Articles in Category: M&A Activity

This morning in metals news: Barksdale Resources announced it will acquire 100% of the Sunnyside copper-lead-zinc-silver project in Arizona; meanwhile, Cleveland-Cliffs signs have gone at the former ArcelorMittal Burns Harbor steel mill; and, lastly, the Biden administration has approved the first large-scale offshore wind power project in US waters.

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Barksdale to acquire Sunnyside project

mining

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Vancouver-based Barksdale Resources Inc. announced it will acquire 100% of the Sunnyside copper-lead-zinc-silver project in Arizona from Regal Resources Inc.

“The Transaction allows Regal shareholders to participate in a larger, more liquid company that not only holds the consolidated Sunnyside project, but also the 100% owned San Antonio, Goat Canyon, and Canelo copper porphyry exploration projects near Sunnyside as well as the San Javier copper-gold project in Sonora, Mexico,” Barksdale said in a release.

The transaction still requires regulatory approval, in addition to approval by Regal shareholders.

Cliffs signs up at Burns Harbor mill

In December, Cleveland-Cliffs closed on its acquisition of most of ArcelorMittal’s North American assets.

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ThyssenKrupp

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ThyssenKrupp has ended discussions with London-based Liberty Steel over the potential sale of the German conglomerate’s steel unit.

The parent company made the announcement Wednesday evening, Feb. 17.

“We opened the door for negotiations, but in the end our ideas about the corporate value and the structure of the transaction were far apart,” ThyssenKrupp Chief Financial Officer Dr. Klaus Keysberg said.

Keysberg added ThyssenKrupp regrets the decision because it perceived Liberty Steel “as a serious partner in the process.”

“There was a close exchange between ThyssenKrupp and Liberty Steel on a number of complex topics. As a result, however, no common solution could be found for key requirements addressed by ThyssenKrupp,” the group also stated.

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ThyssenKrupp, Liberty talks end

ThyssenKrupp had sought approximately €1.5 billion ($1.8 billion) for its steel assets. Liberty, however, wanted either to acquire it for nothing or receive extra payment with it, one industry watcher in Germany said.

Liberty Steel officials were also unavailable for comment. A ThyssenKrupp spokeswoman declined to comment beyond the group’s original statement.

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ArcelorMittal sign in Ontario

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Impacts from the COVID pandemic and asset sales saw ArcelorMittal report a 20.4% decline in its crude steel production in 2020.

“The countries worst affected by COVID were the ones that saw drops in their production,” one industry watcher added about lower production at the group’s assets in Europe, Brazil and the United States.

ArcelorMittal output down 20.5%

ArcelorMitttal poured a total 71.5 million metric tons of liquid steel in the 12 months of 2020. Meanwhile, it poured almost 90 million metric tons in 2019, the group noted Feb. 11.

Shipments for the year came to 69.1 million metric tons, down 18.2% year on year from 84.5 million metric tons, ArcelorMittal added.

The Europe segment recorded a decline of 22.6% to 34 million metric tons from almost 44 million metric tons. Meanwhile, shipments in that segment fell to 32.8 million metric tons. That total marked a decline of 22.5% from 42.3 million metric tons.

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Demand boost

Improved demand from the automotive and manufacturing sectors pushed up crude production in the last quarter of 2020. Q4 2020 production rose by over 15% to 9.11 million metric tons from the 7.9 million metric tons produced in Q3.

Overhaul of a blast furnace in Belgium, however, offset that increase.

“Although the company has restarted capacity, some steel-making capacity during [Q4] remained idled, including a blast furnace at Ghent, Belgium, that is due to restart mid-February 2021 following a planned major reline,” the group said.

Higher flats demand also helped to boost quarter-on-quarter shipments 4.7% to 8.6 million metric tons from 8.2 million metric tons, ArcelorMittal added.

The December sale of ArcelorMittal USA to Cleveland Cliffs pushed down crude production in North America 18.7% to 17.8 million metric tons from almost 22 million metric tons, the group said.

