1. www.pwc.com/metalsdeals Metals Deals Forging Ahead 2012 outlook and 2011 reviewMergers and acquisitionsactivity in the metalsindustry

2. ContentsIntroduction3Report highlights42012 deal outlook: caution will be the watchword 62011 deal review: a year of deal bounce-back 10 Deal makers 12 Deal places 14 North America 16 Asia Pacific18 Europe (including the Russian Federation) 20 Central and South America 22Contacts23 Methodology Metals Deals 2011-12 is based on published transactions from the SDC Platinum (Thomson Reuters) database, January 2012. The report includes data from prior years and is the latest in an annual series of metals deals reports. Comparative data for prior years may differ to that appearing in previous editions of our annual analysis. This can arise, for example, as a result of updated information or methodological refinements and consequent restatement of the input database. Analysis encompasses only those deals which are completed in the calendar year, except for figure 5 which is based on pending deals. Deal values are the consideration value announced or reported including any assumption of debt and liabilities. Figures relate to actual stake purchased and are not extrapolated to 100%. The geographical split of the deals refers to the location of the target company or assets. Deals located in the territory of the Russian Federation are included in the totals for central and eastern Europe. The analysis relates to target companies in the supply chain for metals and basic metal products, including recycling. The sector and subsectors analysed includes deals for targets with primary SIC codes that fall into one of the following industry groups: iron ores; ferroalloy ores, except vanadium; steel works, blast furnaces, rolling mills, and finishing mills; iron and steel foundries; primary smelting and refining/ nonferrous; secondary smelting and refining/nonferrous; rolling, drawing, and extruding/nonferrous; nonferrous foundries; miscellaneous primary metals products; and metals service centres and offices..2 Metals Deals 3. IntroductionWelcome to Metals Deals, PwCs annual analysisof deal activity in the metals industry and ouroutlook on the prospects for dealmaking in theyear ahead. We also take a regional look at whatis happening in the main markets around theworld.This year, for the first time, we open The report is the latest annual reviewour report with our discussion of theedition in our Forging Ahead series onoutlook for the year ahead and dealmaking in the sector. It sitsidentify some of the main themes wealongside our quarterly Forging Aheadexpect to be at work. In our lastreports and is one of a range of dealsreport, we correctly forecasted thepublications from PwC, coveringbreakout of deal activity which hassectors including mining,translated into a 56% year on year aerospace&defence, renewableincrease in total metals deal value andenergy, power, and oil&gas. Togethera continuing high number of deals in the family of deals reports provides athe sector.comprehensive analysis of M&A activity across industries worldwide.Looking ahead, signals on US growth,the Chinese real estate and Jim Forbesconstruction sector and developments Global Metals Leaderin the eurozone will determine themomentum of future deal flow. If theyare positive, we expect momentum tobe maintained with a number ofthemes underpinning buyer and sellerdecisions. On balance, we anticipatemoderate deal growth in 2012 withcaution being the watchword. Morerobust growth is likely to come onlywhen metal prices and otherfundamentals including margins show continuous sustainedimprovement.Forging Ahead 2012 outlook and 2011 review 3 4. Report highlightsMomentum stayingbehind metals dealbounce-back Supply chain securityThe current run-rate of over 500 spurring new alliancesmetals deals a year puts deal flowat near historic high levels. Total The critical importance of resourcecompleted deal value rose from supply is producing a mix ofUS$26.1bn in 2010 to US$40.7bn in vertical integration and horizontal2011, up 56% year on year and up alliance moves as metals companies170% on its US$15.1bn 2009 trough. continue to seek greater certaintyPending deal flow indicates deal value over raw materials. We are seeingis continuing an upward trend. All the emergence of manufacturereyes will be on the eurozone crisis, the alliances, enabling companies to poolpace of recovery in North America, investment in order to secure resourceand the real estate and construction stakes. Four Chinese steelmakersmarkets in China. Any worries on the formed a consortium to secure alast of these two, in particular, could stake in a South American rare metaldampen deal flow but, if confidence supplier. This followed a similar movebuilds, we expect deal momentum be by a group of Japanese and Southmaintained in 2012. Korean companies. 2012 began with the announcement that a consortium of German manufacturers has been formed to pursue a strategy to secure future raw material supplies. Vertical integration through minority stakes in miners continues to be a major theme behind metals M&A.4 Metals Deals 5. Steel consolidation setto accelerate in 2012Signals are pointing to a long overduewave of steel industry consolidation.The Sumitomo-Nippon merger hasgained key regulatory clearance andlooks set to complete in 2012. Theeurozone crisis and market conditionsare putting extra pressure onEuropean steelmakers to find answersto the capacity and scale challengesthey face. In China, governmentpolicy is encouraging the emergenceof a small number of steel giants in Iron ore producers lookthe next few years and the closure beyond current ironor consolidation of smaller and less ore pricesefficient steelmakers. Iron ore producers are seeking deals that strengthen their options whatever the direction of future price trends. The merger of Cliffs Natural Resources and Consolidated Thompson was a major consolidation move in North America which, at the same time, strengthened vertical relationships into the Chinese steel end-market. In South America, Vale and Norsk Hydros aluminium deal, although a sale of assets by Vale, also represents a diversification play away from iron ore, with the Brazilian company becoming Norsk Hydros second largest shareholder. Forging Ahead 2012 outlook and 2011 review 5 6. 