PIC likely to oppose BHP’s bid for Anglo? That’s not a given …

David Masondo, chairperson PIC, & deputy finance minister, South Africa

THE Public Investment Corporation (PIC), the government pensions fund, gave few clues as to its standing on BHP’s takeover proposal for Anglo American.

In an interview with Business Day, PIC chairperson David Masondo said the corporation would assess any transaction “to ensure value creation for clients” whilst also taking into account the “socioeconomic impact”.

He added: “… new opportunities that may arise in the sector need to take these factors and long-term sustainability into account, including the depth and health of financial markets and the South African economy.”

That’s about as evasive as it’s possible to be. but it’s perhaps worth pointing out that as a participant in South Africa’s last major mining transaction – the takeover of Royal Bafokeng Platinum (RBPlat) – the PIC took up an interesting position.

Instead of immediately plumping for Impala Platinum’s bid for RBPlat, which saved thousands of jobs, the PIC waited more than a year for a better offer from Northam Platinum which had bought a stake in RBPlat at a premium to Implats’ offer.

This should give BHP some hope that the PIC, a 14% shareholder in Anglo, isn’t de facto going to adopt the anti-investment position of the South African government.

It’s also worth pointing out that minerals and energy minister Gwede Mantashe’s disaffection of BHP is more anti-business than supportive of a home-grown mining icon.

Were the South African government supportive of business, it would already have supported Anglo CEOs Duncan Wanblad’s, and his predecessor Mark Cutifani’s ambitions to unwind the unwieldy South African structure.

Wanblad said in February that given a blank piece a paper, he wouldn’t have drawn in subsidiary companies listed on the JSE as Kumba Iron Ore and Anglo American Platinum as an optimal structure for Anglo. Speaking to Miningmx in April, before BHP’s offer for Anglo became public, Cutifani said he too faced similar frustrations.

It’s a great shame South Africa risks losing an iconic brand such as Anglo American. Although not primarily listed here or headquartered here, the group is the last direct link South Africa has to its glittering mining history when it was a voice on the global stage.

Let’s hope the government doesn’t shame the country by opposing the unwinding of this structure which must now happen, regardless.

One final thought is that Masondo’s comments to Business Day could be read as an invitation to interlopers, like a Glencore. BHP’s unbundling of Amplats and Kumba is brutal and could be improved upon.