Australia's BHP ready to make another bid for Anglo - report

Stephen Grootes gets comment fromPeter Major, Director of Mining at Modern Corporate Solutions.

The Financial Times reports that a visit to South Africa last week by BHP execs has fuelled speculation that the Australian miner is ready to have another go at taking over Anglo American.

BHP CEO Mike Henry and chief development officer Catherine Raw are said to have met with government officials and the Public Investment Corporation (PIC), which has a 7.5 per cent stake in Anglo.

During BHP's takeover bid for Anglo minus its SA assets, three proposals were rejected.

It valued the Joburg-based mining company at £38.6 billion, approximately R900 billion.

"BHP was examining how it might make a renewed offer after the standstill period comes to an end on November 29, according to bankers seeking advisory or financing roles."

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Stephen Grootes interviews mining expert Peter Major, Director of Mining at Modern Corporate Solutions.

Major says, by all accounts, it does appear that BHP is ready to make another bid after it spent a lot of money doing an initial 'botched' offer.

"They virtually had three offers - maybe they're thinking 'we dumped all that money and got egg all over our face, if we could still get Anglo for a decent price we could take a lot of that away'."

Peter Major, Director: Mining - Modern Corporate Solutions

But just what would that decent price be?

Major believes a new offer from BHP would be lower than before, because they don't need to offer more.

"You can see BHP's share price is already going down and Anglo's is going up because everybody's worried they ARE going to overpay."

"They were certainly going to overpay six months ago, so I can't believe they're going to offer a higher price. If they do, I think the deal will go through."

Peter Major, Director: Mining - Modern Corporate Solutions

Major does however raise the issue of what it costs now to develop a mine from scratch, taking into account factors like unknown delays and cost escalations.

If you can buy a mine, even though it looks like you're paying a premium, it's probably going to work out cheaper than if you have to build one, he says.

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