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UPDATE 1-Merged Glencore, Xstrata would take aim at iron ore
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Fri Feb 3, 2012 7:58am EST
* Glencore, Xstrata marriage could trigger iron ore M&As
* Iron ore conspicuous in absence from Xstrata stable
* High-margin potential in iron ore hard to resist
By James Regan
SYDNEY, Feb 3 (Reuters) - An $80 billion marriage of commodities trader Glencore and miner Xstrata could lead to a new round of takeovers in iron ore, creating a goliath eager to muscle its way onto one of mining's richest and most closely guarded sectors.
Glencore and Xstrata, which have yet to reach a deal, would together rank as the world's largest thermal coal exporter, the largest zinc producer and third-largest copper miner - but would remain all but non-existent in iron ore mining.
Xstrata wants to get into iron ore, underlined in 2009 by its attempt to buy mining giant AngloAmerican. But it has been thwarted by a scarcity of major new discoveries and a virtual oligopoly among mining giants Vale, Rio Tinto and BHP Billiton, which have no intention of loosening their grip, say industry players and analysts.
"With a fortified balance sheet thanks to Glencore, it's a logical move for Xstrata which should light a fire under the others, like Vale," said an Australian mining executive who asked not to be named.
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