Copper lure drives Rio Tinto into R3.4trln merger talks with Glencore

Shares in Glencore surge 10% on the Johannesburg Stock Exchange, closing at over R100-per-share

- TAWANDA KAROMBO

GLENCORE'S strong exposure to copper appears to be a key driver behind Rio Tinto's renewed acquisition interest in the global resources group, which has operations in South Africa and saw its shares surge 10% on the JSE on Friday.

The two mining giants have confirmed that discussions are under way on a potential merger that could create a mining behemoth with a market value of more than $200 billion (around R3.42 trillion).

Any combination would significantly expand exposure to copper, a metal increasingly in demand due to the rapid growth of renewable energy, electric vehicles and artificial intelligence.

"Rio is most likely attracted by Glencore's copper exposure," Roy Topol, portfolio manager at Cratos Asset Management told Business Report in an interview on Friday.

"Rio remains very iron-ore heavy - around 80% of their profits are from iron ore - while Glencore has none, so a merger would materially diversify the commodity mix and result in the largest mining company in the world."

The two companies have confirmed that they are pursuing a "possible combination of some or all of their businesses, which could include an all-share" merge.