Russian metals giant Norilsk Nickel took a bold step outside its homeland on Monday, buying a fifth of the world's fourth-biggest gold miner, Gold Fields Ltd, for $1.16 billion.
The purchase of the stake from miner Anglo American Plc is one of the largest foreign investments ever by a Russian firm. It fuels speculation that the country's top gold producer might use South Africa's Gold Fields as a launch-pad for further expansion. Norilsk said it sought global co-operation with Gold Fields.
"We see this as a beginning of a strong relationship between our two companies, where we can exploit joint activities around the world," Christophe Charlier, Norilsk's head of strategic development and acquisitions, told Reuters.
But he said Norilsk had no immediate plans to increase the stake. "Not at this time," Charlier said.
Industry analysts said Norilsk, a major player in platinum group metals which aims to boost its production of precious metals to 100 tonnes by 2007 from 40 tonnes last year, had clearly signalled its global ambitions.
"I think it makes their intention very clear," said Leon Esterhuizen, analyst at Investec Securities in Johannesburg.
"They certainly want to be a very large global gold producer, and by taking 20 percent of Gold Fields they are preventing someone else from snatching it. I would think in time they are definitely going to grow the stake, if not take out the company."
Daniel Major, London-based analyst at Wall Street investment bank J.P. Morgan, said Norilsk could later inject assets into Gold Fields in return for a higher stake and then use the firm's New York listing to tap into Western capital markets.
Anglo American said it had sold its stake in Gold Fields as part of a strategy to focus all its gold interests in its 54.5 percent stake in AngloGold Ltd, the world's second-largest gold producer behind Newmont Mining Corp.
Spokeswoman Anne Dunn in Johannesburg said Anglo had been waiting for an opportunity to unload its Gold Fields holding, which it got in December 2000 when it sold most of its stake in banking group FirstRand to holding company Rembrandt.
"It was an opportunity to realise value," she said.
Gold Fields said it had been given very little notice of Anglo American's sale, which is expected to give the global mining and paper group a gain of about $480 million.
"This is a welcome new development which will bring certainty to the market in Gold Fields shares, especially after the recent speculation about the intentions of Anglo American," the firm said.
"Norilsk has done a great deal and we trust we will make them as much money as we did for Anglo American and all our other shareholders," it said.
Gold Fields was one of the most actively traded stocks on the Johannesburg bourse. The shares closed down 1.2 percent at 82 rand, mainly due to the rand's rally against the dollar fuelled by the deal. It fared better than its peers, outperforming the gold mining index, which was down 2.6 percent.
Traders said the stock was benefiting from removal of the overhang of a 20 percent holding that could be sold.
The deal helped strengthen the rand, since Anglo said it would use the sale proceeds, which totalled 7.631 billion rand, pay off debt and finance capital expenditure, so bringing the cash back into the local economy.
Norilsk shares were up 2.7 percent at $75, while Anglo American's London shares were up 0.9 percent at 12.87 pounds.
This is Norilsk's first investment in South Africa, though it has ventured outside its homeland before with its purchase of a majority stake in US platinum and palladium producer Stillwater Mining Co last year.
Norilsk, which has been aggressively snapping up gold mines across Russia, is seen as the most likely winner of an upcoming tender for rights to develop the giant Sukhoi Log gold field in eastern Siberia.
Gold Fields said it would make a statement later in the day.