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Mining: bidding war for Anglo? Glencore (and more) could challenge Bhp

Rumours of interest from the Swiss giant are heating up the market. But there are also other possible suitors for the group, which recently rejected a $39 billion takeover proposal

by Sissi Bellomo

3' min read

3' min read

The possibility of a bidding war for Anglo American has convinced the market. The mining group, which has rejected a $39 billion takeover proposal from Bhp, accelerated its rise in the stock market, gaining more than 3% on Friday 3 at the opening of the session on the London Stock Exchange after rumours of interest also from Glencore. The latter's stock, however, weakened by about 2 per cent.

It was the same script on Wall Street, where Anglo had jumped 6.5% on Thursday 2, shortly after rumours spread by Reuters. So far there has been no approach, according to agency sources: these are only internal discussions at Glencore, which might not even lead to an offer. After all, the Swiss giant is still busy on another front: the $6.9 billion acquisition of coal assets from Canadian Teck Resources, a deal announced in November 2023 that it expects to close no earlier than the third quarter.

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The idea that Glencore in parallel is also considering a takeover of Anglo American, however, is credible. The group has always grown by acquisition, proving to be very aggressive in pursuing expansion targets. And in this case the prey is undoubtedly of interest to it. Indeed, it is likely that the company's management has had its eye on it for a long time.

Analysts have always pointed to Glencore as a possible buyer of Anglo, a group with which it would have greater potential synergies than those identified with Bhp and which might enjoy a more benevolent gaze from the South African government.

Glencore owns coal and chrome mines in South Africa and has never expressed any intention to leave the country, while Bhp has even made the prior divestment of Amplats and Kumba Iron Ore, companies focused on platinum and iron ore respectively, a condition for the purchase of Anglo.

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Glencore, also powerful in commodities trading, moves millions of tonnes of iron ore but does not produce any, and it has often been rumoured that management is willing to fill this gap. Anglo also has interesting iron ore mines in Brazil, partly in a joint venture with Vale.

As for copper - which is at the centre of Bhp's sights - a merger between Glencore and Anglo would be much easier and more synergetic. The two groups are already partners (with 44% each) in the giant Collahuasi mine in Chile.

Glencore, however, is not the only mining giant that may have its eye on Anglo American. Canada's Barrick Gold, often cited as one of the possible suitors, denied in recent days that it was interested: the copper mines 'we are developing on our own,' CEO Mark Bristow told Reuters on 1 May.

But other groups remain in play. Analysts, in addition to Glencore, cite Rio Tinto as one of the potential candidates. The mining bigwig - second only to Bhp in terms of capitalisation - is out of coal and already owns many iron and copper mines, but has little prospect of further growth organically. It also produces diamonds, such as De Beers, a subsidiary of Anglo now in serious trouble and subject to 'overhaul'. Rio could perhaps only buy the latter.

Should Bhp - or any other bidder - win, however, it is very likely that a 'break-up' of Anglo will take place, possibly also to satisfy the conditions set by antitrust authorities, primarily the Chinese one, concerned about excessive concentration especially in copper, of which Beijing consumes half of global production and is highly dependent on imports.

Chinese companies could also come forward for 'pieces' of Anglo: analysts cite Zijin Mining and MMG in particular, which in 2013 had snapped up the Las Bambas copper mine after Beijing had forced Glencore to divest in order to get the go-ahead for the takeover of Xstrata.

Finally, an interest of the Indian giant Vedanta or the Brazilian Vale (in this case mainly for iron ore activities) is not excluded.

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