Glencore, Xstrata rise on reports of merger approval from China

Glencore International and Xstrata saw their shares surge on Tuesday as the companies were said to be close to clearing the final regulatory hurdle in their multi-billion-dollar merger.

The mining companies were expected to agree to concessions this week to soothe Chinese fears over its control on the supply of copper. A deal would end months of negotiations between the nation and the miner.

Analysts said an agreement was likely to involve sale from among Xstrata's greenfield copper projects, which could include Las Bambas in Peru, due to begin production in 2015.

Sources told Reuters a solution might also involve giving China a guaranteed slice of the group's copper production.

Xstrata is the world's fourth-largest producer of copper. It aims to increase output by more than 50% from 2011 levels by 2015, on the back up of projects like the $5.2bn Las Bambas mine ramp up.

A merger between the two producers would account for around 7.0% of global copper supply, which is expected to increase with mines in Australia, Peru and Chile.

A spokesperson from Glencore declined to comment when reached by Sharecast and Digital Look.

Glencore and Xstrata were trading 4.38% at 4.83% higher, respectively, on Tuesday morning in London.

Stocks across the whole mining sector were making gains early on after suffering heavy falls the day before as commodity prices dropped on the back of disappointing growth figures from China.

RD