Australia’s Mineral Resources quits contest for Atlas Iron

BENGALURU: Mining infrastructure provider Mineral Resources said it would not make an offer to counter Hancock Prospecting’s A$390mil (US$288mil) bid for Australia’s Atlas Iron.

That will likely cool expectation of a possible bidding war for the iron ore miner, after Atlas on Tuesday gave Mineral Resources three business days to match a A$0.042 per share takeover offer from Australian billionaire Gina Rinehart’s Hancock Prospecting. Atlas operates in the iron ore rich Pilbara region of Western Australia and has undeveloped tenements that could be brought into production with a larger partner.

It also has potential port access coveted by major miners as they look to expand output in coming years, as well as a stake in lithium exports and large tax losses that an acquirer could use to offset their taxable gains.

Hancock Prospecting launched an unconditional all-cash bid for the iron ore miner on Monday, trouncing an earlier A$280.2mil scrip offer in April from Mineral Resources.

The spotlight now shifts to world No. 4 iron ore miner Fortescue which has built up 19.9% stake in Atlas – large enough to block Mineral Resources’ offer, but not enough to hold back Hancock which is seeking a majority stake.

Fortescue chief executive Elizabeth Gaines said in a statement yesterday that the miner would continue to assess its strategic options.

Analyst Peter O’Connor at brokerage Shaw and Partners said the chance of a counterbid by Fortescue was between zero and 50%, and suggested the miner was more likely to try to negotiate with Fortescue to carve up Atlas. — Reuters