Fortescue takes stake in Atlas Iron, Rio Tinto formalises Minmetals JV

Fortescue Metals Group (FMG) has bought a 15% stake in Atlas Iron, along with a cash settled swap of 4.9%, taking its overall interest in the Australian iron ore junior to 19.9%.

This aggregate physical and economic interest is enough to block a takeover of Atlas by Mineral Resources. Fortescue said it would not support Mineral’s proposed US$214 million takeover of Atlas announced in April on the current deal terms, but said it reserved the right to do so.

“We view FMG’s increased stake as a blocking one, and not as a counter bid per se for AGO, at this stage,” said Foster Stockbroking.

Fortescue reserving the right to support the scheme may indicate it wants to negotiate with Mineral Deposits on sharing Port Hedland infrastructure, the brokerage said.

FMG has recently floated plans for its Eliwana project – a new 30 million tonnes per year iron ore mine in the Pilbara – and is likely to require greater access capacity at Port Hedland, Australia’s largest export port.

Meanwhile, Rio Tinto has formalised its relationship with Chinse state-owned miner Minmetals by agreeing to put $5.5 million into an exploration joint venture in China.

The JV agreement deepens a cooperation pact between the two companies that was signed in May 2017 and comes after Rio’s chief executive J-S Jacques said last month that miners need to increasingly work together on projects.

“The formalisation of the exploration joint venture is an important milestone in our growing partnership with China and Minmetals, who is an increasingly important player in the global mining industry,” said Jacques.