2012 deal outlook: caution willbe the watchwordUneven and uncertain world demand forms the backdrop for The US and China will be keymetals dealmaking in 2012. Encouraging economic signals The current upturn in the US will playin the US are contrasting with the recession in Europe. The an important role. The latestcross-Atlantic differences have been reflected in a striking split International Monetary Fund (IMF)between US and European steel prices. US/German prices wereexpectation is for US growth to betypically about US$20/tonne apart over the last decade but maintained at 1.8% in 20122. Anyended 2011 with a US$128/tonne divergence1. China remainsstrengthening of momentum willone of the most important demand drivers. It purchases morereinforce domestic confidence and that of China. But a faltering in the USthan half of global iron ore trade. recovery is likely to have the opposite effect and, in turn, dampen the outlook All eyes will be on developments in the for China. Given this background, eurozone crisis, the pace of recovery indealmakers will be keeping a careful North America, and the real estate andeye on signals from both these major construction markets in China.markets. Until sufficient signals come to Significant negative news on one of deliver confidence in a sustained period these fronts could tilt the balance of growth, caution is likely to be the between optimism and pessimism. Any watchword for dealmakers in 2012. major weakening of either US or Asian Chinese demand remains demand is likely to have a negative considerable impact on dealmaking. Similarly, positive signals will encourage deal There are signs of cooling in Chinas flow. In Europe, the continuing real estate sector, which is responsible eurozone crisis is a worry. But, if it is for nearly half of total steel demand in combined with continued growth in the China. At the same time, the other major markets, it may not dampen governments drive against inflation is overall deal flow. Instead it could curbing funding for infrastructure hasten long-awaited European steel projects. But some policy easing is consolidation and perhaps prompt possible as the government seeks to outside buyers to take advantage of low avoid too sharp an impact on growth. European valuations. Any policy easing will, in turn, feed into steel demand. And the big picture is that, while Chinese growth will be slower, it will still be substantial. The The eurozone crisis may not dampenIMF January 2012 forecast, sharply revised down in the light of the Europe overall deal flow if there is continued debt crisis, still anticipates Chinese growth in the other major markets.growth at 8.2% in 20123. Coming on top Indeed, recession in Europe is likely toof previous 9-10% per annum growth, this means that absolute growth will spur consolidation moves. remain very high as it will be from an overall economic base that is about a third larger than just three years ago.1 Financial Times, US and Europe steel prices diverge sharply, 3 January 2012.2 IMF, World Economic Update, 24 January 2012.3 Ibid.6 Metals Deals 7. The aerospace, automotive and energy infrastructure markets are providing end-market growth hotspots for metals companies.Eurozone crisis could spurin Asia and South America. Such will prove to be. The Indian metalsconsolidation growth is coming on top of a healthysector is also ripe for consolidation andrebound in the automotive sector and a2011 saw the completion of a landmarkEurozone worries did not prevent aburgeoning civil aerospace order book deal between JSW Steel and Ispatsignificant upturn in European as wellthat is having a positive impact on Industries. Consolidation has been rareas worldwide metals deal value in 2011. aircraft metals suppliers. An important among Indian companies but the JSW/But, worries about a further recession, missing piece of the jigsaw in NorthIspat move may spur other companies toconstraints on financing and fears of a America and Europe is recovery in the consider deals.worst case eurozone collapse will residential construction sector.inevitably cause dealmakers toRaw materials self sufficiencycontinually reassess their options over China consolidation to gain remains a main themethe coming months. Some form of momentumeurozone realignment remains a very The quest for security of supply andreal possibility. A climate of rolling Consolidation in the Chinese steelreduced dependence on the contractuncertainty looks set to continuesector has been on the cards for some pricing strategies of the large miningthrough 2012 in the absence oftime and is now ripe to gathercompanies remains a main deal driversustained growth signals or strongmomentum. The industry has long beenthat will continue into 2012. Southleadership from policy makers. If characterised by overcapacity and Koreas Posco, the worlds third largesteconomic growth signals turn positive,fragmentation with government policysteelmaker, expects its investments inthen rolling uncertainty could turn seeking to create a smaller number of Australia, Brazil, Canada and Africainto growing confidence. However, steel giants. In Hebei province, home towill lift the companys self-sufficiencyfurther adverse events would be likelya significant portion of the countrysin raw materials from the current 20%to cause a strain on manufacturers. The steelmakers, the provincial governmentto 50%6. Beijing is also pursuing aeffect will be to constrain some but, is reportedly planning to reduce thestrategy of seeking ownership of halfalso, possibly to accelerate long-awaited number of its steel mills from 88 to 10 the supply requirement with theconsolidation of the sector in Europe.during the 2011-15 period4. The latestChinese government declaring thatcentral government five year plan setsChinese companies should step upEnergy among a number oftargets for reduced energy intensity, overseas investments in iron ore, a keybright spotswater usage and CO2 emissions thatsteelmaking ingredient, with the goal ofwill put further pressure on smaller andhaving half of Chinas iron-ore importsInfrastructure renewal and expansioninefficient steel plants to close orcome from Chinese-invested mines7. Thein the energy sector is proving to be a consolidate5. A slowdown in steel quest to secure raw materials does notbright spot for steelmakers. In North demand will add further momentum to stop at iron ore as we discuss in the nextAmerica, new sources of shale gas and such consolidation. But it is yet to be paragraph, Indian companies and othersoil from tar sands are requiring newseen how strong the consolidation pushare facing coking coal shortages.pipeline connections and fuellingdemand for tubular drilling products. Amajor expansion of onshore andoffshore windpower in Europe isConsolidation, long-awaited in Europecreating demand for turbine steel whileworld solar growth is keeping silicon and also in the highly fragmented Chinesemanufacturers busy. Similar generation metals industry, is set to be a strong themeand infrastructure growth is a feature in the period ahead.of the major growth economy markets4 China Daily, Steel industry plan forged, 27 January 2011.5 Government of China, 12th Five-Year Plan, March 2011.6 Financial Times, Posco to invest in Australian mining venture, 17 January 2012.7 China steel consortium takes Brazil stake, Financial Times, 2 September 2011. Forging Ahead 2012 outlook and 2011 review 7 8. New alliances and new deal structures areemerging as companies look to gaingreater muscle and scale in the bid tosecure natural resources and capitalise ongrowth markets.Supply chain security concernsDivestitures deal flow likely to finance from their respective bankingwiden continue sectors, compared to European players in particular. But currency trends areThe search to secure raw materialsCompanies in North America and now having a mixed effect with thesupply is a now well established M &A particularly in Europe continue to weakness in the Indian rupeetrend in the sector. The main focus has maintain a focus on costs and dealingcontrasting with the Chinese renminbibeen on iron ore but, increasingly, the with underperforming assets. Demandstrength. Chinese investments are alsorare earth minerals