Glencore’s chief executive, Gary Nagle, is pressing a renewed push to reawaken merger discussions with Rio Tinto, buoyed by a recent upswing in coal prices, three investors who met with leaders from both companies in Australia this week told Reuters. The investors spoke on condition of anonymity because the talks were private.
Earlier this year the two miners engaged in talks aimed at creating what would have been the world’s largest mining group, a proposed tie-up valuing the combined business at about $240 billion. Under that proposal, Glencore planned to fold its marketing business and copper assets into a larger group that would leverage Rio Tinto’s operational capabilities to meet growing copper demand. The discussions were discontinued in February after the companies said they could not agree on valuation.
UK regulations prevent Rio Tinto from reopening negotiations with Glencore for six months. Despite that restriction, the investors said Nagle presented an upbeat view to those he met, suggesting a future opportunity could arise to strike a deal.
One of the investors quoted a blunt assessment of the situation: "This is definitely not going away, unfortunately," reflecting a view among some that a merger would not create sufficient value. Both Glencore and Rio Tinto declined to comment to Reuters on the recent investor meetings.
In February, after talks broke down, Rio Tinto’s chief executive Simon Trott told media on a call: "Ultimately we formed the view that we couldn’t stand up a value case, and that’s where it stands." That assessment remains a central obstacle for any renewed approach.
How price moves alter the math
Glencore’s case for revisiting a tie-up rests heavily on recent shifts in commodity markets and share prices. Since January 7 - the date Glencore says Rio used to anchor its valuation of Glencore - coal prices and Glencore shares have risen by about 26%. Over the same period Rio’s shares have climbed roughly 9%, with iron ore price weakness weighing on Rio’s gains.
Those movements have changed the relative market valuations of the two companies. Investors told Reuters Glencore now represents approximately 35% of the combined market value in a theoretical Glencore-Rio pairing, up from about 31.5% when the talks became public. That share brings Glencore closer to the roughly 40% slice it had been pressing for in the prior proposal that Rio ultimately rejected.
According to the sources, Glencore argued that valuing the company strictly to the spot prices of key commodities on January 7 ignored a broader view that would include projected prices. Nagle, the investors said, favoured a more forward-looking assessment.
Glencore also expects pressure on Rio Tinto’s iron ore business should the market move into surplus, which would further shift relative value away from Rio in Glencore’s view and, the company believes, make a deal easier to achieve.
Investor and governance headwinds
Some Australian investors questioned the logic of Rio re-acquiring coal assets after previously divesting them to bolster its environmental credentials. One source recounted Nagle telling investors that Australia trails Europe on attitudes toward coal and that, for Europe, ESG was "no longer an issue" for coal.
Beyond valuation, governance concerns also loomed. Five Australian funds sent a joint letter to Rio Tinto’s board on January 20 raising issues including governance, citing corruption probes into aspects of Glencore’s business practices, three sources said. Glencore viewed that Australian contingent as a small but vocal minority, representing around 4% of the total shareholder base.
The dual-listed nature of Rio Tinto adds further complexity. The investors noted that more than half of Rio’s profits come from its Australian operations, meaning any merger would have a disproportionately large impact on Australia and require government approval. On the shareholder front, the rules for greenlighting such a deal are exacting: approval would need support from 50% of ASX shareholders present and voting and 75% of the votes cast.
Some investors said Glencore had underestimated the strength of the Australian bloc. Nevertheless, one investor described Glencore’s roadshow as effective, adding that Glencore would be seen as investable by some if it were to list in Australia. That same investor, however, judged that the proposed merger did not offer compelling operational synergies.
Other investors voiced scepticism that short-term share price outperformance would be enough to alter Rio’s stance. In the January talks, the parties also disputed the valuation of undeveloped Argentinian copper assets owned by Glencore, a point of contention that remains unresolved. "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," one investor said.
Data services note included in original reporting
The original reporting also included a separate service note referencing a stock evaluation product: it stated ProPicks AI assesses RIO alongside thousands of other companies using more than 100 financial metrics and highlighted past winners such as Super Micro Computer (+185%) and AppLovin (+157%). That description positioned the AI as a tool that identifies stocks with favorable risk-reward profiles based on current data.
For now, the combination of altered commodity prices and renewed investor engagement appears to have given Glencore fresh hope of rekindling merger talks. However, persistent valuation disputes, governance concerns, shareholder blocks and regulatory thresholds mean any path forward remains uncertain.