Glencore Shares Slide as Rio Tinto Walks Away From Takeover Talks, Focus Shifts to Results

Glencore (LON: GLEN) shares fell on Thursday last week after Rio Tinto (LON: RIO) confirmed it no longer intends to pursue a takeover, ending weeks of speculation over a potential deal between two of the sector’s biggest players.

Rio Tinto said it “could not reach an agreement that would deliver value to its shareholders,” drawing a line under discussions and triggering a sharp market reaction.

Hargreaves Lansdown head of equity research Derren Nathan noted that Glencore’s valuation dropped as “hopes for an imminent takeover by Rio Tinto evaporated,” adding that investor focus now turns to the miner’s full-year results.

Management has been relying on progress in its copper operations to improve second-half performance and “deliver a return to cash generation,” he wrote in a reaction note.

Nathan highlighted Glencore’s ongoing cost-cutting efforts, with $1 billion of annual savings expected by year-end.

He explained that while the group remains one of the few majors still holding thermal coal assets, “write-downs of its Colombian and South African operations could be taken as a sign that management expects tough conditions are here to stay.”

As Glencore gradually winds down thermal coal, he believes steelmaking coal is set to play a larger role. “Margins are much higher than for thermal coal, and the longer-term demand picture looks much more positive,” Nathan added.

Metals such as copper and nickel, now generating more than half of industrial cash profit, remain central to Glencore’s strategy.

Nathan described copper as an area with “ambitious growth plans,” while warning that execution and financing will determine value creation.

Glencore’s marketing division continues to provide diversification, though Nathan cautioned it is “extremely complex with a lot of moving parts.”

He added that the balance sheet is strong and the 2.8% dividend yield looks “on fairly solid ground,” but warned the sector still faces headwinds from U.S. trade tensions and slowing global growth.