Mexican Manganese Sale Momentum Builds

The auction of Minera Autlan is heard gaining momentum, with a number of large strategic bidders apparently readying offers. Brazilian mining giant Vale is understood to be among foreign parties interested in scooping up the Mexican manganese and ferroalloys producer. It is competing with global steel and mining players including Eramet, BHP Billiton, Tenaris, Citic and Glencore, according to executives away from the seller. Vale has a substantial M&A cash warchest and may seek to extend its dominance in manganese beyond its already abundant supplies in Brazil, say analysts. Autlan presents some interesting synergies, including the chance to mix Vale’s high-grade manganese with Autlan’s low-grade output to produce ferroalloys. The price of manganese has soared in recent months thanks to high demand from steel producers. At yesterday’s close, Autlan’s market cap stood at $2.03bn, which suggests it could go for over $2.40bn if a buyer agrees to a 20% premium, in line with competitive auctions. Autlan’s shares have leapt 396% in 2008 alone and closed yesterday at MXP78.73. Bids are heard due by the end of September, and officials close to the company provide a broad timeframe for the deal’s conclusion that runs into early next year. Autlan tapped Lehman to advise on the sale.