that are used in aconstraints are being given an added widening out to include more frontierrange of high technology applications twist by financing constraints as aterritories in Mongolia and parts ofare part of the story. There have beenresult of the European debt crisis.Africa.increased concerns about ChineseDivestitures are proving a strong driverpolicies that can have the effect ofof deals. Around a quarter of metals Deal structures likely tolimiting the export of its own rare M deals in 2011 were divestitures&A innovate and evolveearths. This was the subject of a World and it is likely that this deal flow willTrade Organisation ruling at the end of remain strong as more assets come to Newer structures will evolve for deals,January 2012. Earlier in the same the table (see p17 for a discussion of the particularly those involvingmonth, it was announced that German issues companies need to consider when international investment in rawsteelmakers Georgsmarienhtte considering divestitures or spinoffs). materials resources. In Brazil, jointHolding, Stahl-Holding-Saar andventures are a preferred option forThyssenKrupp, as well as copper Asia Pacific go global strategiesinbound investors seeking to gain theproducer Aurubis, had joined awiden outbest value in the context of local12-strong commodities alliance ofregulatory and environmentalleading German industrial companies,We expect the trend of Chinese frameworks. In Canada, inboundcoordinated by the Federation ofoutbound purchases, which has been a investors are working with entities German Industry. One of the statedkey part of recent metals M by the&A such as the First Nations Trusts as agoals of the alliance is to taketop tier Chinese steel companies, to means of partnering with indigenousshareholdings in commodity projects toextend downwards to include more communities. In China and Korea, thereachieve a long-term improvement in thecompanies from the second layer of is a trend to minority stakes withsupply of raw materials to industry.state owned enterprises at the financing for capex and offtake. InNatural disasters, such as the Japanprovincial level. Vertical integration Europe, the current environment meansearthquake and Thailand floods, havewill be an important strategy for thesemany companies need to look atalso added to concerns about supply companies and deals may also involve alternatives to bank finance. Wellchain fragility. Concerns about securityChinese financial investors and privatefinanced companies can look toof supply are not restricted to metalscompanies. Indian conglomerates aretraditional markets, such as theraw materials. Chinese and Indian also likely to be active acquirers if theinvestment grade bond market. Butsteelmakers, for example, are facingright opportunities arise. Both Chineseothers need to look for alternatives.shortages in coal for energy and in and Indian companies have thecoking coal due to high prices andadvantage of less constrained access toinefficiency in the domestic coal sector,leading them to consider internationalsupply and M options. &A Expect an extension of go global moves by Chinese companies as more buyers come to the table from the second layer of state owned enterprises at the provincial level.8 Metals Deals 9. Modelling metals M&A flow againstwider commodities and macroeconomictrendsPwC has conducted an analysis testing the historical relationship of metals sectorM&A with a variety of macroeconomic variables and metal commodities indicators.The analysis encompasses factors including nominal GDP, direct investment levels,trade volumes and commodity prices. In particular, global GDP and aluminiumprices were often good predictors of deal activity.We found strong correlations between trends in metals deal activity and the set of wider metals andmacroeconomic measures in the analysis, especially in terms of flows in metals deal announcements.The models produce coefficient of determination (R2) values of 0.928 and 0.952 for announced deals.Weve taken the analysis back over two decades with the following results:1990-2011 Looking aheadWhat the analysis predicted:What the models predicts for the year 6.0% compound annual growth rate ahead: (CAGR) in announced deal numbers.11.1% CAGR in announced deal 8.1% CAGR in announced dealnumbers. value. 7.6% CAGR in announced dealvalue.What the actual outturn was: 6.6% CAGR in announced dealThe model supports our overall view numbers. that the year ahead will be one ofmoderate deal growth in metals M .&A 11.8% CAGR in announced dealThe growth assumption holds whether value.the analysis is conducted against dealThe fit between actual and predictedvolume or value, announced ordeal flow is strongest for deal volume. completed. We publish the outcomeDeal value is more volatile hile it hasw only for announced deals here becausestatistically significant relationships the historical analysis indicates that thiswith economic and metal commodity provides the most robust and strongvariables, it can be slightly less certaincorrelation.to predict because of this highervariability compared to the trend indeal volume. Announced deal value projections200,000180,000160,000140,000120,000100,000 80,000 60,000 40,000 20,000 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 121919191919191919191920202020202020202020202020PredictionActualForging Ahead 2012 outlook and 2011 review 9 10. 2011 deal review: a year of dealbounce-backThe strong bounce-back in metals M&A activity from its postThe steel totals would have looked verycredit crunch low continued in 2011 with a 56% year on yeardifferent if the US$16.8bn of steel deal value, represented by four of the largestrise in total deal value. Total completed deal value was up from five deals that remained pending at theUS$26.1bn in 2010 to US$40.7bn in 2011, 170% above its end of 2011 (figure 5), had got over theUS$15.1bn 2009 trough. The sector continues to witness very busy line. Some of these deals, notably thedeal activity with the number of deals continuing at very high US$9.4bn Sumitomo-Nippon merger,levels. Indeed, deal numbers in the last three years are more than a together with a number of the deals thatthird higher than the total reached in the three peak years of M&A were completed in 2011, are indicative of the consolidation that is gettingtotal deal value before the credit crunch (figures 1 and 2). underway among steel manufacturers. Consolidation momentum is being seenThe continuing upturn in deal value upstream in iron ore as well as inwas in large part due to a number of big manufacturing. Together with moves toaluminium deals and the quest by secure raw material resources, this issteelmakers and others to secure raw translating into a continued increase inmaterials resources. Steel M was up&A international deals. In the immediate15% from US$9.8bn to US$11.3bn year aftermath of the credit crunch,on year. The number of aluminium companies had largely focused on dealsdeals rose by a third and their total close to home. But in 2011, internationalvalue of US$8.7bn was up more than deal totals maintained the bounce-backtenfold from a very low base the that had started in 2010. Totalprevious year (figure 3). The value of crossborder deal value rose 82%, fromdeals in the other metals