The Australian company does not have much to show in the way of profit, but it does own the rights to huge deposits of high-quality hard coking coal in Mozambique
If an equities analyst were to bet on which Australian companies held the greatest growth prospects for next year, he would be hard-pressed not to choose the small and medium-size copper, oil and coal mining companies that have soared on the local bourse in the past year.
The proof is in the interest global mining and steel companies are showing in a virtually unknown resources company that happens to control some of the best coal assets on the planet. Riversdale Mining, a tiny coal miner with no extraordinary profits, is considered one of the best resource plays around.
The mining world's attention was first caught by a bid from global miner Rio Tinto, which made a US$3.5 billion (Dh12.85bn) approach for Riversdale this month. This week, Rio upped the bid to $3.75bn, prompted by Riversdale's soaring share price. The company is now in a trading halt, ahead of an announcement of the takeover.
Riversdale controls 13 billion tons of coal reserves in Mozambique, much of which is export-quality, industrial coking coal. Its mines could eventually supply as much as 10 per cent of the global market for the key steel-making material.
As coking-coal prices continue to soar, it is not just Rio that is showing an interest. Brazil's Vale has been touted as the most likely rival to Rio if its bid is not accepted, as it already has coal mines in Mozambique. India's Tata Steel, Riversdale's biggest shareholder, is another contender.
There is also mounting speculation that India's International Coal Ventures will also launch a bid for Riversdale. Some of the more familiar mining names are also said to be in the mix, notably Peabody Energy, Xstrata, Anglo American and ENRC.
Riversdale is hardly the jewel in Australia's coal-mining crown. In the year to June 30, it posted a $779,000 loss, down from a $300,000 profit accrued the year previously, based on steadily reducing production levels at its Zululand anthracite colliery in South Africa.
As with so many ventures in mining, it is not the actual but the potential numbers that count. Riversdale has what the industry terms "tier one" assets - "high quality, low-cost, export-oriented and expandable" as one analyst describes them. The company's main Benga project in Mozambique is targeting 20 million tonnes of coal output per annum by 2013.
Now offering $16 a share, Rio is likely to need to bid more to win support from Riversdale's three major shareholders: Tata Steel, the Brazilian steel maker CSN and the US investment firm Passport Capital, which together own more than half the company. The shares climbed even further in the past week to as high as $16.50, pricing the company at nearly $200 million above the Rio bid. Only a month ago, the company's shares were trading at about $10.50.
The advantages to a big miner are considerable. If Riversdale's projects were to produce as much as 15 million tonnes of saleable coal per year, it would boost Rio's overall coal volumes by 50 per cent and double its hard coking coal assets. Coking coal is Rio's Achilles' heel, the one commodity its resources armoury currently lacks.
The Indians also see a chance at controlling a commodity that goes to the heart of the country's burgeoning economic needs. India lacks its own sources of coking coal, although it is relatively self-sufficient in iron ore, the other key ingredient in steel-making.
The other proposition is Riversdale's third project in Mozambique, Tete East, where it hopes to sell a 50 per cent stake and management rights. Like the Benga project, it contains huge volumes of high-quality coking coal, but Riversdale lacks the infrastructure to exploit it. It risks Mozambique invoking a "use it or lose it" policy on the third project.
The analyst Charlie Aitken at Southern Cross Equities says the markets in Australia have never doubted Riversdale's "A" grade resources. "They simply doubted how they would commercialise it by finding a feasible infrastructure solution," Mr Aitken says.
