A major mining deal once worth about $200 billion is fading from view as Rio Tinto turns its attention to a very different growth plan.

Melbourne, August 4. The standstill on Glencore’s (GLEN.L) pursuit of Rio Tinto (RIO.L), which brought the companies closer to a deal, will end this week, but sources close to senior management do not expect merger talks to resume for now, as Simon Trott remains focused on cutting costs and selling assets.

Trott has introduced a simplification strategy: dividing Rio Tinto into three core businesses and focusing on its most profitable assets after taking over as chief executive a year ago.

However, within months of taking the role, he considered a mega-merger worth around $200 billion that could have combined Glencore’s marketing assets with Rio Tinto’s operational expertise to maximize the potential of copper.

Ultimately, Trott did not see an economic rationale for the deal, and the company walked away from the talks on February 5, triggering a six-month standstill under UK rules that ends on Tuesday.

“The company received a fairly clear message during the talks that it should not go down that path. If Simon Trott were to restart negotiations, the share price could fall from a corporate-governance perspective,”

– Michael Bell

Trott assured Australian investors that Rio Tinto had no reason to return to talks with Glencore, three sources said.

Rio Tinto declined to comment.

“The changes Rio Tinto has made in recent years in aluminium, lithium and copper are exactly what investors want to see for future growth, rather than a return to coal,”

– Michael Bell

A sharp rise in coal prices earlier this year raised Glencore’s hopes that the potential merger might be reconsidered, but investors in the market expressed differing expectations about what might happen next.

“The ball is now in Glencore’s court. Any offer would have to be significantly different from the one discussed and rejected six months ago,”

– Glyn Lawcock

Glencore declined to comment. The balance of the talks has shifted in Glencore’s favor: its shares have risen by around 33% this year, while Rio Tinto’s London-listed shares are up 18%.

“Glencore’s share-price gains undoubtedly reduce the chances of Rio returning to the negotiating table,”

– Jon Mills

It is worth noting that Trott’s top priority is to generate more than $10 billion from asset sales, with a plan to raise half that amount by the end of the year, while simultaneously expanding its trading business and seeking opportunities in copper.

According to Trott, Rio Tinto should consider partnerships and additions to its asset base, a point he made during the company’s latest results review.

Barclays analysts said the company’s strategic task was to find copper-growth options beyond 2030, but not through a direct return to the old Glencore plan.

GLENCORE COURTS AUSTRALIAN INVESTORS

Meanwhile, Glencore is focusing on demonstrating the strength of its copper assets and increasing its visibility in the Australian market. After publishing its half-year results on Wednesday, the company will hold calls with Australian institutional investors, including shareholders as well as investors who do not hold stakes.

The investor meetings follow the company’s reassessment of the impact of Australian opposition to a potential merger with Rio Tinto, including concerns over its coal portfolio, the value of its marketing business and historical corporate-governance issues.

In the UK, consolidation is viewed as a more favorable scenario: BlackRock, one of the leading shareholders in both companies, supports the creation of large-scale combinations among major mining groups.

As Glencore considers its options, one possible route could remain a Sydney listing, alongside the search for other partners.

People familiar with Glencore’s thinking said in June that a friendly approach by the Swiss company to open talks with global mining giant BHP, led by its new chief executive Brandon Craig, could not be ruled out.

BHP declined to comment. However, Craig said that BHP remained focused on growing its own assets.

“Our position is that we will not support a combination involving Glencore and either BHP or Rio,”

– Michael Bell

As for an Australian listing, some banks believe it remains on the radar. Although interest from equity-market players has yet to reach a critical level, some institutions have expressed a willingness to invest if Glencore decides to pursue a Down Under listing.