The Rio Tinto Group Logo Atop Central Park Tower, which houses the company’s offices, in payth, australia, on Friday, jan. 17, 2025.
Bloomberg | Bloomberg | Getty Images
The mining sector appears poised for a frantic year of dealmaking, following market speech speculation over a potential tie-up between industry giants Rio tinto and Glencore,
It came after bloomberg news Reported Thursday that British-Australian multinational rio tinto and switzerland-based glencore was in early-stage merger talks, Although it was not cleaed not clears the discusations was still live.
Separately, Reuters Reported Friday that Glencore Approached Rio Tinto Late Last Year About The Possibility of Combining their Businesses, Citing a source family with the matter. The talks, which was said to be brief, was thought to be no longer active, the news agency reported.
Rio tinto and glencore both declined to comment when contacted by CNBC.
A Prospective Merger Between Rio Tinto, The World’s Second-Larget Miner, And Glencore, One of World’s Larget Coal Companies, WOLD RANK SINK AS The Mining Industry Deal.
Combined, the two firms would have a market value of Approximately $ 150 Billion, Leapfrogging Longstanding Longstry Leader BhpWhich is worth about $ 127 billion.
Analysts were broadly skeptical about the merits of a rio tinto-glencore merger, pointing to limited synergies, Rio Tinto’s Complex dual structure And strategic divergences over coal and corporate culture as factors that Pose a challenge for concluding a deal.
“I think everyone’s a bit surprised,” Maxime kogge, equity analyst at oddo bhf, told cnbc via telephone.
“Honestly, they have limited overlapping assets. It’s only copper where there is really some synergies and opposite to add assets to make a bigger groups,” Kogge said.
Global mining giants have been mulling the benefits of mega-mergers to shore up their position in the Energy transitionParticularly with demand for metals such as copper Expected to Skyrocket Over the coming years.
A highly conductive metal, copper is projection to face shortages due to its use in powering electric vegetables, wind turbines, solar panels and energy storage systems, among seems.
Oddo bhf’s kogge said it is currently “really tricky” for large mining firms to brings new projects online, Citing Rio Tinto’s Long-delayed and controversial Resolution Copper Mine in the Us as One Example.
“It’s a very promising copper project, it would be one of the largest in the world, but it is frught with issues and somehow acquiring another company is a way to really aclely accelerate Kogge said.
“For me, a deal is not so attractive,” He added. “It goes against what all these groups have previously tried to do.”
Last year, bhp made a $ 49 billion bid for smaller rival Anglo americanA proposal which Ultimately Failed due to ise with the deal’s structure.
Some analysts, include at jpmorgan, expect another unsolicited offer for anglo American to materialize in 2025.
M & A Parlor Games
Analysts LED by dominic o’kane at jpmorgan said was coming to fruition just two weeks into the Year.
The Wall Street Bank Said Its Own Analysis of the Mining Sector Found That The Current Economic and Risk Management Environment Meant M & A was Likely Preferred to the Building of Oorganic Projects.
Analysts at jpmorgan predicted the latest speech song only anglo American back into the spotlight, “Specifically the merits and probability of another combination proposal from bhp.”
Prior to Pursuing Anglo American, BHP completed An acquisition of oz minerals in 2023, bolstering its copper and nickel portfolio.
The company logo adorns the side of the bhp gobal headquarters in Melbourne on February 21, 2023. – The australian multile, a leading producer of metallurgical coal, iron ooren IT Slumped 32 Percent Year-On- Year to 6.46 billion us dollars in the six months to December 31.
William West | AFP | Getty Images
Analysts LED by Ben Davis at RBC Capital Markets Said It Remains Unclear Whether Talks Between Rio Tinto and GlencoreCore Cold Result in A Simple Merger or Require the CORAKUP .
Regardless, they said the m & a parlor games that Arose Following Merger Talks Between Bhp And Anglo American will undoubtedly “Start up Againston.”
“Despite Glencore Once Approaching Rio Tinto’s Key SHAREHOLDER CHINALCO In July 2014 for a Potential Merger, It Still Comes as a Surprise,” Analysts at RBC Capital MarKets SAID in ASAID sday.
BHP’s Move to Acquire Anglo American May Have Catalyzed Talks Between Rio Tinto and Glencore, The Analysts Said, with the Former Potanily looking to Gain More Copper Exposure and the Latter SEEKTEN Its large shareholders.
“We would not expect a straight merger to happy as we belly Olders and Management Happy, “They added.
Copper, Coal and Culture
Analysts LED by Wen Li at Creditsights said Speculation Over a Rio Tinto-Glencore Merger Raieses Questions About Strategic Alignment and Corporate Culture.
“Strategically, Rio Tinto Might Be Inteced in Glencore’s Copper Assets, Aligning With Its Focus on Sustainable, Future-Facing Metals. Adhyal And expand rio tinto’s record, “analysts at creditsights said in a research note published Friday .
“However, Rio Tinto’s Lack of Interest In Coal Assets, Due to Recent Divestments, Sugges Any Merger would need careful structure structuring to avoid unwanted asset overs,” that added. “
A mining truck carries a full load of coal at glencore plc operated tweefontein coal mine on October 16, 2024 in Tweefontein, MPumalanga Province, South Africa.
Per -nders Petterson | Getty Images News | Getty Images
From a cultural percective, analysts at creditsights said rio tinto was know for its conservative approval and focus on stability, whereas glencore has garnered a reputation for ” Pe in its operations. “
“This Cultural Divide Might Pose Challenges in Integration and Decision-Making If a Merger was to proceed,” analysts at creditsights said.
“If this materializes, it could have broader implications for mega deals in the metals (and) mining space, potentially putting bhp/anglo american back in play,” They added.
– CNBC’s Ganesh Rao Contributed to this Report.