category, US$13.4bn to US$24.4bn, continuing itsmany of which are purchases of iron ore steep climb from its US$4.4bn low inresources, were up by a third, from 2009. Nonetheless, this remains wellUS$15.5bn to US$20.7bn. below the total crossborder deal value recorded in the three M boom years&A of 2006-2008 when annual totals Figure 1: Total metals deals, 2003-2011 reached US$63bn, US$98bn and US$38bn respectively. Number Cross border Value (US$bn) Cross border valuenumber as % of as % of total valuetotal number2011 533 33%40.7 60%2010 547 34%26.1 51%2009 521 25%15.1 29%2008 397 38%60.6 62%2007 411 35%144.768%2006 385 29%86.4 73%2005 250 40%34.8 49%2004 166 40%37.0 31%2003 164 30%16.1 60%10 Metals Deals 11. Figure 2: Crossborder and domestic metals deals, 2010-2011 20102011 Change in 2011Number Value NumberValue% Number% Value Metals547 US$26.1bn 533 US$40.7bn -2.5%+55.9%Cross border 187 US$13.4bn 177 US$24.4bn -5.3%+82.0%Domestic 360 US$12.7bn 356 US$16.3bn -1.1%+28.3% Figure 3: Deal making by industry sector (by target) 20102011 Change in 2011Number Value NumberValue% Number% Value Steel 159 US$9.8bn145 US$11.3bn -8.8%+15.3%Cross border46US$1.6bn47US$3.9bn +2.1% +143.7%Domestic 113US$8.2bn98US$7.4bn-13.2%-9.7% 20102011 Change in 2011Number Value NumberValue% Number% Value Aluminium33 US$0.8bn 43US$8.7bn+30.3% +987.5%Cross border13US$0.6bn17US$8.3bn+30.7%+1283.3%Domestic20US$0.1bn26US$0.4bn+30.0% +300.0% 20102011 Change in 2011Number Value NumberValue% Number% Value Other Metals355 US$15.5bn 345 US$20.7bn -2.8%+33.5%Cross border 128 US$11.1bn 113 US$12.2bn-11.7%-9.9%Domestic 227US$4.4bn 232US$8.5bn +2.2%+93.1%*Sums may not total because of rounding Figure 3: Deal making by industry sector (by target)20112010 Steel Steel 28% 38%Other metals (US$11.3bn) Other metals(US$9.8bn) 51%59%(US$20.7bn)(US$15.5bn) AluminiumAluminium 21%3% (US$8.7bn)(US$0.8bn) Forging Ahead 2012 outlook and 2011 review 11 12. Deal makersDeal size is on the rise in the metals sector with five of the largest added to the need to squeeze out coststen deals topping the US$2bn mark compared with only two to keep home-based manufacturing competitive.the year before. Billion plus deals dominate the top ten tablewith the deals by the biggest deal makers reflecting a range ofThe largest completed 2011 deal sawthemes diversification, resource acquisition, manufacturingNorsk Hydro complete its US$4.9bnrepositioning, divestment of underperforming assets andpurchase of Brazilian aluminium assets from Vale. It included full control andconsolidation in both raw materials and manufacturing ownership of Paragominas, one of the(figure 4).largest bauxite mines in the world, 91% of the worlds largest alumina refinery Alunorte, 51% of the Albras aluminiumA landmark US$9.4bn Japanese merger plant and 81% of the CAP aluminabetween Nippon Steel and Sumitomo refinery project. The transaction alsoremained pending at the end of 2011 included additional bauxite licenses and(figure 5). The Japanese authorities a volume off-take agreement for Valeshave given the deal the green light so it 40% stake in the MRN bauxite mine.looks on course to achieve completion Prior to the combination, Norsk Hydroas expected in 2012. The combination already had a 34% stake in Alunortewill put the company at number two in and 20% in CAP. As well as givingworld crude steel output with the Norsk Hydro security of supply overdeclared ambition to expand in growth valuable alumina and bauxite supplies,markets overseas. The logic of the deal the deal represented a diversificationbecomes even more compelling in the play for Vale, extending its footprintface of a strong yen. This has put away from iron ore. The deal made ValeJapanese companies in a strong bid the second-largest shareholder in Hydroposition for overseas M assets but&A after the Norwegian government. Figure 4: Top ten metals deals 2011 Rank CompletionTarget Sector Bidder Target nation Bidder nation Value month ($m) 1Feb 2011Vale SA-Aluminum OperationsAluminum Norsk Hydro ASABrazilNorway4,948 2 May 2011 Consolidated Thompson Iron Mines Ltd Other MetalCliffs Natural Resources Inc CanadaUnited States 4,356 3Jan 2011Arcelor Mittal NV-Stainless Division SteelShareholders LuxembourgLuxembourg3,181 4Jan 2011CommScope IncOther MetalThe Carlyle Group LLCUnited States United States 3,020 5 April 2011 Elkem AS Aluminum China National Bluestar Co Ltd NorwayChina 2,179Cia Brasileira de Metalurgia e Mineraco 6 Sep 2011Other MetalChina Niobium Inv Holding Co BrazilChina 1,950(CBMM)Cia Brasileira de Metalurgia e Mineraco 7Apr 2011 Other MetalInvestor Group BrazilJapan 1,950(CBMM) 8Feb 2011Draka Holding NV Other MetalPrysmian SpA Netherlands Italy 1,259Severstal North America Inc- 9Mar 2011Operations, Warren, Wheeling,SteelThe Renco Group IncUnited States United States 1,192Sparrows Pt. United10*Sep 2011 Delachaux SA SteelInvestor Group France969 Kingdom*The deal has been included as coded to the SIC code: steel works, blast furnaces and rolling mills12 Metals Deals 13. Figure 5: Top five deals still pending at year-end 2011 RankMonthTarget SectorBidderTarget nation Bidder nation Value announced ($m)1 Feb 2011Sumitomo Metal Industries LtdSteel Nippon Steel Corp Japan Japan 9,433Hebei Shouganag Qianan Iron & Steel2 Nov 2011 Steel Beijing Shougang Co Ltd China China 2,920Co LtdUsinas Siderurgicas de Minas Gerais3 Nov 2011 Steel Investor GroupBrazilArgentina 2,879SA(Usiminas)4*Nov 2011Commerical Metals Co Steel Icahn Enterprises LPUnited States United States 1,560 Hanlong Mining Investment5Jul 2011 Sundance Resources Ltd Other Metal Australia Australia 1,274 Pty Ltd * Withdrawn 11 January 2012.Iron ore sector consolidation as well asChinese buyers featured in two of thegrowth in the energy cable market wasaccess to valuable Chinese end marketstop ten deals the US$2.2bn purchasea factor in the interest shown byunderpinned the second largest deal,of Norwegian maker of solar-gradeChinese investment fund Xinmao inUS company Cliffs Natural Resourcessilicon Elkem by chemicals company Dutch cable maker Draka Holdings. ButUS$4.4bn takeover of Canadas China National Bluestars and atheir interest could not compete withConsolidated Thompson Iron Mines. ItUS$1.9bn China-Brazil niobiumthe agreed US$1.3bn merger of therepresents a significant consolidation in resource tie-up. The latter saw acompany with Italian cable makerthe North American iron ore sector. consortium of Chinese companies form Prysmian. The companies say theCliffs expects the deal to enable it to a special purpose vehicle called China combined group creates the worldsbecome a producer of up to 30 million Niobium Investment Holding Company largest global energy and telecom cablemetric tons of iron ore pellets, up to 16 to take a 15% stake in the privately heldcompany with 98 plants in more thanmillion metric tons of iron ore niobium miner, Companhia Brasileira50 countries. Elsewhere, an investorconcentrate and up to 11 million metric de Metalurgia e Mineracao (CBMM).group comprised of CVC Capitaltons of lump and fines iron ore.The consortium included steelmakersPartners Ltd of the UK and AndeCrucially, it will enable the company toAnshan, Shougang, Baosteel, andInvestissements SA of Luxembourgbuild scale by owning expandable andTaiyuan Iron Steel. CBMM is