Anglo’s Top Shareholder Wants More South African Control

  • Public Investment Corp. seeks single African asset from sale
  • PIC been approached by other shareholders who are dissatisfied

Anglo American Plc’s biggest shareholder wants South African investors to follow its lead and increase their holdings in the century-old miner as it pushes for the creation of a domestic commodities “champion.”

“Our role is to make Anglo more South African-owned and controlled,” Public Investment Corp. Chief Executive Officer Dan Matjila said in an interview on Tuesday in the capital, Pretoria. “We have been vocal and when the price was low we almost doubled our stake. So we have booked a seat at the table.”

Anglo unveiled a turnaround plan in February to cut debt that involved selling more than half its mines and exiting commodities including coal and iron ore to focus on more profitable platinum, diamonds and copper. So far that plan, combined with a wider rebound in commodities, has worked, with the stock hitting 1,029 pence on Tuesday compared with a record-low 215.55 pence in January. Anglo is looking to exit coal in Colombia and Australia along with nickel and iron ore in Brazil, and is considering sizable disposals in South Africa. 

The PIC is the continent’s biggest money manager, handling South African public workers’ pensions and holding 13.4 percent of Anglo. It met with the company’s management last month to discuss the asset-sale plans, and expects the producer to advise it on the next step soon, Matjila said.

New Producer

If the mining company insists on proceeding with the sales, to which the PIC is opposed, it wants to see the creation of a new producer containing all the African operations, he said. Selling assets piecemeal can be used to “get around shareholders” and “in the end, the outcome on the company is significant -- we are not happy about that,” he said.

The company has said it will look to exit Kumba Iron Ore Ltd., Africa’s biggest producer of the steelmaking ingredient, South African coal mines and some of its platinum operations. Still, the company has committed to maintaining a local presence with the Mogalakwena platinum mine and Venetia diamond operation among assets it considers core to its future.

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.

Anglo CEO Mark Cutifani told investors in July that while the current strategy was to continue with the individual asset sales, the company remained “very open” to other possibilities so long as they delivered shareholder value.

Why Rush?

“What is the rush to sell?” Matjila said. It would be better for the company to hold on to its assets until commodity prices improved further, he said. He also views platinum, and to some extent diamonds, as critical should a new domestic company be established.

Other shareholders “not long ago” approached the PIC, expressing dissatisfaction by how Anglo is being managed, Matjila said. “The problem is that there is no consensus yet on the way forward, but there is a bidding process on assets for sale.”

Anglo will make sure it has a disposal process that works for shareholders and the nation, Norman Mbazima, who is the deputy chairman of the South African operations and is overseeing the exit process, said in an interview Wednesday. “If the bigger deal turned out, when we’ve done all that work, to be the best deal that is available, we’ll go for it. If it isn’t good, we’ll engage with the PIC and say ‘this is what we’re doing and this is why’. We’re not opposed to anything. We would like to make sure it’s a deal that works for everybody. ”

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