The European Commission (EC) reviewed antitrust concerns and cleared the world’s largest diversified commodities trader to complete the acquisition, but said it must scrap an exclusive European zinc sales agreement with producer Nyrstar.
Terminating the agreement between Glencore and Nyrstar addresses one of the European steel industry’s major concerns, but the remedy may not be sufficient, steel industry body Eurofer said on Thursday, according to a report in Reuters.
“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 in a statement.
Post-merger, the parties will still have a share of around 35% of the Zinc, used in metal alloys and to prevent corrosion, is a metal where Glencore and Xstrata would be particularly strong as a combined entity.
European zinc market and the vertical integration of the new entity, which includes mining, smelting, trading, logistics and warehousing, is also concerning according to Eurofer.
“This shows that Glencore/Xstrata can still exert controlling influence on the zinc market, for instance by artificially shortening supplies,” Gordon Moffat, Eurofer director general, said.
The European steel industry needs zinc for corrosion-resistant coatings applied to steel products. More than half of global zinc production goes into steel making.
