Rio Tinto and Glencore Abandon $260bn Merger Plan After Talks Fail
Mining giants Rio Tinto and Glencore have abandoned revived plans for a $260bn merger, walking away from a deal that would have created the world's largest mining company. This marks the third time that talks to combine the two commodities behemoths have collapsed, after discussions were reignited last month.
Shareholder Value Concerns Derail Deal
Rio Tinto stated it was no longer considering a "merger or other business combination" with Glencore after determining that it could not reach an agreement delivering sufficient value to its shareholders. Glencore, meanwhile, argued that the key terms of the potential offer "significantly undervalued Glencore's underlying relative value contribution to the combined group."
The Swiss-based company added that the deal did not adequately value its copper business and growth pipeline, concluding that the merger was not in the best interests of its shareholders. Under the proposed terms, Rio would have kept both the chair and chief executive roles in the combined entity.
Market Reaction and Regulatory Deadline
Shares in Glencore fell by as much as 10.8% on the news, before recouping some losses, making them the biggest faller on the FTSE 100. Shares in Rio Tinto slid by a more modest 1.4%. Rio decided not to progress with the deal on Thursday, which marked the "put up or shut up" deadline requiring it to make a firm offer for Glencore or walk away, unless both sides agreed to an extension.
Under UK takeover rules, Rio is now prevented from making a bid or taking other steps towards a takeover for six months, unless the Takeover Panel consents or specific exceptions apply. Rio, founded in 1873 with an enterprise value of $162bn, had indicated in January that the deal under discussion would have potentially resulted in it acquiring Glencore.
Historical Context and Industry Implications
The idea of combining these two companies has been raised several times over the past two decades, first floated shortly before the global financial crisis in 2008. Rio rejected Glencore's merger approach in 2014, while another round of talks in 2024 also came to nothing. The most recent discussions between Rio and Glencore resumed following the $53bn merger of London-listed miner Anglo American with its Canadian rival Teck in September, which combined two of the world's largest copper producers.
A Rio-Glencore merger would have created a global leader in metals including iron ore, copper, cobalt and lithium—resources critical in the production of technology products like smartphones at the centre of the AI boom. Copper prices have been extremely volatile recently, at times recording all-time highs above $14,000 a tonne, as analysts predict a potential supply shortfall of up to 10 million tonnes by 2040.
Corporate Profiles and Future Prospects
Rio Tinto employs about 60,000 people across 35 countries, while Glencore—established in the 1970s as a trading company—has operations in more than 30 countries and a workforce of about 150,000 through employees and contractors. In December, Gary Nagle, Glencore's chief executive, stated the company's aim was to become "the biggest copper producer in the world." It is currently the world's sixth-largest copper producer and the largest listed coal producer.
The collapse of these merger talks leaves both companies to pursue independent strategies in a rapidly evolving mining sector, where consolidation has been accelerating to secure critical resources for the global energy transition.
