Anglo-Swiss commodities firms Glencore International and Xstrata (Dusseldorf: XTR.DU - news) have confirmed a merger to create a new group with a combined market value of $90bn (£57bn).
Commodities (Santiago: COMMODITIES.SN - news) trader Glencore and Xstrata, the world's fourth-biggest diversified miner, would create the seventh biggest firm on the FTSE 100 (Euronext: VFTSE.NX - news) .
The merged company will be a commodities powerhouse spanning mining, agriculture and trading.
Xstrata chief executive Mick Davis, who will be the boss of the enlarged Glencore, said: "A merger between Glencore and Xstrata offers a unique opportunity to create a new business model in our industry to respond to a changing environment.
He added: "It is the logical next step for two complementary businesses."
Ivan Glasenberg, chief executive of Glencore, will be deputy CEO and Xstrata chairman John Bond will retain his post.
The new group will be looking to ride an extended surge in demand for commodities from China and other booming emerging nations, over the next few years.
It is forecast to increase production by 11% annually to 2015 and have a significant presence in African copper (Berlin: BNA.BE - news) mines as well as in Kazakhstan and South America.
It will become the world's biggest exporter of coal for power plants and will have to compete with mining sector leaders BHP Billiton (Hamburg: BHP1.HM - news) and Rio Tinto (Berlin: CRA1.BE - news) .
Glencore, the world's largest diversified commodities trading house, will issue 2.8 new shares for each Xstrata share.
In the 12 months ending December 31, Glencore reported $186.2bn (£117.6) in sales and Xstrata had sales of $33.9bn (£21.4) over the same period.
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