ANALYSTS yesterday said that BHP was mainly interested in Anglo American’s copper producing assets after it tabled a $38.9 billion (R741bn) acquisition offer for the London and Johannesburg-listed mining group.
This, as the proposed bid conditionally excludes Kumba Iron Ore and Anglo American Platinum (Amplats).
Anglo American raised its copper production for the quarter to the end of March 2024 by 11% to 198 000 tons, a profile that could have attracted BHP in its quest to benefit from the global race to green transition.
In its proposed takeover bid, BHP is also clearly leaving out Anglo American Platinum, which mines platinum group metals (PGMs), mainly used in combustion engines, as well as Kumba Iron Ore.
Anchor Capital investment analyst Seleho Tsatsi told Business Report yesterday: “We believe BHP is interested in Anglo American, principally for its copper business.
“BHP acquired Oz Minerals last year for $5.9bn, so it clearly wants to grow its copper business.”
Tsatsi added that “demand for copper is forecast to grow strongly over the next 10 to 20” years although “supply does not appear to be growing” at similar rates, given the world’s impending transition to a greener economy.
“We have seen several mining companies look to acquire copper assets over the last few years,” said Tsatsi.
For one, Glencore had shown interest in Teck Resources’ sizeable copper business while South32 made a bid to acquire the Khoemacau copper project in Botswana from Cupric Canyon Capital.
Last year, BHP acquired Oz Minerals while Exxaro has previously stated that copper was one of the commodities it was looking to pursue.
This means that copper mergers and acquisitions are a prevalent theme in the industry, while it will be interesting to see whether other firms are interested in Anglo American.
Other market watchers said BHP had to raise the premium it was paying for Anglo American to stave off rival offers.
Market analyst Dave Hazelwood said PGMs would have helped BHP to “diversify its assets base” as it “already has tons of iron ore” assets.
However, it is the copper assets of Anglo American that analysts and market watchers said were more appealing for BHP.
Anglo American this week said higher output for the 2024 first quarter period reflected higher throughput at Quellaveco in Peru, despite the impact of planned lower grades, as well as the benefit of higher grades and throughput from Collahuasi and El Soldado in Chile.
With a production profile of about 750 000 metric tons of copper a year, BHP would be keen to add this up to its 1.8 million tons or so of the commodity it mines per year.
BHP CEO Mike Henry yesterday made a bigger play for what he terms “future fencing” commodities, explaining the bold move for Anglo American.
“BHP clearly wants the copper assets – it's not long after buying Oz Minerals,” Henry said.
Neil Wilson, chief market analyst for Finalto, said: “Clearly, competition authorities would take note due to the position in copper a combined company would have.”
BHP has until May 22 to either announce a firm intention to make an offer or announce that it does not intend to make an offer.
BUSINESS REPORT