BHP, the world’s largest mining company, has finally abandoned its takeover bid for Anglo American. However, the group tried to force fate by returning to power after its target announced its intention to acquire Canadian company Teck Resources. The merger between Anglo and Teck, now free from BHP’s interference, is intended to give birth to a $50 billion extraction giant. If the battle in the stock market ends, it will raise deeper questions about the true state of the copper market.
Copper prices on the London Metal Exchange recently passed the $10,600 per tonne mark, a level not seen in the last eighteen months. This outbreak is hard to read. Nicknamed Doctor Copper for its ability to diagnose global economic health, the metal is unlikely to show as much strength in a tough but weak global macroeconomic environment. The explanation for this paradox no longer lies in industry fundamentals, but in a series of political and financial distortions that confuse market readings.