the worldsacquired a 63.67% interest inexportable steelmaking raw material largest producer of niobium, which is an Delachaux SA, a Gennevilliers-basedassets serving international markets. element used for strengthening steel for manufacturer and wholesaler of steelImportantly, it is also providing Cliffsuses such as gas pipelines. The deal and metal products. We discuss thean expanded relationship with Wuhan followed a similar deal between CBMM other leading deals in the regionalIron and Steel (Group) Corporation, and a Japanese-South Koreansections that follow.Chinas third largest steel producer. consortium earlier in 2011, whichincluded Japanese steelmakers JFESome of the most significantHoldings and Nippon Steel and Southrepositioning and consolidation moves Koreas Posco.came in Europe. These includedArcelorMittals decision to spinoff of itsThe profile of private equity (PE)stainless steel business to a separately- investors in 2011 metals deals is fairlyfocused company known as Aperam.low with most such deals beingThis US$3.2bn deal was concluded at relatively low value purchase by US PEthe beginning of 2011 and was followedfirms. The major exception to this wasa year later by the January 2012the completion of Carlyle Groupsannouncement that Germanys US$3bn acquisition ofThyssenKrupp and Finlandstelecommunication steel wire and cableOutokumpu are to combine theirmaker CommScope. Elsewhere, thestainless steel operations. The goal ofsuch consolidation is to create acompany with the scale to compete onthe world stage with the likes of Poscoand Tisco. Forging Ahead 2012 outlook and 2011 review 13 14. Deal placesThe number of deals for targets in North America and westernThe strong upturn in North AmericanEurope rose year on year to the end of 2011. Deal numbers wereand European deal value shifted theworldwide geographical centre ofeither down or level in other regions but total deal value rosegravity for metals deals away from thesignificantly in all parts of the world except the Asia Pacific Asia Pacific region. The Asia Pacificregion (figure 6). The largest increases came in western Europe share of worldwide metals deal value bywhere metals deal value rose more than sixfold (up 518% yeartarget had multiplied some ten-foldon year) and in North America with a nearly fourfold increase between 2007 and 2009. It fell back(up 294%).somewhat in 2010 yet still accounted foreasily the largest share 51% of totalmetals deals value worldwide. But inThese same two regions accounted for2011 its share fell to 18%, leaving it inthe greatest share of worldwide dealfourth place, behind North America,value North American targetswestern Europe and central and Southcomprised 30% of total value andAmerica. Nonetheless deal activity inwestern European targets 26%. Central the region was intense and it still hadand South American targets, buoyed by the largest share of deal numbers.some big deals for Brazilian assets, tookThe majority of deals are betweena 24% share with the remainder comingbuyers and sellers in the same regionmainly from targets in the Asia Pacific(figure 7). Regional deals, as opposed toregion (18% share), led by deals forcross-continental deals, accounted forAustralian iron ore resources.79% of all metals deals by number and59% of total deal value. This is littlechanged from the previous year and Figure 6: M&A activity by target continent contrasts with the earlier years of 2007and 2008 when pre-credit crunchcross-continental dealmaking pushed North America2010 2011% changeregional deal value share down to 39% Number of deals 90 118+31.1% and 45%. A notable year on year changeis a fall in the number and value of % of all world deals 17%22%cross-continental other metals deals. Value of deals The total value of such deals, mainly foriron ore targets, fell from US$10.3bn in Total value (US$bn) 3.1 12.2+293.5%2010 to US$6.2bn in 2011. In contrast, % of total value 14%30%regional other metals deal value nearlytripled, from 2010s US$5.1bn toUS$14.6bn in 2011. Asia Pacific 2010 2011% change Number of deals239 206-13.8% % of all world deals 45%39% Value of deals Total value (US$bn)11.57.3-36.5% % of total value 51%18%14 Metals Deals 15. Central & South America 2010 2011% changeNumber of deals 33 33 -% of all world deals6%6%Value of dealsTotal value (US$bn)5.89.8+68.9%% of total value26% 24%Western Europe2010 2011% changeNumber of deals 87104+19.5%% of all world deals16% 20%Value of dealsTotal value (US$bn)1.710.5 +517.6%% of total value8%26%Central and eastern 2010 2011% changeEuropeNumber of deals 85 72 -15.2%% of all world deals16% 14%Value of dealsTotal value (US$bn)0.40.9 +125%% of total value2%2%Figure 7: Regional vs cross-continental metals deals, 2010 & 2011 Steel AluminiumOther metalsAll Sectors2011 % share of total steel % share of total aluminium% share of total other metals % share of alldealsRegionalNumber 12284.1% 2865.1%271 78.5% 421 78.9%Value (US$bn)9.180.5% 0.4 4.5% 14.670.1%24.1 59.0%Cross-ContinentalNumber2315.9% 1534.9% 74 21.5% 112 21.1%Value (US$bn)2.219.5% 8.3 95.5% 6.229.9%16.7 41.0% Steel AluminiumOther metalsAll Sectors2010 % share of total steel % share of total aluminium% share of total other metals % share of alldealsRegionalNumber 13786.1% 2575.7%264 74.3% 426 77.8%Value (US$bn)9.495.9% 0.6 85.7% 5.133.1%15.1 58.3%Cross-ContinentalNumber2213.9%824.3% 91 25.7% 121 22.2%Value (US$bn)0.44.1%0.1 14.3%10.366.8%10.8 41.7%Forging Ahead 2012 outlook and 2011 review 15 16. Deal places:North AmericaDeal numbers rose by nearly a third and deal value almostVertical relationships between iron orequadrupled to give North America the largest regional share of producers and steelmakers are a strong M as well as contractual theme. &Aworldwide metal deals value. The regions US$12.2bn total was There has been a continuation ofup by US$9.1bn year on year. The lions share of this came frombackward integration by steelmakersa big increase in other metals M&A, including iron ore, from through direct iron ore acquisitions.US$1.0bn in 2010 to US$8.6bn in 2011, most of which came The start of 2011 saw an intensefrom iron ore deals. bidding contest for junior mining company Baffinland. The companys substantial iron ore deposit in Canada The US$4.4bn merger of Cliffs Natural was acquired when ArcelorMittal and Resource and Consolidated ThompsonIron Ore Holdings agreed a joint bid Iron Mines (see the earlier dealmakersgiving them 70% and 30% ownership section) provided the main boost to ironrespectively. The US$514m purchase ore deal value. This combination of two was completed in March 2011. important iron ore producers givesBaffinlands Mary River Project is one of them scale in an industry where the largest mining developments leverage and access to buyers in growth currently planned in Canada and by far markets is important. In this case, Cliffsthe most significant development ever gained from Consolidateds existing planned above the Arctic Circle with its relationship with Chinese company attendant environmental challenges. Wuhan Iron and Steel. Figure 8: M&A activity in North America (by target) North AmericaSteel AluminiumOther metals 2011NumberValue Number ValueNumber Value Domestic 14US$1.9bn5US$0.1bn 71US$3.6bn Cross border5US$0.9bn7US$0.7bn 16US$5.0bn All deals19US$2.8bn 