PRELIMINARY discussions between Rio Tinto and Glencore over a potential merger could catalyse further consolidation within the mining sector whilst intensifying pressure on BHP to defend its position as the world’s largest miner, said Reuters.
The proposed combination would create a company valued at nearly $207bn, potentially ranking amongst the ten largest mergers and acquisitions transactions on record. Rio Tinto faces a 5 February deadline to submit a formal offer, though this timeframe may be extended.
Industry observers suggest BHP, currently valued at $161bn, represents the most probable spoiler, said Reuters. “The most likely interloper to this deal is BHP,” Richard Hatch, an analyst at Berenberg told the newswire. The company could table a rival bid, retaining Glencore’s copper assets whilst divesting other operations, he said.
However, BHP declined to comment on the speculation or its succession planning, despite reports indicating preparations to appoint a new CEO.
Copper exposure remains the primary motivation behind sector consolidation, said Reuters. Artificial intelligence expansion and global energy transition initiatives have elevated demand for the metal, which offers the most cost-effective electricity conductivity. Mergers provide immediate access to producing assets, circumventing expensive and uncertain exploration processes, it added.
Last September, Anglo American announced plans to merge with Canada’s Teck Resources, forging another copper-focused heavyweight in what ranked as the sector’s second-largest deal. That transaction awaits regulatory approval.
BHP’s failed pursuit of Anglo American throughout 2024, including a brief November revival, adds complexity to its strategic positioning. George Cheveley, portfolio manager at Ninety One, suggested BHP might find intervention “difficult emotionally” given these repeated setbacks.
“This is yet another example that the mining space is consolidating,” said Mark Kelly, CEO at advisory firm MKI Global.
Alternative acquisition targets including Vale and Freeport have been mentioned, though their availability remains doubtful.
