Mega M&A: Rio Tinto-Glencore Merger Talk Sparks Speculation

Mining giants Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) and Glencore (LSE:GLEN,OTC Pink:GLCNF) have been making headlines this week following news that they previously engaged in merger discussions.

In a January 18 article, Reuters said the companies reportedly had “brief” conversations late last year; however, a source told the news outlet that these talks ultimately led nowhere and are no longer active.

Reuters notes in a separate article that a source with direct knowledge of the situation said Rio Tinto had questions about how much money it would have to spend, as well as about cultural compatibility with Glencore.

"Glencore is a trader ... and their operating assets are nothing but a captive source of material for them to trade against. The clash culture would be quite something ... but any deal can be done at the right price," Abel Martins Alexandre, previously a Rio Tinto treasurer and a former managing director at Lloyds Bank, commented.

Speaking to CNBC, Maxime Kogge, equity analyst at Oddo BHF, said the companies “have limited overlapping assets.” In her view, copper is the only place where Rio Tinto and Glencore have synergies.

Both Rio Tinto and Glencore had not released any statements regarding the matter at the time of this writing.

Glencore previously offered to merge with Rio Tinto in 2014, but Rio Tinto rejected the idea.

A major transaction occurred between the two firms years later, with Glencore announcing plans to acquire Rio Tinto’s 82 percent interest in the Hail Creek coal mine and adjacent coal resources in 2018. The deal was for total cash consideration of US$1.7 billion, and included a 71.2 percent interest in the Valeria coal resource in Central Queensland.

Last year, both companies made significant partnerships with other notable mining companies.

This past December, Rio Tinto signed a term sheet with Sumitomo Metal Mining (TSE:5713) through which they will advance the Winu copper-gold project in Western Australia. In October, the company said it would acquire Arcadium Lithium (NYSE:ALTM,ASX:LTM) in a bid to meet growing demand for lithium in electric vehicle production.

Meanwhile, Glencore, closed its acquisition of a 77 percent interest in Elk Valley Resources from Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK) in July 2024.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.