Mining and commodities trader Glencore has announced it is open to mergers and acquisitions (M&A) that create value for shareholders.
A Glencore spokesman said: "As we have always said, M&A is something we are good at and we are always open to doing transactions that add value to the company." Reuters.
Potential M&A deals were the focus of investors in the mining industry last year.
Mining companies are working to increase copper production as demand increases for energy transition applications such as solar panels, electric vehicles and artificial intelligence data centers.
Still, major producers are wary of paying hefty premiums as it could strain balance sheets and dissatisfy shareholders.
The failure of BHP Billiton's $49 billion (A$78.61 billion) takeover of Anglo American in May 2024 highlighted the challenges of merging diversified producers.
Glencore proposed a merger with Rio Tinto late last year, but discussions did not progress.
A merger with Glencore could boost Rio Tinto's copper production. However, questions have been raised about the Swiss company's spending and cultural compatibility.
Glencore produces more than 1 million tons of copper annually, 40% more than Rio Tinto's output.
Former Rio Tinto finance chief Abel Martins-Alexander said the company's coal business was seen as a "poison pill" for shareholders of other companies.
While many Western miners have moved away from carbon-intensive fossil fuels, Glencore continues to accumulate them.
Glencore's failed attempt to acquire Teck Resources for $23 billion (CHF20.93 billion) in 2023 resulted in the company acquiring 77% of the Canadian miner's steelmaking coal assets it planned to divest .
Some institutional shareholders said they "would be delighted" if a company like Glencore or Anglo American were acquired by a major miner at a premium of more than 30%.
They see potential synergies from reducing overhead costs or sharing infrastructure at neighboring mines.
Glencore has been considering a potential merger with Anglo American after BHP's practices came to light.
The company remains hopeful of resuming talks with Rio Tinto, people familiar with the matter said.
However, one mining banker noted that other shareholders remain skeptical of large-scale M&A in the mining sector and that executives are unlikely to "push the boundaries" because there is no perfect portfolio and some assets are more popular than others .
Analysts pointed out that Glencore’s valuation is low compared with peers, and its share price will fall by 25% in 2024.
By comparison, BHP Billiton and Rio Tinto's London shares fell 21% and 19% respectively, while Anglo American's shares rose 20%.
“Glencore expresses openness to value-added M&A transactions” was originally created and published by Mining Technology, a brand of GlobalData.
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