Anglo American’s share price soared over 16% on Thursday morning on the news that BHP, the world’s biggest mining company, had made an unsolicited all-share merger proposal with a clear eye on the target’s coveted South American copper assets.

Read more in Daily Maverick: BHP approaches rival miner Anglo American about takeover

The deal, which the Anglo board is considering, pointedly hinges on the demerger of Anglo American Platinum and Kumba Iron Ore — the main South African assets for a company that has for over a century been linked with the country’s turbulent history.

“The Board of Anglo American plc (‘Anglo American’) notes the recent press speculation and confirms that it has received an unsolicited, non-binding and highly conditional combination proposal from BHP Group Limited (‘BHP’),” Anglo said in a SENS statement Thursday morning.

“The proposal comprises an all-share offer for Anglo American by BHP and would be preceded by separate demergers by Anglo American of its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to Anglo American shareholders. The two parts of the proposal would be inter-conditional,” it said.

“The Board is currently reviewing this proposal with its advisers.”

This is effectively a copper play and BHP has no interest in being exposed to South Africa’s risky political, social and economic environment — with the exception of diamonds and De Beers. The proposed merger would see BHP absorb De Beers as well as Anglo’s nickel and steelmaking coal assets, its Brazilian iron ore operations and its UK fertiliser project.

A truck transports copper at the Anglo American PLC Los Bronces (Minera Sur Andes) copper mine in central Chile. 10 October 2006. (Photo: Alejandra Parra / Bloomberg via Getty Images)

All of the world’s major mining companies are on the hunt for copper, an old metal which now has a green sheen as it is seen playing a crucial role in the new low-carbon economy.

If the deal goes ahead, Anglo will likely spin off Amplats and Kumba the same way that it unbundled its South African coal assets into Thungela.

“BHP just seems to not want to manage assets in South Africa,” Bruce Williamson, a mining analyst with Integral Asset Management, told Daily Maverick.

“Anglo could do what they did with Thungela. They said here are the Anglo coal shares, we are going to put it into a new company, so Anglo shareholders you now have shares in Thungela. If you don’t want the coal, sell, if you want it, keep it.”

But copper is the magnet at a time when new finds and new mines are tough to come by.

“The big thing that they are telling the market is that we have looked all over and to find new ore bodies and get a new entity into production is a long hard slog. If you replace the copper that Anglo has got with new copper, you need new exploration, new permitting, new funding, and you will never find the skills,” Williamson said.

There has been speculation for some time that Anglo could be a take-over target.

According to Bloomberg, before Thursday’s surge, Anglo’s share price had dropped 12% over the last 12 months. That gave the London and JSE-listed company a market value of £27-billion compared to BHP’s towering valuation of $149-billion. Anglo’s share price shot up 16% this morning.

If the deal goes through, it will be the biggest in the mining sector in over a decade and could be a harbinger of more mega-mergers as the scramble for copper and other “green metals” heats up. DM