By Brian Swint
Two of the world's largest mining giants are considering merging in on of the biggest industry moves in years that would likely reshape the playing field for U.S. firms such as Freeport-McMoRan and Albemarle.
BHP Group, the Australian miner, approached rival Anglo American about an all-share offer, the U.K. based target said in a press release Thursday. The offer would be contingent on the company demerging two South Africa-listed units, Anglo American Platinum and Kumba Iron Ore.
The proposed merger comes as competition for vital metals used in making batteries, electronics, and electric vehicles heats up. Copper demand in particularly is being boosted by artificial intelligence, and it makes up some 30% of Anglo American's output.
It's just the latest in a string of deals in metals, mining, and commodities. Nippon Steel has recently offered to buy U.S. Steel, a move opposed by President Joe Biden. In February, Alcoa offered to buy out Australian aluminum partner Alumina Limited. Anglo American is also considering the sale of De Beers, its storied diamond unit, The Wall Street Journal reported, citing people familiar with the talks. In the 1960's it was De Beers that came up with a marketing campaign with the slogan 'A Diamond is Forever'.
Anglo American, with a market capitalization of about $35 billion, surged 14% in London trading. BHP's American depositary receipts slipped 2.3% in premarket trading. Anglo American was a Barron's stock pick in March.
BHP didn't immediately respond to a request for comment when contacted by Barron's.
A merger of BHP and Anglo American could have an impact on competitors such as Freeport-McMoRan, Albemarle or Southern Copper because it would create a huge new rival that might be able to leverage its scale in the race to secure more resources. But a merger might also mean units are spun off, so available for acquisition, to get the deal past regulators.
Anglo American said it's reviewing the proposal with its advisors and there's no certainty that any offer will be made. It will make more announcements when appropriate, it said.
Write to Brian Swint at brian.swint@barrons.com
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(END) Dow Jones Newswires
April 25, 2024 05:44 ET (09:44 GMT)
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