London - Swiss-based commodities trading firm Glencore International will take over marketing and sales for nickel, cobalt and ferronickel produced by Xstrata Nickel from April 2, according to a document seen by Reuters.
Xstrata bought nickel and cobalt producer Falconbridge in a $16 billion (R116 billion) deal last year.
The letter, sent by Falconbridge yesterday, advised that firms wanting to buy metal after April 2 should contact Glencore.
"All existing commitments made by Xstrata Nickel will be honoured, but from April 2 2007 these will be invoiced by Glencore," the letter said.
Glencore owns 34.72 percent of London-listed Xstrata. It markets many of the diversified mining company's products, and has a reputation for negotiating contracts aggressively.
A metals trader said this deal could support prices of cobalt, a metal used in aircraft parts and batteries. Unlike nickel, cobalt is not traded on an exchange.
Glencore, which owns stakes in production facilities in Africa and Australia, is a big player in the cobalt market.
"Glencore's strategy has been to get to grips with the primary organs of the market so it can have influence over the whole flow of events that takes metal into China," the trader said.
This deal would particularly affect American superalloy producers that had been reliant on Falconbridge material sold by Canadians, and were going into the land of much tougher businessmen. "It's difficult to put a number on what it means for the market, but prices are going to be higher," the trader said.
On Monday, Xstrata said it would buy Canadian nickel producer LionOre for C$4.6 billion (R29 billion) in cash.
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