)/"01*5"01)"9/,0"1*+<".<"=>#>?"D5"*5"
%))1%"(2/.&$%2(2@&./%"&0#"1'/2&%).&%**3/*%;/&0%"1/2&?/3/&
7AB&%).&7B&C(*C/3&;C%)&7858&%).&577B&%).&D7B&C(*C/3&
01*5"=>>'?"E."F60"014,"450."F)/,F)704A)$"7.5,4()/"01*0"
%))1%"(2/.&0#"1'/2&'%>/&7855&;C/&$12(/2;&4/%3&#E&+,-&()&;C/&
14,0./G".<"01)";45458",)70./"H;./)"</)5I4)("01*5")A)5"=>>&JK?"
F&&+%)4&2(*)2@&C#?/0/3@&=#();&;#&%&2"#?.#?)&E#3&;C/&3/'%()./3&
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<%=(;%"&'%3>/;2H9&-2&./=(<;/.&()&I(*13/&J&#)&;C/&E#""#?()*&
=%*/@&./%"&0%"1/2&%).&0#"1'/2&C%0/&%"3/%.4&./<3/%2/.&$4&
!"#&%).&$%#&'#);C�/3&'#);C&()&K1"4&%).&%&E13;C/3&&
"&#&%).&'#&3/2=/<;(0/"4&()&-1*12;9&L()</&K1)/@&#)&
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(%#&%).&./%"&0#"1'/2&C%0/&./<"()/.&$4&"&#&9
!""E1)"*A)/*8)"()*+"A*+6)"(6/458"01)"9/,0"1*+<".<"=>##"-*,"
)$*(+,-..-/01&%&(*#&()<3/%2/�/3&78589&I#3&=1$"(<"4&&
"(2;/.&;%3*/;2@&;C/&%0/3%*/&=3/'(1'�/3&;C/&.%4&=3(#3&;#&
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7.5,4()/*3+G"3G"0*/8)0",4I)L"M./"2C>>";4++4.5N"*7O64,404.5,$"
01)"*A)/*8)"F/);46;"-*,"%&B?"M./",63P2C>>";4++4.5"()*+,$"
;C/&%0/3%*/&=3/'(1'&?%2&#)"4&2#9&-"2#&)#;/?#3;C4&(2&;C/&
E%<;&;C%;&;C/2/&=3/'(1'2&?/3/&#)&;C/&C//"2&#E&%&("#&;3%("()*&
;?/"0/&'#);C&%==3/<(%;(#)&()&=1$"(<&'()()*&<#'=%)(/2N&
'%3>/;&0%"1/2&G%2&'/%213/.&$4&;C/&6LOP&!"#$%"&+()()*&&
588&Q)./R&%2&%;&K1)/&D8@&7855H9
F&&K(;;/34&*"#$%"&/S1(;4&'%3>/;2&?(""&"(>/"4&=1;&.#?)?%3.&
=3/2213/&#)&'#2;&'()()*&<#'=%)4&0%"1%;(#)2&()&;C/&)/%3&
;/3'9&-2&%&=3#R4&E#3&/R=/<;/.&<#'=3/22(#)2&()&./%"&0%"1/@&
<#)2(./3&;C%;&$/;?//)&K1"4&5&%).&-1*12;&D5@&;C/&6LOP&
Q+.3*+"R45458"S5():"()7+45)("3G"'B?"Q.+("*5(",4+A)/"&
%3/&)#;%$"/&/R</=;(#)2&%2&<133/)<4&()2;%$("(;4&=3#=/""/.&&
/%<C&#E&;C/&'/;%"2&;#&%==3/<(%;/&"!#�/3&;C/&"%2;&;?#&
'#);C2&%"#)/9&
Source: Capital IQ, PwC Analysis
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
0
500
1,000
1,500
2,000
2,500
3,000
FY20
05
FY20
06
FY20
07
FY20
08
FY20
09
FY20
10
1H 2
010
1H 2
011
Num
ber o
f tra
nsac
tion
s
US
$ (m
illio
ns)
Global mining M&A volume and aggregate value
Total number of transactions Total deal value ($mm)
Figure 1: Global mining M&A volume and aggregate value
Global Mining M&A (1H 2011) by transaction size
Greater than $1 billion (1%)
Less than $100mm (47%)
Undisclosedvalue (47%)
$100-$499.9mm (4%)
$500-$999.9mm (1%)
Source: Capital IQ, PwC Analysis
Figure 2: Global mining M&A (1H 2011) by transaction size
• Theglobalminingindustrybecomesincreasinglymoreconsolidated
• 1,379dealsworth$71billionwereannouncedduringthefirsthalfof2011.
