AngloAmerican turns down $39Billion: It’s NOT about the Diamonds
Gary Roskin –
RoskinGemNewsReport –
AngloAmerican is a mining company. It owns 85% of De Beers (15% owned by the government of Botswana), mining diamonds in Botswana, Canada, Namibia and South Africa.
AngloAmerican also mines copper, nickel, platinum group metals iron iron ore, steelmaking coal, manganese and polyhalite.
In other words, they are not just about diamonds.
The Buyout!
The latest news is that BHP (Broken Hill Proprietary and Billiton) is trying to buy (“takeover”) AngloAmerican. But wait – there’s more… There are several Chinese mining companies all looking for an opening. (read MiningWeekly below)
Too many stories have popped up this week trying to explain the complications of the BHP offer, as well how this may create chaos (more than we’re in right now) in the diamond business. It is mind boggling!
To top it all off, there’s the Russian diamond company ALROSA that has been forced to sell off its mines in Angola. (see Intellinews below)
You could blame all of this takeover talk on Created Diamonds if you want, but it looks like the price of metals is what’s driving this train. And the jewelry industry may just be in the caboose!
Read the Economist, May 2nd (subscription):
Why does BHP want Anglo American?
Its $39bn takeover offer is the latest in a string of mining mega-mergers
Talk of takeover has long swirled around 107-year-old Anglo American, once among the biggest mining companies in the world. On April 25th speculation turned to specifics when bhp, the $140bn behemoth that is today top of the pile by market value, offered to buy its diminished rival (minus Anglo’s South African business) for $39bn. It then emerged that Elliott Management, an activist hedge-fund known for picking apart lumbering giants to unearth buried value, had amassed $1bn-worth of Anglo shares, giving it a 2.5% stake. In the following days it raised this slightly, perhaps counting on other suitors to come in and bid up the price.
This clash of big dirt and high finance suggests that Anglo harbours something worth fighting over. Its big mines indeed tick all the right boxes: high quality and low cost, with the potential to expand. They are also extracting the right stuff at the right time. One of Anglo’s main products is copper, which is in high demand, particularly as tonnes of it will be needed for the electrification of transport and power in the green-energy transition; the red metal’s price has risen by 15% this year. Another is high-grade iron ore, which is in demand for its use in forging green steel.
Read the Economist, May 2nd (subscription)
Anglo American copper assets worth $35 billion — report
BHP’s (ASX, LON, NYSE: BHP) bold move last week to approach Anglo American (LON: AAL) with an unsolicited, $39 billion takeover offer, has a main objective of grabbing the target company’s copper assets.
As copper is a metal key to the green energy transition, analysts estimate that the coveted operations, which have carried the weight of Anglo American’s balance sheet in recent years, are worth at least $35 billion. The figure, only $4 billion lower than BHP’s offer for the whole company, factors in the year-to-date rally in copper equities and a 30% control premium, experts from financial research firm CreditSights said on Wednesday.
With only four copper mines, Anglo American has an established presence in the world’s top copper producing countries, Chile and Peru…
Read in MiningWeekly.com, May 2nd:
Chinese miners see opportunities as BHP’s mega bid unfolds
China’s leading metals companies, including its state iron ore buyer, are considering their next moves following BHP Group’s blockbuster $39-billion approach for rival Anglo American, potentially the largest mining deal in over a decade.
The world’s top consumer of commodities including copper and iron-ore, China and its regulators play a key role in any global resources combination. In the aftermath of last week’s proposal, its mining companies are still trying to understand the exact configuration of a deal that is still in flux.
That includes the impact on tight supply of copper concentrate for the country’s smelters. An enlarged BHP could affect concentrate pricing, given the world’s largest miner uses an index provided by third parties and not an annual benchmark established through negotiation between leading miners and Chinese smelters.
People working in and with Chinese metal companies said the scale of this new entity — should an offer reach the finish line, after Anglo’s swift initial rejection — would almost certainly mean asset sales, forced by regulators or initiated by the company, a potential opening for Beijing and its key miners.
The people, who could not be identified as the discussions are private, said access to additional secure supply could help China’s bargaining power at a time of fraying diplomatic ties with the West. It could also help efforts to safeguard a vast domestic processing and manufacturing industry, they said.
Miners like Zijin Mining, China Minmetals and others are likely to examine closely a deal that creates the world’s top copper producer, the people said. But state iron ore buyer China Mineral Resources Group may also step in. Set up in 2022, it has struggled to achieve its official aim of increasing China’s clout in the iron-ore market, even with financial and domestic political support.
