When a big M&A deal fails, it often ends up with one side viewed as damaged goods. The stock market was quick to give its verdict on Thursday after Rio Tinto Plc and Glencore Plc abandoned talks to create the world’s largest mining company. Rio shares fell 2.5%, Glencore plunged 7%. Zoom out, though, and both companies have taken a hit. Each now faces, alone, the enormous problems they wanted to solve with a merger.
Rio Tinto, with a market value of £115 billion ($156 billion), has been left overexposed to iron ore, a market wholly dependent on China and one that faces a growing surplus and falling prices. If anyone knows about the dangers of a glut, it’s Rio, a large shareholder in a huge West Africa iron mine that’s just starting to ship its product. The miner can wave a sad farewell, for now, to Glencore’s copper assets, the prized metal at the heart of the electrification era that has driven a spate of industry mergers.