• Dealsvolumesandaggregatevalueswere10%and25%higherthanthefirsthalfof2010.
• Theaveragedealvalueduringthefirsthalfof2011was$104million,a40%increaseover2010.
20111HTop10GlobalMiningDeals
!"# Mining Deals 2011 Mid-year update
Announced Date
Target Target Description Target Headquarters
Transaction Value (millions)
Target Resource Type
Acquirer Acquirer Description Acquirer Headquarters Transaction Status (as at August 8, 2011)
01/28/2011 Massey Energy Corporation
Massey Energy Company, through its wholly owned subsidiary, A.T. Massey Coal Company, Inc., produces, processes, and sells bituminous coal primarily in the United States.
United States US$8,500 Coal Alpha Natural Resources, Incorporated
Alpha Natural Resources, together with its subsidiaries, engages in the production, processing, and sale of coal in the United States.
United States Closed
04/24/2011 Equinox Minerals Limited Equinox Minerals Limited engages in the mining and exploration of mineral properties.
Australia C$7,300 Copper Barrick Gold Corporation
Barrick Gold Corporation engages in the production and sale of gold, as well as related activities, such as exploration and mine development.
Canada Closed
01/11/2011 Consolidated Thompson Iron Mines Limited
Consolidated Thompson Iron Mines Limited, a mining company, engages in the exploration and development of mineral properties in Canada.
Canada C$4,900 Steel Cliffs Natural Resources Incorporated
Cliffs Natural Resources, a mining and natural resources company, produces iron ore pellets, lump and fines iron ore, and metallurgical coal products.
United States Closed
05/02/2011 International Coal Group, Incorporated
International Coal Group, Inc. produces coal in northern and central Appalachian regions of the United States.
United States US$3,400 Coal Arch Coal Incorporated
Arch Coal engages in the production and sale of steam and metallurgical coal from surface and underground mines located throughout the United States.
United States Closed
04/14/2011 KazzInc Kazzinc JSC primarily produces zinc with copper, precious metals, and lead credits in Kazakhstan.
Kazakhstan US$3,200 Zinc Glencore International plc
Glencore International plc, together with its subsidiaries, engages in producing, sourcing, processing, refining, transporting, storing, financing, and supplying commodities to industries worldwide.
Switzerland Announced
06/10/2011 PT Bumi Resources Minerals Tbk
PT Bumi Resources Minerals Tbk, through its subsidiaries, engages in the exploration and development of mineral properties in Indonesia and in west Africa.
Indonesia US$2,100 Diversified Metals and Mining
Bumi plc Bumi plc, through its subsidiaries, engages in the exploration, mining, and processing of coal and other minerals in Indonesia and West Africa.
United Kingdom Announced
02/03/2011 Fronteer Gold Incorporated
Fronteer Gold Inc. engages in the acquisition, exploration, and development of mineral resource properties in Canada, the United States, and Turkey.
Canada C$2,300 Gold Newmont Mining Corporation
Newmont Mining, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties.
United States Closed
03/02/2011 Companhia Brasileira de Metalurgia e Mineracao
Companhia Brasileira de Metalurgia e Mineração engages in the extraction, processing, manufacture, and marketing of niobium-based products.
Brazil US$1,950 Diversified Metals and Mining
POSCO, Sojitz Corporation, Nippon Steel Corporation, JFE Holdings Incorporated, The Japan Oil, Gas and Metals National Corporation & National Pension Service
JFE Holdings, Inc., through its subsidiaries, engages in steel and engineering operations in Japan.
National Pension Service is a pension fund manager.
Nippon Steel Corporation, through its subsidiaries, engages in the manufacture and sale of steel and related products in Japan and internationally.
POSCO engages in the manufacture and sale of steel products in South Korea and internationally.
Sojitz Corporation operates as a general trading company worldwide.
Japan oil, Gas and Metals National Corporation provides financial assistance, technology development, technical support, stockpiling, gathering/providing information, mine pollution control, and overseas field survey services in Japan.
JFE Holdings Inc.: Japan
National Pension Service: South Korea
Nippon Steel Corp.: Japan
POSCO: South Korea
Sojitz Corporation: Japan
The Japan Oil, Gas and Metals National Corporation: Japan
Announced
06/22/2011 Vale Fertilizantes SA Vale Fertilizantes S.A. produces and supplies phosphate- and nitrogen- based inputs for the production of fertilisers and inputs for chemical companies in Brazil.
