Anglo American CEO Duncan Wanblad says the group’s commitment to SA remains strong, even as the mining major proceeds with a deal that will see it merge with Canadian firm Teck and move its headquarters to Vancouver from London.
Following the merger, which is subject to shareholder and regulatory approvals, the merged group will be called Anglo Teck, with corporate offices in SA and Canada.
Wanblad said the transaction, which would create a $50bn group, would have no effect on Kumba, the group’s JSE-listed iron producer.
“For SA, Anglo American has an enduring commitment to contributing to economic growth through substantial investments we are making in our operations and the social fabric of the country, while supporting SA’s national priorities. That commitment prevails and gives plenty of opportunities for further investments in SA,” he said on Tuesday.
“Kumba fundamentally is core and pivotal to the portfolio with the UHDMS (ultra-high dense medium separation) project we announced.”
Last year, Kumba passed muster in a large-scale portfolio review undertaken by Anglo American as part of the group’s asset simplification process. The review saw Anglo turn its back on its diamonds, platinum group metals (PGM), nickel and steelmaking coal business.
This is as Anglo focuses its portfolio on copper, premium iron ore and crop nutrients — having fended off two bids last year from the world’s largest mining house, BHP, which sought its copper assets.
The merger with copper miner Teck is in furtherance of the asset simplification plan.
Kumba’s board last approved investment of R7.6bn in UHDMS technology at Sishen to boost the quality of iron ore and extend the mine’s operational life. This brought the total investment in UHDMS technology to R11.2bn.
Kumba expects its new UHDMS technology to triple the proportion of premium quality ore production at Sishen, taking it to 55% from the current 18%.
Kumba Iron Ore is looking for new mining opportunities in the Northern Cape and in the rest of Africa to shore up its dwindling mineral reserves, with the group expecting its peak production to taper off in the next decade.
The group, Africa’s largest iron producer, said in its annual report published earlier this year that as peak production tapered off by 2035, the company may face constraints in replacing mineral resources and ore reserves.
“A failure to grow our reserves or develop new operations to maintain our current levels of production beyond the remaining life-of-mine, will undermine our ability to generate long-term value,” it said in the report.
“There may be a potential challenge regarding general affordability and the availability of capital over the next three years.”
In a statement on Tuesday, Kumba noted the merger between Anglo and Teck.
“The board notes the announcement highlights that the premium iron ore produced by Kumba will remain a key component of the combined company,” it said.
Wanblad said the group was forging ahead with plans to dispose of De Beers.
“As far as De Beers is concerned, we continue as per the original programme of either doing a divestment or a demerger. However, a divestment is looking more likely and that’s the pathway we are on.”
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