12US$0.8bn 87US$8.6bn 2010 Domestic 19US$2.0bn6US$0.1bn 45US$0.5bn Cross border1US$0.0bn2US$0.0bn 17US$0.5bn All deals20US$2.0bn8US$0.1bn 62US$1.0bn*deal values not disclosed16 Metals Deals 17. The third largest US deal, and thea rebound in steel demand in the US,The year finished with a battle aroundlargest steel deal outside Europe inSeverstal has decided to focus on its steel and other metal producer2011, saw Severstal spinoff its Warren, Dearborn and Columbus facilities. Commercial Metals with an attempt byWheeling and Sparrows Point facilitiesThese are among the most modern and activist investor Carl Icahn to winin a US$1.2bn sale to private holding efficient in North America as a result of control of the company in a deal thatcompany The Renco Group. The plants the companys considerable capexcould have been worth up to US$1.6bnhad been bought by the Russianinvestment in various expansions and(figure 8). But his attempts to increasecompany in the early part of 2008 justimprovements, including the launch of his 10% holding to a controlling levelahead of the credit crunch. At a time ofnew hot dip galvanising and push pull did not gain sufficient support from hispickle lines. fellow shareholders and the bid waswithdrawn in January 2012.PwC deal dialogue:Using divestitures and spin-offs to position anorganisation for growthDivestitures and spin-offs accounted for 38.5% of metals deal activityduring 2011. Many companies see such moves as effective strategiesfor shedding noncore businesses, rightsizing their organisations, andproviding a platform for growth.There are a number of factors behind better opportunities from its Determining separation issuesspin-offs and divestitures in the metals business and product portfolio. early during the process In thesector. Portfolio rationalisation is Forward-thinking companiescase of a plant-level carve-out,occurring alongside reviews of identify appropriate divestiturewhich is common in the metalsgeographic footprints. There is interest candidates based on a wide range of industry, every divestiture mayfrom strategic buyers with morefinancial, operating, and commercialresult in the division of a plant. Theintegrated operations or from financialparameters. seller typically will keep part of thebuyers seeking to make their businessesplant viewed as core to its mission,more attractive to future strategic Evaluating operations for possiblewith the other part of the plantbuyers. Shifts in the value chain arecorrection in todays environment,transferred to the unit beingtaking place, with upward pricingconcerns that buyers might have divested. As a result, a series ofpressure in raw materials andoverlooked in previous years maycomplex ownership issues arise forcommodities creating challenges fordamage or even derail a deal. Toresolution which are best resolved asconverters compared with the prepare for a divestiture, sellersearly as possible during the process.companies that are verticallyshould conduct an assessment ofintegrated. A key question of theoperations and, where possible, Presenting the business in a moreindustry is what will future profitidentify and correct significantfavourable light historicalmargins look like if the industry shifts issues. Even if sellers cannot correctfinancial results may need to betoward commodity producers?issues prior to closing, buyers are revised to accurately reflect the unit keen to gain an understanding of theas a stand-alone operation andBut, for most companies, divestiturestargets costs and benefits.exclusive of nonrecurring items. Forare far less common than acquisitions. the most challenging divestitures toConsequently, there are great Walking in the buyers shoes adoptbe successful, the vendor maychallenges when it comes to effectivelya buyers perspective by performing develop a detailed business plan tomanaging the process and drawing ondue diligence of the business beforepresent to prospective purchasers.their teams experiences. A seller involving potential buyers. A The plan could include a detailedlooking for success in any given thorough review of the unit slatedanalysis of the recurring historicaldivestiture or spin-off will prepare on afor sale may be essential when thefigures and describe the forecastsnumber of fronts, such as: sellers and buyers pricingand actions to consider for expectations vary significantly.implementation. A vendor may make Repositioning to seizeAdvance diligence may also help the a divestiture more attractive to opportunities by employing aseller identify and promote the unitspotential purchasers by using well-defined and regular portfoliostrengths and evaluate alternativestrategies such as providing them process, a company can achievetransactions and structures from an with contracts for a predetermined informed perspective. time. Sellers also could consider the various tax and accounting structures available to them and choose the one that works from a deal perspective.Forging Ahead 2012 outlook and 2011 review 17 18. Deal places:Asia PacificAsian steel production rose by 7.9% in 2011 with its share of representing a weighty US$2.9bn worthworld steel production edging up from 64% in 2010 to 64.7%of buyer activity for Asia Pacific targets.This was nearly two and half times theirin 2011. The Japanese earthquake and tsunami hit output withUS$1.2bn total in the previous year.the countrys crude steel production down by 1.8%. In contrast,South Korean production rose 16.2% and Chinese production The other significant share came fromwas up by 8.9%, giving China a 45.5% share of world steel Indian buyers with US$734m worth ofpurchases accounting for a 10% share ofproduction8. Deals value for targets within the region was downmetals M in the region a big leap&A37% year on year, from US$11.5bn in 2010 to US$7.3bn in from the US$93m of Indian buyer2011. activity a year earlier. India is projected Metals M for targets in the Asia &A to become the worlds third biggest Pacific region was dominated by buyers consumer of steel, after China and the from within the region. 82% of total US, US$474m of the US$734m came 2011 regional metals deal value came from the completion of a major from in-region buyers. Buyers from consolidation move in the Indian steel China and Hong Kong accounted forindustry with the integration of Ispat US$1.5bn or 21% of the US$7.3bn total, Industries into JSW Steel. Elswhere, down from their 35% share in the Japanese and South Korean buyers took previous year. It was Australian buyersa 4% and 3% share of regional metals who were behind the largest share of deal value respectively. 