Brazil US$1,390 Fertilisers and Agricultural Chemicals
Vale S.A. Vale S.A. engages in the exploration, production, and sale of basic metals in Brazil. Brazil Announced
06/15/2011 Drummond Company, Inc., Colombian Mining Operations and Related Infrastructure
Drummond Companys, Colombian Mining Operations and Related Infrastructure comprises coal exploration properties with probable reserves of about 2 billion net tons.
Colombia US$1,524 Coal Itochu Corporation ITOCHU Corporation operates as a general trading company primarily in Japan and internationally. Japan Announced
!$%%#&'(#%$#)*'+,*#-././0#12,*3
!"# Mining Deals 2011 Mid-year update
Announced Date
Target Target Description Target Headquarters
Transaction Value (millions)
Target Resource Type
Acquirer Acquirer Description Acquirer Headquarters Transaction Status (as at August 8, 2011)
01/28/2011 Massey Energy Corporation
Massey Energy Company, through its wholly owned subsidiary, A.T. Massey Coal Company, Inc., produces, processes, and sells bituminous coal primarily in the United States.
United States US$8,500 Coal Alpha Natural Resources, Incorporated
Alpha Natural Resources, together with its subsidiaries, engages in the production, processing, and sale of coal in the United States.
United States Closed
04/24/2011 Equinox Minerals Limited Equinox Minerals Limited engages in the mining and exploration of mineral properties.
Australia C$7,300 Copper Barrick Gold Corporation
Barrick Gold Corporation engages in the production and sale of gold, as well as related activities, such as exploration and mine development.
Canada Closed
01/11/2011 Consolidated Thompson Iron Mines Limited
Consolidated Thompson Iron Mines Limited, a mining company, engages in the exploration and development of mineral properties in Canada.
Canada C$4,900 Steel Cliffs Natural Resources Incorporated
Cliffs Natural Resources, a mining and natural resources company, produces iron ore pellets, lump and fines iron ore, and metallurgical coal products.
United States Closed
05/02/2011 International Coal Group, Incorporated
International Coal Group, Inc. produces coal in northern and central Appalachian regions of the United States.
United States US$3,400 Coal Arch Coal Incorporated
Arch Coal engages in the production and sale of steam and metallurgical coal from surface and underground mines located throughout the United States.
United States Closed
04/14/2011 KazzInc Kazzinc JSC primarily produces zinc with copper, precious metals, and lead credits in Kazakhstan.
Kazakhstan US$3,200 Zinc Glencore International plc
Glencore International plc, together with its subsidiaries, engages in producing, sourcing, processing, refining, transporting, storing, financing, and supplying commodities to industries worldwide.
Switzerland Announced
06/10/2011 PT Bumi Resources Minerals Tbk
PT Bumi Resources Minerals Tbk, through its subsidiaries, engages in the exploration and development of mineral properties in Indonesia and in west Africa.
Indonesia US$2,100 Diversified Metals and Mining
Bumi plc Bumi plc, through its subsidiaries, engages in the exploration, mining, and processing of coal and other minerals in Indonesia and West Africa.
United Kingdom Announced
02/03/2011 Fronteer Gold Incorporated
Fronteer Gold Inc. engages in the acquisition, exploration, and development of mineral resource properties in Canada, the United States, and Turkey.
Canada C$2,300 Gold Newmont Mining Corporation
Newmont Mining, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties.
United States Closed
03/02/2011 Companhia Brasileira de Metalurgia e Mineracao
Companhia Brasileira de Metalurgia e Mineração engages in the extraction, processing, manufacture, and marketing of niobium-based products.
Brazil US$1,950 Diversified Metals and Mining
POSCO, Sojitz Corporation, Nippon Steel Corporation, JFE Holdings Incorporated, The Japan Oil, Gas and Metals National Corporation & National Pension Service
JFE Holdings, Inc., through its subsidiaries, engages in steel and engineering operations in Japan.
National Pension Service is a pension fund manager.
Nippon Steel Corporation, through its subsidiaries, engages in the manufacture and sale of steel and related products in Japan and internationally.
POSCO engages in the manufacture and sale of steel products in South Korea and internationally.
Sojitz Corporation operates as a general trading company worldwide.
