Africa Oil Corp

[sumisu]

Teck Cominco CEO: Iron Ore Assets Would Be A Good Fit

|Published: February 26, 2008 5:44 PM

Brian Truscott

Of DOW JONES NEWSWIRES

http://tinyurl.com/2b89ds

VANCOUVER -(Dow Jones)- Adding iron ore assets to Teck Cominco Ltd.'s (TCK) diversfied resource portfolio would be a particularly good fit, especially because of its metallurgical coal division, President and Chief Executive Don Lindsay said Tuesday.

"If you have iron ore, you are a stronger strategic supplier to a customer (of coal)," he said, speaking at the BMO Capital Markets 2008 Global Metals and Mining Conference in Hollywood, Florida.

He used the example of BHP Billiton Ltd. (BHP), which uses its iron ore product as a carrot for customers looking for coal.

Lindsay said that, especially in down years, its coal business has suffered as customers would order 100 metric tons of coal but only take 92 metric tons, while the BHP customers would take their full order, knowing full well that they would need BHP's iron ore as well.

He also said customers have "literally come and asked us to get into the business, because they would like to see another competitor. That situation has become even starker as BHP tries to take over Rio Tinto PLC (RTP) - two of the top four iron ore producers in the world.

"Customers don't like the current structure of the iron ore industry with three big players dominating," he said.

Lindsay said there's a concern that players with both coal and iron ore will lure customers by saying: "Buy our iron ore and we'll cut you a good deal on coal."

That would undermine the global pricing structure for coking coal, which is used in the production of steel - as is iron ore.

From a practical standpoint, he said the iron ore business is a large open-pit mining, shovel truck operation, so Teck Cominco's skillset could be put to work.

"And I like the outlook where there's three big players and consolidation has already occurred," he said.

Having said that, Lindsay said the probability of buying an operating iron ore asset looks dim, if only because operators are currently enjoying a great pricing run, so why sell?

He dismissed the idea of looking for a development project simply because Teck Cominco already has enough on its plate in terms of development projects.

The one caveat: if BHP manages to buy Rio Tinto, regulators might force the pair to give up a number of assets to close the deal - including some iron ore assets.

"In which case, we might be the logical buyers," he said.

Company website: http://www.teckcominco.com

-Brian Truscott, Dow Jones Newswires; 604-669-1595; [e-mail]


(END) Dow Jones Newswires

02-26-08 1744ET

Copyright (c) 2008 Dow Jones & Company, Inc.