Mining
Industry
Overview
Boyi
Xie
March
5,
2012
Michael
Porter’s
Five
Forces
Outline
• 
• 
• 
• 
• 
• 
• 
Products
Suppliers/Customers
Industry
Compe?tors
Cost
Revenue
&
profit
Overall
trends
Other
factors
Products
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
Aluminum
Copper
Lead
Zinc
Gold
Silver
Uranium
oxide
Diamonds
Stainless
Steel
Materials
Iron
Ore
Coal
Aluminum
Zinc
Copper
Gold
Iron
ore
Diamond
Marketing
&
Customers
•  Marke?ng
centers
of
mining
companies
•  Sell
products
at
the
most
advantageous
price
to
make
the
most
of
their
intrinsic
value
•  Act
as
a
source
of
specialist
exper?se
•  Iden?fy
value
opportuni?es
•  Customer
service:
•  Technical
assistance
•  Transporta?on,
e.g.
BHP
Shipping,
Rio
Tinto
Marine
•  Customers
•  Jewelry
makers.
E.g.
gold,
silver
and
diamonds
•  Manufacturing/construc?on
companies.
•  E.g
Hyundai
Steel
•  Government
•  Other
retailers
BHP
Billiton
•  BHP
Billiton
is
a
global
mining,
oil
and
gas
company
headquartered
in
Melbourne,
Australia
and
with
a
major
management
office
in
London,
UK.
It
is
the
world’s
largest
mining
company
measured
by
revenue.
•  BHP
Billiton
was
created
in
2001
through
the
merger
of
the
Australian
Broken
Hill
Proprietary
Company
Limited
(BHP)
and
the
Anglo‐Dutch
Billiton
plc.
(Billiton
origins
stretch
back
to
1860)
•  It
is
now
a
dual‐listed
company
in
Australian
Securi?es
Exchange
and
London
Stock
Exchange.
•  It
operates
a
wide
variety
of
mining
and
processing
opera?ons
in
25
countries,
employing
approximately
41,000
people.
•  It
has
opera?ons
on:
aluminum,
diamonds,
iron
ore,
petroleum,
stainless
steel,
uranium,
etc.
•  Mines
in:
Algeria,
Australia,
Brazil,
Canada,
South
Africa,
USA
Rio
Tinto
•  Rio
Tinto,
now
headquartered
in
London,
UK
(and
Brisbane,
Australia),
was
founded
in
1873,
when
a
mul?na?onal
consor?um
of
investors
purchased
a
mine
complex
on
the
Rio
Tinto
river,
in
Huelva,
Spain.
•  It
is
now
a
dual‐listed
company
in
Australian
Securi?es
Exchange
and
London
Stock
Exchange.
•  It
is
one
the
world
leaders
in
the
produc?on
of
aluminum,
iron
ore,
copper,
uranium,
coal
and
diamonds.
•  It
also
has
significant
opera?ons
in
refining,
par?cularly
for
refining
bauxite
and
iron
ore.
•  It
has
opera?ons
on
six
con?nents
but
is
mainly
concentrated
in
Australia
and
Canada.
Vale
•  Vale
is
a
Brazilian
mul?na?onal
diversified
metals
and
mining
corpora?on
and
one
of
the
largest
logis?cs
operators
in
Brazil.
•  It’s
the
largest
producers
of
iron
ore,
pellets,
and
second
largest
nickel;
other
products
include
manganese,
ferroalloys,
copper,
bauxite,
aluminum.
•  It’s
listed
on
stock
exchanges
of
Sao
Paulo,
New
York,
Paris,
Hong
Kong
and
Madrid.
•  It’s
also
the
corpora?on
with
the
most
“contempt
for
the
environment
and
human
rights”
and
was
named
world’s
most
evil
company.
@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$51+,:%
Global
Indices
Global indices (February 1989=1)
9
•  Mining
companies
have
con?nued
to
outperform
the
overall
market.
•  While
the
industry
was
hit
hard
by
the
global
financial
crisis,
mining
companies
have
led
the
return
and
gone
beyond.
8
7
6
5
4
3
2
1
0
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Dow Jones
FTSE
HSBC Global Mining Index
Source: Bloomberg.
