Mike Henry’s African adventure raises talk of another BHP bite at Anglo American

Anglo American had announced a break-up plan as part of a defensive play. Picture: Reuters

Attention has turned back to BHP and its buying intentions surrounding Anglo American after the former’s chief executive, Mike Henry, recently paid a visit to South Africa.

South African affairs were previously considered to be one of the sticking points for the deal, with concern that the country’s government might take exception to the deal even if Anglo American approved BHP’s proposal.

Due to British takeover rules, BHP is in a standstill period until November 29 after it walked away from its target in May saying its $74bn scrip offer was its best and final after it was rejected. The laws disallow another offer for six months after the negotiations.

By the end of November, Anglo American would have concluded the sale process for its $US4bn coalmine portfolio in Queensland, for which Yancoal or Glencore are shaping up as the strongest contenders.

One view is that this would be convenient for BHP to have Anglo American tidy up the portfolio.

Anglo American had announced a break-up plan as part of a defensive play, where the company would sell its Queensland metallurgical mines, spin off its platinum assets, put its nickel operations into care and maintenance, divest or demerge its interests in diamond behemoth De Beers and suspend the development of its huge Woodsmith potash project in the UK.

The restructure, estimated to take two years, would leave Anglo as a dramatically slimmed down company built around its South American copper mines, which are attractive to BHP, and its iron ore interests in South Africa and Brazil.

Whether Anglo American can execute its break-up plan and see its share price increase will play a major part on whether BHP can successfully pull off a second play.

BHP could wait until early next year to strike.

BHP has a site tour in November for its Escondida mine, which has large capital spending requirements, and moves to slow down or a reduce spending on the asset could provide a hint as to whether the mining giant sees its money better spent elsewhere such as though an Anglo American play.

Meanwhile, with a trend playing out where major miners are embarking on mergers and acquisitions (BHP’s rival Rio Tinto justagreed to buy Arcadium Lithium for $9.9bn), it has some wondering if the $16.5bn BHP spin off South32 could be next.

South32 has some lively investors on its register that would certainly have something to say about any bold move to buy anotherbusiness.

Most in the market are betting that any big takeover play in the mining industry would centre on copper.

The $4.9bn Australian listed Sandfire Resources is considered the most obvious target.

But market experts say that the deterrent so far for South32 is that Sandfire has been too expensive.