The $5.8 billion offer by BHP Group for Oz Minerals was rejected

Monday, Australian copper miner OZ Minerals Ltd (ASX:OZL) rejected a $5.8 billion purchase offer from BHP Group (ASX:BHP), citing the deal's "seriously undervalued" nature.

BHP offered A$25 per share for Oz Minerals on Monday, representing a premium of 32,1% over the stock's weekly closing price. Oz Minerals will sell the Carrapateena and Prominent Hill copper holdings in South Australia to the world's largest mining business.

However, the board of directors of Oz Minerals rejected the offer because it could not comprehend the development potential of its copper and nickel holdings.

We extract minerals that are in strong demand, particularly for the global electrification and decarbonization trend, and our Resource and Reserve base has a long life. We do not feel that BHP's proposal appreciates these features appropriately," Oz Minerals CEO Andrew Cole said in a statement.

In addition, the company revealed that BHP had purchased a stake in the company through derivative instruments comprising less than 5 percent.

Copper prices have plummeted as a result of a global downturn in industrial activity, and BHP's offer comes at a time of great uncertainty.

A series of COVID lockdowns in China, the largest copper importer in the world, have considerably impacted copper consumption. This has resulted in a decrease of more than 40 percent in the stock price of Oz Minerals so far this year.

The second half of 2022 is predicted to witness a major reversal of this trend as the government adopts further economic development stimulative measures.

By expanding its copper presence, BHP is aiming to diversify its interests outside its principal export of iron ore. The majority of the company's copper output comes from the Escondida mine in Chile, which has been the scene of several worker clashes in recent years.

BHP's chief executive officer, Mike Henry, released a statement expressing his "disappointment" at Oz Minerals' rejection of the offer.

Copper and nickel demand is predicted to expand in the coming years due to their widespread usage in electric vehicles and lithium-ion batteries.