Anglo American once held pride of place on the sharemarket. Now its reputation is in tatters. And for BHP, the crisis at Anglo has come at the perfect time.
When former boss Mark Cutifani left Anglo American in mid-April 2022, things had rarely looked better for the century-old miner. Metals prices soared as the world emerged from lockdowns, the company had recently posted its best-ever annual profit and the popular industry veteran was handing over to a trusted lieutenant. Anglo stock hit a record the same day.
And it’s not the only one — other big miners have also been shifting their focus back to acquisitive growth. Anglo has been underperforming at a time when money is pouring into the wider metals and commodities space, and rumours had swirled for months that the floundering miner was in play. The disasters continued to pile up. Many of the issues were outside of Anglo’s control — the diamond market imploded, platinum prices collapsed and rail and port problems in South Africa have squeezed exports from the company’s cash-cow iron ore business. Anglo is the only major miner with big platinum and diamond businesses and is particularly exposed to South Africa, which means it lagged rivals who weren’t dealing with the same hurdles.
The company has sought to turn the corner, telling investors it’s reviewing all its businesses. Anglo is open to selling its De Beers mining unit and looking for a partner for the big English fertiliser project.But its weakness has left the company vulnerable. BHP has made a nonbinding proposal to buy Anglo in an all-share deal that valued the smaller company at about $60 billion based on Tuesday’s prices, BHP said in a statement on Thursday morning.
One of the keys for BHP to pull off a deal for Anglo may lie in South Africa. The country’s state pension fund manager is Anglo’s biggest shareholder, and the group’s platinum and iron ore companies are two of South Africa’s biggest listed stocks.
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