Japan oil, Gas and Metals National Corporation provides financial assistance, technology development, technical support, stockpiling, gathering/providing information, mine pollution control, and overseas field survey services in Japan.
JFE Holdings Inc.: Japan
National Pension Service: South Korea
Nippon Steel Corp.: Japan
POSCO: South Korea
Sojitz Corporation: Japan
The Japan Oil, Gas and Metals National Corporation: Japan
Announced
06/22/2011 Vale Fertilizantes SA Vale Fertilizantes S.A. produces and supplies phosphate- and nitrogen- based inputs for the production of fertilisers and inputs for chemical companies in Brazil.
Brazil US$1,390 Fertilisers and Agricultural Chemicals
Vale S.A. Vale S.A. engages in the exploration, production, and sale of basic metals in Brazil. Brazil Announced
06/15/2011 Drummond Company, Inc., Colombian Mining Operations and Related Infrastructure
Drummond Companys, Colombian Mining Operations and Related Infrastructure comprises coal exploration properties with probable reserves of about 2 billion net tons.
Colombia US$1,524 Coal Itochu Corporation ITOCHU Corporation operates as a general trading company primarily in Japan and internationally. Japan Announced
!$%%#&'(#%$#)*'+,*#-././0#12,*3
PwC !"
Announced Date
Target Target Description Target Headquarters
Transaction Value (millions)
Target Resource Type
Acquirer Acquirer Description Acquirer Headquarters Transaction Status (as at August 8, 2011)
01/28/2011 Massey Energy Corporation
Massey Energy Company, through its wholly owned subsidiary, A.T. Massey Coal Company, Inc., produces, processes, and sells bituminous coal primarily in the United States.
United States US$8,500 Coal Alpha Natural Resources, Incorporated
Alpha Natural Resources, together with its subsidiaries, engages in the production, processing, and sale of coal in the United States.
United States Closed
04/24/2011 Equinox Minerals Limited Equinox Minerals Limited engages in the mining and exploration of mineral properties.
Australia C$7,300 Copper Barrick Gold Corporation
Barrick Gold Corporation engages in the production and sale of gold, as well as related activities, such as exploration and mine development.
Canada Closed
01/11/2011 Consolidated Thompson Iron Mines Limited
Consolidated Thompson Iron Mines Limited, a mining company, engages in the exploration and development of mineral properties in Canada.
Canada C$4,900 Steel Cliffs Natural Resources Incorporated
Cliffs Natural Resources, a mining and natural resources company, produces iron ore pellets, lump and fines iron ore, and metallurgical coal products.
United States Closed
05/02/2011 International Coal Group, Incorporated
International Coal Group, Inc. produces coal in northern and central Appalachian regions of the United States.
United States US$3,400 Coal Arch Coal Incorporated
Arch Coal engages in the production and sale of steam and metallurgical coal from surface and underground mines located throughout the United States.
United States Closed
04/14/2011 KazzInc Kazzinc JSC primarily produces zinc with copper, precious metals, and lead credits in Kazakhstan.
Kazakhstan US$3,200 Zinc Glencore International plc
Glencore International plc, together with its subsidiaries, engages in producing, sourcing, processing, refining, transporting, storing, financing, and supplying commodities to industries worldwide.
Switzerland Announced
06/10/2011 PT Bumi Resources Minerals Tbk
PT Bumi Resources Minerals Tbk, through its subsidiaries, engages in the exploration and development of mineral properties in Indonesia and in west Africa.
Indonesia US$2,100 Diversified Metals and Mining
Bumi plc Bumi plc, through its subsidiaries, engages in the exploration, mining, and processing of coal and other minerals in Indonesia and West Africa.
United Kingdom Announced
02/03/2011 Fronteer Gold Incorporated
Fronteer Gold Inc. engages in the acquisition, exploration, and development of mineral resource properties in Canada, the United States, and Turkey.
Canada C$2,300 Gold Newmont Mining Corporation
Newmont Mining, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties.
United States Closed
03/02/2011 Companhia Brasileira de Metalurgia e Mineracao
Companhia Brasileira de Metalurgia e Mineração engages in the extraction, processing, manufacture, and marketing of niobium-based products.
Brazil US$1,950 Diversified Metals and Mining
POSCO, Sojitz Corporation, Nippon Steel Corporation, JFE Holdings Incorporated, The Japan Oil, Gas and Metals National Corporation & National Pension Service
JFE Holdings, Inc., through its subsidiaries, engages in steel and engineering operations in Japan.
