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Xstrata Profits Plunge; Glencore Merger Back in Focus

Xstrata reported a sharp fall in profits Tuesday as the miner battled rising costs and falling prices – which is likely to revive the debate surrounding its stalled $60 billion merger with Glencore, the commodities trader.

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The miner reported first half underlying net profits for the year of $2.19 billion and $15.5 billion of revenue.

However, it managed to beat analyst forecasts which had suggested profits would be down even more at $1.44 billion which would have been a fall of almost 50 percent.

The planned 'merger of equals' between Glencore

and Xstrata has made little progress after Glencore refused to raise its offer for the miner from 2.8 shares for each Xstrata share.

Qatar Holdings, the sovereign wealth fund which owns a significant share in the miner, is looking for 3.25 shares for each Xstrata share citing the company’s long term viability.

However, the numbers could test that highlighting the company’s exposure to market forces and the problems facing the sector regarding falling commodity prices and rising costs.

Last month Anglo American saw a similar drop of almost 40 percent in first half profits which it blamed on rising costs but falling prices.

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