Xstrata Plc (LSE: XTA) announced that it has no intention of making an offer for Anglo American (LSE: AAL). This morning’s statement follows Xstrata’s latest protracted merger attempt. In 2008 Xstrata failed in a bid to acquire Lonmin, another FTSE 100 constituent and top tier platinum miner. The Anglo-American approach was made in June. Following the disclosure of Xstrata's approach, Anglo American released a statement on the 22nd June in which it rejected Xstrata's proposal.
Earlier this month the UK Takeover Panel Executive set a deadline of October 20th for Xstrata to make a firm offer for Anglo American under Rule 2.5 of The City Code on Takeovers and Mergers.
Earlier reports suggest that the combination would have created a new mining ‘Super-Major’ with a premier portfolio of operations diversified across multiple commodities and geographies, with enhanced scale and financial flexibility to fund future growth.
Xstrata plc Chief Executive, Mick Davis commented on Xstrata’s growth strategies following the unsuccessful merger attempt;
"Our decision not to proceed with an offer before the deadline imposed by the UK Takeover Panel reflects our disciplined approach to growth and our focus on the value proposition for Xstrata's shareholders in a merger. We continue to assess a range of alternative growth options, in full recognition that transactions of this nature often take time and patience to mature.”
Xstrata remain ‘very confident’ of their standalone prospects, their portfolio is exposed to early stage, infrastructure commodities such as copper and thermal coal. There development pipeline include many projects that are in the construction phase, representing over $7.5bn of investment. In total, the development pipeline is expected to deliver an uplift of approximately 50% over Xstrata's current production profile by 2013.
One such development is the ATCOM East Project in South Africa, in a separate announcement Xstrata Coal revealed that it would approve the full implementation of the proposed operation. The new ATCOM East Project will be integrated into the existing Xstrata Coal South Africa ATCOM infrastructure and produce approximately 5.7m tonnes per annum of run of mine production and 3.1m tonnes of saleable thermal product for domestic and export markets annually.
Elsewhere, Xstrata Copper approved a $293m investment to increase the life of its Lomas Bayas mine in Chile by eight years, through the development of the Fortuna del Cobre satellite ore deposit, three kilometres away from the existing operation.