Rio Tinto and Glencore back in the ring for talks to form global mining behemoth

Rio Tinto shares have taken a dive after revealing it was back at the negotiating table with Glencore exploring a $300 billion merger that could lead to the creation of the world’s biggest mining company. Both companies confirmed the talks in separate statements on Friday morning, saying any combination between some or all of their businesses would likely happen via a scheme of arrangement and that there was no guarantee of a deal. “Rio Tinto note the announcement by Glencore and confirm that Rio Tinto and Glencore have been engaging in preliminary discussions about a possible combination of some or all of their businesses, which could include an all-share merger between Rio Tinto and Glencore,” Rio Tinto said. “The parties’ current expectation is that any merger transaction would be effected through the acquisition of Glencore by Rio Tinto by way of a court-sanctioned scheme of arrangement.” Should the deal go ahead it would likely knock rival BHP from its perch at the top of global mining pecking order by market value. But the prospect of a transaction has rattled Rio shareholders. The London-based miner’s Australian Securities Exchange stock fell sharply by more than 5 per cent during early trade, and had plunged by 6.27 per cent by the end of the day to $143.06 on its $199b market cap. Meanwhile, Glencore’s US depository shares rose 8.8 per cent. The company’s primary listing is on the London Stock Exchange where it has a market value of about £48.77b ($72.8b). It is not the first time the Anglo-Australian mining giant and the diversified Swiss miner have broached the topic of merging. The companies held talks in 2024 that did not eventuate to a deal, and Glencore had even approached Rio back in 2014. Rio, the bigger of the two, is currently required to make a bid or say that it does not intend to by February 5 under UK takeover rules. But that deadline can be extended. Wilson Asset Management, a large Rio shareholder, believes the potential tie-up leaves a lot to be desired. “One thing that’s clear is that there’s a lack of information,” portfolio manager John Ayoub said. “They (Rio) have pointed to the fact it’s preliminary (negotiations), but I think I’d encourage both companies to come out through a little bit more detail, because this is a significant transaction and we need to understand the mechanics behind it. “Whether or not this a true merger with no premium makes a lot of difference as to how it’s viewed by the market.” Macquarie mining analyst Rob Stein said the merger talks with Glencore conflicted with Mr Trott’s pledge last month to make his company “stronger, sharper and simpler”. “The surprise move by Rio to resume talks with Glencore could cast doubt on Rio’s valuation and investment thesis even beyond the February 5 ‘put up or shut up’ deadline,” he said. The talks between the duo come as the world’s biggest mining companies race to secure more copper resources, something Glencore has through its Mt Isa copper mine in Queensland, operations in Chile, and the far less geopolitically stable Democratic Republic of Congo. Rio believes the market is straining to meet huge electrification-driven demand for the metal and has projected a 9 million tonne shortfall over the next decade. It mined 697,000 tonnes in 2024 to generate earnings of about $US3.4 billion ($5b) and plans to crank up production substantially to between 860kt and 875kt for 2025. The price for a tonne of copper climbed above $US13,000 for the first time earlier this month. Rio’s own copper foothold is largely held in Mongolia through its Oyu Tolgoi mine, considered one of the biggest deposits in the world. Rivals Anglo American and Teck Resources combined at the end of 2025 raced ahead to become one of the biggest producers of the metal in the world. BHP, also eager to make advances in copper, made several plays for Anglo in 2024 and even a last-minute attempt in 2025, but failed to get a deal. Glencor comes with significant reserves of coal — a commodity Rio exited years ago — with open cut and underground operations in New South Wales and Queensland. Iron ore remains Rio Tinto’s highest earning segment by far with earnings of about $US16.2b but the group had made large advances and big capital outlays into lithium under former chief Jakob Stausholm, who stepped down as chief executive in 2025. His resume included striking a $10 billion acquisition for Arcadium Lithium. How the assets are carved up or whether a deal even progresses, is likely to prove a test for new chief executive Simon Trott, who was promoted from running its revenue-driving iron ore division to the top job in July. He made clear in his first presentation to investors In December that he wanted to make the business more agile, and to put Rio in “the best possible position to take advantage of whatever opportunities” came its way. That included a swift move to sort Rio’s structure into three pillars of iron ore, copper and aluminium & lithium in a forthright move that saw two-high ranking former peers axed. He also believed there could be further dollar savings unlocked in the order of between $US5 billion and $US10 billion by putting its California-based borates business, and its iron and titanium operations in Quebec up for sale. As for M&A, the new CEO disagreed at the time that consolidation among the world’s global players was necessarily needed to meet demands for growing commodities such as copper. On the other side of the negotiating table will be Glencore’s chief executive Gary Nagle, who has led the company since 2021 and was at the miner’s helm during its last round of talks with Rio. In its statement on Friday Glencore said a further announcement would be made as appropriate. “Glencore notes recent media speculation and confirms that it is in preliminary discussions with Rio Tinto about a possible combination of some or all of their businesses, which could include an all-share merger between Rio Tinto and Glencore. “The parties’ current expectation is that any merger transaction would be effected through the acquisition of Glencore by Rio Tinto by way of a Court-sanctioned scheme of arrangement.” The two London Stock Exchange-listed miners have a combined market value of about $US207b.