Frost & Sullivan metals & mining analyst Wonder Nyanjowa shares his thoughts on the results out of Xstrata. Developments at Xstrata will be closely watched as the company is attempting what is fast becoming a hostile takeover or merger between itself and Anglo American:

Read the analyst comments below:

In its results announcement this morning, Xstrata reiterated what it believes is the compelling strategic rationale for a merger with Anglo American Corporation, but without offering any new terms or conditions. Frost & Sullivan’s opinion continues to be that the Xstrata proposal is unlikely to find approval.

Anglo already has the scale and capacity to withstand the downturn in commodity prices. The recent upside potential shown by copper and iron ore prices will make up for the turmoil in diamond and platinum markets. Anglo has declined to formally open up discussions with Xstrata on the envisaged synergies and cost reductions of approximately $1 billion (as determined by Xstrata).

The envisaged synergies and savings are primarily unattractive to Anglo when the company has stated its own plans of trimming its cost base by $2 billion by 2010.