US miner Phelps Dodge has said it has agreed to acquire the two Canadian firms Inco and Falconbridge in a $56 billion deal that will create one of the world's largest mining companies.

The new company would be the world's fifth-largest miner. Phelps Dodge said it would buy Inco for C$80.13 per share.

"This transaction represents a unique opportunity in a rapidly consolidating industry to create a global leader based in North America," said Steven Whisler, chairman and chief executive of Phelps Dodge.

"The combined company has one of the industry's most exciting portfolios of development projects, and the scale and management expertise to pursue their development successfully."

Inco is itself currently involved in a friendly take over of Falconbridge.

Based on current growth projects and expansion plans, and as a result of the synergies accounted for to date, Inco and Falconbridge expect by 2009 to increase production of platinum group metals by approximately 111,000 oz in their combined Canadian operations.

Canadian mining firm Teck Cominco recently attempted launch a takeover move for Inco that was dependent on the ending of the company's deal with Falconbridge.

Inco responded to that attempt by announcing an enhanced offer for Falconbridge, with both companies' boards endorsing the deal.   

Ÿ Adfero Ltd