Heavyweight miners Glencore (OTC:GLCNF) and Rio Tinto (NYSE:RIO) made headlines last week after confirming early-stage talks about the mega merger. The $200 billion deal, which has eluded the market for nearly two decades, now looks closer than ever.
Glencore chief executive Gary Nagle has previously described a combination with Rio as “the most obvious deal in mining,” a view long championed by his predecessor Ivan Glasenberg, according to Bloomberg. While earlier attempts stalled, people familiar with the discussions say the current round is materially different.
This time, Rio itself reinitiated talks, driven by growing concern that its iron ore-heavy portfolio risks being left behind as a wave of copper-led mergers sweeps the sector.
Softening Frictions
A key shift is in leadership. Rio’s former chief executive, Jakob Stausholm, who resisted a deal in 2024, has been replaced by long-time insider Simon Trott, a leader seen as more open to large-scale transactions. Cultural friction also appears less acute, with both sides now showing greater flexibility on management structure and valuation. Rio, which was previously reluctant to pay a premium, may now be willing to do so, while Glencore has shown pragmatism regarding control.
Investor sentiment toward coal, which used to be a major obstacle, has also softened. Rio exited coal in 2018, but Bloomberg has reported the miner is now open to retaining Glencore’s coal assets, reflecting a more nuanced view of energy security during the transition. Still, coal remains one of the deal’s most contentious elements.
“Coal would have to be divested to garner the support of the Australian shareholder base,” John Ayoub, portfolio manager at Wilson Asset Management, noted, according to Reuters.
All About The CopperÂ
The strategic focus, however, centers squarely on copper. Rio’s revenue is heavily dependent on iron ore, which accounted for more than half of its latest earnings. Meanwhile, supply is strengthening while demand is weakening, owing to the subdued Chinese property market.
Copper, by contrast, is at the heart of electrification and AI-driven demand growth. Global consumption is expected to rise sharply, with S&P Global warning of a potential 10-million-ton annual shortfall by 2040 without new mining and recycling.
There, Glencore offers what Rio lacks, a deep pipeline of brownfield and greenfield copper projects.
“Glencore have a lot of brownfield and greenfield copper projects, and Rio doesn’t, but Rio have the expertise to build them and run them,” George Cheveley, a portfolio manager at Ninety One, said per Bloomberg.
Yet complexity abounds. Glencore’s trading arm, past corruption issues, and exposure to high-risk jurisdictions could deter some shareholders, while regulators from China to Canada are likely to scrutinize any deal closely.
Market reaction has been mixed, with Glencore shares in London jumping nearly 8.5% while Rio closed the Australian trading session 6.27% lower on Friday.
Photo by Adwo via Shutterstock
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