Are mega mining deals dead after the Rio Tinto Glencore merger failed?

Last week, the Rio Tinto Glencore merger got consigned to the bin…at least for now and investors may be wondering if mega mining deals are too difficult to pull off that you might as wells say they are dead.

We’ve already written about what it means for both companies, but let’s take a look at what it means for the broader sector. Are mega M&A deals in the mining sector dead? They’re tough to pull off, but not impossible.

What are the best ASX stocks to buy right now?

This is not the first time a mega mining deal has failed…

…as little consolation as it is to shareholders who wanted the deal.

Probably the most famous Australian example is BHP and Rio Tinto. In 2007–08 BHP launched what would have been the biggest mining merger in history, aiming to combine the two Pilbara iron ore giants. It collapsed under a mix of shareholder resistance, the global financial crisis, and very loud competition concerns from regulators and steelmakers. The irony is that parts of the operational logic later re-emerged in joint ventures rather than a full merger.

BHP has had failures to do deals too such as with Anglo American in recent months and its hostile bid for PotashCorp in 2010. It was ultimately blocked after fierce political opposition from Saskatchewan and the Canadian federal government, becoming a textbook case of resource nationalism trumping corporate logic.

Another ASX-relevant near-miss was Woodside and Santos. Talks in 2021 explored creating a dominant Australian LNG champion, but valuation gaps and board-level differences killed it. Given how much consolidation has happened in global energy since, it’s often cited as a deal that might look more attractive in hindsight.

The issues

We covered this in more detail in an article last week but there are many hurdles to overcome in mega mining deals. You may name price as the first that comes to mind and this is important. No major mining deal ever went ahead when parties could not agree on a price. But there are other obstacles too…you may name regulators and this is true. Regulators of varying stripes in varying jurisdictions need to approve and this can be complicated for multinational miners like Rio Tinto and Glencore. Again, it is not the only hurdle even if it is one of the more major.

There are issues including governance (i.e. who gets the most board seats, who keeps their name or chooses a new name), cultural issues at both companies, political scrutiny, institutional inertia and accountability asymmetry.

Can mega mining deals ever work?

Sometimes mega-deals do proceed – one fairly recent example is Newcrest being swallowed up by Newmont. To be clear, we are not talking about deals where you have a successful explorer/developer bought for a few billion dollars by a company worth tens of billions of dollars. This article is about mega miners joining forces, and the Newcrest Newmont deal was a textbook example.

That deal succeeded largely because it reduced complexity instead of amplifying it. Newmont wasn’t trying to stitch together two philosophically different models; it was consolidating within a single commodity with broadly similar operating assumptions. Gold is politically sensitive, but it isn’t strategically scarce in the same way copper or iron ore are, and it doesn’t sit at the centre of energy-transition policy. That alone lowered the political temperature.

Governance was also unambiguous. This wasn’t a merger of equals in disguise. Newmont was clearly the acquirer, with an existing global platform, systems, and capital-allocation framework. Newcrest shareholders got exposure to a larger, more diversified gold major; Newcrest directors didn’t have to negotiate control, branding, or philosophy. Clear hierarchy removes a huge source of friction.

Culturally, the fit was unusually clean for mining. Both companies were engineering-led, safety-focused, and capital-disciplined, with similar approaches to reserve classification, project hurdles and balance sheet conservatism. That meant integration was about execution, not identity. No one was being asked to abandon how they fundamentally thought about risk.

Regulatory risk was fragmented but shallow. Assets were spread across multiple jurisdictions, but none of the combinations created dominant positions in a way that spooked competition authorities. There was no single market where the merged entity suddenly became unavoidable. Compare that to iron ore, copper trading, or thermal coal, where concentration ratios matter far more.

Timing helped too. The gold sector was already in a consolidation phase amidst a major upward trajectory, with investors pushing for scale, cost efficiencies and reserve replacement rather than organic megaprojects. Capital markets were receptive, and the gold price environment made the deal easier to defend without heroic assumptions.

Finally, the deal had a clear, narrow narrative: improve portfolio quality, extend reserve life, lower costs, and enhance optionality. There was no attempt to solve five strategic problems at once. That restraint matters. The more a deal tries to be transformational across commodities, geographies and business models, the more ways it can fail.

So Newcrest–Newmont didn’t succeed because mega-deals are easy; it succeeded because it avoided the traps that kill most of them. Clear control, cultural alignment, limited political sensitivity, and a simple strategic story. When those boxes are ticked, scale becomes an advantage rather than a liability.