By Clara Denina and Pratima Desai
LONDON (Reuters) – Miner and commodity trader Glencore said it is open to M&A transactions that create value for its shareholders, leveraging its position as a top three global copper producer.
“As we have always said, M&A is something we are good at and we are always open to do transactions that are value-accretive for the company,” a Glencore spokesperson said.
Potential M&A deals were the chief preoccupation for investors in the sector in 2024, but BHP’s $49 billion failed bid for Anglo American in May showed the difficulty of combining diversified producers.
Glencore made an approach to Rio Tinto late last year with a proposition to merge the two mining companies but talks did not progress, according to two sources close to the matter. Neither company has commented on any talks.
The spokesperson would not comment on the reports.
Rio Tinto would benefit from more copper production through a deal with Glencore, but the world’s second-largest miner had questions around how much it would have to spend and its culture compatibility with the Swiss company, a third source with direct knowledge of the matter said.
“Glencore is a trader… and their operating assets are nothing but a captive source of material for them to trade against. The culture clash would be quite something… but any deal can be done at the right price,” said Abel Martins Alexandre, previously a Rio Tinto treasurer and a former managing director at Lloyds Bank.
For example, Martins Alexandre said if Glencore had Rio Tinto’s portfolio they may believe they could make more money out of trading the materials that Rio Tinto produces than Rio Tinto does alone, as this is not a trading entity.
Mining companies are racing to expand copper output, with demand poised to jump from use for energy transition applications such as solar panels, electric cars and data centres for artificial intelligence.
At the same time, major producers are wary of paying hefty premiums that could put pressure on their balance sheets and irritate shareholders.
Glencore produces more than one million metric tons of copper a year, outpacing Rio’s output by up to 40%.
Glencore’s valuation is cheap compared with peers, analysts say, and its share price lost 25% of its value in 2024. Diversified miners BHP and Rio Tinto’s London shares lost 21% and 19% respectively, while Anglo’s shares rose 20%.
Glencore’s coal operations will be perceived as a “poison pill” for other companies’ shareholders, said Martins Alexandre.
