Ongoing consolidation in copper mining

British-Swiss mining giant Glencore and British-Australian company Rio Tinto are in advanced talks about a possible merger. This is the second round of negotiations after a break of more than a year. The outcome of these talks should be known by February 5 at the latest, when Rio Tinto must announce its decision on whether or not to submit an offer. If the merger goes ahead, it could create the world's largest mining company, with an estimated value of USD 210 billion.  

While Rio Tinto is one of the largest producers of iron ore and aluminum, Glencore is a leader in zinc and steelmaking coal mining. Although the merger would significantly strengthen their position across commodities, the main focus is on copper mining.

Together, they mine up to 2 million tons of copper per year, which corresponds to a 10% share of global production. The price of this metal has risen by 40% over the past year, and most of its production comes from a small number of deposits that are vulnerable to political and environmental risks. Demand for copper is expected to increase by up to 50% by 2040 in connection with its use in the green transition, whether in electric vehicles, battery storage, or digital and transmission infrastructure.

The potential merger fits into a broader trend of consolidation in the copper mining sector. For example, a merger between the British company Anglo American and the Canadian company Teck Resources is currently in the works, which would create the fifth-largest copper producer in the world.

The issue of coal could also be important for the success of the transaction. While Rio Tinto sold its last coal mines in 2018 and its shareholders are emphasizing decarbonization, Glencore owns approximately twenty coal mines in Australia and South Africa. In addition, in 2023, it expanded its portfolio with Canadian steel coal mines worth USD 9 billion. The possible sale of these assets would be a significant transaction opportunity and could also appeal to large Czech companies operating in the mining and steel industries.