With a record-setting deal already in the works, the global mining industry is poised for a wave of consolidation, says Morningstar DBRS Inc.
In a report published Monday, the rating agency said the mining sector is facing a potentially massive year for mergers and acquisitions (M&A), led by a possible tie-up between industry giants, Rio Tinto plc and Glencore plc — which could produce the biggest deal ever in the mining business.
“The proposed merger between Rio Tinto and Glencore would create a global mining powerhouse with an enterprise value of US$260 billion and put them significantly ahead of the BHP Group Ltd.,” it said, noting that BHP has been Rio Tinto’s main rival for the title of the industry’s largest player.
Under U.K. takeover rules, Rio Tinto now has until Feb. 5 to announce its intention to make a bid for Glencore.
If a deal is ultimately consummated, this will likely fuel further dealmaking, the report said.
“It is safe to say that the Rio Tinto and Glencore merger will provide added pressure for BHP to complete its own version of a mega merger,” it said. “We expect BHP to be aggressive on the acquisition front for the remainder of 2026.”
Additionally, the industry’s other big players — including, Southern Copper Corp., Freeport-McMoRan Inc., Vale S.A. and Chinese companies such as Zijin Mining Group Co., Ltd. and CMOC Group Ltd. — could also feel pressure to make acquisitions of their own for “fear of being left behind.”
Alongside potential mergers between equals, DBRS said the M&A pipeline may also include senior producers acquiring intermediate or junior producers to “quickly strengthen their near-term production profiles” and strategic acquisitions of high-quality, long-life development projects.
The environment for deals is also supported by the robust credit metrics of mining companies, which have been able to deleverage their businesses on the strength of record-high commodity prices since 2020, the report noted.
Mergers can also have positive credit implications by boosting the scale of companies’ operating assets, and enhancing their diversification. At the same time, this can allow companies to reduce risk by rethinking their asset portfolios and divesting non-core assets, the report said.