Infrastructure solutions is what the big global miners deal in. As coking-coal prices are expected to rise next year, it will be interesting to see just how much "infrastructure" - and cash - they will be prepared to throw at it.
business@thenational.ae
UAE currency: the story behind the money in your pockets
UAE%20v%20West%20Indies
%3Cp%3EFirst%20ODI%20-%20Sunday%2C%20June%204%20%0D%3Cbr%3ESecond%20ODI%20-%20Tuesday%2C%20June%206%20%0D%3Cbr%3EThird%20ODI%20-%20Friday%2C%20June%209%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3EMatches%20at%20Sharjah%20Cricket%20Stadium.%20All%20games%20start%20at%204.30pm%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EUAE%20squad%3C%2Fstrong%3E%0D%3Cbr%3EMuhammad%20Waseem%20(captain)%2C%20Aayan%20Khan%2C%20Adithya%20Shetty%2C%20Ali%20Naseer%2C%20Ansh%20Tandon%2C%20Aryansh%20Sharma%2C%20Asif%20Khan%2C%20Basil%20Hameed%2C%20Ethan%20D%E2%80%99Souza%2C%20Fahad%20Nawaz%2C%20Jonathan%20Figy%2C%20Junaid%20Siddique%2C%20Karthik%20Meiyappan%2C%20Lovepreet%20Singh%2C%20Matiullah%2C%20Mohammed%20Faraazuddin%2C%20Muhammad%20Jawadullah%2C%20Rameez%20Shahzad%2C%20Rohan%20Mustafa%2C%20Sanchit%20Sharma%2C%20Vriitya%20Aravind%2C%20Zahoor%20Khan%0D%3C%2Fp%3E%0A
All%20The%20Light%20We%20Cannot%20See%20
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THE BIG MATCH
Arsenal v Manchester City,
Sunday, Emirates Stadium, 6.30pm
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
AL%20BOOM
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Williams at Wimbledon
Venus Williams - 5 titles (2000, 2001, 2005, 2007 and 2008)
Serena Williams - 7 titles (2002, 2003, 2009, 2010, 2012, 2015 and 2016)
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Emirates exiles
Will Wilson is not the first player to have attained high-class representative honours after first learning to play rugby on the playing fields of UAE.
Jonny Macdonald
Abu Dhabi-born and raised, the current Jebel Ali Dragons assistant coach was selected to play for Scotland at the Hong Kong Sevens in 2011.
Jordan Onojaife
Having started rugby by chance when the Jumeirah College team were short of players, he later won the World Under 20 Championship with England.
Devante Onojaife
Followed older brother Jordan into England age-group rugby, as well as the pro game at Northampton Saints, but recently switched allegiance to Scotland.
Miss Granny
Director: Joyce Bernal
Starring: Sarah Geronimo, James Reid, Xian Lim, Nova Villa
3/5
(Tagalog with Eng/Ar subtitles)
Company%20profile
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
At a glance - Zayed Sustainability Prize 2020
Launched: 2008
Categories: Health, energy, water, food, global high schools
Prize: Dh2.2 million (Dh360,000 for global high schools category)
Winners’ announcement: Monday, January 13
Impact in numbers
335 million people positively impacted by projects
430,000 jobs created
10 million people given access to clean and affordable drinking water
50 million homes powered by renewable energy
6.5 billion litres of water saved
26 million school children given solar lighting
Kibsons%20Cares
%3Cp%3E%3Cstrong%3ERecycling%3Cbr%3E%3C%2Fstrong%3EAny%20time%20you%20receive%20a%20Kibsons%20order%2C%20you%20can%20return%20your%20cardboard%20box%20to%20the%20drivers.%20They%E2%80%99ll%20be%20happy%20to%20take%20it%20off%20your%20hands%20and%20ensure%20it%20gets%20reused%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EKind%20to%20health%20and%20planet%3C%2Fstrong%3E%3Cbr%3ESolar%20%E2%80%93%2025-50%25%20of%20electricity%20saved%3Cbr%3EWater%20%E2%80%93%2075%25%20of%20water%20reused%3Cbr%3EBiofuel%20%E2%80%93%20Kibsons%20fleet%20to%20get%2020%25%20more%20mileage%20per%20litre%20with%20biofuel%20additives%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ESustainable%20grocery%20shopping%3C%2Fstrong%3E%3Cbr%3ENo%20antibiotics%3Cbr%3ENo%20added%20hormones%3Cbr%3ENo%20GMO%3Cbr%3ENo%20preservatives%3Cbr%3EMSG%20free%3Cbr%3E100%25%20natural%3C%2Fp%3E%0A