Nikanor and Katanga Mining announced an agreed merger that will create one of the world’s largest independent copper and cobalt producers worth about $3.3b (£1.6b).

The merger will bring together two adjacent copper and cobalt mines owned by the companies in the Katanga region of the Democratic Republic of Congo.
The merged group, which will retain the name Katanga Mining, said that it aimed to be producing 400,000 tons of copper annually by 2011 -- making it Africa’s largest copper producer -- and 40,000 tons of cobalt, making it the largest producer of the metal in the world.
John Leslie, executive chairman of Nikanor, claimed the deal would create an “African champion” with “fantastic assets”.
The new group will be led by Arthur Ditto, president, chairman, and chief executive of Katanga, while Stephen Jones, chief financial officer of Katanga, will become the CFO.
Under the terms of the deal, Nikanor shareholders will receive 0.613 new Katanga shares and $2.16 in cash. Nikanor shareholders will hold 60% of the merged company.
A separate, exclusive supply agreement has been reached with Glencore, the international raw materials group, to bulk purchase the copper and cobalt supplied by the mine.
The deal represents a blow for CAMEC, a rival Congolese mining group run by Phil Edmunds, the former cricketer, which owns a 22% stake in Katanga but had failed in an earlier effort to take control of it.
The group will be listed on the London Stock Exchange and the Toronto stock exchange.
The companies also claimed that the deal was unlikely to be threatened by a review of mining licenses being undertaken by the government of Congo.
Congo, which has 10% of the world’s copper reserves and less than 1% of its production, has attracted a flood of foreign investment since the end of the country’s civil war in 2003, in which millions died.
The transaction is expected to close in the first quarter of 2008, but is subject to shareholder and regulatory approvals. About 74% of the Nikanor shareholding is supportive as is 48% of Katanga.
Katanga is being advised by CIBC World Markets and its legal advisers are Cassels Brock & Blackwell in Canada, Norton Rose in the UK, and Appleby in Bermuda. Nikanor is being advised by J. P. Morgan Cazenove.