Brussels, 23/11/2012 (Agence Europe) - On 22 November, the European Commission granted conditional clearance to the acquisition of Xstrata (of Switzerland), the world's fifth biggest metals and mining group, by Glencore (also of Switzerland), the world's leading metals and thermal coal trader. The clearance is conditional on the termination of Glencore's off-take arrangements for zinc metal in the European Economic Area (EEA) with Belgium's Nyrstar, the world's largest zinc metal producer, and the divestiture of Glencore's minority shareholding in Nyrstar.
The Commission had concerns that the merged entity would have the ability and incentive to raise prices for zinc in the European Economic Area (EEA) because Glencore and Xsastra are the main world suppliers of zinc concentrate and the two biggest zinc suppliers to the EEA through the above-mentioned off-take agreements, covering import, storage, production and exports.
To allay these concerns, Glencore has committed (a) to terminate its exclusive long-term off-take agreement with Nyrstar, the largest European zinc metal producer, insofar as the agreement relates to commodity zinc products produced by Nyrstar in the EEA; (b) not to buy, directly or indirectly, any EEA zinc metal quantities from Nyrstar for a period of ten years; (c) not to engage, for ten years, in any other practices which have the effect of materially restricting Nyrstar's ability or incentive to compete effectively with Glencore in zinc metal in the EEA; and (d) to divest Glencore's minority shareholding in Nyrstar of around 7.79 %.
As long as these commitments are fully implemented, the Commission is confident that the deal will not raise any competition issues. The merged company, known as Glencore Xstrata, will be the fourth biggest zinc company in the world, with a combined stock market value of €64 billion. (FG/transl.fl)