Copper miners in $25.9bn merger

Phelps Dodge mines and processes copper around the world

US mining giant Freeport-McMoran has agreed to buy its larger rival Phelps Dodge - creating the world's largest publicly listed copper firm.

The $25.9bn (£13.6bn) deal is the latest round of consolidation in the global mining industry and comes as firms battle to increase reserves.

Firms are also keen to capitalise on copper prices, up 53% on a year ago.

The deal must be approved by US regulators but would create a firm with combined 2006 profits of about $7.9bn.

Strong demand

Phelps Dodge produces copper and molybdenum, with mines and processing facilities in North and South America, Europe and China.

Freeport's major interests are in Indonesia, mining copper, gold and silver there. The Grasberg mine is its most high-profile operation.

Earlier this year Phelps Dodge had hoped to buy buy Inco and Falconbridge - two Canadian firms which have now both been taken over by rival miners.

It has also been tipped as a takeover target of Gruppo Mexico.

Freeport's offer of $126.46 per share is 33% above the Phelps Dodge closing price at the end of last week.

The surge in commodity prices is down to strong demand among emerging nations such as China and India at a time when supplies are tight.