Glencore has confirmed that it is in preliminary discussions with Rio Tinto regarding a possible combination of some or all of their businesses. This could potentially involve an all-share merger between the two companies. Glencore stated that the current expectation is that any merger transaction would be executed through Rio Tinto’s acquisition of Glencore via a court-sanctioned scheme of arrangement.
Glencore, a multinational commodity trading and mining company, indicated that there is no guarantee that the terms of any transaction or offer will be agreed upon. Rio Tinto, on the other hand, is a leading global mining group that focuses on finding, mining, and processing Earth’s resources. Glencore added that there is no certainty regarding the terms or structure of any such transaction or offer, if agreed. The company stated that a further announcement will be made when appropriate.
The confirmation follows a report by the Financial Times, which noted that a merger between the two mining companies would create a company with an enterprise value exceeding $US260 billion ($388 billion). The discussions occur against the backdrop of a significant surge in copper prices, which have surpassed $US13,000 a tonne in London trading this week.
S&P Global has projected that the increasing demand from artificial intelligence and rising defence spending are set to exacerbate an anticipated copper shortage. They estimate that copper demand will increase by 50 per cent from current levels, reaching 42 million tonnes by 2040. Global copper production is expected to peak around 33 million tonnes in 2030, potentially leading to a 10-million-tonne deficit.
