Xstrata

Xstrata’s origins date back to 1926, when a financial investment vehicle called Südelektra AG was founded in Zug, Switzerland. The entity’s original purpose was to invest in infrastructure and electricity projects in Latin America. Südelektra’s investments were largely wiped out during the Depression, and the entity remained dormant until after the Second World War. It once again developed a significant portfolio in South America, though most of those holdings were eventually nationalized. Union Bank of Switzerland, which came to control Südelektra, sold its stake to the Swiss trading group Glencore International in 1990.

Glencore achieved notoriety after its founder, Marc Rich, was accused of tax evasion, fraud and racketeering by the U.S. federal government (though Rich was later pardoned by Bill Clinton at the end of his term in office). After joining with Glencore, Südelektra initially invested in a variety of industrial properties, but in the late 1990s it began to focus on metals. It purchased businesses such as the Mount Holly aluminum smelter in South Carolina and two vanadium producers in South Africa: Rhoex and Vantech. The latter were added to Südelektra’s holdings in South African ferrochrome company Chromecorp Holdings. Another South African ferrochrome producer, CMI, was purchased in 1998.

In 1999 the company changed its name to Xstrata AG and then moved into the zinc and lead market. This initiative was bolstered by the 2001 acquisition of the Spanish company Asturiana de Zinc. Mick Davis, the finance director at Billiton who had played in key role in that company’s merger with BHP, was brought in chief executive of Xstrata, which in 2002 carried out a successful initial public offering in London and became known as Xstrata PLC.

Once on its own (with Glencore retaining a minority stake), Xstrata purchased various coal and zinc properties, but a more ambitious move came in 2003, when it launched a takeover bid for MIM Holdings, the largest remaining independent mining group in Australia. The addition of MIM’s huge holdings of coal, copper, lead and zinc made Xstrata one of the world’s larger mining companies.

Xstrata tried to grow even larger with a bid for another Australian mining giant, WMC Resources, but it was outbid by BHP Billiton in 2005. That same year, Xstrata outmaneuvered Inco and Phelps Dodge to win control of the Canadian nickel and copper mining company Falconbridge. It also bought a one-third stake in the large Colombian coal operation known as El Cerrejon.

In early 2008 Xstrata revealed that it was in talks with the Brazilian iron ore giant Companhia Vale do Rio Doce SA about a possible merger. Vale was reported to be willing to pay up to $90 billion for Xstrata. After several months, however, the negotiations came to an end. In August 2008 Xtrata made a $10 billion bid for platinum producer Lonmin but withdrew the offer two months later.

In June 2009 Xstrata proposed a merger of equals with Anglo American but was immediately rebuffed. In October 2009 Xstrata acknowledged defeat and dropped the bid.