Clara Denina, Pratima Desai and Felix Njini
LONDON (Reuters) – Commodities group Glencore (OTC:) is exploring an approach to Anglo American (JO:), two sources said, in a move that could trigger a bidding war for the 107-year-old miner.
Glencore has not yet approached Anglo, one of the sources said. At this stage, discussions are internal and preliminary and may not lead to any approach, the source added.
“We do not comment on market rumors or speculation,” a Glencore spokesman said.
Anglo on Friday rejected a $39 billion offer to acquire all shares from the world’s largest miner BHP Group (NYSE:).
BHP’s proposed premium was 31% above Anglo’s closing price on April 23.
A source familiar with the matter previously told Reuters the Australian mining giant was considering making an improved offer. A formal offer must be made by May 22.
US shares of Anglo American rose on the news, closing up 6.5% for the session. Glencore shares fell 1% in the US.
Anglo is attractive to its rivals because of its valuable assets in Chile and Peru – a metal used in everything from electric vehicles and power grids to construction, demand for which is expected to grow as the world transitions to cleaner energy and greater use of artificial intelligence.
Anglo American and Glencore each own 44% of the Collahuasi mine in Chile, which is estimated to have some of the world’s largest copper reserves.
Meanwhile, Anglo’s extensive portfolio also includes platinum, iron ore, steel coal, diamonds and a fertilizer project.
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Anglo’s share price has soared since the offer was made public.
The miner had previously lagged its peers due to lower productivity and write-downs, leading to a strategic review of its assets in February.
Glencore is still in the process of acquiring 77% of Canadian miner Teck’s coal division for $6.9 billion, which the company expects to complete by the third quarter of this year.
A precondition for BHP’s offer was Anglo selling its shares in Anglo Platinum (Amplats) and Kumba in South Africa, the country from which the world’s largest listed company emerged in 2015.
In a May 2 statement, BHP said the proposal “reflects its portfolio priorities and synergy opportunities.”
Glencore owns coal and chrome assets in South Africa.
“Unlike BHP, Glencore could benefit from retaining Kumba and selling its iron ore, and Glencore may face less political resistance in South Africa, particularly if it were to propose a simple all-share deal that does not include the separation of Kumba and Amplats Jefferies analyst Christopher LaFemina said in a research note dated April 29, where he assessed various takeover scenarios for Anglo American.