The news of Australian mining giant BHP Billiton's purchase of potassium for $39 billion was announced recently. This is only one of the recent mergers and acquisitions between mining companies and fertilizer companies, and the wind is getting more and more intense. The industry believes that the mining company's initiatives are based on the consideration of extending the industry chain and are more optimistic about the prospects of the fertilizer industry.
According to the reporter's knowledge, the acquisition and reorganization of fertilizer companies by mining companies has been very active this year, and it is basically the acquisition of fertilizer companies by large-scale mining companies. Combined with the recent increase in global food prices, the cyclical and long-term demand for fertilizers is strong. The acquisition of fertilizer companies by mining companies is still very wise.
At the beginning of the year, Vale, the world’s second-largest miner, reached an agreement with Bunge Limited, the world’s largest oilseeds processor, to acquire Bongi’s fertilizer business in Brazil for US$3.8 billion in cash, including phosphate mines. 42.3% of Fosfertil, a manufacturer and phosphate fertilizer company. According to industry analysts, Vale's $3.8 billion purchase of Bunge shares is expected to reduce Brazil's dependence on imported fertilizer. The more important reason is that Vale aims to become a global large-scale fertilizer other than mining. manufacturer.
The Russian metal oligarch Suleiman Klimov will acquire a majority stake in potash producer Silvinit and merge it with Ural Potash Corp listed in London. Ural Chemicals, which has the dual status of mining companies and fertilizer companies, also announced plans to reorganize the company and will reorganize Azot and Ural Management.
Recently, as the price of wheat in the commodity market has increased by 60%, corn prices have increased by 20%, cotton prices have reached the highest point in 15 years, and other favorable news has stimulated, market confidence has recovered. According to PotashCorp's estimate, global demand should rebound this year. To about 50 million tons, it will rise to about 55 million tons in 2011. This means that the capacity utilization rate of the fertilizer industry will reach around 90% even if it does not take into account the factors of inventory supplementation, which further indicates that the manufacturers will have a lot of profits.
The acquisition of fertilizer companies by mining companies has the following characteristics: First, the size of mining companies is much larger than that of chemical fertilizer companies. If the mining company's determination is determined, it is relatively easy to make small purchases. Secondly, the dependence of fertilizer companies on resources is increasingly strengthened and cooperation with related mining companies should be helpful. Thirdly, the mining companies are generally well-capitalized, and they can play a powerful financial support role for fertilizer companies that are investing more and more, and whose profits are relatively flat.
The mining company's move to acquire fertilizer companies is easily reminiscent of decades when oil companies produced fertilizers. At that time, world-renowned oil companies once owned fertilizer production. However, in the 1970s, most of the oil companies were stripped of profit due to the fact that the profit of the fertilizer business was flat and the industrial scale was limited. Fertilizer companies have achieved today's situation through four decades of self-rolling development.
Nowadays, some fertilizer companies have been valued by mining companies and have been integrated into their layouts to achieve unified planning and development. This may be a cycle of business development.