Anglo’s Wanblad describes mega-deal M&A “a calamity”

Duncan Wanblad, CEO of Anglo American, speaks during the World Mining Congress in Brisbane, Australia, on Tuesday, June, 27, 2023. Photographer: Ian Waldie/Bloomberg via Getty Images

ANGLO American CEO Duncan Wanblad described the prospect of mega-deals in the mining industry as “a calamity” as they would ultimately hurt society.

“Why do I think consolidation is bad thing,” he said in an interview at the Mining Indaba conference on Monday. “It will undoubtedly result in less actual mining being done in the world; it will result in less projects being developed.

“As a result of that it will prejudice people and the countries that desperately need these projects to derive benefits from them for decades and decades.

“What you benefit from financially in a very short-term window (from consolidation), you pay for, for almost ever,” said Wanblad. “Society pays for this. There aren’t enough responsible mining companies to go round in the world today that make a difference.”

Reports in January said that Rio Tinto and Glencore had discussed a combination of their businesses last year. Although the deal didn’t get off the ground, it was described as a sign of industry desperation amid forecasts of surging supply deficits.

Wanblad’s comments echo the sentiments of Adam Matthews, chief responsible investment officer for the Church of England Pensions board. He said during a £39bn takeover attempt of Anglo by BHP last year that “… as an asset owner we are not convinced such consolidation will serve our long-term interests as a pension fund”.

Investors might scoff at Wanblad’s assertion as the market is looking for companies with scale to build projects. But Wanblad replied: “This is not an excuse for not being efficient. We have to be really efficient so investors don’t think it is better for them to consolidate in the short-run”.

Although BHP’s offer for Anglo was repulsed, speculation the Australian group would make a fresh pass has been unceasing.

“Anglo being acquired by anyone – and I mean anyone – doesn’t accelerate the organic options Anglo has in critical minerals,” said Wanblad.

“There is a natural time-frame to develop feasibility study. Because we are managing shareholders’ money we have to have confidence to develop the projects which takes time. It takes time to get permits and it takes time to get licences.

“Then you need skills to build projects which some companies are better at than others; and when you are up and running you have to hope you’re not expropriated for all different reasons you get,” said Wanblad.

Trade sale for De Beers

A couple of weeks after BHP launched its Anglo offer, Wanblad unveiled a restructuring of Anglo he said had been in the works for some time. It’s key elements is to sell Anglo’s platinum, diamonds, and metallurgical steel assets. The latter has been achieved for about $4bn – at much higher valuation than analysts first estimated.

The demerger of Amplats was due by mid-year, said Wanblad who declined to comment specifically on speculation it could be planned for April or May.

As for selling its diamonds business, held in 85%-owned De Beers, Wanblad said that a deal by the end of this year or early 2026 was a reasonable timeframe.

“It would be lovely if could do an IPO,” he said of selling Anglo’s stake in De Beers. But given the extended weakness in the diamond market, Anglo was likely to derive more value from a trade sale, he said.

“I favour a trade sale based on sentiment. Trader buyers have more of a feel [for the market] than the public. But as markets recover, the public might get a lot more confident. There’s an equal option for both. I definitely would not discount an IPO,” he said.

Anglo was boosted today by confirmation of a sales agreement with the Botswanan government which Wanblad confirmed was unchanged from the ‘in-principle’ pacts signed with Botswana under former president Mokgweetsi Masisi in 2023.

Debswana, a 50:50 joint venture between top diamond producer Botswana and De Beers, currently sells 75% of its output to De Beers.

“The signing will be in the next few weeks…the government of Botswana will be hosting the signing,” De Beers CEO Al Cook told Reuters in an interview.