Mining Giant BHP Makes Takeover Offer for Anglo American

Mining giant BHP has made an all-share offer for fellow major Anglo American. If completed, the deal would be the biggest one in the mining world in years.

Anglo American described the offer as “unsolicited, non-binding and highly conditional,” according to the Financial Times, and added that there was “no certainty that any offer will be made nor as to the terms on which any such offer might be made”.

If Anglo agrees to BHP’s offer, the deal would also consolidate the global copper market in one fell swoop at a time when demand is expected to rise but supply is not growing in tune with these expectations as prices do not yet reflect the expected level of demand.

"This is all about copper. BHP becomes the global leader, knocking out Freeport," Tribeca Investment Partners portfolio manager Ben Cleary told Reuters.

 The Australian Financial Review recalled that BHP’s chief executive Mike Henry had been public about the company’s expansion plans in copper, warning last year investments in new supply were $195 billion short of what they needed to be to avoid a deficit.

Since the start of the year copper prices have gained about 15%, the Wall Street Journal notes, but they are still palpably below the records they hit in 2022 in the months after Russian troops entered the Ukraine in February.

BHP’s biggest business is in iron ore but with all the forecasts predicting a surge in the demand for copper thanks to the energy transition, it would make sense that the world’s biggest miner would look for an expansion in that segment.

Anglo American, for its part, operates some of the biggest copper mines in the world, although it recently disappointed shareholders with the news that it would reduce spending—and production—in a bid to rein in costs. The output cuts included copper, raising understandable doubts about demand projections and reality.

By Irina Slav for Oilprice.com

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