ANGLO AMERICAN's Collahuasi copper mine in Chile.

ANGLO AMERICAN's Collahuasi copper mine in Chile.

John MacKenzie in Talks with Takeover Targets

Issue 71, January 2014

John MacKenzie, Anglo American’s former head of copper, is reviewing takeover targets as he plans a $300m to $700m mining float later this year.

“In terms of the mining markets,” MacKenzie tells Global Mining Observer in his first interview on the new group, “assets are undervalued. The medium term outlook for the industry is very positive, so now seems to be an opportune time to acquire assets with a view to improving their cash flow, but also benefitting through the cycle.”

MacKenzie, 45, has spent the last 4 years overseeing the ramp-up of Los Bronces, Anglo’s copper flagship, and the turnaround of Collahuasi, a vast open-pit in the Atacama Desert. The two mines account for over 12 per cent of Chile’s copper production, equal to 4 per cent of global supply.

Backed by hedge fund Audley Capital, he is now launching his own public vehicle focused on base metals, insiders disclosed last week. “We see three main sources of how we can create value,” he says. “One is fixing a distressed balance sheet, the second is optimising operational performance and the third is looking very closely at the resource base and the infrastructure and finding ways to extract value which hasn’t been exploited to date.”

MacKenzie spent 24 years at Anglo American, running both its copper and zinc divisions and heading coal deals in South America. Copper supply he says will remain hampered by permitting obstacles and a lack of capital investment in the building of new mines, whilst demand has “surprised on the upside.” Spending by China’s electric grid, the world’s biggest copper buyer, is budgeted to rise 13 per cent this year.

MacKenzie is also eyeing zinc deals: “Because zinc has been so unfavoured there’s been very limited development, particularly by the majors, so there’s relatively little high quality supply coming online.” Glencore closed two zinc mines in Canada last year, whilst Vedanta and MMG have both scheduled massive closures, lopping 500,000 tonnes off annual supply.

“We’re looking for operating assets or projects in a very late stage of development,” MacKenzie says. “As to where those assets come from, divestitures from the majors is one potential source, but across the market there are a lot of good assets out there that are currently undervalued.”

“We see three main sources of how we can create value... One is fixing a distressed balance sheet.”

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