BHP says Anglo American deal structure is not a negative reflection of South Africa

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BHP has said its proposed takeover of Anglo American, which excludes its South African platinum and iron ore assets, was not a reflection of negative views of the country.

In its first material statement since tabling a bid for Anglo last week, Australian-headquartered BHP sought to “clarify” perceptions that its planned spin-off of Anglo American Platinum and Kumba Iron Ore showed a lack of confidence in South Africa.

“The structure of BHP’s proposal . . . reflects the priorities for BHP’s portfolio and opportunity for synergies,” BHP said in a statement on Thursday. It “does not reflect a view of South Africa as an investment destination and is based on portfolio and commodity considerations”.

The statement came as BHP chief executive Mike Henry was in South Africa on a charm offensive, according to people familiar with the situation.

His visit comes days after the country’s mineral resources and energy minister Gwede Mantashe told the Financial Times that he did not support BHP’s bid, and later said that if companies did not want South African assets, “then they don’t want Anglo”.

Meanwhile, David Masondo, deputy finance minister and chair of the state-owned Public Investment Corporation that is Anglo’s second-biggest shareholder, said in an interview on Thursday that the decision to exclude South African assets was a “key issue” for him.

The deal, which was initially valued at £31bn, would be the biggest on record for the mining sector. Anglo rebuffed the offer last week, arguing that it undervalued the company, leaving analysts expecting a rival bid to emerge. BHP proposed an all-stock bid for London-listed Anglo to get access to a portfolio that includes copper mines in Chile and Peru. Copper is a metal vital to the transition to cleaner energy.

BHP’s decision to exclude South African assets is especially sensitive for the ruling African National Congress ahead of its toughest election since the end of apartheid. The 107-year-old Anglo is an iconic institution that has dominated the South African economy for most of the past century.

Masondo disputed that companies faced more onerous operating conditions in South Africa than in other jurisdictions and said President Cyril Ramaphosa was working to resolve the energy and rail problems that have made it difficult for miners to sell to international markets.

In Thursday’s statement, BHP said under the proposed deal, Anglo American Platinum — known as Amplats — and Kumba would continue to be listed on the Johannesburg Stock Exchange, and be run by South African-based teams.

“South Africa will continue under BHP’s proposal to benefit from Anglo Platinum and Kumba operating as independently listed South African companies investing in local operations, communities and jobs,” it said.

BHP said the merged company would deliver “growth opportunities and investment currently not available under the existing ownership structure”.