Glencore PLC (LSE:GLEN) has confirmed it is in merger talks with Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF), after reports the miners were discussing a potential tie-up that could reshape the global sector.
The Swiss mining and commodity trading giant said on Friday it was in preliminary discussions with its British-Australian rival “about a possible combination of some or all of their businesses”.
Glencore said the deal could proceed as an all-share merger.
The Financial Times first reported the companies were discussing a “megamerger” that would create the world’s largest mining company, with a combined value of more than US$260 billion. Both groups said there was no certainty the early-stage discussions would result in a transaction.
Rio Tinto said it had until February 5 to announce whether or not it is going ahead with a takeover offer.
Coal remains a flashpoint
The talks come as the sector faces continued scrutiny over coal exposure and decarbonisation strategies.
Rio Tinto has been exiting coal, while Glencore announced in August last year it had decided against spinning off its coal business.
At the time, Glencore said shareholders viewed coal as a cash-generating activity.
The miner had weighed merging newly acquired Elk Valley Resources with its own coal operations and spinning it off, but said it needed coal cash flow to fund investment in commodities linked to the energy transition, including copper and cobalt.
That stance drew criticism from environmental groups and some investors, who noted coal is excluded from certain investment portfolios.
Norway’s sovereign wealth fund, the world’s largest, has excluded Glencore shares since 2020.
Oil, gas and coal companies remain under pressure to reduce fossil fuel exposure, with coal a major contributor to climate change.
Copper ambitions in focus
A combined Glencore-Rio Tinto group would also deepen exposure to copper, a metal expected to see rising demand as countries expand electrical networks to support renewable energy.
Glencore chief executive Gary Nagle in December set out the group’s ambitions in copper, telling an investor presentation: “Our portfolio, in particular in copper is world class,” and adding: “The coal business supports the energy needs of today as we transition in the world.”
Glencore said the “current expectation” is that Rio Tinto would acquire Glencore by a court-sanctioned scheme of arrangement.