The growth in decarbonisation and rising copper demand to drive electrification have brought mining giants Rio Tinto and Glencore to the table to explore a $260bn merger.
Rio Tinto confirmed it had been engaging “in preliminary discussions” about a possible combination of some or all of its businesses, which could include an all-share merger. But it added there was “no certainty” that an offer would be made.
Rio Tinto, which operates in 35 countries, is continuously searching for new projects that can support the energy transition. It is currently exploring seven commodities in 17 countries, and its market capitalisation ranges between $132bn and $144bn.
Glencore’s capitalisation is significantly lower, at around $69bn, but its large base metals portfolio, including significant copper and cobalt assets, would complement Rio Tinto’s global iron ore and aluminium operations. Glencore is also a major coal producer.
Several analysts have expressed concerns whether the pair are a natural fit.
Macquarie analysts noted that a massive acquisition seems inconsistent with Rio’s recent pledge to become “stronger, sharper and simpler”. Some question why Rio would seek external growth when it already has a strong internal pipeline of high-growth projects.
Analysts at Allan Gray and Atlas Funds Management also warned that Rio Tinto might be forced to pay a high “control premium” for Glencore, which could destroy shareholder value.
Jefferies suggested the deal could lead to a dual-listed structure where iron ore and coal assets are grouped in a high-dividend Australian entity, while base metals are listed separately at a premium valuation.
Rio Tinto is heavily investing in hydrogen to decarbonise it operations, using the gas as a reductant for green steel and in alumina refining.
It is piloting projects such as hydrogen calcination at Yarwun refinery and partnering on hydrogen-fired direct iron reduction for green iron production. It is exploring various forms of hydrogen, including natural (white) hydrogen through an investment in Snow Fox Discovery, to reduce reliance on diesel and coal for lower-carbon material production, as it aims for significant emissions cuts by 2030.
The company has also been testing hydrogen-powered haul trucks with Caterpillar and Scania, alongside battery electric vehicles.
Glencore’s hydrogen involvement focuses on internal use for metal processing, such as hydrochloric acid production in Norway using green hydrogen from Nel Electrolysers.
It is also exploring large-scale projects, such as the Surat Hydrogen Project in Australia, which aims to produce blue hydrogen and ammonia from coal with carbon capture and storage, and engaging in hydrogen hubs in Germany (H2 Marsch) for industrial decarbonisation.