National Pension Service is a pension fund manager.
Nippon Steel Corporation, through its subsidiaries, engages in the manufacture and sale of steel and related products in Japan and internationally.
POSCO engages in the manufacture and sale of steel products in South Korea and internationally.
Sojitz Corporation operates as a general trading company worldwide.
Japan oil, Gas and Metals National Corporation provides financial assistance, technology development, technical support, stockpiling, gathering/providing information, mine pollution control, and overseas field survey services in Japan.
JFE Holdings Inc.: Japan
National Pension Service: South Korea
Nippon Steel Corp.: Japan
POSCO: South Korea
Sojitz Corporation: Japan
The Japan Oil, Gas and Metals National Corporation: Japan
Announced
06/22/2011 Vale Fertilizantes SA Vale Fertilizantes S.A. produces and supplies phosphate- and nitrogen- based inputs for the production of fertilisers and inputs for chemical companies in Brazil.
Brazil US$1,390 Fertilisers and Agricultural Chemicals
Vale S.A. Vale S.A. engages in the exploration, production, and sale of basic metals in Brazil. Brazil Announced
06/15/2011 Drummond Company, Inc., Colombian Mining Operations and Related Infrastructure
Drummond Companys, Colombian Mining Operations and Related Infrastructure comprises coal exploration properties with probable reserves of about 2 billion net tons.
Colombia US$1,524 Coal Itochu Corporation ITOCHU Corporation operates as a general trading company primarily in Japan and internationally. Japan Announced
20111HTop10GlobalMiningDeals
MergersandAcquisitions
PwC !"
!""#$%&'()*"+,-(.(-%"/+'")*,()*)0%")(11*2*3-"(3"45667"83-(-(*'"
!"#$%&#'("'"$)*+)(!"),+*("$)-(#(".)/,-0)12"'(113)4#+#$*#+)
"+(*(*".)(1)5"617")(!")7*+*+8)."6(1'9.)71.()#6%&*.*(*2")5&:"'.)
/!"#)7#'3"().!#'";)5:)2#<&"0=)>&:"'.)?'17)(!"),-)#++1&+6"$)
12"')$%"&'())(*+)*+)#6%&*.*(*1+.;)","#)!*8!"')(!#+)$1<<#')
2#<&".)#++1&+6"$)$&'*+8)(!")"+(*'")@ABA)6#<"+$#'):"#'=)C1&')
1?)(!")(1D)("+)$"#<.)1?)(!")!#<?E:"#')F"'")<"$)5:),-)5&:"'.;)
(!'"")1?)F!*6!)F"'")5*8)5"(.)1+)'*.*+8)$"7#+$)?1')(!")3":)
.(""<7#3*+8)*+8'"$*"+(.)7"(#<<&'8*6#<)61#<)#+$)*'1+)1'"G
E))H<D!#)I#(&'#<)J".1&'6".)#6%&*'"$)K#..":)L+"'8:)?1')
9:7;"<(00(=3">+"46?"@2*A($A"-="-B*"'B+2*"@2(,*"-B*")+%"@2(=2"-="
(!")#++1&+6"7"+(0=)M+)#)%&".()(1)5&*<$).6#<";)H<D!#)'"D1'("$<:)
5"#()1&()?"<<1F)H7"'*6#+)H'6!)41#<)(1)."6&'")(!")$"#<=)
!"#$%#&'()'*+&,-./0-,&,-#&1.2345',4.5&3#,)##5&./6&&
,).&1.27'54#+&)'+&+,6',#0418&,6'5+9.62',4.5'(&'5:&
1.27#((4508;&C0@B+"DB(*1"8E*,$-(.*"F1G,*2"H*.(3"
D2$-,BG*0)"'-+-*)7&!"#&)#5,&45,.&,-#&76.1#++&)4,-&'5&#*#&
,.)'6:&)4554508&'5:8&',&,-#:&.9&,-#&:'*&)#&:4:#60#&
%41,.64./+&'5:&)#$6#&'3+.(/,#(*&:#(40-,#:&,-',&)#&:4:<;
E))4<*??.)I#(&'#<)J".1&'6".)#6%&*'"$)41+.1<*$#("$)N!17D.1+)
I2=3"J(3*'"1=2"D9K7L"<(00(=3">+"M5?"@2*A($A"-="-B*"'B+2*"
D'*6")(!")$#:)D'*1')(1)(!")#++1&+6"7"+(;)"O6<&$*+8)6&''"+6:)
*7D#6(.0=)N!")$"#<)F#.)71(*2#("$)5:)#)$".*'")(1)?&'(!"')
