BHP Group, the largest mining company in the world, has intensified its efforts to secure a proposed $39 billion takeover of rival Anglo American by sending a top-level delegation, including CEO Mike Henry, to South Africa. The team aims to engage with government officials, regulators, and local shareholders, who are key to the success of the merger.
Upon arrival, Melbourne-based CEO Mike Henry was involved in discussions to clarify and promote the benefits of BHP’s proposal, which has been swiftly rejected by Anglo American in its initial approach. This proposal notably includes a plan for Anglo American to divest its Johannesburg-listed platinum and iron ore units, Kumba Iron Ore Ltd. and Anglo American Platinum Ltd., prior to the takeover.
There are several moving parts behind BHP’s acquisition strategy. BHP’s offer is made more difficult by Anglo American, a group with strong cultural and industrial ties to South Africa that was founded in 1917. Local stakeholders, such as Mining Minister Gwede Mantashe, have taken note of the Australian miner’s prior disinvestment from South Africa in 2015, when he established South32 Ltd. He has voiced reluctance to accept BHP’s latest proposal.
The BHP’s bid comes at a highly delicate time for South Africa, which is gearing up for a national election later this month. The African National Congress (ANC), which is now in power, may lose its majority for the first time since 1994 in this election, which might result in profound political changes. The opposition has taken advantage of BHP’s proposal as a critique of the current government’s economic management, given the country’s high unemployment rates and deteriorating infrastructure.
The advantages of the deal for South Africa, such as the possibility of greater local control and financial returns from the divested entities, are being emphasized by BHP executives in their strategic communications. This approach may be well-received by the government and the Johannesburg Stock Exchange, where Amplats and Kumba are listed. The state pension fund of South Africa, which owns an 8.4% share in Anglo, is another important player in these negotiations.
Notwithstanding the planned initiatives, obstacles persist. Minister Mantashe’s remarks to Bloomberg suggested a weakness in BHP’s stakeholder engagement strategy because they showed no prior communication from the company regarding their objectives. Additionally, the Competition Commission has stated that an essential part of BHP’s plan is the distribution of Anglo’s shares in Kumba and Amplats to its shareholders, which would likely need regulatory approval, adding another layer of complexity to the deal.
The possible purchase is being closely examined not only for its financial possibilities but also for its wider social implications, such as job creation and advantages for historically marginalized South African communities. In line with recent regulatory rulings, like the conditions of Vitol Holding BV’s purchase, BHP may be granted approval by making strategic compromises that address issues of public interest.
