Massive mining sector shakeup: Bloomberg reports Rio Tinto and Glencore in preliminary deal talks

The mining sector could be in for a massive shakeup this year as Rio Tinto Group and Glencore Plc have reportedly discussed a potential merger.

According to a Bloomberg report citing unnamed sources, the two companies have held early-stage discussions about the merger. Neither company has publicly addressed the rumors.

Rio Tinto, the world’s second-largest miner with a market capitalization of $103 billion, could potentially merge with Glencore, valued at $55 billion. This merger would represent the largest deal in the sector’s history, surpassing the current industry leader, BHP Group, which is valued at $126 billion, and creating the world’s largest mining company.

While this would be a merger between peers in the base metals space, many analysts anticipate that mergers and acquisitions (M&A) will be a dominant theme across the mining sector throughout 2025.

Focusing on copper, the ongoing green energy transition is expected to drive demand for the base metal, supporting prices through 2025. Copper is starting the new year on a strong footing, with prices trading at a 10-week high above $4.40 per pound.

Broadening the M&A outlook, equity analysts predict increased deal activity this year as major producers enhance their production capabilities. Meanwhile, a lack of investment capital has left many smaller companies underfunded.

For many analysts, the precious metals sector appears particularly primed for M&A activity. Higher gold prices are expected to boost producers' cash flow and margins.

“High-grade single-asset companies look good for acquisition targets,” said Chris Mancini, associate portfolio manager of the Gabelli Gold Fund (GOLDX) at Gabelli Funds.