Chinese Smelters Concerned Over BHP’s Potential Takeover of Anglo American

Chinese Smelters Concerned Over BHP’s Potential Takeover of Anglo American

Chinese copper smelters are expressing concerns over BHP Group’s proposed acquisition of Anglo American, fearing that the merger could diminish their negotiating power in copper price discussions. BHP, already the world’s largest listed mining group, is refining an offer that could position it as the top global copper producer—ahead of industry giants like Chile’s Codelco and Freeport-McMoRan.

The merger would grant BHP control of approximately 10% of the world’s mined copper supplies, intensifying worries in China, a country heavily reliant on imported copper. According to Zhang Weixin, a metals analyst at China Futures, the deal could adversely affect Chinese companies that already hold limited copper resources.

Despite these concerns, the China Smelters Purchase Team (CSPT), a collective of leading smelters that annually negotiates copper treatment and refining charges, currently has no plans to push for a regulatory review of the transaction. This decision comes despite past precedents where Chinese regulators have intervened in significant deals affecting copper supplies, such as the 2011 requirement for Glencore to divest its interest in the Las Bambas project to secure approval for its merger with Xstrata.

China, as the largest global consumer of copper, imported over 27.54 million metric tons of the metal in 2023, illustrating its substantial dependence on external supplies. The prospect of BHP’s increased market dominance is causing unease among smelters who fear that more copper supply could be sold under index pricing, which introduces greater unpredictability regarding costs and operational planning. This is especially concerning as smelters are still grappling with the effects of recent supply shortages and historically low treatment charges.

While some industry experts like William Adams of Fastmarkets believe that consolidation could stabilize the market by addressing the high costs and risks associated with mine development, the immediate outlook for Chinese smelters appears challenging. With copper concentrate expected to be in deficit for the next few years, the potential increase in BHP’s market sway could significantly impact the dynamics of global copper trading and pricing. icon

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