Ferrexpo eyes regional consolidation

By Eric Onstad

LONDON (Reuters) - Ukrainian iron ore producer Ferrexpo Plc (FXPO.L: Quote, Profile, Research, Stock Buzz) is keen to buy regional peers, but such companies must first boost transparency to Western standards, Ferrexpo said on Wednesday.

The primary focus of Ferrexpo is still an ambitious expansion plan, but it is also looking at opportunities to grow by acquisition, Chief Executive Mike Oppenheimer told the Reuters Global Mining Summit in London.

"We would be interested in consolidation in the Ukraine and the CIS, but we can't really participate because there isn't the transparency that we need," he said.

"What we are now looking to do is ... get them to transform themselves to a point where they are transparent enough to justify the kind of due diligence we would want to do on them."

Ferrexpo itself is a good example of how privatized state assets can relatively quickly boost financial and corporate governance standards.

The world's 12th-largest producer of iron ore pellets became the first Ukrainian company to list on the main market of the London Stock Exchange when it floated last June.

"It's a six- to 12-month exercise, I think, for one of these Ukrainian producers to transform themselves into an entity that is transparent enough to value, for us to go to our investors and say we want to do a deal," Oppenheimer said.

"We are keeping our eyes and ears open, but we have nothing specific on the agenda at this particular point in time."

Ferrexpo is also watching with interest the bid by the world's biggest mining group BHP Billiton (BHP.AX: Quote, Profile, Research, Stock Buzz)(BLT.L: Quote, Profile, Research, Stock Buzz) for rival Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz)(RIO.AX: Quote, Profile, Research, Stock Buzz).

The firm might be interested in acquiring any iron ore assets that the combined firm might sell if the takeover is successful, Oppenheimer added.

PARTNER SEARCH

Ferrexpo was progressing with its search for a partner to help accelerate expansion plans that would see production jump nearly fourfold to around 100 million tonnes by 2018.

Oppenheimer, who first announced the firm wanted a partner last September, said initial candidates had been whittled down to a short list, including some Chinese parties.

He previously said interested parties included steel firms, big mining groups and customers.

Initially, a partner was due to be selected by mid-year, but that might slip because the company has enough cash for short-term expansion so feels no pressure to do a quick deal.  Continued...