LONDON, May 21, 2024–(BUSINESS WIRE)–

FORM 8.3

PUBLIC OPENING POSITION DISCLOSURE/DEALING DISCLOSURE BY

A PERSON WITH INTERESTS IN RELEVANT SECURITIES REPRESENTING 1% OR MORE

Rule 8.3 of the Takeover Code (the "Code")

1. KEY INFORMATION

(a) Full name of discloser:

Elliott Investment Management, L.P

(b) Owner or controller of interests and short positions disclosed, if different from 1(a):

The naming of nominee or vehicle companies is insufficient. For a trust, the trustee(s), settlor and beneficiaries must be named.

Elliott International, L.P.

Elliott Associates, L.P

The Liverpool Limited Partnership

(c) Name of offeror/offeree in relation to whose relevant securities this form relates:

Use a separate form for each offeror/offeree

BHP Group Limited

(d) If an exempt fund manager connected with an offeror/offeree, state this and specify identity of offeror/offeree:

(e) Date position held/dealing undertaken:

For an opening position disclosure, state the latest practicable date prior to the disclosure

16th May 2024

(f) In addition to the company in 1(c) above, is the discloser making disclosures in respect of any other party to the offer?

If it is a cash offer or possible cash offer, state "N/A"

Anglo American Plc

2. POSITIONS OF THE PERSON MAKING THE DISCLOSURE

If there are positions or rights to subscribe to disclose in more than one class of relevant securities of the offeror or offeree named in 1(c), copy table 2(a) or (b) (as appropriate) for each additional class of relevant security.

(a) Interests and short positions in the relevant securities of the offeror or offeree to which the disclosure relates following the dealing (if any)

Class of relevant security:

Ordinary shs : AU000000BHP4

Ordinary

Interests

Short positions

Number

%

Number

%

(1) Relevant securities owned and/or controlled:

10,000

0.0002%

6,636,224

0.1309%

(2) Cash-settled derivatives:

8,508,361

0.1678%

(3) Stock-settled derivatives (including options) and agreements to purchase/sell:

5,000,000

0.0986%

TOTAL:

5,010,000

0.0988%

15,144,585

0.2986%

All interests and all short positions should be disclosed.

Details of any open stock-settled derivative positions (including traded options), or agreements to purchase or sell relevant securities, should be given on a Supplemental Form 8 (Open Positions).

(b) Rights to subscribe for new securities (including directors’ and other employee options)

Class of relevant security in relation to which subscription right exists:

Details, including nature of the rights concerned and relevant percentages:

3. DEALINGS (IF ANY) BY THE PERSON MAKING THE DISCLOSURE

Where there have been dealings in more than one class of relevant securities of the offeror or offeree named in 1(c), copy table 3(a), (b), (c) or (d) (as appropriate) for each additional class of relevant security dealt in.

The currency of all prices and other monetary amounts should be stated.

(a) Purchases and sales

Class of relevant security

Purchase/sale

Number of securities

Price per unit

(b) Cash-settled derivative transactions

Class of relevant security

Product description

e.g. CFD

Nature of dealing

e.g. opening/closing a long/short position, increasing/reducing a long/short position

Number of reference securities

Price per unit

(c) Stock-settled derivative transactions (including options)

(i) Writing, selling, purchasing or varying

Class of relevant security

Product descriptione.g. call option

Writing, purchasing, selling, varying etc.

Number of securities to which option relates

Exercise price per unit

Type

e.g. American, European etc.

Expiry date

Option money paid/ received per unit

DR (US0886061086)

Call option

Purchase

2,500,000

US$62.5

American

19/07/24

US$ 1.64583

(ii) Exercise

Class of relevant security

Product description

e.g. call option

Exercising/ exercised against

Number of securities

Exercise price per unit

(d) Other dealings (including subscribing for new securities)

Class of relevant security

Nature of dealing

e.g. subscription, conversion

Details

Price per unit (if applicable)

4. OTHER INFORMATION

(a) Indemnity and other dealing arrangements

Details of any indemnity or option arrangement, or any agreement or understanding, formal or informal, relating to relevant securities which may be an inducement to deal or refrain from dealing entered into by the person making the disclosure and any party to the offer or any person acting in concert with a party to the offer:

Irrevocable commitments and letters of intent should not be included. If there are no such agreements, arrangements or understandings, state "none"

None

(b) Agreements, arrangements or understandings relating to options or derivatives

Details of any agreement, arrangement or understanding, formal or informal, between the person making the disclosure and any other person relating to:

(i) the voting rights of any relevant securities under any option; or

(ii) the voting rights or future acquisition or disposal of any relevant securities to which any derivative is referenced:

If there are no such agreements, arrangements or understandings, state "none"

None

(c) Attachments

Is a Supplemental Form 8 (Open Positions) attached?

NO

Date of disclosure:

17th May 2024

Contact name:

Michael Cross

Telephone number:

0203 009 1306

Public disclosures under Rule 8 of the Code must be made to a Regulatory Information Service.

The Panel’s Market Surveillance Unit is available for consultation in relation to the Code’s disclosure requirements on +44 (0)20 7638 0129.

The Code can be viewed on the Panel’s website at www.thetakeoverpanel.org.uk.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240520106053/en/

Contacts

Elliott Advisors (UK) Limited

(Bloomberg) — BHP Group Chief Executive Officer Mike Henry said investors must decide whether his team or the rival one at Anglo American Plc is best positioned to deliver value from their respective restructuring plans.

Most Read from Bloomberg

Henry’s counterpart at Anglo, Duncan Wanblad, announced on Tuesday that the storied mining company will exit diamond, platinum and coal mining, as it fends off a £34 billion ($43 billion) bid from BHP. The BHP CEO said his company would remain “disciplined” in its pursuit of Anglo.

“Shareholders must decide which plan creates the greatest value, soonest,” Henry said at a mining conference in Miami. “Which team has the better track record of execution.”

Anglo has rejected two offers, saying that BHP’s condition to spin off South African assets before the takeover was unworkable. However, Anglo’s own plan to spin off its Anglo American Platinum Ltd. unit is “a pretty clear indicator that it is doable,” according to Henry, who cited previous spinoffs by both companies.

Read More: Anglo Goes for Bold Breakup Plan in Move to Fend Off BHP

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

JOHANNESBURG/ LONDON (Reuters) -BHP Chief Executive Mike Henry said that Anglo American investors need to consider the merits of his company's bid for its smaller London-listed rival, seeking to drum up support for a proposal that has been rejected twice.

The CEO of the world's biggest listed mining group told investors at a metals and mining conference in Miami that Anglo shareholders must make a "determination" on the benefits of a combination of the two companies and which team they think has a better track record of executing projects and delivering returns to investors.

Anglo CEO Duncan Wanblad on Tuesday outlined plans to refocus on energy transition metal copper while spinning off or selling its less profitable coal, nickel, diamond and platinum businesses.

Henry, meanwhile, emphasised the merits of BHP's $43 billion bid and dismissed concerns that the proposed deal would be complex to execute.

"At the end of the day, it's going to be up to shareholders. They have to look at the plans, decide which one they believe is going to create the greatest value soonest," he said.

"And they have to make a determination as to the likelihood of execution of those plans, including which team they believe is more capable and has a better track record of execution. It's that simple."

The Anglo board argues that the proposed deal undervalues the company and is difficult to execute, with BHP planning to demerge two of Anglo's South African assets prior to a takeover.

BHP chief Henry, however, says the company has sufficient experience to execute complex transactions, having divested South32 assets in South Africa.

Henry said he was disappointed with the Anglo board's continued refusal to engage, adding that BHP would have preferred to continue talking in private.

"Our strong preference was to be able to hold these discussions with Anglo in private," Henry said. "Rather unfortunately, it got leaked."

While BHP is intent on growing its copper business, it would maintain its disciplined approach to capital allocation, Henry said, adding that the copper industry remains fragmented.

"We do not take capital discipline lightly, we will remain disciplined and we have demonstrated that in previous instances," he said.

($1 = 0.7953 pounds)

(Reporting by Felix Njini and Clara DeninaEditing by David Goodman)

The mining company raised its first offer after Anglo American said it “significantly undervalues” it.

(Bloomberg) — Anglo American Plc will exit diamond, platinum and coal mining in a massive restructuring designed to fend off a £34 billion ($43 billion) bid from rival BHP Group and turn itself into a copper giant.

Most Read from Bloomberg

Anglo’s hand was forced by BHP’s approach — which it has twice rejected — but the move also responds to pressure from shareholders to shed less profitable businesses and focus on the copper assets that are the envy of the industry. It leaves a much simpler company — and a potentially more attractive one to suitors.

The radical overhaul laid out by Anglo Chief Executive Officer Duncan Wanblad is to create a company much like the one his rival CEO Mike Henry proposed. As both men have a similar view of where value lies in Anglo’s sprawling empire, shareholders will now have to decide who they believe can best deliver.

Anglo is pinning its hopes on shareholders supporting its plan — and backing management to deliver it, rather than pushing to accept an offer from BHP. Investors see copper as the crown jewel because of its role in the energy transition and today’s move addresses what some of them were calling for. Activists Elliott Investment Management are among Anglo’s shareholders.

“There’s still a debate over whether this really offers shareholders more than BHP’s improved offer,” said Dawid Heyl, a Cape Town-based portfolio manager at Ninety One, a top shareholder. Heyl said that while it was a robust plan it would create a shrunken Anglo that “would be attractive to others as well.”

Anglo’s shares fell 2.5% to £26.38 in London trading, below the £27.53 that BHP is offering, in a sign investors see a lower chance of a successful BHP bid. Amplats, as the platinum business is known, fell as much as 10% in Johannesburg.

It’s now up to BHP to decide how to respond. Two offers have been rejected, though crucially its improved bid didn’t address one of the main obstacles: Anglo said BHP’s condition to spin off South African assets before the takeover was unworkable. Now Anglo is proposing to spin off Amplats, it could bolster BHP’s argument that it can be done.

“The outcome of Anglo’s strategic review will not have changed BHP’s plans, but they are probably actively assessing where they are now in light of this,” said Lachlan Shaw, an analyst from UBS Group AG.

Read More: What’s Anglo Worth? For Now It’s Less than the Sum of Its Parts

Anglo is now set to focus on copper mines and iron ore, its two biggest and most consistent earners and the businesses that BHP is most attracted to. Perhaps controversially, it will also stick with its Woodsmith fertilizer project in the north of England that some investors have pushed for it to quit. Still, it will dramatically cut spending there.

It will demerge or sell its De Beers diamond business, separate its Anglo American Platinum Ltd. unit and sell its coking coal mines in Australia.

The company will also either sell or shutter its relatively small nickel business in Brazil.

The move to dramatically shrink and simplify its business has been years in the making at Anglo, which has always been a hotchpotch of commodities. Yet the approach from BHP served as a catalyst for the company to speed up decisions it’s been sitting on for years.

Getting rid of Amplats and De Beers marks a turnaround from less than a decade ago when Wanblad’s predecessor planned on making them the cornerstones of the business.

Wanblad conceded today however that they are just too volatile. When they are good they are very good, but when they’re bad they drag down the entire company, hitting the returns shareholders get from the commodities they really covet such as copper. And the last year was especially tough for both.

Why BHP Is Targeting Anglo in Mining Mega Deal: QuickTake

De Beers — despite its status as a trophy asset — has looked increasingly out of place within the Anglo stable. The diamond market has become increasing volatile in recent years, whipsawing between boom and bust. The challenges posed by changing consumer habits require more and more spending on things like advertising, an area outside the comfort zone of many mining investors.

It will break the almost 100-year link between the two companies, with Anglo first becoming a major shareholder in 1926. Sovereign wealth funds have in the past expressed interest in the storied diamond producer.

Anglo will also look to exit Amplats, as its platinum unit is called. The business is currently listed in South Africa, with Anglo as a majority owner. Its coking coal business, which lies adjacent to BHP’s mines, will also be sold and Anglo said it has already received approaches.

While Anglo’s new plan has similarities to the one proposed by BHP, Wanblad was keen to point out that they were not completely leaving South Africa. It will keep its Kumba iron ore subsidiary. BHP had wanted Anglo to shed the South African assets before the takeover.

