South Africa’s most iconic company is reinventing itself

Anglo American is reinventing itself by pivoting away from its historic crown jewel in De Beers and platinum to copper, iron ore, and crop nutrients assets. 

This transformation has been driven by Australian miner BHP’s failed takeover bid last year, with Anglo CEO Duncan Wanblad pledging reform to stave off any future bids. 

While necessary, this process threatens to make Anglo a shell of its former self and, with promises to sell out of its platinum business and De Beers, potentially unrecognisable. 

Such a situation would have seemed unimaginable to Anglo’s founder, Sir Ernest Oppenheimer, and his son Harry. 

Founded in 1917, Anglo was a company born out of the successive diamond and gold rushes in South Africa in the early 20th century. 

Sir Ernest’s son, Harry Oppenheimer, transformed Anglo from a mining company centred on the diamond trade into a sprawling megacorporation. 

This began with the company’s development of gold fields in the Free State in the 1940s and extended into investment banking and paper milling. 

Harry focussed on expanding Anglo’s interest into sectors outside of mining. As chair of Anglo, he wanted to drive South Africa’s and its neighbours’ industrialisation. 

This resulted in the company holding assets from coal mining to finance and paper mills and establishing the first investment bank in South Africa in the second half of the twentieth century. 

By the time he retired from the chairmanship of Anglo in 1982, Harry had created an international conglomerate with assets worth an estimated $15 billion at the time. 

Anglo was the largest producer of gold, platinum, and vanadium. It had operations in the US, South America, Europe, Asia, and Australia. 

Beyond mining in South Africa, Anglo had a diversified investment portfolio ranging from chemicals and explosives to pulp and paper, beer and bricks, banks and insurance houses. 

It also owned hotels, commercial offices, automotive manufacturers and distributors and had investments in some of the country’s largest retailers. 

Even before Anglo started snapping up the assets of foreign companies divesting from Apartheid South Africa in the late 1980s, the company controlled over 50% of all the companies listed on the JSE. 

Anglo American alone was responsible for 60% of the JSE’s entire market capitalisation, and its status as the preeminent miner in the world seemed impregnable. 

The making of Anglo 2.0

Just over 30 years later, this empire no longer exists, with Anglo being eclipsed by Australian giants BHP and Rio Tinto, while commodities traders such as Glencore have risen to be among the most lucrative mining companies in the world.  

Research analyst at Melville Douglas, Loftty Mmola, explained in a research note that Anglo has to reinvent itself to stay competitive with global mining giants. 

It will have to unbundle some key assets to free up capital and management time, while also enabling it to capitalise on emerging trends in the mining industry. 

Chief among these is the focus on maximising the return on its high-quality copper assets in South America and iron ore deposits in South Africa. 

This continued a process that began in the early 2000s when Anglo unbundled some of its diverse holdings, which included industrial giants such as Mondi. 

The most recent of these developments was the unbundling of Thungela Resources, which holds all of Anglo’s significant coal assets, to reduce the risk of clean-up liabilities at a group level and make the company more attractive to investors sensitive to environmental issues. 

Anglo’s latest reinvention was kickstarted by a takeover bid from Australian rival BHP Billiton in April 2024. Anglo rejected the initial bid and a revised offer in May 2024. 

To stave off the takeover bid and appease shareholders attracted to BHP’s offer, which required Anglo to get rid of its South African assets, the miner revealed an extensive overhaul of its business. 

As part of this radical overhaul, Anglo is expected to exit its diamond, platinum and remaining coal businesses to turn the company into a copper giant. 

BHP’s main target in buying Anglo was the company’s copper assets in South America, which have the potential to be extremely lucrative as spending on the green transition and data centres ramps up. 

After rejecting BHP’s second bid, Anglo said it would demerge or sell its De Beers diamond business, separate its Anglo American Platinum (Amplats) unit, and sell its coking coal mines in Australia. 

Anglo American CEO Duncan Wanblad and his management team have made strong progress in implementing this turnaround plan, selling 13.94 million shares in Amplats to raise R7.2 billion. Anglo has also slowed spending on a huge fertiliser mine in England. 

This restructuring is set to result in a much simpler mining company focused on iron ore and copper, in which Anglo has extremely high-quality production. 

Anglo’s bet on these metals is clearly a play on the green transition, with both being vital for the buildout of new electricity infrastructure. 

The company’s copper mines and iron ore are also its two largest and most consistent earners, providing a stable base for future growth, Mmola said. 

“We are making excellent progress with our portfolio simplification to create an exciting and differentiated investment proposition focused on our world-class copper, premium iron ore and crop nutrients assets – all future-enabling products,” Wanblad said in the company’s latest production update. 

“This highly cash-generative and much higher margin portfolio will offer greater resilience through cycles with the benefit of significant-high-quality and well-sequenced growth options.” 

The company is planning to increase annual copper production to more than one million tonnes by the early 2030s to benefit from the green transition. 

Dubbed Anglo 2.0, Mmola said the restructuring provides the company and investors with enhanced exposure to profits from copper. 

Mmola explained that Anglo has unrivalled growth prospects for copper, given its ability to increase production from existing mines. 

Its competitors, if they want to match this potential production increase, would have to spend billions to build new copper mines that take around 15 years to come online. 

Furthermore, the simplified structure after the restructuring would give Anglo shareholders greater exposure to copper and a superior commodity mix that would result in greater profitability. 

The image below, courtesy of Melville Douglas, shows how significantly Anglo can increase its copper production from its existing mines, with its Quellaveco mine in South America able to increase its output by 300 kilotonnes per annum (KTPA).