Mining giant explores options

Hopes of further takeover moves among the world’s major miners were fuelled today after Xstrata confirmed consolidation talks with rivals.

Hopes of further takeover moves among the world’s major miners were fuelled today after Xstrata confirmed consolidation talks with rivals.

The London-listed firm, which has a lead refinery in Northfleet, Kent, said it was in ongoing discussions over “a range of topics of mutual interest such as industry consolidation”.

Xstrata added the “very preliminary” talks had not so far led to any bid approach to the company, or resulted in a move for a rival.

Elsewhere in the sector, mining giant BHP Billiton again pressed its case for a merger with rival Rio Tinto.

Rio rejected BHP’s $US153bn (€106.5bn) approach in November and yesterday called for the Takeover Panel to set a “put up or shut up” deadline for its suitor to make a firm bid or walk away.

Xstrata said it was "continually reviewing opportunities'' in the sector to add value for shareholders.

The firm completed three major acquisitions in 2006 and its most recent major move was an offer for Australian company Jubilee Mines, valuing the business at AUS$3.1bn (€1.8bn).

Seymour Pierce mining analyst Asa Bridle said: “Since the BHP Billiton-Rio thing, everything is up for grabs. Whether Xstrata have got something big up their sleeve who knows, but anything is possible.”

Xstrata is the world’s sixth largest miner and the biggest producer of zinc, which is used in galvanising steel.

It is also a significant producer of copper, nickel and coal and employs around 50,000 staff in 18 countries.

Despite the takeover hints, shares in the heavily-weighted sector were on the back foot today after the US Federal Reserve’s failure to give a clear signal on future interest rate cuts triggered overnight losses on US and Asian exchanges.

Xstrata’s 1% losses were smaller than peers elsewhere.

The firm posted a 22% increase in underlying earnings to US$5.7bn (€3.9bn) in the first half of the year on buoyant prices across all its commodities.

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