Rio Tinto and Glencore Discussed a Merger in 2024

Mining giant Rio Tinto and commodity major Glencore last year discussed a possible tie-up of their business, unnamed sources told Bloomberg, adding that the talks never yielded a deal.

The report noted that a deal may still be on the table but it is unclear if the two are still in contact about a possible tie-up.

A deal of this size would rank among the biggest in the mining industry, the Financial Times commented in a report on the news, noting that Rio Tinto had a market cap of some $103 billion and Glencore was worth around $55 billion.

The publication also suggested the talks may have been prompted by the bid that BHP made for Anglo American last year, offering to take over the company for $49 billion. The bid eventually failed as Anglo’s leadership rejected a call to offload its South African iron ore business to clear the way for the merger. However, a recent report in The Times suggests the prospective buyer may have prepared a new bid for Anglo American.

The focus of the BHP-Anglo deal was on copper, as demand prospects for the basic metal remain extremely bright amid the energy transition push. Copper would be a key consideration for a potential tie-up between Rio and Glencore as well, with majors angling for access to more of the transition metal.

According to the FT, however, “A potential deal with Glencore would be complicated by the Swiss-based company’s heavy exposure to thermal coal, a commodity Rio has abandoned in recent years.”

Last year, Glencore refused to ditch its coal business, seeing as it was making the commodity trader some pretty good money. In addition, many Glencore shareholders also expressed skepticism that a potential remaining business of metals would only raise the company’s valuation.

Source: By Irina Slav from Oilprice.com