A second major mining merger could be taking shape in Australia, with speculation growing about a fresh bid by Rio Tinto for Glencore, as Gold Fields considers increasing its takeover offer for Northern Star Resources.
London-based Rio Tinto and Swiss-based Glencore have previously come close to a deal aimed at creating the world’s largest mining company, with a strong focus on copper. However, the two companies have been unable to agree on a price.
A return to the negotiating table could follow Glencore’s secondary listing on the Australian Securities Exchange, scheduled for tomorrow, which could boost confidence in the company among Australian investors in Rio Tinto.
Credit: Forbes.com
There are currently no formal merger talks between Rio Tinto and Glencore. However, Glencore Chief Executive Officer Gary Nagle said last week that “nothing is impossible”, adding that consolidation in the mining industry makes sense.
Meanwhile, Gold Fields’ proposed takeover of Australia’s Northern Star Resources is at a more advanced stage, although its initial offer was swiftly rejected.
Gold Fields could consider a higher offer with a larger cash component, potentially paving the way for the creation of the world’s second-largest gold mining company.
Mining merger activity is increasing as demand for raw materials grows faster than new mines can be developed.
Copper, in particular, faces long-term supply constraints due to declining ore grades at ageing mines and rising consumption of the metal, which is widely used in construction, transport and electrification.
