BHP's unsolicited £31bn takeover strategy for Anglo American has shaken the mining industry, sparking speculation that the historic company is set to be sold or split up.
Anglo rejected the preliminary offer on Friday as “very unattractive”, but investors hope BHP will return with an improved deal or a rival will emerge with a competitive offer.
“I think there could be a lot of risk of intruders,” said one major mining investor. “The details of Anglo are on every CEO's desk, I can tell you that.”
Anglo, which will hold its annual shareholders meeting in London on Tuesday, is a sprawling business encompassing coveted copper mines in Peru and Chile, complex iron ore and platinum operations in South Africa and the long-established diamond company De Beers. 136 years.
Rival miners with the muscle to mount a competitive bid include Anglo-Australian mining company Rio Tinto and UK-listed Glencore. North American rivals such as Mark Bristow's Barrick Gold are also likely to be weighing their options, while a bid for all or part of Anglo American by Brazil's Vale, India's Vedanta Resources or a Chinese player such as Zijin Mining cannot be ruled out. according to analysts. saying.
Glencore: better option than BHP?
Glencore, along with London-listed rival Rio, is the most viable alternative bidder for Anglo, according to analysts and investors. Its chief executive, Gary Nagle, has probably been examining the Anglo business and the BHP proposal since the news broke last week.
The Switzerland-based trader-miner is the most naturally acquisitive of the large miners, having been created by former CEO Ivan Glasenberg, who favored purchasing existing assets rather than developing new mines. Glasenberg, who owns about 10 percent of the company, remains its largest shareholder.
Many of Anglo's mines would fit better into Glencore's portfolio than BHP's, according to analysts and market insiders. Glencore and Anglo each own 44 percent of the prized Collahuasi copper mine in Chile, meaning an acquisition would give Glencore almost complete control.
While BHP has asked Anglo to spin off South Africa's Kumba Iron Ore before any acquisition, Glencore would likely integrate it into its own operations in the country. The Swiss company has coal mines in South Africa and has long considered building an iron ore business. The company markets the metal but does not extract it. For the same reason, he would also be attracted to Anglo's Brazilian iron ore project, Minas-Rio.
“It's a better option than BHP,” said Ben Davis of investment bank Liberum, adding that Glencore “seems to have infinite bandwidth for corporate strategy compared to other people.”
Glencore is already in the midst of a $9 billion acquisition of Teck Resources' coal division.
The challenge for Glencore could be the size of the deal, Davis added. Glencore's market value is greater than Anglo's, but half that of BHP. Glencore shareholders would therefore be left with only about 60 percent of the combined entity, he said.
Rio Tinto: eager to diversify
Rio Tinto's market capitalization of $118 billion is also smaller than BHP's, but the world's second-largest miner is big enough to mount a share offer for some or all of Anglo.
The UK-listed miner relies heavily on its highly profitable iron ore operations in Western Australia and is keen to diversify. It is still expanding the Oyu Tolgoi copper mine in Mongolia, but otherwise has limited options to increase its production of the metal, demand for which is expected to rise during the energy transition.
“In Rio, the need for diversification is much clearer,” Davis said. Rio is developing the world's largest mining project in the Republic of Guinea, but that mine will only provide more iron ore.
Unlike BHP, Rio also has operations in South Africa and an existing diamond business, which could help it run Anglo's diamond unit, De Beers. Anglo and Rio also have primary listings in the UK, which could facilitate any transaction. However, Rio would not want Anglo's steelmaking coal assets, having exited the coal business in 2018.
Barrick Gold: copper at sight
Barrick Gold, which is listed on the Canadian stock exchange, could also be interested. The world's second-largest gold miner has sought to increase its access to copper under South African chief buccaneer Mark Bristow.
Bristow founded gold miner Randgold Resources in South Africa in 1995 and built it into a darling of the London Stock Exchange before merging with larger Barrick in 2018.
Returning to South Africa and the LSE to buy Anglo American would be a big coup for Bristow, said John Meyer, mining analyst at SP Angel. “It would be the resistance part for Mark Bristow’s career.”
Other possible suitors
One person who knows Anglo better than most is its former boss Mark Cutifani, who was appointed president of Vale's independent base metals division in July 2023. The Brazilian iron ore miner spun off the copper and nickel-focused unit into a new structure last year. sell a 10 percent stake to Saudi Arabia for nearly $3 billion.
At the time, Vale said the company would invest up to $30 billion in new projects over the next decade and could consider an initial public offering or merger within three years.
With Cutifani at the helm and money to spend, he is in a better position than most to target Anglo or some of its mines, but lacks the shares of his own to do an equity deal.
A Chinese state-backed miner, such as Zijin Mining, or an Indian group such as Vedanta, could also try to outbid BHP or make a bet on individual Anglo assets, Meyer said.
Vedanta founder Anil Agarwal was Anglo's largest shareholder between 2017 and 2019 through a complex structure that led to speculation he was planning a bid for the entire company.
China has huge demand for copper and iron, and controlling the producing mines is a critical priority for Beijing.
“I think it's reasonably likely that the Chinese will come in,” Meyer said. “The question is which Chinese state-owned company is in the best position to do it?”
Rio, Glencore, Barrick and Vale declined to comment. Vedanta and Zijin have been contacted for comment.
