Rio Tinto rejected Glencore approach in August, company reveals

British-Australian diversified resources group Rio Tinto has revealed that it had turned down the advances of Glencore after an approach from the mining and commodities giant in the summer.

The deal would have created the biggest mining company in the world with a market value estimated to be $160bn, surpassing that of BHP Billiton ($154bn).

Glencore, which had already consumed sector peer Xstrata last year, had contacted Rio Tinto about a "possible combination" in July.

Glencore's chief executive Ivan Glasenberg is said to be wanting to tap into Rio Tinto's low-cost, high-quality iron ore operations to run alongside his already strong copper, nickel, zinc and coal portfolio.

However, Rio Tinto said in a statement on Tuesday to the Australian stock exchange that the board had decided unanimously that a combination "was not in the best interests" of its shareholders.

The company said that there has been no further contact between the two parties since the rejection in early August.

"The board believes that the continued successful execution of Rio Tinto's strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders," said chairman Jan du Plessis.

"Rio Tinto's shareholders stand to benefit from the very considerable value that this will generate."

Rio Tinto was responding to press speculation after Bloomberg earlier said that Glencore was in talks with Rio Tinto's biggest shareholder, Chinalco, to gauge its interest in a potential deal.

Bloomberg's sources said that the talks with Chinese state-owned Chinalco had taken place in recent weeks.

Leak may scupper deal, broker says

Ironically, the leak may suffice so that no deal finally goes through, in so far as it may put a floor under Rio’s share price, analysts at Liberum explained to clients in a research note.

The analysts further point out that the only way that Rio’s board would recommend a transaction, on terms sufficiently agreeable to Glencore, would be if the price of iron ore cratered below $70 per tonne, and the outlook for Glencore’s own markets improved. 2015 looked likely to provide the best opportunity for such a move, the broker added.

Rio's shares were up 5.7% at 3,167.5p in morning trade in London.