For almost a year, the international equity markets have been awaiting the final announcement of the merger between two Swiss companies that are already closely related. The merger of the giant trading company, Glencore with registered offices in the tax haven of Jersey and what is probably the world's most transnational mining companies Xstrata with main offices in the tax haven of London is expected to result in a firm with a market capitalisation of $80 billion (P650 billion).
Though the new entity is yet to be formally named, it has been dubbed 'Glenstrata'. Glencore is one of the world's largest commodity trading companies. It is reportedly the largest company in Switzerland, with a 2010 global market share of 60 percent in the internationally tradable zinc market, 50 percent in the internationally tradable copper market, nine percent in the internationally tradable grain market and three percent in the internationally tradable oil market. Xstrata is one of the world's most diversified and transnational mining companies and the world's biggest trader in thermal coal with operations in 19 countries on virtually every continent. Glencore already owns some 40% of Xstrata. It is estimated that the merger, seen as the 'perfect marriage' will soon create the world's fourth largest mining company. But neither company operates in Botswana so why does it matter to the country? In order for such a merger to occur, the governments of the countries in which the merged companies operate have to agree to it. Each has complex competition policy rules to be complied with in order for the merger to be consummated. And a funny thing happened on the way to formation of South Africa's Competition Tribunal.In South Africa, which is one of the most important places where Xstrata operates, the Competition Tribunal had initially approved the merger and then two weeks ago, Eskom and the National Union Mineworkers (NUM) raised an objection.
