Glencore's merger and acquisition of Xstrata breaks the pricing pattern of the two extension iron ore

Barratt's BulletinCEO, a research institution, said that the successful merger of Glencore and Xstrata, the world's commodity trading giant, will increase the price competitiveness of minerals and break the pricing pattern of the two largest iron ore companies, Rio Tinto and BHP Billiton. Benefit to global end-consumers.

Comprehensive media report on February 3, Jonathan Barratt, founder and chief executive of Barratt's Bulletin, a commodity market research company, said that the Swiss mining giant Xstrata and global commodity trading giant Glencore International PLC once Successful mergers will increase the competitiveness and pricing transparency of commodity prices.

Jonathan Barratt said that the merger of Glencore and Xstrata is a good thing for the commodity market. Once the merger is successful, it will be able to build a scale and current world mining giants such as Rio and BHP Billiton (BHP). Comparing the new mining group, it will help to break Rio Tinto and BHP Billiton's "two dominance" in commodity pricing, and promote product pricing to be more transparent.

Jonathan Barratt pointed out that the current global coal and iron ore market operations are not very transparent, and once the merger of Glencore and Xstrata succeeds, it will increase the transparency of the pricing of these mineral resources and benefit all terminal consumers worldwide.

Xstrata confirmed on the 2nd that it is negotiating with Glencore International on potential mergers. According to unnamed sources, the potential merger negotiations between Glencore and Xstrata are approaching an agreement, which is expected to be announced this week (February 1st week), but negotiations are still likely to be broken.

Glencore International, the world's largest commodity trader, already holds a 34.5% stake in Xstrata, and the acquisition is aimed at acquiring the remaining shares in Xstrata. This portion of the remaining equity is calculated at the closing price on the 1st, valued at 21.9 billion pounds (35 billion U.S. dollars). Once the merger is successful, it will be a reintegration of the two companies after they were split 10 years ago, and it is expected to save $704 million in expenditure.

Jonathan Barratt also stated that once the merger between Glencore and Xstrata is successful, the new company will be worth US$80 billion and become the world’s fourth largest mining group after BHP Billiton, Vale and Rio Tinto. At present, the three world giants such as BHP Billiton have obtained the vast majority of contracts for China and other major global resource consumers. Therefore, the increase in high-level participants in the world mining industry will change the existing pattern and make commodity prices more flexible.

As for the question whether Glencore's merger with Xstrata would lead to industry mergers and acquisitions, Jonathan Barratt believes that this situation is unlikely to occur. After all, the current global economic and commodity demand is still full of uncertainties.