The World’s Top Miner Abandoned Its Proposed Megadeal. Here’s What Could Be Next for BHP

The Australia-based miner’s weekslong pursuit of London-listed Anglo American ended abruptly Wednesday after its rival said it wouldn’t further engage in talks on what would have been the industry’s largest-ever deal. BHP’s failed tilt at the storied, century-old Anglo shows the challenges that even arguably the world’s most powerful miner faces in adding to its copper stable.

The industrial metal has been at the heart of BHP’s growth plans for years, and the miner made some inroads with a takeover of smaller Australian producer Oz Minerals a year ago in what was its biggest acquisition in over a decade. A takeover of global miner Anglo, for whom copper accounts for roughly 30% of production, would have given it control of roughly 10% of global mine supply.

Instead, BHP—which, under U.K. takeover rules, has to stay away from Anglo for six months unless another bidder emerges—goes back to business as usual and is expected to focus on gradually advancing its own expansion options and rewarding shareholders with meaty payouts, investors say.

“I think it’s just BAU [business-as-usual] for BHP," said Wilson Asset Management portfolio manager Matthew Haupt, whose fund holds stock in the miner. “They will keep plugging away at their brownfield projects" and “there will be a higher dividend paid, I’d say, than if they did the deal," he said.

Haupt said he is disappointed an agreement couldn’t be reached with Anglo, but happy that BHP walked away after failing to entice its directors with a trio of takeover proposals.

Even as BHP Chief Executive Mike Henry sought to bring Anglo to the deal table, he framed the proposed deal as a good opportunity but not a must-have.

“BHP is never dependent on acquisitions, and that remains the case," Henry told an industry conference in Miami in mid-May.

BHP, which relies on steel ingredient iron ore for most of its profit, has been narrowing its focus in a bet on the transition to a lower-carbon world. It sold its oil-and-gas unit to Woodside Energy in mid-2022, and has also offloaded some coal operations.

Henry has sought to alleviate concerns that BHP now lacks its own options for growth. The only major project BHP has under construction today is a potash mine in Canada’s Saskatchewan province. Roughly a decade ago, BHP had 18 major projects including mines and port infrastructure under construction.

“We are so much better placed than we were even just a few years ago when it comes to growth," Henry said at this month’s conference. That potash mine is slated to become one of the world’s top sources of the fertilizer ingredient. Henry also highlighted what he said was “a strong pipeline" of copper options being evaluated in south Australia and northern Chile.

Yet the miner has for years faced technical and permitting challenges in growing its own copper business. Resources are becoming harder to find and harder to extract, Henry told another conference last year. Mines are becoming costlier to build due to higher prices for labor and materials, and mining companies are coming under sharper scrutiny for their impact on local communities, indigenous peoples and the environment.

Over recent weeks, a number of investors raised concerns about what the proposed tie-up could mean for future copper supply. Some worried BHP’s focus on expanding its copper business by buying Anglo American wasn’t going to spur investment in new mines needed to feed copper-hungry manufacturers of electric vehicles and wind turbines.

“The merger does nothing for global copper production and simply moves assets from one company to another," said Adam Matthews, chief responsible investment officer of the Church of England Pensions Board, which holds stock in both Anglo and BHP. “Not one extra ton of copper comes as a result of all this energy and time."

Matthews welcomed the decision by Anglo’s board not to extend talks with BHP.

BHP’s Henry said he had envisaged the combined company as having greater financial strength to pursue planned investments. He acknowledged the world needs more copper supply for the global energy transition.

Anglo said it favored its prospects as a stand-alone company.

Analysts at Jefferies say an acquisition of Anglo would have been a win in the long term for BHP, but that its shares should still benefit in the short run from the miner holding its ground.

Some investors reckon BHP’s interest won’t vanish with this knockback and that it will be watching closely while Anglo pursues a breakup plan it set out earlier this month aimed at reviving its fortunes. “If another opportunity came up, they’d be there in a heartbeat," said Wilson’s Haupt.

Henry, BHP’s CEO, said the miner will take a disciplined approach to mergers and acquisitions, adding that the miner still thinks “our proposal was the most effective structure to deliver value for Anglo American shareholders."

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com