Shakeup in the copper market: BHP presents an “unsolicited” offer for Anglo American

Shakeup in the copper market: BHP presents an “unsolicited” offer for Anglo American
Shakeup in the copper market: BHP presents an “unsolicited” offer for Anglo American

The potential global business of the year would be mining and would be carried out by two firms that operate in Chile. This Wednesday, the board of directors of the British Anglo American confirmed that BHP, the Anglo-Australian and largest miner in the world, presented an “unsolicited, non-binding and highly conditional” merger offer, as reported by international news agencies such as Reuters and Bloomberg.

The proposal would consist of an exchange of shares and would be preceded by an operation that would allow Anglo American to spin off for its shareholders the businesses that the company develops in other minerals through Anglo American Platinum and Kumba Iron Ore.

It would be a multimillion-dollar business. The British mining company has a market capitalization of more than US$36 billion, but in the last twelve months, its shares have fallen almost 16%. In 2023, the firm reported a sharp drop in profits and has drastically adjusted its copper production forecasts.

Senior executives in the sector believe that such an operation would make sense because there is a lot of appetite for copper in the global market and that there are companies in the sector, such as BHP, that have a lot of cash. Furthermore, they point out that the fall in the British company’s stock leaves it very vulnerable and exposed to a take over or unsolicited proposals.

This Wednesday, Anglo shares closed with a rise of 4.45% on the London stock market, at £2,205 per share.

On the other hand, BHP is the largest miner globally and the first in market capitalization, with more than US$149 million. It is located at the center of global mining, and among the main world producers of minerals such as iron, copper, nickel and metallurgical coal. If it materializes, BHP could far surpass Codelco as the world’s largest copper producer, in a concentration operation.

In fact, in Chile BHP operates the largest copper deposit in the world, Escondida, in addition to Spence and Cerro Colorado.

Anglo American, for its part, operates Los Bronces, El Soldado and Collahuasi, where it has 44% ownership. In the first, Anglo is a partner with Codelco.

The joint operations of both companies in Chile accounted for 44% of production in 2023, with 2,304 thousand tons of fine copper. But Escondida contributed the largest part: 1,098,000 tons of the red metal.

Although this deposit could mean that BHP becomes the main copper producer worldwide in 2024, in the future its production is threatened by what is expected to be a drop in the grade of the mineral starting in 2027.

In this sense, the firm has been adjusting certain studies to increase production capacity, such as expanding the capacity of its concentrator, and the application of new leaching technologies. A task in which it is embarked together with its partner Rio Tinto.

 
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