U.S. News

Australia's Oxiana Sees Zinifex Bid Benefits


Australian miner Oxiana Resources considers that a merger with zinc producer Zinifex would produce benefits, the Australian Financial Review reported on Thursday.

Oxiana's managing director, Owen Hegarty, said in an interview with the paper published on Thursday that a takeover of Zinifex would produce cost savings through synergies, especially after Zinifex spins off its smelting assets.

"Like us they've got some good quality assets," the paper quoted him as saying. "We've probably got a good, strong growth pipeline and so do they, and there's probably some synergies there."

In September, Zinifex will create a new company, Nyrstar, which will hold a combination of Zinifex's zinc smelting assets and those of Belgium-based Umicore.

Analysts believe Nyrstar will be a catalyst for some much-anticipated corporate activity, the paper said.

Both Oxiana and Zinifex are themselves seen as takeover candidates by overseas groups such as Xstrata or Teck Cominco, the paper said.

In a separate interview, the paper said Zinifex's acting chief executive, Tony Barnes, realized the company would be a bigger takeover target when it gets the money from the spin off of the smelting assets, but said it did not need to make an acquisition of its own to protect itself.

Zinifex has said the funds, up to A$4 billion (US$3.4 billion), would be used for project acquisition and development or returned to shareholders, according to the paper.

Barnes said that Zinifex would benefit from more diversity, given that the spin off would leave it with two producing assets in one country.