MELBOURNE - BHP is likely to sweeten its $43-billion takeover offer for Anglo American for a second time and possibly add cash, investors in both companies said on Tuesday, after the London-headquartered target rejected a higher bid.

Anglo said the improved all-share offer, up 10% from BHP's initial proposal, continued to significantly undervalue the company.

Shares in BHP were trading 0.5% lower at A$43.03 on Tuesday.

BHP has until May 22 to return with a binding offer or walk away under UK takeover rules. The revised bid again required Anglo to sell its shares in iron ore and platinum assets in South Africa, a structure Anglo says is unattractive.

"The language in the release suggests it's not the best and final offer, said Todd Warren, a portfolio manager at Tribeca Investment Partners, which holds Anglo shares.

Anglo said on Monday it had accelerated plans to deliver its standalone strategy and would update investors on Tuesday.

"The market is waiting with baited breath for the details of Anglo's strategy day. There's not a lot Anglo can do to realise the immediate value that would be daylighted by accepting a BHP bid," Warren said.

BHP CEO Mike Henry is due to present at Bank of America's global mining conference in Miami later on Tuesday.

Several Australian fund managers holding BHP shares spoke to Reuters ahead of his presentation on condition of anonymity because of the sensitivity of the matter.

One BHP investor said it would be reasonable for the miner to add a cash component to get the deal done, though the overall deal structure was complex, which raised risks around Anglo achieving acceptable prices for unwanted assets.

A second BHP investor said he would be surprised if BHP did not come back with another offer, adding that it still had scope to add a cash component.

"The copper is what we like," the investor said. "I think there is investor support broadly for another bid."

Copper prices have climbed 12% in the past six weeks to hit two-year highs on Tuesday above $10 200 a metric ton.

Anglo is attractive to its competitors for its prized copper assets in Chile and Peru, with demand expected to rise as the world moves to cleaner energy and wider use of artificial intelligence will drive power use. Copper is highly efficient at transporting power because of its conductive properties.

Anglo's rejection was disappointing but BHP was in a difficult position given the need to balance a strong run in copper prices and the need to stay financially disciplined, said a third BHP investor.

BHP's latest offer of 27.53 pounds per share, up from an initial 25.08 pounds, would lift Anglo shareholders' aggregate ownership in the combined group to 16.6% from 14.8%. Anglo shares closed 2.4% lower at 27.07 pounds on Monday.

Jefferies analysts said it might need to raise its offer above 30 pounds per share to gain approval from Anglo's board.

"We are just not sure that BHP is prepared to go that high. This latest offer could be final," Jefferies said.