Mining giants' strong alliance shatters dreams; focus of copper mine trading may shift to individual assets

Royal Bank of Canada Capital Markets analyst Kaan Peker said that the failure of the merger negotiations between Rio Tinto and Glencore highlights the challenges of large-scale copper mine acquisitions during a hot market. Peker pointed out that Rio Tinto was unwilling to pay excessive premiums for forward copper options at the “cyclical peak,” while Glencore refused to pre-sell its copper growth pipeline. Peker believes, “The strategic implication is that mergers and acquisitions will shift toward asset-level copper transactions.” This means more asset divestitures, minority stake acquisitions, and project partnerships in the future, rather than giant mergers.