The merger of the Australian BHP and Anglo American would create the largest copper producer in the world. The metal is central to the energy transition.
The mining industry may be facing the biggest deal in over a decade. Australia’s BHP Group, the world’s largest mining company, announced on Thursday that it had made a takeover bid for British-South African rival Anglo American. The offer is worth $38.9 billion.
If the deal goes through, it would be one of the 10 largest mining deals ever completed – and the largest since Glencore acquired Xstrata in 2013.
BHP’s offer is primarily aimed at strengthening the group’s position in the copper business. Copper is of great importance for the energy transition. The value of the metal has risen by 15 percent since the beginning of the year alone. If BHP takes over its competitor Anglo American, it would become by far the largest copper producer in the world with a market share of around 10 percent.
Anglo American lurches
BHP has so far made the most money from its iron ore business; the group also mines coal, potassium carbonate and nickel, among other things. BHP has recently tried to adapt its business to the energy transition. A year ago, the Melbourne-based group acquired Australian rival Oz Minerals for $6.4 billion to bolster its copper business. In 2022, BHP sold its oil and gas business to Woodside Energy.
Anglo American is attractive to BHP because it owns some of the world’s most valuable copper mines in Peru and Chile. Anglo American – originally founded in South Africa in 1917 as a gold miner – owns, among other things, the legendary diamond company De Beers.
BHP’s takeover bid is also likely to be motivated by the fact that Anglo American is under pressure. The company sharply revised its production forecasts downwards at the end of 2023. The prices of several metals that the company mines are rather low, including nickel and platinum. Anglo American’s profits fell 94 percent in 2023 compared to the previous year, and its share value has fallen by more than a third since the beginning of 2023. Only after BHP’s takeover plans became known did Anglo American’s share price rise on Thursday.
Copper discoveries cause excitement
BHP justified its takeover plans not with Anglo American’s weakness, but with its competitor’s copper portfolio. The deal would increase BHP’s exposure to “future-focused raw materials through Anglo American’s world-class copper assets,” BHP said. Like Anglo American, BHP already owns copper mines in Chile and Peru. The combined output could be 2.6 million tons annually.
The heat and electricity conductor copper is needed for electric vehicles and wind farms, among other things. Experts assume that the value of the metal will continue to rise, also because the known deposits are only able to meet the increasing demand with difficulty. When geologists come across large new deposits, this triggers a lot of excitement. For example, when the company Kobold Metals, which uses artificial intelligence to search for “green” minerals, announced in February that it had found the largest copper reservoir in a century in Zambia.
Anglo American says it is reviewing BHP’s takeover offer. Under British takeover rules, BHP has until May 22 to make a definitive offer. If the takeover goes ahead, it could trigger a domino effect in the mining industry – with other companies attempting to secure attractive holdings of “green” minerals through mergers.