“They make us do the work then off they go,” Wanblad said. “We remain in South Africa, that’s a unique difference between what we and BHP are proposing to do.”

That may have made a difference for South Africa’s government as the new plan has already received a warmer welcome than BHP’s proposal.

Read: South Africa Minister Warms to Anglo Plan After Opposing BHP Bid

Anglo will also slow spending on a $9 billion fertilizer mine in northern England that’s been a focal point for investors and analysts pushing for an overhaul.

The company — which has been spending about $1 billion a year on the giant Woodsmith mine — will cut spending to about $200 million in 2025, and plans to spend nothing on it in 2026. It will also look to bring in one or more strategic partners. Investors are worried the mine will produce a relatively obscure fertilizer product called polyhalite, and Anglo will need to create a huge new global market for it almost from scratch.

–With assistance from Mark Burton and Paul-Alain Hunt.

(Updates with details)

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

(Bloomberg) — South Africa’s mines minister struck a conciliatory tone as Anglo American Plc announced plans to separate its platinum unit as part of a major shakeup following its rejection of two approaches from BHP Group.

Most Read from Bloomberg

“It is their strategy and they must do anything that will optimize value,” Mines Minister Gwede Mantashe said by phone.

That marks a contrast with the senior official’s frostier reaction to rival BHP’s proposal, which involves spinning off both Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. before acquiring the miner’s prized assets outside South Africa.

The platinum unit known as Amplats fell as much as 10% in Johannesburg trading, after Anglo unveiled its restructuring plan on Tuesday.

The upheaval in South Africa’s key mining industry comes at a difficult time for the ruling African National Congress, which risks losing its majority in elections later this month for the first time since coming to power in 1994.

Read more: Anglo To Exit Diamonds and Platinum in Bid To Fend Off BHP

Under the turnaround plan outlined Tuesday by Anglo Chief Executive Officer Duncan Wanblad, the London-listed miner will exit platinum and diamond mines in South Africa, while retaining its Kumba iron ore subsidiary and a stake in a manganese business.

Wanblad said the company would have liked to make its announcement after the South African election and that it was “completely disrespectful” to do so now. Still, he said BHP had forced his hand by making an approach.

Anglo said it will demerge its 79% stake in Amplats “in a responsible and orderly way,” separate or sell its De Beers diamond business and divest its coking coal mines in Australia. The overhaul plans have been accelerated by BHP’s £34 billion ($43 billion) takeover proposal to acquire the 107-year-old firm.

Anglo has long ties to South Africa and was built on the riches of the country’s gold mines before moving into diamonds. In recent decades, however, the company has rapidly accumulated assets overseas including the South American copper mines that are so coveted by BHP.

Read More: BHP CEO Flies to South Africa to Push $39 Billion Takeover

Mantashe had signaled his opposition to BHP’s twice-rebuffed proposal for Anglo to demerge its controlling interests in its South African platinum and iron ore units, telling Bloomberg on April 25 that he “wouldn’t support” the idea.

Amplats – the world’s largest platinum producer – “will survive” as a standalone company, said Mantashe who also chairs the ANC. “It’s leading in the platinum business.”

Shares of Amplats were down 7% as of 11:03 a.m. in Johannesburg.

Anglo’s second-biggest shareholder, South Africa’s Public Investment Corp., will continue to engage with both companies after noting both Anglo’s accelerated strategy and its rejection of BHP’s improved offer, PIC Chairman David Masondo said by email. The PIC manages the pensions of South African government workers.

“The PIC is a long-term investor and any transaction presented will be assessed to ensure value creation for our clients,” said Masondo, who is also South Africa’s deputy finance minister.

The Congress of South African Trade Unions, the country’s biggest federation of labor groups, said it welcomed Anglo’s commitment to the country.

“We need a commitment that whatever changes Anglo plans include the needs of its loyal employees,” Cosatu said in a response to queries. “Anglo’s professed commitment to South Africa is welcome.”

The labor federation has previously said it opposed BHP’s bid.

–With assistance from Thomas Biesheuvel and Antony Sguazzin.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

Anglo American (AAL.L)

Anglo American has announced a group restructuring that includes the sale of several assets to boost its portfolio, a day after rejecting a mega takeover bid from Australian rival BHP (BHP.L).

As part of the split, the miner will divest or demerge its diamond unit De Beers, spin off its platinum-metals subsidiary Anglo American Platinum, and sell its steelmaking coal assets, while exploring options for putting its nickel operation on care and maintenance before divesting it.

The reorganisation will reduce costs by $1.7bn (£1.36bn), it said.

The announcement comes a day after the London-listed miner rejected a sweetened £34bn offer from BHP, saying it continued to significantly undervalue the company and was “highly unattractive” for its shareholders.

“We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction,” chief executive Duncan Wanblad said.

Read more: FTSE 100 LIVE: European markets cautious as traders look to key inflation data

Investors still believe that BHP will lift its offer again and possibly add cash before 22 May, the deadline under UK rules to return with a binding offer or walk way.

"The language in the release suggests it's not the best and final offer," Todd Warren, a portfolio manager at Tribeca Investment Partners, told Reuters.

GameStop (GME)

Shares in GameStop, the video game retailer whose popularity among pandemic-era traders helped coin the idea of a meme stock, were surging in pre-market trading after a single post by a social media account named “Roaring Kitty”.

The internet persona, whose real name is Keith Gill, posted a picture on X of a video gamer leaning forward on their chair as if to indicate he’s taking the game seriously, making his first post on the platform since 2021.

Read more: Strong UK pay growth puts interest rate cut path at risk

Gill is a day trader whose videos during the meme-stock bubble encouraged millions of others into the market, in turn propelling stocks such as GameStop to record heights.

The tweet was enough to drive a rally in GameStop on Monday which caused losses approaching $1bn for short sellers, according to data from S3 Partners.

With GameStop soaring 74%, short-selling hedge funds suffered a mark-to-market loss of $838m in the brick-and-mortar video game retailer, data firm S3 Partners said.

Vodafone (VOD.L)

Vodafone has reported a 2.2% rise in organic earnings for 2024, meeting market forecasts, after it returned to top-line growth in the final quarter helped by gains in the UK and Germany.

The UK-listed company revealed an 11.3% decline in underlying profits last year to €11bn (£9.5bn) and a 2.5% fall in revenue to €36.7bn (£31.5bn).

It said revenues were hit by the disposals of Vantage Towers, Vodafone Hungary and Vodafone Ghana in the prior financial year and adverse exchange rate movements.

Germany returned to growth with service revenue increasing by 0.2% for the full year and 0.6% for the fourth quarter, the company said, but adjusted core earnings dropped by 5.8% due to higher energy and other inflationary costs.

"Much more still needs to be done in the year ahead," said chief executive Margherita Della Valle.

Read more: Stocks that are trending today

Free cash flow fell from €2.6bn to €1.8bn. Net debt, excluding the sold segments of Spain and Italy, was broadly flat at €33.2bn.

Mark Crouch, analyst at eToro, said: "Vodafone investors may have been bracing themselves for another tumultuous earnings report this morning and while this might not have them jumping for joy, there are signs the business has turned a corner."

Greggs (GRG.L)

Greggs reported sales growth of 7.4% as the bakery chain remains on track to open between 140 and 160 new stores in 2024.

The firm reported a 7.4% rise in like-for-like sales for the first 19 weeks of 2024, with total sales in the period hitting £693m.

Greggs added that its new range of iced drinks was “performing well”, with plans to roll it out further from the current 300 shops to up to 700 in the coming months.

Since the start of the year Greggs has opened 64 stores, and closed 37 — including relocations — giving a total of 2,500 shops trading nationwide.

Novavax (NVAX)

Shares of Novavax jumped as much as 50% as Wall Street cheered a new multibillion-dollar deal with French drugmaker Sanofi (SAN.PA) that kicked off a dramatic turnaround for the struggling vaccine maker.

Novavax signed a $1.2bn licensing agreement with Sanofi that includes commercialising a combined COVID-19 and flu shot.

The pharma company reported a first-quarter 2024 loss of $1.05 cents per share while revenues in the quarter came in at $94m, below expectations of $101m. Still, the top line rose 16% on a year-over-year basis.

It recorded $11.5m of revenues from royalties and adjuvant sales to licensing partners compared with the year-ago quarter’s revenues of $1m.

Watch: This has been a tough day for short sellers in GameStop: Charlie Gasparino

Download the Yahoo Finance app, available for Apple and Android.

(Bloomberg) — Pension giant AustralianSuper, BHP Group Ltd’s largest Australian shareholder, said capital discipline was of “utmost importance” for the mining industry as investors weigh the heavyweight’s twice-rebuffed efforts to woo smaller rival Anglo American Plc.

Most Read from Bloomberg

Luke Smith, the senior portfolio manager who oversees the fund’s Australian mining investments, declined to comment on whether or not it would support a takeover, but confirmed it had engaged “more than once” with BHP.

The world’s biggest miner approached Anglo last month with a proposal aimed squarely at the iron-to-diamond producer’s Latin American copper deposits — only to be swiftly turned down. It has since tabled a sweetened $43 billion all-share bid but maintained a structure that would see Anglo doing much of the heavy lifting on a restructuring before the deal goes through — including spinning off two listed South African businesses.

Anglo rejected the latest approach, arguing the non-binding offer continues to “significantly undervalue” the company and its future prospects, while creating “significant uncertainty” for shareholders. It has now laid out a bold self-help plan that would see it divest diamonds, platinum and coal.

“If part of your strategy is copper then you follow and try and execute on that strategy,” Smith said in an interview in Melbourne. But capital discipline is “of utmost importance, and I think that’s at the forefront of people’s minds when it comes to any consolidation across the commodity landscape,” he said.

BHP has long been clear on its desire to expand in copper, eager to take advantage of rising demand for a metal key for renewable energy installations, expanding grids and electric vehicles. But the mining industry is also emerging from more than a decade of purdah after a string of frenzied, ill-timed and overly expensive acquisitions that burnt billions of investor dollars and left even the largest firms saddled with debt.

“I think we are in a much stronger environment from a capital allocation aspect of the mining industry,” Smith said. “There probably wasn’t the focus then that there is now on capital allocation. And not just from the companies, but from the stakeholders.”

Read More: BHP Seeks to Break Mining’s M&A Curse With Thorny Anglo Deal

Anglo’s shares ended Monday slightly below the value of BHP’s offer, indicating the market is not yet convinced a deal will get done. Still, among the miner’s smaller Australian investors, many said they saw room for maneuver that could yet help BHP clinch its prey.

“Obviously they haven’t got there with a good enough offer yet, so watch this space,” said Matthew Haupt, portfolio manager at Wilson Asset Management in Sydney, who is underweight BHP. “Another 5% to 7.5% bump, with a cleaner structure, could get a deal done.”

Jun Bei Liu at Tribeca Investment Partners in Sydney, also a BHP shareholder, said an increase of another 15% could make the difference and that she expected BHP to try to get there. Any short-term dip in the price as a consequence would be an opportunity to increase exposure.

“They’re not buying for the next couple of years, they’re really looking into the future of the copper shortage,” she said. “Yes, there’s every chance of overpaying and mining companies haven’t had a great record on this, but what they’re saying is that they believe their strategy.”

The company was unlikely to take an openly hostile approach, though.

“It’s a big transaction, which requires a lot of regulatory approval across many jurisdictions. So I just think that being aggressive is going to be very costly,” she said. “There’s a lot more uncertainty with what is already a very complex deal.”

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

By Clara Denina and Felix Njini

LONDON (Reuters) -Anglo American laid out plans on Tuesday to refocus on energy transition metal copper while spinning out or selling its less profitable coal, nickel, diamond and platinum businesses, as it moves to fend off BHP Group's $43 billion takeover offer.

The announcement comes a day after the London-listed miner rejected its Australian suitor for the second time in less than three weeks, saying an increased proposal continued to significantly undervalue the company.

Anglo said on Tuesday it would divest its steelmaking coal assets, demerge its South African platinum unit, explore options for its nickel mines and divest or demerge diamonds business De Beers. The group expects the new configuration will lower costs by $1.7 billion.

