Eurofer, the association of European steelmakers, Thursday
criticized the European Commission's approval of Glencore
International PLC 's (GLNCY) merger with Xstrata PLC (XTA.LN),
saying the EU remedies addressing zinc supplies aren't sufficient
to shield the European market from one supplier having a dominant
influence.
The merger integrates the world's largest zinc trader, Glencore,
with Xstrata, which is the world's largest zinc ore miner and one
of the largest zinc smelters, Eurofer said. Europe's steel industry
needs zinc for corrosion-resistant coatings applied to steel
products, but the measures the European Commission required for the
merger to go ahead will still leave the parties with a European
market share of around 35% after the merger, Eurofer said. That
concentration level is "dangerously close to the 40% threshold set
by the Commission," it said.
"The European steel industry, which uses the lion's share of
zinc metal traded in Europe, will still have to face a leading
provider effectively controlling the zinc supply chain from mining
to warehousing operations," Eurofer said.
Commodities trader Glencore Thursday won regulatory approval
from the European Union for its multibillion-dollar merger with
Anglo-Swiss miner Xstrata, after it improved its initial offer to
allay competition concerns in the zinc market.
To clear the deal, Glencore agreed to cancel its off-take
contract with Nyrstar NV, the world's largest zinc metal producer,
and will give up its 7.8% holding in the company, the European
Commission said.
Write to Leia Parker at leia.parker@dowjones.com
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