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(Bloomberg) -- Rebuffed by Rio Tinto Group last year, Glencore Plc will soon have another acquisition target to consider for expanding its mining empire: the company formed from the biggest spinoff in the industry’s history.

BHP Billiton Ltd. plans to split off assets including its silver, manganese and aluminum operations to focus on larger businesses such as iron ore. The newly formed company -- Perth, Australia-based South32 Ltd. -- may appeal to Glencore because it’s being spun off near the bottom of the commodity cycle and it produces many of the same metals as the Swiss giant, said Aviate Global LLP.

South32 could command a market value of about $15 billion when it lists in coming months and earnings are set to surge in the next five years with prices of its materials poised to rise, said Macquarie Group Ltd. As his biggest rivals such as Vale SA and Anglo American Plc hunker down to ride out plunging prices of bulk commodities, Glencore Chief Executive Officer Ivan Glasenberg is looking for undervalued acquisition targets.

“He’s got a free pass into these assets,” Paul Gait, a London-based mining analyst at Sanford C. Bernstein & Co., said by phone. “Looking at it from Ivan’s perspective, I’d be thinking the current downturn isn’t going to last. It never does.”

Representatives for Glencore and Melbourne-based BHP declined to comment.

Big Miner

South32 -- named after the line of latitude connecting the company’s Australian and South African operations -- will include the Cannington mine in Australia, the world’s largest silver and lead operation, a South African coal business, a nickel mine in Colombia and aluminum assets in three countries. South32 will also be the dominant producer of manganese ore, used to strengthen steel, according to Macquarie estimates.

BHP shareholders will vote on the spinoff plan in May and once approved, South32 shares will trade in Australia, South Africa and the U.K.

BHP is “on track to complete the process before the end of the financial year” in June, CEO Andrew Mackenzie said in a statement today as the company released second-quarter production figures.

Glasenberg said last month that the recent decline in commodity prices, which includes slumps in oil, iron ore, silver and copper in the past six months, may create takeover opportunities.

The South Africa-born billionaire has built Glencore into a producer and seller of more than 90 commodities through dozens of investments. He owns about 8.4 percent of the Baar, Switzerland-based company, which commands a market value in London of about 34 billion pounds ($51 billion).

‘It’s Ivan’

Glasenberg’s record as a relentless acquirer of assets makes him a potential buyer of South32, said Paul Phillips, a Melbourne-based analyst with Perennial Investment Partners Ltd., which manages about A$18.5 billion ($15 billion).

“I wouldn’t rule it out, because it’s Ivan,” Phillips said by phone.

China’s shift to consumer-led economic growth from an investment-led expansion will rely more on the kinds of metals produced by South32, Morgan Stanley analysts Tom Price and Joel Crane wrote in a Dec. 16 note. By the end of the decade, aluminum is poised to gain 19 percent, silver may rise 21 percent and lead could advance 6 percent, they said.

Worth More

Rising prices and cost cuts at South32 could swell the company’s earnings before interest, taxes, depreciation and amortization 52 percent to $2.7 billion by 2020, analysts at Macquarie said in a Sept. 1 report.

“In someone else’s hands, they are probably worth more than they were in the BHP portfolio,” said James Santo, a special situations sales trader at Aviate in Sydney, referring to South32’s assets. “Particularly in the hands of someone like Glencore, who are already dominant in all of the core commodities that South32 produces.”

Glasenberg suggested in September that Glencore may study the new company as a target. “It’s a good set of assets,” he told reporters.

Glasenberg’s hardest task may be convincing the new company’s investors to part with their shares, said Phillips at Perennial. South32 stock would soar if Glencore made an approach, he said.

“Can Ivan pay a high enough price?” said Phillips. “If most South32 investors believe that prices are going up and cashflows are improving, they’re not going to give it away.”

No Rio

A bid for South32 wouldn’t plug the hole Glencore sought to fill last year with Rio, which makes almost half its revenue from iron ore. Glencore doesn’t currently produce the steelmaking ingredient, though owns mine projects in Africa.

In July, Glencore approached London-based Rio with a deal that would have created the world’s largest mining company. Rio, which has a market capitalization of about 53 billion pounds, rejected the proposal.

Since then, Glencore’s market value has fallen more than 25 percent as metals and minerals have tumbled, curbing Glasenberg’s prospects of a deal with Rio. That may make the cheaper South32 a more realistic option, according to Jeff Largey, a London-based mining analyst at Macquarie.

“I would imagine the likelihood of success is probably higher,” Largey said by phone.

Other Suitors

Glencore may not be the only suitor for South32, according to Gait and Phillips.

X2 Resources, the private investment fund set up by former Xstrata Plc CEO Mick Davis that’s raised about $4.8 billion, could also be interested, they said. X2 is already considering a bid for Vale’s nickel business, according to people with knowledge of the situation.

A London-based representative for X2 declined to comment.

After the slump in metals prices, South32 is more likely to be a buyer of assets than a seller, Paul Young, a Sydney-based analyst with Deutsche Bank AG, said by phone.

All the same, with South32 an easier target than Rio and few other mining companies hunting for assets, Glencore’s Glasenberg has a unique opportunity, said Gait at Bernstein.

“The competitive situation is going to be that much less intense,” he said.

--With assistance from Jesse Riseborough in London.

To contact the reporters on this story: Brett Foley in Melbourne at bfoley8@bloomberg.net; David Stringer in Melbourne at dstringer3@bloomberg.net; Angus Whitley in Sydney at awhitley1@bloomberg.net To contact the editors responsible for this story: Beth Williams at bewilliams@bloomberg.net; Ben Scent at bscent@bloomberg.net; Jason Rogers at jrogers73@bloomberg.net Elizabeth Wollman

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