Johannesburg — A COMBINED Anglo-Xstrata entity was likely be listed on the JSE as Xstrata was aware of exchange- control restrictions on South African investors, Xstrata group strategy executive GM Thras Moraitis said yesterday.

Moraitis's remarks will reassure some of Anglo 's South African shareholders and help to secure their support for Xstrata's merger proposal to Anglo last month. About a quarter of Anglo's shareholders are in SA.

He said in an interview that while the combined entity would not be as big as BHP Billiton , it would offer similar diversity, with a spread of assets across SA, Australia and the Americas and a high global ranking in the production of coal, copper, zinc and ferro-alloys.

Listing the merged entity on the JSE would also reinforce the exchange's global credibility as a source of mining finance.

Moraitis is visiting SA to speak to stakeholders about Xstrata's proposed "all-share merger of equals", which Anglo's board rejected unanimously. Xstrata hoped Anglo's board would agree to a meeting to discuss the proposal.

When Xstrata held talks with its own shareholders, the biggest of which was Glencore, they indicated they would not be happy to be diluted in a merger, he said.

Dilution would come about if Xstrata offered a premium for Anglo shares instead of its current one-for-one merger proposal.

Asked if Xstrata owned Anglo shares, he said regulations would require Xstrata to report any stake in Anglo above 3%. Anglo says its biggest shareholder is the Public Investment Corporation with 4,8%.

Although Xstrata also passed last year's final dividend ahead of its rights issue, Anglo's announcement in February that it would pass its final dividend shook many long- term investors, who rely on dividend income. Moraitis said Xstrata was committed to a progressive dividend policy, and would return to paying dividends as soon as possible. But it was a growth company, and its dividend payout was lower than Anglo's as a proportion of earnings.

Mineral Resources Minister Susan Shabangu told Bloomberg yesterday the government regretted letting Anglo move its head office to London as it was built on South African assets. "We feel strongly if anybody is going to list" the primary listing must be in SA.