Teck Cominco in $3.9B Deal; Rio Tinto Says Unable to Meet Chinese Demand

Canadian mining company Teck Cominco has agreed to purchase Aur Resources, also from Canada, for C$4.1 billion ($3.89b), or $41/share, in cash and shares. This represents a 29% premium over its Monday close in Toronto. Post-merger, Teck Cominco expects an immediate 43% increase in annual copper production (a 72% rise by 2010) and said reserves will increase by 136%. Meanwhile, Rio Tinto approved a $1.8b expansion of the Yarwun Alumina Refinery in Queensland, Australia. The expansion is expected to commence during Q3 and be completed in about three years. Aluminum production is seen doubling by 2011. Separately, Rio Tinto Iron Ore Group CEO Sam Walsh said the iron ore market is "extremely tight." He told analysts the company "quite frankly, can't meet demand." Iron ore prices have more than doubled in the past three years. Rio Tinto's iron ore export expansion plans in Western Australia remain on schedule and on budget, said Walsh. Shares of Teck Cominco gained 4.6% to $44.46 Monday. Rio Tinto's ADSs rose 5% to $321.48.

Sources: Teck Cominco press release, Rio Tinto press release, MarketWatch I, II, III
Commentary: Teck Cominco Should Benefit From Strong Chinese Copper Imports • What A Soaring Loonie Means for Canadian Miners' Earnings • Speculation Takeover Continues For Alcan, Alcoa: BHP, Rio Tinto Front-Runners
Stocks/ETFs to watch: Teck Cominco Ltd. (TCK), Rio Tinto plc (RTP). Competitors: Newmont Mining Corp. (NEM), Freeport-McMoRan Copper & Gold Inc. (FCX), Alcoa Inc. (AA), Alcan Inc. (AL), BHP Billiton Limited (BHP), Companhia Vale do Rio Doce (RIO). ETFs: Market Vectors Steel (SLX), iShares MSCI Australia Index (EWA)

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.