BHP drunk on Anglo takeover


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.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.