Kazakhmys, the FTSE-listed copper miner, is expected to make a statement to the London Stock Exchange today denying claims that it has held informal takeover talks with another Kazakh mining giant over a proposed £18 billion deal.

About £1.1 billion was added to Kazakhmys's market value yesterday after Eurasian Natural Resources (ENRC), the world's largest producer of ferrochrome and one of the world's largest iron-ore producers, said that it had held informal talks with Kazakhmys over a potential merger.

A Kazakhmys spokesman said yesterday, however: “No proposals have been received from ENRC.”

Earlier, a regulatory statement from ENRC, which listed its shares in London in January, had said: “One of the opportunities that is at the early stages of being evaluated is a potential combination of its business with that of Kazakhmys.” ENRC said that it had made the statement in response to share-price movements at Kazakhmys, which had risen 4.5 per cent in early trading. The statement caused an immediate spike in Kazakhmys's share price, which ended the day up 16 per cent.

The confusion is an embarrassing setback for ENRC in its attempt to convince the London market that its corporate governance meets the required levels. The company, which was formed from a collection of privatised Kazakh mining assets, became a legal entity only two years ago. It has tried to overcome the perception among City institutions that it lacks transparency by hiring some big names to sit on its board.

ENRC's chairman is Sir David Cooksey, the former chairman of Advent Venture Partners and a former director of the Bank of England. Other non-executive directors include Sir Richard Sykes, former chief executive of Glaxo Wellcome, and Sir Paul Judge, a former director general of the Conservative Party. ENRC has also secured the services of Mehmet Dalman, a hedge fund banker and former Commerzbank deal maker.

ENRC would be able to take over its rival only with support from the Kazakhmys chairman and chief executive, who control nearly 55 per cent of its shares between them.

An added complication is the 14.6 per cent of ENRC that is owned by Kazakhmys. The shares were bought by Vladimir Kim, the Kazakhmys chairman, who spotted a bargain when the shares were offered last year. He bought the stake for $800 million (£395 million); Kazakhmys assessed their value at $3.8 billion last week.

Analysts expect that the two miners might seek a merger at some point in the future, but it is not known what the Kazakh Government - which owns a minority stake in both companies - favours.

ENRC was told on Tuesday night that its market capitalisation was sufficient to qualify for entry into the FTSE 100, where it will join Kazakhmys. Sir David said: “This success is a testament to the strength and diversity of our assets, the quality of our management and the prospects of the business.”

The company's share price has risen 50 per cent since its listing two months ago. Ferrochrome, ENRC's core product, is used in the production of stainless steel. The chrome gives stainless steel its colour and enables it to resist corrosion. ENRC had sales last year of more than $3 billion.

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