Gwede Mantashe vents his displeasure over BHP’s unsolicited mega merger offer to Anglo

The mega merger proposal by the world’s biggest mining company, BHP, to acquire Anglo American — minus most of its South African assets — does not have the blessing of Mineral Resources and Energy Minister, and ANC heavyweight, Gwede Mantashe.

“I wouldn’t support it. I don’t think Anglo will agree to that. I wouldn’t if I was on the board,” Mantashe told Bloomberg.

In comments to the Financial Times (FT), Mantashe — who stressed he was not giving the official government position — said South Africa’s experience with BHP had been “not positive”, as it triggered capital flight from the country.

“What we saw is that it dumped coal and then created a small company called South32, which is now marginal,” the FT quoted him as saying.

BHP, the world’s biggest mining company, had made an unsolicited all-share merger proposal for Anglo with a clear eye on the target’s coveted South American copper assets.

Read more in Daily Maverick: BHP is keen on Anglo’s global copper assets without the risky SA baggage

The Department of Mineral Resources and Energy had not responded to Daily Maverick’s requests for comment at time of publishing.

The proposed deal would pointedly exclude Anglo’s main remaining South African assets — Anglo American Platinum (Amplats) and Kumba Iron Ore — and is hardly a vote of confidence in the country’s mining sector. This might explain why Mantashe is seeing red.

That doesn’t mean the deal won’t get the green light.

If the deal is accepted by Anglo, it will face regulatory hurdles in numerous jurisdictions, including South Africa presumably.

But on the surface, it does not seem like a vexed issue for the Competition Commission if Amplats and Kumba are unbundled.

And the government does not have voting power to stop the deal. The Public Investment Corporation (PIC), which manages the pension funds of South Africa’s public servants, holds only about 7% of Anglo.

There is no magic handbrake which Mantashe can engage to stop a deal involving two companies that have their primary listings outside of South Africa.

Then there is the matter of the 29 May elections, which most polls suggest will see the ANC drop below the 50% mark for the first time since the dawn of democracy in 1994. Mantashe may or may not be the minister of mineral resources and energy in a few weeks’ time.

Against this uncertain political backdrop, comments by almost all South African ministers at this time must be taken with a massive dose of salt. DM