Fortescue shares jumped today amid speculation Noble Group may have secured a strategic stake in Andrew Forrest’s independent iron ore group.
RBS has bought around 90 million Fortescue shares in recent months and its RBS Nominee Company has filed a notice saying it owns 89 million Fortescue (Quinambo Nominees).
Fortescue shares rose 29 cents to close at $5.36 today.
Speculation before Christmas had it that RBS was buying for a “trading company”. Sources earlier today were speculating the buyer was either Glencore, Noble or Trafigura.
One source close to RBS told BusinessDay the buyer is Noble. Strategically, this would make sense as the iron ore market is the last commodity that remains dominated by a handful of major producers – BHP, Rio and Vale – while the trading companies have little presence.
However, a spokesman representing Noble this afternoon denied the group was behind the buying.
There was also strong buying today in Fortescue $5.50 February call options, consistent with speculation of corporate interest in the iron ore producer, which is moving towards 150mtpa of production in coming years.
Whereas Glencore is focused on its proposal to mop up the 66 per cent of Xstrata it doesn’t own, a deal it announced last week and one which, if successful, would give the trading house full control over significant global mining production, Noble is wrapping up a deal of its own.
Noble is in talks to sell its Gloucester Coal shares to Chinese Group Yancoal, for which it is likely to make a net profit in the vicinity of $300 million.
The acquisition of a strategic stake in Fortescue makes sense for Noble which could put its food on the iron ore trading rights and strike off-take deals for a large clientele of steel mills in China.