Mega-miner deal set to close soon

This is according to a competition expert.

The specialist, who preferred not to be named, said South Africa's competition authorities would likely give the go-ahead to the merger, which would ­create an $86-billion mega-miner with revenues of more than $200-billion. The merged entity would be the world's fourth-largest mining company, after BHP Billiton, Rio Tinto and Vale.

It would have massive exposure to base metals such as zinc, copper and lead and would have a substantial presence in thermal coal, because both companies own coal mines in South Africa.

Should the merger go ahead, it would be the number one producer of lead and zinc in the global market.

The mooted deal still needs regulatory approval from Europe, South Africa and China, and analysts suggest that China is the unknown in the equation.

The Mail & Guardian understands that the merger was lodged with the Competition Commission for consideration in April and its investigation is almost complete.

It has been suggested in competition analyses in Europe and South Africa that authorities have treated the two companies as one because a third of Xstrata is already owned by Glencore.

Europe's demand
The competition expert said coal prices had risen because of the opening up of coal markets in India. The source pointed out that Europe's demand was for a much higher grade of coal, which meant it did not compete with Eskom, whereas India used similar coal grades to Eskom. As demand in India has picked up, this has, in turn, led to a rise in coal prices.

The expert said logistics and port costs in South Africa were also affecting the coal price.

Glencore first proposed the deal in February this year, offering Xstrata shareholders 2.8 Glencore shares for every Xstrata share. The deal has since been upped to 3.05 Glencore shares for every Xstrata share.


The deal is expected to be put to the vote at a shareholders' meeting in November, when the controversial retention payments to 70 Xstrata senior managers will also be decided.

Analysts predict the deal may be closed late this year or early in 2013.

Some analysts have speculated that the merged entity may look at off-loading its platinum interests, considering the recent turmoil in the sector. Xstrata owns a 25% stake in Lonmin.

Implementation
One concern may be over control and access at the Richard's Bay coal terminal, but the competition expert said the government would be able to eliminate this potential stumbling block fairly easily.

Glencore is listed in London and Hong Kong and its headquarters are in Baar, Switzerland. It has a global network of 50 offices in 40 countries throughout Europe, as well as in the United States, Central and South America, Asia, Australia, Africa and the Middle East.

It has a 58 000-strong workforce and is run by South African chief executive Ivan Glasenberg.

Xstrata operates in more than 20 countries and employs more than 70 000 people. It has a presence in the US and South America, Africa, Asia, Australia and Europe.

Xstrata's website says it is one of the world's largest mining and metals companies and a major producer of seven commodities. The company has 19 projects in implementation and a significant number of them are at the feasibility, pre-feasibility or concept stages.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Lloyd Gedye
Lloyd Gedye
Lloyd Gedye is a freelance journalist and one of the founders of The Con.
Advertising

Protective equipment for schools in KwaZulu-Natal goes ‘missing’

Without protective equipment, schools in uMlazi, Pinetown and Zululand won’t meet the already delayed deadline for reopening

The statue of Louis XVI should remain forever handless

A statue of the French king in Louisville, Kentucky was damaged during the protests against police killings. It should not be repaired
Advertising

Press Releases

Empowering his people to unleash their potential

'Being registered as an AGA(SA) means you are capable of engineering an idea and turning it into money,' says Raymond Mayekisa

What is an AGA(SA) and AT(SA) and why do they matter?

If your company has these qualified professionals it will help improve efficiencies and accelerate progress by assisting your organisation to perform better

Mining company uses rich seam of technology to gear up for Covid-19

Itec Direct technology provides instant temperature screening of staff returniing to the workplace with no human contact

Covid-19 and Back to School Webinar

If our educators can take care of themselves, they can take care of the children they teach

5G technology is the future

Besides a healthcare problem Covid-19 is also a data issue and 5G technology, with its lightning speed, can help to curb its spread

JTI off to court for tobacco ban: Government not listening to industry or consumers

The tobacco ban places 109 000 jobs and 179 000 wholesalers and retailers at risk — including the livelihood of emerging farmers

Holistic Financial Planning for Professionals Webinar

Our lives are constantly in flux, so it makes sense that your financial planning must be reviewed frequently — preferably on an annual basis

Undeterred by Covid-19 pandemic, China and Africa hold hands, building a community of a shared future for mankind

It is clear that building a community with a shared future for all mankind has become a more pressing task than ever before

The best local and international journalism

handpicked and in your inbox every weekday