2011 deals, with their 40% shareFigure 9: M&A activity in Asia Pacific (by target)1Asia-Pacific SteelAluminiumOther metals2011 Number Value NumberValueNumber ValueDomestic 44US$1.3bn 12US$0.3bn90US$3.9bnCross border 17US$0.3bn3US$0.1bn40US$1.3bnAll deals61US$1.6bn 15US$0.4bn 130US$5.2bn2010Domestic 47US$5.8bn3 US$0.0bn2 113US$2.9bnCross border 19US$1.5bn 10US$0.6bn47US$0.7bnAll deals66US$7.3bn 13US$0.6bn 160US$3.6bn *1Sums may not total because of rounding *2Deal values not disclosed8 World Steel Association, World Crude Steel Production, 23 January 2012.18 Metals Deals 19. But it was on the worldwide front thatin Canada. Japanese buyers accountedThe biggest Asia Pacific purchaseAsia Pacific buyers really got involved.for US$2.9bn (7%) of worldwide metals outside the region, not already coveredThey accounted for US$14.5bn worth of deal value. in the earlier sections of this report, wasglobal metals M in 2011, a 36%&Athe US$680m purchase of USshare. Over a third of this came from The biggest 2011 deal within the region aluminium sheet maker Arcobuyers in China and Hong Kong, whowas BHP Billitons US$732m acquisitionAluminium by a Japanese consortium,were responsible for US$5.7bn ofof HWE Mining Subsidiaries from comprised of Sumitomo Light Metalworldwide metals M value, led by a &A Leighton Holdings. The deal coversIndustries Furukawa Sky Aluminum,number of US$1bn plus deals in Europe contract mining services that Sumitomo Corporation, Itochuand South America (see dealmakers). collectively account for almost 70% ofCorporation and Itochu MetalsAustralian buyers were the other main total material movement of iron ore inCorporation. The purchase gives theplayers worldwide with US$4bn worth Western Australia. The deal is part ofconsortium added capacity for servingof deals, boosted by OneSteel US$932mBHP Billitons plan to directly operate US and Latin American markets.purchase of Anglo Americans AltaSteelrather than contract out its WesternAustralia iron ore business.PwC deal dialogue:Gaining an M talent advantage&AFinancial and business logic may be the starting point for M&A but itis people issues that often determine whether deals lead to success ornot. A staggering 70% of deals fail to deliver their intended benefits,often because cultural and people issues were underestimated ormismanaged9.Companies are becoming increasingly be critical because they are responsibleSkills shortages and retaining talent,aware that M value creation,&Afor day-to-day operations.associated with M activity, have a&Astrategic growth, and sustainable direct effect on the bottom line. Morebusiness success hinge on effective When defining these needs, it is useful than a third of metals CEOs say talentmanagement of the human capital sideto examine three levels of criticality: constraints have already affected theirof the equation. But how is this best companys performance in overseas Strategically critical employeesapproached during a merger? markets and impaired its ability to most essential to the ongoinginnovate. The situation could be evenMajor changes in the workplace, such asoperations of the newly combinedworse in the future as only a quarter ofa merger, can cause fear and organisation. Typically, these are topmetals CEOs are confident of theiruncertainty among employees. executives, key business unitcompanies talent pipelines, accordingIdentifying, retaining and motivatingleaders, and key individualto the 40 metals CEOs in countries whopivotal talent people in the biddercontributors.responded to the PwCs 15th Annualand target companies whoseGlobal CEO Survey. Finding, keeping Integration critical employeesperformance can make or break the and motivating employees who have the essential to the integration effort.new entitys success is an importantright skillsets has become a top priority.part of making sure there is no Knowledge-transfer critical Recruitment and retention areunwanted talent drain during an M &Aemployees with specialised particularly challenging in China,process. knowledge essential to the transfer of where turnover can be double, triple, or ongoing information and know-how.even quadruple the rate in the UnitedThe acquiring company must defineStates or Europe. To address thoseeach employees importance to the Categorising key employees in this wayconcerns metals CEOs reported plans tobusiness relative to the transition and helps an organisation assess employeesuse non-financial incentives, includingbeyond. The company must make anindividually and determine whethertraining and mentoring programmes asassessment regarding which employeesmanagers at different levels or locationswell as improved living and workingit needs for short-term transition andwill require different retentionconditions.long-term value creation. Somepackages. The process also allows foremployees may be essential to the more efficient deployment of strongprocess of transitioning the targets performers to other positions within thecustomer base to the acquirer, whilenew company, particularly in situationsothers may be integral to managing or where two talented employees performotherwise maintaining the targetsduplicate roles.ongoing operations. Another group may9 When two become one, Hourglass, PwC, December 2010Forging Ahead 2012 outlook and 2011 review 19 20. Deal places:Europe (including the Russian Federation)While dealmaking for targets in central and eastern Europe and European metals companies continue toRussia was quiet, western Europe proved a busy deal arena in face higher raw materials and energy costs which they have struggled to pass2011. The number of deals was up by a fifth (20%) and total on in the absence of a clear recovery incompleted deal value shot up from a very low base to top the all their end markets. EU steelUS$10bn mark by the year end. US$7.6bn of the US$10.5bnproduction as a whole increased 2.8%total western European deal value came from the four largest year on year in 2011 compared with adeals, headed by ArecelorMittals US$3.2bn Aperam spinoff (see 6.8% increase in world steel production.dealmakers). Among the larger producing countries, production in Russia rose by 2.7%, German output rose by 1% but there were declines of 4.6% and 2.4% inThe majority of western European Spain and the UK respectively. Polishtargets were purchased by buyers production rose 10% and, among thewithin the region. Western Europeansmaller producing nations, there werebuyers accounted for 80 of the 104 big rises in the Czech Republic (updeals and US$6.6bn, or 62%, of total 7.8%) and Kazakhstan (up 11.4%)10.western Europe target value. TheArcelorMittal Aperam spinoff was one Consolidation in the European steelof two US$1bn plus deals involving industry seems inevitable and thebuyers and sellers within the region.recessionary and difficult financialThe other was the US$1.3bn friendlyenvironment caused by the Europeantakeover of Dutch cable maker Drakasovereign debt crisis could spur a flowHoldings by Italys Prysmian. The target of deals. 