BHP’s bid for Anglo American underlines the growing appetite for energy transition metals like copper from miners who must become more aggressive to secure new projects or risk missing out, according to investors and mining CEOs.
The proposed acquisition of Anglo by the world’s biggest listed miner, BHP, is expected to fuel more deals in the sector, whether the bid goes ahead or not. Investors and mining executives cited the rising costs of developing new projects and the need to secure supplies of critical metals like copper as key drivers behind the increased M&A activity.
“There is clearly a preference for buying over building because costs have ramped up so much in the past few years,” said Ben Cleary of Tribeca Investment Partners, an investor in Anglo American. He added that major miners like BHP and Rio Tinto have long emphasized their preference for copper, and that “you are going to see more deals” as they seek to rebalance their portfolios.
The surge in copper prices, which hit a record above $11,000 a tonne this week, is further intensifying competition for copper assets. Brett Beatty of private equity firm Resource Capital Funds said the rising prices will make the competition for copper assets “more intense.”
Beyond copper, there is also interest in other energy transition metals like lithium. Joshua Thurlow, head of lithium at Australian miner Mineral Resources, said the company has been on an acquisition spree of stakes in Australian lithium developers, and that M&A is “on people’s minds” as the industry reaches a point in the cycle where counter-cyclical deals can be rewarding.
Even nickel, which has seen prices hit by a surge in Indonesian supply, is attracting interest from players like Wyloo Metals, a family office that is “always acquisitive” and seeking longer-term opportunities.
The growing focus on securing supplies of critical energy transition metals is expected to drive more M&A activity in the mining sector in the coming years, as companies seek to strengthen their portfolios and position themselves for the global shift towards a greener economy.