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Rio Tinto Ltd (ASX:RIO) has seen its share price drop about 1% on rumours that it’s in discussion with another high-powered miner Glencore about merging their respective businesses.
The Australian Financial Review cited Bloomberg as the main originator of the news – in addition to others close to the issue – saying that ‘Rio and Glencore have recently held early-stage talks about a deal’.
The Fin acknowledged that a potential arrangement of this kind would put pressure on another mining titan, BHP Group Ltd, which leads the industry, followed by Rio.
The two companies are valued at $US126 billion and $US103 billion respectively.
It’s unclear what the deal could mean for the Australian market, but one area to watch may be short interest against Rio shares on the ASX. Currently, Rio shares are shorted in total to 7.24%, and this trend has been steadily climbing for a year.
Other factors to consider are growing interest in copper, with both companies holding impressive portfolios of the red metal, which is set to play an essential role in the green economy.
At 4.34pm AEDT, Rio shares were at $118.46 – down 0.96%.
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