EDITORIAL PAGE — Rivalry in the Big League

The world’s largest mining companies are continuing to hold their place in the sun despite some intense competition from ambitious companies anxious to make it into the Big League.

Granted, increased global competition and a number of corporate developments that took place this past year have changed the ranking of the world’s top 50 companies somewhat. Barrick Gold, for example, is believed to have made the quickest move up through the top-50 list, with preliminary figures suggesting a position of between 15 and 20.

Swedish-based Raw Materials Group, which annually charts the ownership and control of the world’s mining and refining industry, says that Barrick’s takeover of Lac Minerals was by far the biggest corporate deal in mining from June, 1994, to May of 1995. And, according to Raw Materials Group, Barrick “warrants strong attention”, because it is typical of a new breed of North American companies to concentrate on only one metal (in this case, gold) with a geographical focus on the Americas.

But the group’s recent study of the top ranking companies shows that companies based outside North America are also on the move. The world’s largest mining group, Anglo American of South Africa, was cited for having stepped up the pace of its international activities, particularly on the African continent.

While Anglo increased its lead over RTZ, the perpetual number two, during the past year, recent developments suggest that this could see-saw in the years ahead.

RTZ’s strategy has been to grow by consolidation and by increasing its own production. The recent signing of a partnership agreement with Freeport-McMoRan to buy a stake in the Grasberg copper mine in Indonesia yet again demonstrates the power of RTZ and its commitment to further growth through the acquisition of world-class mines.

RTZ was described as a leader among giant mining companies which have interests in many metals and operations in many parts of the world. This top-tier list includes Anglo American, as well as BHP of Australia.

These giant companies are taking a few lessons from juniors and becoming more aggressive on the global stage. They have the advantage of being cash-rich, and, therefore, better positioned to acquire advanced stage projects and to take advantage of opportunities being made available through the privatization of state-mining companies.

The study also cited South African-based Gencor as an up-and-comer into the Big League. The second-largest corporate deal during the study period was Gencor’s purchase of Billiton from Royal Dutch/Shell. In contrast to the battle for Lac, which was initiated by Royal Oak Mines’ hostile bid, this deal was negotiated over an extended period.

Raw Materials Group says Gencor represents a new type of South African mining company, one that takes a global approach and is trying to leave the legacy of apartheid behind as quickly as possible. Through this takeover, Gencor now ranks as one of the top 10 mining companies in the world, and it has interests in many metals as well as projects in many regions.

The aforementioned mining companies are the industry’s giants today; however, tomorrow may be a different story. It is interesting to note that among the 25 largest companies in 1993, only two were based in Europe (RTZ and the state-owned French companies); three were from Australia; and four were from South Africa. However, ten — by far the largest group — were North American-based.