BHP’s (ASX, LSE, NYSE: BHP) bold move last week to approach Anglo American (LSE: AAL) with an unsolicited US$39 billion takeover offer has as its main objective to grab copper assets.
The coveted operations, which have carried the weight of Anglo American’s balance sheet in recent years, are worth at least US$35 billion, according to New York-based financial research firm CreditSights. The figure, only $4 billion lower than BHP’s offer for the whole company, factors in the year-to-date rally in copper equities and a 30% control premium, analysts said on Wednesday.
With only four copper mines, Anglo American has an established presence in the world’s top copper producing countries, Chile and Peru:
- Los Bronces: One of Anglo American’s two largest copper operations and its flagship operation, is located in central Chile. The asset has been mined for over 150 years and is running out of high-grade ore. Anglo, with a 50.1% stake, is in the midst of a US$3 billion planned expansion to tap higher grade ore from a new underground section. The mine-life could be extended through 2036.
It produced 215,500 tonnes of copper last year, down by 20% from 2022 levels due to lower ore grades.
Los Bronces copper mine in Chile. Credit: Anglo American | Flickr
- Collahuasi: This large copper mine is located at high altitude in the north of Chile. Anglo American has a 44% stake in the operation, with Glencore (LSE: GLEN) owning another 44% and Mitsui & Co. the rest. It has one of the world’s largest copper reserves, estimated at 3.93 billion tonnes of ore grading 0.66% copper. It produced 52,200 tonnes copper in January this year. The construction of a desalination plant is underway and, once completed in 2026, is to meet a significant portion of the mine’s water needs.
Collahuasi copper mine in Chile. Credit: Minera Collahuasi
- El Soldado: The mine is the smaller of the three copper mines Anglo runs in Chile. It’s been the majority-owner (50.1%) since 2002. Located 125 km north of the capital, Santiago, it started operations in 1980. It produced 39,500 tonnes tonnes of copper last year, making it relatively small by Chilean standards. El Soldado’s production is expected to fall to about 30,000-35,000 tonnes by mid-2028, when the mine reaches the end of its life. Anglo recently obtained an environmental permit for a potential expansion that would extend the mine’s productive life to 2037.
El Soldado copper mine. Credit: Anglo American | Facebook
- Quellaveco: Anglo’s newest copper mine, located in the Moquegua region of Peru, began operations in 2022. It reached its highest throughput rate in this year’s first quarter. The mine is expected to deliver around 300,000 tonnes a year of copper in the first decade.
Quellaveco, in which Anglo has a 60% stake, was the first fully digital mine in Peru and is among the first to implement a technology developed by NASA to improve efficiency and safety.
Quellaveco copper mine. Credit: Anglo American | Flickr
Anglo reported last month an 11% increase in its copper output for the first three months of the year and kept its guidance for the year unchanged at 730,000-790,000 tonnes of copper.
Analysts estimate a company would need to invest $3.5 billion to bring a 100,000-tonne-per-year copper mine online, not counting the time required to build it. Anglo’s Collahuasi and Quellaveco generate four times that figure each year.
If BHP does end up buying these mines, the company would produce 10% of global output of the red metal, trumping Chile’s Codelco and Freeport-McMoRan (NYSE: FCX) as the world’s largest copper producer. Copper is highly sought due to its use in electric vehicles and wiring for the world’s energy transition.
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