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Two of the world’s largest miners are plotting a £130bn mega-merger to ride the net zero commodity boom.
Rio Tinto and Glencore have been discussing combining their businesses in what could become the largest deal in the mining industry’s history, people familiar with the matter told Bloomberg.
Talks between the two London-listed businesses are said to be at an early stage. A deal would create the biggest mining company in the world, overtaking the long-standing industry leader BHP, which is valued at around $126bn (£103bn).
Rio Tinto is the second largest mining company in the world, valued at around $103bn, while Glencore is worth $55bn. A combined group would therefore be expected to be worth an estimated $158bn.
A Glencore spokesman said the company did not comment on market rumour or speculation. Rio Tinto declined to comment.
Any deal is likely to hinge on the support of Ivan Glasenberg, the swashbuckling trader who made billions from Glencore’s listing in 2011.
Mr Glasenberg stepped down as Glencore’s chief executive in 2021 but still retains a 10pc share in the company. While chief executive, he spearheaded an unsuccessful attempted merger with Rio Tinto in 2014.
The support of Qatar and China will also be crucial. Qatar is one the largest shareholders in Glencore, with an 8.5pc stake, while China’s state-owned aluminium company Chinalco is the largest investor in Rio Tinto.
The mining industry has been scrambling to make deals in recent years in response to the global drive towards net zero carbon emissions.
The wholesale rewiring of the planet’s energy system and industries is expected to lead to a boom in demand for certain commodities, such as copper for electrical conduction and lithium for batteries.
However, constructing new mines to access these materials is hugely expensive and requires the scale to borrow and invest large sums. Rio Tinto has been positioning itself to capitalise on the expected copper boom.
In 2023, it began underground copper production at its Oyu Tolgoi mine in Mongolia, which it forecasts will produce 500,000 tonnes of copper per year between 2028 and 2036.
A combination with Glencore would give Rio Tinto access to its rival’s 44pc share in the Collahuasi mine in Chile, which has one of the world’s biggest copper reserves.
A merger would also help Rio Tinto to diversify its business and ride out a downturn in China. The Australian-based business is still heavily dependent on iron ore and highly exposed to China.
A construction boom there has come to a sticky end amid its prolonged property crisis, while Donald Trump’s election in the US is likely to cause more problems for China’s slowing economy.