BHP’s failed Anglo American bid fuels forecasts for new mining merger wave

Market experts are expecting more consolidation among mining companies. Picture: AP

BHP may have once again walked away from a possible deal to buy Anglo American after holding preliminary talks in recent months, but some think the market may not have seen the end of consolidation among resources companies at the big end of town.

While BHP may not be making any plans now to interrupt Anglo America’s $US53bn ($82bn) merger with Teck Resources, it’s not to say that BHP will not come back in at least a year and bids for the merged company as a whole.

Market experts say that the overall trend in the resources industry is that large mining groups are looking to get even bigger with further consolidation already playing out.

Gold miners are expected to be among those looking to do so, as they sit on large piles of cash, which is what has many keeping tabs on Agnico Eagle and its intentions for Northern Star in Australia.

There have also previously been merger talks between Glencore and Rio Tinto.

The motivating factor behind BHP’s Anglo American tilt was all about gaining greater access to copper, and the Anglo American and Teck merger creates a global copper mining giant.

Large listed mining groups from western nations are attracted to copper because of the fact that the metal is used for most electrical goods and will be critical in the energy transition, but it is not the sole reason why.

China controls the supply chain in the lithium and rare earths markets, but only about half of the market for copper, leaving the opportunity there for large corporates from western nations to continue to assert their dominance.

China moved swiftly to buy up lithium and rare earths assets to prevent the reliance it has on other countries to source the commodities to manufacture goods, as has been the case with Australia’s iron ore.

But now nations from South America and Africa are less willing to let China through the front door to buy key assets, making it difficult for the Asian superpower to expand with more assets.