Anglo American’s Copper Pivot Could Decide Its Fate Amid BHP Interest

The speed at which Anglo American shifts towards becoming a copper-focused miner could ultimately decide its future—either continuing as an independent company or being absorbed by a larger rival, such as BHP Group. Earlier this year, BHP attempted but failed to acquire Anglo, walking away from a \$49 billion bid in May after being rebuffed three times. With a six-month restriction on another approach set to expire at the end of November, the possibility of a renewed takeover bid is again on the table.

During BHP's initial approach, Anglo American managed to convince investors that it had a solid growth strategy centered on shedding underperforming assets in platinum, diamonds, and coal to focus on copper—a metal crucial for the global energy transition. If Anglo succeeds, the increased value brought by its copper assets may be enough to fend off another takeover attempt, according to a portfolio manager at a Cape Town fund. However, the longer it takes to complete this transformation, the more likely investors might be tempted by another bid.

Investors holding shares in both companies told Reuters that while they expect BHP CEO Mike Henry to renew his pursuit of Anglo, the timing and justification of such an approach could depend on whether Anglo can grow quickly enough to stay beyond the reach of its cash-rich competitor.

Anglo CEO Duncan Wanblad is currently focused on selling off coking coal mines in Australia and nickel assets in Brazil, as well as spinning off platinum mines in South Africa. The company is also considering selling or separately listing its De Beers diamond unit. Anglo’s extensive copper assets in Latin America are particularly attractive to rivals eager for increased exposure to copper, but operational challenges persist. On Thursday, Anglo reported that its copper output had declined by 13% in the third quarter, although the company remains on track to meet its 2024 production target of between 730,000 and 790,000 tons.

Anglo American declined to comment on the situation, while BHP did not respond to requests for comment.

Anglo American's shares rose as much as 4.3% in London on Monday amid a general uptick in mining stocks. However, they have since lost much of the premium gained in the wake of BHP's approach. If Anglo's valuation lags while its restructuring continues, BHP might seize the opportunity for another takeover.

According to a source at a major investor in both companies, a restructured Anglo would create more value for BHP, which is still cautious about the risks of taking on South African assets. “If I were BHP, I would let Anglo do most of the heavy lifting—the restructuring it promised to complete by the end of 2025,” the source told Reuters.

Any potential new bid could come when Anglo completes some of its restructuring, likely by June or July next year. UBS Group analysts suggest that BHP may wait until Anglo has spun off its platinum business by mid-2025 to make the deal less complex. “We expect Anglo to re-rate as the group simplifies,” UBS analysts said. “If not, we see potential for another takeover approach.”

Christiaan Bothma, an investment analyst at Sanlam Private Wealth, which holds shares in both companies, agreed it would make sense for BHP to wait until Anglo has separated some of its assets. “The counterargument is that if BHP waits too long, Anglo’s valuation premium could become too high, or iron ore prices could fall, impacting BHP's leverage,” Bothma said.