2012 kicked off with thehad attracted interest from Chinasannouncement that GermanysXinmao but it did not pursue its bid inThyssenKrupp and Finlandsthe light of the agreement between Outokumpu are to combine theirDraka and Prysmian (see dealmakers stainless steel operations. The newlyfor more). combined stainless steel businesses will operate under the name of OutokumpuMore than half of the remaining deal and the two companies envisage thatvalue that was not accounted for bythe opportunities for synergies andwestern European buyers came fromscale will give them more effectiveChina Bluestars US$2.2bn purchase ofgrowth opportunities by joining forces,Norways Elkem (see dealmakers). The especially in the Americas and Asia.next largest deal involving a buyer from ThyssenKrupp has also sold its non-coreoutside the western European regionshipbuilding operations to UK privatewas Russian steelmaker NLMKsequity fund Star Capital as part of itsUS$600m purchase of the remainingdivestment strategy.50% interest in Steel Invest and Finance(SIF) that it did not already own fromjoint venture partner Duferco Group.NLMK receives rolling assets from thedeal with some non-core long productand Belgian steelmaking operationstransferring to Duferco.10 Ibid.20 Metals Deals 21. Figure 10: M&A activity in western Europe (by target)1 Western Europe SteelAluminiumOther metals 2011 Number Value NumberValue NumberValue Domestic 19US$4.1bn7 US$0.0bn233US$0.2bn Cross border 13US$2.0bn4 US$2.5bn 28US$1.7bn All deals32US$6.1bn 11 US$2.5bn 61US$1.9bn 2010 Domestic 18US$0.2bn8 US$0.1bn227US$0.6bn Cross border 13 US$0.0bn21 US$0.0bn220US$0.8bn All deals31US$0.2bn9 US$0.1bn 47US$1.4bn*1Sums may not total because of rounding*2Deal values not disclosed Figure 11: M&A activity in central and eastern Europe (by target)1 Central & eastern Europe SteelAluminiumOther metals 2011 Number Value NumberValue NumberValue Domestic 18US$0.1bn2 US$0.0bn227US$0.2bn Cross border9US$0.6bn2 US$0.0bn214US$0.0bn2 All deals27US$0.7bn4 US$0.0bn 41US$0.2bn 2010 Domestic 24US$0.1bn3 US$0.0bn235US$0.3bn Cross border 10 US$0.0bn20 US$0.0bn213US$0.0bn2 All deals34US$0.1bn3 US$0.0bn 48US$0.3bn*1Sums may not total because of rounding*2Deal values not disclosedForging Ahead 2012 outlook and 2011 review 21 22. Deal places:Central and South AmericaDeals for targets in Central and South America accounted for Deal activity was dominated by rawalmost a quarter (24%) of total metals deal value in 2011. materials investments, by a variety of buyers largely from outside the region.This was broadly in line with the regions 2010 share. Three The exceptions to this included somelarge inbound purchases Norsk Hydros US$4.5bn purchasemanufacturing assets that formed partof Vales aluminium operations and the two US$1.95bn moves of the Norsk Hydro/Vale aluminiumby separate consortia of Chinese state owned companies and a deal and a significant deal with anJapanese/South Korean grouping to take 15% shares in CBMMundisclosed value that saw South(see dealmakers) accounted for US$8.8bn, 90%, of the regionsKoreas Posco acquire a 20% stake in Cia Siderurgica Pecem (CSP), aUS$9.8bn total metals deal value. manufacturer of steel slab, from Dongkuk Steel Mill Company. CSP is a joint venture between Brazils Vale,Brazil delivered the vast majority of which holds a 50% stake, Dongkuk2011 target metals deal value in the Steel Mill Company with 30% andregion, accounting for a total of Posco with 20%. 2011 ended with theUS$9.3bn of the regions US$9.8bn announcement that the engineering andworth of deals. The largest deal outside construction side of Posco had securedBrazil was a US$199m move by powder a US$4.3bn order to build a newmetallurgical products company integrated steel mill in Brazil for CSP.Plansee for a 7% share in Chileancompany Molibdenos y Metales(Molymet). Molymet had been asupplier to Plansee for many years andthe company described the deal as afirst step to secure molybdenum powdersupply. Figure 12: M&A activity in Central and South America (by target)1 Central & South AmericaSteelAluminiumOther metals 2011 Number Value NumberValueNumber Value Domestic3 US$0.0bn20 US$0.0bn211US$0.6bn Cross border3 US$0.0bn21 US$4.9bn 15US$4.2bn All deals 6 US$0.0bn21 US$4.9bn 26US$4.8bn 2010 Domestic5US$0.1bn0 US$0.0bn2 6US$0.1bn Cross border3US$0.1bn0 US$0.0bn219US$5.6bn All deals 8US$0.2bn0 US$0.0bn 25US$5.7bn*1Sums may not total because of rounding*2Deal values not disclosed22 Metals Deals 23. ContactsGlobal Metals Team Territory contactsJim Forbes CEE/RussiaMiddle EastGlobal Metals Leader John Campbell Masood Hassanjim.forbes@ca.pwc.comjohn.c.campbell@ru.pwc.commasood.hassan@uk.pwc.comTel: +1 (905) 972 4105 Tel: +7 495 9676279 Tel: +44 (0)20 7213 4575Usha Bahl-SchneiderBrazilNetherlandsGlobal Senior Marketing andRonaldo ValinoSander GerritsenKnowledge Managerronaldo.valino@br.pwc.com sander.gerritsen@nl.pwc.comusha.bahl-schneider@de.pwc.com Tel: +55 21 2516 6139 Tel: +31 (0) 20 5687198Tel: +49 30 2636 5425 China Poland Ken SuTomasz Reinfuss ken.x.su@cn.pwc.com tomasz.reinfuss@pl.pwc.com Tel: +86 6533 7290Tel: +48 (12)4296100 Germany Russia Thomas Stieve John Campbell thomas.stieve@de.pwc.comjohn.c.campbell@ru.pwc.com Tel: +49 511 5357 3380Tel: +7 495 9676279 Finland Slovakia Markku Marjomaa Alica Pavukova markku.marjomaa@fi.pwc.comalica.pavukova@sk.pwc.com Tel: +358 (0) 9 2280 1464 Tel: +421 2 59350 419 FranceSweden Didier PitotSten Hkansson didier.pitot@fr.pwc.com sten.haakansson@se.pwc.com Tel: +33 (0) 01 56 57 8755Tel: +46 (0) 8-55533349 India Taiwan Tapan Ray Gary Chih tapan.ray@in.pwc.comgary.chih@tw.pwc.com Tel: +91 98201 02067Tel: +886 (0) 2 27296666 Japan UK Maurice ToyamaChris Baker maurice.a.toyama@jp.pwc.com chris.baker@uk.pwc.com Tel: +81 (0) 80-3124-7717 Tel: +44 (0) 20 721 31500 Korea US Jong-Chul Han Robert McCutcheon jong-chul.han@kr.pwc.comrobert.w.mccutcheon@us.pwc.com Tel: +82 (0) 2-709-0408 Tel: +1 (412) 355 2935 MexicoUkraine Jose AlmodovarNilesh Lad jose.almodovar@mx.pwc.com nilesh.lad@ua.pwc.com Tel: +52 55 5263-6000 Tel: +38 044 490-6777 Forging Ahead 2012 outlook and 2011 review 23 24. PricewaterhouseCoopers Global Metals PracticeOur global Metals practice comprises a network of industryprofessionals serving metals clients strategically located in over 30countries around the world. PricewaterhouseCoopers serves globalclients involved in ferrous and non-ferrous primary and secondarymetals production around the world. We bring experience,international industry best practices and a wealth of specialisedresources to help solve business issues.For more information on our Metals practice and other industrypublications, please visitwww.pwc.com/metalsReaders with an interest in the mining industry may also want tosee our new publication, Mining Deals 201 Annual Review. InMining Deals, we examine the rationale behind the overall trendsand the key individual deals. We look at the year under review, thecontext of the preceding three years, and ahead to the futuredirection of deal-making in the sector. Copies of the report can beobtained atwww.pwc.com/miningwww.pwc.com/metalsAcknowledgmentsData analysis for this industry summary was provided by MichaelPortnoy from the PwC Research and Analytics team, and JonCandeloro from the PwC Global Metals team; the report waswritten by Dominic Byrne (The Bigger Picture Consultancy).Special thanks are due to Usha Bahl-Schneider for the projectmanagement of this report. Thanks also go to John Campbell,Robert McCutcheon, Tapan Ray, Ken Su, Martin Theben, RonaldoValino for sharing their knowledge and expertise and for theirvaluable feedback.PwC firms help organisations and individuals create the value theyre looking for. Were a network of firms in 158 countries with close to 169,000 people who arecommitted to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon theinformation contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracyor completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability,responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or forany decision based on it. 2012 PwC. All rights reserved. Not for further distribution without the permission of PwC. 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