By Clara Denina and Pratima Desai
LONDON (Reuters) – Miner and commodity dealer Glencore stated it’s open to M&A transactions that create worth for its shareholders, leveraging its place as a prime three international copper producer.
“As now we have all the time stated, M&A is one thing we’re good at and we’re all the time open to do transactions which might be value-accretive for the corporate,” a Glencore spokesperson stated.
Potential M&A offers have been the chief preoccupation for buyers within the sector in 2024, however BHP’s $49 billion failed bid for Anglo American in Could confirmed the problem of mixing diversified producers.
Glencore made an strategy to Rio Tinto late final 12 months with a proposition to merge the 2 mining corporations however talks didn’t progress, in keeping with two sources near the matter. Neither firm has commented on any talks.
The spokesperson wouldn’t touch upon the studies.
Rio Tinto would profit from extra copper manufacturing via a cope with Glencore, however the world’s second-largest miner had questions round how a lot it must spend and its tradition compatibility with the Swiss firm, a 3rd supply with direct data of the matter stated.
“Glencore is a dealer… and their working belongings are nothing however a captive supply of fabric for them to commerce towards. The tradition conflict can be fairly one thing… however any deal may be accomplished on the proper value,” stated Abel Martins Alexandre, beforehand a Rio Tinto treasurer and a former managing director at Lloyds Financial institution.
For instance, Martins Alexandre stated if Glencore had Rio Tinto’s portfolio they might imagine they might make more cash out of buying and selling the supplies that Rio Tinto produces than Rio Tinto does alone, as this isn’t a buying and selling entity.
Mining corporations are racing to develop copper output, with demand poised to leap from use for power transition purposes equivalent to photo voltaic panels, electrical automobiles and information centres for synthetic intelligence.
On the similar time, main producers are cautious of paying hefty premiums that would put strain on their stability sheets and irritate shareholders.
Glencore produces a couple of million metric tons of copper a 12 months, outpacing Rio’s output by as much as 40%.
Glencore’s valuation is reasonable in contrast with friends, analysts say, and its share value misplaced 25% of its worth in 2024. Diversified miners BHP and Rio Tinto’s London shares misplaced 21% and 19% respectively, whereas Anglo’s shares rose 20%.
Glencore’s coal operations shall be perceived as a “poison tablet” for different corporations’ shareholders, stated Martins Alexandre.