BCDC%)'?%/$'4%0$+)81+%8+%0#$%('/;$0%')%&/1?0#%
/$712+,$,6%133)$0%75%'%+2(7$/%13%8+*8,$+0)%0#'0%;$90%
Global
Indices
"#$%&'(#)*+)*,-.%)/0
-.$/%0#$%*12/)$%13%0#$%4')0%5$'/6%&417'4%$*1+1(8*%'+,%
914808*'4%0/$+,)%#'.$%*#'+&$,%0#$%8+,2)0/5:%"#$%(8+8+&%
!"#$%&'()*"#%)!&%+,-)!").)"+/)+'.)."#)&0+'+)!%)"1)&$'"!"2)
7'*;:%<($/&8+&%('/;$0)%'/$%4$',8+&%72448)#%41+&=0$/(%
,$('+,%9/1>$*081+)%?#84$%)29945%/$('8+)%*1+)0/'8+$,6%
?80#%*#'44$+&$)%)2*#%')%,$*48+8+&%&/',$%'+,%(1/$%
/$(10$%41*'081+):%"#$%*1)0%*2/.$%#')%)#830$,%296%
*1+08+28+&%01%920%9/$))2/$%1+%0#$%8+,2)0/5%01%('8+0'8+%
*"."3!.,)#!%3!4,!"+5)6+/)4,.(+'%).'+)+7+'2!"2)."#)&0+)
8+,2)0/5%8)%/$*$8.8+&%(1/$%'00$+081+%3/1(%80)%('+5%'+,%
.'/8$,%)0';$#14,$/):%!"#$%&'#$"&($)"&*%#+%8+%0#$%(8+8+&%
8+,2)0/5:
•  Emerging
countries
con?nued
to
storm
ahead,
with
demand
for
resources
driven
by
strong
GDP
growth,
including
close
to
10%
growth
in
China.
•  Mining
market
capitaliza?on
con?nued
to
rebound
in
2010,
with
many
players
recovering
the
remaining
market
capitaliza?on
lost
during
the
global
financial
crisis
and
surpassing
the
level
seen
at
the
end
of
2007.
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$51+,:%
•  The
total
year
end
market
capitaliza?on
of
the
top
40
companies
increased
by
26%,
with
larger
gains
generally
achieved
by
the
smaller
companies.
Global indices (February 1989=1)
9
8
7
6
5
4
3
2
1
0
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Dow Jones
FTSE
HSBC Global Mining Index
Source: Bloomberg.
BCDC%)'?%/$'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$)%
3A.!).'1&*0$(!'./$!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$$,!).'1&*0$(!&*+!.3#$/(!3.!
&)Q20/$!'0*0*%!&(($3(!'&4$(!03!'./$!)#&,,$*%0*%!$&)#!
5$&/!3.!+$3$/'0*$!A#.!3#$!".1!G?!'0*0*%!).'1&*0$(!&/$7
Top
10
Mining
Companies
•  Across
the
top
companies,
there
was
a
cumula?ve
32%
increase
in
Top 10 market capitalisation ($ billion)—31 December 2010
revenue,
a
72%
increase
in
adjusted
EBITDA
and
a
156%
increase
in
net
250
profit.
200
C*!>?@?
1*%*+(*
).11$/!
/)28$%&
"#$!+0-1/.+2)$
0*!>?@?
'./$!3#
3/&+030.
3.!3#$!A
$'$/%0*
3/&+030.
A./,+B!$
Top 40 TS
100
250%
50
Coal
India
PotashCorp
Barrick
Gold
FreeportMcMoRan
Anglo
American
Xstrata
China
Shenhua
0
Rio
Tinto
200%
Vale
•  The
big
get
bigger.
They
are
also
diversifying
in
other
direc?ons.
For
instance,
some
have
begun
exploring
the
benefits
of
ver?cal
integra?on
in
an
anempt
to
control
the
en?re
commodity
value
chain
–
from
coal
mining
to
steel
produc?on
to
power
genera?on.
150
BHP
Billiton
•  New
entrant:
Coal
India.
Following
its
IPO
in
October
2010,
it’s
the
largest
new
entrant.
5$&/!".3
(#.A(!'
3#$!($)3
150%
100%
2009
2010
Source: Capital IQ.
Note:
EBITDA:
earnings
before
interests,
taxes,
deprecia?on,
and
amor?za?on
9%.#1:.%&7%2;-201$<%
:3/.*%!+$'&*+!#&(!'&+$!>?@?!&!(3&*+!.23!5$&/!-./!3#$!
'0*0*%!0*+2(3/57!R)/.((!3#$!".1!G?!3#$/$!A&(!&!
50%
0%
Source: B
"#$%&'($)%*+,-)&%&.$(%-'.
