{"id":55706,"date":"2025-01-17T03:34:56","date_gmt":"2025-01-17T03:34:56","guid":{"rendered":"https:\/\/innodebt.com\/?p=55706"},"modified":"2025-01-17T03:34:57","modified_gmt":"2025-01-17T03:34:57","slug":"rio-tinto-and-glencore-held-talks-about-combining-their-businesses","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=55706","title":{"rendered":"Rio Tinto and Glencore held talks about combining their businesses"},"content":{"rendered":"<div>\n<p>Stay informed with free updates<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Simply sign up to the <!-- -->Mining<!-- --> myFT Digest &#8212; delivered directly to your inbox.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=afd654e5-cb6e-4a43-adaa-488c504aa7dc&amp;concept-id=f95dd6f8-9ab9-407f-b8b3-9239815216b5\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Rio Tinto and Glencore held talks last year about combining part or all of their businesses, in an indication of how the push by mining companies to secure metals needed for the energy transition has focused executives on large-scale deals.<\/p>\n<p>The London-listed companies engaged in early-stage talks as recently as October, according to people familiar with the matter, but the discussions did not progress to a deal.<\/p>\n<p>A full-blown merger between Rio and Glencore \u2014 which have market capitalisations of $103bn and $55bn, respectively \u2014 would rank among the largest-ever transactions in the mining industry.<\/p>\n<p>The talks between the two companies followed BHP\u2019s failed \u00a339bn bid for Anglo American last year, which prompted rivals to review strategic options.<\/p>\n<p>BHP was interested in Anglo\u2019s copper mines, among other assets, because the metal is used in renewable energy projects and electric vehicles.<\/p>\n<p>Glencore and Rio declined to comment. Bloomberg first reported the companies had discussed combining their businesses.<\/p>\n<p>Rio has been looking to boost its exposure to commodities including lithium and copper to offset weakness in the iron ore market as demand from China slows.<\/p>\n<p>Glencore owns stakes in two significant copper mines \u2014 Collahuasi in Chile and Antamina in Peru \u2014 that would boost its production of the metal by almost 1mn tonnes a year and offer substantial expansion capacity, according to analysts.<\/p>\n<p>A potential deal with Glencore would be complicated by the Swiss-based company\u2019s heavy exposure to thermal coal, a commodity Rio has abandoned in recent years.<\/p>\n<p>Matthew Haupt, a portfolio manager at Wilson Asset Management, which owns shares in Rio, said the deal \u201cdidn\u2019t make a lot of sense\u201d given Rio\u2019s efforts to get out of coal and invest in renewable energy to power its operations.<\/p>\n<p>Glencore, which has a large commodity trading business and mining operations, has been debating the future of its coal business.<\/p>\n<p>The company said in 2023 it would spin out its coal mines into a separate listed business but changed its mind last year and decided to retain them.\u00a0 <\/p>\n<p>Glyn Lawcock, an analyst with investment bank Barrenjoey, said coal assets could be spun out as a separate company as part of any agreement. He added there was little overlap between the two companies, meaning there were few synergy benefits from a merger and a deal would need to be justified by asset diversification and creating more scale.<\/p>\n<p>Ray David, a portfolio manager at Blackwattle Investment Partners, which owns Rio\u2019s UK-listed shares, said Rio could fund an acquisition of Glencore by issuing shares in Australia, which would rebalance Rio\u2019s share structure and close the value gap between its Australian and London listings.<\/p>\n<p>Activist investors, including Blackwattle, have urged Rio to move its primary listing to Sydney \u2014 where its stock trades at a premium \u2014 to simplify share-based deals.<\/p>\n<p>Rio\u2019s Australia-quoted shares fell 1.8 per cent in early trading in Sydney on Friday, before climbing back to be down 0.5 per cent.<\/p>\n<p>Demand for commodities required to decarbonise the global economy \u2014 such as copper, lithium and aluminium \u2014 has triggered a flurry of dealmaking activity in the mining industry over the past year.<\/p>\n<p>Rio last year announced a $7bn deal to acquire Arcadium Lithium to increases its presence in metals used in batteries for electric vehicles. People close to the company said it was still digesting that transaction.\u00a0<\/p>\n<p>Rio previously rejected a takeover bid by Glencore in 2014.<\/p>\n<p>Lawcock said the reaction from some Rio investors in Australia was one of unease given Glencore\u2019s reputation for smart dealmaking.<\/p>\n<p>\u201cShareholders have said I don\u2019t want any of my companies sitting across the table from Glencore,\u201d he said.<\/p>\n<p>Blackwattle\u2019s David said the fact talks had ended showed Rio remained cautious in a consolidating market.<\/p>\n<p>\u201cI suspect Glencore wants a high premium,\u201d he said. \u201cIt is a positive sign [that talks ceased] as it shows Rio is being disciplined and aware of not destroying shareholder value. It would be easy to panic.\u201d<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/afd654e5-cb6e-4a43-adaa-488c504aa7dc\" target=\"_blank\" rel=\"noopener\" rel=\"nofollow\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stay informed with free updates Simply sign up to the Mining myFT Digest &#8212; delivered directly to your inbox. Rio Tinto and Glencore held talks last year about combining part or all of their businesses, in an indication of how the push by mining companies to secure metals needed for the energy transition has focused [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":55707,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-55706","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Rio Tinto and Glencore held talks about combining their businesses | Innodebt<\/title>\n<meta name=\"description\" content=\"Stay informed with free updatesSimply sign up to the Mining myFT Digest -- delivered directly to your inbox.Rio Tinto and Glencore held talks 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