The board of Anglo American, the London-listed mining company, has rejected a £31bn takeover approach from the Australian rival BHP.

BHP’s all-share proposed offer for Anglo American had the potential to be one of the biggest deals in the global mining sector for a decade but has attracted criticism from Anglo’s shareholders as being too low and “highly opportunistic”.

Anglo American said in a statement that its board had unanimously rejected BHP’s approach because it “significantly undervalues” the company and its future prospects. It also added that the structure of BHP’s proposal, which required Anglo American to complete two separate demergers, was “highly unattractive”.

Stuart Chambers, the chair of Anglo American, called the BHP proposal “opportunistic” and said the structure of the plans meant that potential risks of the transaction would be borne mainly by Anglo’s investors.

Anglo American, which has a market value of about £34bn, has long been seen as a takeover target as its share price has lagged behind rivals. Last December, its shares plummeted after it cut its copper production forecasts because of difficulties at its mines in Peru and Chile. Its shares were roughly unchanged in early trading on Friday at £25.60.

The proposed BHP offer came as miners race to corner the market for copper, which is in high demand within the clean energy sector. Anglo investors would have received 0.7097 BHP shares for each Anglo share, valuing each Anglo share at £25.08. BHP also said it would undertake a strategic review of Anglo American’s other operations, including its diamond business post completion.

BHP’s plans were criticised by Anglo investors including Legal & General Investment Management, one of its largest shareholders, and Abrdn as being “highly opportunistic” and “unattractive”.

South Africa’s mining minister, Gwede Mantashe, also signalled he was against the takeover plan. Anglo American’s largest shareholder is the South African state asset manager, the Public Investment Corporation, which holds about 7% of Anglo’s shares, and a significant number of mines are located in South Africa.

A foreign takeover of Anglo American, one of the largest companies on the FTSE 100, would deal a further blow to London’s financial market, hastening the exodus of London-listed companies to other bourses.

BHP moved its primary listing from the UK to Australia in 2022, and a takeover of Anglo American would have meant the London Stock Exchange losing one of its 25 largest companies at a time when companies such as Tui are planning to leave London to list elsewhere.

Under takeover rules, BHP must make a firm offer for Anglo American by 22 May or walk away.