Call it Rio Redux. Anglo American, the diversified mining group being stalked by its Swiss-based rival Xstrata, seems to be taking a leaf out of the blood-spattered Rio Tinto defence playbook. Having rebuffed Xstrata's proposed nil-premium merger last week, Anglo is now seeking to demonstrate the standalone value of its assets and boost confidence in a bedraggled management team lacking a chairman. Step one is an auction of a minority stake in MMX Minas-Rio, the Brazilian iron ore producer for which it overpaid only last year and lacks the cash to develop.

Investors disliked the way Rio Tinto earlier this year offered Chinalco, the Chinese state-controlled aluminium company, a stake in its prime assets as an alternative financial solution to a rights issue that they ended up doing anyway. Even if Anglo manages to avoid letting its biggest customer, China, inside its business by selling to a Gulf investor, shareholders have little reason to like this deal much more than they liked Rio/Chinalco. Anglo can expect a hostile hearing from investors when it does the rounds in the coming days. Buying at the top of the cycle and selling strategic stakes somewhere in the middle is not a great way for a company with a governance vacuum to boost its credibility.

Xstrata, though, remains caught in a Catch-22 situation. The more it talks up the synergies it can deliver by combining the fourth- and fifth-largest diversified miners, the more it looks like it is proposing not a merger of equals but a takeover. Xstrata reckons it can achieve more than $1bn a year of savings by merging with Anglo, on top of the $2bn of efficiencies spread over two years that Anglo already projects. It also claims it can pull off a merger without job losses or falling foul of antitrust authorities in South Africa. It will not get the chance until it offers a decent premium.