The merger wave has returned to mining. Rio Tinto (ASX:RIO) has confirmed talks to acquire Glencore in a deal that would create the world’s largest miner. Anglo American (LSE:AAL) and Teck Resources (CSE:TECK) announced their own tie-up just months ago. Should both transactions close, annual deal activity would rival the frenzied peaks of the late 2000s and early 2010s, episodes that ended badly for acquirers.
But will any of this produce more copper, lithium, or nickel?
The answer, increasingly, is no. Consolidation reshuffles existing assets between corporate owners but does nothing to close the gap between what the energy transition demands and what the industry can supply. That gap is widening, and the majors know it. What they seem less certain about is whether technology, rather than acquisitions, offers the better path forward.
The price of poor organic growth
The current merger wave reflects desperation as much as strategy. Once Rio Tinto completes Simandou and Oyu Tolgoi, and BHP (ASX:BHP) finishes Jansen, neither company has an obvious pipeline of tier-one development projects. Sustaining capital requirements are rising simply to maintain existing volumes. The uncomfortable reality is that except for copper, where new spending is desperately needed, cash flow generation and capital requirements sit in different parts of the portfolio.
M&A becomes attractive in such circumstances for defensive reasons — eat or be eaten. With little debt on balance sheets and limited organic options, acquiring producing assets offers a faster route to growth than the 15–20-year slog of greenfield development.
But history suggests caution. The boom-era deals of 2006–08 were fuelled by soaring commodity prices and abundant cash, leading acquirers to overpay dramatically. The subsequent downturn forced fire sales at depressed valuations. Shareholders in acquiring companies bore the losses both times. Current conditions (strong prices, clean balance sheets, scarce growth options) echo that earlier period uncomfortably.
The supply constraints make matters worse. Established copper operations are depleting, with ore quality declining steadily. South American mines that yielded head grades above 1% two decades ago now struggle to reach half that level. Acquiring these ageing assets means inheriting their problems.
Transaction and integration costs compound the risk, typically consuming several percentage points of deal value. Glencore (LSE:GLEN) derives a substantial share of its profits from commodity trading rather than extraction; capturing those benefits for Rio’s production would demand meaningful organisational change at both companies.
The structural problem remains: mergers redistribute existing production capacity rather than expanding it. A merged Rio-Glencore would rank as the world’s top copper producer yet would still supply under 10% of global output.
Technology as the alternative
While boardrooms focus on deal structures, a parallel transformation is underway in how minerals are found, extracted, and processed. Technology addresses precisely what M&A cannot: it creates supply rather than redistributing it.
The exploration challenge illustrates this clearly. Grassroots exploration has collapsed from half of industry budgets in the 1990s to roughly a fifth today. The easy discoveries are gone; the remaining prospective ground lies beneath hundreds of metres of transported cover that blinds traditional surface methods. Discovery costs have roughly tripled over two decades while success rates declined.
KoBold Metals, backed by Bill Gates and Jeff Bezos, announced the Mingomba copper deposit in Zambia last year, potentially the highest-grade Zambian discovery in a century. The deposit sat beneath the surface for decades while traditional exploration looked elsewhere. KoBold found it by applying machine learning to a century of geological data, identifying targets that human geologists had overlooked.
The company is not alone. Earth AI, an Australian startup, claims dramatically higher discovery success rates using predictive algorithms paired with low-cost drilling. Fleet Space Technologies has deployed satellite-connected sensors that deliver three-dimensional subsurface imaging within days rather than months.
Processing technology unlocks a different category of supply: resources that exist in known deposits but cannot be economically extracted. Direct lithium extraction has moved from laboratory to commercial deployment, achieving recovery rates that evaporation ponds cannot match from brines too dilute for conventional methods. For copper, bioleaching already accounts for roughly a fifth of global production from ores that traditional smelting cannot process.
At operating mines, automation reduces cost bases and expands what counts as mineable reserves. Fortescue (ASX:FMG) reports productivity improvements exceeding 30% from its autonomous fleet, which has hauled over a billion tonnes without a lost-time injury. Each technological advance makes marginal deposits more attractive to develop.
The investment gap
The contrast between M&A activity and technology investment is stark. Mining accounts for roughly a tenth of global economic output but receives a fraction of a percent of venture capital. After peaking above US$1.2 billion annually in 2022 and 2023, VC funding for mining technology halved in 2024 before rebounding strongly last year. Yet even at peak levels, annual investment in mining innovation barely matches what majors spend on a single mid-sized acquisition.
The imbalance reflects mining’s conservative culture. Operations are capital-intensive with long payback periods. Remote locations complicate technology deployment. The industry has historically preferred reliability over innovation.
Yet the structural supply challenge demands a different response. The energy transition requires a doubling of copper production and a manifold increase in lithium supply within decades. Discovery rates have stagnated even as exploration budgets grew. The average deposit found in recent years contains less metal than discoveries made a generation ago.
Government programs are providing some of the derisking capital that private markets have withheld. The US Department of Energy has committed hundreds of millions to critical minerals processing. Australia’s Critical Minerals Strategy and Argentina’s streamlined permitting regime are accelerating commercialisation timelines. But public funding cannot indefinitely substitute for private investment in an industry facing a multitrillion-dollar supply gap.
Two paths, one destination
The race for critical minerals is being run on two tracks. One plays out in investment bank conference rooms, where advisers sketch deal structures and integration plans. The other unfolds in pilot plants and exploration camps where startups are testing whether technology can find and extract minerals that conventional methods cannot reach.
Consolidation may provide the balance sheets needed to fund major projects. Technology, by contrast, expands what is geologically and economically possible: finding deposits beneath cover, extracting value from dilute brines, and making marginal resources viable.
Mergers reshuffle existing assets. Technology creates new ones. For an industry facing a supply gap that no amount of dealmaking can close, that distinction may prove decisive.
The views expressed in this article are those of the author and do not necessarily reflect the views of Mining.com.au, its affiliates or the companies Marina is associated with.
Subscribe to Marina Baslina at LinkedIn
Images: Dealroom, Mining.com.au
