Anglo American has rejected a £31.1 billion plan to create the world’s largest copper miner after being approached by Australian rival BHP.

The company’s board on Friday said that BHP’s proposal “significantly undervalues” the business and its “future prospects.”

The unsolicited approach from BHP would include a structure which “is highly unattractive” for Anglo’s shareholders, “given the uncertainty and complexity inherent in the proposal, and significant execution risks”, the board said.

The board said that it had unanimously rejected the proposal.

“Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends,” said chairman Stuart Chambers.

“With copper representing 30% of Anglo American’s total production, and with the benefit of well-sequenced and value-accretive growth options in copper and other structurally attractive products, the board believes that Anglo American’s shareholders stand to benefit from what we expect to be significant value appreciation as the full impact of those trends materialises.”

The FTSE 100 mining giant revealed on Thursday that it had been approached by BHP, sending its shares soaring by around 16%.

The proposal was “unsolicited” and “highly conditional”, but Anglo said on Thursday that it would consider it.

The bid would have seen BHP pay £25.08 for every Anglo American share, which would include stock in Anglo subsidiaries Anglo Platinum and Kumba Iron Ore.

It would be conditional on Anglo demerging its entire shareholdings in the two businesses to its shareholders.

If it goes ahead, BHP still has the chance to up its offer or take the deal to shareholders, the tie-up of the two companies could create the world’s largest copper miner.

Together the two businesses produce around 10% of global output.

Copper is going to be one of the key metals of the future because it is a good conductor of electricity.

This means that it is a vital component in the devices that will be needed to move the global economy away from fossil fuels and towards green electrical alternatives.

“The BHP proposal is opportunistic and fails to value Anglo American’s prospects, while significantly diluting the relative value upside participation of Anglo American’s shareholders relative to BHP’s shareholders,” Mr Chambers said.

“The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk borne almost entirely by Anglo American, its shareholders and its other stakeholders.

“Anglo American has defined clear strategic priorities, of operational excellence, portfolio, and growth, to deliver full value potential and is entirely focused on that delivery.”