The copper wars are here: Mega merger could trigger battle of the mining giants

5 days ago 7

Opinion

September 10, 2025 — 12.06pm

There’s a $77 billion-plus question mark hanging over the $US50 billion ($75 billion) merger of Anglo American and Canada’s Teck Resources unveiled overnight. Which one, or ones, of the mining sector’s heavyweights will attempt to gatecrash their party?

With both Anglo and Teck having been targeted unsuccessfully in the past – Anglo by BHP last year and Teck in 2023 by Glencore – and all the miners in a scramble to lift their copper exposure, it is inevitable that BHP, Glencore and Rio, among others, will have opened their M&A playbooks in response to this merger.

Everyone wants copper. So which of the mining sector’s heavyweights will attempt to nix Anglo and Teck’s deal?

Between them, Anglo and Tech produce about 1.2 million tonnes of copper a year. Given that it has been structured as a nil-premium deal, the proposed merger’s pricing provides no deterrent.

There are, however, obstacles to an acquisition of either of the merger parties, or, for a more ambitious predator, both of them. The attempt by BHP to acquire Anglo and Glencore’s tilt at Teck both failed because of issues that had nothing to do with price.

Anglo rejected a bid that had been complicated by its ownership of a number of poison pills – its South African platinum, iron ore and diamond assets – ostensibly because of the deal’s complex structure, with BHP proposing to spin off the platinum and iron ore assets ahead of a completed bid. Anglo instead preferred to pursue its own restructuring of its operations, which have chalked up massive losses in recent years.

Demand for copper is booming and will continue to boom as investments in renewable energy, electric vehicles and data centres for artificial intelligence soar.

Teck rejected Glencore’s overtures (although it did sell Glencore its metallurgical coal assets) because the company’s founding family opposed it. The Keevil family holds about 55 per cent of “A-class” super-voting shares in Teck, each of which carries 100 votes.

The family is backing the merger with Anglo, under which the combined company will be headquartered in Canada (although its primary sharemarket listing will be in London) and chaired by Teck’s chair, Sheila Murray. Teck shareholders would own 37.6 per cent of the merged entity.

The other obstacle to any rival offer for Teck is Canada’s resources nationalism. Canada said last year it would only approve foreign takeovers of its miners involved in critical minerals “in the most exceptional of circumstances”.

The tie-up with Anglo will trigger a government review but, perhaps because it has been framed as a merger rather than a takeover and the headquarters of what will be Canada’s biggest mining group will remain in the country, the initial response from the government appeared receptive.

The Canadian government’s stance isn’t necessarily an impenetrable obstacle to a rival bidder’s ambitions. BHP (potash), Glencore (base metals and coal) and Rio (aluminium) all have important, substantial and long-standing resources interests in Canada. None, however, would be likely to agree to move their headquarters to gain Canada’s approval.

The family behind Teck and its 87-year-old patriarch, Norman Keevil, might be the more difficult hurdle, although Keevil indicated during the talks with Glencore that he wouldn’t stand in the way of an overwhelmingly attractive deal for Teck shareholders.

The more vulnerable of the two merger partners is probably Anglo, which is still valued at significantly less than BHP offered last year – $US39.6 billion versus BHP’s $US49 billion – and which is still racking up heavy losses, including $US1.96 billion in the first half of this financial year.

It has offloaded/demerged its platinum business, which is now listed separately, but a deal to sell most of its metallurgical coal assets to Peabody Resources for $US3.8 billion fell through after a fire halted production from the Moranbah North mine in Queensland. Its 85 per cent stake in De Beers is on the market but, even after it has written down its value by more than $US4.5 billion over the past two years, it hasn’t landed a buyer in a very depressed market for natural diamonds.

With Anglo planning to shift its headquarters to Vancouver, and the labour-intensive platinum business now independent, the South African government – which sided with Anglo last year – might be more open to a new bid for Anglo from BHP or another major miner.

The larger copper-hungry miners would be derelict in their duties to shareholders if they didn’t at least consider whether and how to intervene.

Teck, with its very attractive copper assets in Canada and Chile, would be a cleaner buy if the Keevil family could be brought/bought onside, although its Quebrada Blanca 2 (QB2) project in Chile is now undergoing a major operational review, and growth projects have stalled after the company experienced problems with its tailings management facility.

Certainly, the merger announcement has put both Anglo and Teck in play and, given the dearth of significant copper-exposed opportunities available, the larger copper-hungry miners would be derelict in their duties to shareholders if they didn’t at least consider whether and how to intervene.

If there weren’t multiple potential bidders for the merging companies, an obvious strategy might be to wait until the merger was completed and then bid for the lot.

Anglo’s Collahuasi copper project is close to Teck’s QB2 – they are essentially mining the same ore body – so it makes sense for those companies and anyone seeking a big boost to their copper resources to bring those projects together. Glencore, incidentally, has a matching 44 per cent interest with Anglo in Collahuasi.

The potential for $US800 million a year in synergies (from the fourth year after the merger) from combining their Chilean interests is clearly a major motivation for the Anglo and Teck deal. It would also be appealing to Glencore, or anyone prepared to wait and bid for the combined entity.

Demand for copper is booming and will continue to boom as investments in renewable energy, electric vehicles and the data centres for artificial intelligence soar. The supply of new projects, however, is quite constrained and the grades and production volumes at existing established projects are under pressure.

That’s why the announcement of the merger could be a catalyst not just for someone to gatecrash the Anglo and Teck party, but to trigger deals elsewhere as the big miners scramble to secure larger access to the most critical metal of the 21st century.

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