CHINA could intervene in the proposed takeover of Anglo American by BHP in an effort to improve its access to copper and iron ore supply, said Bloomberg News.
The world’s second largest economy could use anti-trust concerns to buy Anglo assets, such as Rio Minas, the Brazilian iron ore mine. It did not have to block the Anglo transaction outright to do this, rather delay it which would exert sufficient leverage, the newswire said.
“China is likely to be concerned about this deal, as it heavily relies on importing copper raw materials and the transaction would create the world’s largest copper supplier,” Angela Zhang, associate professor at The University of Hong Kong and an expert on Chinese antitrust regulation told Bloomberg News.
“To address these concerns, China may impose structural remedies as conditions for approving the merger, such as requiring the divestiture of assets,” she said.
Miners like Zijin Mining, China Minmetals Corp. and others are likely to examine closely a deal that creates the world’s top copper producer, Bloomberg said. But state iron ore buyer China Mineral Resources Group may also step in.
China’s major miners have waded into mega mergers before. Aluminum Corporation of China, known as Chinalco, took a stake in Rio Tinto during BHP’s ultimately unsuccessful 2007-2008 takeover effort, said Bloomberg News.
To get the combination of Glencore and Xstrata approved a few years later, meanwhile, the trader and miner had to sell its Las Bambas project in Peru, after China’s regulator raised concerns about excessive clout in the copper market, again fretting about concentrate.
The deposit was bought by a group including China Minmetals’ MMG a year later, in 2014, for $5.9bn.
