BHP’s Anglo bid was all about copper

The failed BHP–Anglo American takeover attempt offers a clear signal about copper demand and what it could mean for Australia’s major miners.

You might have seen this week that BHP (ASX: BHP) wanted to take over a resource company called Anglo American. BHP’s management snuffed out the idea on Monday (24/11) via a release to the ASX. Don’t get me wrong though. BHP were prepared to act. Anglo American didn’t like the deal, at least at the price BHP was tabling, and turned it down. Can we take anything away from it all? Yes.

Consider the sums involved. BHP was prepared to stump up serious cash for this deal. Anglo American’s market cap is £31.9 billion ($64.7 billion), according to the Australian Financial Review. BHP needs to be very confident to pay out a sum anywhere near that. What’s the appeal? Easy. It’s Anglo’s copper assets.

There is a lot of “noise” in financial markets. A bid like that tells us one thing clearly: BHP is bullish copper. Likely, you know the reasons. Renewable energy, electric vehicles and now AI data centres need copper, and lots of it. This will last for years. At the same time, the general drift of the industry is to lower mining grades (harder to produce more) and fewer discoveries, and has been for some time.

All the above is common knowledge. What’s less apparent is what a bullish copper market can do for BHP earnings, and therefore its valuation. The team at Macquarie have run some numbers around this, and it makes for fruitful reading.

BHP isn’t really “diversified”

BHP is a “diversified” miner, at least according to its ASX category. It’s not true, really. 90% of its earnings come from just two commodities: iron ore and copper. The iron ore price is holding up higher than previous expectations. Except few people would consider it much of a “growth” industry. China’s need for iron ore will likely plateau roughly where it is now. Iron ore should remain a cash cow, but copper is the sizzle to the story for BHP.

This is where we can bring in the Macquarie numbers. Resource stocks are (simplifying things a bit) priced on their cashflow, production and – here’s the key bit – the estimated prices of the commodities they produce. Analysts then arrive at a valuation. That’s certainly not easy. BHP point out that a 1c change up in the US copper price can add $42m in earnings for the year. In other words, higher iron ore and copper prices can add millions of dollars to their accounts.

The big swing factor: commodity prices

Here’s the catch. Nobody knows where iron ore and copper prices will be in 12 months. They could be the same, higher, or lower. Hence why the stocks gyrate like crazy throughout the year. As it happens, right now, iron ore is 20% higher and copper is 7% higher than Macquarie’s estimates they’ve used to price the stock.

Macquarie add that the upside in earnings would be 23% for BHP and 26% for RIO (ASX: RIO) if copper and iron ore prices just stay where they are now in 2026. That’s significant. By contrast, the big banks will barely grow earnings at all.

As above, nobody knows where commodity prices go, in the short or long term. Resource investment can be a dangerous pursuit. What we do know is that Macquarie is using a US$80–$90 range for iron ore in CY26/27 and US$4.50–$5 range for copper. Those could prove – and I emphasise the point could – too modest if copper really does break out next year or 2027 as many expect, including BHP (hence why they wanted Anglo’s copper assets).

Why copper matters so much for 2026

This is also why, at Marcus Today, we are watching China and AI investment trends closely. These are the demand drivers for copper and iron ore. If they prove genuine, BHP (and RIO) could rally strongly in 2026, all else being equal. We’ll also likely see more merger and takeover activity in the copper space too.

Resource stocks can be high risk. They can also make fabulous medium-term trading opportunities. Keep reading the newsletter. If an opportunity presents, we could be buying.