Chris Hattingh | 29 April 2024
If the deal goes ahead Anglo American will have to split off its SA platinum and iron ore units.
The unsolicited all-share merger proposal from BHP Group, the world’s largest mining group, for Anglo American contains nuggets of truth which, if you are the minister responsible for mining and mineral resources in SA, won’t be altogether welcome (“BHP-Anglo deal could leave SA out in the cold”, April 26).
Should Anglo American end up moving forward with the deal it will need to split off its SA platinum and iron ore units, since BHP’s offer is contingent on this. SA’s heightened country risk premium — driven up by electricity and logistics constraints as well as bureaucratic labyrinths, equity requirements, cadre deployment and preferential procurement — raises the pain threshold for international business and capital. It might well become a more common occurrence that these businesses and investors find the threshold too high to deal with.
In the global context, Anglo American’s operations in Brazil, Chile and Peru (Latin America) are of particular interest and worth much for BHP; all sources of copper will be highly sought after. Should the deal be completed BHP will become the world’s top copper producer.
With investors adopting a risk-off stance of late, emerging and developing economies are under pressure to present ever stronger cases for investment. SA continues to do itself few favours, and the narrative, never mind the reality, might take a while yet to be improved.
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.