Mineworkers' union not keen on $102b merger

LONDON - South Africa's powerful National Union of Mineworkers (NUM), with 317,000 members, has intervened in the proposed merger between the mining companies Anglo American and Xstrata.

It claims any deal would "lead to unacceptable job losses" at Anglo, which is South Africa's largest industrial company and accounts for 3 per cent of the country's GDP. It employs 110,000 in dozens of mines across South Africa, in Botswana and Namibia.

The NUM did not believe assurances given by Xstrata chief executive Mick Davis last week that the company had no intention of achieving cost-savings at the merged group of US$1 billion ($1.55 billion) via large cuts in employee numbers.

An NUM spokesman said: "We have heard this before. Two companies get together and promise there won't be any job cuts, but they always restructure and re-engineer their operations in a way that leads to people being laid off."

Meanwhile, Davis is struggling to secure support from Anglo's shareholders after the company last week turned down his plan for an all-share merger that would create a group valued at £40 billion ($102 billion).

Many of Anglo's investors say that management under chairman Mark Moody-Stuart and chief executive Cynthia Carroll were right to rebut the merger proposal, which fails to offer a takeover premium. But investors want Carroll and Stewart to make it clear to Xstrata that they are prepared to sit down and discuss terms.

Speculation is swirling in the City of London that China Minmetals Corporation, with backing from Chinese sovereign wealth funds, is looking at a possible bid for Xstrata, but is reluctant to move while its target maintains an interest in Anglo.

Minmetals is one of the largest metals and minerals trading companies in the world and handles more than 12 million tonnes of steel products annually.

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