-./0+&%1232%4$%)'4%5#$%567%5#/$$%(0+$/)%89:;%90<<056+=%
>'<$%'+,%?06%"0+56@%)5$7%*<$'/%6A%5#$%/$)5%6A%5#$%0+,.)5/BC%
"#$%('/D$5%*'705'<0)'506+%6A%5#0/,%7<'*$%?06%"0+56%0)%
,6.E<$%5#$%)0F$%6A%5#$%+$G5%<'/&$)5%7<'B$/=%H#0+'%
!"#$"%&'()"*+"(,#+-*$#,(./0(*$(1&-%#(,%2*$3(.4546(78(
5#$%567=%9:;%90<<056+I)%('/D$5%*'705'<0)'506+%A./5#$/%
)5/$+&5#$+$,=%7.550+&%05%*<$'/<B%'E6J$%5#$%/$)5C%;/0*$%'+,%
7/6,.*506+%0+*/$')$)%0+%0/6+%6/$%4$/$%('K6/%,/0J$/)%6A%
5#$%&/645#%EB%5#$%567%5#/$$C%
The
Super
Majors
Step
Out
•  During
2010
we
saw
the
top
three
miners
(BHP
Billiton,
Vale
and
Rio
Tinto)
step
clear
of
the
rest
of
the
industry.
Top 3 market capitalisation ($ billion)—31 December
250
200
•  At
the
top,
BHP
Billiton’s
market
capitaliza?on
further
strengthened,
150
pupng
it
clearly
above
the
rest.
•  The
market
capitaliza?on
of
third
place
Rio
Tinto
is
double
the
size
of
the
next
largest
player,
China
Shenhua,
which
declined
25%
in
value
during
2010.
•  Price
and
produc?on
increases
in
iron
ore
were
major
drivers
of
the
growth
by
the
top
three.
P5%5#$%)'
$G5/'*506
76<050*'<
6A%7/6K$*
!%<<-=*$
,$('+,
"#$%46/
(0+0+&%*
7/$))./$
":)(8:(,
6A%,$<0J$
5#$0/%*6+
.+,$/)56
100
50
0
"#$%/)0
L5/$+&5#
7/$,6(0
E0&%)56/B
9*3$(:;(-#
&/645#%0
B#&2(A-&
)7$+,=%)
/'0<4'B%
BHP Billiton
2005
2006
2007
Source: Capital IQ.
Vale
2008
2009
2010
Rio Tinto
Source: PwC analysis.
1.8
57
56
Production
and
Revenue
J
EHF
K-9+%9-$%E:9++$)F
JDL
DL
M98,%E:9++$)F
4H
B
N'/=0:$%E:9++$)F
HC
DC
O9:')#%E:9++$)F
D4
4C
P0*Q$8%E:9++$)F
D
H
O8':0+/(%E9/+*$)F
H
C
R0+*%E:9++$)F
4
C
DH
EDF
S0'(9+,)%E*'-':)F
• 
• 
• 
• 
K+*-$')$)%0+%;-9,/*:09+%'*-9))%:#$%19'-,%'-$%$.0,$+*$,%
'19.$G%T0:#%9+82%*9;;$-%'+,%,0'(9+,)%)#9T0+&%,$*80+$)6%
Z$%#'.$%*'8*/8':$,%:#$%-$('0+0+&%(0+$%80<$%9<%:#$%"9;%HC%
0%
/)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+%
2009
0+*-$')0+&%12%(9-$%:#'+%:#$%',,0:09+)%:9%-$)$-.$)6
2010
Other
metals
@9;;$-%E:9++$)F
2010
Diamonds
D
Zinc
DGHII
Copper
Platinum
@9'8%E:9++$)F
83<
Nickel
E(08809+F
Bauxite
59:&;$(<4,-(
09$(74/,4(*$:4(
Other
"#$%&-';#%'19.$%)#9T)%'%*9(;'-0)9+%9<%:9:'8%;-9,/*:09+%
#$%$&'$()*(+,--,./0*
9<%:#$%"9;%HC%2$'-U9+U2$'-G%/)0+&%9+$%:9++$%9<%*9;;$-%
Share
of revenue by commodity
')%'+%$[/0.'8$+:%/+0:G%1')$,%9+%BCDC%*89)0+&%;-0*$)6%
"#0)%($:#9,989&2%'889T)%<9-%'%*9(;'-0)9+%9<%-$8':0.$%
30%
(*",.'/-"+&#'*"??&#$$&'"CC",-/-)?A&4>)&*)?.$/?&?>"F&#&E3&
0+*-$')$%0+%9.$-'88%;-9,/*:09+6%"#0)%0)%(9-$%:#'+%&891'8%
25%
$*9+9(0*%&-9T:#%1/:%8$))%:#'+%:#$%$*9+9(0*%&-9T:#%
0+%:#$%,$.$89;0+&%*9/+:-0$)%:#':%#'.$%1$$+%:#$%;-0('-2%
20%
,-0.$-)%<9-%#0&#$-%,$('+,6%"#$%0+*-$')$%0+%;-9,/*:09+G%
8$,%12%0-9+%9-$G%):$()%<-9(%8'-&$%$=;'+)09+%;-9>$*:)%
15%
*9(0+&%9+!80+$%-$)/8:0+&%0+%#0&#$-%;-9,/*:09+%'*-9))%'%
+/(1$-%9<%*9((9,0:0$)6%\9-%:#9)$%:#':%T$-$%T0880+&%'+,%
10%
'18$%:9%0+.$):%12%*9+:0+/0+&%*';:0'8%$=;'+)09+)%,/-0+&%:#$%
=$"G#$&I+#+'-#$&'*-?-?%&/>)&(#@"00%&-+&/>)&0"*C&"0&-+'*)#?),&
5%
;-9,/*:09+G%0)%1$&0++0+&%:9%1$%)$$+6
Gold
6,7(81(
74,.'+0/,&(
Bauxite
Source: PwC Analysis.
