Very Unique
What makes the business so attractive is that there are only a few operating mines. Anglo and Niobec account for about 9 percent of production, and Brazil’s CBMM supplies the rest, according to Argonaut Securities Pty. Both the U.S. and Europe list niobium as a strategically important mineral.
“Niobium is a very unique business,” said Kalidas Madhavpeddi, who heads the CMOC International unit of Luoyang, China-based China Molybdenum. “We typically want to buy from people who regret selling it. We’ve been very carefully assembling a war chest in anticipation of a downturn in the industry.”
CBMM, controlled by the billionaire Moreira Salles family, has mostly dominated supply since starting operations five decades ago. It sold a 30 percent stake to a group of Asian steelmakers in two transactions valued at $3.9 billion in 2011.
In another deal, Magris Resources Inc., founded by former Barrick Gold Corp. Chief Executive Officer Aaron Regent, agreed to pay $530 million for the Niobec mine in Canada in 2014.
Unsuccessful bidders in Anglo’s sale may turn their interest to Cradle’s Panda Hill project in Tanzania, Argonaut said in a research report. Pending financing, it’s expected to start producing in mid-2018.
Cradle shares jumped 8.6 percent in Australian trading, reaching the highest since 2011. The sales “have brought a lot of participants in,” Cradle’s Burton said. “There was only one winner. That leaves lots of parties that might be interested in talking to us because we do need to raise some capital to bring this project on.”
