It is all about the copper. But Jake Klein already knows this, which is why he bought Ernest Henry and Northparkes.
The proposed or potential takeover here, of Anglo American by BHP, just reinforces the attractiveness of the long-term fundamentals for the copper market.
A tie-up with Anglo American would give BHP about 10% of global copper production.
BEN CLEARY, PORTFOLIO MANAGER AT TRIBECA INVESTMENT PARTNERS
"This is all about copper. BHP becomes the global leader, knocking out Freeport. I think it’s a good deal for BHP. Anglo is obviously very much in play now.
"Good timing I think for BHP as most of their competitors are busy or not in the position to strike. Big read through for other copper producers clearly the global consolidation is on.
"Anyone that has watched the Australia Open ad breaks for the last five years knows BHP likes copper and wants to increase exposure. The deal would also mean London will become even smaller centre for financing the global mining sector."
HAYDEN BAIRSTOW, HEAD OF RESEARCH AT BROKER ARGONAUT
"It’s all about copper. BHP has talked about getting more copper for a long time. Anglo’s got plans to go to a million tonnes per year in the next 10 years. There’s also a tie in with BHP’s Jansen potash, and Anglo’s Woodsmith.
"As for the rest of it, some can be refloated or maybe there’s a combination of assets they package together similar to what BHP did with South32."
CHRISTOPHER LAFEMINA, ANALYST JEFFRIES
"Based on our analysis, Anglo would be a good strategic fit for BHP or another major miner due to potential synergies, asset quality, and commodity exposure (especially copper). Our analysis indicates that Anglo consists of an undervalued portfolio of multiple tier-1 assets, several of which are in relatively low- risk jurisdictions (Chile, Peru, Australia, Brazil). There is a scarcity value to tier-1 mining assets that is not reflected in equity valuations. Hence, Anglo could be a compelling fit."
Cheers
These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.
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