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Shares in Glencore have leapt higher after confirming it is in talks with rival Rio Tinto over a possible merger that could create the world’s largest mining company.

Glencore’s share price surged by more than 8% on Friday morning, with investors hoping to cash in on the potential acquisition of the Switzerland-based mining firm.

Shares dipped by about 3% for its larger competitor and likely buyer Rio Tinto.

The two mining giants told investors they are in early discussions about a “possible combination of some or all of their businesses, which could include an all-share merger between Rio Tinto and Glencore”.

Any deal would likely consist of Rio Tinto acquiring Glencore, they said.

The businesses stressed there is no certainty an offer will be made, with February 5 set as the deadline for any formal bid to be put on the table under UK takeover rules.

The pair had already held discussions over a tie-up in 2024 but they failed to agree on the conditions of a deal and it never came through.

Glencore is one of the world’s biggest copper producers as well as other metals like cobalt and nickel, while Rio Tinto is a major iron ore producer and also focuses on metals and minerals including diamonds and aluminium.

A merger could create the world’s largest mining company with a combined market capitalisation of about 200 billion US dollars (£150 billion).

The mining sector has become the focus on major merger talks as firms look to expand their operations and meet evolving global demand for metals.

Last year, Anglo American agreed to merge with Canada’s Teck Resources to create one of the world’s largest copper producers, with the combined group becoming Anglo Teck.

Anglo American had previously rebuffed multiple approaches from Australia’s BHP Group, while Teck rejected a 22.5 billion US dollar (£16.8 billion) takeover bid by Glencore in 2023.