Xstrata mulls Australian listing

ANGLO-Swiss mining group Xstrata said today it may consider listing on the Australian stock exchange as it steps up its hostile bid for WMC, Australia's last major independent mining group.

The company has been on a massive buying spree Down Under and now has more than half its net assets in the country.

Xstrata, listed on the London Stock Exchange, told reporters it would look at the possibilities of a dual listing if its tilt at WMC is successful.

'We have always been prepared to look at it seriously but there is a real issue about secondary listings,î an Xstrata spokesman said.

Xstrata is mounting a major public relations campaign in its bid for WMC and says it is prepared to meet Australian politicians at state and federal level to discuss its plans.

Treasurer Peter Costello would be required to give foreign investment approval for Xstrata to take over the company.

Xstrata has bid A$6.35 a share in cash for WMC, valuing the company at A$7.4bn (£2.9bn).

WMC directors rejected a scheme of arrangement offer from Xstrata at the same price last month, and describe the latest bid as 'opportunistic and grossly inadequate'.

The bid represents a 10% discount to yesterday's closing price of A$7.08. Xstrata is primarily interested in WMC's Olympic Dam copper and uranium mine and its western Australian nickel operations.

Mick Davis, Xstrata's chief executive, defended the bid, which is conditional on 90% acceptance, saying WMC's share price was inflated by 'exuberant expectations' of a bidding war, with Anglo-Australian groups Rio Tinto and BHP Billiton the most likely other players.

'This offer reflects the value of the company,' he said. 'We would create a powerful vehicle and be competitive against the majors.'

But analysts say Davis' timing is problematic. Last month, WMC announced plans for a A$4bn expansion at Olympic Dam to meet long-term demand for uranium to China.

Those plans highlighted the potential for WMC and may create reluctance among investors to accept any discounted price.

There are doubts, also, as to Davis' timing as there is some evidence that demand in China - a major driver of the current resources boom - may be losing steam.

Xstrata has made £3bn in Australian acquisitions in five years, including last year's A$2.3bn purchase of Queensland miner MIM. Buying WMC would take its investment in the country to A$18bn.