The decade-long pursuit of a landmark mining merger between Glencore and Rio Tinto has ultimately ended in failure. On February 5th, negotiations between the two companies broke down completely. Glencore insisted on holding a 40% stake in the merged entity, while Rio Tinto's leadership concluded that prolonging talks would be futile and decided to terminate the deal.

The collapse represents a significant setback for both parties. Glencore, which has seen its copper production decline by over 40% in the past decade, has been striving to convince investors of its successful business transformation. Meanwhile, Rio Tinto had hoped the merger would help reduce its heavy reliance on the iron ore market.

Following the news, Glencore's ADR shares plummeted more than 6% in a single day, as investors began questioning the company's ability to independently grow its copper operations.

**The Final 24-Hour Breakdown**

Rio Tinto had engaged Evercore, led by veteran UK dealmaker Simon Robey, along with JPMorgan and Macquarie Group as advisors. Glencore brought in seasoned dealmaker Michael Klein, who had previously worked with the company on its unsuccessful attempt to acquire Teck Resources in 2023.

Klein's primary task was to communicate the value of Glencore's business to Rio Tinto's executives. Glencore's founder and largest shareholder, Ivan Glasenberg, also became more actively involved as the deadline approached, partly to address concerns that he was reluctant to finalize a deal.

However, within the final 24 hours, the situation deteriorated rapidly. It became increasingly clear to Rio Tinto that Glencore and Glasenberg were unwilling to significantly compromise on the 40% ownership demand. On Glencore's side, frustration grew over Rio Tinto's insistence on linking the offer price to the share price on the day the deal was announced, which Glencore viewed as an arbitrary ratio that failed to reflect the historical and future performance of both companies.

According to more than six sources familiar with the matter, when talks resumed on Thursday morning, there was still hope within Rio Tinto that Glencore might show a willingness to lower its demand. Glencore CEO Gary Nagle and Rio Tinto CEO Simon Trott held two calls in an attempt to break the deadlock. But as the deadline loomed, it became apparent that an extension would be pointless. Their final conversation focused on how to announce the deal's failure to investors.

Under UK takeover rules, the two companies are barred from re-entering negotiations for at least six months, unless a competing bidder emerges or Glencore formally requests to restart talks.

**Negotiation Timeline and Sticking Points**

Glencore CEO Gary Nagle laid the groundwork for talks in the summer of the previous year, informally approaching Simon Trott shortly after Trott assumed the role of Rio Tinto CEO. After Trott settled into his new position, formal negotiations commenced in December, with Rio Tinto Chairman Dom Barton also playing a leading role.

These secret talks concluded in early January when the Financial Times first reported that negotiations were underway. This triggered a countdown: under UK rules, Rio Tinto was required to make a formal offer, withdraw, or seek an extension by 5:00 PM London time on February 5th.

In the early stages, the companies' leaders remained largely removed from the process, with Rio Tinto's deal teams and advisors making multiple trips to Glencore's Swiss headquarters for due diligence. This was a monumental task, given the extreme complexity of Glencore's operations, which span mines, smelters, refineries, and a vast trading and logistics business.

As due diligence progressed, both sides believed an extension was likely due to the sheer volume of work. The review raised no major red flags, with the key sticking point being the price Rio Tinto would need to pay. The target was to announce an offer before both companies reported earnings in mid-February.

For mining billionaire Ivan Glasenberg, a merger with Rio Tinto represented a deal he had coveted for over a decade. The founder who transformed Glencore from a commodity trader into a mining giant had made several previous attempts to broker this union. Over the past month, the dream seemed within reach. This was at least the fourth time merger talks had been initiated, and nearly all participants considered this round the most serious yet. But in less than 24 hours, it all fell apart.

**A Deal of Major Strategic Importance**

The merger held significant strategic value for both companies. For Glencore, proving its business turnaround was critical as copper prices surged to record highs. Rio Tinto, viewing itself as one of the industry's smartest operators, saw the deal as a way to unlock the growth potential of Glencore's copper portfolio. Without it, Rio Tinto's earnings prospects remain tied to the iron ore market, which faces pressures from increasing supply and weak demand.

A merger would have created the world's largest mining company, surpassing BHP. It would have integrated Glencore's substantial coal and copper assets and its commodity trading division with Rio Tinto's massive iron ore operations. For Rio Tinto, a key benefit would have been a doubling of its copper production, potentially establishing it as the world's largest copper miner and adding one million tonnes of future production capacity.

While previous attempts to merge Glencore's aggressive mining and trading culture with Rio Tinto's more conservative corporate ethos had quickly collapsed, the risk of inaction was growing as rivals also sought major copper acquisitions, making the opportunity increasingly difficult to ignore.

**Market Impact and Future Speculation**

Glencore's 7% share price drop highlights the impact of the failed deal on both company executives and investors, with analysts beginning to question Glencore's standalone copper strategy. For Rio Tinto, falling iron ore prices serve as a reminder of the risks of walking away from what would have been the industry's largest-ever transaction. Attention is now turning to whether a competing bidder might emerge.

As RBC Capital Markets analyst Ben Davis noted in an email report, "We have long believed BHP was the most likely party to intervene. BHP now has an opportunity, but the challenge will be explaining to value-focused Australian investors how they see value in Glencore that Rio Tinto did not."