Mining giant BHP is weighing a possible takeover of rival Anglo American in what would be one of the biggest deals of the year.

The potential sale of Anglo American, which owns the world’s largest diamond company De Beers, comes after its shares on the London Stock Exchange have fallen by almost 10pc over the past year.

Discussions are at an early stage and there’s no certainty that BHP will proceed with the potential acquisition, Bloomberg reported.

However, Anglo American confirmed the offer in a statement late on Wednesday.

The company said it had received an “unsolicited, non-binding and highly conditional” all-share offer from BHP Group.

The proposed takeover is contingent on Anglo American demerging its holdings in its platinum and iron ore businesses to its shareholders.

Anglo American said that it is currently reviewing the proposal with advisers.

BHP moved its primary stock market listing to Australia in 2022 as part of a sweeping overhaul of the nearly 140-year-old business, which involved scrapping its dual listing across London and Sydney.

The move forced the business to drop out of the FTSE 100, where it was previously one of the index’s biggest members.

However, it still holds a standard listing in London and has a market value of around $149bn (£119.6bn).

Any acquisition of Anglo American, which is headquartered in London and worth £29bn, would serve as a fresh blow to the Square Mile.

It comes amid fears that low valuations in the UK are leaving companies vulnerable to foreign takeovers and risk sending the stock market into a spiral of decline as more businesses leave.

Over the past year, Anglo American recorded a 31pc drop in underlying earnings before interest, tax, depreciation and amortisation to $10bn (£7.9bn).

The London-listed company blamed the drop in performance on a commodities slump after writing down $2.4bn in its diamond and nickel divisions, including a $1.6bn impairment charge on its diamond producer De Beers. 

The group’s platinum mining arm, AmPlats, also announced plans to cut 3,700 jobs earlier this year in response to lower demand for palladium and rhodium, key metals used in vehicle exhausts to neutralise harmful engine emissions.

Duncan Wanblad, the chief executive of Anglo American who has been at the helm since 2022, has promised to reduce annual costs by $1bn over the next three years.

Anglo American earlier this week cut its production guidance for diamonds in 2024 as output across its rough diamond mines fell during the first quarter of 2024.

The mining group has earmarked billions of dollars for plans to build a fertiliser mine in North Yorkshire, in what is Britain’s largest private sector infrastructure project.

The Woodsmith project involves extracting a polyhalite, a new fertiliser product, from a mile underneath the North York Moors National Park and transporting through a 23-mile tunnel to Teesside.

The project is estimated to cost about $9bn.

Anglo American, which is the world’s largest producer of platinum, has a secondary listing on the Johannesburg Stock Exchange in South Africa.

BHP was contacted for comment.