London-listed miner Anglo American has received an all-share buyout offer from BHP Group, a deal that would create the world’s biggest copper miner churning out about 10% of global output.
The deal, if agreed, could also trigger further transactions in the global mining industry, which has experienced a slew of mergers and acquisitions as firms review their assets to raise exposure to metals deemed critical to the energy transition.
“This is all about copper,” said Ben Cleary, portfolio manager at Tribeca Investment Partners, which holds shares in BHP and Anglo.
“I think it’s a good deal for BHP. Anglo is obviously very much in play now and there’s probably room for others to interlope. This is going to set the whole sector on fire.”
If the deal is completed, it would likely be among the 10 biggest-ever mining deals by value and has the potential to delist Anglo from the London market, a fresh blow to an exchange that is struggling to retain big companies and to attract new share offerings.
The BHP proposal comes after Anglo, which had a market capitalisation of $37.7bn (£30bn) as of Wednesday’s close, began a review of its assets in February after a 94% plunge in annual profit and a series of writedowns amid falling demand for most of the metals it mines.
Anglo owns mines in countries including Chile, South Africa, Brazil and Australia.
BHP, the world’s biggest listed miner and best-known for mining iron ore, copper, coking coal, potash and nickel, had a market capitalisation of about $149bn as of Wednesday.
The deal, if agreed, would give BHP access to more copper, one of the most sought-after metals for the clean energy transition, and potash, which are its key strategic commodities, as well as more coking coal in Australia.
Technological developments such as artificial intelligence and automation, and the energy transition, which includes electric vehicles and renewable energy, have driven up demand prospects for copper cable used to conduct electricity.
Anglo has copper mines in Chile and Peru, countries in which BHP also has operations, and their combined output would amount to about 2.6m metric tonnes a year, or about 10% of global production, pushing it well ahead of US-based Freeport-McMoRan and Chilean state miner Codelco.
Copper prices on the London Metal Exchange have surged by 15% this year, approaching $10,000 a tonne and two-year highs on demand hopes prompted by encouraging macroeconomic data, bets on US interest rate cut and speculative trading.
Supply bottlenecks driven by the forced shutdown of Cobre Panama, one of the world’s largest open-pit copper mines, are also fuelling the gains.
Anglo said the offer would be conditional on being preceded by separate distribution of its entire stakes in Anglo American Platinum and Kumba Iron Ore to its shareholders, which would significantly lower its exposure to South Africa.
The deal could also trigger a wave of transactions for any other unwanted assets such as nickel, manganese and diamonds, where Anglo owns 85% of industry giant De Beers.
“There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made,” Anglo American said in a statement, adding the unsolicited proposal is non-binding and highly conditional.
The company said its board was reviewing the proposal and did not disclose the share ratio on offer. Under UK takeover rules, BHP has until 22 May to make a firm offer.
BHP declined to comment when asked about preliminary talks with Anglo, first reported by Bloomberg.