Glencore operates 15 coal mines in NSW and Queensland, making it the biggest Australian coal producer. It supplies coal-fired power stations and the global steel-making industry. It also mines copper, lead, zinc, nickel and cobalt.
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Rio Tinto divested its last coal mines seven years ago, making it the biggest diversified miner to be rid of fossil fuels entirely. It has a target to halve its direct carbon footprint by 2030 and to reach “net zero” emissions, removing as much carbon dioxide from the atmosphere as it emits, by 2050.
Other miners including Australian mining giant BHP have also been divesting or announcing closures of their coal assets, while a growing number of lenders, insurers and shareholders have pledged not to make new investments in the sector, citing questions about future demand and concerns over global warming.
Analysts at CreditSights also questioned whether Rio Tinto and Glencore were a suitable match. Rio Tinto was seen as conservative with a focus on stability, they said, while Glencore was known for a more aggressive approach and for “pushing the envelope” in its operations.
“Never say never, but the potential mega-merger raises questions about strategic alignment and corporate culture,” the analysts said.
Rio Tinto’s lack of interest in coal following divestments suggested any merger would need “careful structuring to avoid unwanted asset overlaps”, they said.
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