"We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction," Anglo CEO Duncan Wanblad said.

Anglo shares fell 3.2% to close at 26.19 pounds, after trading at the bottom of the London stock market's benchmark index FTSE 100.

Moving to drum up support for his proposal, BHP CEO Mike Henry said on Tuesday it was down to investors to weigh the merits of his company's offer for Anglo, adding he would have preferred to continue talking with Anglo in private.

"Our strong preference was to be able to hold these discussions with Anglo in private," Henry said. "Rather unfortunately, it got leaked."

BHP's 27.53 pound per share approach, raised from an initial 25.08 pounds, would require Anglo to sell its iron ore and platinum assets in South Africa, where it employs more than 40,000 people.

That has caused alarm in South Africa, where unemployment and a stagnant economy are major issues ahead of a May 29 election.

Wanblad said BHP's bid had forced him to accelerate plans for a spin-off of Johannesburg-listed Anglo American Platinum (Amplats).

Under Tuesday's plan, Anglo will keep its South African Kumba Iron Ore business, while Wanblad said the planned divestment of Amplats would be "completely different" in terms of time and complexity to the BHP proposal.

South Africa's mines minister Gwede Mantashe said on Tuesday he had no problem with Anglo's proposal, and that he hoped it would continue to resist BHP's bid.

Anglo is also exploring an initial public offering of its diamond business De Beers, two people familiar with the matter told Reuters on Tuesday, with one flagging London as the preferred venue. Anglo declined to comment.

The company also said on Tuesday it would slow the development of its Woodsmith fertiliser project in northeast England and seek strategic partners. First production at Woodsmith will be pushed back from 2027, Wanblad said.

The divestment of Anglo's steelmaking coal operations could move rapidly, he added, given available interest.

SELF-HELP

Anglo has been meeting investors since BHP's initial approach in April, and after a review of its assets initiated in February following a 94% plunge in annual profit.

One top 20 investor at Anglo, who said a deal with BHP was likely to lead to less copper being produced rather than the increase needed to accelerate the world's energy transition, welcomed Tuesday's proposal.

"At the moment, Anglo has lots of very interesting assets … but it is not a focused business, focused on a clear strategic goal," the shareholder said. "This plan offers clarity of purpose."

MKP Advisers said however that the concern with the "self-help plan" will be that it is "too little, too late".

"There is no timescale attached to most of the plans and it has been clear to most that many of the potential disposals across the portfolio are simply tough to execute," MKP said.

Activist fund Elliott, one of Anglo's top 10 shareholders after building up a $1 billion stake, declined to comment on the plan. It is expected to put out a statement later in the day, sources say.

Developments such as artificial intelligence and automation, and the energy transition that includes electric vehicles and renewable energy, have driven up demand prospects for copper cable used to conduct electricity.

Copper prices have risen 25% from this year's Feb. 9 low to $8,127 a tonne.

Ashwin Pillay, senior associate at law firm Charles Russell Speechlys, said the new plan addressed shareholder concerns that the value of Anglo's copper mines has been suppressed by less valuable operations such as the diamond division.

"Intriguingly, there is still an opportunity for BHP to raise their offer further, including by adding a cash component, which would sweeten the pot," he added.

($1 = 0.7966 pounds)

(Additional reporting by Melanie Burton in Melbourne, Sinead Cruise in London and Eva Mathews; Writing by Jan Harvey; Editing by Nivedita Bhattacharjee, Kirsten Donovan, Sonali Paul, Catherine Evans and Emelia Sithole-Matarise)

*

Anglo expects new structure to lower costs by $1.7 bln

*

Will keep South African Kumba Iron Ore business

*

Says revised BHP offer significantly undervalues Anglo

*

BHP CEO urges Anglo investors to consider takeover benefits

(Updates share prices, adds BHP CEO comment on leaks, paragraphs 5,7)

By Clara Denina and Felix Njini

LONDON, May 14 (Reuters) – Anglo American laid out plans on Tuesday to refocus on energy transition metal copper while spinning out or selling its less profitable coal, nickel, diamond and platinum businesses, as it moves to fend off BHP Group's $43 billion takeover offer.

The announcement comes a day after the London-listed miner rejected its Australian suitor for the second time in less than three weeks, saying an increased proposal continued to significantly undervalue the company.

Anglo said on Tuesday it would divest its steelmaking coal assets, demerge its South African platinum unit, explore options for its nickel mines and divest or demerge diamonds business De Beers. The group expects the new configuration will lower costs by $1.7 billion.

"We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction," Anglo CEO Duncan Wanblad said.

Anglo shares fell 3.2% to close at 26.19 pounds, after trading at the bottom of the London stock market's benchmark index FTSE 100.

Moving to drum up support for his proposal, BHP CEO Mike Henry said on Tuesday it was down to investors to weigh the merits of his company's offer for Anglo, adding he would have preferred to continue talking with Anglo in private.

"Our strong preference was to be able to hold these discussions with Anglo in private," Henry said. "Rather unfortunately, it got leaked."

BHP's 27.53 pound per share approach, raised from an initial 25.08 pounds, would require Anglo to sell its iron ore and platinum assets in South Africa, where it employs more than 40,000 people.

That has caused alarm in South Africa, where unemployment and a stagnant economy are major issues ahead of a May 29 election.

Wanblad said BHP's bid had forced him to accelerate plans for a spin-off of Johannesburg-listed Anglo American Platinum (Amplats).

Under Tuesday's plan, Anglo will keep its South African Kumba Iron Ore business, while Wanblad said the planned divestment of Amplats would be "completely different" in terms of time and complexity to the BHP proposal.

South Africa's mines minister Gwede Mantashe said on Tuesday he had no problem with Anglo's proposal, and that he hoped it would continue to resist BHP's bid.

Anglo is also exploring an initial public offering of its diamond business De Beers, two people familiar with the matter told Reuters on Tuesday, with one flagging London as the preferred venue. Anglo declined to comment.

The company also said on Tuesday it would slow the development of its Woodsmith fertiliser project in northeast England and seek strategic partners. First production at Woodsmith will be pushed back from 2027, Wanblad said.

The divestment of Anglo's steelmaking coal operations could move rapidly, he added, given available interest.

SELF-HELP

Anglo has been meeting investors since BHP's initial approach in April, and after a review of its assets initiated in February following a 94% plunge in annual profit.

One top 20 investor at Anglo, who said a deal with BHP was likely to lead to less copper being produced rather than the increase needed to accelerate the world's energy transition, welcomed Tuesday's proposal.

"At the moment, Anglo has lots of very interesting assets … but it is not a focused business, focused on a clear strategic goal," the shareholder said. "This plan offers clarity of purpose."

MKP Advisers said however that the concern with the "self-help plan" will be that it is "too little, too late".

"There is no timescale attached to most of the plans and it has been clear to most that many of the potential disposals across the portfolio are simply tough to execute," MKP said.

Activist fund Elliott, one of Anglo's top 10 shareholders after building up a $1 billion stake, declined to comment on the plan. It is expected to put out a statement later in the day, sources say.

Developments such as artificial intelligence and automation, and the energy transition that includes electric vehicles and renewable energy, have driven up demand prospects for copper cable used to conduct electricity.

Copper prices have risen 25% from this year's Feb. 9 low to $8,127 a tonne.

Ashwin Pillay, senior associate at law firm Charles Russell Speechlys, said the new plan addressed shareholder concerns that the value of Anglo's copper mines has been suppressed by less valuable operations such as the diamond division.

"Intriguingly, there is still an opportunity for BHP to raise their offer further, including by adding a cash component, which would sweeten the pot," he added.

($1 = 0.7966 pounds)

(Additional reporting by Melanie Burton in Melbourne, Sinead Cruise in London and Eva Mathews; Writing by Jan Harvey; Editing by Nivedita Bhattacharjee, Kirsten Donovan, Sonali Paul, Catherine Evans and Emelia Sithole-Matarise)

By Melanie Burton

MELBOURNE (Reuters) – BHP Group is likely to sweeten its $43 billion takeover offer for Anglo American for a second time and possibly add cash, investors in both companies said on Tuesday, after the London-headquartered target rejected a higher bid.

Anglo said the improved all-share offer, up 10% from BHP's initial proposal, continued to significantly undervalue the company.

Shares in BHP were trading 0.5% lower at A$43.03 on Tuesday.

BHP has until May 22 to return with a binding offer or walk away under UK takeover rules. The revised bid again required Anglo to sell its shares in iron ore and platinum assets in South Africa, a structure Anglo says is unattractive.

"The language in the release suggests it's not the best and final offer, said Todd Warren, a portfolio manager at Tribeca Investment Partners, which holds Anglo shares.

Anglo said on Monday it had accelerated plans to deliver its standalone strategy and would update investors on Tuesday.

"The market is waiting with baited breath for the details of Anglo's strategy day. There's not a lot Anglo can do to realise the immediate value that would be daylighted by accepting a BHP bid," Warren said.

BHP CEO Mike Henry is due to present at Bank of America's global mining conference in Miami later on Tuesday.

Several Australian fund managers holding BHP shares spoke to Reuters ahead of his presentation on condition of anonymity because of the sensitivity of the matter.

One BHP investor said it would be reasonable for the miner to add a cash component to get the deal done, though the overall deal structure was complex, which raised risks around Anglo achieving acceptable prices for unwanted assets.

A second BHP investor said he would be surprised if BHP did not come back with another offer, adding that it still had scope to add a cash component.

"The copper is what we like," the investor said. "I think there is investor support broadly for another bid."

Copper prices have climbed 12% in the past six weeks to hit two-year highs on Tuesday above $10,200 a metric ton.

Anglo is attractive to its competitors for its prized copper assets in Chile and Peru, with demand expected to rise as the world moves to cleaner energy and wider use of artificial intelligence will drive power use. Copper is highly efficient at transporting power because of its conductive properties.

Anglo's rejection was disappointing but BHP was in a difficult position given the need to balance a strong run in copper prices and the need to stay financially disciplined, said a third BHP investor.

BHP's latest offer of 27.53 pounds per share, up from an initial 25.08 pounds, would lift Anglo shareholders' aggregate ownership in the combined group to 16.6% from 14.8%. Anglo shares closed 2.4% lower at 27.07 pounds on Monday.

Jefferies analysts said it might need to raise its offer above 30 pounds per share to gain approval from Anglo's board.

"We are just not sure that BHP is prepared to go that high. This latest offer could be final," Jefferies said.

(Reporting by Melanie Burton; Editing by Jamie Freed)

(Bloomberg) — As Anglo American Plc sets out a survival plan that echoes the vision of its suitor BHP Group, the rival mining bosses are now locked in a battle to convince shareholders they are the man for the job.

Most Read from Bloomberg

Anglo Chief Executive Officer Duncan Wanblad and his BHP counterpart Mike Henry took center stage on Tuesday, as the personalities behind two of the world’s biggest miners came to the fore. Wanblad presented his own radical turnaround plan to investors, before Henry made his first public remarks on BHP’s bid at a conference in Miami.

“We don’t need BHP to deliver this strategy, we absolutely do not need them at all,” Wanblad said in an interview on Tuesday. “We can deliver this.”

BHP wants Anglo to spin off its two listed South African businesses producing iron ore and platinum, before the world’s biggest miner acquires the rest of its assets. Anglo would also separate its Anglo American Platinum Ltd. unit, while exiting diamond mining and selling its coal business. Both CEOs see copper as the crown jewel.

Read More: Anglo Goes for Bold Breakup Plan in Move to Fend Off BHP

Hours after Wanblad made his pitch, BHP’s Henry told the same conference that Anglo’s shareholders must choose between the two management teams.

“Shareholders must decide which plan creates the greatest value, soonest,” Henry said “Which team has the better track record of execution.”

Henry, who has been at the helm of BHP since 2020, has had time to stamp his image on the company. In a series of sweeping reforms, he implemented the biggest shakeup at the company since its creation two decades earlier.

