Mining Giants Reshape Portfolios Amid M&A Buzz

Anglo American has completed the demerger of Valterra Platinum, formerly Anglo American Platinum, transferring approximately 51% of its interest following strong shareholder support. Effective from 31 May 2025, the move forms part of Anglo’s broader effort to streamline its portfolio and sharpen its focus on high-growth commodities such as copper, premium iron ore, and crop nutrients.

Strategic Realignment in a Shifting Market

With demand for platinum under pressure due to the global shift toward electric vehicles, which do not use catalytic converters, the group is reducing its exposure to South African platinum group metals (PGMs). It has, however, retained a 19.9% stake in Valterra for at least 90 days post-demerger. This pivot aligns with a broader trend in the mining industry, where major players like Glencore are also restructuring to unlock value and reposition themselves for future mergers or acquisitions.

In the capital-intensive, highly competitive mining sector, companies are increasingly restructuring, consolidating assets, or divesting non-core operations to attract strategic partnerships. These efforts aim to simplify corporate structures, boost transparency, and align with the priorities of potential suitors, particularly in a market where scale, asset quality, and geopolitical risk are key drivers of deal-making.

Glencore and Rio Tinto: The Next Mega-Merger?

Against this backdrop, Glencore and Rio Tinto are rumoured to be exploring what could become the largest merger in mining history. Glencore’s copper assets are particularly attractive amid surging global demand, though Rio may be reluctant due to Glencore’s substantial coal business. Cultural differences and Rio’s traditionally cautious stance on large-scale deals could further complicate any potential merger.

According to the Australian Financial Review, Glencore recently moved over $30 billion worth of foreign assets, including coal mines in Canada, South Africa, and Colombia, as well as a copper project in Argentina, into its Australian subsidiary, Glencore Investment Pty Ltd. The restructuring, which also includes South African chrome, vanadium, and manganese operations, is seen as an effort to consolidate less-desirable assets and pave the way for simpler merger negotiations with firms hesitant about coal and South African exposure.

Despite scrapping its earlier plan to spin off the coal division, which made up 38% of earnings last year, Glencore still consolidated its global coal assets with Australian operations in a restructuring that involved $3.8 billion in cash transfers and $600 million in share issuances.

A portfolio manager from an Australian investment firm observed, “Glencore appeared to be readying for a transaction with the restructure,” adding, “None of their suitors want coal or South African assets - similar to what Anglo American has done over the past 12 months… The Glencore coal assets would trade at a much higher multiple in Australia than in London. There won’t be much reason to go to London other than the cricket if Glencore and Anglo get knocked off.”

While Rio Tinto has historically resisted major mergers, there are signs some executives may now be more receptive. Although Glencore has not clarified why it included non-coal assets in the restructuring, the move likely reflects a desire to streamline the business and prepare for a potential deal.

Investor Implications and Long-Term Outlook

As part of this, Glencore has bundled most of its South African mines, often viewed as unattractive due to infrastructure challenges and regulatory complexity, into a single entity, simplifying its copper asset base. Though Rio have generally avoided coal and South African operations, sentiment within Rio may be shifting, despite the CEO’s previous reluctance to pursue such transactions.

For investors, these corporate maneuvers hint at significant shifts across the mining landscape, especially as consolidation and M&A activity gain momentum. A merger between Glencore and Rio Tinto, if realized, could reshape the global commodities market, particularly for in-demand resources like copper. Streamlining operations and reducing complexity could unlock value, enhance transparency, and improve margins.

Still, the road to consolidation comes with risks. Execution challenges, cultural integration issues, and regulatory scrutiny remain considerable obstacles. Glencore’s asset restructuring signals a deliberate move to position itself as a more appealing partner, potentially boosting its valuation and strategic flexibility.

Possible outcomes amid mergers 

Mergers often lead to corporate actions like company formation or absorption, affecting stock ownership, valuations, and investor portfolios through share conversions or cash payouts.

Key outcomes:

• Share Ownership Changes
• New shares issued in a merged or acquiring company
• Cash payouts to target company shareholders

Valuation Impact

•  Stock price volatility
• Post-merger price adjustment

Other Actions

• Target company delisting
• Organisational restructuring

It's important to consider whether the deal materialises and to monitor key dates announced as part of the transaction, such as shareholder vote dates, regulatory approval timelines, and expected completion dates. The company would also outline how the transaction could affect investors and whether any action is required on their part.

Conclusion

Glencore’s decision to retain its coal division may help sustain cash flows in the short term, but it could deter ESG-minded investors and merger partners like Rio Tinto, which are distancing themselves from fossil fuels. Investors should remain alert to the potential devaluation or divestment of assets such as thermal coal and certain South African holdings. While the prospect of consolidation may drive share price appreciation and create deal-related upside, careful consideration must be given to the long-term strategic fit, the strength of retained assets, and how the market ultimately responds to these bold, transformative moves.