Rio Tinto and Glencore reportedly held talks about a potential merger late last year, but the talks have seemingly fizzled out, a source revealed to Bloomberg.

If successful, the merger would effectively create the world’s largest listed mining company, combining the strengths of Glencore, a global leader in coal and base metals, and Rio Tinto, the world’s second-largest miner.

While neither Rio Tinto nor Glencore have commented on the matter, analysts believe Rio’s interest may have been centred on Glencore’s extensive copper assets, a critical resource as industries transition to cleaner energy.

However, Rio would’ve likely been less interested in Glencore’s coal portfolio after it exited coal mining in 2018 to focus on renewable energy materials.

Tribeca Investment Partners portfolio manager Ben Cleary said Rio would have to pay a significant premium if they were interested in the merger.

“Anything under five pounds wouldn’t make sense for Glencore (which was trading at 3.8 pounds per share at the time of writing) given … material capital returns this year,” Cleary said.

CreditSights, a Fitch Solutions Company, said Rio Tinto is traditionally conservative and focused on stability, whereas Glencore is known for its aggressive approach and constantly pushing the envelope.

“This cultural divide might pose challenges in integration and decision-making if a merger were to proceed,” the analyst said.

“If this materialises, it could have broader implications for mega deals in the metals and mining space, potentially putting BHP/Anglo American back in play.”

BHP’s $74 billion bid for Anglo American collapsed in May 2024 due to complications with deal structuring.

The transaction involved the demerger of Anglo American Platinum and Kumba Iron Ore, which Anglo described as “highly unattractive”.

Anglo American chair Stuart Chambers said the demerger would’ve taken as long as 18 months to complete, carrying “significant execution and completion risks relating to both value and time”.

While merger discussions between Rio and Glencore are not currently active, it does highlight the current deal-making appetite in the global mining sector and the importance of inorganic growth to future-proof a company.

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