China\'s regulator approves Glencore merger

A long-awaited merger between Swiss commodities trader Glencore with mining giant Xstrata has won a green light from China's regulator, clearing a key final hurdle, Glencore announced Tuesday. Glencore said in a statement that Beijing had given its backing on condition that once the merger was completed, the combined group sells its interest in the Las Bambas copper mine project in Peru to Chinese-approved players by the end of September 2014. Thanks to China's approval, Glencore said, the merger is now expected to go ahead on May 2 after court hearings to finalise the details. Xstrata shares are to be delisted in Switzerland on May 3. China also set supply conditions on the future minerals and mining powerhouse, which will rival top global commodities companies such as BHP Billiton, Vale and Rio Tinto. "For a period of eight years from 1 January 2013, Glencore will continue to offer to supply Chinese customers with a minimum volume of copper concentrate annually under long-term contracts," it said. Similar conditions were set for the zinc and lead markets. Glencore also announced that the current chief executive of Swiss-based Xstrata, Mick Davis, had agreed not to take up the same role in the merged group. Davis initially had been due to take the helm of the combined operation for six months, but Glencore's chief executive Ivan Glasenberg is to assume that role instead. Davis will receive a 4.6-million-pound (5.6-million-euro, $7.0-million) compensation package, Glencore said. In a separate statement, Xstrata said that other members of its management team had announced that they planned to leave the group. Chinese approval for the merger was the last one needed since the European Commission and South African competition authorities had already given the deal a green light. Glencore and Xstrata's shareholders had voted in favour of the merger last November, with a view to sealing the deal by the end of 2012. That target was pushed back to March 15, before again being shifted to April 16 due to delays in China's regulatory approval. Glencore underlined that it had fulfilled a European Commission requirement to halt its contracts in Europe with Belgian group Nyrstar, the number one player on the global zinc market. Nyrstar said that Glencore had paid it 44.9 million euros for breach of contract. In early afternoon trading Tuesday in London, Glencore's shares were up 2.0 percent to 327.55 pence, while those of Xstrata had jumped 3.08 percent to 996.1 pence, with the overall FTSE index down by 0.21 percent. In Zurich, meanwhile, Xstrata's share were up 3.64 percent at 14.25 Swiss francs. Glencore is not listed in Switzerland. Glencore was founded in 1974 as Marc Rich + Co AG. It started out with a focus on ferrous and non-ferrous metals, minerals and crude oil, before expanding into oil products shortly thereafter. It employs almost 3,000 people in its global marketing operations in some 50 offices in over 40 countries, while its industrial operations involve over 58,000 people in 33 countries. The roots of Xstrata, meanwhile, lie in Swiss infrastructure company Sudelektra AG, founded in 1926. The company was renamed Xstrata AG in 1999, and in October 2001 Davis and the rest of the current team joined the business.