Xstrata PLC (XTA.LN) Wednesday said a combination with rival Anglo American PLC (AAUK) would create savings of more than $1 billion per year as the miner looked to raise pressure on Anglo's board to reconsider talks on a deal.

Xstrata Chief Executive Mick Davis a week ago wrote to both Anglo's Chairman and Chief Executive outlining rationale for an all-share "merger of equals" to create the world's third biggest miner by market value, a proposition that Anglo rejected on Monday.

Xstrata Wednesday released publicly a proposal that outlines cost savings and competitive advantages of combining the two companies, though a person close to Anglo said it contained nothing new and that the terms remained unacceptable. "The strategic case for the combination remains unattractive for Anglo shareholders and the unchanged terms proposed by Xstrata are totally unacceptable," said the person, who asked not to be named.

Xstrata forecasts a merger would save $1 billion a year after three years, largely from combining coal operations in Australia and South Africa, copper interests in Chile, streamlining management and combining corporate functions such as procurement.

The company also emphasized that the estimate "does not assume nor envisage" layoffs in South Africa, a touchy issue for the country's politicians and unions.

Davis added that a combination would allow the new company to better compete against larger peers BHP Billiton Ltd. (BHP), Rio Tinto PLC (RTP) and Vale S.A. (VALE) in the rapidly consolidating industry.

"In future, only the largest and most diverse global mining groups will generate superior returns for their shareholders by gaining access to capital, the most attractive resources and the best talent, while better managing the increasing complexity and risk associated with our industry," Davis wrote.

U.K.-based Anglo American Monday rejected Xstrata's proposal for an all-share "merger of equals," saying such a deal is strategically unattractive and the terms are "totally unacceptable."

Some analysts and shareholders had expected Xstrata to come back with a sweetened offer, but Davis resisted those calls for now. "The proposal bears none of the characteristics of a takeover, in which a premium would typically be payable," the company said.

Xstrata is hoping public release of the information will indicate to Anglo shareholders that the proposal is more complicated and a potential deal is more compelling than initially indicated by Anglo's swift rejection.

The person close to Anglo noted that the miner had already considered the proposal for four days prior to Monday's rejection.

The two companies have a combined market value of about GBP40 billion, and together would be the world's biggest producer of thermal coal, platinum and ferrochrome, and one of the world's top producers of copper, nickel, coking coal and iron ore.

Anglo's shares closed up 168 pence, or 10.2%, at 1820 pence, leading the FTSE100. Xstrata's shares rose 35 pence, or 5.5%, at 675 pence.

Company Web site: www.xstrata.com

-By Jeffrey Sparshott, Dow Jones Newswires; +44 (0)207 842 9347; jeffrey.sparshott@dowjones.com