By Christine Chen

SYDNEY, Jan 15 (Reuters) - One of Australia's oldest and largest investors has added to the growing local chorus of concerns about Rio Tinto's RIO.AX, RIO.L potential acquisition of Glencore GLEN.L, questioning the proposed tie-up's merits and timing.

Mark Freeman, managing director of the near-century-old Australian Foundation Investment Company (AFIC) AFI.AX, said Rio Tinto had "a lot of questions the company needs to answer as to how it's going to create value."

"A lot of M&A at the top of the market hasn't created value in the long term. So we're certainly curious to understand why they think this time it would be different," he told Reuters.

Rio Tinto and Glencore confirmed on Friday they were in talks over a potential merger that could create the world’s largest mining company worth more than $200 billion. The companies did not disclose whether there would be a takeover premium or who would manage the combined company if completed.

The possible deal has generally been better received by investors in London, where many have shares in both companies, than in Australia, where Rio Tinto is the more popular holding.

Several investors in Australia, home to more than 20% of dual-listed Rio Tinto's shares and its highly profitable iron ore mines, have said they were concerned the company would overpay.

Some have said the deal reminded them of what they considered poor transactions in the past, such as BHP's BHP.AX acquisition of Billiton in 2001.

"There are a lot of scars," Freeman said. "If you're going to do this, it's got to create value for Rio shareholders. Not just make the company bigger or more diverse."

The race among global miners to bulk up in metals including copper, set to benefit from the energy transition and artificial intelligence demand, has sparked a new wave of project expansions and takeover attempts, including the pending merger of Anglo American AAL.L and Teck Resources TECKb.TO.

But Freeman questioned why Rio Tinto was going after Glencore's pipeline of copper assets when prices for the metal were near record highs.

"When you're at the top of the mining boom, there's a lot of companies that look good. But when the cycle unwinds, the good companies stand out and the weaker ones get found out," he said.

AFIC is Australia's largest listed investment company with about A$10.5 billion ($7 billion) under management. BHP was its biggest holding and Rio Tinto was its 11th largest as of December 31.

AFIC on Thursday also reported that Mirrabooka Investments MIR.AX, its A$661 million investment company focused on small and mid-cap companies, returned 1.3% for the half year to December 31. It underperformed the combined Small Ordinaries and Mid Cap 50 benchmark including franking, which rose 14.3%.

($1 = 1.4995 Australian dollars)

(Reporting by Christine Chen; Editing by Jamie Freed)

((christine.chen@thomsonreuters.com; +61 2 9171 7119;))