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MEI Online: General Minerals Engineering: Latest News: October 2nd 2008


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:: Credit Crunch Hits Xstrata and BHP Billiton

Evidence of the spreading impact of the credit crunch came from Mick Davis, the multimillionaire head of the Xstrata mining group. He said that he was scrapping a 5 billion takeover bid for Lonmin, the platinum producer, after failing to secure debt on sufficiently attractive terms. The few bankers capable of finding 5 billion to lend to Xstrata had offered their money with numerous strings attached, including a demand to refinance within one year.

Mr Davis took the view that with the financial sector in meltdown, he could not risk refinancing so soon - after all, who knows how bad things might be in a year?

The bid by BHP Billiton, the world's largest mining company, for Rio Tinto will also be affected by the credit crunch. BHP arranged a $55 billion debt facility last year but bankers say the cost of borrowing this money could be double what it originally expected.




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