By Felix Njini
JOHANNESBURG (Reuters) – The speed at which Anglo American shifts to becoming a copper-focused miner may well dictate its ultimate fate – survival as an independent operator, or absorption by a bigger rival such as BHP Group, which earlier this year failed to buy the group.
BHP walked away from a $49 billion bid to acquire Anglo in May after it was rebuffed three times. With a six-month block on another approach set to expire at the end of November, a deal is again under scrutiny.
Anglo was able to convince investors during BHP’s approach that it had a better plan to grow value, focused on shedding underperforming platinum, diamonds and coal to focus on copper, a metal key for the energy transition.
If that succeeds, the higher value that comes with copper assets may help keep Anglo safe, one portfolio manager at a Cape Town fund manager said.
But the longer it takes to achieve a transformation, the more likely it is that investors will be tempted by another bid.
Investors with shares in both companies told Reuters that even though they expect BHP CEO Mike Henry to renew his pursuit for the London-listed miner, the timing and even the rationale for such an approach could be shaped by whether Anglo can grow beyond the grasp of cash-rich rivals.
Anglo CEO Duncan Wanblad is rushing to sell coking coal mines in Australia and nickel assets in Brazil while spinning off platinum mines in South Africa. The company is also weighing whether to sell or separately list its De Beers diamonds unit.
Anglo’s world-class copper assets in Latin America are the prize for rivals seeking increased exposure to copper.
But its copper mines are still dogged by operational issues. On Thursday, it said copper output declined 13% in the third quarter, though the company remains on course to meet this year’s output guidance of 730,000 tons to 790,000 tons.
Anglo declined to comment. BHP did not respond to emailed requests for comment.
CHOOSING THE MOMENT
Anglo’s shares rose as much as 4.3% in London on Monday amid a broad uptick in mining stocks, but have shed most of the premium they added in the wake of BHP’s approach.
If Anglo’s valuation takes time to catch up with its restructuring, it could present a golden opportunity for BHP.
According to a source at a top investor in both companies, a restructured Anglo creates more value for BHP, which is still wary of the risks associated with absorbing South African assets.
“If I was BHP, I would say let Anglo do most of the heavy lifting, the restructuring it promised it will do by end 2025,” the source told Reuters.