Mining behemoths Rio Tinto and Glencore reportedly considered merger
Mining giants Rio Tinto and Glencore reportedly discussed a merger last year.
The two companies held discussions as late as October last year, but they didn’t progress further, as first reported by the Financial Times.
A merger in full or in part of Glencore, with a market cap of £46.47bn and Rio Tinto, with £164.99bn, would make it one of the biggest transactions in the industry ever.
The two firms were reportedly looking to join forces to better navigate the energy transition, and secure access to metals necessary for renewable fuel.
This comes after BHP abandoned its £39bn pursuit of Anglo American in May last year after the London-listed firm refused to offload its South African iron ore business and declined to extend takeover talks.
According to the FT, Glencore owns stakes in two key copper mines, and a deal would be complicated by Rio’s abandonment of coal in recent years, to which Glencore is heavily exposed.
Last August, Glencore said it no longer planned to demerge its coal business after an “overwhelming majority” of shareholders told the mining giant to retain the division.
In October, Rio Tinto was set to acquire the chemical producer Arcadium Lithium in a $6.7bn (£5.12bn) deal. Lithium is often used in renewable batteries.
It also faced calls from Pallister Capital to abandon its primary London listing, arguing its corporate structure had cost shareholders $50bn (£39.4bn) in value.
Matthew Haupt of Wilson Asset Management said the deal “didn’t make a lot of sense”.
Glencore said: “We do not comment on market rumour or speculation.”
Over the past year, Rio Tinto’s share price has dropped by 6.16 per cent, while Rio Tinto’s has suffered further, dropping by 9.98 per cent. The latter is, however, up by 4.12 per cent in the last month.