SHARES in Anglo American rose 3.45% in Johannesburg by mid-afternoon on Friday outperforming peers Glencore as well as BHP – the company connected with rekindling its interest in a buy-out of the platinum, diamonds and copper miner.
That is because a six month bar on BHP revisiting its April takeover of Anglo has now expired which the Financial Times said – citing analysts – would likely result in another takeover attempt, possibly before the year-end.
“An approach from BHP is very much still on the cards,” Marina Calero, an analyst at RBC was quoted as saying in the newspaper on Friday. “The initial approach was all about copper, and that’s still pretty much the case — Anglo American has a very attractive copper portfolio,” he added.
“The reasons why they had to buy in April are still pretty much all there . . . If anything the case for copper demand has only gotten stronger,” said George Cheveley, a portfolio manager at investment manager Ninety One. “They should still do it.”
BHP recently held a visit for investment analysts at its Escondida copper mine in Chile where the group is looking at an upgrade and possible expansion. This could cost BHP $10bn over seven years. As a result, buying 700,000 tons of annual copper production in Anglo American might be a cheaper option than organic expansion over the long term.
“The capital intensity of the copper projects is going to be higher and higher,” said Chris LaFemina at Jefferies, one of the analysts who attended a recent tour of Escondida, told the Financial Times. “I think ‘buy versus build’, still favours ‘buy’,” he added.
The issue of timing is dividing analysts. Some believe the Australian firm might wait until Anglo has completed its restructuring.
Anglo has made good progress in the last few months on its restructuring. It has sold two tranches of new shares in Anglo American Platinum (Amplats), reducing its stake to about 66.7% from about 79% previously and raising nearly R17bn for its own balance sheet. Anglo said it expected to conclude the demerger of Amplats by mid-2025.
Anglo has also sold its metallurgical coal assets in Australia, potentially for up to $4bn – more than analysts expected.
“There’s a very good chance they [BHP] will just keep their powder dry until they see how Anglo executes [its disposal programme],” said Richard Hatch, a mining analyst at Berenberg.
Shares in BHP gained 1.25% while Glencore was 0,08% stronger. Shares in Rio Tinto were 0.08% weaker in London as of mid-afternoon on Friday.
