BHP’s $39B Acquisition of Anglo American Faces Scrutiny from South Africa

BHP’s intent to acquire Anglo American for the price of USD 39 billion will need to go through the approval process of the South African authorities. The timing of the deal is perhaps not ideal as South Africa is scheduled to hold elections at the end of May 2024 and the deal could have negative impact on the South African economy.

In addition to owning platinum and iron mines in South Africa, Anglo American also owns platinum assets in Zimbabwe, diamond mines in Zimbabwe and Namibia via its De Beers Subsidiary. Anglo American also owns copper mines in Chile and Peru.

BHP reveals that it is after the copper assets and this merger would propel BHP as the world’s largest Copper producer. By that logic, it is likely that BHP will dismantle Anglo and perhaps sell it piece by piece.

Despite its name, Anglo American was founded by Gold and Diamond baron Ernest Oppenheimer in 1917. Oppenheimer was an Englishman who moved Johannesburg at the start of the 20th century. Today, its employee count is about 45,000 in South Africa.

Based on initial feedback, the BHP’s offering price is said to be less than what Anglo Afmrican values itself. If the merger implies layoffs, this could also derail the deal since job-cutting is a tricky during normal times and even trickier in an election year.

Moreover, Anglo American is synonymous with mining in South Africa, the economy of which still depends heavily on mining. Within a few decades after its creation, Anglo American became the world’s largest producer of gold while its sister company De Beers basically had a monopoly on diamonds with nearly 90% of the global diamond market.

The Department of Mineral Resources and Energy (DMRE) is the competent authority to evaluate the mining deal. When interviewed by Financial Times, South African Minister of Mines Gwede Mantashe pointed out that South Africa’s experience with BHP was ‘not positive!’