Glencore, Xstrata Again Delay Merger — China Gets the Blame

The delay is “due to the ongoing regulatory processes in China,” according to today’s note. This is the third such delay to the merger, which will create a mining and trading company worth $70 billion.

China is raising the issue of Glencore’s possible influence on the country’s copper market. China is the world’s largest consumer of copper, and Glencore and Xstrata produce about 10% of the world’s copper concentrate, according to The Wall Street Journal.

That production is not enough to unduly influence the Chinese market, but it is the sort of concern that the government can use as an instructional tool. The message to Glencore is probably something like, “We’ll let you in, but we can kick you out at any time; so watch your step.” The continuing delay underscores the message.

Glencore says its discussions with the government have been “constructive” and that “these discussions are now in their final stages.” The merger will go through, but Glencore has been schooled.