Whereas Rio Tinto has a smaller market capitalization than rival BHP — A$180 billion ($119bn) versus A$218 billion ($144bn) — the corporate is massive sufficient to make an all-share provide for some or all of Anglo American.
In contrast to BHP, Rio already has operations in South Africa, having purchased Richards Bay Minerals from BHP itself in 2012.
It additionally has a presence within the diamond market, which may help within the administration of Anglo’s diamond unit, De Beers.
One other level in Rio’s favour is that, as Anglo American, it has a most important itemizing within the UK, which may simplify any potential transaction.
By way of copper, Rio Tinto remains to be engaged on the growth of its Oyu Tolgoi copper mine in Mongolia. It additionally has a 30% stake in Escondida mine in Chile, the world’s largest copper operation, managed by BHP.
In any other case it has restricted choices to extend manufacturing of the coveted orange metallic, demand for which is predicted to increase in the course of the vitality transition.
Aside from the Oyu Tolgoi issue, Rio’s deliberate copper output enhance will pushed by an ongoing growth in Utah and international exploration efforts, together with a partnership with Chile’s owned Codelco, the world’s largest copper producer.
A degree of rivalry could be Anglo’s steelmaking coal belongings, which Rio Tinto is extremely unlikely to need after efficiently exiting the coal enterprise in 2018.
Dealmaker on the sidelines
One other participant reportedly contemplating throwing its hat within the ring is Glencore (LON: GLEN), which is already a companion of Anglo American in Chile with a 44% stake every within the huge Collahuasi copper mine.
The Swiss miner and commodities dealer is within the midst of buying 77% of Canadian miner Teck’s coal unit for $6.9 billion, which can deter it from additional main investments. The corporate is thought for not often letting potential obstacles stand in the best way of a possibility so as to add quantity and develop its buying and selling enterprise.
BHP’s proposal required Anglo to divest its stakes in Anglo Platinum (Amplats) and Kumba Iron Ore in South Africa as a precondition.
“In contrast to BHP, Glencore may benefit from conserving Kumba and advertising iron ore, and Glencore could face much less political pushback in South Africa, particularly if it had been to suggest an easy all-share deal that doesn’t embrace Kumba and Amplats demergers,” Jefferies analyst Christopher LaFemina mentioned in a analysis word on April 29, the place he assessed completely different takeover eventualities for Anglo American.
The Baar, Switzerland-based agency is also interested by shopping for Anglo’s Australian steelmaking coal operations.
Each Rio Tinto and Glencore are most definitely to maintain monitoring whether or not BHP’s strategy is profitable in separating a few of Anglo’s belongings from the remainder of its operations, permitting them to select these up versus your entire firm.
“It can disappointing to lose one other massive miner from the London Inventory Alternate if a deal goes by. [But] it’s not unforeseeable that this attracts out some aggressive bids although,” Charles Bond, a pure assets companion on the legislation agency Gowling WLG advised MINING.COM.
“There are such a lot of transferring components to the deal and so many permutations with attainable third events – which makes predicting what’s going to occur tough,” Bond famous.
BHP has till Might 22 to make a proper bid for Anglo American.