D"+"('#(")4!*+#)/2*#)41+.1<*$#("$)N!17D.1+9.)"O*.(*+8)
4!*+#E51&+$)5&.*+"..0)#+$)F#.)#'8<:)#+1(!"').*8+)1?))
(!")(&'+*+8)(*$")*+)(!")I1'(!)H7"'*6#+)*'1+)1'")*+$&.(':=)
41+.*$"')(!#(;)&+(*<)@AAP;)4<*??.)8"+"'#("$)#<<)1?)*(.)'"2"+&".)
*+)I1'(!)H7"'*6#=)N1$#:;)4<*??.)8"+"'#(".)#51&()#)%&#'("')1?)
'+0*'"(3"-B*"C'(+&N+,(G,"2*O(=37"
!=-#&>.6,-&?2#641'5.5.24#+&'6#&%#6*&+,'05'5,8;&D8F"
Q1."D!)4#''#55#).#*$=)!"#&9#(,&)#&5##:#:&2.6#&#@7.+/6#&,.&
06.),-&2'6A#,+<<<;
N!"),-)12"'(#3".)4#+#$#)#+$)H&.('#<*#)(1)5"617")(!")7*+*+8)."6(1'9.)71.()#6%&*.*(*2")+#(*1+)/5:)$"#<)2#<&"0=)K1.()$"2"<1D"$)F1'<$)5&:"'.)#'")"OD"6("$)(1)'"7#*+)61+."'2#(*2")(!'1&8!)(1):"#')"+$=
Figure 10: Global M&A Activity Market Share of Deal Values by Geography (1H 2011)
Figure 11: Change in Share of Global Mining M&A Market: 1H 2011 vs FY 2010 (measured by aggregate deal values)
Source: Capital IQ, PwC Analysis
United States 31%
Canada 19%China 7%
Global M&A ActivityMarket Share of Deal Values by Geography(1H 2011)
Australia 4%
United Kingdom 1%
Brazil 3%
India
Other 35%
Source: Capital IQ, PwC Analysis
-20% -15% -10% -5% 0% 5% 10% 15% 20% 25%
United States
Canada
Australia
United Kingdom
Brazil
China
India
Change in Share of Global Mining M&A Market: 1H 2011 vs FY 2010(measured by aggregate deal values)
• TheUSovertakesCanadaandAustraliatobecometheminingsector’smostacquisi?vena?onbyvalue.
• BuyersfromtheUSannouncedover$21billioninacquisi?ons,101%higherthantheen?re2010.
• FourofthetoptendealsofwereledbyUSbuyers.
• Bigbetsonrisingdemandforthekeysteelmakingingredients,metallurgicalcoalandironore.
MergersandAcquisitions
PwC !
!"#$%&'()*#+(,#+-#.%"&/(0**1(23%&*/*(4-5*$/(6+"/*(
."(3"7*8(9"+%.%6#+(#&)(*6"&"7%6(1$*//-$*/(."(:*%'3(
"&("-.4"-&)(#6.%,%.5(.3$"-'3(."(5*#$(*&)8
!""#$"%&'"()*%"*+,"-.$%&*"./"01223"4&+$'*'"'$%+%+'*"5$$.6$7'8"(
!"(#6;-%/%.%"&/(%&(.3*('+"4#+(7%&%&'(/*6."$(:"$.3(#(.".#+(
#$%!&'())(*+(<*=6+-)%&'(6#&6*++*)(>(:%.3)$#:&()*#+/?8(
@"++#$(,#+-*/(:*$*()":&(,"-".9')"%&'"()*%"&5:/"./"0121"(
#&)A("&(#&(#&&-#+%/*)(4#/%/A(:*$*(,.-&+":*$(.3#&(BCDC8
