AngloGold leaves SA - more than 100 years after the Oppenheimer empire was founded in local gold min
BUSINESS INSIDER / 12 FEBRUARY 2020 - 05.17 / ANDREW THOMPSON
AngloGold has sold its last remaining assets in South Africa.
The company has its roots in Anglo American, which was started as a gold mining company by Ernest Oppenheimer in 1917.
Other large multinational companies are exiting the country due to load shedding and regulatory uncertainty.
For more, go to Business Insider South Africa.
Mining company AngloGold Ashanti has sold the last of its South African businesses, in a R4.4 billion transaction with Harmony.
The deal, announced this week, brings to a close the long history the firm, and its predecessors, has had in South Africa.
AngloGold has its roots in multinational mining company Anglo American, started by Ernest Oppenheimer in 1917. At its prime, the company was one of the world’s leading gold miners.
Anglo American originally focused only on developing and expanding the country’s East Rand gold mines, and saw massive expansion by tapping into the rich goldfields of the Vaal Reef and Free State.
It used this to expand and diversify into several other fields over the course of its history. In 1926, Anglo American became the single largest shareholder in diamond company De Beers, and Oppenheimer later became chairman of the company.
Two years later, the company established the precursor to Anglo American Platinum, by partnering with Hans Merensky, and by 1945 it had moved into the coal industry through acquisition of Coal Estates.
By the 1960s, Anglo American had further diversified by opening its first uranium plant in Gauteng, and it then created the Swaziland Iron Ore Development Company.
The company made their first global move in 1961 by investing in Canadian mining company Hudson Bay Mining and Smelting Company.
In the 1970s, it set up an office in Brazil - a move that would lead to new interests in gold, nickel, niobium and phosphates, and iron ore across the country.
In 1998, the company consolidated its interests in gold and uranium by forming AngloGold. Later that year, AngloGold became the first South African company to list on the New York Stock Exchange.
It changed its name to AngloGold Ashanti after the 2004 merger with Ghanian company Ashanti Goldfields. In 2006, Anglo American began reducing its stake in AngloGold Ashanti and by March 2009, the company had sold its remaining shares in AngloGold Ashanti, officially marking their exit from investing in gold.
Now, eleven years later, AngloGold Ashanti has sold its last South African assets to Harmony Gold in a deal worth about R4.4 billion.
Since taking control of the company in 2018, Chief Executive Officer Kelvin Dushnisky has shifted the company’s focus towards more profitable mines in Australia, Ghana, and the Americas.
Two years later, AngloGold only had two South African assets left: its Mponeng mine in Carletonville, the world’s deepest gold mine - as well as its Mine Waste Solutions business, a mining waste retreatment operation.
Both were sold to Harmony Gold for about R4.4 billion, at a steep discount to their accounting values.
Harmony, backed by African Rainbow Minerals, has been looking for new opportunities as reserves at its South African mines continue to decline.
Why international miners are leaving SA
It was no surprise that AngloGold wanted to sell its South African mines, says Jean Pierre Verster, CEO of Protea Capital Management. The company signalled this intention since last year.
Verster says that operational problems, particularly labour strikes and load shedding, have likely contributed to this decision – as has political risk.
While talk of the nationalisation of mines has died down, SA’s third mining charter, which requires 30% black ownership for companies that apply for mining rights and has much stricter procurement rules, is seen as a deterrent. Importantly, the proposed new charter follows shortly after the previous one – and mining companies now want a guarantee that the new mining charter will be in place for at least a decade. But the charter says the Minister of Mineral Resources and Energy can change it at any time.
SA’s biggest gold producer Sibanye Gold last year said that it was not spending new capital to grow its SA operations as the investment climate is “not yet conducive to make decisions that require billions of rand.
“It’s difficult to convince shareholders that South African mining is an investment case,” CEO Neal Froneman told Bloomberg. Sibanye is now considering moving its primary listing overseas.
Other multinationals have exited South Africa for similar reasons. Gold Fields, which has been doing in business in South Africa since 1887 when it was formed by Cecil John Rhodes, has a only one South African mine (South Deep) left.
And five years ago, BHP Billiton – which has partial roots in a company formed in Johannesburg in 1895 – spun off its South African assets in a separate company called South32. South32 sold its local coal assets at the end of last year.
The Public Investment Corporation, the manager of South African civil servant pensions, remains one of the largest shareholders in AngloGold, which remains listed on the JSE – for now.
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