From Saturday's Globe and Mail
December 7, 2007 at 7:27 PM EST
In a surprise announcement this week, Fording Coal said it would explore a possible sale of the trust, which owns a 60-per-cent interest in the Elk Valley Coal Partnership. Teck Cominco owns the remaining 40 per cent of Elk Valley, as well as a 20-per-cent stake in Fording.
With a controlling economic interest in the operations, Teck is seen as the natural buyer for Fording and Teck chief executive officer Don Lindsay has long expressed an interest in increasing the miner's exposure to commodities such as coal that are sold under long-term contracts.
Sources have said that Teck approached Fording several months ago hoping to begin discussions that could lead to Teck taking full ownership of Elk Valley.
However, Fording's so-called “strategic process” is expected to attract interest from other potential buyers, including international steel producers seeking to hedge their exposure to prices for coking coal, which is used in steel production. Major mining companies, including Companhia Vale do Rio Doce of Brazil and Swiss-based Xstrata PLC, have also been cited as possible bidders.
Yet the major mining companies are unlikely to want only Fording's passive interest in Elk Valley, which is the world's second-largest supplier of hard coking coal; they would prefer to acquire all of Elk Valley.
