Anglo CEO says firm “will adapt” to political change in SA

Duncan Wanblad, CEO, Anglo American

ANGLO American CEO Duncan Wanblad said his group’s restructuring plans would not be derailed by political developments in South Africa where the ruling ANC lost its majority following elections last week.

“We will rely on the institution of government to move it (restructuring) forward. But if there are any massive exogenous changes that come with this we will have to adapt to those,” Wanblad said in an interview on May 30.

The ANC garnered only 41% of the vote and will have to choose a partnership with at least one party in order to form a government. Its main options are to favour a coalition or government of national unity with either the pro-business Democratic Alliance or the EFF which has controversial policies on nationalisation.

Wanblad announced on May 14 plans to simplify Anglo in order to capture the economic upside of its copper production. Setting an 18 month to two year deadline on his plans, he said Anglo would unbundle its 79.2% stake in Anglo American Platinum (Amplats), and sell De Beers.

Unbundling Amplats, which may also see the firm listed in London to minimise the effects of an expected share overhang, will require discussions with government, but Wanblad said calling the outcome of the ANC’s next month was tough.

It took Anglo just over a year to demerge its South African coal assets into Thungela Resources in July 2021. In 2007, it unbundled paper manufacturer, Mondi.

Analysts said a poor ANC coalition choice would weaken Anglo’s chances of unbundling Amplats “for value”, as it has termed it. “No international investors would be interested in either keeping or buying its shares,” said René Hochrieter an analyst for Noah Capital.

“The ANC/DA may work but South Africa’s investor-hostile government will take a lot of time to become investor friendly,” he said.

Arnold van Graan, an analyst for Nedbank Securities said the greater risk to Amplats’ unbundling would be selling the shares at the right time. “The current PGM market is not the right time but Anglo doesn’t have the luxury of time,” he said.

PGM prices fell about 60% last year on average forcing a number of primary producers to cut production and trim projects. This year, the average price of platinum, palladium and rhodium has improved about 10% but the pressure is still on.

Amplats last year announced R10bn in operating and project capital followed by a restructuring review in February that could potentially affect 3,700 fixed term employees as well as 620 contracting companies.