Xstrata reveals merger talks with Vale are 'ongoing'

Xstrata has revealed its merger talks with the Brazilian rival Vale are still on, despite rumours last week that the negotiations had hit an impasse. This comes as the mining giant posted a 13 per cent bump in profits in 2007, and predicted its business would not be significantly damaged by a slowdown in the US.

Mick Davis, the chief executive of Xstrata, said at the company's full-year results presentation: "Discussions with Vale are ongoing and may or may not lead to an offer." He added that the talks had not prevented Xstrata from evaluating potential acquisition targets of its own.

This followed speculation last week that talks with Vale were on the verge of collapse as Glencore, which holds a 35 per cent stake in Xstrata, wants an exclusive 10-year marketing deal for the merged group.

Xstrata first confirmed discussions with "industry participants" on 12 December, with interest understood to have come from Anglo American and Vale, formerly known as Companhia Vale do Rio Doce. Vale confirmed talks with Xstrata's management on 21 January.

Xstrata has grown from a medium-sized player to the fifth largest miner in the world by market capitalisation, through an aggressive acquisition strategy.

Mr Davis said yesterday: "Industry consolidation is a trend we foreshadowed some years ago." He added that the trend "has undoubtedly accelerated" since BHP Billiton approached Rio Tinto over a potential merger worth more than $150bn (£75.5bn).

The group boosted profits by 13 per cent from $4.8bn in 2006 to $5.5bn last year, as the price of commodities soared. It proved a record year for its production of ferrochrome, zinc, nickel, platinum and coal.

The share price rose 1 per cent to £40 as Mr Davis talked up a bright future for the group. He said that the impact of a slowdown in the US would have a "muted" effect on the demand for commodities from the emerging marke ts and China.

Mr Davis said: "I believe that the medium-term outlook for commodities is further strengthened by the return to growth of the Western economies over the next two to three years.

"As a result, I remain very confident in the outlook for all of Xstrata's commodities through the medium and long term."

Since the start of 2007, Xstrata has maintained its acquisitive strategy with $6bn worth of bolt-on acquisitions, including its takeover of the western Australian nickel group Jubilee Mines for more than A$3bn (£1.4bn).

It added that as well as scrutinising potential acquisition targets, it has a pipeline of $30bn-worth of organic growth projects, of which $12bn has been approved.

Meanwhile, the Australian miners Oxiana and Zinifex have agreed to a A$12bn merger.

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before