Resources sector intelligence provider IntierraRMG has outlined the approval by Xstrata independent directors of the revised US$33 billion takeover bid from Glencore last week, to not only create the formation of the world’s third-largest mining business in terms of market capitalisation, it will also result in the creation of an entity that will hold an impressive 11 per cent share of annual global mined zinc production.
Information from the IntierraRMG Mergers & Acquisitions data module shows that while some attention is focused on the new company’s oil trading strength and dominant position in coal and copper, it is in zinc that the combined organisation really pushes size and scale boundaries.
When the takeover deal receives final approval, Glencore-Xstrata will be the world’s largest zinc miner, one of the largest smelters, and also the leading trader of zinc.
“When the dust settles, Glencore-Xstrata will own more ships than the British Royal Navy and trade 3 per cent of the world’s oil, but it is the data surrounding zinc that best illustrates the trading power of the new entity,” IntierraRMG managing director Peter Rossdeutscher said.
On top of the double-digit share of annual global mined zinc production, Glencore-Xstrata will also hold 5 per cent of global contained zinc reserves (proven and probable), and control 8 per cent of global refined zinc production.
“For industry watchers, the value of mined zinc production is itself impressive, however the combination of a very strong mining company with the world’s largest commodity trader, which already has its own production facilities and off-take agreements, is what is really striking,” Rossdeutscher added.
Last month, Glencore raised its offer to 3.05 new shares for every Xstrata share it does not already hold (up from 2.8).
Its conditions for the higher price included naming its chief executive officer, and leading shareholder, Ivan Glasenberg, as chief executive of the enlarged company, with the departure of Xstrata’s CEO, Mick Davis, after six months.