London
CNN
 — 

Mining giant BHP has made a near-$40 billion bid to take over its UK rival Anglo American in what would be the largest mining deal on record.

BHP said in a statement Thursday that it valued Anglo American shares at £25.08 ($31.40) apiece, or £31.1 billion ($38.9 billion) in total. If completed, the acquisition would increase BHP’s access to copper reserves, it added.

Copper is an essential component in some renewable energy technologies, including solar panels and electric vehicles, as well as in electrical grids. And it is in high demand: The price of the metal on the London Metals Exchange has risen more than 13% so far this year to almost $10,000 a metric ton, its highest level in about two years.

“First and foremost” the proposed takeover is about copper, William Tankard, principal analyst of base metals at CRU Group, told CNN.

BHP is the world’s second-biggest producer of mined copper, while Anglo American is the ninth-biggest, according to CRU Group analysis. Their combination would attract the scrutiny of competition authorities around the world, Tankard added.

If it goes ahead, the BHP-Anglo American deal will be worth more than the $38.3 billion acquisition of Switzerland’s Xstrata by commodities company Glencore in 2012, according to Dealogic data. It would also be the biggest merger or acquisition in the mining industry by value since Dealogic began collecting the data in 2004.

Anglo American’s board is “currently reviewing this proposal,” the company said in a statement, adding that there was “no certainty” a formal offer would be made by BHP, or the terms of that potential offer.

BHP has until May 22 to make a formal offer.

Shares in Anglo American soared as much as 13.8% on the news. By 10.20 a.m. ET, they were trading at £25.10 ($31.35). Shares in BHP closed 0.6% down in Australia.

BHP has been looking to bulk up in copper for a while. A year ago, the Melbourne-based company acquired Australian rival Oz Minerals to widen its access to copper and nickel.

The Oz buyout was part of BHP’s strategy to “meet increasing demand for the critical minerals needed for electric vehicles, wind turbines and solar panels,” company CEO Mike Henry said in a statement at the time.

Tankard at CRU Group called copper “the ubiquitous future-facing commodity.” “Whether we’re talking about EVs or data centers, or general electrification… there’s a common theme, and that theme is copper.”

Anglo American is one of the largest companies listed on the London Stock Exchange and the approach by BHP may fuel concerns about an exodus from from the London market.

Wael Sawan, the CEO of Shell, told Bloomberg last month that he believed the energy giant’s London listing made the company “undervalued,” drawing comparisons to its much bigger rivals Exxon Mobil and Chevron, both listed in New York.

That fuelled speculation that the £186 billion ($232 billion) oil behemoth could ditch London for Wall Street, a switch that would deal a huge blow to Britain’s main stock exchange. Several companies have already moved their primary listings elsewhere or chosen New York for going public in recent years.

The offer for Anglo American “will send a fresh chill through the City of London,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, wrote in a note Thursday. “There are concerns that, if the deal goes through, it could be the tip of the iceberg and more giants could leave the exchange.”

Correction: An earlier version of this article gave an incorrect ranking for BHP among the world’s biggest producers of mined copper.

Rob North contributed reporting. This story has been updated with additional information.