BHP’s $39 Billion Bid for Anglo American Was Years in the Making

But he also inherited a stronger company than Wanblad. In Australia, BHP has some of the most profitable iron ore operations and it also runs the world’s biggest copper mine. It has no exposure to commodities such as platinum and diamonds, which have caused Anglo problems as prices slumped.

Still, there have also been missteps by Henry, such as betting on nickel before the market collapsed and wading into a South African election campaign when his approach for Anglo became public.

Wanblad by contrast has faced a tougher start. While the company he inherited was riding high, buoyed by soaring commodity prices, some of Anglo’s key markets quickly soured, exposing flaws in some of the underlying businesses. That ultimately led Wanblad to launch the root-and-branch review of the business.

Both Henry and Wanblad have been at their respective companies for decades, working their way up to the top job. Canadian Henry is described by those who work with him as incredibly detail driven, making decisions based on cold logic and hard facts. South African Wanblad, like his counterpart at BHP, is described by employees as deeply analytical but with a reputation for being more personable.

The two disagreed on their respective plans for South Africa, which is turning into a key battleground. Henry said Anglo’s own plan to spin off its Amplats platinum business is “a pretty clear indicator that it is doable.”

The “key difference” between the two proposals is that BHP’s plan involves securing simultaneous regulatory approval in South Africa for a pair of demergers and the top-level transaction, Anglo’s Wanblad said in an interview.

Such an “unprecedented” undertaking would be “all potentially at the expense of Anglo shareholders,” he said.

Wanblad, who like Henry is meeting investors in Miami this week, will hope those shareholders back his vision.

“I don’t believe at all that BHP has a better management team than Anglo,” he said. “Our plan will make the company much stronger than we are today, especially at the bottom of cycles.”

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

Anglo American has rejected a second takeover offer from Australian mining rival BHP and promised to set-out a new plan for growth to convince shareholders to back its future as an independent business.

The FTSE 100 mining group on Monday said it had rejected an improved £34bn takeover offer from BHP.

The second bid was priced at £27.53 per share, 9.7pc higher than the £25.08 a share approach rejected last month.

However, Anglo said the latest offer still “significantly undervalues” the group.

Duncan Wanblad, Anglo chief executive, and chairman Stuart Chambers promised to unveil a new strategy on Tuesday in a bid to convince shareholders to reject the continued takeover advances. Shareholders had complained about the slow pace of the group’s review.

Mr Chambers said the new plan would focus on “delivering against its strategic priorities of operational excellence, portfolio simplification and growth”

It has sparked speculation that Anglo American could spin-off divisions including its planned fertiliser mine in Yorkshire.

Deutsche Bank analysts said Anglo could simplify its sprawling empire by fully or partially selling luxury diamond brand De Beers and its fledgling polyhalite mine Woodsmith in North Yorkshire.

The outcome of the review will be closely watched by politicians in both the UK and South Africa because of the number of jobs tied to Anglo’s mining assets.

In the UK, Tory MP Sir Robert Goodwill has said he will seek assurances over the future of Woodsmith if the site changes hands.

Sir Robert, whose Scarborough and Whitby constituency is home to the project, told The Telegraph last month that mothballing the site was not an option because of its advanced state of development.

Analysts have suggested that Anglo American could simplify its structure by selling its Woodsmith site in North Yorkshire

Anglo’s mining commitment to South Africa is also particularly sensitive given how many local workers rely on the company. Upcoming South African elections on May 29 will further heightened scrutiny of Anglo’s plans.

Mr Chambers promised to “unlock value” at the group in light of the fresh BHP approach.

Management are seeking to bolster the case for keeping Anglo independent amid expectations that BHP may yet return with a third bid. The Australian company has until May 22 to make a final binding bid.

Other potential suitors such as Glencore and Rio Tino have all studied the possibility of making rival offers, according to reports.

BHP chief executive Mike Henry said: “BHP put forward a revised proposal to the Anglo American board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected.”

Mr Henry’s offer involves a complex two-step process whereby Anglo shareholders would first receive shares in its subsidiaries Anglo American Platinum, known as Amplats, and Kumba Iron Ore. Both are listed on the South African stock market.

After this demeger is completed, Anglo investors would then swap each share they own for 0.8132 BHP shares.

It means investors would swap UK-listed Anglo shares for three separate non-UK listed shares: BHP, Amplats and Kumba.

Anglo’s UK shareholders have previously criticised the takeover structure as unappealing.

BHP offer is all stock. A cash element may prove more appealing to Anglo shareholders.

Liberum analysts said: “Given the emphatic ‘no’ from Anglo American’s board on accepting execution risk of demergers pre-deal, it’s no surprise BHP’s revised offer was rejected.

“Clearly, a successful bid probably requires a much higher premium – one that BHP is probably unwilling to pay.”

By Clara Denina

LONDON (Reuters) -Anglo American rejected a raised takeover offer of 34 billion pounds ($42.67 billion) from BHP Group on Monday, saying the world's largest listed miner "continues to significantly undervalue" the company.

The London-listed miner had earlier rebuffed BHP's initial $39 billion all-share proposal made on April 25, dismissing it as opportunistic and saying it would dilute the upside value for its shareholders relative to BHP's.

"The latest proposal from BHP again fails to recognise the value inherent in Anglo American," Chairman Stuart Chambers said on Monday.

The new offer, made on May 7, was 10% higher than the first, or a 15% increase in the merger exchange ratio to lift Anglo American shareholders' aggregate ownership in the combined group to 16.6% from 14.8%.

"We are disappointed that this second proposal has been rejected," BHP CEO Mike Henry said in a statement.

"BHP continues to believe that a combination of the two businesses would deliver significant value for all shareholders."

The revised bid again required Anglo to sell its shares in iron ore and platinum assets in South Africa, a structure Anglo says is unattractive.

"The BHP proposal … leaves Anglo American, its shareholders and stakeholders, disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover," Chambers said.

Anglo shares closed down 2.3% at 27.07 pounds, while BHP shares closed up 0.8% at A$43.25 before the announcement.

Anglo is attractive to its competitors for its prized copper assets in Chile and Peru with demand expected to rise as the world moves to cleaner energy and wider use of artificial intelligence.

Its portfolio also includes platinum, iron ore, steelmaking coal, diamonds and a fertiliser project.

"We estimate that if Anglo divested its iron ore, diamonds, manganese and PGM portfolio, the remaining entity would have a c.70% exposure to copper," RBC Capital Markets analysts said in a note.

"Adding our forecasts for the potential divestments, we calculate 31 pounds per share could be realised, 13% higher than today's revised offer."

BHP had offered Anglo American shareholders 27.53 pounds per share, up from 25.08 previously. It has until May 22 to log a binding offer.

Both Anglo and BHP have been meeting investors since April's initial approach, which followed a review of all of Anglo's assets initiated in February in response to a 94% plunge in annual profit and writedowns at its diamond and nickel operations.

"Anglo has been trying to restructure for a long time and hasn't really achieved many of its own goals…There's no natural bigger party to come over and pay more for Anglo…they would struggle to find anyone better to do the deal with," said Daniel Sullivan, portfolio manager at Janus Henderson Investors.

Anglo's investors are concerned that they stand to lose heavily by holding shares in the South African subsidiaries if they are spun out. BHP said their new proposal would bear the costs of the unbundling.

"I'm intrigued why BHP are so obsessed with maintaining the original structure when it was flagged by many as an obstacle to the deal," said Nicholas Stein, a portfolio manager at Coronation Fund Managers, a top-20 investor in Anglo.

Anglo in March picked investment bank RBC Capital Markets to begin a syndication process for its costly Woodsmith fertiliser project in northeast England, two sources previously said.

Another source said Anglo was looking for partners for its De Beers diamonds business, which is among the assets BHP has said it would review after completion of any deal.

The company said on Monday it had accelerated plans to deliver its standalone strategy and would update investors on them on Tuesday.

The mining sector has seen a jump in M&A activity recently, with a total deal value of $26.4 billion in 2023, S&P Global Market Intelligence data shows.

"The big miners all benchmark themselves to each other. They will be taking a keen interest," said SP Angel analyst John Meyer.

($1 = 0.7968 pounds)

(Reporting by Clara Denina, Felix Njini, Pratima Desai, Eva Mathews; editing by Veronica Brown, Bernadette Baum, Catherine Evans and Jason Neely)

*

Had rejected a previous $39 billion all-share proposal in April

*

Offer again required Anglo to unbundle South Africa iron ore, platinum assets

*

Anglo to update investors on its standalone strategy on Tuesday

*

Anglo shares closed down 2.3%

(Adds investors, analyst comments, share price close)

By Clara Denina

LONDON, May 13 (Reuters) – Anglo American rejected a raised takeover offer of 34 billion pounds ($42.67 billion) from BHP Group on Monday, saying the world's largest listed miner "continues to significantly undervalue" the company.

The London-listed miner had earlier rebuffed BHP's initial $39 billion all-share proposal made on April 25, dismissing it as opportunistic and saying it would dilute the upside value for its shareholders relative to BHP's.

"The latest proposal from BHP again fails to recognise the value inherent in Anglo American," Chairman Stuart Chambers said on Monday.

The new offer, made on May 7, was 10% higher than the first, or a 15% increase in the merger exchange ratio to lift Anglo American shareholders' aggregate ownership in the combined group to 16.6% from 14.8%.

"We are disappointed that this second proposal has been rejected," BHP CEO Mike Henry said in a statement.

"BHP continues to believe that a combination of the two businesses would deliver significant value for all shareholders."

The revised bid again required Anglo to sell its shares in iron ore and platinum assets in South Africa, a structure Anglo says is unattractive.

"The BHP proposal … leaves Anglo American, its shareholders and stakeholders, disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover," Chambers said.

Anglo shares closed down 2.3% at 27.07 pounds, while BHP shares closed up 0.8% at A$43.25 before the announcement.

Anglo is attractive to its competitors for its prized copper assets in Chile and Peru with demand expected to rise as the world moves to cleaner energy and wider use of artificial intelligence.

Its portfolio also includes platinum, iron ore, steelmaking coal, diamonds and a fertiliser project.

"We estimate that if Anglo divested its iron ore, diamonds, manganese and PGM portfolio, the remaining entity would have a c.70% exposure to copper," RBC Capital Markets analysts said in a note.

"Adding our forecasts for the potential divestments, we calculate 31 pounds per share could be realised, 13% higher than today's revised offer."

BHP had offered Anglo American shareholders 27.53 pounds per share, up from 25.08 previously. It has until May 22 to log a binding offer.

Both Anglo and BHP have been meeting investors since April's initial approach, which followed a review of all of Anglo's assets initiated in February in response to a 94% plunge in annual profit and writedowns at its diamond and nickel operations.

"Anglo has been trying to restructure for a long time and hasn't really achieved many of its own goals…There's no natural bigger party to come over and pay more for Anglo…they would struggle to find anyone better to do the deal with," said Daniel Sullivan, portfolio manager at Janus Henderson Investors.

Anglo's investors are concerned that they stand to lose heavily by holding shares in the South African subsidiaries if they are spun out. BHP said their new proposal would bear the costs of the unbundling.

"I'm intrigued why BHP are so obsessed with maintaining the original structure when it was flagged by many as an obstacle to the deal," said Nicholas Stein, a portfolio manager at Coronation Fund Managers, a top-20 investor in Anglo.

Anglo in March picked investment bank RBC Capital Markets to begin a syndication process for its costly Woodsmith fertiliser project in northeast England, two sources previously said.

Another source said Anglo was looking for partners for its De Beers diamonds business, which is among the assets BHP has said it would review after completion of any deal.

The company said on Monday it had accelerated plans to deliver its standalone strategy and would update investors on them on Tuesday.

The mining sector has seen a jump in M&A activity recently, with a total deal value of $26.4 billion in 2023, S&P Global Market Intelligence data shows.

"The big miners all benchmark themselves to each other. They will be taking a keen interest," said SP Angel analyst John Meyer.

($1 = 0.7968 pounds) (Reporting by Clara Denina, Felix Njini, Pratima Desai, Eva Mathews; editing by Veronica Brown, Bernadette Baum, Catherine Evans and Jason Neely)

Anglo American has rejected a second takeover approach by its Australian rival BHP that values the London-listed mining company at £34bn.

