The year 2011 is expected to be an action-packed year for M&As in the metals space with Tata Steel, the AV Birla Group, NMDC and Vedanta, among others, reported to be on a hunt for raw material integration. Moreover, with Posco, JFE and Kobe forming joint ventures in India, cross continental acquisitions and JVs are making a comeback as companies attempt to optimise global production and distribution footprint. According to a recent PwC report, the number of cross-border deals in 2010, together with the focus on raw material deals, were up 46% y-o-y globally, from 129 to 188 with total cross-border deal value more than trebling, from a low of $4.4 billion in 2009 to $14.3 billion in 2010.

Continuing the 2010 trend of acquisitions and joint ventures, experts believe 2011 will see more deals in the raw material space as Indian steel majors see opportunity for asset allocation. India, in its first quarter (January to March) of 2011 saw steel major SAIL extending its relationship with Japan’s Kobe steel in jointly building a steel plant in Uttar Pradesh with an investment of Rs 10,000 crore. Similarly, the Ruias-owned Essar Africa Holdings acquired 60% equity interest of the government of Zimbabwe in the beleaguered Zimbabwe Iron and Steel Company (Zisco) to meet the growing regional demand.

Meanwhile, with cash and cash equivalents of R8,229 crore as on December 31, 2010, Sesa Goa, a Vedanta group company, during its third quarter results, said it is scouting for acquisition in Goa and overseas. Tapan Ray, leader metals, PwC India, said, ?India with economic growth around 9% year-on-year continues to be a large market domestically and remains relatively less affected by the global financial crisis. As a result, we are seeing predictable capacity expansions in the sector. Unlike the past, sector today isn?t reliant on the developed export markets, as new avenues in Latin America and Africa have opened up internationally, coupled with the buoyant domestic demand.? Taking a step forward in its move to diversify into coal and coking coal, India?s largest iron ore producer NMDC is in talks for acquiring coking coal mines in British Columbia, a Canadian province. Agreeing to the discussions made with geologist and concerned people in British Columbia, NMDC chairman Rana Som had told FE, ?British Columbia officials had briefed us on picking up stake in coking coal mines there. But we are more interested in acquiring a mine and operating it rather than just picking up stake,? he said. However, NMDC is keeping the British Columbia option open and keeping a close watch on it, he said. “At the same time, we are also trying to get operating mines in the US,? he added. Tata Steel is also keen at looking at the assets in British Columbia. And NMDC is also looking at the possibility of acquiring or operating mines in the US, Russia and Australia.

Koushik Chatterjee, group chief financial officer of Tata Steel said, ?The steel sector certainly has some distance to go in terms of consolidation. Following the global financial crisis, it would certainly be more meaningful to consolidate the sector further to leverage pricing power away from the suppliers to the industry.? Going ahead, reports state that Aditya Birla Group is in race to acquire Australian coal mining company Whitehaven Coal and the group had been selected in the first round and is likely to make a formal bid soon. Around 20 companies, including the Anil Dhirubhai Ambani Group and consortia of Korea Resources Corporation and Daewoo and China?s Shenhua Energy and Yanzhou Coal are in bid for Whitehaven Coal.