xstrata doesn't need copper, page-2

Xstrata's $1b fuels talk of bid
By Alex Wilson
August 11, 2005

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Swiss miner Xstrata posted a record interim profit yesterday and said it was still "alert" to acquisitions as rumours of a tilt at Australian miner Oxiana intensified.

Xstrata recorded a net profit for the first half of the year of $US797.10 million ($1 billion), up 73 per cent on the same period in 2004, on the back of strong commodity prices.

The Australian market was humming ahead of the profit result with rumours Xstrata could announce a takeover bid for gold and copper miner Oxiana.

Oxiana's share price rose to close at a record of $1.175, up 9.5c, in heavy turnover.

But Xstrata chief executive Mick Davis made no mention of Oxiana in the results release, saying only that the company was still looking for opportunities.

"We remain alert to acquisition opportunities that may have a profound positive impact on our scale, diversity and rating in the investment market," he said.

Oxiana managing director Owen Hegarty scotched rumours of an impending takeover offer.

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AdvertisementDaiwa Securities senior resource analyst Mark Pervan said Oxiana was a prime takeover target and would be a good fit for Xstrata. "It wouldn't surprise me at all if Xstrata has run the rule over Oxiana or is looking at it pretty closely," he said.

Xstrata, which earlier this year lost a takeover battle for WMC Resources to BHP Billiton, expects strong commodity prices to continue for the rest of 2005 and into 2006.

Mr Davis said the company would benefit in the second half from production increases at its Queensland coal and Mount Isa copper operations, as well as "significant growth and efficiency gains" in its Australian zinc business.

Xstrata closed the door on a controversial chapter in its history on Tuesday when it finalised an agreement to sell the abandoned Windimurra vanadium mine in WA to Precious Metals Australia.

Mr Pervan said the episode had made Australian miners wary of Xstrata.

"There is a bit of a sentiment issue with Xstrata," he said. "It has lost a fair lot of credibility with the locals."

The West Australian Government poured more than $30 million into infrastructure for the project and was furious when Xstrata shut it down and dismantled parts of the machinery.