China’s leading metals companies, including its state iron ore buyer, are considering their next moves following BHP Group’s blockbuster $39 billion approach for rival Anglo American, potentially the largest mining deal in over a decade.
That includes the impact on a tight supply of copper concentrate for the country’s smelters. An enlarged BHP could affect concentrate pricing, given the world’s largest miner uses an index provided by third parties and not an annual benchmark established through negotiation between leading miners and Chinese smelters.
Miners like Zijin Mining, China Minmetals and others are likely to examine closely a deal that creates the world’s top copper producer, the people said. But state iron ore buyer China Mineral Resources Group may also step in. Set up in 2022, it has struggled to achieve its official aim of increasing China’s clout in the iron ore market, even with financial and domestic political support.
Aluminum of China, known as Chinalco, took a stake in Rio Tinto during BHP’s ultimately unsuccessful 2007-2008 takeover effort. To get the combination of Glencore Plc and Xstrata approved a few years later, meanwhile, the trader and miner had to sell its Las Bambas project in Peru, after China’s regulator raised concerns about excessive clout in the copper market, again fretting about concentrate. The deposit was bought by a group including China Minmetals’ MMG a year later, in 2014, for $5.
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