Ukrainian billionaires offer $860 million for manganese producer
One of Ukraine’s biggest and aggressive business groups is embroiled in a three-week bidding war against a western investment group for control of a leading Australian mining company.
Palmary Enterprises, an offshore vehicle that represents the interests of Ukrainian billionaires Igor Kolomoisky and Gennady Bogolyubov, majority owners of Ukraine’s so-called Privat business group, upped the ante last week in their bid for Consolidated Minerals with an $860 million offer, or $72 million dollars more than last offered by London-based Pallinghurst Resources. The Privat group had offered $736 million for the company in late August.
The board of directors at Consolidated Minerals expressed their preference for Palmary Enterprises’ bid a second time. Shareholders are laying back and watching as bids rise up higher and higher.
The bidding war for Consolidated Minerals started in February, but Privat only entered the game in late August. The fight for ConsMin comes at a time of increasing demand for natural resources and a flurry of takeover activity for mining groups. All indications suggest that competition for the prized Australian mining company, a leading producer of manganese ore and nickel, will continue to be fierce.
According to market analysts, Consolidated Minerals mines about 10 percent of the world’s manganese, an alloy used in steel production.
Palmary is currently Consolidated Minerals’ largest shareholder with a stake of 14.4 percent.
If Privat gains control of Consolidated Minerals, the Ukrainian group will double its control over the worldwide ferroalloy market to 20 percent.
The Privat group currently controls much of Ukraine’s ore and ferroalloy business and holds interests in factories in Russia, Poland, Romania and the US.
Reportedly, Privat has ownership interests in US-based Highlanders Alloys, Russia’s Alapayevskiy metallurgical factory, Romania’s Tulcha factory, Zestafonskiy ferroalloy factory in Georgia and Chiaturmarganets, Georgia’s largest producer of manganese. In addition to owning Ukraine’s largest privately-owned bank, Privatbank, Kolomoisky and Bogolyubov also control a broad portfolio of assets in metallurgy, telecommunications, media and oil production. The wealth of each has been estimated at more than $3 billion.
Territory Resources, another Australian mining company initially bid for ConsMin on its own, but later teamed up with Privat.
Michael Kiernan, chairman of Territory, said that negotiations with Palmary had provided positive results. Palmary would be willing to operate Consolidated Minerals as a joint venture once they secure a deal gaining control of a majority stake in the potentially lucrative Australian miner. Global demand for manganese has steadily increased in recent years. Prices for this mineral on world markets have skyrocked.
