China holds up Xstrata and Glencore merger on its fears over copper

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The Independent Online

Glencore's £56bn merger with Xstrata is being held up by the Chinese government on concerns the resulting group could wield too much influence over China's copper market.

The merger has been blessed by both sets of investors as well as the EU and South Africa, leaving Chinese approval as the only hurdle. However, while China had been expected to pass the deal, Glencore has had to postpone its expected date of completion three times as negotiations with the Chinese drag on.

Ivan Glasenberg, Glencore's chief executive, revealed yesterday that its negotiations centre on copper concentrate, which is copper ore with some of the impurities removed. "That's the one that they're looking at and that is the one which they are trying to ascertain how big our supply is into China," he said.

"We don't believe there is any particular commodity that we dominate into China, and even if you take copper as an example, there are 20 or 30 different companies supplying tonnage into China. We believe that we should meet [the 16 April] date," he added.

Mr Glasenberg was speaking after Glencore reported a 25 per cent drop in profits to $3.1bn (£2.1bn) yesterday, while its merger partner Xstrata unveiled an even bigger 37 per cent decline, to $3.6bn. Xstrata's profits fell by 79 per cent to $1.2bn after the miner took $2.6bn of impairment charges, including writedowns on its stake in the troubled South African platinum miner Lonmin and some of its other nickel and zinc assets. Adding exceptional items to Glencore's bottom-line results leaves profits 75 per cent lower at $1bn. It took $1.6bn of impairment charges, mostly linked to its investment in the Russian aluminium producer Rusal.