London: BHP’s battle to buy rival miner Anglo American has shone a spotlight on copper, the industrial metal in strong demand owing to its key role in greener technology.
UK-based Anglo on Wednesday rejected a third offer worth $49 billion from Australian giant BHP, which has set it sights on creating a copper behemoth.
Copper is a vital component for energy storage, electric vehicles, solar panels and wind turbines.
Meanwhile Anglo has said that should it remain independent, it will offload its diamond and platinum businesses—traditionally seen as more prestigious than its copper operations.
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It traded at $10,398.50 on Thursday, with traders and investors banking profits according to analysts.
Copper production is struggling to keep up with demand—and by purchasing Anglo, BHP does not have to uncover new mines, a project that comes at great expense.
“To mine 200,000 tonnes of copper, you need $10 billion and 10 years,” said Philippe Chalmin at commodities research group Cyclope.
However, with copper’s high price, new mining projects could become economical.
“The now significantly higher price level could even stimulate production in the medium term,” said Barbara Lambrecht, commodities analyst at Commerzbank.
Peru’s Minister of Energy and Mines, Romulo Mucho Mamani, recently declared that the rise in copper prices should attract investors.
Peru is the second largest copper-producing country, behind Chile.
Buying Anglo American would give BHP control of key mines in both nations, and put it in charge of about 10 percent of world copper production.
Anglo has said that as a standalone company, it would either split and sell its De Beers diamond business.
“The diamond is rather in crisis,” Chalmin told AFP, noting that consumers are opting for cheaper synthetic stones.
According to Queensmith, a jeweller based in Hatton Garden—the central London district renowned for its jewellery stores and workshops—“lab-created diamonds can cost up to 85 percent less and are considered a more sustainable option than mined diamonds”.
Real diamonds are falling out of favour also owing to ethical reasons.
So-called blood diamonds, which have been used to finance conflicts, notably in Angola and Sierra Leone, are however kept off the market through the international Kimberley Process certification scheme.
De Beers “has lost its former strength, that is to say a virtual marketing monopoly”, said Chalmin, in particular because of competition from synthetic diamonds.
Amid the BHP takeover pursuit, Anglo American is set to rid itself also of its platinum division.
BHP has made clear it does not want Anglo American Platinum, the world’s biggest producer of the metal.
Anglo American itself has indicated a plan to demerge the unit should it remain a standalone company.
Unlike copper, platinum is threatened by the transition to greener energy.
The metal is widely used in the production of catalytic converters, which reduce harmful emissions pumped out by vehicles powered by combustion engines.
As consumers switch to electric vehicles, platinum’s price has suffered in recent years.
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