ANC chasing South Africa’s most iconic company out of the country

The ANC’s economic policies and its alliance with major trade unions pushed Anglo American to effectively leave South Africa in 1999 to ensure the company could survive in its present form. 

Anglo’s moving of its headquarters to London made it a fundamentally global miner and began the process of slowly reducing its exposure to South Africa. 

The company’s merger with Canadian giant Teck will move its headquarters to Vancouver and reduce Anglo’s South African presence even further. 

With the unbundling of its coal assets into Thungela, the sale of De Beers, and a push to transform Anglo into a major copper player by selling off its platinum assets, there is a concern that the company could leave South Africa altogether in the near future. 

The fate of South Africa’s most iconic company, which once controlled over 80% of the JSE and straddled the local economy, is emblematic of the broader decline of South Africa’s mining sector. 

The industry is a shadow of its former self, with decades of policy uncertainty, difficult labour relations, and increasingly onerous transformation regulations hobbling the sector. 

While these factors have played out over 30 years to result in little to no new exploration and thousands of job cuts, Anglo American, as a South African company, was one of the first victims. 

Mining analyst at Modern Corporate Solutions, Peter Major, explained to BizNews that it is only a matter of time before Anglo leaves South Africa altogether. 

This is despite the fact that it seems as though South Africa is getting its act together, with reforms driving improved performance at Eskom and Transnet alongside healthier government finances. 

Major compared this to going back to an old girlfriend that you separated from in bad circumstances and trying to make up decades later. 

“We are talking decades later. Anglo effectively left this country in 1999. I think the claws were out for them along with the grinders and the hacksaws,” Major said. 

“The unions and the ANC said in the 1980s what they were going to do to Anglo when they came to power. They put the fear of God into everybody related to Anglo, including investors, and so when they had the chance to leave in 1999, they took it.” 

Major recalled that Harry Oppenheimer was actually the one person who fought the hardest against Anglo moving to London, as he was adamant that it was a South African company. 

“But Harry could not win over the executives, and I give them credit, they read the situation pretty well, having seen what happened before in Zambia, Uganda, and Zimbabwe when mines were nationalised,” Major said. 

Major expects Anglo to keep ownership of Kumba Iron Ore, which operates in South Africa, as it is a great asset and is relatively easy to control and run.

However, Kumba remains heavily reliant on South Africa’s logistics infrastructure, and Major thinks that if a good offer for it comes along, Anglo is likely to sell it and leave the country altogether.

The decline of South African mining

South Africa’s mining industry has been on a downward trajectory for the past 30 years, with output steadily declining and little new investment being made. 

Close to no new exploration has occurred over the past 20 years, despite evidence of a rich mineral bounty and soaring demand.

Major attributes this to the government’s destructive economic policies, which have resulted in it being ranked among the ten worst jurisdictions to operate in for mining companies. 

“We have seen so much bad legislation in South Africa, particularly on mining, because there is never an adult in the room when these policies are formulated,” Major said. 

“The people never think more than one step ahead, about the immediate reactions and longer-term consequences.”

This has resulted in exploration for new mineral deposits plummeting in South Africa, with little to no new exploration being conducted in the past 20 years. 

“Our exploration spending has probably been on a 45-degree downward slope continuously since the early 1990s. There is nothing we see in the legislation to change that,” Major said. 

“It is sad and scary that in 2004, when we came out of a long slump in metal prices and entered a supercycle, we are still in, and it has not stopped the downward slope of exploration spend in South Africa.” 

“That means it is irrelevant to metal prices. We can no longer blame the failure to build new mines, modernise mines, and explore due to low prices. What is it? It can only be policy.” 

Major said that things have gotten so bad that miners are not even exploring the areas surrounding their existing mine. 

“Mining companies are saying there is no commercial reason for us to sink a shaft here. The legislation has gone wrong. There is no way some would sink a shaft even if they found new mineral deposits,” he said.

South Africa is following the same path as other African countries, which had flourishing mining sectors that are now largely moribund. 

The collapse in these mining powerhouses was also due to poor policy, uncertain implementation, calls for nationalisation, and demands to have specific shareholders through the empowerment policy. 

“We were a leviathan in the 1980s. Nobody could beat us. Anglo American was the largest investor in the United States. The Americans were terrified of us,” Major said. 

“You are now seeing what happened in Zambia and in Zimbabwe, now in South Africa. It has not turned around. It is still going down.” 

Major explained previously that things began to change in South Africa in the 1990s, with the ANC government making significant changes to mining legislation and imposing transformation policies on the sector. 

These policies, often well-intentioned, have had disastrous side effects and consequences, with the government failing to coure correct.