The race for clean energy could spark the biggest mining deal in decades

The race for clean energy could spark the biggest mining deal in decades

Mining giant BHP has made a nearly $40 billion bid to take over UK rival Anglo American in what would be the biggest mining deal on record.

BHP said in a statement Thursday that it valued Anglo American’s shares at £25.08 ($31.40) each, or £31.1 billion ($38.9 billion) in total. If completed, the acquisition will increase BHP’s access to copper reserves, he added.

Anglo American said on Friday that it had rejected BHP’s proposed offer because it “significantly undervalued” the company. BHP has until May 22 to make a formal offer, and Australian mining groups can still come forward with higher offers.

“There’s every chance BHP will come back to the table,” said Sophie Lund-Yates, principal equity analyst at Hargreaves Lansdown.

Copper is an important component in several renewable energy technologies, including solar panels and electric vehicles, as well as in the electrical grid. And it’s in high demand: Copper prices on the London Metals Exchange have risen more than 15% this year to nearly $10,000 a metric ton, their highest level in about two years.

“First and foremost” the acquisition proposal is about copper, William Tankard, principal base metals analyst at CRU Group, told CNN.

BHP is the world’s second largest mined copper producer, while Anglo American is the ninth largest, according to CRU Group analysis. Their combination will attract the attention of competition authorities around the world, Tankard added.
Under the terms of BHP’s rejected offer, the deal would be worth more than commodities company Glencore’s $38.3 billion acquisition of Switzerland’s Xstrata in 2012, according to Dealogic data. It would also be the largest merger or acquisition in the mining industry by value since Dealogic began collecting data in 2004.

Shares in Anglo American were down 0.5% in early trading Friday to £25.48 ($31.89), after jumping 16% the previous day on news of the BHP offer. The Australian company’s shares closed 4.6% lower Friday.

BHP has been looking to add volume in copper for a while. A year ago, the Melbourne-based company acquired Australian rival Oz Minerals to expand its access to copper and nickel.

The Oz purchase is part of BHP’s strategy to “meet growing demand for critical minerals needed for electric vehicles, wind turbines and solar panels,” company CEO Mike Henry said in a statement at the time.

Tankard at CRU Group calls copper “a future-facing commodity everywhere.” “Whether we’re talking about EVs or data centers, or general electrification… there’s a common theme, and that theme is copper.”

Bad news for London?
Anglo American is one of the largest companies listed on the London Stock Exchange and an approach by BHP may have sparked concerns about an exodus from the London market.
Wael Sawan, Shell’s CEO, told Bloomberg last month that he believed the energy giant’s London listing made the company “undervalued”, drawing comparisons with its much larger rivals Exxon Mobil and Chevron, both listed in New York.

That sparked speculation that the £186 billion ($232 billion) oil giant could ditch London for Wall Street, a switch that would deal a blow to Britain’s main stock exchange. Several companies have moved their primary listings elsewhere or chosen New York to go public in recent years.

A bid for Anglo American “will send a fresh vibe through the City of London,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, wrote in a note Thursday. “There are fears that, if the deal goes through, it could be the tip of the iceberg and more giants could leave the exchange.”

Correction: An earlier version of this article incorrectly ranked BHP among the world’s largest mine copper producers.