Mining behemoth BHP must overcome major hurdles to salvage its faltering pursuit of rival Anglo American, analysts said on Monday as a midweek deadline over the seismic takeover bid approaches.

UK-based Anglo American has already knocked back two attempts by the Australian giant, which has until 5pm London time on Wednesday to up its offer, walk away or launch a hostile takeover at enormous risk.

Any deal between two of the world’s largest resources companies would fundamentally reshape the sector, with far-reaching consequences for commodities markets and the global energy transition.

The latest bid sits at $43 billion (R782.6bn), which would rank as one of the largest mining deals ever seen.

MineLife analyst Gavin Wendt said Anglo American’s disinterested board had kept the larger competitor at bay for now.

“Firstly, the biggest challenge for BHP so far is Anglo’s unwillingness to engage within the context of a very tight timeline,” Wendt said.

“Anglo has already rejected two non-binding proposals from BHP, based on valuation and complexity,” he said.

BHP claims to be the largest mining company in the world, with a market value of around $148bn.

Its desire to buy its long-time rival, which has a market value of about $36bn, first came to light in late April.

It is a high-stakes gambit from the company nicknamed the “Big Australian”.

If BHP ends up walking away from the negotiating table on Wednesday, UK financial laws would prevent it from tabling another offer for at least six months, Wendt said.

Difficult path

A hostile takeover, seen as the least likely outcome would preclude BHP from looking at Anglo American’s books and force it to swallow under-performing parts of the company it would rather cast off.

“At this stage the path for BHP seems difficult in terms of negotiating with Anglo’s board, which might mean it tries to generate interest directly with Anglo’s biggest shareholders,” Wendt said.

That is a pathway fraught with complicated geopolitical considerations.

Anglo American is based in London, has lucrative projects across South America, and lists South Africa’s Public Investment Corporation among its largest shareholders.

BHP’s interest is largely stoked by its hunger to secure a reliable copper supply.

Anglo American’s South American copper holdings include four of the largest copper mines in the world.

An electrical conductor used in wiring, the metal is seen as a bedrock of emerging clean-energy industries.

It is a crucial component in the manufacture of solar panels, electric vehicles and rechargeable batteries.

“They are trying to grow their copper exposure because the future demand is expected to grow in the coming years, and there are signs the global supply seems to be drying up in some places,” said Moody’s Ratings senior analyst, Saranga Ranasinghe.

Saxo Bank head of commodity strategy Ole Hansen said it was easier to buy an existing copper mine, than to dig one from scratch.

“Hence the reason why miners are more interested in growing through acquisitions and consolidation rather than through investments into new projects,” he said.

“The latest example being BHP Group’s so far futile attempt to acquire Anglo American,” he said.

BHP did not reply to a request for comment from AFP.

Anglo American said: “UK laws restrict us from commenting ahead of the deadline.”

AFP