FTSE 100 mining titans discuss potential £190bn blockbuster merger

Potential Landmark Merger in the Mining Industry

Two of the globe’s mining giants are currently negotiating a possible £190 billion merger that could dramatically alter the landscape of the commodities sector.

Both Glencore and Rio Tinto, major players on the FTSE 100, revealed on Thursday that they have resumed discussions aimed at forming the world’s largest mining corporation, following an earlier breakdown in talks last year.

Should the two London-listed firms reach an agreement, the resulting entity would overtake BHP as the top global mining company and become a dominant force in copper production, with extensive operations worldwide.

“Rio Tinto and Glencore are in early-stage conversations regarding a potential merger of some or all of their operations, which may involve an all-share transaction,” the companies stated.

The combined business would be valued at approximately £130 billion in equity, rising to £190 billion when including debt and cash.

Founded in 1873, Rio Tinto is the larger of the two, while Glencore operates on a smaller scale.

Key figures expected to participate in the negotiations include Rio Tinto’s chairman Dominic Barton and CEO Simon Trott, alongside Glencore’s chairman Kalidas Madhavpeddi and CEO Gary Nagle.

Approval from Ivan Glasenberg, Glencore’s former chief executive who retains a 10% stake after stepping down a decade after the company’s 2011 London listing, will likely be crucial for any deal to proceed.

Qatar, holding an 8.5% stake, is another major Glencore shareholder, while China’s state-owned Chinalco is the largest investor in Rio Tinto.

Talks have resumed after last year’s collapse, which was primarily due to disagreements over the future of Glencore’s thermal coal operations and valuation issues.

Rio Tinto exited the coal sector in 2018, and it remains uncertain whether the company is interested in re-entering that market.

The recent merger between Anglo American and Canada’s Teck Resources in September has intensified competition, prompting companies like Rio Tinto to seek a larger share of the global copper market.

Both Rio Tinto and Glencore, headquartered in London, have been strategically positioning themselves to benefit from the anticipated surge in copper demand.

If the merger proceeds, Rio Tinto would gain access to Glencore’s 44% ownership in Chile’s Collahuasi mine, one of the largest copper reserves on the planet.

This week, copper prices soared to a record $13,387 per tonne, as concerns over potential import tariffs led US investors and companies to stockpile the metal, tightening global supply.