South Africa considers ‘corporate sunset’ over Anglo-Americans

A group of laid-off Anglo American workers sit drinking in the morning sun outside a makeshift bar in the town of Ga-Puka, deep in South Africa’s platinum mining belt.

“The sad truth is that it is us ordinary South Africans who are suffering. Government and mines [shareholders] become rich, we only think about how to survive,” an engineering contractor said, drinking a can of beer.

The discovery in the 1920s of huge platinum reserves beneath quiet farmland north of Pretoria transformed the region. Today, job offers are few and far between for those moving to the barren, sunny settlement of Ga-Puka.

While other platinum miners in the region have also cut jobs, Anglo American Platinum, along with the LSE-listed miner’s Kumba iron ore unit, have been in the spotlight. following BHP’s £31 billion offer last month. The Australian miner’s unsolicited bid is conditional on Anglo spinning off its Johannesburg-listed divisions.

Plunging prices for the platinum group metal, used in everything from medical devices to diesel car exhaust pipes, have contributed to a 45% drop in Amplats’ shares over the past year, along with rising costs causing the number of employees to decrease by nearly 1/5.

The downturn in the platinum metals market comes as South Africa’s mining industry is hobbled by power outages and aging infrastructure following years of underinvestment by the government. Anglo’s journey from a corporate wealth creator in South Africa to falling prey to a rival mining company reflects the country’s decline as a mining power, as well as as the increasing risks when doing business in this country.

“You can’t escape the fact that South Africa is a very tough environment for large mining companies to invest in, let alone explore resources,” said Michael Cardo, the book’s author. new resources”. Harry Oppenheimer: Diamonds, Gold and Dynasty, one biography of the son of Anglo’s founder, who led Anglo for 25 years.

“What’s happening now is almost like the sun setting on a corporate empire.”

According to a report, foreign investors last year found South Africa to be in the bottom 10 – below Mali and Burkina Faso – among 62 mining jurisdictions. survey from Canada’s Fraser Research Institute.

According to the Minerals Council, the government’s delays in establishing basic industry information such as the mining cadastre – a public online map listing available mining or exploration rights – has contributed to delaying a series of projects.

Years of frequent violent strikes have also fueled the search for alternatives to platinum metals and exploration elsewhere.

Joseph Mathunjwa, leader of the powerful platinum mining federation, who has sought to turn influence in the shafts into political power by registering a new political party for elections this month, said: “ The government is the problem and their only concern is themselves.” .

More than a decade ago, the breakaway Association of Mineworkers and Construction Union of Mathunjwa, or AMCU, took the lead in organizing militant strikes demanding fairer wages and better working conditions. . That culminated in the 2012 Marikana massacre at the Lonmin platinum mine, on the western platinum belt, when police acting on government orders summoned four morgue trucks before opening fire on miners and killed 34 of them.

“I think a lot of mining companies just look at the political situation here, see there are so many obstacles in the way, and don’t want to own assets in South Africa. Peter Major, director of Mining for Modern Corporate Solutions, said asset operations here are chaotic.

Anglo was at the heart of the industry that transformed South Africa from a backward colony into the world’s largest producer of gold and diamonds, laying the foundations for Africa’s most industrialized economy.

The company began operations in 1917 after Ernest Oppenheimer, a German-born diamond trader, raised £1 million to form the Anglo-American Corporation to mine gold around Johannesburg. Gold mines are among South Africa’s stable of asset sales, but the company remains a vast international business spread across coveted copper mines in Peru and Chile.

In its birthplace, it has long had to navigate a tense relationship with the ruling African National Congress.

“Anglo American in its heyday was a giant, which makes the ANC government fear.

A decade ago, Thabo Mbeki, the then chairman, reacted angrily to Anglo CEO Tony Trahar’s comments that operating in South Africa came with political risks. Mbeki shot back that Anglo was built on the labor of “the poor and despised. . . during the years of white minority rule.”

The move to the London Stock Exchange in 1999 damaged investor sentiment and had lasting real-world consequences for South Africa. “There is a huge reservoir of intellectual capital built locally and in mines across southern Africa. . . to a significant extent has been dissipated,” Ralfe said.

This month, Mines Minister Gwede Mantashe echoed Mbeki’s anger at the proposed breakup of Anglo, saying it was “born and bred here, thanks to our cheap labour. . . So you can’t want Anglo and not want South African.”

BHP countered in a statement that the Australian miner’s proposal to exit Anglo’s remaining South African assets did not reflect negatively on the country. Mantashe told The Financial Time that his view of the Australian miner remained “negative”.

Despite the series Serious misstep encouraged by BHP’s offer, Anglo remains the leading private sector employer and investor in the country.

The mining company has poured more than $6 billion into South Africa over the past five years, investing heavily in renewable energy projects and driving business efforts to partner with the government of the United States. President Cyril Ramaphosa to overcome the electricity and logistics crises.

However, for the coming generation of South Africans, the mining sector seems to be in the rearview mirror. The industry accounts for just over 6% of total GDP compared to the 1980s, when its contribution was about one-fifth.

On a sunny Monday afternoon in Johannesburg’s central business district, a few students walked out of the imposing neoclassical building that now serves as a business school for disadvantaged youth, knowing that this building was once Anglo’s iconic headquarters.

“Anglo-American? Is it a mining company?” asked 19-year-old Sinethemba Somana, turning to a friend with a confused look.

This question was almost unthinkable when Anglo was a household name and occupied nearly a dozen buildings whose faded signs still crop up amid the pawnshops and dank pubs of the current business district. has been abandoned.

“Is it gold mining?” asked another 22-year-old student whose father was a gold miner. “We will never go mining.”