Bloomberg News: RPT Rio Tinto and Glencore are in early merger talks
Bloomberg News reported Thursday that Glencore and Rio Tinto have had early-stage discussions about merging their businesses. The report was based on people familiar with this matter.
If successful, the merger would be the largest in the mining industry and would create a combined company valued at around $158 billion. This value is higher than the $126 billion market valuation of BHP, the top miner.
It was not clear whether the talks are still ongoing.
Both companies declined to make any comment. Rio Tinto shares listed in the United States fell 2.5% while Glencore's stock rose 7.4%.
Sources familiar with the matter say that Glencore approached Rio in late 2014, but the talks were short and no longer active.
It would not be the very first time that the two companies had considered merging. Rio Tinto turned down a Glencore merger offer in 2014 that would have allowed it to surpass BHP's position as the largest miner in the world.
Recent discussions are taking place as China, the largest consumer of iron ore in the world, is hit by a slowdown within the country's heavily indebted property sector.
The mining industry has also seen a consolidation as companies compete to secure metals for the electric vehicle batteries and clean energy transition.
Rio agreed last year to purchase U.S. listed lithium producer Arcadium, for $6.7 billion. The world's biggest producer of iron ore wanted to transform itself into an advanced processor of low-carbon raw material.
Rio Tinto is still facing challenges due to the depletion of primary mines. To maintain production levels, they are increasing production of iron ore with lower grades.
Rio Tinto has been hit by these challenges, as the company reported its lowest annual iron-ore shipments for two years on Thursday. (Reporting from Roushni, Urvi, and Shivangi in Bengaluru; additional reporting by David French, Clara Denina, and Alan Barona, and editing by Devika Syamnath and Alan Barona)
(source: Reuters)
