By Rhiannon Hoyle and Katherine Hamilton
Rio Tinto and Glencore are in talks about a deal that would create the world's largest mining company with a market value of more than $200 billion, as a scramble for copper and other metals drives an industry return to big deals.
Glencore and Rio Tinto separately confirmed that talks are underway over an all-share deal, revisiting a tieup that was first discussed around a year ago when the U.S. and other countries began to reshape supply chains for metals and minerals essential to industries such as defense, automaking and semiconductor chips.
The expectation is that Rio Tinto would buy Glencore by way of a court-sanctioned scheme of arrangement, the companies said.
It underscores a shift in thinking among mining executives, who had grown leery about doing big deals after companies overpaid for assets more than a decade ago just as a China-led boom in commodities began to lose steam. Investors at the time pressured companies including Rio Tinto and Glencore to focus on returns, including higher dividends.
Interest in dealmaking has rekindled as executives and investors worry that their pipeline of new projects aren't big enough to sustain profits and power share-price growth on their own. The biggest miners had largely anchored their businesses around the production of iron ore and coal, two bulk commodities that were needed by China during its early industrialization.
That focus left many of these miners light on production of copper, which has become a hot commodity as investors bet on rising demand from the roll out of data centers that support the adoption of artificial intelligence and cloud computing. Doing deals can help miners to increase their production faster than building new mines, which typically take years given permitting hurdles and are at risk of cost overruns.
BHP Group, currently the world's No. 1 miner by market value, recently made a new bid to acquire Anglo American-a proposal that was rebuffed by its rival. Anglo has agreed to merge with Canada's Teck Resources in a deal signed off by shareholders of both companies late last year.
Rio Tinto's willingness to discuss a deal with Glencore comes just months after it overhauled its leadership team. In an early memo to employees, Rio Tinto's new chief executive, Simon Trott, promised "fundamental" changes at a company where he previously ran the iron-ore business.
Rio Tinto's market value is about $145.32 billion and Glencore has a market capitalization of about $67.44 billion, according to FactSet.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com and Katherine Hamilton at katherine.hamilton@wsj.com
(END) Dow Jones Newswires
01-08-26 1808ET
