Brazil okays BHP’s $6.6 billion acquisition of OZ Minerals

Sunset at Prominent Hill, a copper-gold mining operation in northern South Australia. (Image courtesy of Oz Minerals.)

Brazilian regulators have cleared BHP’s (ASX: BHP) intended acquisition of Australian copper-gold producer OZ Minerals (ASX: OZL) for A$9.6 billion ($6.6bn), bringing the world’s no.1 miner closer to securing its biggest deal in more than a decade.

OZ Minerals has a number of operations in Brazil, including the Santa Lúcia iron oxide copper-gold mineral deposit, the Antas copper-gold mine, and CentroGold, one of the country’s largest undeveloped gold projects.

The transaction, unanimously backed by OZ Minerals’ board in November, still requires the approval of Australia’s regulatory bodies and the copper-gold miner shareholders.

If successful, the deal would become the largest mining deal in Australia since BHP’s $12.1 billion purchase of Petrohawk Energy in 2011 and it would consolidate the company’s position as one of the world’s largest producers of copper.

The metal is considered key for the world’s clean energy transition, which is expected to boost demand by almost 60% over the next two decades.

Since BHP first announced its intention of buying OZ Minerals in August last year, copper prices have shot up 20%, from $3.55 per pound up to $4.27. This has led some shareholders to indicate they will vote against the existing deal.

“The reality of the situation is that the BHP offer now looks a little anaemic,” David Franklyn of Argonaut Funds Management wrote on January 30.

In his opinion, the Australian miner has one of the best exposures to the global copper market and sees “no reason to sell out cheaply to BHP.”

OZ Minerals shareholders will vote in early April on the A$28.25-a-share bid, which represents a 49% premium increase on the miner’s share price prior to BHP’s initial offer.

(With files from Reuters and Bloomberg)