Inco targeted by $17bn buyout bid

Surging demand from China has heated up metals prices

Brazilian mining group CVRD has tabled a $17.6bn (£9.3bn) bid for rival Inco in a move that could lead to a bidding war breaking out for the Canadian firm.

The cash offer of $86 per Inco share trumps previous bids from US group Phelps Dodge and Canada's Teck Cominco.

News of the bid comes weeks after Inco pulled out of a takeover battle for Canadian mining group Falconbridge.

The sector has seen a wave of takeovers as record prices have led to firms fighting to buy resource assets.

Surging demand

In particular, strong demand from China - the worlds leading metals consumer - has pushed copper, nickel and zinc to record levels.

Prices for nickel, which is used in the production of stainless steel, have more than trebled in the past three years amid strong demand and tight supplies.

CVRD said it would make a formal all-cash offer to Inco on Monday. The $17bn bid would be one of the biggest made by a Brazilian firm for an overseas company.

If the offer is accepted it would become the world's largest nickel producer as well as one of the three largest diversified mining firms in the world.

Earlier in the week, Inco rebuffed a cash and stock offer of $73.42 a share from Vancouver based Teck Cominco.

Instead the group has recommended an offer of $76.20 per share from America's Phelps Dodge to shareholders.