!"";'*<+%'")'<'5%'8"'//.)%*"%."',%'$8"+%*"='.=)5<&+7")'57&"9+5"
E>FA(23%&*/*(*&.%.%*/($*7#%&*)(6+"/*(."(3"7*(%&(BCDD8((
/.-"./"57>6+*+%+.$*"?')'"+$"@*+5AB57+(7"'-')=+$="-5)C'%*3"
%&6+-)%&'(.3*(+#$'*/.(23%&*/*(#6;-%/%.%"&("G(.3*(5*#$A(H"&'I
J"&'(+%/.*)(E"&'"+%#&(E%&%&'(2"$1"$#.%"&K/(<EE2?(
#6;-%/%.%"&("G(E"&'"+%#&(6"0%&'(6"#+(7%&*$(LMN(2"#+(G"$(
DEFG"-+::+.$H"DIJKLG"-+::+.$"+$"75*&"<:6*"DMG"-+::+.$"+$"
6"&,*$.%4+*(4"&)/(<1+-/(#(G-.-$*(1$%6*(#)O-/.7*&.(4#/*)((
"&(G-.-$*($*/*$,*(6#+6-+#.%"&/?8
!""N57C:6*%)'"4&+$'*'"O6PQ*+8'"9.:6-'*"?')'"$.%"/.)":57C"(
"G(#()*/%$*(G"$()*#+I7#0%&'8(P&(G#6.A(BCDD(/#:(&-7*$"-/(
23%&*/*I+*)(.#0*",*$(#..*71./(.3#.(G#%+*)()-$%&'(,#+-#.%"&(
&*'".%#.%"&/8(Q:"(&".#4+*(*=#71+*/(#$*R(
I((P&(*#$+5(F1$%+A(E%&7*.#+/(S*/"-$6*/(7#)*(#&(-&/"+%6%.*)(
4DFLI"O+::+.$"75*&".//')"%."57>6+)'"@6*%)5:+5R*"S>6+$.,"
E%&*$#+/A(#(6"11*$(7%&*$(:%.3($%63($*/*$,*/(%&(T#74%#((
#&)(!#-)%(F$#4%#8(U+.%7#.*+5A(E%&7*.#+/K("GG*$(:#/(.$-71*)(
OP"T5))+7C"U.:8R*"4DJLI"O+::+.$".//')3"5"7.6$%').//')"%&5%"
1$"71.*)(E%&7*.#+/(."($*.$*#.A($#.3*$(.3#&(*&'#'*(%&(#(
4%))%&'(:#$8(
!"#$%&'()$%*++$'$,%-.%/0''()1%(2%0-*3$%*4'%5*26%*&6(5(26()%
022$225$76%*+%3084$9:%/#%)(F&)$*:(E%63*+7"$*A(23%*G(
S,'76%+9'"V/(7')"./"W+$-'%5:*"X'*.6)7'*L"!;*5&$6(7<%
=(6#%/0''()1%06%6#$2$%&'()$2%=*48,9%(7%*4'%3($=9%-$%3084$%
,$26'4)6(3$>:(
Source: Capital IQ, PwC Analysis
Chinese equity acquisitions in the global mining sector(excluding cancelled/withdrawn deals)
0
20
40
60
80
100
120
140
160
180
2,000
0
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
1H 2
010
1H 2
011
Num
ber
of t
rans
actio
ns
US
$ (m
illio
n)
Value Volume
Figure 6: Chinese equity acquisitions in the global mining sector (excluding cancelled/withdrawn deals)
Figure 7: Chinese acqusitions in the mining sector (by geography, 1H 2011)
Source: Capital IQ, PwC Analysis
Chinese Acqusitions in the Mining Sector(by geography, 1H 2011)
Europe 0%
Asia / Pacific(Emerging) 68%
Asia/Pacific(Developed) 15%
Africa/Middle East 4%
United States and Canada 9%
Latin America and Caribbean 4%
PwC !
