China's antitrust authority, the last obstacle in the way of Glencore's takeover of Xstrata, has set its sights on copper, in a move that says more about Chinese industrial aims than it does about the trader's market clout.
China, the biggest buyer of the materials Glencore trades and mines, must give the go-ahead before the commodities powerhouse can tie up its $35 billion acquisition of miner Xstrata , the largest deal in the sector to date.
But China's Ministry of Commerce (MOFCOM), which regulates mergers, is also the newest and least predictable of the world's main watchdogs. Critically, it is the only one to take national industrial policy into consideration in its decisions.
Glencore said earlier this week that MOFCOM was focusing its attention on copper - specifically, copper concentrate, the intermediate product that feeds smelters and refineries.
MOFCOM is not deaf to China's clamouring hunger for copper, or to the country's ambition to process more copper ore at home. This, industry sources say, means that while China is unlikely to block Glencore's ambitions to become a mining and trading powerhouse, it could impose conditions to secure its supply.
MOFCOM's focus surprised analysts who had considered Glencore's share was not dominant. European regulators zeroed in on the combined group's position in European zinc - not copper - and eventually imposed remedial sales.
Traders and analysts suggest Glencore has a share ranging from below 10 to 14 percent of Chinese concentrate imports, which should not change dramatically, as it already markets much of Xstrata's metal.
But it is not just about market share. Citigroup estimates domestic production accounts for 73 percent of copper consumed in China, up from 57 percent in 2004, and that may rise.
"(China has) been a big importer of refined products but the country has increased its smelting capacity very significantly in recent years, and there is a shift going on towards producing more of the refined copper at home," Nic Brown, head of commodities research at Natixis in London said.
"So you can see why this is of great importance to China, and why they are not simply looking at the current numbers, but at the prospective numbers."
Glencore and Xstrata combined will have the biggest exposure to copper among the diversified mining groups. Xstrata, the world's fourth-largest copper producer, aims to increase output by more than 50 percent by 2015, as projects like the $5.2 billion Las Bambas development in Peru begin producing.
The Chinese focus on copper, analysts say, raises even bigger questions for any future Glencore deals, especially the takeover of significant producers like rivals Anglo American or smaller ENRC - both rumoured targets.
Glencore, in regular contact with the Chinese watchdog, is confident it can close its acquisition in mid-April, implying Chinese approval in March, as Lunar New Year holidays have concluded and as political change in China settles.
Glencore is no stranger to lengthy processes - the acquisition of grain handler Viterra was approved almost 9 months after the deal was first announced. MOFCOM has declined to comment on the status of the Glencore application.
Political change, with bureaucrats reluctant to push for big decisions, has not helped. Adding to the delays, industry sources say Glencore pulled and refiled its submission late last year. Glencore declined to comment.
"The fact it's taken so long, even with understandable delays, suggests negotiations are not easy," said one antitrust lawyer based in China. "Negotiations with MOFCOM are not always easy - they'll have to explore and find solutions to the objections raised."
The lengthy talks have kept hedge funds busy. They have maintained big bets the deal will go through, but have swooped on uncertainty around the exact timing of MOFCOM's approval.
China has only blocked one deal since anti-monopoly laws came into force in 2008 - Coca-Cola's planned purchase of juice maker Huiyuan in 2009. But it has imposed conditions, including price and supply conditions, in many cases.
The closest comparison to Glencore-Xstrata in terms of key suppliers is the acquisition of Russian potash producer Silvinit by rival Uralkali in 2011. MOFCOM fretted the merged entity, as the second-largest producer of potassium chloride, which is used in fertilisers, could have excessive weight.
It imposed conditions on supply and ordered the group to maintain existing sales procedures and price negotiations.
"The European Commission's decision to require Glencore to take remedial action to clear the deal may help MOFCOM to take remedial action too if necessary," said David Anderson, an antitrust partner in the Brussels office of Berwin Leighton Paisner who has experience with China's antitrust regime.
"I do think agencies take courage from each other's decisions - there is some safety in numbers."
(Additional reporting by Rachel Armstrong in SINGAPORE, Polly Yam in HONG KONG, Maytaal Angel in MADRID; Editing by Helen Massy-Beresford)