Glencore-Xstrata to hold 11% of global zinc market

The approval by Xstrata independent directors of the revised US$33 billion takeover bid from Glencore last week, not only sees the formation of the world's third-largest mining business in terms of market capitalisation, it also sees the creation of an entity that will hold an impressive 11% share of annual global mined zinc production.

Information from the IntierraRMG M&A 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.

Peter Rossdeutscher, Managing Director for IntierraRMG stated: “When the dust settles, Glencore-Xstrata will own more ships than the British Royal Navy and trade 3% of the world’s oil, but it is the data surrounding zinc that best illustrates the trading power of the new entity.”

On top of the double-digit share of annual global mined zinc production, Glencore-Xstrata will also hold 5% of global contained zinc reserves (proven and probable), and control 8% of global refined zinc production [see Table 1 below and attached].

Mr Rossdeutscher added; “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.” [see Map 1 below and attached].

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 CEO, and leading shareholder, Ivan Glasenberg, as chief executive of the enlarged company, with the departure of Xstrata's CEO, Mick Davis, after six months.

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Based on IntierraRMG information