Glencore bid to merge rejected by Rio Tinto

UPDATED — Resources giant Rio Tinto has revealed it rejected a potential merger with Glencore in July, following a report the Swiss mining rival was in talks with major shareholder Chinalco.

Glencore bid to merge rejected by Rio Tinto
Photo: Fabrice Coffrini/AFP

The Anglo-Australian firm also confirmed there were no ongoing talks with Glencore about such a bid, which would have created the world's largest mining firm, worth an estimated US$160 billion.
"In July 2014, Glencore contacted Rio Tinto regarding a potential merger of Rio Tinto and Glencore," Rio said in a statement Tuesday.
"The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto's shareholders.
"The board's rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter."
Glencore said its suggestion had taken the form of "an informal enquiry by telephone call to Rio Tinto, seeking to gauge whether there might be any interest at Rio Tinto in investigating some form of merger between the two companies".
"Glencore confirms that it is no longer actively considering any possible merger transaction with, or offer for the shares of, Rio Tinto," the company said in a statement.
The denial came after a Bloomberg report Monday that Glencore had approached Rio shareholder Chinalco, China's largest alumina producer, about whether it would be interested in a possible deal.
Rio Tinto is the world's second largest miner and has a market capitalization of Aus$107.7 billion (US$94.4 billon), while Swiss commodities trader Glencore became the world's fourth-biggest commodities company after merging with resources giant Xstrata in May 2013.
Analysts have said a Glencore takeover of Rio would give it presence in the iron ore market, one commodity that it does not have sizeable operations in.
Rio Tinto shares jumped on the revelation, ending 0.78 percent up in London trade at 3,020.5 pence after soaring 5.71 percent earlier.
Rio chairman Jan du Plessis said his firm had made "significant progress in refocusing and strengthening its business" under chief executive Sam Walsh and chief financial officer Chris Lynch.
"The board believes that the continued successful execution of Rio Tinto's strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders," he said.
Glencore reported a net profit of US$1.72 billion during the first half of 2014, while Rio — supported by surging iron ore shipments — recorded a net profit of US$4.4 billion in the six months to June 30th.

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At least 19 illegal miners killed at subsidiary of Swiss-based Glencore

At least 19 illegal miners were killed on Thursday after part of a copper mine collapsed in southeastern DR Congo, Swiss-based mining giant Glencore said.

At least 19 illegal miners killed at subsidiary of Swiss-based Glencore
Photo: AFP

The incident happened when two galleries caved in at a mine in the Kolwezi area operated by Kamoto Copper Company (KCC), a subsidiary of Glencore.

“Tragically there were 19 fatalities today, with possible further unconfirmed fatalities,” Glencore said in a statement, which said there had been recurrent problems with illicit mining on its concessions.

Other reports suggest the death toll could be higher. 

The Congolese site Actualite.CD reported at least 36 deaths.

“The illegal artisanal miners were working two galleries in benches overlooking the extraction area. Two of these galleries caved in,” the company said.

Glencore said KCC had observed a “growing presence” of illegal miners, with on average 2,000 people a day intruding on its operating sites.

“KCC urges all illegal miners to cease from putting their lives at risk by trespassing on a major industrial site,” Glencore said.

Illegal mining is common and frequently deadly in Democratic Republic of Congo, where safety is often poor and risk-taking high.

Figures indicating the scale of the problem are sketchy, given that many mines are illegal and remote.