SAP, CommerceOne to Power Online Metal Marketplace

FRAMINGHAM (08/14/2000) - After three months of evaluating vendors, the Mining and Metals Procurement Marketplace today announced the selection of SAPMarkets Inc. in Palo Alto, Calif., and Commerce One Inc. in Pleasanton, Calif., to put its operations online.

The group, formed in May, plans to create a global e-commerce marketplace to allow more efficient and less costly equipment and supplies procurement for mining and metals companies.

Kit Robinson, a spokesman for Commerce One, said the marketplace will be operational in the fourth quarter. The deal marks the second such marketplace created by Commerce One and SAPMarkets since the two companies formed an alliance in June.

Fifteen metals and mining companies, as well as a financial services firm, make up the founding members of the new marketplace. The members are Alcan Aluminum Ltd., Alcoa Inc., Anglo American PLC, Barrick Gold Corp., The Broken Hill Proprietary Company Ltd. , Corporacion Nacional del Cobre de Chile, Companhia Vale do Rio Doce, De Beers Consolidated Mines Ltd., Inco Ltd., Morgan Stanley Dean Witter, Newmont Mining Corp., Noranda Inc., Pechiney, Phelps Dodge Corp., Rio Tinto PLC and WMC Ltd.

The marketplace, which is based in Los Angeles, is envisioned as a global, Internet-based source where participating buyers and suppliers will be able to be do business more efficiently and more cheaply in the procurement process.

Robinson wouldn't disclose the value of the deal, but a spokesman for the marketplace said that the numbers could be released after the contracts are signed in about two weeks.

However, analysts note that while the deal may be good for SAP and Commerce One, the metals and mining marketplace market is becoming crowded.

"The vendors are making a big deal out of these announcements," said Ronald Exler, an analyst at Robert Frances Group in Westport, Conn. "It's a confusing situation out there. The vendors are pushing real hard to get into the space."

Exler said such marketplaces involve many tricky issues that have nothing to do with the technologies used to create them, including how they will make money and how they will avoid antitrust concerns. Many companies are already providing the marketplace services, he said, including MetalSite, an industry leader.

Analyst Laurie Orlov at Forrester Research Inc. in Cambridge, Mass., said the deal fills service voids at both SAPMarkets and Commerce One, but agreed that a shakeout will eventually come to this niche.

"The announcement of another one is kind of ho-hum as far as I'm concerned," Orlov said. "There can only be so many of these in any industry."