Copper in Sight: BHP Eyes New Move on Anglo American

The Escondida copper mine, the largest of its kind worldwide, is putting the mining giant BHP in a difficult position. Declining ore grades, harder rock, and the necessity to replace a $5 billion concentrator present challenges for the Australians. Additionally, BHP plans to invest up to $10 billion in modernizing the facility over the next seven years. Amid this transformation and the global race for copper, a key raw material for the energy transition, BHP might soon attempt another takeover of the British competitor Anglo American. Six months ago, the same attempt—valued at £39 billion—failed. BHP CEO Mike Henry has so far shown restraint in future acquisitions but emphasizes interest in additional copper assets. His interest recently led to a $2 billion investment in a copper project in Argentina. The aim: to meet the rising demand for copper, which is indispensable for power grids, wiring, and electric vehicles. The analyst discourse focuses on market developments and increasing demand, making the resumption of the bidding contest for Anglo American seem likely. Analysts and investment bankers agree that this move would be strategically wiser for BHP, given the high capital intensity of new copper projects, than expanding existing mines. Anglo American, having achieved successes with its own restructuring, could become costly in a new offer. Since BHP’s first bid, the Anglo share price has increased by 18 percent, while BHP's shares have declined. This development could complicate mergers and increase the pressure on BHP to prevent further value increases by courting Anglo American. However, competitors like Glencore could also position themselves to acquire Anglo once the restructuring is complete. For BHP CEO Henry, the successful conclusion of such a deal could crown his strategy of focusing on future-oriented minerals like copper and potash. One thing remains uncertain: whether BHP will "keep its powder dry" until Anglo completes its divestiture activities or whether the company will act early to avoid driving up the price.