National Union of Mineworkers in South Africa has bogged down the proposed merger two mining companies, viz. Anglo American and Xstrata. The union fears that the proposed merger would throw them out of jobs.

Anglo which provides employment to 110,000 people in mines across South Africa, and in Botswana and Namibia, accounts for 3% of the country's GDP.

The proposed merger would create a market leader worth£43.6billion. At present, Anglo American is worth about £24billion and Xstrata is worth about £20billion.

Last week Xstrata chief executive Mick Davis assured union members that the company had no plans to achieve cost-savings through large cuts in jobs.

Speaking on the issue, union spokesman said, "We have heard this before. Two companies get together and promise there won't be any job cuts, but they always restructure and re-engineer their operations in a way that leads to people being laid off."

Mick Davis, chief executive of Xstrata is of the view that the merger could take a long time running from 18 months to two years.

A little bird told the reporter that China Minmetals Corporation, which is one of the largest metals and minerals trading companies in the world, is also looking at a possible bid for Xstrata.

The proposed merger would create a market leader worth£43.6billion. At present, Anglo American is worth about £24billion and Xstrata is worth about £20billion.

JP Morgan Cazenove and Deutsche Bank are combined shouldering the task of advising Xstrata. UBS and Goldman Sachs are advising Anglo.

In the recent trading Anglo closed at 1804p a share, whilst Xstrata closed at 686p a share.