Mick Davis, Xstrata s CEO, clearly wants to make his company a mining major. But to date he's been price sensitive. He's trying to win over the Australian miner by making a cash approach. This may succeed, but if there's a bidding war, Xstrata may not win.
It is a good time to be miner, especially one with mediocre assets. Xstrata would like to grow, but does not want to buy at the peak. It is starting to act as if it thinks the good times will last. But don't imagine that the mining group's expansionary management has abandoned acquisition ambitions. The buyback is reversible. And Xstrata thinks the commodity price boom will endure. So it's probably only a matter of time before it's sniffing out another big deal.