BHP said Anglo’s board had not engaged with its offer, which came after an initial £31bn offer was also rejected last month. Anglo rejected the second offer on Monday, BHP said.

A takeover of Anglo, a member of the FTSE 100, would create a global player in markets for commodities including copper, potash, iron ore and metallurgical coal used for steelmaking. It would be the biggest takeover ever in the mining sector, and a large deal at a time when mergers and acquisitions have slowed.

Copper in particular is in high demand as a crucial raw material in the low-carbon energy transition because it is essential in manufacturing components for renewable energy projects and electric vehicles. Anglo American’s key assets are copper mines in Peru and Chile.

Related: Anglo American rejects second takeover approach from BHP worth £34bn; UK housebuilding tumbles 20% – business live

Anglo American responded to BHP’s statement on Monday by saying that the latest offer “continues to significantly undervalue Anglo American and its future prospects” and that the board “unanimously rejected” the second proposal.

The offer will increase pressure on Anglo American’s boss, Duncan Wanblad, to reveal plans to improve Anglo American’s performance and persuade shareholders that the company would be better off staying independent. Anglo said it would provide a detailed investor update of its “standalone strategy” on Tuesday.

The new all-share offer is worth £27.53 for each Anglo American ordinary share, with BHP still proposing that Anglo sells its stakes in Anglo American Platinum and Kumba Iron Ore, returning cash to shareholders.

Anglo said the requirement from BHP to demerge the two businesses as part of a deal was “highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent, and significant execution risks”.

BHP said it was a 50% premium to the value of the Anglo American assets it wants before the approach became public. BHP’s original proposal was worth £25.08 a share. But since the deal came to light last month, Anglo’s shares had surged to about £28 on Monday morning. Shares in Anglo were down 0.5% at £27.58 after BHP announced that a second bid had been rejected.

In a statement to the London Stock Exchange, BHP said: “BHP is disappointed that the Anglo American board has chosen not to engage with BHP with respect to the revised proposal and the improved terms. BHP continues to believe that a combination of the two businesses would deliver significant value for all shareholders.”

BHP has until 22 May to make a firm offer or walk away under UK takeover rules.

Mike Henry, the BHP chief executive, said: “BHP put forward a revised proposal to the Anglo American board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected.

“BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world-class businesses.”

(Bloomberg) — Anglo American Plc rebuffed a sweetened takeover offer from BHP Group Ltd. that valued it at about £34 billion ($43 billion), leaving it up to the Australian miner to make a better bid or lose out on what could be the industry’s biggest deal in a decade.

Most Read from Bloomberg

BHP, the world’s largest miner, is seeking to buy Anglo for its South American copper assets. That would make it the No. 1 copper producer, alongside its sprawling portfolio of iron ore and coal. BHP’s initial approach was rejected by Anglo.

BHP said Anglo rejected its latest offer, which was 15% higher than its first approach, on Monday. The new proposal — tabled on May 7 — still included the stipulation that Anglo must spin off its South African units before the acquisition. Anglo has dismissed that structure.

The pressure is now on Anglo to show shareholders how it can deliver more value on its own, while BHP will need to improve its offer again for a deal to happen. Top executives of both companies are at a conference in Miami this week.

Read More: Anglo Investors Tell Company to Move Faster to Survive BHP Bid

If successful, a takeover would mark a return to large-scale dealmaking for BHP, which has revived its appetite for transformational acquisitions in the past couple of years under Chief Executive Officer Mike Henry.

“BHP put forward a revised proposal to the Anglo American Board that we strongly believe would be a win-win for BHP and Anglo American shareholders,” Henry said in a statement on Monday. “We are disappointed that this second proposal has been rejected.”

BHP presented its own vision for Anglo: separate two South African businesses and buy the rest, including the company’s copper mines, its crown jewels.

Read More: What’s Anglo Worth? For Now It’s Less than the Sum of Its Parts

BHP, which has a market value of about $145 billion, has made copper a central part of its strategy, betting that supply will struggle to keep pace with demand for metal to build electric vehicles, solar panels and high-voltage cables. But the company’s expansion options at its own assets are not enough to offset its retreat from fossil fuels, creating pressure to add new mines from outside.

A successful takeover would make BHP the biggest copper producer with about 10% of the market. The offer is also sparking predictions that it will set off a wider wave of mining M&A, with many of BHP and Anglo’s rivals scouting for their own copper deals.

Anglo shares fell 0.5% as 2:15 p.m. in London, while BHP’s London traded shares dropped 0.4%.

(Updates with details throughout.)

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

(Bloomberg) — Anglo American Plc rejected a second approach from BHP Group that valued the miner at $43 billion, as pressure builds on the 107-year old company to lay out a compelling vision to survive on its own.

Most Read from Bloomberg

Anglo shareholders were already demanding the company accelerate a turnaround plan that it’s been working on since the middle of last year. Rejecting BHP’s latest overture will add more pressure on Anglo to explain how it would create more value than by just selling to the rival. It now plans on doing that on Tuesday.

While BHP has raised its all-share offer, crucially it has maintained a structure that Anglo had already branded as unworkable, making it hard for the company to agree to talks under those terms. BHP will have to return with an improved offer, and possibly a new structure, if it wants to get a deal done.

“BHP obviously want the prize, but are not willing to take on the execution risk,” said Ben Davis, an analyst at Liberum. “They’re hoping that Anglo shareholders are frustrated enough with management that they pressure them to go for this.”

Anglo’s shares closed 2.4% lower at £27.07 — below the £27.53 that BHP is offering, in an indication investors don’t currently see the deal going ahead and aren’t banking on a better bid coming along. BHP’s London traded shares closed 0.7% lower

The world’s largest miner is seeking to buy Anglo for its South American copper assets. That would make it the No. 1 copper producer, alongside its sprawling portfolio of iron ore and coal.

BHP sweetened its proposal by almost 15%: offering 0.8132 of its shares for each one of Anglo’s, up from 0.7097 shares in its initial approach. But it still said that Anglo must spin off its two listed South African businesses first.

Anglo said Monday that it’s confident in its own plans for the business and will update investors on Tuesday, after accelerating a review.

The company also reiterated its rejection of BHP’s proposed deal structure, saying it leaves its holders with a disproportionate level of risk. It also still undervalues the company, Anglo said.

The pressure is now on Anglo to show shareholders how it can deliver more value on its own. Those investors include Elliott Investment Management, the activist hedge fund that’s built a roughly $1 billion stake in Anglo. So far, it’s not made its view public.

Read More: Anglo Investors Tell Company to Move Faster to Survive BHP Bid

Anglo American has long been viewed as a potential target among the largest miners, particularly because it owns attractive South American copper operations at a time when most of the industry is eager to add reserves and production. However, suitors have been put off by its complicated structure and mix of other commodities from platinum to diamonds, and especially its deep exposure to South Africa.

Anglo has faced a series of major setbacks over the past year as prices for some of its key products plunged, while operational difficulties have forced the company to slash its production targets — driving down its valuation and leaving the company vulnerable to potential bidders.

Investors have since pushed for details of a business review that Chief Executive Officer Duncan Wanblad has been running since mid-2023, looking at every mine in its portfolio. Central to investor concerns are the future of diamond miner De Beers, the Woodsmith fertilizer mine that Anglo is building in the UK and its South African businesses.

Read More: What’s Anglo Worth? For Now It’s Less than the Sum of Its Parts

If successful, a takeover would mark a return to large-scale dealmaking for BHP, which has revived its appetite for transformational acquisitions in the past couple of years under CEO Mike Henry.

BHP, which has a market value of about $145 billion, has made copper a central part of its strategy, betting that supply will struggle to keep pace with demand for metal to build electric vehicles, solar panels and high-voltage cables. But the company’s expansion options at its own assets are not enough to offset its retreat from fossil fuels, creating pressure to add new mines from outside.

A successful takeover would give BHP about 10% of global copper output. The offer is also sparking predictions that it will set off a wider wave of mining M&A, with many of BHP and Anglo’s rivals scouting for their own copper deals.

(Updates with shares in fifth paragraph.)

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

(Bloomberg) — Anglo American Plc’s shareholders are pushing the company to speed up the release of its turnaround plan as the 107-year-old miner seeks to present an alternative to BHP Group Ltd.’s takeover bid.

Most Read from Bloomberg

Anglo has been reviewing its business since mid-2023, looking at every mine in its portfolio to help reshape a company that’s fallen behind competitors in recent years. Yet that process was broadsided by a takeover approach last month from the world’s biggest miner.

Now, Anglo shareholders have been urging the company to expedite that analysis and explain to investors how it would create more value than by just selling to the rival, according to conversations with five of Anglo’s biggest holders, who asked not to be identified as the discussions are private.

Anglo may unveil the strategy as soon as the coming week, when the world’s top mining bosses attend Bank of America Corp.’s annual conference in Miami, according to people familiar with the matter.

Still, the situation remains fluid and Anglo is weighing the best time to show its hand, with BHP expected to return with a fresh bid and activist investor Elliott Investment Management, which has emerged as one of Anglo’s biggest shareholders, potentially planning to make its views public too.

An Anglo spokesman declined to comment.

Read more: South African Unions Urge Anglo Holders To Reject BHP Bid

Anglo Chief Executive Officer Duncan Wanblad told investors in February that while there was urgency about the company’s review, there was a danger of making decisions at a wrong point in the cycle.

The mining industry has been captivated by BHP’s move, watching to see what comes next. BHP likely will return with a fresh offer, but sitting on the sidelines is Elliott.

BHP presented its own vision for Anglo: separate two giant South African businesses and buy the rest, including the company’s copper mines, its crown jewels.

Read more: BHP CEO Flies to South Africa to Push $39 Billion Takeover

Anglo quickly dismissed BHP’s proposal, saying the value was too low and the spinoff plan was unworkable. Still, investors want to know what Anglo plans to do with the diamond business De Beers, the $9 billion Woodsmith fertilizer project underway in northern England, and those South African units.

Investors have pushed the company to slow spending on Woodsmith, bring in a partner, or even halt development altogether, some of the people said. The company is currently spending about $1 billion a year on the project.

In addition, some see De Beers as a strange fit for Anglo — diamonds are a discretionary product and require significant marketing in a way other commodities don’t — and its growth options are limited.

Still, De Beers is seen as a trophy asset, so while diamonds are at a low point, Anglo won’t accept a lowball offer.

–With assistance from Loukia Gyftopoulou and Jack Farchy.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

TSMC (TSM)

Taiwan Semiconductor Manufacturing Company’s April revenue jumped nearly 60% percent on-year, as the firm rides a wave of sustained demand for the advanced semiconductors used in artificial intelligence (AI) hardware.

The world’s largest contract chipmaker said consolidated revenues for April were approximately TWD236.02bn (£5.7bn/$7.2bn), an increase of 59.6% from April 2023. This compares with a 34.3% on-year jump in March 2024.

The company is Nvidia’s (NVDA) sole manufacturer for the most advanced training chips. TSMC also fabricates semiconductors for Apple (AAPL).

Read more: FTSE 100 LIVE: European stocks climb as UK economy escapes recession

Last month, TSMC announced its newest semiconductor process, advanced packaging, and other technologies for powering the next generation of AI innovations.

"We are entering an AI-empowered world, where artificial intelligence not only runs in data centres, but PCs, mobile devices, automobiles and even the internet of things," said CEO C.C. Wei.

Novavax (NVAX)

Shares in Novavax were higher in pre-market trading as the pharmaceutical said it has signed a $1.2bn (£957m) deal with French drugmaker Sanofi (SAN.PA) to co-commercialise the company’s COVID vaccine starting next year.

Novavax will receive $500m in upfront payments as well as $700m in development, regulatory and launch milestones, according to a statement.

That total is roughly double Novavax’s current market cap of $627m.

Sanofi is also taking a minority equity stake of about 5% in Novavax. Novavax will benefit from a double-digit percentage of royalties from the sales of its Covid jab as well as any combined shot using its technology.

Novavax has had some turbulent times. Its market value boomed to more than $40bn at the height of the pandemic, propelled by investor excitement over its COVID shot. But it has since fallen by almost 99%.

