Reuters reported that Xstrata Plc is unlikely to renew a bid for No 3 platinum producer Lonmin Plc while it still harbors hopes of forging a major mining group and doubling in size by combining with Anglo American Plc.

Analysts said that rushing to make a bid for Lonmin would effectively mean Xstrata was giving up its quest to create a mining giant by seeking a merger with Anglo since it cannot buy both firms due to antitrust issues in platinum.

Ms Rebecca O'Dwyer analyst at Investec Securities said that Xstrata should be in no hurry to make a quick move 1 year after it canceled a 33 pound per share cash offer worth USD 10 billion on October 1st 2009 and bought a 25% stake in Lonmin.

She said that "In my eyes that is pretty much a blocking stake. So I guess the question is why they need to move in early October, particularly after they've seen the share price go up more than 20% in the last 3 trading days."

Anglo owns the world's biggest platinum producer, South Africa's Anglo Platinum which accounts for close to half of global output of the silver white metal which is used mainly to cut pollutants in vehicles and in jewelry.

Xstrata has long said that it was keen to build up a platinum division and got a start in 2007 with the purchase of South African junior Eland Platinum for USD 1 billion.

Buying the remaining 75% of Lonmin which would cost USD 3.7 billion at current share prices could also hit Xstrata's balance sheet several months after concluding a USD 5.9 billion rights issue in March to cut debt.

Mr Michael Rawlinson analyst at Liberum Capital said that "We consider it unlikely that Xstrata's management would stretch its balance sheet so soon after the rights issue."

(Sourced from Reuters)