Glencore Xstrata Eyes Oil, Nickel Assets
Shell's Nigerian Oil, BHP's Australian Nickel Assets Are Possible Targets
LONDON— Glencore Xstrata GLNCY -0.46% PLC said Tuesday it will look at Royal Dutch Shell RDSB.LN +1.28% PLC's Nigerian oil and BHP Billiton Ltd BLT.LN +0.82% 's Australian nickel assets as part of its opportunistic approach to mergers and acquisitions strategy.
Chief Executive Ivan Glasenberg said the commodities titan only purchases assets that meet its criteria for returns on investment.
Glencore will look at Shell's Nigeria assets although, "I'm not sure we will get there at the [investment] hurdle rates which we require," he told journalists on a call.
A Shell spokesman declined to comment on whether Glencore was in the running for the Nigerian oil assets. Shell had received interest from more than 100 parties for them, he said, and has whittled the pool to 20 bidders.
Shell Chief Executive Officer Ben van Beurden, who took the reins Jan. 1, is mapping out a more conservative path for the Anglo-Dutch company after a decade of heavy investment in large, long-term projects and as low natural gas prices in the U.S. are weighing on its earnings.
As part of its business review, Shell sold its Australian refinery and gas stations to energy trader Vitol Group for $2.6 billion. Glencore had also put in a bid for those assets, but in the end walked away.
"We looked at the Shell assets in Australia," said Mr. Glasenberg. "The numbers that it was going at didn't meet the (return on investment) rates that we believe were worthwhile, so we didn't go down that path."
Mr. Glasenberg also said Glencore will look at BHP Billiton's Nickel West operations in Western Australia, given potential synergies with Glencore's Minara unit, which controls the Murrin Murrin nickel and refining project in the same region.
"Nickel West is out in the market and you know us, we kick tires and look at anything which is available," he said.
Glencore reported Tuesday a $454 million impairment charge on Murrin Murrin.
Nickel West also suffered an impairment charge of $865 million post tax during BHP's fiscal year ending June 30. For the period, the project produced 103,300 metric tons of saleable nickel, down from 109,000 tons the year earlier.
A BHP spokeswoman declined to comment on Mr. Glasenberg's comments.