Iron ore
E($')/-$F
Iron ore
Copper
5,--,./0*%
2009
Coal
!121(34,.'+0/,&
55
Fertilizer
!"#$%&'"(()*&#+,&-*"+&"*)&#''".+/&0"*&123&"0&4"(&56&
*)7)+.)&8966:&;&163<&=)+)*#/),&/>-?&@)#*A&B*"+&"*)&
-$.$+/$)%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-$6
Source: PwC analysis.
A
5%
increase
in
overall
produc?on
The
increase
in
produc?on
is
led
by
iron
ore.
!"#$%&'"(()*&#+,&-*"+&"*)&#''".+/&0"*&123&"0&4"(&56&
!"#$!"#$%&'($%#')%*#'+&$,%%%%!"
More
than
global
economic
growth
but
less
than
the
economic
growth
in
the
developing
countries
*)7)+.)&8966:&;&163<&=)+)*#/),&/>-?&@)#*A&B*"+&"*)&
Developing
countries
are
the
primary
drivers
for
higher
demand
-$.$+/$)%0+*-$')$,%12%34567%108809+%0+%:#$%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'-&$):%1
-$.$-)'8%9<%:#
8$.$8)%#'.$%-$
$=;'+,%9;$-'
K+%BCDCG%T0:#
':%</88%*';'*0:
=)+)*#/),&#&D
;-9,/*:09+%,
8'19/-%):-0Q$)
*'($%9+80+$%0
)'8$%9<%0:)%XY%
);/--$,%0+*-$
Total production
(Using Copper eq
60
59
58
57
56
55
2009
Cost
•  Costs
are
going
up
across
the
board
•  Bumper
profits
have
fuelled
labor
unrest
•  New
and
replacement
equipment
•  Haul
truck
?res
alone
had
tripled
•  New
taxes
and
royal?es
is
pushing
up
regulatory
compliance
costs
Cost
•  Educa?on,
such
as
mining
major
•  Long‐term
infrastructure
investment,
including
railways,
ports,
community
housing
and
schools
•  High
commodity
prices
are
driving
shortages
in
equipment,
labor
and
other
key
inputs,
pushing
costs
up.
This
means
mining
companies
must
walk
a
?ghtrope
between
ramping
up
volumes
to
meet
demand
and
containing
their
costs.
Mergers
and
Acquisitions
•  The
global
mining
industry
&'()()*&+,-&./%"&0#"1'/2&%).&0%"1/2&3%""4&
becomes
increasingly
more
*&56&78559&:#"%;("/&<%=(;%"&'%3>/;2&?(""&
consolidated
Global mining M&A volume and aggregate value
Figure 1: Global mining M&A volume and aggregate value
=;&./%"'%>/32&;#&=3#<//.&<%1;(#12"49
160,000
140,000
100,000
1,500
80,000
1,000
60,000
40,000
500
20,000
0
Total number of transactions
1H 2011
1H 2010
FY2010
FY2009
FY2008
FY2007
FY2006
0
FY2005
higher
than
the
first
half
of
4&2(*)2@&C#?/0/3@&=#();&;#&%&2"#?.#?)&E#3&;C/&3/'%()./3&
/&4/%3&G"%3*/"4&%2&%&3/21";&#E&1)</3;%();4&()&$3#%./3&
2010.
