Javier Blas and Commodities Editor

Glencore and Xstrata are in advanced talks over a nearly $80bn merger that could reshape the mining industry, combining the world?s largest commodities trading house with one of the largest miners of thermal coal and copper.

The deal could be announced as soon as early next week, ahead of Xstrata?s annual results on Tuesday, according to a person familiar with the discussions.

In a brief statement on Thursday,

Xstrata confimed that it had received an approach from Glencore and was in discussions, but cautioned there was no certainty that any offer would be made. Under UK takeover rules, Glencore has until March 1 to make an offer. News of the talks was first reported by Bloomberg.

?The companies are closer to a merger than [at] anytime in the last five years,? the person with knowledge of the conversations said. ?Nothing is firm, however.?

Ivan Glasenberg, chief executive of Glencore, has been pushing for a deal for the last five years, but Mick Davies, his counterpart at Xstrata, has resisted it, arguing that the world?s largest trading house was a difficult company to value. The $10bn flotation of Glencore last May put a valuation on the company, however, paving the way for the current merger talks.

Mr Glasenberg told the Financial Times last year ahead of the IPO that combining with Xstrata, the London-based miner in which the trader owns a 34 per cent stake, made strategic sense.

?We believe there is good value in the two companies being together,? he said at the time. ?Why has that not happened? It is a value debate. Xstrata . . . seems more comfortable for Glencore to go public and get a market price before they may or may not enter into discussions,? he added.

Mr Glasenberg argued that having the flow of Xstrata?s commodities production within the Glencore trading system was ?advantageous? to both companies. ?There are a lot of benefits and synergies to put the two companies together,? he said.

Commodities bankers have in the past estimated that the combination of the two companies will deliver synergies of about $700m. But some investors remain sceptical of the savings, arguing that the two companies, and their strategies, are different.

Although Glencore has never recovered its initial public offering price of 530p, the trader has outperformed slightly Xstrata, putting the market valuation of both companies roughly at par.

At the close of Wednesday Glencore, which is listed in London and Hong Kong, was valued at nearly $45bn while London-listed Xstrata was worth roughly $50bn. After excluding the stake that Glencore already owns in Xstrata, the combined company could be worth more than $80bn.

Two people familiar with the discussions declined to comment on the details of the transactions. Glencore has for long time argued for a merger of equals, but some large investors in Xstrata have dismissed that approach, asking for a substantial takeover premium.