Investors divided on the merits of BHP’s takeover bids for Anglo-American
The scramble for critical minerals to the energy transition has been at the heart of BHP's bid to take over Anglo American but investors warn that it could become detrimental to a sustainable transition
Australian mining giant BHP, the largest mining firm in the world, has set its sights on Anglo American’s critical minerals business. The Melbourne-headquartered firm has made a series of takeover bids for the London-listed company, all of which have been rejected so far.
In a recent development, BHP placed a £34bn bid, which was swiftly rejected by Anglo American. Following this, Anglo announced plans to demerge its diamond, platinum, and coking coal business to enhance its focus on mining rare minerals crucial to the energy transition.
BHP’s bids are primarily aimed at acquiring Anglo American's extensive portfolio of metals essential for the energy transition, including copper, nickel, and rare earth elements. These materials are vital in manufacturing renewable energy technologies such as solar panels, wind turbines, and batteries for electric vehicles.
Demand for these materials is expected to surge in the coming decades as the world shifts towards greener energy solutions to combat climate change, as previously reported by Net Zero Investor.
Anglo American's assets are especially appealing to BHP due to their global distribution and the quality of the resources. For example, Anglo American’s operations in South Africa and South America boast some of the world’s largest and most productive mines for platinum group metals and copper—metals increasingly demanded for their use in various green technologies.
If BHP were to succeed in acquiring Anglo American, it could become the world’s largest copper miner. According to S&P Global, global copper consumption is projected to rise by more than 20% over the next ten years, largely driven by the energy transition. This move could benefit investors like Australian Super, BHP’s largest Australian shareholder. The AUD300bn pension giant has broadly supported the push for copper mining but has emphasised the need for capital discipline, according to Bloomberg.
However, Adam Matthews, chief responsible investment officer at the Church of England Pensions Board and chair of the Global Investor Commission on Mining 2030, warns of the potential risks of a BHP acquisition.
“The Church of England Pensions Board is concerned about the long-term risks to asset owners’ interests from any proposed takeover of Anglo American. Anglo is a globally significant diversified mining company that operates in key parts of the world, particularly in important emerging and developing markets, and strives to uphold the highest standards. Losing Anglo as a distinct entity may serve short-term financial interests, but as an asset owner, we are not convinced that such consolidation will serve our long-term interests as a pension fund,” he stresses.
Matthews, who has been at the forefront of campaigns to increase awareness of the importance of rare minerals and mining in the energy transition, argues that Anglo American has been relatively more responsive to stewardship proposals on responsible mining practices.
He also highlights the potential role Anglo could play in ensuring that the African continent benefits from the increased global demand for rare minerals.
“We need more companies like Anglo that are willing to embrace the opportunities of operating in emerging and developing markets such as Africa, not fewer. Seeing it swallowed up would risk damaging the enhanced role mining could play in key economies, especially in Africa. The sector benefits from there being a race to the top among the major mining companies, and consolidation at this level removes a key actor in pursuit of a socially and environmentally responsible mining sector.”
Mining for net zero: a green commodities crisis might be just around the corner
