BHP going big:
BHP is doubling down on its big bet on copper demand growing exponentially in the global shift away from fossil fuels, with a bold takeover bid for British resources heavyweight Anglo American that values it at almost $60 billion.
Copper only contributed a third of Anglo’s profits last year. Anglo does have plans for big copper expansions, but that only makes sense if it is needed. We don’t think so, and we expect recycling to accelerate into the supply gap as driverless cars cut the number of vehicles on the road by half.
In the meantime, 53% of Anglo’s earnings come from iron ore and coking coal, two of the least attractive assets in the world right now as China goes ex-growth.
And both commodities to which BHP is already heavily exposed.
Unless there is some hidden plan to divest the losing Chinese commodities later, this takeover looks like buying the entire Bunnings chain and catalogue so you can use more hammers.
