China OK's Glencore-Xstrata Merger

Ivan Glasenberg will now take charge of the combined group from the outset.

Chinese authorities have removed what was the final obstacle to the $30 billion merger between commodities trader and crude oil player Glencore International PLC [LON:GLEN] (Glencore) and mining giant Xtrata PLC [LON:XTA] (Xstrata), Reuters reports.

The approval by antitrust regulators was given on the requirement that Glencore, the parent company of marine fuels company Chemoil Energy Limited (Chemoil), sell Xstrata's $5.2 billion Las Bambas copper mining project in Peru to reduce its power in the copper market.

If the company fails to find a buyer for the mine by the end of August 2014 at a fair market price, it will have to find different copper assets to sell.

Glencore also agreed to 8-year commitments to supply copper, zinc, and lead to China.

"Them being willing to sell Las Bambas shows there are no sacred cows in the eyes of the Glencore management," said Nomura analyst Jeff Largey.

"If they can pull value forwards on Las Bambas by selling it - rather than taking on all the operational and execution risk associated with building it (and) bringing it to production - I think the market will reward them."

What started as a merger now looks to have turned into a takeover, with Xstrata chief executive Mick Davis saying he will leave the combined group, along with a number of Xstrata's management team, rather than continue the role for the first six months as previously agreed.

"This clearly turned into a takeover rather than a merger. We all knew (Glencore chief executive) Ivan Glasenberg was going to be the top dog, it was just a matter of time," Largey said.

Davis will sublet the Xstrata offices until March 2017 raising speculation about his new plans, and in a detail highlighting potentially strained relations between the parties, he will have to pay the combined group for the furniture and computers.

Besides its majority ownership of Chemoil, Glencore also owns parts of oil production subsidiaries of Russian oil firm Russneft.

Shareholders of both Glencore and Xstrata approved the merger in November, 2012, and the deal has already gotten regulatory approval from other countries.