Carly Simon’s 1972 hit You’re So Vain, in which she asserted that “you probably think this song is about you”, rings in my ears when I look at BHP’s recent “proposal” (read: offer) to buy Anglo American. Our brittle national psychology has been on show.
When capital tells you a story about yourself it is an icy experience. The BHP-Anglo deal tells us a lot, and we need to show a measure of fortitude by turning our faces into that cold wind to see what warmth can be found.
It has been fascinating how South Africans appear united in their offence at the offer, in terms of which BHP would buy UK-listed Anglo so long as it divests its SA assets, Kumba Iron Ore, Amplats and De Beers.
Anglo is the mining story at the heart of our country, and at the heart of Johannesburg — our Big Hustle city, marked by bling and squalor. It was ever thus; in the early days of the city Transvaal president Paul Kruger denounced the city south of his capital, Pretoria, as “Duivelstad”. And yet it was Duivelstad, a few years after the birth of the Union of SA in 1910, that gave birth to Anglo and all that followed.
I have been in the boardroom at 44 Main Street, Johannesburg, dominated by a gleaming table the length of a yacht. I have remembered the decisions made there — to look north into then-Southern Rhodesia and to South America, to recognise black trade unions in 1985 as realisation dawned that such wealth created on the back of cheap black labour was unsustainable, the decision to list in London, the decision to dispose of Mondi and AngloGold. Flashes of the past glint off that table.
Equally, the list of the first general secretaries of the National Union of Mineworkers explains why a nostalgia pervades; Cyril Ramaphosa, Kgalema Motlanthe and Gwede Mantashe. Whether it is confident capitalists building a New York in the veld, or resistance, organisation and mobilisation against all the grim abuses that came with it that you remember — we all have a memory of Anglo of one flavour or another.
It is impossible for me to preside over a swathe of editorial comment on the dysfunction in our railways, ports, electricity supply and policing and then describe this offer as a surprise. But these are actually still small issues in the grander scheme of things, and the grander scheme is where BHP operates.
BHP CEO Mike Henry jetted into Cape Town on Thursday evening and was gone in under 24 hours after meeting Ramaphosa and some important institutional Anglo shareholders such as Coronation.
It will have been difficult. He will have had to manage dented political egos on a big global deal that, on the face of it, speaks about SA’s un-investibilty just three weeks ahead of an election. While a conversation between Anglo and BHP has been ongoing for months, a leak of the deal ahead of an election is the last thing BHP wanted and appears to have taken its executive completely by surprise, suggesting an odd moment of naivete.
Henry would also have had to persuade shareholders and regulators about the benefits for SA, in terms of “decolonising” Anglo’s local assets and returning management, services and — importantly — the tens of billions of rand in cash that they generate, to SA from London, rather than using it to prop up investments Anglo has made in the UK.
There would have been dissonance. Anglo’s heavily SA-based shareholding (and the 7% of the company owned by the Public Investment Corporation) has allowed Anglo’s management to preside over strategic drift and investments that hoover up cash generated by the SA operations. If this deal says anything about SA at all beyond the obvious it is that our institutional shareholders are too passive and have not held Anglo’s board to account for management’s underperformance, the discount it has traded at for years, or for overcommitting to growth that will not be achieved.
Perhaps most importantly, Henry will have been the personification of a new era of disruption. BHP’s strategy is to focus on “future-facing commodities” that accommodate global trends of decarbonisation, the electrification of value chains and the feeding of a burgeoning human population. It has focused on copper and potash for fertiliser.
BHP has iron ore for days and has no need of the Kumba asset, as stellar as it might be, and while it would surely have been an easier sell in SA to just scoop that up too, it represents a complicating regulatory stumbling block in the Anglo deal that it would rather do without. Platinum group metals, in the form of Amplats, are likely regarded as off strategy and dismissed out of hand. BHP has a history of aggressively selling assets not considered strategic — the South32 demerger being a case in point.
This strategic approach — this song — is not about us, like Carly Simon said. It is not about our business environment. It’s not about Eskom or Transnet or “business forum” gangsters — though they don’t help. It is the cold steel of capital’s truth-telling about the future shape of the world economy.
Are we listening? Our response to this matters a great deal, and for the smart money it is the actual point. It is in many ways a pivotal moment for us. Yelling at the Australians will reveal us as a country living in a backwater of our imagination, sloshing about in a small, increasingly fetid pool of our own exceptionalism.
Our approach needs to dispense with nostalgia and be clear-eyed. We desperately need to create jobs and value in this country. We need to offer a stable and friendly fiscal regime. We need to hold international companies to account, to become interested and active shareholders who really show that we understand how ownership is control — and to act on it. Any politically motivated moves to block this deal will create an extremely negative view of SA we cannot afford.
The Anglo-BHP deal, if and when it eventually goes through, will represent the end of an era. How SA mining looks afterwards will be in our own hands. Both opportunities and risk abound.
• Parker is Business Day editor-in-chief.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.