BHP launches £31bn bid for Anglo American: Audacious swoop threatens 'to set whole mining sector on fire'

Mining giant BHP was last night told it will need to raise its bid for Anglo American after launching an ‘opportunistic’ £31billion swoop on its Footsie rival.

The offer, which analysts said could set the whole mining sector ‘on fire’, is the second for a FTSE 100 company this year and fuelled fears over the health of the stock market amid a wave of takeover activity.

BHP, which quit London for Sydney in 2021, is hoping the mega-merger will boost its copper production.

But analysts believe it will have to significantly improve the offer. And investors branded the offer ‘opportunistic’ due to Anglo’s ‘depressed’ valuation.

The move also met with opposition in South Africa where a political backlash threatens to derail any deal.

Offer: Mining giant BHP has been told it would need to raise its bid for the Footsie rival Anglo American

Minerals resources minister Gwede Mantashe said he was against the takeover, branding his country’s experience of BHP ‘not positive’.

Anglo’s biggest shareholder is South Africa’s state-backed Public Investment Corporation – giving Johannesburg a major say in the proceedings.

Anglo shares rocketed up 16.1 per cent, or 355p, to 2560p.

The swoop is just the latest bid for a London-listed firm – amid warnings that the stock market is in crisis.

Fellow FTSE 100 company DS Smith has agreed a takeover by a US rival and there are offers on the table for firms from Virgin Money to Royal Mail owner International Distributions Services.

The approach also raises questions over which firm will be next amid concerns London-listed stocks are undervalued.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the bid would ‘send a fresh chill through the City’.

Anglo is best known for its diamond brand De Beers and as the owner of the Woodsmith mine in North Yorkshire.

Australia’s BHP, the world’s largest listed miner – and valued at nearly £120billion – has its sights on Anglo’s copper production.

The metal is used in everything from cars and power grids to building construction, and prices have soared 15 per cent this year on expectations it will be crucial for the energy transition.

Anglo’s shares are down 12 per cent in the last 12 months and during the tenure of boss Duncan Wanblad who took the top job in April, 2022, its shares have tumbled 46 per cent. Other miners could swoop in with a rival bid.

A tie-up between the two would create the world’s largest copper miner, with around 10 per cent of global production.

‘The energy transition is only just getting started, and if electricity is the lifeblood of this revolution, copper is the veins and arteries,’ said Peter Arkell, chairman of the Global Mining Association of China.

Ben Cleary, portfolio manager at Tribeca Investment Partners, which holds shares in BHP and Anglo, said: ‘Anglo is obviously very much in play now and there’s probably room for others to interlope. This is going to set the whole sector on fire.’

Under the proposal, Anglo American would have to spin off its platinum arm and Kumba Iron Ore business.

But Nick Stansbury, head of climate solutions at Legal & General Investment Management, Anglo’s 11th-largest shareholder, told the Financial Times that BHP had made a ‘highly opportunistic approach’.

Anglo’s board said it is reviewing the proposal, and BHP has until May 22 to make a firm offer.

Future of De Beers in doubt 

BHP will sell Anglo American’s diamond business De Beers if a takeover goes ahead.

The Australian mining giant is primarily interested in the London-listed firm’s copper production – meaning it would offload De Beers, the company famous for coining the phrase ‘A diamond is forever’.

De Beers has been hit by a slump in demand as the popularity of lab-grown gems soars.

A deal with BHP would also put the future of Anglo’s Woodsmith mine in North Yorkshire in doubt. Anglo bought the Woodsmith mine from Sirius Minerals in 2020 for £405million.

The former Sirius team struggled to raise enough money to fund the project, which involves building two-mile-deep shafts and constructing a tunnel that would be longer than the Channel Tunnel to take fertiliser from the main site near Whitby to Teesside for processing.

Anglo dates back to 1917. Founded in South Africa, it turned into one of the largest mining firms in the world with annual revenues of £25billion, and is perhaps best known as the majority owner of De Beers.