World's Largest Mining Company BHP Pursues Acquisition of Competitor... Could Control 10% of Global Copper Production

English Company Anglo American Proposes Merger
Offers 53.4 Trillion KRW to Shareholders
Market Value Above Offer and Antitrust Issues Pose Merger Challenges

The world's largest mining company, BHP, has proposed a merger and acquisition (M&A) to its competitor, the British mining company Anglo American.

Photo of Australian BHP Group. [Photo by Reuters Yonhap News]

On the 25th (local time), Australian BHP Group announced in a statement that it offered Anglo American shareholders approximately ?25.08 per share (about 43,100 KRW), totaling ?31.1 billion (about 53.4 trillion KRW) as terms for the M&A. This is about 14% higher than the previous day's closing price (based on the London Stock Exchange).

Following this news, Anglo American's stock price surged 12.7% on the London Stock Exchange that day, and the UK FTSE 100 index also hit an all-time intraday high. Anglo American stated that it had received an M&A proposal from BHP and that its board of directors is reviewing the offer with advisors.

BHP's move to acquire Anglo American is aimed at securing a larger copper production volume. In May last year, BHP also acquired Australian copper mining company Oz Minerals for $6 billion (about 8.25 trillion KRW). Anglo American owns large-scale copper mines in South America. It is reported that BHP has set a condition to divest its platinum and iron ore mines in South Africa as part of the Anglo American acquisition.

Experts predict that if this M&A is completed, BHP will account for 10% of the world's copper production. BHP produces about 1.2 million tons of copper annually, while Anglo American produces about 830,000 tons.

Photo of 'Panama Cobre,' the world's largest open-pit copper mine located in Donoso, Panama. [Photo by Yonhap News]

Copper is an essential mineral widely used in various industries such as electric vehicles, power grids, and wind turbine manufacturing, and is considered a key metal in the energy transition ecosystem. Citibank recently reported that copper demand is expected to increase by 4.2 million tons by 2030 compared to now, and predicted that copper prices will exceed $10,000 per ton by the end of this year.

However, Christopher Lafemina, a commodities analyst at Jefferies (a US investment bank), told Bloomberg that there are several challenges to this M&A. He first estimated Anglo American's market value at $42.6 billion (about 58.6 trillion KRW), which is higher than BHP's proposed amount, and expected other mining companies to enter a bidding war. He believes BHP will need to invest more money than currently proposed to acquire Anglo American.

Additionally, if the merged company's copper production share reaches 10%, BHP's influence in the copper market would become too large, and antitrust authorities in major countries are expected to block the merger. Lafemina noted that many countries worldwide consider copper a strategic mineral and said, "Antitrust issues could be a problem in this deal."

Meanwhile, BHP, nicknamed the "Big Australia," was formed in 2001 through the merger of Australia's BHP and the UK's Billiton, and is the world's largest mining company with a market capitalization of $148 billion (about 203.5 trillion KRW). BHP has shifted away from traditional energy-related businesses such as gas and coal and has focused on mineral mining industries like copper and nickel in recent years.