Presidency clarifies its stance on rejection of BHP’s Anglo bid

The rejection of a bid by Australia’s BHP to merge with SA mining giant Anglo American — minus its SA assets — did not signal that SA was hostile to investors, presidency spokesperson Vincent Magwenya said on Monday. 

Magwenya also said the exclusion of Anglo’s SA assets did not mean that international investors were seeking to limit their exposure to SA.

The proposed merger would have required the unbundling of Anglo Platinum (Amplats) and Kumba Iron Ore as a condition, leading to market watchers raising concerns that SA’s mining assets were unattractive to international investors. 

Anglo’s board on Friday unanimously rejected BHP’s merger proposal, saying the structure was “highly unattractive” and Anglo would deliver significant value for its shareholders on its own. This is amid growing frustration over energy, logistics, crime and corruption in SA — all factors that play a crucial role in shaping this year’s economic growth prospects.

Magwenya refuted claims of a hostile investor environment in SA citing the joint initiative by the presidency and business lobby groups to resolve SA’s pressing issues such as crime and corruption and to rebuild the country’s economic trajectory.

“This partnership should reassure both local and foreign investors that considerable resources and expertise are being leveraged in government and in the private sector to curtail crime, continue improving the functionality of our ports and enable an investor and societal environment that fosters inclusive economic growth and prosperity,” he said.

“The presidency would implore the investor community to note the optimism expressed by the business community in various publications and platforms on the progress achieved across the three focal areas. This should reassure investors that momentum is building and will be maintained to reduce crime and corruption, continue improving energy supply and resolve logistic backlogs.” 

BHP’s proposal came under fire from mineral resources & energy minister Gwede Mantashe, who told Business Times at the weekend that the mining giant — which was the product of a merger between Australia’s BHP and SA-owned Billiton two decades ago — had never done anything for SA. If he could have stopped it he would have, Mantashe said.

A deal would face scrutiny by regulators across the jurisdictions in which the two groups operate. An analyst said one of investors’ concerns was antitrust risk. The merged group would produce about 10% of the world’s copper, which is considered a critical mineral for the “green transition”, and would be bound to face scrutiny by competition authorities.

Another concern is that Amplats and Kumba would face “flowback” risk if they were unbundled from Anglo, because some shareholders would be forced sellers. Some in the market have expressed concern that without a global parent the two companies would lose some of their access to technology and markets.

Anglo chair Stuart Chambers said in a statement on Friday that the BHP proposal was opportunistic and failed to value Anglo’s prospects.

Magwenya said the market moves by BHP and Anglo did not point to a lack of confidence in the country’s economy, pointing to investment pledges by various international firms including Amazon’s R15.6bn pledge, while in the auto sector Toyota pumped in R4.2bn, Ford invested R16bn, Mercedes invested R10bn and BMW put in R5bn.

“It’s still early days in terms of the proposal that BHP has submitted to Anglo, and from what we know, that initial proposal has been rejected by Anglo. For us, this is your normal market activity. Admittedly, it involves very large players in the sector and a significant player in SA’s mining industry, but it’s still very early days in that transaction.”

maekot@businesslive.co.za