Vale launches $1.1 billion bid for S.Africa's Metorex

JOHANNESBURG/RIO DE JANEIRO Fri Apr 8, 2011 11:03am EDT

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JOHANNESBURG/RIO DE JANEIRO (Reuters) - Brazil's Vale (VALE5.SA), the world's largest iron ore producer, bid $1.1 billion for Metorex Ltd MTXJ.J to tap into its copper and cobalt operations and drive growth via resource-rich Africa.

The 7.5 billion rand offer at 7.35 rand per Metorex share was a 20 percent premium to the South African miner's closing price on March 25, the last business day before a cautionary announcement related to the matter was made.

"I don't think the shareholders would get much more than that in this current market," said Abri du Plessis, chief investment officer at Cape Town-based Gryphon Asset Management.

He added that he would not be surprised if Vale was not looking at other, bigger mining acquisitions in South Africa.

The takeover is the latest in a series of high profile moves into Africa by firms in emerging market giant Brazil. Metorex would give Vale exposure to copper and colbalt resources in Zambia and the Democratic Republic of Congo.

Analysts also said it signaled Brazilian investors were serious about Africa to help drive their own growth plans.

"The fact that a big Brazilian global partner is having a look at African assets might signal something for some of the other majors around the world," said Sasha Naryshkine, an analyst at Johannesburg-based Vestact.

"Because if you aren't afraid of mining in the Democratic Republic of Congo, you are not afraid of anything," he added.

Metorex, which will be delisted in Johannesburg if the deal goes through, recently raised its copper and cobalt reserves estimates.

Its output has also been rising. It said earlier this week that its January-March copper output rose 8 percent from the previous quarter to 13,344 tons, while cobalt production increased by 10 percent to 1,041 tons.

Metorex said in March that with a busy project pipeline and potential for other brownfields expansion it seeks to more than double its current annual copper production of around 50,000 tons.

Metorex's share price was 0.56 percent lower at 7.05 rand, underperforming the broader all share index in Johannesburg which was 0.35 percent higher.

(Additional reporting by Ruona Agbroko; Editing by David Cowell)

($1=6.652 Rand)

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