!"#$%&'()*#+(,#+-#.%"&/(0**1(23%&*/*(4-5*$/(6+"/*(
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%&6+-)%&'(.3*(+#$'*/.(23%&*/*(#6;-%/%.%"&("G(.3*(5*#$A(H"&'I
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#6;-%/%.%"&("G(E"&'"+%#&(6"0%&'(6"#+(7%&*$(LMN(2"#+(G"$(
DEFG"-+::+.$H"DIJKLG"-+::+.$"+$"75*&"<:6*"DMG"-+::+.$"+$"
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!""N57C:6*%)'"4&+$'*'"O6PQ*+8'"9.:6-'*"?')'"$.%"/.)":57C"(
"G(#()*/%$*(G"$()*#+I7#0%&'8(P&(G#6.A(BCDD(/#:(&-7*$"-/(
23%&*/*I+*)(.#0*",*$(#..*71./(.3#.(G#%+*)()-$%&'(,#+-#.%"&(
&*'".%#.%"&/8(Q:"(&".#4+*(*=#71+*/(#$*R(
I((P&(*#$+5(F1$%+A(E%&7*.#+/(S*/"-$6*/(7#)*(#&(-&/"+%6%.*)(
4DFLI"O+::+.$"75*&".//')"%."57>6+)'"@6*%)5:+5R*"S>6+$.,"
E%&*$#+/A(#(6"11*$(7%&*$(:%.3($%63($*/*$,*/(%&(T#74%#((
#&)(!#-)%(F$#4%#8(U+.%7#.*+5A(E%&7*.#+/K("GG*$(:#/(.$-71*)(
OP"T5))+7C"U.:8R*"4DJLI"O+::+.$".//')3"5"7.6$%').//')"%&5%"
1$"71.*)(E%&7*.#+/(."($*.$*#.A($#.3*$(.3#&(*&'#'*(%&(#(
4%))%&'(:#$8(
!"#$%&'()$%*++$'$,%-.%/0''()1%(2%0-*3$%*4'%5*26%*&6(5(26()%
022$225$76%*+%3084$9:%/#%)(F&)$*:(E%63*+7"$*A(23%*G(
S,'76%+9'"V/(7')"./"W+$-'%5:*"X'*.6)7'*L"!;*5&$6(7<%
=(6#%/0''()1%06%6#$2$%&'()$2%=*48,9%(7%*4'%3($=9%-$%3084$%
,$26'4)6(3$>:(
Source: Capital IQ, PwC Analysis
Chinese equity acquisitions in the global mining sector(excluding cancelled/withdrawn deals)
0
20
40
60
80
100
120
140
160
180
2,000
0
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
1H 2
010
1H 2
011
Num
ber
of t
rans
actio
ns
US
$ (m
illio
n)
Value Volume
Figure 6: Chinese equity acquisitions in the global mining sector (excluding cancelled/withdrawn deals)
Figure 7: Chinese acqusitions in the mining sector (by geography, 1H 2011)
Source: Capital IQ, PwC Analysis
Chinese Acqusitions in the Mining Sector(by geography, 1H 2011)
Europe 0%
Asia / Pacific(Emerging) 68%
Asia/Pacific(Developed) 15%
Africa/Middle East 4%
United States and Canada 9%
Latin America and Caribbean 4%
• Inthefirstsixmonthsof2011,Chineseen??esannounced75acquisi?onsintheglobalminingsectorworthatotal$4.7billion.
• DespiterepeatedeffortstoextenditsgeographicalreachviaM&A,Chineseen??esremainedclosetohome.68%ofacquisi?onswereinAsia/Pacificemergingmarkets.(HongKonglistedMongolianMiningCorpora?on’sacquisi?onofMongoliancokingcoalminerfor$465million)
GovernmentRegulation• Governmenttouchesallaspectsoftheopera?ons• Aleaseorlicenseoftherighttoaccessthelandandextracttheproduct
• Therightstotransport• Taxes• Produc?onsharing• Landrehabilita?on
GovernmentRegulation• Governmentaroundtheworldarereassessingtheir
approachtotheminingsector.It’snotsimplyabouttaxesanymore.It’saboutgovernmentsstrivingtotakeagreatershareineveryareaoftheindustry.As?megoeson,thismaydriveminingcompaniestoinvestinregionsbasednotonlyontheirpoli?calstability,butalsoonthestabilityoftheirfiscalregime.
Sustainability• Keepingpeoplesafeandhealthy• Exposuretonoise• Hazardousmaterials
• Isola?onwork• Disease
Sustainability• Reducingclimatechangeimpacts• Engagementinpolicydevelopment
• ReducingenergyandGHGemissions
• Managingwateruse
• Enhancingbiodiversityandlandmanagement
‐‐Valeturnedfarmlandsintomines.Itwasnominatedasthemostevilcompanyof2011.
Reference• Mine2011–TheGamehasChanged.Reviewofglobaltrendsintheminingindustry.PWC.
• Mine2010–BacktotheBoom.Reviewofglobaltrendsintheminingindustry.PWC.
• RidersontheStorm–Globalminingdeals2011mid‐yearupdate.PWC.
• TrackingtheTrends2012–thetop10trendsminingcompaniesmayfaceinthecomingyear.Deloine.
• MiningMarketReview.Willis.Spring2010.
• BHPBillitonAnnualReport2011.• RioTintoReview.YearXX.• Someotheronlinepublicresources.
ThankYou.
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