Anglo American’s Biggest Shareholder Wants Vote on Sale Plan

  • PIC concerned sales would not realize full value of assets
  • Public Investment Corp. oversees $123 billion of pension funds

Anglo American Plc’s biggest shareholder, South Africa’s Public Investment Corp., will meet with the company next week to discuss whether its plan to sell more than half of its mines including local coal and iron-ore assets is the best option for the country.

The PIC, which owns about 14.5 percent of Anglo, wants the sale plan put to a shareholder vote because it’s concerned that selling mines after commodity prices plunged wouldn’t realize the full value of the assets, said Deon Botha, the Pretoria-based PIC’s head of corporate affairs. The PIC oversees South African government workers’ pension funds among the $123 billion in assets it holds.

If the disposal plan does go ahead, the PIC would prefer that the coal, iron ore and manganese mines up for sale be bundled with some of Anglo’s platinum mines, Botha said. The PIC doesn’t favor the sale of the assets as single mines, he said.

Anglo has previously said its platinum division, Anglo American Platinum Ltd., is core to the group, along with diamonds and copper.

“We are considering a number of options for divestment, whether as individual assets or as packages of assets, but will only divest for value and in the interests of all our shareholders,” Pranill Ramchander, a spokesman for Anglo in Johannesburg, said by e-mail.

Cutting Debt

Anglo, which borrowed heavily to build mines during the decade-long commodities boom that ended in 2011, is attempting to cut its net debt to below $10 billion by the end of the year by selling assets. These include Kumba Iron Ore Ltd., coal mines that supply state-owned power producer Eskom Holdings SOC Ltd., and manganese operations. The sales would mark a major retreat from South Africa, where Anglo was founded by Ernest Oppenheimer in 1917.

Boosted by a rebound in commodity prices, the stock has risen 161 percent this year, making it the best performer on the FTSE 100 Index. The shares gained 0.3 percent to 782.2 pence at 4:14 p.m. in London. 

Chief Executive Officer Mark Cutifani has repeatedly insisted that the company is not running a firesale and will rebuff offers that do not meet expectations.

Timing Questioned

Other shareholders are also skeptical of Anglo’s attempt to sell mines at a time when commodity prices have plunged.

“It seems odd to me that people are panicking to sell assets when the industry is under pressure,” said Andrew Lapping, chief investment officer at Cape Town-based Allan Gray Ltd., which manages about $34 billion including Anglo shares. “I’m sure they’ll probably re-assess what’s core and what’s non-core in six months’ time, when coal is doing well and something else is doing badly.”

If Anglo does sell, South Africa’s government is keen to support “new black economic empowerment champions,” Mineral Resources Minister Mosebenzi Zwane said in February. Zwane wants to increase black ownership of the mining industry, which formed the bedrock of the economy under white-minority rule that ended in 1994.

While the PIC has a mandate to achieve high returns for pensioners, it also seeks to encourage the country’s economic and social development.

— With assistance by Antony Sguazzin, Kevin Crowley, Paul Burkhardt, Ana Monteiro, and Gordon Bell

    Before it's here, it's on the Bloomberg Terminal.