Anglo American (AAL.L)

Shares in the miner were higher amid reports that rival Rio Tinto (RIO.L) had considered an offer for British miner Anglo American, which is now BHP’s (BHP.L) £31bn takeover target.

Rio “management had not ruled out making a play for part or all of the mining group and continued to study the day-to-day situation", the Australian Financial Review reported.

Anglo has turned down BHP’s proposal, saying it was opportunistic and significantly undervalued the British company. Under the UK’s takeover rules, BHP has until May 22 to make a formal offer.

Read more: Bank of England holds interest rates but hints at summer cut

“Shares in Anglo American are up on a report that Rio Tinto also considered a bid following BHP’s rejected offer. M&A speculation is helping to keep Anglo shares supported at the moment,” Victoria Scholar, head of investment at Interactive Investor, said.

BHP and Rio have a close working relationship at Escondida and Resolution Copper. One option for Rio is to informally assist BHP’s bid for Anglo by acquiring the assets that BHP does not want, such as Anglo’s diamond business, AFR wrote.

Glencore is also studying options for a possible approach for Anglo, Reuters reported earlier in the month, a move that could spark a bidding war.

IAG (IAG.L)

The owner of airlines British Airways and Aer Lingus has said its earnings have soared in recent months thanks to higher sales and lower fuel costs.

International Airlines Group (IAG) reported an operating profit for the first three months of the year of €68m (£58.5m), up from the €9m (£7.7m) reported this time last year.

Total revenues also jumped to €6.4bn (£5.5bn), up from €5.9bn (£5.1bn) last year, while fuel costs were about 5% lower than the previous year, due to lower average prices and more efficient aircraft deliveries.

IAG said the improved profits and sales had been driven by stronger demand across its airlines, which also include Iberia and Vueling.

It also highlighted that it was continuing to see a rebound in leisure travel.

Watch: Market strategist sees dollar dip lifting non-US stocks

Download the Yahoo Finance app, available for Apple and Android.

South African shareholders of the mining company Anglo American have signalled they are open to a revised takeover offer from BHP, despite warnings from South African politicians and unions that a deal could be bad for the country.

Investors, which collectively own more than 15% of the London-listed mining company, told the Financial Times that they were not opposed in principle to an acquisition by its Australian rival but said an improved and less complex offer would be needed.

It comes after the ruling African National Congress has been publicly critical of BHP’s move, with its mining minister, Gwede Mantashe, saying South Africa’s experience with BHP “was not positive”.

Last month, Anglo rejected a £31bn takeover offer from the Australian company, in what would have been the biggest deal in the mining sector for a decade.

At the time, the board unanimously rejected the offer, saying it “significantly undervalued” the company and its future prospects.

As part of the BHP proposal, Anglo’s South African platinum and iron ore businesses – Amplats and Kumba – would be excluded from the deal, which the board deemed “highly unattractive”.

However, several local investors have now told the FT that they would be open to a revised offer, but stressed this would need to be at a higher price because of BHP’s desire to spin off the South African parts of the business.

Dawid Heyl, a fund manager at Ninety One, which owns 2.1% of Anglo, said a deal along the lines proposed could be struck but the price would have to be substantially higher.

He said: “It would be easier, though, if BHP were to come back with a higher and simpler offer, which removes the conditionality of getting rid of Amplats and Kumba, which would make it trickier.”

Karl Leinberger, the chief investment officer at Coronation Fund Managers, which owns 1.2% of Anglo, said that it would “definitely” consider a deal but BHP would have to pay more if it wanted to exclude the South African businesses.

This is at odds with the mining minister Mantashe, who has publicly stated that he is against the takeover.

Speaking after the rejection of the first offer last month, Mantashe said BHP’s merger with the South African miner Billiton in 2001, “never did much for South Africa”.

South Africa’s government-owned Public Investment Company is Anglo’s largest stakeholder and owns a 7% stake in the company.

The Congress of South African Trade Unions, which includes the National Union of Mineworkers, has also urged local shareholders to reject a BHP bid, saying a deal would not be in the national interest.

BHP now has until 22 May to make a formal offer for Anglo American under UK merger and acquisition rules. There is speculation that other global mining companies could also enter the race, with Rio Tinto and Glencore also reported to be eyeing up bids.

(Reuters) -Mining giant Rio Tinto had considered an offer for British miner Anglo American, which is now BHP Group's $39 billion takeover target, the Australian Financial Review reported on Friday.

Rio "management had not ruled out making a play for part or all of the mining group and continued to study the day-to-day situation", the AFR reported, citing sources close to Rio.

The report did not mention why Rio did not make a proposal but said there is no suggestion that Rio is about to make an alternative bid. Rio declined to comment on the report.

BHP shares were down 0.4%, while Rio Tinto was trading flat. The Australian mining index was also flat as of 0438 GMT.

Anglo has turned down BHP's proposal, saying it was opportunistic and significantly undervalues the British company. BHP has until May 22 to make a formal offer under the UK's takeover rules.

Glencore is also studying options for a possible approach for Anglo, Reuters reported earlier in the month, a move that could spark a bidding war.

"Our policy is we don't speculate or comment on M&A activity," Rio's chair, Dominic Barton, said in reply to a question at a shareholder meeting last week on whether the company was considering a rival bid.

BHP and Rio work closely together on the Escondida and Resolution Copper mines, in which they both own stakes.

Rio should not stand against BHP but instead should look at smaller copper and lithium miners, said Daniel Sullivan, portfolio manager of Janus Henderson Investors' global natural resources fund that owns shares in Rio, the AFR report said.

(Reporting by Rishav Chatterjee in Bengaluru and Melanie Burton in Melbourne; Editing by Savio D'Souza and Rashmi Aich)

By Melanie Burton and Yuka Obayashi

MELBOURNE/TOKYO (Reuters) -Japanese steelmakers have raised concerns with Australian authorities that BHP Group could become too dominant in the global supply of coking coal if it goes ahead with a takeover of Anglo American.

Australia is the world's biggest exporter of coking coal and top supplier to Japan, making up around 60% of its imports, with most of the steel-making ingredient coming from the state of Queensland, where BHP and Anglo American are the two largest producers.

Steelmakers' concerns about BHP's coking coal market power could derail a deal if the Australian giant comes back with a revised bid for Anglo American, after being rebuffed with a $39 billion offer last month.

"BHP already has a large share of the supply of high-quality hard coking coal in the seaborne trade, and we will take measures to ensure that further oligopolisation will not impede sound price formation and stable supply," a JFE Steel spokesperson said, declining to elaborate on what measures they could take.

Representatives of Japanese steelmakers met with Queensland government officials raising alarm bells that if a deal went ahead it would concentrate the world's top quality coking coal mines in the state's Bowen Basin in the hands of BHP, two people familiar with the talks said.

The combined group would control 44 million tons, or about 13%, of the seaborne coking coal market, data from consultants Wood Mackenzie shows. That comes even as BHP's production has fallen after sales of some mines in recent years.

"In general, we are against the (BHP-Anglo) union as it would create a supplier with a huge market share, especially in the hard-coking coal market," said a source at a Japanese steel maker, adding that it was closely monitoring the situation.

"We, for our part, would not want BHP to buy Anglo and gain a stronger price competition power."

Queensland Deputy Premier and Treasurer Cameron Dick said BHP would need to ensure its coal remains competitive or risk losing state government support. "We work closely with our Japanese customers and are aware of their concerns," Dick told Reuters.

"BHP needs to explain to Japanese steelmakers and the market more broadly how it will ensure the ongoing supply of steelmaking coal remains competitive," he said.

BHP declined to comment for this story but has said expanding in high quality coking coal was a main driver of its tilt for Anglo.

Anglo American declined to comment.

COKING COAL SQUEEZE

Japan's Fair Trade Commission has the authority to investigate a BHP-Anglo American transaction and could block a deal if it found it would harm Japanese companies, two anti-trust lawyers in Tokyo said.

However, if a deal was deemed anti-competitive, the commission would likely ask BHP to offer a remedy, which could include a coal divestment, one of the two lawyers said. They both declined to be named due to the sensitivity of the issue.

The Fair Trade Commission declined to comment whether it has received any request to examine the BHP-Anglo deal.

Like JFE, Kobe Steel said it is keeping a close eye on the proposed deal and a potential increase in BHP's market power.

Japan's biggest steelmaker Nippon Steel declined to comment on the deal, but said it had expressed concern to the Queensland government that its royalty rate hike could result in lower investment in mines and disrupt coking coal supply in the future.

Key among steelmakers' concerns is that BHP has stressed it will not invest to expand production in Queensland after the state hiked coal royalties without industry consultation, a source familiar with the matter told Reuters.

BHP CEO Mike Henry said last year the company "will not be investing any further growth dollars in Queensland under the current conditions".

Anglo's Moranbah North and Grosvenor mines are effectively an extension of BHP's Goonyella mine, which produces a type of coal favoured by Japan and India.

The Japanese are facing growing competition from India for that coal. BHP already sends 40% of its coking coal to India and expects the country's demand for the steel-making ingredient to double by the end of the decade, CFO Vandita Pant said in March.

Japan could lobby anti-trust authorities in other jurisdictions to block a deal if it believes there will be an impact to the competitiveness of the global coking market, as it did when BHP made a bid for its iron ore rival Rio Tinto in 2007, one of the lawyers said.

Queensland could also complicate a deal.

"The transfer of mineral assets in Queensland are subject to a number of state government approvals. No resources company should take those approvals for granted," Treasurer Dick said.

(Reporting by Melanie Burton in Melbourne and Yuka Obayashi in Tokyo; Additional reporting by Katya Golubkova in Tokyo; Editing by Sonali Paul)

(Bloomberg) — South Africa’s biggest labor union federation urged local shareholders, including the powerful Public Investment Corp., to oppose BHP Group Ltd.’s bid to buy Anglo American Plc.

Most Read from Bloomberg

The Congress of South African Trade Unions, which includes the National Union of Mineworkers among its members, said a deal wouldn’t be in the national interest. South African shareholders hold about 26% of Anglo, with the PIC owning 8.4%, according to data compiled by Bloomberg.

BHP’s proposal to acquire Anglo on April 25 raised the ire of some members of South Africa’s government, including Mines Minister Gwede Mantashe. The Australian company responded by deploying a senior team including its chief executive officer to South Africa to win over government officials, regulators and local Anglo shareholders.

BHP’s proposal includes a plan for Anglo to spin off its Johannesburg-listed platinum and iron ore units before an eventual takeover of the remaining assets. Anglo, founded in Johannesburg in 1917, also owns manganese and diamond mines in South Africa. While the miner was the bedrock of the South African economy for decades, it shifted its headquarters to London in the late-1990s.

Anglo rejected the initial bid, but BHP is expected to make an improved offer, Bloomberg has reported. The PIC, which manages the pensions of government workers, has said it will assess any BHP offer.

“Cosatu is deeply concerned about the possible sale of Anglo assets in South Africa to BHP,” the union federation said in comments sent to Bloomberg on Tuesday. “It is critical that South African shareholders, including the PIC, ensure these assets remain South African-owned.”

A BHP spokesman referred to comments it made last week, when the company said Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. would continue to be listed on the Johannesburg Stock Exchange and would continue to be run by established South African-based management teams.

“South Africa will continue under BHP’s proposal to benefit from Anglo Platinum and Kumba operating as independently listed South African companies investing in local operations, communities and jobs,” BHP said last week.

Cosatu is a key ally of South Africa’s ruling African National Congress and President Cyril Ramaphosa was a co-founder of the National Union of Mineworkers. The bid from BHP comes before a national election later this month, which could see the ANC lose its majority for the first time since winning power in 1994.

The presidency has rejected the premise that BHP’s approach is vote of no-confidence in South Africa, after the opposition presented the bid as a stinging rebuke of the government’s handling of the economy in a country with one of the world’s highest unemployment rates and deteriorating infrastructure.

Read More: BHP CEO Flies to South Africa to Push $39 Billion Takeover

“These companies were built on the back of South African mine workers and pension funds,” Cosatu said. “The profit they generate is needed to grow the economy and create decent jobs.”

