BHP Group’s unsuccessful 2024 pursuit of Anglo American has inadvertently catalysed a merger wave amongst rivals, leaving the world’s largest miner potentially vulnerable as copper markets surge, said Bloomberg News.
The Melbourne-based company now confronts the prospect of Rio Tinto and Glencore forming a combination that would surpass BHP as the industry’s most valuable enterprise, whilst also contending with mounting tensions over iron ore sales to China, its principal customer, the newswire said.
BHP’s aborted Anglo American bid created conditions enabling two major competitor tie-ups. Anglo subsequently agreed to merge with Canada’s Teck Resources, whilst Rio’s prospective Glencore acquisition threatens to establish an even more formidable rival. Anglo is currently valued at approximately $52bn following restructuring along lines BHP originally proposed.
Sources familiar with BHP’s position indicate the Rio-Glencore developments have caused internal concern, though they downplayed prospects of a counter-bid for Glencore. The company is monitoring developments and reviewing options with advisers.
“If Rio combines with Glencore, and you’ve already got Anglo and Teck in play, BHP risks being left behind,” Iain Pyle, senior investment director at Aberdeen, which holds stakes in both Rio and BHP, told Bloomberg News.
Any BHP move towards Glencore would face substantial complications. Both companies rank amongst the largest metallurgical coal miners, raising significant antitrust concerns. Additionally, CEO Mike Henry approaches the conclusion of his tenure, potentially complicating transformational deal negotiations.
A merged Rio-Glencore entity would likely exceed BHP in copper production scale and could overtake Chile’s Codelco as the world’s largest copper miner. BHP is valued at $158bn against Glencore’s $73bn and Rio’s $138bn, said Bloomberg News.
George Cheveley, portfolio manager at Ninety One, suggested BHP might find intervention “difficult emotionally” following its Anglo American failure.
