Online Reporter
Rio Tinto Group and Glencore Plc have held early stage talks about combining their businesses to create a behemoth to rival longstanding industry titan BHP Group.
The discussions took place as recently as late last year but are not currently active, according to people familiar with the matter, who asked not to be identified discussing private information.
Rio Tinto is the world’s second-biggest miner, with a market value of about US$104 billion as trading got underway in London on Friday, while Glencore was valued at about $56 billion. BHP is worth about $126 billion.
A potential combination of the two companies would rank as the largest-ever mining deal, but any transaction would be complex and face multiple potential hurdles. While Glencore has large copper assets at a time when the world’s biggest producers are all seeking to expand in the metal crucial to the energy transition, it also owns a massive coal business that would likely be unattractive to Rio. The larger miner’s chief executive has repeatedly expressed wariness about mega deals, and the two companies have vastly different cultures.
The mining industry has been galvanised by a wave of dealmaking in the past couple of years, driven largely by a desire by the biggest producers to expand in copper.
Both Glencore and Rio own some of the best copper mines in the world. However, Rio — like BHP — still depends heavily on iron ore to drive its profits, at a time when China’s decades-long construction boom is drawing to an end and the iron ore market appears headed for an extended period of weakness.
Glencore, which previously proposed a merger with Rio in 2014, has been one of the most aggressive dealmakers in the sector. — Bloomberg.