BHP is targeting Anglo for its South American copper mines, which would make it the world’s biggest producer of the key metal.

Anglo’s South African operations have been hamstrung by fractious labor relations, power outages and the deterioration of the national freight rail company. Its Kumba unit has had to stockpile the steelmaking raw material because there aren’t enough trains to take it to a port.

–With assistance from Thomas Biesheuvel and William Clowes.

(Updates with BHP comments from seventh paragraph.)

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

(Bloomberg) — BHP Group Ltd. is pulling out the stops to gain support for a proposed tie-up with rival Anglo American Plc, but calculating the true value of the megadeal can be a bit tricky. US natural gas prices have snapped a losing streak. And wheat traders will be watching for the latest US Department of Agriculture estimates on crops, with the grain being of particular interest as North America’s growing season begins.

Most Read from Bloomberg

Here are five notable charts to consider in global commodity markets as the week gets underway.

Mining

BHP’s pitch to Anglo American has been touted as a $39 billion deal, but it’s a lot more complicated than that. The actual offer is significantly lower because BHP is asking Anglo to first demerge its two main South African businesses to shareholders, striping out a fair chunk of that topline number. Once that work is done, Anglo holders would end up owning those two businesses and then getting a big chunk of BHP stock for the rest of Anglo, currently worth about $25 billion.

Natural Gas

US natural gas prices, which had slumped earlier as an unusually mild North American winter damped demand, are now making a comeback. April saw the first monthly gain since October, snapping the longest losing streak in more than four years. The market is expecting hotter weather to arrive soon, bringing demand for gas with it as households and businesses crank up air conditioning that taxes gas-fired power plants. Natural gas rose 3.3% at 10:04 a.m. in New York on Monday.

Wheat

The world’s wheat supply will be top of mind for grains traders this week as they await the latest estimates from the US government. There are still plenty of questions about this year’s crop size as the growing season starts in the Northern Hemisphere, and the USDA’s World Agriculture Supply and Demand Estimates report due Friday will shed some light on production and stocks of the key grain. Global wheat stocks have contracted over the last few years, under pressure from Russia’s war in the Ukraine and other geopolitical issues as well as weather woes in important producing regions. If those issues persist, wheat could face a tightening between supply and demand. The grain was up about 1% at 9:03 a.m. Chicago time Monday.

Oil

The disconnect among energy experts on just how much oil will be consumed in 2024 will be in the spotlight this week, with the US releasing its latest supply and demand forecasts. The Energy Information Administration’s Short-Term Energy Outlook, which looks at supply and demand in the US and around the world, was more pessimistic in April than the International Energy Agency and the Organization of Petroleum Exporting Countries. Oil traders will see whether that bearish mood prevails when the latest monthly report is released Tuesday.

Renewables

The UK’s decade-long bet on offshore wind is paying off, as rising green power generation starts to push fossil fuels to the margins of the British electric grid. Wind farms in the UK produced twice as much power as gas and coal-fired plants in April, which followed two straight quarters when the UK got more electricity from wind than from fossil fuels, according to National Grid data. The trend will only accelerate as Britain works toward a goal to more than triple its offshore wind power fleet by the end of the decade.

–With assistance from Doug Alexander, William Mathis, Thomas Biesheuvel and Julia Fanzeres.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

Many investors define successful investing as beating the market average over the long term. But if you try your hand at stock picking, your risk returning less than the market. We regret to report that long term BHP Group Limited (ASX:BHP) shareholders have had that experience, with the share price dropping 17% in three years, versus a market return of about 21%.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

Check out our latest analysis for BHP Group

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the unfortunate three years of share price decline, BHP Group actually saw its earnings per share (EPS) improve by 1.0% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

After considering the numbers, we'd posit that the the market had higher expectations of EPS growth, three years back. Looking to other metrics might better explain the share price change.

Given the healthiness of the dividend payments, we doubt that they've concerned the market. BHP Group has maintained its top line over three years, so we doubt that has shareholders worried. A closer look at revenue and profit trends might yield insights.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth

BHP Group is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for BHP Group in this interactive graph of future profit estimates.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for BHP Group the TSR over the last 3 years was 20%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

BHP Group shareholders gained a total return of 0.8% during the year. But that was short of the market average. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 13% over five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with BHP Group , and understanding them should be part of your investment process.

Of course BHP Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

(Bloomberg) — Brazil’s government rejected mining giants Vale SA and BHP Group Ltd.’s offer to pay about $25.7 billion (127 billion reais) in total compensation for a 2015 tailings dam disaster at the companies’ iron ore joint venture Samarco Mariana.

Most Read from Bloomberg

“I cannot fail to express my outrage at how brazen it is for Vale and BHP to present a settlement proposal for the humanitarian tragedy of Mariana that’s less adequate than the previous one,” the nation’s Mines and Energy Minister, Alexandre Silveira, said in an interview with Bloomberg in Rome. “We’ll reject it.”

Read More: BHP, Vale Offer Brazil $25.7 Billion to Cover Dam Disaster (1)

Silveira said the proposal is technically and economically inappropriate because it reduces the companies’ obligations, transferring them to the federal government and the states. Brazil’s general attorney’s office confirmed in a statement the proposal was officially rejected Friday.

Brazil’s mines and energy chief signaled that President Luiz Inacio Lula da Silva’s government is studying legal ways of putting pressure on Vale, BHP and Samarco to speed up a settlement, without giving details.

“Vale and BHP either make an agreement or they will face the full rigor of the law,” Silveira said.

Minas Gerais state government said in a statement that it sees room for adjustments in the companies’ proposal with a focus on speeding up the reparation, adding that there has been progress compared with the previous $8.2 billion (42 billion reais) offer. State Planning Secretary Luisa Barreto criticized what she called “a unilateral decision by the federal government” to reject it.

A final settlement in the 2015 Mariana dam collapse, which killed 19 people and contaminated waterways in two Brazilian states, would remove a major legal shadow hanging over the companies and cement a reparation schedule for victims in what is Brazil’s biggest environmental disaster.

Silveira said he is concerned that BHP could expand operations in Brazil before giving reparation to the victims of Samarco dam break, if a bid to buy rival miner Anglo American Plc is successful. Anglo holds Minas Rio iron ore mine in Minas Gerais, one of the two states directly affected by Samarco’s dam collapse.

–With assistance from Carlos Caminada.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

BHP Group BHP announced that its iron ore production rose 3% year over year to 61.5 Mt in the third quarter of fiscal 2024 (ended Mar 31, 2024). This was attributed to a 3% rise in iron ore output at Western Australia Iron Ore (WAIO).In the first nine-month period of 2024, iron ore production was recorded at 191 Mt, down 1% year over year. This decline can be attributed to heavy rainfall in the third quarter of fiscal 2024,  the continued tie-in activity for the Rail Technology Program, the impacts of the ongoing ramp-up of the Central Pilbara hub (South Flank and Mining Area C) and a bushfire near Yandi.BHP stated that South Flank is on track to ramp up to a full production capacity of 80 Mt per year (100% basis) by the end of fiscal 2024.Copper Output Up 15% in Q3: Total copper production in the third quarter of fiscal 2024 rose 15% year over year to 466 kt. This brings the copper production total to 1,360 kt for the first nine-month period of fiscal 2024, which marks 10% growth year over year.  This reflects strong performance and additional tons from Copper South Australia, record year-to-date performance from Spence, as well as improved grades and production at Escondida.Production at Escondida was up 7% year over year to 816 kt in the first nine-month period of fiscal 2024. Copper output at Pampa Norte declined 9% to 200 kt in the first nine-month period compared with year-ago levels. Cerro Colorado entered temporary care and maintenance in December 2023. Spence continues to perform well with its output attaining a nine-month record of 189 kt, mainly driven by improved concentrator throughput and higher recoveries.Production from Copper South Australia surged 49% to 233 kt in the first nine-month period of fiscal 2024, driven by additional contributions from Prominent Hill and Carrapateena. Antamina’s copper production rose 4% to 106 kt in the first nine months of fiscal 2024.Nickel Production Down 4% in Q3: Nickel production was down 4% year over year to 18.8 kt during third-quarter fiscal 2024. In the first nine months of fiscal 2024, nickel output was 58.6 kt, which was 1% higher than the year-ago comparable period.Energy Coal Up, Metallurgical Coal Plunges: Energy coal production rose 5% year over year to 4.1 Mt in the third quarter of fiscal 2024. In the first nine months of fiscal 2024, production improved 23% year over year to 11.6 Mt owing to strong operating performance.Metallurgical coal production was 6 Mt, down 13% compared with the year-ago quarter. Production in the first nine months of fiscal 2024 was 17.4 Mt, which was 16% lower than the year-ago levels due to planned maintenance, an extended longwall move, as well as increased stripping to improve supply-chain stability.Prices: In the third quarter of fiscal 2024, average realized prices for iron ore were down 3% to $106 per ton. Copper prices were up 5% sequentially to $3.85 per pound. Average nickel prices were $16,581 per ton, down 1% sequentially. Prices for thermal coal dipped 4% sequentially to $116.11 per ton and metallurgical coal prices were down 4% sequentially to $281.51 per ton.

FY24 Production Guidance

BHP’s iron ore production guidance for fiscal 2024 is 254-264.5 Mt. WAIO's production is expected to be between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).BHP expects copper production within 1,720-1,910 kt in fiscal 2024. Production guidance for metallurgical coal has been lowered to 21.5-22.5 Mt from the previous expectation of 23 -25 Mt. The production guidance for energy coal is 13-15 Mt. Nickel production is expected to be near the lower half of the range of 77 kt and 87 kt.

Cost Guidance for FY24

Unit cost guidance for WAIO is $17.40-$18.90 per ton. Escondida unit cost is estimated to be $1.40-$1.70 per pound. Spence unit costs are expected to range between $2.00 per pound and $2.30 per pound. BMA unit cost is expected to be between $119 per ton and $125 per ton, higher than the prior stated range of $110-$116 per ton.

Other Updates

BHP and Mitsubishi Development Pty Ltd, on Apr 2, announced the completion of the divestment of the Blackwater and Daunia mines to Whitehaven Coal.  Daunia and Blackwater were part of the BHP Mitsubishi Alliance (BMA) metallurgical coal joint venture in Queensland. Each of BHP and MDP holds a 50% interest in BMA.

Peer Performances

Vale S.A. VALE reported iron ore production of 70.8 Mt for the first quarter of 2024, which was up 6% year over year, attributed to improved operating performance at the S11D mine and higher third-party purchases. Vale’s iron ore production guidance for 2024 is 310-320 Mt.Vale produced 81.9 kt of copper in the quarter, which marked 22.2% year-over-year growth, benefiting from the steady ramp-up of Salobo 3 as well as better performance at Salobo’s 1 & 2 plants.Rio Tinto Group RIO reported a 2% decrease in its first-quarter 2024 iron ore production to 77.9 Mt (on a 100% basis) as planned ore depletion, predominantly at Yandicoogina, was partially offset by productivity gains across other operations.Shipments for the quarter (on a 100% basis) were reported at 78 Mt, marking a 5% year-over-year drop. This was due to weather disruption at the ports as well as lower output at the mines. RIO expects Pilbara iron ore shipments (100% basis) between 323 Mt and 338 Mt in 2024. The midpoint of the range indicates a year-over-year dip of 0.4%.Rio Tinto’s copper production was 156 thousand tons (on a consolidated basis), which was 7% higher than the year-ago quarter.

Price Performance

BHP’s shares have declined 7.6% in a year against the industry’s 3% growth.

Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank & Another Key Pick

BHP currently carries a Zacks Rank #3 (Hold).A better-ranked stock in the Basic Materials space is Carpenter Technology Corporation CRS, which carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $4.00 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 68% in a year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BHP Group Limited Sponsored ADR (BHP) : Free Stock Analysis Report

VALE S.A. (VALE) : Free Stock Analysis Report

Rio Tinto PLC (RIO) : Free Stock Analysis Report

Carpenter Technology Corporation (CRS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

In this piece, we will take a look at the 11 best coal mining stocks to invest in. To know more about the top stocks, go directly to 5 Best Coal Mining Stocks To Invest In.