%"&'%3>/;2H9&-2&./=(<;/.&()&I(*13/&J&#)&;C/&E#""#?()*&
@&./%"&0%"1/2&%).&0#"1'/2&C%0/&%"3/%.4&./<3/%2/.&$4&
•  The
average
deal
value
during
#&%).&$%#&'#);C&#0/3&'#);C&()&K1"4&%).&%&E13;C/3&&
#&%).&'#&3/2=/<;(0/"4&()&-1*12;9&L()</&K1)/@&#)&
the
first
half
of
2011
was
$104
/*%;/@&*"#$%"&'()()*&./%"&0%"1/2&C%0/&./<"()/.&$4&&
million,
a
40%
increase
over
#&%).&./%"&0#"1'/2&C%0/&./<"()/.&$4&"&#&9
120,000
2,000
Total deal value ($mm)
2010.
A)/*8)"()*+"A*+6)"(6/458"01)"9/,0"1*+<".<"=>##"-*,"
,-..-/01&%&(*#&()<3/%2/&#0/3&78589&I#3&=1$"(<"4&&
;%3*/;2@&;C/&%0/3%*/&=3/'(1'&#0/3&;C/&.%4&=3(#3&;#&
1)</'/);&2C%3/&=3(</2&?%2&5AB9&M3/'(1'2&0%3(/.&
()/*3+G"3G"0*/8)0",4I)L"M./"2C>>";4++4.5N"*7O64,404.5,$"
Source: Capital IQ, PwC Analysis
Figure 2: Global mining M&A (1H 2011) by transaction size
Number of transactions
2,500
US$ (millions)
()*+,"-./01"2&#"34++4.5"-)/)"*55.657)("(6/458"01)"&
•  1,379
deals
worth
$71
billion
:";.501,".<"=>##?"@)*+"A.+6;),"*5("*88/)8*0)"A*+6),"
were
announced
during
the
#>B"*5("=CB"1481)/"01*5"01)"9/,0"1*+<".<"=>#>?"D5"*5"
"(2/.&$%2(2@&./%"&0#"1'/2&%).&%**3/*%;/&0%"1/2&?/3/&
first
half
of
2011.
).&7B&C(*C/3&;C%)&7858&%).&577B&%).&D7B&C(*C/3&
=>>'?"E."F60"014,"450."F)/,F)704A)$"7.5,4()/"01*0"
•  Deals
volumes
and
aggregate
"(2/.&0#"1'/2&'%>/&7855&;C/&$12(/2;&4/%3&#E&+,-&()&;C/&
G".<"01)";45458",)70./"H;./)"</)5I4)("01*5")A)5"=>>&JK?"
values
were
10%
and
25%
180,000
3,000
Announced
Date
Target
Target Description
Target
Headquarters
Transaction
Value
(millions)
Target
Resource
Type
!$%%#&'(#%$#)*'+,*#-././0#12,*3
2011
1H
Top
10
Global
Mining
Deals
Acquirer
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
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
Announced
01/11/2011
Date
Target
Consolidated Thompson
Iron Mines Limited
Target
Description
Consolidated
Thompson Iron Mines Limited, a mining company, engages in
the exploration and development of mineral properties in Canada.
Target
Canada
Headquarters
Transaction
C$4,900
Value
(millions)
Target
Steel
Resource
Type
Acquirer
Cliffs Natural
Resources
Incorporated
05/02/2011
01/28/2011
US$3,400
US$8,500
Coal
Coal
Kazakhstan
US$3,200
Zinc
04/24/2011
Equinox Minerals Limited
Australia
C$7,300
Copper
06/10/2011
01/11/2011
PT Bumi Resources
Consolidated
Minerals Tbk Thompson
Iron Mines Limited
International Coal Group, Inc. produces coal in northern and central
Massey
Energy
Company,
its wholly owned subsidiary, A.T. Massey
Appalachian
regions
of thethrough
United States.
Coal Company, Inc., produces, processes, and sells bituminous coal primarily
Kazzinc
JSC States.
primarily produces zinc with copper, precious metals, and lead
in
the United
credits in Kazakhstan.
Equinox Minerals Limited engages in the mining and exploration of mineral
properties.
PT Bumi Resources Minerals Tbk, through its subsidiaries, engages in the
Consolidated
Thompson
Iron Mines
Limited,
a mining
company,and
engages
in
exploration and
development
of mineral
properties
in Indonesia
in west
the
exploration and development of mineral properties in Canada.
Africa.
United States
United States
04/14/2011
International Coal Group,
Massey
Energy
Incorporated
Corporation
KazzInc
Indonesia
Canada
US$2,100
C$4,900
Diversified
Steel
Metals and
Mining
02/03/2011
05/02/2011
Fronteer Gold
International
Incorporated Coal Group,
Incorporated
Fronteer Gold Inc. engages in the acquisition, exploration, and development of
International
Coalproperties
Group, Inc.
coalUnited
in northern
mineral resource
in produces
Canada, the
States,and
andcentral
Turkey.
