Glencore is planning a takeover bid for Anglo American that would spark a bidding war with rival BHP.
Top brass at the mining giant are weighing up a strategy for Anglo after the London-listed miner rejected BHP’s £31bn offer last week.
A bid would start a bidding war for the 107-year-old mining company, and BHP is also working on a better deal.
BHP boss Mike Henry arrived in South Africa yesterday to sweet talk officials amid fears that opposition in the country could derail a takeover.
Anglo was founded in Johannesburg in 1917 and has close links with the country.
Bidding war?: Glencore holding preliminary internal discussions about making a bid for Anglo
The South African government is the mining company’s second largest shareholder. The company has become an acquisition target at a politically charged time, when the country goes to the polls this month.
Glencore is holding preliminary internal talks about making a bid for Anglo, Reuters reported.
The company has not yet contacted Anglo and the talks may not lead to a bid, but a Glencore spokesperson declined to comment on “rumours or market speculation”.
Bidders are eyeing Anglo’s copper mines in Peru and Chile amid a rush to cash in on growing demand for the metal.
Copper is used in everything from cars to power grids and construction, as well as in the development of clean energy and artificial intelligence. Analysts expect a shortage of copper this year as demand grows, as it is crucial to the energy transition.
Russ Mould, chief investment officer at brokerage AJ Bell, said: “The big prize is picking up a ready-made portfolio of copper assets, a much easier way to scale up in a key metal for the energy transition than having to drill thousands of holes.” in exploration projects to find new supplies.’
Anglo and Glencore each own 44 percent of the Collahuasi mine in Chile, which is estimated to have some of the largest copper reserves in the world. At the same time, Anglo’s extensive portfolio includes platinum, iron ore, steelmaking coal, diamonds and a fertilizer project.
BHP would sell Anglo’s diamond unit De Beers, insiders said, while the future of its Woodsmith mine in North Yorkshire is in doubt. And under the proposal, Anglo would have to sell its shares in its platinum and iron ore businesses in South Africa, a country that BHP, the world’s largest listed company, exited in 2015.
The company was forced to issue a statement on Thursday saying its plans to divest two of Anglo’s South African businesses “did not reflect a view on [the country] as an investment destination.”
A deal with Glencore could face less opposition at home, analysts said.