NEW YORK (TheStreet) -- Shares of Rio Tinto (RIO) - Get Report are up 7.57% to $50.74 on very heavy trading volume, after it was reported that Glencore (GLCNF) is laying the groundwork for a potential merger with Rio in the next year that would create the world's largest mining company, worth about $160 billion, sources told Bloomberg.
As a preliminary step, Glencore contacted Aluminum Corp. of China (ACH) - Get Report , the Chinese state-backed company that is Rio Tinto's largest shareholder, to gauge its interest in a potential deal, sources added. The discussions with the company, which is known as Chinalco and controls about 9.8% of Rio, took place in recent weeks, sources said.
Rio executives are aware of Glencore CEO Ivan Glasenberg's interest in a deal, which has been made clear in informal settings, sources continued. However, no talks are underway between the two companies, no formal offer has been made, none is likely before the end of 2014, and Glencore could decide against an offer, they also said.