Appalachian regions of the United States.
Canada
United States
C$2,300
US$3,400
Gold
Coal
Arch Coal
Alpha
Natural
Incorporated
Resources,
Glencore
Incorporated
International p
Barrick Gold
Corporation
Bumi plc
Cliffs Natural
Resources
Incorporated
Newmont Min
Arch
Coal
Corporation
Incorporated
04/14/2011
03/02/2011
KazzInc
Companhia Brasileira de
Metalurgia e Mineracao
Kazzinc
JSCBrasileira
primarily de
produces
zincewith
copper,engages
preciousinmetals,
and lead
Companhia
Metalurgia
Mineração
the extraction,
credits
in Kazakhstan.
processing,
manufacture, and marketing of niobium-based products.
Kazakhstan
Brazil
US$3,200
US$1,950
Zinc
Diversified
Metals and
Mining
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
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
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
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
POSCO, Sojit
Corporation, N
Steel Corpora
Holdings Inco
ValeJapan
S.A. Oil
The
and Metals Na
Corporation &
Pension Servi
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 Corpor
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
Vale S.A.
Glencore
POSCO, Sojit
International
Corporation, p
Steel Corpora
Holdings
Bumi
plc Inco
The Japan Oi
and Metals N
Corporation &
Pension Serv
Newmont
Min
Corporation
2011
1H
Top
10
Global
Mining
Deals
get
source
e
Acquirer
Acquirer Description
Acquirer Headquarters
Transaction
Status (as at
August 8,
2011)
al
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
pper
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
el
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
al
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
c
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
ersified
tals and
ing
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
d
Newmont Mining
Corporation
Newmont Mining, together with its subsidiaries, engages in the acquisition, exploration, and
production of gold and copper properties.
United States
Closed
ersified
tals and
ing
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.
JFE Holdings Inc.: Japan
Announced
National Pension Service is a pension fund manager.
National Pension Service:
South Korea
Nippon Steel Corporation, through its subsidiaries, engages in the manufacture and sale of steel and
related products in Japan and internationally.
Nippon Steel Corp.: Japan
POSCO engages in the manufacture and sale of steel products in South Korea and internationally.
POSCO: South Korea
Sojitz Corporation operates as a general trading company worldwide.
Sojitz Corporation: Japan
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.
The Japan Oil, Gas
and Metals National
Corporation: Japan
tilisers
d
icultural
emicals
Vale S.A.
Vale S.A. engages in the exploration, production, and sale of basic metals in Brazil.
Brazil
Announced
al
Itochu Corporation
ITOCHU Corporation operates as a general trading company primarily in Japan and internationally.
Japan
Announced
,-)12"'(#3".)4#+#$#)#+$)H&.('#<*#)(1)5"617")(!")7*+*+8)
'9.)71.()#6%&*.*(*2")+#(*1+)/5:)$"#<)2#<&"0=)K1.()$"2"<1D"$)
$)5&:"'.)#'")"OD"6("$)(1)'"7#*+)61+."'2#(*2")(!'1&8!)(1)
"+$=
Mergers
and
Acquisitions
•  The
US
overtakes
Canada
and
Australia
to
become
the
mining
'()*"+,-(.(-%"/+'")*,()*)0%")(11*2*3-"(3"45667"83-(-(*'"
%&#'("'"$)*+)(!"),+*("$)-(#(".)/,-0)12"'(113)4#+#$*#+)
sector’s
most
acquisi?ve
na?on
".)(1)5"617")(!")7*+*+8)."6(1'9.)71.()#6%&*.*(*2")5&:"'.)
by
value.
#)7#'3"().!#'";)5:)2#<&"0=)>&:"'.)?'17)(!"),-)#++1&+6"$)
$%"&'())(*+)*+)#6%&*.*(*1+.;)","#)!*8!"')(!#+)$1<<#')
.)#++1&+6"$)$&'*+8)(!")"+(*'")@ABA)6#<"+$#'):"#'=)C1&')
•  Buyers
from
the
US
announced
")(1D)("+)$"#<.)1?)(!")!#<?E:"#')F"'")<"$)5:),-)5&:"'.;)
over
$21
billion
in
acquisi?ons,
)1?)F!*6!)F"'")5*8)5"(.)1+)'*.*+8)$"7#+$)?1')(!")3":)
101%
higher
than
the
en?re
7#3*+8)*+8'"$*"+(.)7"(#<<&'8*6#<)61#<)#+$)*'1+)1'"G
Global M&A Activity
Share
of Deal
Values
by Geography
FigureMarket
10: Global
M&A
Activity
Market
Share of Deal Values by
(1H
2011)
Geography (1H 2011)
2010.
