BHP Group Shot Down in $5.8 Bln bid for Copper Miner Oz Minerals

By Ambar Warrick Australian copper miner OZ Minerals Ltd (ASX:OZL) rejected an 8.4 billion Australian dollar ($5.8 billion) takeover offer from BHP Group (ASX:BHP)  on Monday, stating that it “significantly undervalues” the firm.

Earlier on Monday, BHP offered A$25 per share for Oz Minerals, offering a 32.1% premium to the stock’s close last week. The world’s largest miner is likely looking to expand its copper interests by acquiring Oz Minerals’ Carrapateena and Prominent Hill projects in South Australia. 

But the Oz Minerals board of directors rejected the offer, stating that it did not recognize the growth potential of its copper and nickel assets. 

“We are mining minerals that are in strong demand particularly for the global electrification and decarbonisation thematic and we have a long-life Resource and Reserve base. We do not consider the proposal from BHP sufficiently recognises these attributes,” Oz Minerals CEO Andrew Cole said in a statement. 

The company also revealed that BHP had built a less than 5% stake in it through derivative instruments.

BHP’s offer comes amid volatile times for copper prices, which have fallen substantially in the face of slowing industrial growth across the globe. 

Shares of Oz Minerals have tumbled over 40% so far this year, as a series of COVID lockdowns in major importer China severely dented copper demand. 

But this trend is largely expected to change in the second half of 2022, as the country rolls out more stimulus to support economic growth. 

BHP is trying to diversify its interests beyond its main iron ore exports, by expanding its presence in copper. A bulk of the firm’s copper production comes from the Escondida mine in Chile, which was subject to a series of worker strikes in recent years. 

BHP CEO Mike Henry said in a statement that he was “disappointed” that Oz Minerals had rejected the offer. 

Demand for copper and nickel is expected to heat up in the coming years, given their large usage in electric vehicles and lithium-ion batteries.

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