Aug. 7 - Anglo-Swiss mining company, Xstrata's half-year profits were better than expected, although still down by a third, and questions are being asked over whether the merger deal with Glencore will be affected by the results. Joanne Nicholson reports.
The takeover deal between Xstrata and commodities giant Glencore has been on the table for six months. It's already been pushed to the limit by shareholder Qatar Holdings which wanted better terms. Now the mining company's results are suggesting that Glencore may have to raise their bid. Earnings were down by almost a third at $4 billion - but they were higher than many analysts had forecast. Kevin Allison is from Reuters Breaking Views (SOUNDBITE) (English) KEVIN ALLISON, REUTERS BREAKING VIEWS COLUMNIST, SAYING: "It's a good result for Xstrata and Xstrata shareholders can point to it and say, look, the company's managed to do better than expected in a really tough environment and that means that Glencore should be willing to pay a little bit more. But the ball really is in Glencore's or more importantly, Glencore's chief executive, Ivan Glasenberg's court. It's not clear whether he's going to feel the same way." Xstrata cushioned the fall by making a series of cuts. It took a half a billion dollar hit on a stake in platinum miner Lonmin - a market that's been battered by rising costs and weak demand. It also reported an increase in costs for its copper project in Peru - 23 percent more than original estimates two years ago. And, it's put work on some future projects on hold. All that means costs for 2013 will rise by $400 million dollars. The Glencore Xstrata merger would create the world's largest mining company worth $90 billion dollars. Many believe these latest results won't make any difference to Glencore - but it's the shareholders who have the deciding vote in September. Joanne Nicholson, Reuters