Glencore Could Start a Bidding War for Anglo American

Commodity giant Glencore has held early internal discussions about making a potential approach for mining giant Anglo American, which has just rejected an initial takeover offer from BHP, Reuters reported on Friday, quoting two sources.

Glencore, which is active in both commodity mining and trading, hasn’t approached Anglo American yet, and it may not do it as all discussions have been internal and preliminary, one of the sources told Reuters.

“We do not comment on market rumor or speculation,” a spokesperson for Glencore told Reuters.

Last week, mining giant BHP made an all-share offer for fellow major Anglo American. If completed, the deal would be the biggest one in the mining world in years.

On the day after announcing it had received an offer from BHP, Anglo American rejected the proposal, after the Board and its advisers concluded that it “significantly undervalues Anglo American and its future prospects.”

Under takeover offer rules, BHP must by not later than May 22, 2024, either announce a firm intention to make an offer for Anglo American or announce that it does not intend to make an offer.

A potential BHP-Anglo American deal would consolidate the global copper market in one fell swoop at a time when demand is expected to rise but supply is not growing in tune with these expectations as prices do not yet reflect the expected level of demand.

Since the start of the year copper prices have gained about 15%, the Wall Street Journal notes, but they are still palpably below the records they hit in 2022 in the months after Russian troops entered the Ukraine in February.

BHP’s biggest business is in iron ore but with all the forecasts predicting a surge in the demand for copper thanks to the energy transition, it would make sense that the world’s biggest miner would look for an expansion in that segment.  

By Tsvetana Paraskova for Oilprice.com

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