The market is alive with chatter about a mega-merger in the mining space after the revelation of a failed coupling between Rio Tinto (RIO) and Glencore (GLEN).       

That’s understandable for several reasons, but recent history shows flirtations between corporate giants often go unconsummated.

Having covered the oil and gas sector for nearly 20 years, I have seen the topic of a combination between BP (BP.) and Shell (SHEL) come up from time to time but it has never moved beyond the realms of dealmaking fantasy.

Making transactions on this scale happen is fraught with complication, not least due to the financing involved.

The mining industry faces a difficult transition as it looks to switch from largely serving a growing and commodity-hungry Chinese economy to providing the metals required to deliver the transition to renewable energies and electric vehicles.

There can be strength in scale, but consolidation does not offer all the answers and the different sensitivities involved in serving these new markets means miners are having to clean up their act.

Would a business like Rio Tinto (RIO), which has been on an ESG journey under current chief executive Jacob Stausholm, really want to undo that by joining forces with Glencore, which has a more pragmatic approach as shown by its decision to retain its coal assets last year on the basis they were continuing to make money?

Giant transactions have a patchy track record, at best, when it comes to creating value. Perhaps a better model for miners to follow is Shell’s takeover of a still large but second-tier name BG in 2016, which continues to benefit the acquirer through a leading position in LNG (liquefied natural gas).

Presumably BHP (BHP) was looking to follow a similar path to Shell with its failed attempt to capture Anglo American (AAL) in 2024, a move predicated on the latter’s strong footprint in copper, a metal which is seen as central to the energy transition.

A subsequent surge in Anglo American’s share price as it mounted a successful defence makes any potential takeover more expensive today.

The wildcard we talked about during our usual preview of the year ahead at the end of 2024 has now been played as Donald Trump enters the White House – Ian Conway covers the initial market response this week.

On tariffs, it still feels we are in the dark on exactly how the new administration will proceed and this, as much as anything else, will dictate how investors react to the Trump presidency.

Elsewhere in the magazine, Steven Frazer takes a detailed look at the quantum computing space and what could be in store for investors after the recent hype and, with most of the big names having reported, James Crux delivers his scorecard on the sector’s Christmas performance.

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