Anglo American told the BBC that the proposal is currently being reviewed by its board of directors but did not reveal the value of the offer. Under UK M&A rules, BHP has until 22 May to make a formal offer for Anglo American.

If the deal went ahead, it would represent the largest mining M&A deal since Glencore acquired Xstrata in 2013. Australia-based BHP is the world’s largest publicly listed mining company with a market cap of about US$149Bn. Anglo American has a market cap of US$37.7Bn.

Copper is likely one of the key reasons BHP is interested in Anglo, which has major copper operations in Chile and Peru. Anglo has a world-class asset position in copper, built around its interests in two of the world’s largest copper mines – Los Bronces (a 50.1% owned operation) and Collahuasi (44% owned joint operation), in addition to the El Soldado mine in Chile, the giant Quellaveco project in Peru and the polymetallic Sakatti deposit in Finland.

The acquisition would create the world's biggest copper miner producing around 10% of global output. BHP has been active in copper M&A recently having bought producer Oz Minerals for US$6Bn last year.

Other key Anglo assets (some of which are joint ventures) are its nickel operations in Brazil, PGM and chrome operations in Southern Africa, manganese operations in Australia and South Africa, iron ore operations in South Africa and Brazil and polyhalite fertiliser operations in the UK. The company is also the world’s third-largest producer of steelmaking coal with operations in Australia and owns 85% of De Beers Group, the world's leading diamond company.

It was reported by the Financial Times that Anglo said as part of any deal BHP was proposing spin-offs of two Anglo units — Anglo American Platinum, the platinum division known as Amplats and Kumba Iron Ore. Both are listed in South Africa.

Earlier this year it was reported that Anglo American will review its assets after a 94% plunge in annual profit and writedowns at its diamond and nickel operations. The miner announced a US$1.6 Bn impairment charge on its De Beers diamond business owing to faltering demand and a US$500M impairment on its Barro Alto nickel mine in Brazil as prices were hit by slowing demand. Its PGM operations have also been hit by low prices.

What does this mean for critical materials? The takeover would consolidate considerable copper capacity in the hands of BHP, and provide a small increase to its share of the nickel business. Meanwhile, Anglo owns the minority (40%) share in the GEMCO manganese operation (on C&M), with the majority being held by South32 which was spun out of BHP in 2015. It may be that 100% ownership for S32 would be the eventual outcome. The fate of Anglo's PGM and chrome assets is less certain, with a spin-out seemingly on the cards.

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