Glencore-Rio Tinto merger talks stall – report

Investing.com — Glencore (OTC:) reportedly approached Rio Tinto (NYSE:) late last year about a potential merger to combine their operations, but discussions have since stalled, Reuters reported on Friday citing a person familiar with the matter.

The conversations between Rio Tinto, the world’s second-largest mining company, and Glencore, a major player in coal and base metals, were brief and did not advance further, the report said.

Bloomberg News reported on Thursday that the two companies were in preliminary merger discussions. 

If completed, such a deal could mark the largest merger in the mining sector, with their combined market capitalization estimated at approximately $158 billion, exceeding BHP’s $126 billion valuation.

companies globally are exploring options to strengthen their positions in critical metals like copper, which are expected to see increased demand amid the transition to cleaner energy technologies. 

This was also the driving force behind BHP’s unsuccessful $49 billion acquisition bid for Anglo American (JO:) last year, which fell through due to structural issues, the report said.

Glencore, trading near £3.50 per share, is poised to reward investors with capital returns this year, following its $34 billion Viterra-Bunge merger, the report added. 

This is not the first time the two companies have explored the idea of combining their operations. In 2014, Rio Tinto declined a merger proposal from Glencore, citing shareholder interests as the primary reason.

The ongoing mergers and acquisitions in mining reflect the industry’s shift towards renewable energy. 

Rio Tinto’s $6.7 billion acquisition of Arcadium and Glencore’s $6.9 billion purchase of Teck’s steelmaking coal business exemplify this trend, as companies restructure their portfolios to focus on low-carbon materials and capitalize on evolving market demands.