!#)I#(&'#<)J".1&'6".)#6%&*'"$)K#..":)L+"'8:)?1')
;"<(00(=3">+"46?"@2*A($A"-="-B*"'B+2*"@2(,*"-B*")+%"@2(=2"-="
#++1&+6"7"+(0=)M+)#)%&".()(1)5&*<$).6#<";)H<D!#)'"D1'("$<:)
•  Four
of
the
top
ten
deals
of
were
()1&()?"<<1F)H7"'*6#+)H'6!)41#<)(1)."6&'")(!")$"#<=)
led
by
US
buyers.
United States 31%
Other 35%
India
Canada 19%
China 7%
Brazil 3%
Australia 4%
United Kingdom 1%
!"#$%#&'()'*+&,-./0-,&,-#&1.2345',4.5&3#,)##5&./6&&
Source: Capital IQ, PwC Analysis
).&1.27'54#+&)'+&+,6',#0418&,6'5+9.62',4.5'(&'5:&
•  Big
bets
on
rising
demand
for
1.27#((4508;&C0@B+"DB(*1"8E*,$-(.*"F1G,*2"H*.(3"
D2$-,BG*0)"'-+-*)7&!"#&)#5,&45,.&,-#&76.1#++&)4,-&'5&#*#&
the
key
steelmaking
ingredients,
.)'6:&)4554508&'5:8&',&,-#&#5:&.9&,-#&:'*&)#&:4:&#2#60#&
Figure 11: Change in Share of Global Mining M&A Market:
metallurgical
coal
and
iron
ore.
Change
in Share
of Global
Miningby
M&A
Market: 1H
2011
vs FY 2010
1H
2011 vs
FY 2010
(measured
aggregate
deal
values)
%41,.64./+&'5:&)#$6#&'3+.(/,#(*&:#(40-,#:&,-',&)#&:4:<;
?.)I#(&'#<)J".1&'6".)#6%&*'"$)41+.1<*$#("$)N!17D.1+)
3"J(3*'"1=2"D9K7L"<(00(=3">+"M5?"@2*A($A"-="-B*"'B+2*"
")(!")$#:)D'*1')(1)(!")#++1&+6"7"+(;)"O6<&$*+8)6&''"+6:)
(measured by aggregate deal values)
India
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-.-$*($*/*$,*(6#+6-+#.%"&/?8
4,000
40
2,000
20
0
Value
Mergers
and
Acquisitions
I((P&(*#$+5(F1$%+A(E%&7*.#+/(S*/"-$6*/(7#)*(#&(-&/"+%6%.*)(
1H 2011
1H 2010
FY 2010
Latin America and Caribbean 4%
United States and Canada 9%
Africa/Middle East 4%
Asia/Pacific
(Developed) 15%
Asia / Pacific
(Emerging) 68%
FigureSource:
6: Chinese
equity
acquisitions in the global mining sector
IQ, PwC
Analysis
ChineseCapital
equity
acquisitions
in the global mining sector
(excluding cancelled/withdrawn deals)
180
18,000
160
16,000
140
14,000
120
12,000
100
10,000
80
PwC
8,000
60
6,000
4,000
40
2,000
20
0
Value
Source: Capital IQ, PwC Analysis
Volume
1H 2011
1H 2010
FY 2010
FY 2009
FY 2008
FY 2007
FY 2006
FY 2005
FY 2004
0
Number of transactions
20,000
FY 2003
US$ (million)
(excluding cancelled/withdrawn deals)
FY 2002
!""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(
Europe 0%
FY 2001
"&(G-.-$*($*/*$,*(6#+6-+#.%"&/?8
FY 2009
Acqusitions
in theinMining
Sector
FigureChinese
7: Chinese
acqusitions
the mining
sector
(by geography,
1H 2011)
(by geography,
1H 2011)
•  In
the
first
six
months
of
2011,
!"#$%&'()$%*++$'$,%-.%/0''()1%(2%0-*3$%*4'%5*26%*&6(5(26()%
022$225$76%*+%3084$9:%/#%)(F&)$*:(E%63*+7"$*A(23%*G(
Chinese
en??es
announced
75
S,'76%+9'"V/(7')"./"W+$-'%5:*"X'*.6)7'*L"!;*5&$6(7<%
=(6#%/0''()1%06%6#$2$%&'()$2%=*48,9%(7%*4'%3($=9%-$%3084$%
acquisi?ons
in
the
global
mining
,$26'4)6(3$>:(
sector
worth
a
total
$4.7
billion.
