The Church of England Pensions Board (CEPB) has waded into the debate about the future of Anglo American, saying a takeover could be harmful to asset owners and the green transition.
The London-listed mining giant rejected a £34bn (€39.5bn) takeover bid from rival BHP this week, saying it would rather split its business arms up – selling or demerging its diamond, platinum and coking coal units. Shares fell 2.1% to £26.50 on Tuesday, following the announcement. BHP’s most recent acquisition offer valued Anglo’s stock at £27.53.
Adam Matthews, chief responsible investment officer at the Church’s £3.5bn pension fund, called for “greater reflection by institutional investors as to what is at stake and at risk of being lost” if Anglo were to be subsumed into BHP, which is the world’s largest mining company.
“Losing Anglo as a distinct entity may serve short-term financial interests, but as an asset owner we are not convinced that such consolidation will serve our long-term interests as a pension fund,” he noted.
He added that the comments were not intended to criticise BHP.
At the centre of the wrangling over Anglo American’s future is its copper business, which is expected to boom over the coming decade because of the critical role the metal plays in the construction of many low-carbon technologies.
Research from environmental consultancy DNV GL last year suggested that the economy will require twice as much copper between 2023 and 2035 as it used between 1900 and 2022.
“To put it bluntly, copper scarcity may slow adoption of renewable energy systems and hinder progress towards sustainable development goals,” wrote Shaik Ejamani Peer Mohamed Mohamed Marican, a senior consultant with DNV.
Matthews noted that “mining has an absolutely vital role to play over the coming decades to provide the critical resources for the low-carbon transition and other industrial activity”.
The mining industry’s high-profile reputation for poor human and environmental rights practices makes it an uncomfortable fit for many sustainable investors seeking to allocate capital to companies that will drive the green transition.
But Matthews insisted that Anglo is a sustainability leader, having been one of the first companies to back an investor initiative launched in the aftermath of the 2019 Brumadinho disaster, in which hundreds of people were killed when a tailings dam collapsed.
“It is also Anglo that has championed the development of a multi-stakeholder approach to standards through initiatives such as IRMA,” said Matthews, referring to the Initiative for Responsible Mining Assurance.
“We question if losing Anglo is the right market response,” he continued. “The sector benefits from there being a race to the top among the major mining companies, and consolidation at this level removes a key actor,” he added.
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