Shipments for the year were down to 9.41 million metric tons, the group noted, reflecting a 15.9% decline from almost 11.2 million metric tons.

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February 2021 MMI title pageThis morning in metals news: the February 2021 Monthly Metals Index (MMI) report is out; meanwhile, US steel capacity utilization reached 76.9%; and, lastly, Rusal recently announced the acquisition of a German aluminum producer.

February 2021 MMI report

As regular readers know, we have published all 10 of our Monthly Metals Index (MMI) articles over the past two weeks.

The MMI series covers: Automotive, Construction, Rare Earths, Global Precious, Renewables/GOES, Aluminum, Copper, Raw Steels and Stainless.

Those interested in the MMI series can find this month’s reports compiled in PDF form — visit the MMI landing page for download details.

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US steel capacity utilization reaches 76.9%

The US steel sector’s capacity utilization rate for the week ending Feb. 13 reached 76.9%, the American Iron and Steel Institute (AISI) reported.

The rate marked a rise from 75.2% the previous week.

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SSAB Borlange plant

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Swedish steelmaker SSAB has ended discussions with India’s Tata Steel over potential acquisition of IJmuiden plant, or Tata Steel Netherlands, the Stockholm-headquartered group stated Jan. 29.

“After deeper analysis and discussions, it became clear that there were limited possibilities to integrate IJmuiden into the SSAB strategic framework,” SSAB said in a statement. “Discussions with Tata Steel have therefore concluded.”

The Swedish company cited its desire to move toward fossil-free steel production as one of the reasons behind its decision.

“The group’s goal is to be the first in the world, in 2026, to supply fossil-free steel to market and to be a fossil-free company by 2045,” SSAB stated.

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SSAB walks away from costs

Prospective synergies would not justify necessary costs and investments into IJmuiden for SSAB’s desired transformation, the Swedish group added.

Tata Steel acknowledged SSAB’s withdrawal from interest in IJmuiden. However, Tata said it remains committed to a strategic resolution for its European portfolio.

“Currently, around two third of the business of Tata Steel is based in India with best in class, highly cost competitive assets and strong cash flows and Tata Steel remains committed to undertake significant de-leveraging in FY21 and beyond,” the Indian group said.

Tata Steel’s European assets include IJmuiden and the integrated Port Talbot works, or Tata Steel UK.

SSAB originally announced in November that it was speaking with Tata about acquiring IJmuiden. However, at the time it warned there was no guarantee of any deal.

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ThyssenKrupp

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German steelmaker ThyssenKrupp must be desperate to get rid of its steel business.

The steelmaker makes a great range of products of world-class quality. The brand has undeniable strength as a result.

However, it has not and cannot make money from it.

ThyssenKrupp steel division posts losses

The ThyssenKrupp steel division lost money last year.

Quite how much is difficult to say.

However, the Financial Times reported last year the firm predicted losses of a billion Euros for 2020. That is a not inconsiderable proportion of total group losses of more than €5.5 billion reported by the Financial Times this week.

The same article reports the group’s proposal to spin off the steel division as a separate entity, apparently in the expectation it would be easier to raise investment as a standalone unit.

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Previous efforts

Efforts to sell or merge the steelmaking division with competitors in recent years have failed repeatedly.

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U.S., China and Russia flags

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This morning in metals news: the United States Trade Representative released its annually mandated report covering the WTO rules compliance of China and Russia; U.S. Steel officially closed on its acquisition of the remaining equity of Big River Steel; and the Pilbara Ports Authority earlier this month reported shipping data for December.

USTR releases annual WTO compliance report for China, Russia

As mandated by Congress, the United States Trade Representative on Friday released its annual report on the WTO compliance of China and Russia.

“The United States has been closely monitoring China’s progress in implementing its numerous commitments under the Phase One Agreement and has regularly engaged China using the extensive consultation processes established by the agreement to discuss China’s implementation progress and any concerns as they arise,” the report reads. “Currently, the evidence indicates that China has been moving forward in good faith with the implementation of its commitments, making substantial progress in many areas.