Read in MiningWeekly.com, May 2nd
BHP seeks to sway South Africa in pursuit of Anglo American takeover
BHP (NYSE:BHP) has sent a senior executive team led by CEO Mike Henry to South Africa, as the miner raises attempts to win over government officials, regulators and local shareholders for its existing $39B takeover offer for Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY), Bloomberg reported Thursday.
BHP’s (BHP) team aims to engage with South Africa President Ramaphosa’s administration among other key stakeholders, according to the report, laying out the exact detail of the planned deal, plus the benefits of returning control of Anglo American Platinum (OTCPK:ANGPY) (OTCPK:AGPPF) and Kumba Iron Ore to South Africa.
News that BHP (BHP) wants Anglo (OTCQX:AAUKF) (OTCQX:NGLOY) without Amplats (OTCPK:ANGPY) (OTCPK:AGPPF) and Kumba comes as South Africa is set to hold a national election later this month, and the opposition party already has presented BHP’s bid as a stinging rebuke of the government’s handling of the ailing economy.
South Africa officials are concerned that Anglo’s (OTCQX:AAUKF) (OTCQX:NGLOY) potential exit could trigger capital outflows and further harm the country’s reputation as a destination for mining investment.
BHP’s Anglo buyout makes business sense if the price is right
LAUNCESTON, Australia, April 29 (Reuters) – BHP Group’s proposed takeover of rival miner Anglo American is one of those rare instances where a mega-merger actually makes strong business sense, but it will be difficult to pull off to the satisfaction of all parties.
BHP (BHP.AX), opens new tab, the world’s largest mining company, offered $39 billion last week to buy Anglo (AAL.L), opens new tab, a move the London-listed miner that grew out of South Africa rejected as “significantly” undervalued.
The expectation now is that BHP may boost its offer, or other buyers for Anglo, or parts of its diversified portfolio, may emerge.
Much of the media attention has focused on Anglo’s copper assets as the lure for BHP, with a combined company becoming the world’s largest producer of the industrial metal with a share of around 10%.
In effect, BHP’s bid is largely seen as a massive vote of confidence in the future of copper, which is essential to the energy transition given its properties as a conductor and its resistance to corrosion.
Read in IDMA’s WINC, May 2nd (from MiningMx.com):
Anglo rejects BHP’s takeover bid as being too low and too complex
Anglo chairman Stuart Chambers commented, “the BHP proposal is opportunistic and fails to value Anglo American’s prospects while significantly diluting the relative upside participation of Anglo American’s shareholders relative to BHP’s shareholders. “The proposed structure is also highly unattractive, creating substantial uncertainty and execution risks borne almost entirely by Anglo American, its shareholders and other stakeholders.”
Read in IDMA’s WINC, May 2nd (from MiningMx.com)
Read in IDMA’s WINC, May 2nd (from Intellinews.com):
ALROSA must sell stake in Angola’s Catoca, Russian deputy FM says
Russian uncut diamond major Alrosa will have to sell its stake in Angola’s Catoca diamond mining company owing to the latter’s concerns about the prospects for collaborating with the sanctioned company, Interfax reports. “The Angolans believe that the presence of Alrosa as a key shareholder is preventing them from developing their business,” Russian Deputy Finance Minister Alexei Moiseyev is quoted as telling reporters on April 26.
Read in IDMA’s WINC, May 2nd (from Intellinews.com)
Does Anyone Want to Buy De Beers?
For sale: Diamond miner with unprecedented political challenges operating in the toughest market for years.
MAY 2, 2024 | JOSHUA FREEDMAN
In December 2015, Anglo American’s leaders informed investors of a restructuring: The mining giant would be cutting 85,000 jobs, selling some of its noncore assets, and streamlining the business into three divisions, one of which was De Beers. This put a temporary stop to speculation that Anglo could sell its famed subsidiary at the end of a challenging year for commodities, including for diamonds.
This time around, Anglo appears to be putting more serious efforts into a De Beers deal. The mining conglomerate has held conversations with potential buyers for the diamond unit in recent weeks, “including luxury houses and Gulf sovereign-wealth funds,” The Wall Street Journal said, citing unnamed sources.
The situation touches on key questions many in the industry have had in the past year: Was the 2023 slump in the diamond market another cyclical downturn or the sign of a more somber future for the industry? Have lab-grown diamonds had a permanent impact on natural?
