A merger between BHP and Anglo American would create the world’s largest copper mining company. The company would then skim ten percent of the revenue from global copper production. The deal would be one of the largest acquisitions in the industry in years. BHP is offering Anglo-American shareholders 25.08 pounds per share, the world’s largest mining group said on Thursday. Anglo’s iron ore and platinum divisions in South Africa are to be spun off beforehand. On Thursday morning, Anglo American shares rose by a good 13 percent on the London Stock Exchange. The company had previously announced that it had received a non-binding offer from BHP, which was being examined. BHP declined to comment on previous reports of preliminary discussions with Anglo American.
“It’s all about copper”
The Anglo-American group, which owns 85 percent of De Beers’ diamond business, had a market capitalization of $37.7 billion at market close on Wednesday. The mining giant, struggling to cut costs, had announced spending cuts and falling production volumes after a 94 percent collapse in annual profits. The company is suffering from a decline in demand for most metals and has had to take a $1.6 billion impairment charge on its diamond division. Anglo has mines in Chile, South Africa, Brazil and Australia, among others. The much larger BHP group, which primarily mines iron ore, copper, nickel, potash and coal, had a market capitalization of around $149 billion on Wednesday. If the deal with Anglo American goes through, it would be BHP’s second major acquisition in a year, following its purchase of Oz Minerals in 2023.
BHP has until May 22nd to submit a binding offer. “This is all about copper,” said Ben Cleary, portfolio manager at Tribeca Investment Partners. “This is good business for BHP.” By taking over Anglo, BHP would gain access to more copper and potash. The two companies’ combined copper production would amount to 2.6 million tons per year. The price of copper on the London Metal Exchange has already risen by 15 percent this year and is just under the $10,000 mark per ton.