Miner Anglo American's S.Africa Roots Could Hinder Takeover

London, (APP - UrduPoint / Pakistan Point News - 14th May, 2024) The South African roots of British mining giant Anglo American, which on Monday rejected an improved takeover offer from its Australian rival BHP, could hinder any future bids.

BHP's offer, which proposed Anglo American hiving off its platinum and iron ore production activities in South Africa, has caused a stir in the country just before the tightest general election in decades.

Anglo American was founded in South Africa in 1917 by the German-born industrialist Ernest Oppenheimer, 15 years after his arrival and a career in London.

It is now one of the largest mining companies in the world and is listed on stock exchanges both in London, where it is based, and Johannesburg.

BHP's plan to offload South African assets if it manages to buy the company is seen by some analysts and opposition politicians as an indictment of the decline of the country's mining sector and how foreign investors see the country.

Critics blamed the ruling ANC party, which has held power in South Africa since the end of the apartheid regime but which risks losing its absolute majority in parliament for the first time since 1994.

South Africa's presidency dismisses the idea that investors could be faced with a "hostile environment", even as companies face acute electricity shortages and almost daily power cuts.

South Africa's mineral resources minister Gwede Mantashe has told the Financial Times he was against the offer because his country's experience with BHP was "not positive".

But he later clarified that he was expressing a personal opinion.

Despite the concerns, Anglo American's leading South African shareholders, which according to the FT hold some 15 percent of the company, said last week they were open to a sale as long as BHP improved its offer.

The shareholders include the Public Investment Corporation, which owns nearly seven percent of Anglo American and is the investment arm of the South African government.

"From the start, Anglo American played a key role in industrialising South Africa," the group told AFP.

"By the 1980s, Anglo American was by far the biggest company in the country, accounting for an estimated 60 percent of the value of the JSE (Johannesburg Stock Exchange).

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- Key role -

Christopher Vandome, a researcher at the international affairs think-tank Chatham House in London, said South Africa still accounted for about a quarter of Anglo American's revenues.

"It is still a really significant part of its portfolio."

Anglo American started out mining gold, expanding internationally from the 1960s and establishing its headquarters in London at the end of the 1990s.

Over the years, the group has invested in South Africa in other sectors such as manufacturing and metal manufacturing.

Between 2018 and 2023, it committed more than 154 billion rand ($8.4 billion) to its operations across the country.

It is the world's leading producer of platinum but also produces copper, nickel and diamonds with its subsidiary De Beers.

Its operations extend to around 15 countries, notably in Australia and Brazil.

BHP's takeover offer is particularly focused on the idea of creating the world's main producer of copper -- a key metal in the energy transition.

The Australian miner said on Monday that "South Africa will continue to benefit" from Anglo American Platinum and Kumba Iron Ore as "major standalone South African companies and they would be better placed to reinvest in South Africa".

Chatham House's Vandome said the days when Anglo American was "the crown jewel" of the South African economy were gone.

But he added: "It is a hugely important company in a sector that has long been a mainstay of the economy.

"But a sector which is less relevant than it was with the rise of financial and service industries that now cater to a broader international client base."

In a sign of tough times, Anglo American Platinum announced thousands of job cuts in the country in February, citing weak metal prices.

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ANGLO AMERICAN