OZ Minerals has suggested an offer of $30-per-share – or $10 billion – would be a potential starting point for deal negotiations, according to media reports.
Bloomberg indicated BHP is considering announcing a new bid for OZ Minerals as early as this month, however it is not yet clear how much the major miner would pitch.
OZ swiftly rejected BHP’s unsolicited $8.4 billion, $25-per-share takeover bid in early August, saying the offer failed to properly value its assets.
“We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations,” OZ Minerals managing director and chief executive officer Andrew Cole said in a statement rejecting the August offer.
“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.”
In the weeks following BHP’s bid, OZ Minerals announced its own organic expansion plans, which would see the company more than double its copper production from 140,000 tonnes per annum (tpa) at present to more than 340,000tpa.
OZ said this would be done through brownfield expansions to boost production and extend mine life, and through greenfield developments such as the West Musgrave copper-nickel project in Western Australia, which is poised for a final investment decision in the second half of 2022.
BHP chief executive officer Mike Henry admitted the OZ Minerals snub was disappointing, but recently suggested the company’s copper strategy was not solely dependent on mergers and acquisitions (M&A).
“We’ve got this very clear focus on growth in copper but there’s a number of levers we’re pulling to unlock that growth, starting with getting more out of the big resources that we have,” he said at a recent shareholder Q&A session.
Henry said BHP was the world’s largest holder of copper resources and that there was an accelerated effort to figure out how the company can unlock more copper units “economically faster”.
“That’s going to be the lever that’s most within our control,” he said.
While a renewed offer from BHP has yet to materialise, the attraction of OZ Minerals’ assets suggests there could be a bit to play out on this journey yet.