While discussions for a $240bn merger failed just last February, the recent surge in coal prices is breathing new life into Glencore's ambitions. The Swiss giant hopes that the rebalancing of valuations will force Rio Tinto back to the negotiating table.
Gary Nagle, CEO of Glencore, intends to use the current mining cycle to shake up the established order. According to Reuters sources, Glencore does not view the failure of the February talks as an end to negotiations, but rather as a mere regulatory pause.
In February, discussions collapsed because the two giants could not agree on the relative weight of their assets. However, since January 7, the situation has changed radically. Driven by a 26% increase in coal prices, Glencore's stock has outperformed the market. Conversely, Rio Tinto, which is heavily exposed to iron ore, is suffering from the decline in prices for that metal, with its share up just 9%.
For Glencore, the objective is clear: to merge its trading power and massive copper assets, crucial for the energy transition, with Rio Tinto's operational expertise.
However, the Swiss company faces obstacles, particularly in Australia. Local investors take a dim view of coal returning to Rio Tinto's portfolio after years of efforts to "green" their image. Gary Nagle, meanwhile, brushes aside these fears, asserting that Europe has already integrated coal as a transitional necessity, judging Australian investors to be "a bit behind" on ESG criteria.
While the financial logic seems to be improving for Glencore, two major barriers persist. According to British stockmarket rules, Rio Tinto cannot legally resume discussions before a six-month period following the February breakdown. Furthermore, the "vocal minority" of Australian funds, which only represent about 4% of the capital, but enjoy strong political influence, oppose the project. They point to past corruption investigations targeting Glencore and the lack of clear operational synergies.
Gary Nagle believes that the decisive moment will be at the end of summer 2026. If iron ore prices continue to crumble in the face of a surplus market, pressure from Rio Tinto shareholders for a merger could become irresistible. The question remains whether Rio's board will agree to link its fate to that of the Swiss trader, despite the latter's reputation.
Glencore plc specializes in producing and distributing metals, minerals and petroleum products, primarily for the automotive, steel, and food-processing industries. The group also offers logistical, supply, and financing services. Net sales break down by activity as follows:
- sale of oil products, coke and coal (53.9%);
- sale of metals and minerals (46%): aluminum, zinc, copper, alumina, iron alloys, nickel, cobalt, etc.;
- other (0.1%).
Net sales are distributed geographically as follows: Europe (27%), Asia (49.1%), Americas (15.8%), Africa (5%) and Oceania (3.1%).
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