•  Despite
repeated
efforts
to
extend
!"#$%&'()*#+(,#+-#.%"&/(0**1(23%&*/*(4-5*$/(6+"/*(
."(3"7*8(9"+%.%6#+(#&)(*6"&"7%6(1$*//-$*/(."(:*%'3(
its
geographical
reach
via
M&A,
"&("-.4"-&)(#6.%,%.5(.3$"-'3(."(5*#$(*&)8
Chinese
en??es
remained
close
to
!""#$"%&'"()*%"*+,"-.$%&*"./"01223"4&+$'*'"'$%+%+'*"5$$.6$7'8"(
!"(#6;-%/%.%"&/(%&(.3*('+"4#+(7%&%&'(/*6."$(:"$.3(#(.".#+(
home.
68%
of
acquisi?ons
were
in
#$%!&'())(*+(<*=6+-)%&'(6#&6*++*)(>(:%.3)$#:&()*#+/?8(
@"++#$(,#+-*/(:*$*()":&(,"-".9')"%&'"()*%"&5:/"./"0121"(
Asia/Pacific
emerging
markets.
#&)A("&(#&(#&&-#+%/*)(4#/%/A(:*$*(,.-&+":*$(.3#&(BCDC8
!"";'*<+%'")'<'5%'8"'//.)%*"%."',%'$8"+%*"='.=)5<&+7")'57&"9+5"
(Hong
Kong
listed
Mongolian
E>FA(23%&*/*(*&.%.%*/($*7#%&*)(6+"/*(."(3"7*(%&(BCDD8((
/.-"./"57>6+*+%+.$*"?')'"+$"@*+5AB57+(7"'-')=+$="-5)C'%*3"
Mining
Corpora?on’s
acquisi?on
of
%&6+-)%&'(.3*(+#$'*/.(23%&*/*(#6;-%/%.%"&("G(.3*(5*#$A(H"&'I
J"&'(+%/.*)(E"&'"+%#&(E%&%&'(2"$1"$#.%"&K/(<EE2?(
Mongolian
coking
coal
miner
for
#6;-%/%.%"&("G(E"&'"+%#&(6"0%&'(6"#+(7%&*$(LMN(2"#+(G"$(
DEFG"-+::+.$H"DIJKLG"-+::+.$"+$"75*&"<:6*"DMG"-+::+.$"+$"
$465
million)
6"&,*$.%4+*(4"&)/(<1+-/(#(G-.-$*(1$%6*(#)O-/.7*&.(4#/*)((
Volume
Source: Capital IQ, PwC Analysis
FY 2000
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%))%&'(:#$8(
FY 2008
FY 2007
FY 2005
FY 2006
FY 2004
FY 2003
FY 2002
!""N57C:6*%)'"4&+$'*'"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(
FY 2001
FY 2000
0
!
Government
Regulation
•  Government
touches
all
aspects
of
the
opera?ons
•  A
lease
or
license
of
the
right
to
access
the
land
and
extract
the
product
•  The
rights
to
transport
•  Taxes
•  Produc?on
sharing
•  Land
rehabilita?on
Government
Regulation
•  Government
around
the
world
are
reassessing
their
approach
to
the
mining
sector.
It’s
not
simply
about
taxes
anymore.
It’s
about
governments
striving
to
take
a
greater
share
in
every
area
of
the
industry.
As
?me
goes
on,
this
may
drive
mining
companies
to
invest
in
regions
based
not
only
on
their
poli?cal
stability,
but
also
on
the
stability
of
their
fiscal
regime.
Sustainability
•  Keeping
people
safe
and
healthy
• 
• 
• 
• 
Exposure
to
noise
Hazardous
materials
Isola?on
work
Disease
Sustainability
•  Reducing
climate
change
impacts
• 
• 
• 
• 
Engagement
in
policy
development
Reducing
energy
and
GHG
emissions
Managing
water
use
Enhancing
biodiversity
and
land
management
‐‐
Vale
turned
farm
lands
into
mines.
It
was
nominated
as
the
most
evil
company
of
2011.
Reference
•  Mine
2011
–
The
Game
has
Changed.
Review
of
global
trends
in
the
mining
industry.
PWC.
•  Mine
2010
–
Back
to
the
Boom.
Review
of
global
trends
in
the
mining
industry.
PWC.
•  Riders
on
the
Storm
–
Global
mining
deals
2011
mid‐year
update.
PWC.
•  Tracking
the
Trends
2012
–
the
top
10
trends
mining
companies
may
face
in
the
coming
year.
Deloine.
•  Mining
Market
Review.
Willis.
Spring
2010.
•  BHP
Billiton
Annual
Report
2011.
•  Rio
Tinto
Review.
Year
XX.
•  Some
other
online
public
resources.
Thank
You.