BlackRock sees merit in large scale mining M&A

BlackRock will support consolidation among large mining companies because it would 'open the sector to generalists investors? at a scale which would make it easier for?bring large and complex projects required?for a new supply?, said a on Wednesday.

Speaking at the Australian Financial Review conference (AFR), Olivia Markham said that mining has a problem with scale.

"When speaking to a U.S.?generalist, they are looking for large liquid equities. She said that bigger companies "have better access" to capital and trade at higher multiples.

She said, "We have seen a wave of M&As but I think there is merit in doing more."

She added, "If there is a sensible deal that can be made that will make companies larger, I think it's worth doing." Glencore and Rio Tinto, two major miners in the industry, explored a possible merger earlier this summer. The deal would have created a $240 billion firm that combined Glencore's?copper assets and marketing expertise with Rio Tinto operational experience to meet the fast-growing copper demand. Rio Tinto said it couldn't see enough cost benefits for the deal. However, there are rumors that Glencore CEO Gary Nagle may still hold a candle for Anglo-Australian miners and reopen talks if Glencore's share price continues to exceed Rio's.

BlackRock owns stakes in BHP and both mining companies.

(source: Reuters)