Glencore’s Canadian copper refinery in Montreal in March.Bernard Brault/Reuters
Rio Tinto Group RIO-N has dropped plans to acquire rival Glencore PLC and create the world’s largest miner after the two sides failed to agree on the takeover premium Glencore GLNCY deserved, and who would run the combined company.
Glencore and Rio Tinto, both of which have extensive operations in Canada, separately announced on Thursday that they had called off talks just four weeks after confirming they were negotiating a US$75-billion takeover.
The failed marriage comes as mining companies are consolidating and spending billions of dollars to increase production of critical minerals such as copper. In December, shareholders of Vancouver-based Teck Resources Inc. TECK-B-T agreed to a US$20-billion merger with Anglo American PLC. NGLOY
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London-based Rio Tinto provided minimal explanation for the decision, which marked at least the fourth time efforts to combine the two miners have ended without a deal. In a press release, the company said: “Rio Tinto has determined that it could not reach an agreement that would deliver value to its shareholders.”
Glencore highlighted concerns with leadership and the value of Rio Tinto’s bid in a statement meant to show the miner can flourish on its own.
“Key terms of the potential offer were Rio Tinto retaining both the chairman and chief executive officer roles,” Glencore said in its press release. The company said Rio Tinto’s offer delivered “a pro forma ownership of the combined company which, in our view, significantly undervalued Glencore’s underlying relative value.”
Rio Tinto’s market capitalization is US$157-billion, roughly twice Glencore’s US$79-billion equity value. Glencore sought a takeover premium that would give its shareholders approximately 40 per cent of the combined company versus the roughly 33-per-cent stake they would receive on a pro forma basis, Bloomberg reported.
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In Glencore’s view, Rio Tinto’s offer undervalued its coal operations, including mines in southeastern British Columbia’s Elk Valley, and Glencore’s commodity trading operations, according to three sources familiar with the negotiations. The Globe and Mail is not naming the sources because they are not authorized to speak for the companies.
In 2018, Rio Tinto was the first major mining company to exit the coal industry as part of a strategy to make the company more attractive to investors. Glencore purchased some of the company’s mines in Australia.
Glencore is one of the world’s largest producers of coal used for energy and steelmaking. In 2024, Glencore bought Teck’s Canadian coal operations for US$6.9-billion after initially making a hostile bid for the Canadian company.
Last May, the U.S. government designated steelmaking coal a critical mineral, essential to national security. President Donald Trump has also pushed for increased energy production from thermal coal.
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In August, Rio Tinto appointed a new chief executive officer, Simon Trott, who launched a strategic review of multiple divisions. The company’s chair is Dominic Barton, former global managing partner at McKinsey & Co. and Canada’s former ambassador to China.
Rio Tinto traces its roots to British entrepreneurs who acquired copper mines from the Spanish government in the 1870s. Commodity traders founded Glencore in the 1990s.
Seeing two companies so culturally different flirting with each other this many times is “rare,” said Louis Hébert, a professor in the department of management at Montreal’s HEC business school.
Prof. Hébert said he wouldn’t be surprised if the two miners tried again for a big transaction, particularly because the logic of pushing deeper into copper holdings is compelling for Rio Tinto. But he questioned why they don’t shoot for something more modest, such as a joint venture in a specific business activity that could benefit both.
Both Rio Tinto and Glencore have extensive mining operations in Canada, employing about 15,000 and 11,400 people, respectively, in the country.
Quebec’s Saguenay-Lac-Saint-Jean region is the site of close to half of Rio Tinto’s global aluminum production, with an alumina refinery, five smelters and six hydropower plants, among other infrastructure facilities. The company also makes aluminum in B.C., mines diamonds at the Diavik site in the Canadian Arctic and produces iron ore in Labrador City, N.L.
Glencore has an equally extensive footprint, with a copper smelter and refinery in Quebec, as well as nickel mining operations in Quebec and Ontario. The corporation is also Canada’s largest producer of steelmaking coal and the second-largest producer of refined zinc.
The two companies have been courting each other since at least 2014, when Rio rejected an offer to combine with Glencore, although multiple reports have said former Glencore CEO Ivan Glasenberg attempted to engage Rio in merger talks as far back as 2002. Two other rounds of formal talks, both in 2024, also failed to reach a deal.
Under British takeover rules, Rio Tinto faced a Feb. 5 deadline to either make a formal offer to buy Glencore or publicly announce it is no longer pursuing a deal.
Nicolas Lapierre, Quebec director for the United Steelworkers union, which represents workers at some Rio Tinto and Glencore facilities, said it’s not a surprise the companies broke off their merger effort. The ownership status quo suits the union just fine, he added.
“It’s always better that we have more players” in the industry, Mr. Lapierre said. “And that they compete on salaries, on pensions, on insurance regimes. I think it will only improve the pay conditions of workers.”
One of the biggest immediate challenges for Glencore is what to do with its Horne copper smelter in Rouyn-Noranda, Que. The company is at loggerheads with the Quebec government over emissions at the facility and says it needs a multiyear period of regulatory predictability before making a $1-billion investment to upgrade the site.