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Nearly a year after previous deal discussions between global miners failed, Glencore and Rio Tinto have restarted talks over a potential megamerger to create the world’s largest mining company.
The deal, which was in discussion as recently as this week, would create a mining giant with an enterprise value of more than $260 billion, according to people familiar with the matter, at a time when the copper race is reshaping the sector.
Glencore confirmed in a statement On Thursday it was in “initial discussions” with Rio Tinto about a “potential combination of some or all of their businesses”, which could include an all-share merger between Rio Tinto and Glencore.
The statement published shortly after the talks were revealed by the Financial Times also said there was no certainty that any transaction would be agreed. Rio Tinto declined to comment.
The recent combination of Anglo American and Canada’s Teck Resources – a friendly deal done at zero premium – has put pressure on rivals such as BHP and Rio Tinto to vie for miners to secure access to more copper resources.
Copper prices this week hit an all-time high of more than $13,300 a tonne, underscoring the shortage in the market, with analysts warning that copper prices could reach 10 million tonnes by 2040.
A full combination of Rio Tinto and Glencore was one of the options under discussion, according to people familiar with the matter, although the exact contours of a potential deal could not be determined.
It is unclear whether Glencore’s broader trading operations would be included in any merger. People familiar with the matter warned that talks could still falter if the companies choose not to proceed.
Talks resumed late last year and are still in the early stages, according to people familiar with the matter.
Switzerland-based Glencore recently rebranded itself as a copper development company, with Chief Executive Gary Nagle telling investors in December that it would become “the largest copper producer in the world.”
The company is currently the world’s sixth-largest copper producer and the largest listed coal producer. Its expansion plans, which include the development of a new copper mine, El Pachón, in Argentina, will see it produce 1.6 million tonnes of copper annually by 2035, almost double the current level.
Rio and Glencore had previously negotiated a deal due in late 2024, but it collapsed over issues including valuation, the chief executive and the future of Glencore’s coal mines.
After those talks collapsed, Rio appointed a new chief executive, Simon Trott, who took over in August. Trott has focused on cost cutting and streamlining, and has placed several assets, including Rio’s large boron mine in California, under strategic review.
Meanwhile, Glencore has reorganized its coal holdings into a separate, Australia-based entity, a change confirmed in May. Analysts said the new structure would make it easier to spin off the coal mines into a separate company, an option Glencore investigated last year.
Rio quit the coal business several years ago and sold its last mine in 2018. Analysts believe he may be reluctant to get involved with coal again.
Glencore’s share price has risen 35 per cent in the past six months, boosted by rising commodity prices and its new copper strategy. Rio Tinto has gained 41 percent in the same period.
Speaking to reporters in December, Glencore’s Nagel said the mining industry lacks scale and relevance because of the size of its companies.
“It makes sense to build bigger companies,” he said. “Not just for size, but also to create physical synergy, to create relevance, to attract talent, to attract capital.”
Under the terms of the UK Takeover Code, Rio Tinto has until February 5 to either make an offer for Glencore, or state that it has no intention of doing so.