Coal has been recognized for its role in alleviating poverty through coal mining by offering employment opportunities in areas with limited or no jobs. Also, coal mining can spur economic growth by attracting investment and generating revenue for local governments. It is most reliable, and constant power of energy in areas that use coal as a primary energy source thus contributing to enhanced productivity and quality of life. Despite being the most reliable and abundant source of energy, coal consumption has been witnessed to partially decline particularly in the United States due to apprehensions regarding the impact of carbon dioxide and other emissions on climate.

Predominantly “green companies” have been claiming for a long time now that wind and solar are the cheapest forms of electricity and transitioning to renewable energy will contribute to the broader target of achieving net zero emissions. However, the opposite is true in this case as the transition to renewable energy sources has been witnessed to fail because it misaligns with the “Energy Trilemma” of focusing on security, affordability, and sustainability.

According to Ernst & Young's 2024 report, “Top 10 business risks and opportunities for mining and metals 2024”, ESG poses both substantial risks and considerable opportunities for miners that can contribute to achieving long-term value for all stakeholders. Moving forward, coal asset divestment continues because it produces carbon that represents a significant proportion of GHG emissions. Many diversifier miners have either divested their coal assets or set a timeline for closure.  As per the latest IEA market report, a decline of 2.3% has been expected to take place globally in the demand for coal by 2026 in comparison to 2023.

Coal Industry Outlook 2024

China, India and Indonesia are the three largest coal producers. China, among them, has dominated global coal production for decades and is likely to continue as the foremost coal producer in the foreseeable future. Despite setting renewable energy targets, the growing economies of China and India continue to remain the top consumers of coal in efforts to fuel economic growth. China is the world’s largest energy consumer and over 60% of its electricity is generated by coal. Based on the projections from Energy Watchdog International Energy Agency, China’s share of global electricity consumption will surge to one-third by 2025, marking a substantial increase from a quarter in 2015.

On the contrary, according to Ember’s Global Electricity Review 2023, wind and solar energy are expected to replace coal by 2030, it will contribute to 41% of global electricity generation with a significant increase of 10% in 2021. Simultaneously, this transition demands a reduction in coal generation by 54% and gas generation by 28%. A notable surge in electricity demand with an average annual increase of 3.7% from 2021 to 2030 is also anticipated in this period.

Coal’s contribution to Energy Mix in 2024

According to the European Electricity Review of 2024, fossil generation plummeted by a record 19% last year with an unprecedented collapse in coal and gas generation. Coal generation fell by 26% to its lowest level accounting for only 12% of the EU electricity mix in 2023. Also, gas generation fell by 15%, which accounts for 17% of the total EU generation in 2023.

In the US alone, about 60% of 4.18 trillion kilowatt-hours of energy was generated last year from fossil fuels that included coal, according to the US Energy Information Administration. Coal amounted for roughly more than 16% of electricity generation in the nation.

Some of the best coal stocks include Teck Resources Limited (NYSE:TECK), Arch Resources, Inc. (NYSE:ARCH), Peabody Energy Corporation (NYSE:BTU), and others. For this, we decided to take a look at the 11 best coal mining stocks to invest in.

11 Best Coal Mining Stocks To Invest In

11 Best Coal Mining Stocks To Invest In

Our Methodology

To compile the list of the best coal mining stocks to invest in, we filtered companies listed on the New York Stock Exchange and Nasdaq that were engaged in coal mining operations. The stocks were ranked based on Insider Monkey’s database of 933 hedge funds tracked at the end of Q4 2023. The ranking was based on the ascending order of the number of hedge fund investors in each stock and then the top 11 coal mining stocks were picked for investment purposes. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

Best Coal Mining Stocks To Invest In11. Alliance Resource Partners, L.P. (NASDAQ:ARLP)

Number of Hedge Fund Holders: 6

Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the company involved in the production and marketing of coal. Alliance Resource Partners, L.P. (NASDAQ: ARLP) being a diversified coal and producer and marketer plays a significant role in the energy sector predominantly in regions where coal remains a vital source of electricity generation.

The company is the largest coal producer in the eastern United States that caters to both domestic and international utility and industrial sectors. Alliance Resource Partners, L.P. (NASDAQ:ARLP) is well-suited to be a reliable energy partner for the future having a market capitalization of $2.8 billion as of last quarter of 2023 and one of the best coal mining stocks to invest in.

The company possesses royalties from oil and gas operations and has notable investments in emerging alternative energy ventures which makes it as one of the best coal stocks. According to the last quarter of 2023, Alliance Resource Partners, L.P. (NASDAQ: ARLP) had 6 hedge fund investors out of 933 funds tracked by Insider Monkey database. Adam Peterson’s Magnolia Capital Fund was the largest stakeholder with 3.2 million shares having net worth of $68.1 million.

10. Ramaco Resources, Inc. (NASDAQ:METC)

Number of Hedge Fund Holders: 14

Ramaco Resources, Inc. (NASDAQ:METC) is a US based coal mining company that specializes in mining, processing and selling of metallurgical coal primarily used in steel production. As of March 2024, Ramaco Resources, Inc. (NASDAQ:METC) intends to increase its met coal production by two folds from the current 3.5 million tons and delve into the rare earth business that makes it as one the best coal stocks.

According to Insider Monkey’s Q4 database of 2023, 14 hedge funds were bullish on Ramaco Resources, Inc. (NASDAQ: METC) with Steve Cohen’s Point72 Asset Management being the largest stakeholder of the company, with 901,500 shares worth $15.5 million.

Ramaco Resources, Inc. (NASDAQ:METC) is one of the best coal mining stocks to invest in as it leads the coking coal industry as of March 2024 and it has managed to secure an average rating of buy and a price target of $23.50, according to analysts of S&P Capital IQ. In an effort to reduce costs and improve operational efficiency, Ramaco Resources, Inc. (NASDAQ: METC) has purchased a coal preparation plant for the Maben Complex and expects the same plant to get operational by Q4 this year.

9. Hallador Energy Company (NASDAQ:HNRG)

Number of Hedge Fund Holders: 17

Hallador Energy Company (NASDAQ: HNRG) is the leader in energy exploration since 1951 that makes it as one of the best coal stocks. The company is headquartered in Terre Haute, Indiana and through its wholly owned subsidiary, Sunrise Coal, LLC, produces electricity at its 1GW facility at the Merom Generating Station.

As of February 2024, Hallador Energy Company (NASDAQ: HNRG) announced a restructuring of its sunrise coal division to transition from a coal production company to a vertically integrated independent power producer that will eventually enhance the overall cost structure.

The last quarter of 2023 as per Insider Monkey’s database indicated that Hallador Energy had 17 hedge fund holders and Israel Englander’s Millennium Management was the biggest position holder, with 322,570 shares worth $2.9 million of the firm.

Along with Alliance Resource Partners, L.P. (NASDAQ: ARLP) and Ramaco Resources, Inc. (NASDAQ: METC), Hallador Energy Company (NASDAQ: HNRG) is one of the best coal mining stocks to invest.

8. SunCoke Energy, Inc. (NYSE:SXC)

Number of Hedge Fund Holders: 19

SunCoke Energy, Inc. (NYSE: SXC) is an independent manufacturer of coke. The company was established in 1960 and is headquartered in Lisle, Illinois. It operates through three segments: Domestic Coke, Brazil Coke, and Logistics. Analysts who are looking for strong oil-energy stocks, it is prudent for them to seek those companies that are outperforming and as of March 2024, SunCoke Energy, Inc. (NYSE: SXC) has certainly gained attention of many investors and is one of the best coal stocks.

SunCoke Energy, Inc. (NYSE: SXC) had 19 hedge fund holders as per Insider Monkey’s fourth quarter database. And Cliff Asness’s AQR Capital Management is the largest stakeholder of the company with 592,500 shares worth $6.4 million. SunCoke Energy, Inc. (NYSE:SXC) had surpassed its own forecasts with a consolidated adjusted EBITDA of $268.8 million in Q4. And the company is planning ahead for a challenging year of 2024 with a strategic focus on safety, environmental performance, and expanding its customer base.

7. Alpha Metallurgical Resources, Inc. (NYSE:AMR)

Number of Hedge Fund Holders: 20

Alpha Metallurgical Resources, Inc. (NYSE: AMR) was formerly known as Contura Energy Inc. and is a leading coal producer in the United States headquartered in Bristol, Tennessee. The company specializes in mining, producing, blending, and selling metallurgical and steam coal. Its portfolio of mining operations consists of 15 underground mines, nine surface mines and eight coal preparation plants.

Insider Monkey’s Q4 database results show that Alpha Metallurgical Resources, Inc. (NYSE:AMR) held 20 hedge funds out of 933 funds with Mohnish Pabrai as the largest stakeholder with 394,313 shares valued at $133.6 million. Mohnish Pabrai acquired a significant portion of AMR i.e. 369,642 shares during the second quarter of 2023 and added another 12% in the third quarter. The company’s strong financial discipline, clear-cut business model and commitment to maximizing shareholder returns makes it as one of the best coal stocks.

Alpha Metallurgical Resources, Inc. (NYSE:AMR) is one of the best coal mining stocks to invest like Hallador Energy Company (NASDAQ:HNRG) and SunCoke Energy, Inc. (NYSE:SXC).

6. BHP Group Limited (NYSE:BHP)

Number of Hedge Fund Holders: 24

BHP Group Limited (NYE: BHP) is one of the largest diversified mining companies that is the major producer of commodities such as iron ore, copper, coal, petroleum, and nickel with a substantial presence in each sector. Its strong focus and commitment to sustainability and environmental stewardship makes it as one of the best coal stocks.

BHP Group Limited (NYSE: BHP) has a market capitalization of around $144 billion. It published a white paper that focuses on the company’s efforts to transition from fossil fuel and carbon-intensive to a world of low or zero-carbon emission resources. In 2016, BHP Group Limited (NYSE:BHP) is committed to achieving gender balance by 2025, and has achieved 40% female representation this year. It is one of the first mining companies in Chile to exceed 40% female representation.

BHP Group Limited (NYSE: BHP) positions itself as a promising, resilient investment choice and one of the best coal mining stocks to capitalize amidst changing market dynamics and regulatory pressures due to its diversified portfolio spanning various commodities, vigorous operational efficiency and proactive approach to sustainability and environmental stewardship.

Insider Monkey’s fourth quarter database results show that 24 hedge funds were bullish on BHP Group Limited (NYSE:BHP) with Ken Fisher’s Fisher Asset Management as the largest position holder in the company have 19.9 million shares worth $1.4 billion.

Click to continue reading and see 5 Best Coal Mining Stocks To Invest In.

Suggested articles:

Disclosure: None. 11 Best Coal Mining Stocks To Invest In is originally published on Insider Monkey.

(Bloomberg) — The performance of Australia’s mining stocks is lagging their global peers by the the most in over a year, as China’s uneven recovery and volatile metal prices weigh on shares.

Most Read from Bloomberg

Recent rallies in gold and copper prices have done little to lift the S&P/ASX 200 Materials Index, down 6.6% for the year, due largely to share declines in behemoths BHP Group Ltd and Rio Tinto Ltd, which account for over half the gauge. In contrast, the Bloomberg World Mining Index is up almost 7%.

Miner shares have trailed falling iron ore prices, which have sunk by 17% this year as China’s real estate slump continues to damp steel demand. Both Rio Tinto and BHP get more than half of their revenue from China.

Still, there might be some positives for miners: ore prices are rebounding after dipping below $100 a ton, and quarterly production updates from BHP and Rio Tinto cast copper as a bright spot for both miners. SBG Securities analyst Tim Clark raised the recommendation on BHP to buy from hold following its trading update.

“We do expect the demand outlook out of China to stabilize into mid-year and be supportive of early-stage commodities, such as iron ore, coal,” UBS analysts including Lachlan Shaw wrote in an April 9 note.

Prolonged US dollar strength may also benefit Aussie miners’ profits as their US dollar-denominated export incomes gain from favorable exchange rates.

–With assistance from Michael G. Wilson and Paul-Alain Hunt.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.