LETTER: Uncomfortable truths in BHP merger proposal
If the deal goes ahead Anglo American will have to split off its SA platinum and iron ore units
28 April 2024 - 15:53
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
The unsolicited all-share merger proposal from BHP Group, the world’s largest mining group, for Anglo American contains nuggets of truth which, if you are the minister responsible for mining and mineral resources in SA, won’t be altogether welcome (“BHP-Anglo deal could leave SA out in the cold”, April 26).
Should Anglo American end up moving forward with the deal it will need to split off its SA platinum and iron ore units, since BHP’s offer is contingent on this. SA’s heightened country risk premium — driven up by electricity and logistics constraints as well as bureaucratic labyrinths, equity requirements, cadre deployment and preferential procurement — raises the pain threshold for international business and capital. It might well become a more common occurrence that these businesses and investors find the threshold too high to deal with.
In the global context, Anglo American’s operations in Brazil, Chile and Peru (Latin America) are of particular interest and worth much for BHP; all sources of copper will be highly sought after. Should the deal be completed BHP will become the world’s top copper producer.
With investors adopting a risk-off stance of late, emerging and developing economies are under pressure to present ever stronger cases for investment. SA continues to do itself few favours, and the narrative, never mind the reality, might take a while yet to be improved.
Chris Hattingh
Centre for Risk Analysis
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: Uncomfortable truths in BHP merger proposal
If the deal goes ahead Anglo American will have to split off its SA platinum and iron ore units
The unsolicited all-share merger proposal from BHP Group, the world’s largest mining group, for Anglo American contains nuggets of truth which, if you are the minister responsible for mining and mineral resources in SA, won’t be altogether welcome (“BHP-Anglo deal could leave SA out in the cold”, April 26).
Should Anglo American end up moving forward with the deal it will need to split off its SA platinum and iron ore units, since BHP’s offer is contingent on this. SA’s heightened country risk premium — driven up by electricity and logistics constraints as well as bureaucratic labyrinths, equity requirements, cadre deployment and preferential procurement — raises the pain threshold for international business and capital. It might well become a more common occurrence that these businesses and investors find the threshold too high to deal with.
In the global context, Anglo American’s operations in Brazil, Chile and Peru (Latin America) are of particular interest and worth much for BHP; all sources of copper will be highly sought after. Should the deal be completed BHP will become the world’s top copper producer.
With investors adopting a risk-off stance of late, emerging and developing economies are under pressure to present ever stronger cases for investment. SA continues to do itself few favours, and the narrative, never mind the reality, might take a while yet to be improved.
Chris Hattingh
Centre for Risk Analysis
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Anglo American board rebuffs BHP merger bid
Anglo bidding war likely as BHP makes lowball offer of $39bn
HILARY JOFFE: BHP-Anglo deal could leave SA out in the cold
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.