Source : THE AGE NEWS
By Archie Hunter, Thomas Biesheuvel and Dinesh Nair
Rio Tinto and Glencore have been discussing combining their businesses, according to people familiar with the matter, in what could result in the mining industry’s largest-ever deal.
Rio and Glencore have recently held early-stage talks about a deal, the people said, asking not to be identified discussing confidential information. It’s unclear whether the talks are still live.
A deal would potentially create a $US158 billion behemoth to leapfrog longstanding industry leader BHP, which is worth about $US126 billion.Credit: Getty
Rio Tinto is the world’s second-biggest miner, with a market value of about $US103 billion ($166 billion) at the close of trading in London on Thursday, while Glencore was valued at about $US55 billion. Combining the two businesses would potentially create a $US158 billion ($254 billion) behemoth to leapfrog longstanding industry leader BHP, which is worth about $US126 billion.
Representatives for both Rio and Glencore declined to comment. Rio’s American depositary receipts declined while Glencore jumped.
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 — a metal central to the world’s decarbonisation efforts.
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’s former CEO Ivan Glasenberg still owns 10 per cent of the company.Credit: Simon Dawson
Glencore, which previously proposed a merger with Rio in 2014, has been one of the most aggressive dealmakers in the sector. Its former CEO Ivan Glasenberg, who spearheaded the earlier approach to Rio, still owns almost 10 per cent of the company.
Glencore made an unsuccessful bid to buy Teck Resources Ltd. in 2023 but settled instead for the smaller company’s coal unit. BHP last year tried to buy Anglo American in a $US49 billion deal — forcing Anglo to accelerate an overhaul of its business as part of its defence strategy — before eventually walking away empty-handed.
Buying Glencore would give Rio a stake in the Collahuasi mine in Chile, one of the richest deposits, that the company has coveted for more than a decade.
Glencore also operates one of the world’s biggest commodity trading businesses — buying, selling and shipping huge volumes of metals, coal and oil.
A combination with Rio would raise questions about Glencore’s coal mining assets, which is a business that Rio exited several years ago. Glencore is also the world’s biggest shipper of thermal coal and a top producer of coking coal.
Bloomberg
