* Anglo had a market value of $37 bln at Wednesday's close
* Deal would be preceded by Anglo platinum, iron ore demergers
* BHP would gain access to more copper, potash, coking coal
* Australian miner has until May 22 to make firm offer
(Adds graphic, copper outlook, Anglo's investment in paragraphs 10, 12, 25)
MELBOURNE/LONDON, April 25 (Reuters) - London-listed miner Anglo American said on Thursday it had received an all-share buyout proposal from BHP Group, a deal that would create the world's biggest copper miner churning out around 10% of global output.
The deal, if agreed, would also trigger further transactions in the global mining industry, which has seen a slew of mergers and acquisitions as companies review their assets to raise exposure to metals deemed critical to the energy transition.
"This is all about copper," said Ben Cleary, portfolio manager at Tribeca Investment Partners, which holds shares in BHP and Anglo.
"I think it's a good deal for BHP. Anglo is obviously very much in play now and there’s probably room for others to interlope. This is going to set the whole sector on fire."
The proposal comes after Anglo, which had a market capitalisation of $37.7 billion as of Wednesday's close, began a review of its assets in February after a 94% plunge in annual profit and a series of writedowns due to a fall in demand for most of the metals it mines.
Anglo owns mines in countries including Chile, South Africa, Brazil and Australia.
BHP, the world's biggest listed miner and best-known for mining iron ore, copper, coking coal, potash and nickel, had a market capitalisation of about $149 billion as of Wednesday.
COPPER IN FOCUS
The deal, if agreed, would give BHP access to more copper, one of the most sought after metals for the clean energy transition, and potash, which are its key strategic commodities, as well as more coking coal in Australia.
Technological developments such as artificial intelligence and automation, and the energy transition, which includes electric vehicles and renewable energy, have driven up demand prospects for copper cable used to conduct electricity.
Anglo has copper mines in Chile and Peru, countries in which BHP also has operations, and their combined output would amount to around 2.6 million metric tons a year, or about 10% of global production, pushing it well ahead of U.S.-based Freeport-McMoRan and Chilean state miner Codelco.
Copper prices on the London Metal Exchange have surged 15% this year, approaching $10,000 a ton and two-year highs on demand hopes sparked by encouraging macroeconomic data, U.S. rate cut bets and speculative trading.
Supply bottlenecks driven by the forced December shutdown of Cobre Panama, one of the world's largest open-pit copper mines, are also fueling the gains.
Anglo's 2024 copper production guidance is 730,000 to 790,000 tons. BHP is targeting copper production of between 1.7 million and 1.9 million tons for the 12 months ending in June.
ASSET CARVE-OUTS
Anglo said the proposal would be conditional on being preceded by separate distribution of its entire stakes in Anglo American Platinum and Kumba Iron Ore to its shareholders, which would significantly lower its exposure to South Africa.
Anglo's stakes in the platinum and iron ore miners are worth $7.44 billion and $5.4 billion respectively, according to LSEG data based on Wednesday's close of trade.
"Anglo is hurt due to its poor South African asset so ripe to be acquired," said Nicolas Van Broekhoven, CrossASEAN Research analyst who publishes on Smartkarma.
The deal could also trigger a wave of transactions for any other unwanted assets such as nickel, manganese and diamonds, where Anglo owns 85% of industry giant De Beers.
"There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made," Anglo American said in a statement, adding the unsolicited proposal is non-binding and highly conditional.
The company said its board was reviewing the proposal and did not disclose the share ratio on offer. Under UK takeover rules, BHP has until May 22 to make a firm offer.
BHP declined to comment when asked about preliminary talks with Anglo, first reported by Bloomberg. The Australian market is closed on Thursday for a public holiday.
Jefferies analysts said it could take a premium of around 28% above Anglo's most recent share price to get the deal across the line, adding the increased copper market concentration could raise antitrust concerns.
Their combined coking coal assets, both in Australia's Queensland state, could also be subject to regulatory scrutiny given the deal would merge two of the biggest producers in the global seaborne market.
If the Anglo American deal came to fruition, it would be the second major acquisition for BHP in about a year after its 2023 purchase of copper miner Oz Minerals and adds to a frenzy of global M&A activity.
Recent mega-deals in the mining sector include gold giant Newmont's $16.8 billion buyout of Australia-based Newcrest Mining late last year.
Once the deal is completed, it would likely be among the 10 biggest-ever mining deals by value and has the potential to delist Anglo from the London market, a fresh blow to an exchange that is struggling to retain big companies and to attract new share offerings. ($1 = 1.5396 Australian dollars)
(Reporting by Melanie Burton in Melbourne, Scott Murdoch in Sydney and Anousha Sakoui in London; Additional reporting by Rishav Chatterjee in Bengaluru, Siyi Liu in Beijing and Mai Nguyen in Hanoi; Writing by Miyoung Kim; Editing by Jamie Freed)