“Because the Phase One Agreement does not cover all of the United States’ concerns, the United States will need to turn to Phase Two of its trade negotiations with China in order to secure resolutions to important outstanding issues.”

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U.S. Steel closes acquisition of remaining Big River Steel equity

In December, U.S. Steel announced plans to acquire the remaining equity in Arkansas-based Big River Steel for $774 million.

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low carbon steel

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This morning in metals news: Rio Tinto has committed $10 million toward its research partnership with China’s Baowu Steel Group; meanwhile, Freeport McMoRan completed the sale of an undeveloped project in the Democratic Republic of the Congo; and, lastly, copper remains at an over seven-year high.

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Rio Tinto commits $10M investment toward low-carbon steelmaking research

Miner Rio Tinto has announced a commitment of $10 million toward its low-carbon steelmaking research partnership with Chinese steelmaking giant Baowu Steel Group.

“Rio Tinto’s investment will fund the joint establishment of a Low Carbon Raw Materials Preparation R&D Centre, which will initially prioritise the development of lower carbon ore preparation processes,” Rio Tinto said in a release Wednesday. “This will include creating two ore preparation pilot plants, one to use biomass and the other exploring using microwave technology. The investment will also support work on carbon dioxide utilisation and conversion at the China Baowu Low Carbon Metallurgical Innovation Centre, which is a Baowu-led open platform for advancing metallurgical technologies to support the low-carbon transformation of the steel industry.”

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European Union flag

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(Editor’s Note: This is the first of a two-part review of the European steel sector.)

While steelmakers east of Berlin are working to meet rising demand, others are facing myriad technical and regulatory challenges.

Those challenges include a global pandemic that has severely impacted economies, industry watchers and market participants told MetalMiner.

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European steel faces higher costs, environmental restrictions

Steel plants in Central and Eastern European states that are members of the European Union face not only higher costs, but also environmental restrictions that could eventually mean an additional $30-40 per tonne to make steel.

China’s recovery from the coronavirus pandemic has led to increases there in steel production and cheaper imports.

As a result, China’s rebound has further impacted European steelmakers in Central and Eastern Europe.

‘Shifting east’

Foreign metals and mining groups started to acquire plants in Central and Eastern Europe in the late 1990s to early 2000s. Governments in those regions sought to privatize what in many cases were previously state-owned assets.

“The view was that the market was shifting east in terms of manufacturing bases,” as Western European automakers and white goods producers were setting up shop in those countries, one analyst said.

Some of the acquired assets also have either captive raw materials sources or easier access to them. This solved potential supply chain questions and allowed the acquiring groups to redistribute material elsewhere within their own network.

Many of the newer member states that joined from 2004 were also receiving subsidies from Brussels for infrastructure improvements. Those improvements would, in many cases, require steel, the analyst added.

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mergers and acquisitions

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As we noted yesterday, flats and specialty steels producer SSAB is in talks with Tata Steel over potential acquisition of the Indian group’s IJmuiden integrated plant in the Netherlands, the Swedish group confirmed.

“SSAB has participated in several different discussions concerning consolidations in the European steel industry. The discussions with Tata are on-going but no decisions have been made,” SSAB said Nov. 13.

“There can be no certainty that any transaction will materialize, nor as to the terms of any such potential transaction. Further announcement will be made in due course,” the Swedish group added.

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SSAB profile

SSAB’s product assortment includes plates, tubes and special steels. The group’s Luleå plant in northern Sweden produces steel and casts slab for rolling and coating at its Borlänge plant further south in the country.

The company also produces specialty steels at its Oxelösund integrated plant, south of capital city Stockholm, where it also rolls them into finished products.

SSAB acquired Finnish steelmaker Ruukki in 2014. In addition, the group produces plates and hot-rolled coil in the United States via one electric arc furnace at Alabama and at Iowa with a total capacity of 2.4 million tons per year.

SSAB’s IJmuiden interest

SSAB has eyed IJmuiden for at least a year, one analyst familiar with the situation told MetalMiner.

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