We would have blocked Anglo bid — Mantashe
Exclusion of SA assets in BHP proposal a sign of no confidence in country, analysts say
● SA’s mining minister has come out against BHP’s proposed £31.1bn takeover of Anglo American, warning that the world’s biggest miner would decimate the character of the company pioneered in South Africa, just as it did after merging with Billiton in 2001.
BHP on Thursday proposed the takeover of Anglo in what would be the mining industry’s biggest deal in more than a decade.
However, the Anglo board on Friday rejected the proposed merger.
Chair Stuart Chambers described the bid as “opportunistic” given that BHP is said to have set its sights on Anglo’s copper assets, which represents 30% of the group’s total production and has significant value appreciation prospects due to growing demand for copper in the fight against climate change. That demand would benefit Anglo shareholders in the long run.
Should BHP table a revised offer, as expected, and succeed in its bid, the merged entity would have a portfolio of tier-1 assets, including iron ore and metallurgical coal and future-proof commodities, including potash and copper.
Minerals & energy minister Gwede Mantashe said though the government has no say in Anglo — it belongs to shareholders and has a primary listing on the London Stock Exchange — he would block the deal if he could. “I would not support BHP taking over Anglo American. Anglo belongs to shareholders; BHP belongs to shareholders. My experience with BHP is that it took over Billiton which [was] a South African company, and we cannot show anything for it,” Mantashe said.
He said decisions taken in 1998 when Anglo moved its headquarters and primary listing to the UK means the South African public no longer has a say in the affairs of companies that were primarily built here.
“It’s not our choice now; they are listed in London. We wouldn’t have allowed that if it was our choice,” Mantashe added.
Anglo still has important assets in the county, being the majority owner of Kumba Iron Ore, Anglo American Platinum (Amplats) and De Beers, which together contribute hugely to the country’s corporate tax base and mining royalties.
The merger would see BHP become a top copper producer after taking over Anglo’s copper operations that are concentrated in South America. Anglo owns the Quellaveco project in Peru, and Los Bronces and Collahuasi, both in Chile.
“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,” 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,” he added.
Makhosi Nyamela, an equity research analyst at FNB Wealth and Investments, said the offer wasn’t a surprise given the value of Anglo’s copper projects.
“It has always been our view that Anglo was a takeover target because of its quality assets, growth profile, size and valuation relative to peers,” Nyamela said.
“I don’t think there would be a lot more other suitors out there because of the complexity of Anglo’s portfolio. Anglo’s portfolio is unique with commodities such as diamonds, platinum group metals (PGMs) and polyhalite that don’t overlap with their peers’” he added. “Even the current proposal from BHP shows this complexity with the requirement to unbundle PGMs and ‘review’ the diamond business post-merger.” Nyamela said he doesn’t think shareholders liked the deal. “We certainly don’t at these prices, but I think the share price increase means the price BHP proposed sets the floor for Anglo’s share price.” Anglo shares have gained 37% over the past three months after staging a recovery from a December plunge when it announced a capital expenditure cut of $1.8bn
My experience with BHP is that it took over Billiton which [was] a South African company, and we cannot show anything for it
– Gwede Mantashe, Minerals & energy minister
to 2026 to soften the blow of weaker commodity prices.
The shares closed 1.62% higher at R620.90 on Friday.
Another analyst said while the proposed spinning off of South African-based assets sounded like a vote of no confidence in the country, he doesn’t see any competition- or regulatory-related blockages.
“BHP is not interested in Anglo American Platinum and Kumba Iron Ore, both significant and profitable companies. Is this a vote of no confidence in South Africa? Absolutely, but who can blame them given Transnet, Eskom, corruption, mining mafia violence and threats against mining company employees and lack of support from the South African government for the mining industry,” said René Hochreiter, a consulting mining analyst at Noah Capital Markets and
MD of Sieberana Research.
Mining analyst Kieron Hodgson agreed that confidence in South Africa as a mining investment was low, hence the lack of interest in assets based in the country.
“Is this a vote of no confidence in South Africa? It would be hard to convince anyone that this was not, especially given BHP’s history towards the country,” he said.
Anchor Capital investment analyst Seleho Tsatsi said BHP was effectively bidding for Anglo’s rump — everything excluding South African-based assets.
“BHP is interested in Anglo American principally for its copper business. BHP acquired Oz Minerals last year for $5.9bn so it wants to grow its copper business,” Tsatsi said.
“Given the world’s impending transition to a greener economy, demand for copper is forecast to grow strongly over the next 10 to 20 years. Supply does not appear to be growing at similar rates.”
Tsatsi added that Exxaro has also previously stated that copper is one of the commodities it is looking to pursue.
“So clearly it is a prevalent theme in the industry. It will be interesting to see whether other firms are interested in Anglo. BHP has until 22 May 2024 to either announce a firm intention to make [another] bid or announce that it does not intend to make an offer.”
Asief Mohamed, Aeon Investment Management’s chief investment officer, said he anticipated a bidding war erupting for Anglo’s lucrative assets and the board was holding out for a higher offer.
Should a merger proceed, Amplats and Kumba were expected to maintain separate listings on the JSE without Anglo American as a shareholder, while the diamond business De Beers was not mentioned, which makes it ripe for a sale, Mohamed said.
“The ongoing exodus of companies from the JSE is a worrying trend for South Africa’s capital markets. The diamond business was not mentioned in the BHP proposal. Anglo might sell it to a consortium of South African, Botswanan and Namibian nationals with empowerment credentials.”
Mohamed said a successful merger would give the combined entity significant market influence.
The Public Investment Corporation (PIC), a shareholder in Anglo, said it will assess any offers that are presented to shareholders and will engage directly with the investee companies.
“The PIC is a long-term investor and any transaction presented will be assessed to ensure value creation for our clients,” the group said in a statement.
“In addition, the mining sector remains a critical part of the South African economy, impacting a wide variety of stakeholders, therefore new opportunities that may arise in the sector need to take these factors and long-term sustainability into account,” it added.
Is this a vote of no confidence in South Africa? Absolutely, but who can blame them [BHP] given Transnet, Eskom, corruption, mining mafia violence