Peru’s small miners block highways, camp outside Congress demanding registry extension
Analyst says that there are strong competing interests between Congress and small-scale miners that could escalate.
Diversified miner Xstrata (LON:XTA) and commodities trader Glencore (LON:GLEN), which are seeking final regulatory approval from China for their $36 billion merger, posted Tuesday lower annual net profits, mainly as a consequence of a combined $2.6 billion in writedowns in their aluminum, nickel and platinum businesses.
The results add to the recent list of a dreadful reporting season from major miners, such as Rio Tinto (LON:RIO) and Anglo American (LON:AAL), which also announced impairments due to weaker commodities prices and cost overruns in key projects.
The world’s largest commodities trader said its net income fell in 2012 to $1 billion, down 75% from $4.05 billion reported in 2011, as Glencore took $1.6 billion in impairments, mainly related to the investment in aluminum producer Rusal.
Xstrata, in turn, logged a 79% drop in net income for 2012 to $1.18 billion after taking nearly $978 million in writedowns. Excluding the impact of the impairments, the company reported a 37% fall in its profits, down to $3.65 billion.
Merger news
In a phone interview with Bloomberg, Glencore’s CEO Ivan Glasenberg said China’s competition regulator is assessing the influence the combined group will have in the copper market.
“We have been marketing Xstrata tons into China anyway in the past, so it’s not a big increase which is under the control of Glencore,” Glasenberg was quoted as saying.
The merger to create a mining behemoth with a market capitalization of more than $70 billion has faced several twists and turns since it was first announced in 2011. The deal was renegotiated and restructured last year to win the support of several shareholders, which ended up causing delays to the first deadline at the end of October.
On March 1, the companies extended the deadline for closing their long-awaited merger for the fourth time. This time due to continuing discussion with Chinese authorities.
The new date is now April 16.
If successful the combined new giant will have revenues in excess of $140 billion with as much as 80% of sales earned from mining.
