CVRD set to complete Canico purchase
Brazilian iron ore giant Companhia Vale do Rio Doce (CVRD) has agreed to pay CA$875 million for Canadian nickel miner Canico Resource Corp. CVRD is strategically moving into other metals markets. With payment expected on December 1, the cash deal will give CVRD control over the strategic Onca Puma nickel project located in the Amazon. It is also the first notable successful acquisition by the company since it attempted to buy Falconbridge, another Canadian mining company. While the deal is likely to be a boon for the company, it is likely to attract further attention by antitrust watchdogs who worry CVRD already wields too much market power. The company is able to almost singlehandedly control the price of iron ore as evidenced by its push for a 72 percent worldwide price increase last year. CVRD is already pushing for another sharp increase in 2006. Indeed, CVRD has already been cited by the Brazilian government for antitrust violations. The company was able, however, to win a court injunction suspending the regulator's decision. CVRD's original bid on September 15 was rejected by Canico's board of directors. The purchase amount marks a 19 percent increase over that bid.