By Peter Ker
BHP has conceded defeat in the takeover tussle for Anglo American, ruling out a fresh bid to challenge Anglo’s proposed merger with fellow copper miner Teck Resources.
BHP, the world’s largest mining company, confirmed there were preliminary discussions about reigniting last year’s formal $75 billion takeover bid, but said they would go no further.
“BHP confirms that it is no longer considering a combination of the two companies,” said BHP in a statement issued on Monday.
Under British takeover laws, BHP’s statement legally prevents it mounting an offer for Anglo for six months, unless a rival bid emerges.
“While BHP continues to believe that a combination with Anglo American would have had strong strategic merits and created significant value for all stakeholders, BHP is confident in the highly compelling potential of its own organic growth strategy,” said BHP.
Anglo shareholders are due to vote on December 9 on whether to accept a nil premium merger with Canadian miner Teck Resources, under a deal that is focused on the two companies’ copper mines in Chile.
The mining industry has been on edge ahead of the December 9 vote, in case a rival bid emerges for either Teck or Anglo from bigger suitors keen to acquire more copper mines.
BHP has long had an interest in Anglo since last year’s takeover bid, but Glencore is also watching events closely given it is a joint-venture partner in some Anglo copper mines and tried to acquire Teck in 2023.
Rio Tinto has fewer natural overlaps with Teck and Anglo, but cannot be ruled out.
Copper is a malleable metal that conducts heat and electricity. It is used in myriad household appliances, from air conditioners to cars, and demand is expected to remain strong in coming decades with the shift towards electric vehicles and renewable energy.
The merger of Anglo and Teck is designed to extract copper synergies, particularly between Chile’s Collahuasi mine, which is 44 per cent owned by Anglo, and the nearby Quebrada Blanca mine, which is 60 per cent owned by Teck.
Quebrada Blanca has a surfeit of mineral processing infrastructure, while Collahuasi has plenty of mineral resources but less spare processing capacity.
A combination of the two mines would ensure expensive spending on infrastructure at Collahuasi was avoided by sending its high-grade copper ore to Quebrada Blanca for processing, and by enabling other efficiencies such as the sharing of water, power and shipping infrastructure.
Glencore is also a 44 per cent owner of Collahuasi and has been entrenched in three-way talks for years over how best to combine the mine with Quebrada Blanca.
The fact Teck and Anglo had formalised their nil-premium merger plans to the point of holding a shareholder vote put BHP in a weaker position to make a takeover bid for Anglo than it had been in early 2024, when it offered almost $75 billion of its own scrip to Anglo shareholders.
Under the terms of preliminary merger contracts signed between Teck and Anglo, Teck would have had the right to match any unsolicited bid made for Anglo.
Anglo American would also need to pay Teck a $US330 million ($510 million) break fee should it have abandoned the merger plans for a superior offer.
That cost would ultimately have been borne by BHP, should it have acquired Anglo.
Wilson Asset Management portfolio manager Matt Haupt said BHP would have struggled to make an Anglo takeover “meaningfully accretive” to shareholders in the short term.
Haupt said BHP may be better served by focusing on smaller deals.
“With a thinner short-term project pipeline than peers, you could argue the focus should have been on more bolt-on growth opportunities rather than a mega-merger,” he said.
Anglo owns four coal mines in Queensland and plans to resume a sale process for them in early 2026 while it implements the planned merger with Teck.
Teck sold its coal mines to Glencore in 2023.
BHP shares closed 4¢ lower at $40.33 on the ASX on Monday.
Licensed by Copyright Agency. You must not copy this work without permission.
