BHP’s unsolicited £31bn takeover strategy for Anglo American has shaken up the mining trade, frightening hypothesis that the storied firm is ripe to be bought or damaged up.
Anglo rejected the preliminary supply on Friday as “highly unattractive” however traders anticipate BHP to return with an improved deal or for a rival to emerge with a competing bid.
“I think there could be a lot of interloper risk,” stated one giant mining sector investor. “The details of Anglo are sitting on every CEOs desk, that I can assure you.”
Anglo, which is holding its annual shareholders assembly in London on Tuesday, is a sprawling enterprise spanning coveted copper mines in Peru and Chile, advanced iron ore and platinum operations in South Africa and the 136-year-old diamond firm De Beers.
Rival miners with the firepower to mount a aggressive supply embrace the Anglo-Australian mining firm Rio Tinto and UK-listed Glencore. North American rivals similar to Mark Bristow’s Barrick Gold are additionally more likely to be weighing their choices, whereas a bid for all or a part of Anglo American from Brazil’s Vale, India’s Vedanta Resources or a Chinese participant similar to Zijin Mining couldn’t be dominated out, analysts stated.
Glencore: a greater match than BHP?
Glencore, alongside its London-listed rival Rio, is essentially the most viable different bidder for Anglo, based on analysts and traders. Its chief government, Gary Nagle, has probably been scrutinising Anglo’s enterprise and BHP’s proposal since information of the strategy broke final week.
The Swiss-headquartered trader-cum-miner is essentially the most naturally acquisitive of the mining majors, having been constructed by former chief government Ivan Glasenberg, who favoured shopping for current property over creating new mines. Glasenberg, who owns about 10 per cent of the corporate, stays its largest shareholder.
Many of Anglo’s mines would match higher in Glencore’s portfolio than with BHP, based on analysts and market insiders. Glencore and Anglo personal 44 per cent every of the prized Collahuasi copper mine in Chile, that means a takeover would give Glencore close to full management.
Whereas BHP has requested Anglo to spin off South African Kumba Iron Ore previous to any takeover, Glencore would probably combine it into its personal operations within the nation. The Swiss firm has coal mines in South Africa and has lengthy toyed with constructing an iron ore enterprise. The firm trades the steel however doesn’t mine it. For the identical motive, it could even be interested in Anglo’s Brazilian iron ore mission, Minas-Rio.
“It is a better fit than BHP,” stated Ben Davis at funding financial institution Liberum, including that Glencore “seem to have endless bandwidth for corporate strategy compared to other people.”
Glencore is already in the midst of a $9bn takeover of Teck Resources’ coal division.
The problem for Glencore is perhaps the dimensions of the deal, Davis added. Glencore’s market worth is bigger than Anglo’s however half that of BHP. Glencore shareholders would due to this fact be left with solely about 60 per cent of the mixed entity, he stated.
Rio Tinto: eager to diversify
Rio Tinto’s $118bn market capitalisation can be smaller than BHP’s, however the world’s second-biggest miner is large enough to mount an all-share supply for some or all of Anglo.
The UK-listed miner is closely depending on its extremely worthwhile iron ore operations in western Australian and eager to diversify. It continues to be increasing the Oyu Tolgoi copper mine in Mongolia, however in any other case has restricted choices to extend its manufacturing of the steel, demand for which is anticipated to increase through the power transition.
“At Rio, the need for diversification is that much more clear,” stated Davis. Rio is creating the world’s greatest mining mission within the Republic of Guinea however that mine will solely present extra iron ore.
Unlike BHP, Rio additionally has operations in South Africa and an current diamonds enterprise, which might assist it to handle Anglo’s diamond unit De Beers. Anglo and Rio additionally each have major listings within the UK, which might ease any transaction. However, Rio wouldn’t need Anglo’s steelmaking coal property, having exited the coal enterprise in 2018.
Barrick Gold: copper in sight
Canadian-listed Barrick Gold may have an interest. The world’s second- greatest gold miner has sought to extend its entry to copper below buccaneering South African boss Mark Bristow.
Bristow based gold miner Randgold Resources in South Africa in 1995 and constructed it right into a darling of the London Stock Exchange earlier than merging with the bigger Barrick in 2018.
Returning to South Africa and the LSE to purchase Anglo American can be an enormous coup for Bristow, stated John Meyer, a mining analyst at SP Angel. “It would be the pièce de résistance for Mark Bristow’s career.”
Other potential suitors
One one who is aware of Anglo higher than most is its former chief Mark Cutifani, who was appointed chair of Vale’s impartial base metals division in July 2023. The Brazilian iron ore miner spun out the copper and nickel-focused unit into a brand new construction final yr, promoting a ten per cent stake to Saudi Arabia for nearly $3bn.
At the time, Vale stated the enterprise would deploy as much as $30bn on new tasks over the subsequent decade and may think about an preliminary public providing or a merger inside three years.
With Cutifani on the helm and cash to spend, it’s higher positioned than most to focus on Anglo, or a few of its mines, however lacks its personal shares to do an all- inventory deal.
A Chinese state-backed miner, similar to Zijin Mining, or an Indian group similar to Vedanta, may also search to trump BHP’s bid or make a play for particular person Anglo property, stated Meyer.
Vedanta founder Anil Agarwal was Anglo’s greatest shareholder between 2017 and 2019 by means of a posh construction that led to hypothesis he was planning a bid for the entire firm.
China has big demand for copper and iron, and controlling producing mines is a crucial precedence for Beijing.
“I think it’s reasonably likely that the Chinese will come in,” Meyer stated. “The question is which Chinese state-owned company is best placed to do it?”
Rio, Glencore, Barrick and Vale declined to remark. Vedanta and Zijin have been contacted for remark.
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