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The boss of mining giant Xstrata said today his company needs to go ahead with a proposed £40 billion merger with Anglo-American if it is to properly compete with the titans of the global mining industry.
Unveiling a 68% collapse in profits in the first half of the year, Xstrata chief executive Mick Davis did not offer any new sweeteners to Anglo shareholders but told them the planned “merger of equals” is a deal Anglo has to do.
“The most significant combination in our industry in the past ten years, namely the merger of BHP and Billiton in 2001, clearly demonstrates the ability of larger, more diverse mining groups to achieve superior and more consistent returns for shareholders through the cycle,” he said.
“The combination [of Xstrata and Anglo] would create a new major diversified mining powerhouse, able to compete more effectively with our larger peers including BHP Billiton, Rio Tinto and Vale.” Reporting first half pre-tax profits of $909 million (£552 million), slashed by fallen coal, copper, nickel and zinc prices, Davis warned that hopes the mining industry is returning to good times were “premature”.
