October 08, 2008

Vale Xstrata tie up - Talks break down on marketing rights

It is reported that the talks between Brazilian Vale and Anglo Swiss Xstrata PLC have hit serious obstacles over a dispute over marketing rights held by Xstrata’s largest shareholder Glencore International AG.

As per reports, Glencore, which owns a 35% stake in Xstrata and holds long term agreements to market a significant portion of Xstrata's mining output, wishes to significantly expand its market agreements to cover Vale products other than iron ore.

On the other hand, Vale is reported to be objecting to the role of Glencore in a combined company.

As per report, negotiations have veered away from price, which previously had been a sticking point and the two sides are more or less happy with a price.

Vale said on January 21st 2008 that it is in talks to possibly buy Xstrata. Vale is reported to have secured loans of an estimated USD 50 billion from a pool of about eight banks. A marriage of the two companies would diversify Vale from dependence on iron ore by boosting its presence in copper and nickel.