BHP’s purchase of Anglo American could gain a strong opponent: the South African government.
The country’s mineral resources minister, Gwede Mantashe, told the Financial Times that South Africa’s previous experience with BHP had not been positive.
He recalled the merger of BHP with the South African mining company Biliton, which created one of the largest mining groups at that time.
According to Mantashe, the merger “didn’t do much for South Africa” and resulted in an outflow of capital from the country.
“What we saw happen was they abandoned coal and then created a fringe company called South32,” he said.
Although Mantashe has stated that his opinion is not an official government position, the minister is a very close ally of President Cyril Ramaphosa.
Almost half of Anglo American’s revenue comes from mining in South Africa – so having a government that isn’t happy with the deal is far from positive.
Furthermore, with 6.99% of the capital, the South African government is Anglo American’s largest shareholder through the state-owned manager Public Investment Corporation (PIC).
The PIC said in a statement that it will work to ensure value creation from the transaction, but did not comment on the price – BHP offered around US$39 billion, a premium of 14.7% over yesterday’s closing price .
However, other shareholders took the role of criticizing the proposal, after all the attack took place at a time when the mining company’s shares were falling.
Nick Stansbury of Legal & General Investment Management, Anglo’s 11th largest shareholder, told the FT that the proposal was “highly opportunistic”.
Iain Pyle, manager of Abrdn, used the same term and stated that he has the feeling that the proposal will be increased.
Anglo American shares soared almost 14% this Thursday, while BHP shares fell 2.7%.
André Jankavski
