The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Yawen Chen

LONDON, May 26 (Reuters Breakingviews) - Rio Tinto RIO.L is discovering an awkward truth about Glencore GLEN.L: walking away can be expensive. Since merger talks between the $180 billion Australian mining giant and the $90 billion Swiss commodity trader collapsed in February, Glencore’s shares have climbed 23%, outpacing its own 16% gain. Even so, the logic for Rio's newish boss Simon Trott to have another go hasn't collapsed.

Two years ago Rio, BHP BHP.AX, Anglo American AAL.L and Glencore all traded on around 5 to 6 times their EBITDA as estimated by LSEG-compiled analysts for the next 12 months. Since Anglo tied up with Canadian peer Teck last year and dumped its coal to become a transition metal specialist, its valuation has jumped to over 8 times.

With copper accounting for only about a third of Rio's EBITDA, compared with half for higher-valued BHP, acquiring more of the red metal - seen as vital to themes from AI to the energy transition - remains key, especially as its price has risen 40% over the past year to above $13,000 a ton.

In 2025 Glencore produced 851,600 metric tons of copper, aided by assets like Chile's Collahuasi and Peru's Antamina, compared to Rio's output of 883,000 tons. It also has a pipeline of development projects, which Rio’s operational expertise and deeper pockets could help unlock. The counter argument is that Glencore's trading operations carry legal and environmental complications. And it has polluting coal, long seen as undesirable by the other miners.

Geopolitics has flipped the script. Glencore's trading arm is making huge sums amid the current market dislocations. And its coal exposure is looking less like a poison pill, as Iran-related disruptions have spurred demand. Thermal coal prices have risen roughly 15% this year, boosting the value of assets many investors had treated as stranded. Assume those operations - including some steel-making coal - will now generate $5.9 billion worth of EBITDA this year according to analyst forecasts compiled by Visible Alpha, up 70% from the year prior. Applying a 6.3 multiple, in line with peers such as Whitehaven Coal WHC.AX and Warrior Met Coal HCC.N, the coal operations alone could fetch $37 billion.

The risk is that Trott and Glencore boss Gary Nagle just renew February's fruitless haggling, where the target held out for a 40% premium. Yet given Glencore’s share price has now more than doubled in the last year, it's possible Nagle accepts something less punchy. At a 17% premium, and encompassing $11.2 billion of net debt, Glencore is worth $119 billion. Assume Glencore’s operating profit hit $11.7 billion by 2031, and $1 billion of synergies, Rio's post-tax return on investment could have still reached 8%, Breakingviews calculates - in line with RBC's estimate for Glencore’s cost of capital.

Either way, Trott has to wait until August for another try, per UK takeover rules. But even though his quarry is pricier, it has not necessarily become less appealing.

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CONTEXT NEWS

Chilean copper commission Cochilco on May 19 raised its average copper price forecast for 2026 to $5.55 per pound and said it expects prices to remain elevated in 2027 at $5.10 per pound, citing firm global demand and tight supply.

The updated outlook, published in Cochilco's first-quarter copper market trends report, points to continued support from the global energy transition, electric vehicles, new technologies and artificial intelligence, even as supply risks persist.