Slap in South Africa’s face

BHP Group’s insistence that it does not want South African assets as part of a deal to buy Anglo American shows how toxic the local business environment has become.

In April, BHP Group made a takeover approach for rival Anglo American, a move that could spark the biggest shakeup in the industry in over a decade.

Anglo American rejected the offer, after which BHP made an improved takeover offer, which valued the mining company at about £34 billion (R781.85 billion).

Anglo also rejected the second offer and announced a big overhaul to fend off BHP’s takeover approach.

It will exit diamond, platinum and coal mining in a restructuring designed to turn the 107-year-old miner into a copper giant.

One thing that stood out in both offers was BHP’s stipulation that Anglo must spin off its South African units before the acquisition.

Investment expert Piet Viljoen said it showed that South Africa is not an attractive investment destination for global companies.

Viljoen said BHP Group’s insistence on unbundling some South African assets before a deal can be done sends a strong signal about the country.

“A foreign entity doesn’t want to invest in a country where it has to give up 30% of the economic proceeds to a BEE partner for nothing in return,” he said.

Investigative journalist and author Pieter du Toit said inside information from Anglo American suggests there are a few reasons why BHP does not want South African assets.

  • You must give part of your shareholding away because of BEE requirements.
  • The communities around the mines are challenging. Mine owners are burdened with the socio-economic problems of these communities.
  • You must work with Transnet, which is dysfunctional, to get your products to harbours.
  • Eskom’s collapse means local mines have to produce their own power to function optimally.
  • They have to fight criminal elements like the construction mafia demanding a slice of their pie.

“A mining giant like BHP Group does not want any of these problems. It, therefore, wants to buy Anglo, but they want nothing to do with South Africa,” he said.

“This is a screaming indictment on how the ruling ANC has mismanaged the economy over the last twenty years.”