A bid by BHP for Anglo American may look like a Melbourne-based global mining giant proposing marriage to a London-listed global miner. But there is a rich and complicated SA history on both sides of the family.
There is a rich irony, too, in concerns that a merger of the two could strip London of another of the large listed companies that hailed, originally, from Johannesburg.
And that history is worth revisiting at the prospect of a future for Anglo that could have profound implications for the company and the mining industry as well as for the country of its birth.
A merger of BHP and Anglo would in a sense bring the SA mining industry full circle. It would combine two of the “big five” mining houses of four decades ago, but in a way that could exclude SA altogether. BHP has made it clear it’s after Anglo’s rich copper exposure in South America; it’s made it equally clear it’s not interested in Anglo’s rich SA exposure to platinum, iron ore and diamonds.
The history, in brief, starts with the fact that BHP is really BHP Billiton. It is the product of a 2001 merger between Australia’s Broken Hill Proprietary and Billiton, which SA mining house Gencor bought from its Dutch owners in 1994. Gencor itself was born out of Anglo. It was the successful product of an Afrikaner empowerment deal Anglo did in the 1960s, long before Anglo closed some of SA’s early black empowerment deals.
As the newly democratic SA opened up to the world 30 years ago and miners sought to spread their global wings without the restrictions of exchange control, Gencor-Billiton became the first SA company to move its domicile and its primary listing to London in 1997. The BHP merger came not long after, and the group had a dual primary listing in London and Sydney — relinquishing London in 2022. Earlier, in 2015, it had also relinquished its SA assets, stripping these out into Perth-based South32, which later sold the SA coal mines to Seriti.
Anglo followed Billiton’s lead, moving its headquarters and primary listing to London in 1999, as did Old Mutual and later SA Breweries (SAB) and Dimension Data. Anglo ended up as the last man standing of that London group. Billiton, Didata and eventually SAB were swallowed up by other global groups; Old Mutual eventually came home again in 2018.
From its London base, Anglo has successfully expanded its global reach over the past quarter of a century, and there’s no question its centre of gravity has shifted away from SA. But more than a third of the group’s assets are still in SA. It has retained a strong connection and repeatedly emphasises its commitment to the country.
Bellwether mining stock
Anglo still looms large in the corporate landscape. It’s still the bellwether JSE mining stock and the only real diversified miner left here, anchoring the sector as well as playing a sizeable role in community and social investment. And it’s still the key voice in an industry which, to put it politely, has had an often complicated and conflictual relationship with its regulators in government.
We will no doubt hear more of all this as Anglo mounts its defence and it will be interesting to see how tightly it wraps the SA flag around itself.
By contrast, as one miner puts it: “BHP couldn’t get far enough away from SA.” Which explains why it insists Anglo unbundle its majority stakes in Anglo American Platinum and Kumba Iron Ore as a condition of a possible merger, even though they are world-class assets. Anglo’s 85% of De Beers would likely be on the block too (the Botswana government owns the other 15%) as would other SA assets, with a BHP-Anglo mega-deal setting off a wave of global mining industry mergers & acquisitions.
But first BHP has to make a formal bid, by the May 22 deadline. It clearly is being opportunistic, taking advantage of terrible times in the platinum group metal (PGM) and diamond markets as well as of the electricity and logistics challenges Anglo faces in SA. BHP also wants to diversify its portfolio to lessen its dependence on iron ore and up its share of global copper. A merger would make it the world’s largest producer with about 10% of the market. That’s assuming there is one: once Anglo is in play, other bidders could emerge.
The structural and regulatory complexities of a deal are huge — particularly in an election year for SA. Already, mineral resources & energy minister Gwede Mantashe has made clear his distaste for the deal. His colleagues in cabinet, such as the finance minister and minister of trade, industry & competition, may share that distaste. The question of who will occupy those positions after the election adds to the uncertainty around the deal, which would presumably also need Reserve Bank and SA Revenue Service approval. Government has serious leverage as a shareholder, given that the Public Investment Corporation is Anglo’s largest shareholder with 8.3%. It has already hinted it doesn’t like the idea much, saying the mining sector is critical to SA’s economy, affecting many stakeholders, and alluding to “long-term sustainability”.
But SA has in some ways brought this on itself. Johannesburg should have been one of the centres of the global mining industry, along with Sydney and Toronto. Instead, everyone in the industry wants their headquarters to be in Australia and Canada; nobody wants to be in SA. One can debate whether those London listings were a good idea for SA but there is no debating the fact that since that time the government, not to mention Eskom and Transnet, have made SA an ever less attractive jurisdiction for mining.
Losing Anglo would marginalise SA even further. For Anglo and BHP shareholders, it will be about whether the marriage would add more value rather than the singletons alone. For SA and its mining industry, the courtship would raise more existential questions.
• Joffe is editor at large
Correction: April 28 2024
An earlier version of this article incorrectly said that BHP Billiton was Sydney based. It is based in Melbourne.
We also incorrectly said that Anglo American owns 75% of De Beers. It owns 85%.
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