SAYEC welcomes the proposed takeover of Anglo American and international interest

Media Statement

On the 25th of April global mining giant, BHP made an offer to buy Anglo American for approximately R800 billion. This has led to market speculation that other mining giants will also be looking to make an offer. It is speculated that Free Port and Rio Tinto are such giants with an interest. The South African Youth Economic Council supports the interest in a takeover. The company has, for the past 18-24 months, struggled in many respects and faced many internal operational challenges including announcing plans to retrench close to 3700 workers in a mining industry which is on an upward trend in South Africa. As South Africans, we all need to be concerned by developments within the mining sector because all minerals in South Africa belong to the people of South Africa through the state.

Anglo American has a deep history within South Africa’s developmental trajectory. Today, it remains the country's largest single employer and largest mining company in South Africa, its success and long-term continuity are sacrosanct to the development of South Africa's long-term economic prospects. Over the last 18-24 months Anglo American has been struggling and this is reflected in its dwindling share price. Over the past 12 months, the share price has completely collapsed - falling by close to 50%. The market's response serves as a clear indication of waning confidence in Anglo American's executive management and board. This is an indication of market sentiments because it is not in line with the upward trend of mining share prices in the South African market. Other mining houses have ramped up production and their share prices are growing.

In addition to Anglo American’s crashing share price and the financial threats faced by the company, operationally, it is under serious threat. In an attempt to turn around the ailing company, there are plans to cut close to 3700 jobs and cancel over 100 contracts with SMMEs providing services. With Anglo American's significant presence in the Platinum Group Metals market, the current state of the company carries profound implications. Market perceptions of the company, coupled with its stake in Anglo American Platinum, directly impact Anglo American Platinum.  While Anglo American Platinum’s share price has been resilient, it has experienced sizable earnings losses – 73% decrease to the company's bottom line. The multiplier effect of letting Anglo American dwindle expands to the subsidiary company and exacerbates its market difficulties. Therefore, there must be an aggressive response to saving Anglo American in order to mitigate spill over effects that amplify productive and employment losses across the Anglo network.

We, therefore, believe that Anglo American must still be saved and that it needs urgent restructuring through new investments from friendly investors who are prepared to partner with the South African government, local communities, and organised labour to acquire Anglo America and structure new inclusive shareholding that reflects state and community ownership. We don’t believe that the current offer is in line with South Africa's developmental agenda as BHP Bilton has proposed a restricting offer which effectively leaves out South African assets such as Anglo Platinum, and Kumba Iron Ore. Any deal to takeover Anglo American must include all South African assets.

SAYEC calls upon the Department of Trade and Industry, Competition Commission and most especially the Department of Mineral Resources and Energy to ensure that any transaction that involves the sale of a major South African company such as Anglo American, is inclusive and benefits the people of South Africa. They must make sure that our local and domestic commercial interests are protected by placing mandatory conditions which will reflect ownership of the state, together with the youth, women, and local communities in the acquisition of Anglo American or any big South African corporate. This is in line with building an inclusive economy that reflects the demographics of South Africa and begins to undo the legacy of exclusion and inequality. SAYEC further calls for Anglo American to move its primary listing back to South Africa as we believe Anglo American is a South African company and dual listing only results in capital flight and disinvestment in the South African mining industry.

We therefore support the calls for a total acquisition of Anglo American, by new shareholders together with the South African government, who can bring in new investments that will result in turning around the ailing entity. Anglo American is characterised as an enterprise that is ‘too big to fail’ and the council believes it can still be rescued by friendly and patriotic investors both locally and internationally together with South Africa’s government and local companies.

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ISSUED BY SAYEC