Glencore CEO Gary Nagle is hoping that a recent surge in coal prices will entice Rio Tinto back to the negotiating table for another attempt at creating the world’s largest mining company. According to three investors who met with executives from both companies in Australia this week, the prospect of renewed talks is growing as market dynamics shift.
Earlier this year, Glencore and Rio Tinto were engaged in discussions to merge and form a $240-billion company. The proposed deal aimed to combine Glencore’s marketing business and copper assets with Rio Tinto’s operational expertise—particularly to meet increasing demand for copper, a key material in global electrification.
Negotiations between the two mining giants broke down in February due to disagreements over company valuation. Both firms confirmed that talks had ended without a deal, citing a mismatch in how each side valued the other’s assets. Under UK takeover rules, Rio Tinto is prohibited from resuming talks with Glencore for six months.
One of the main points of contention was how Glencore should be valued. Sources say that Rio Tinto’s assessment was based on the spot prices of major commodities like coal as of January 7, the day before their discussions became public. Nagle, however, argued that a fairer approach would account for projected prices and longer-term market trends. “A more measured view would have been to also take projected prices into account,” said Nagle, according to investors.
The impact of fluctuating commodity prices was significant. Since January 7, coal prices—and Glencore’s share price—have jumped 26%, while Rio Tinto’s shares have risen by 9%. Meanwhile, iron ore prices have declined, putting pressure on Rio’s core business. As a result, Glencore’s share of the combined company’s market value has increased from 31.5% to about 35%, moving closer to the 40% that Glencore sought in the failed negotiations.
Despite the optimism from Glencore, not all investors are convinced. “This is definitely not going away, unfortunately,” remarked one investor who remains sceptical about the value of such a merger. Others pointed out that short-term share price gains are unlikely to change Rio Tinto’s stance.
A key issue for some Australian investors is Rio Tinto’s previous decision to sell its coal assets in order to improve its green credentials. This move was meant to enhance the company’s ESG (Environmental, Social, and Governance) profile—a set of standards for a company’s operations that investors use to screen potential investments based on their environmental sustainability, social impact, and ethical governance.
Nagle told investors that, in his view, Australia lags behind Europe, where ESG concerns related to coal are “no longer an issue.” However, for many, the idea of reacquiring coal assets raises questions about Rio Tinto’s commitment to sustainability.
A vocal minority of Australian shareholders—representing about 4% of Glencore’s investor base—has been particularly outspoken against the merger. Yet, as sources noted, more than half of Rio Tinto’s profits come from its Australian operations. Because Rio Tinto is a dual-listed company (meaning its shares are traded on both the London and Australian stock exchanges), any merger would have a strong impact on Australia. Such a deal would require government approval and must meet shareholder voting thresholds: approval from 50% of ASX shareholders present and voting, and 75% of the votes cast.
“Ultimately we formed the view that we couldn’t stand up a value case, and that’s where it stands,” said Rio Tinto CEO Simon Trott during a media call after the talks ended.
The changing commodity landscape is shaping the outlook for both companies. Glencore anticipates that Rio Tinto’s flagship iron ore business could face challenges if the market tips into surplus, which could further shift the balance of value in Glencore’s favour and make a future deal more appealing.
For some investors, Glencore would be a more attractive investment if it listed in Australia, but they remain unconvinced about the operational synergies of a merger. Disagreements also extend to how undeveloped assets—such as Glencore’s copper projects in Argentina—should be valued.
“I don’t see how Rio can change their mind in six months just because coal has gone up and iron ore has gone down,” said another investor.
While Glencore remains hopeful that rising coal prices and shifting market conditions will bring Rio Tinto back to the negotiating table, significant hurdles remain. Disputes over valuation methods, lingering ESG concerns, and the influence of Australian shareholders and government regulators all complicate the path to a potential merger. The next window for talks opens in six months, but many investors believe that lasting differences—rather than short-term market moves—will determine whether the mining industry sees its next mega-merger.
