Investors weigh copper upside, coal risk and deal discipline in mining’s boldest play yet
Copper just hit a record US$13,000 a ton and Rio Tinto is eyeing a blockbuster move to lock in more of it by pursuing Glencore in what could become the biggest mining deal in history.
According to Reuters, Rio Tinto and Glencore are in early talks on an all‑share acquisition of “some or all” of Glencore, with the parties’ current expectation that any deal would be done through a Court‑sanctioned scheme of arrangement that sees Rio buy Glencore.
Under UK takeover rules, Rio has until February 5 to either announce a firm offer or step away for six months.
On current prices, the combined group would be worth just over US$200bn and would overtake BHP as the world’s largest miner, Reuters reported.
CNBC pegged Rio Tinto’s market cap at about US$139.7bn and Glencore at about US$65.1bn, for a combined US$204.8bn.
The market reaction shows the split between buyers and sellers.
Glencore shares jumped about 10 percent in London, according to Bloomberg, while Reuters said US-listed stock rose 6 percent. Rio Tinto fell 6.3 percent in Australia and about 2 percent–2.3 percent in London, reflecting concern it could overpay.
“Investors are not happy with this,” said Hugh Dive at Atlas Funds Management, according to Reuters.
The strategic hook is copper.
Both companies are pivoting harder into the metal as the energy transition and AI‑driven data centres drive electricity demand.
Reuters said S&P Global expects global copper demand to rise 50 percent by 2040, with a supply gap of more than 10m tonnes a year without more mining and recycling.
Bloomberg reported that a deal would expand Rio’s copper output and finally give it a stake in Chile’s Collahuasi mine, one of the world’s richest deposits.
For shareholders, the core risk is price and capital discipline.
“It comes down to price, but if they have to pay a big premium there is a risk that a transaction could destroy some value for shareholders,” said Tim Hillier at Allan Gray, a Rio investor, according to Reuters.
He noted that “Rio has a strong pipeline of internal high-growth projects” and questioned the need to “look externally for things to do.”
John Ayoub at Wilson Asset Management told Reuters this is “Simon’s first test as CEO” and said he expects Rio’s “disciplined approach to be carried through to M&A.”
Coal and culture are the other sticking points.
Glencore remains one of the world’s biggest coal producers, while Rio exited coal in 2018 by selling its last operations to Glencore.
John Ayoub said “Coal would have to be divested to garner the support of the Australian shareholder base,” according to Reuters.
By contrast, Bloomberg reported that people familiar with the talks say Rio is open to keeping Glencore’s coal business if a full takeover happens, with the option to sell it later.
CNBC quoted Cole Smead of Smead Capital Management calling coal “the dirty, dirty business nobody wants to own” and saying he “wouldn’t be surprised to see Glencore do a tax-free spin on the coal business,” while stressing that “there’s nothing settled.”
There is also the question of fit. Glencore “clearly has a trading background, is very opportunistic and results-focused,” said Andy Forster at Argo Investments, a Rio shareholder, as per Reuters.
He argued that elements of that culture “could actually be good for Rio,” but added, “I hope Rio stays disciplined but it makes sense to look at deals where value can be extracted by both parties.”
On top of that, Reuters noted that China, the dominant buyer of industrial metals, would likely raise antitrust hurdles if the deal proceeds.
The talks come as mining M&A accelerates.
Anglo American’s agreement to buy Teck Resources in a US$66bn transaction expected to create one of the world’s top copper producers, and to a broader wave of consolidation as majors chase long‑dated copper exposure.
CNBC said the Stoxx Europe Basic Resources index rose about 2 percent on the latest news, with miners like Antofagasta and Anglo American gaining.
For large capital allocators, the potential prize is scale and liquidity.
CNBC quoted Cole Smead saying a merged Rio–Glencore would be “one of the largest, most liquid public mining companies in the world” and that for an investor who “has got to put US$10bn to work… there’s very few securities they’d be able to go out and own, and this would be one of them.”
Whether that upside outweighs the risk of a top‑of‑cycle, coal‑heavy mega‑deal now rests on how Rio Tinto uses the February 5 deadline.
