SOUTH Africa’s government might be persuaded to wave through BHP’s $39bn bid for Anglo American despite recent animus towards the Australian firm from the country’s mines and energy minister, Gwede Mantashe.
Mantashe said last month that previous encounters with BHP had been “not positive”, adding the company had not done much for South Africa. This comes as BHP CEO Mike Henry last week met with investors, including South Africa’s Public Investment Corporation, and government officials. According to Reuters, Henry was in “listening only mode”.
Similar benefits were extracted by the South African government as part of previous international swoops on local assets, like brewer Anheuser-Busch InBev’s $106bn acquisition of SABMiller in 2016. Reuters argued that Cyril Ramaphosa’s administration would be ill advised not to spook international markets further by opposing the offer especially as the share of non-resident holdings of domestic government bonds has fallen from 40% five years ago to 25% now.
However, the government has other options to consider. It could push for the break up of Anglo American which would net it more than implicit in BHP’s current proposal. It might also be supportive of an offer from Glencore, as speculated by Reuters last week.
Smaller than BHP, Glencore could submit a more straight-forward merger with Anglo American which might be politically more palatable in South Africa. Reuters argued that Glencore CEO Gary Nagle might be minded to keep Anglo’s 70% stake in Kumba Iron Ore. The Swiss miner currently has no iron ore production under its belt.
Reuters said on May 3 that Anglo American CEO Duncan Wanblad was to meet Mantashe for the first time since the miner rejected BHP’s proposal. It added that Anglo’s investors are concerned that they stand to lose heavily by holding shares in the South African subsidiaries, if they are unbundled.
