Morning Chronicle - Miner Anglo American rejects BHP's near $39-billion takeover bid

The snub came one day after BHP formally announced its colossal bid, which aims to create the world's biggest-listed copper producer and reshape the global mining sector.

Copper prices topped $10,000 per tonne for the first time in two years Friday, with analysts citing strong demand and tight supplies that could be stretched further by BHP's proposed bid.

The mineral is critical to the world's transition to renewable energy because it is vital for technology like electric vehicles, solar panels, wind turbines and energy storage.

BHP's takeover tilt caused Anglo stock to surge 16 percent on the London stock market on Thursday, but it dipped one percent on Friday.

- 'Unanimous' rejection -

"The board has considered the proposal with its advisers and concluded that the proposal significantly undervalues Anglo American and its future prospects," the London-listed company said in a statement.

"The proposal contemplates a structure which the Board believes is highly unattractive for Anglo American's shareholders, given the uncertainty and complexity inherent in the proposal, and significant execution risks.

"The board has therefore unanimously rejected the proposal," it added.

The group advised shareholders to take no action over the gigantic offer, which hinges on Anglo splitting off its platinum and iron ore holdings in South Africa.

BHP is keen to obtain the group's global copper assets that include operations in Chile and Peru.

"The BHP proposal is opportunistic and fails to value Anglo American's prospects, while significantly diluting the relative value upside participation of Anglo American's shareholders relative to BHP's shareholders," noted Anglo chairman Stuart Chambers.

"The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk borne almost entirely by Anglo American, its shareholders and its other stakeholders."

He added that copper represents 30 percent of total production of Anglo, which stands to benefit from "significant value appreciation" arising from strong future demand.

"Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends," Chambers said.

- Critical copper -

Chambers insisted that the group was committed to its growth strategy.

"Anglo American has defined clear strategic priorities -- of operational excellence, portfolio, and growth -- to deliver full value potential and is entirely focused on that delivery."

Both Anglo and BHP have been wrestling with the transition away from traditional money makers such as gas and coal, increasingly eyeing opportunities to mine metals and critical minerals such as copper.

Before the renewable energy transition, copper was primarily used in construction, electrical wiring and kitchen utensils.

But its exceptional conductivity and ductility -- the capacity to bend without breaking -- have made it a crucial product for the renewable energy industry.

In commodity trade on Friday, copper prices rallied beyond $10,000 per tonne for the fist time since April 2022.

The base metal hit just over $10,028, but remains some distance from the record peak of $10,845 per tonne struck in March 2022 in the wake of Russia's invasion of Ukraine.

City Index analyst Fawad Razaqzada cited a number of global factors behind copper's recent upswing, including BHP's mega-takeover attempt.

"While there is an increasing demand propelled by the green transition and infrastructure development, concerns have risen regarding supply disruptions stemming from factors such as labour strikes, regulatory alterations, and operational hurdles at mining sites," Razaqzada told AFP.

"There are some fears that BHP's bid to acquire Anglo American would further limit copper production growth, just as demand is likely to rise given that the metal is vital for the green transition."

S.Jones--MC-UK