The proposed merger between Rio Tinto and Glencore could reportedly face significant regulatory challenges, particularly in China.
According to a Reuters report, the companies may need to sell assets to secure approval.
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Earlier this month, Rio Tinto and Glencore disclosed that they had initiated preliminary discussions regarding the potential merger. Both mining majors provided limited details on the possible structure of the deal or which assets might be involved.
They noted that the current proposal involves an all-share acquisition, with Rio Tinto potentially acquiring “some or all” of Glencore.
Past large-scale mergers in the mining sector encountered similar regulatory scrutiny from China, such as Glencore’s acquisition of Xstrata in 2013, Reuters reported. During the deal, Glencore sold its stake in the Las Bambas copper mine to Chinese buyers for nearly $6bn (41.78bn yuan).
China’s regulators are expected to examine the potential dominance of a combined Rio Tinto-Glencore entity in the copper and iron ore markets.
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By GlobalDataRio Tinto has already been considering an asset-for-equity swap to reduce the 11% stake held by its largest shareholder, Chinalco, the state-run Aluminium Corporation of China.
Assets of interest include Rio Tinto’s Simandou iron ore mine in Guinea and the Oyu Tolgoi copper project in Mongolia.
Demand for copper assets has increased due to their significance for the green energy transition and AI technologies.
Both Rio Tinto and Glencore have been shifting focus towards copper, aligning with competitors like Australia’s BHP.
The rising importance of copper has also been noted by other industry players, with Anglo American and Teck Resources planning a $53bn merger, which will also require Chinese regulatory scrutiny.
