South Africa ponders ‘corporate sunset’ for Anglo American

Financial Times

A group of workers laid off from Anglo American sat drinking in the early morning sun outside a makeshift township bar in Ga-Puka, deep in South Africa’s platinum mining belt.

“The sad truth is that it’s us ordinary South Africans who are suffering. Government and the mine [shareholders] get rich, we are just thinking how we will survive,” said one, an engineering contractor, swigging from a can of beer.

The discovery in the 1920s of vast platinum reserves beneath the tranquil farmland north of Pretoria transformed the region. Today, job offers are scant for those relocated to the barren, sun-baked settlement of Ga-Puka.

While other platinum miners in the region have also slashed jobs, Anglo American Platinum, along with the LSE-listed miner’s iron ore unit Kumba, have come under the spotlight after BHP’s £31bn offer last month. The Australian miner’s unsolicited bid was conditional on Anglo demerging its Johannesburg-listed divisions.

A sharp decline in platinum group metal prices, used in everything from medical equipment to diesel car exhausts, has contributed to a 45 per cent fall in Amplats’ shares in the past year, with rising costs leading to a headcount reduction by almost a fifth.

The downturn in the platinum metals markets has come as South Africa’s mining industry has been embattled by power outages and crumbling infrastructure after years of government under-investment. Anglo’s journey from a South African corporate wealth creator to prey for a rival miner reflects the country’s own decline as a mining powerhouse, as well as the rising risks of doing business in the country.

“You can’t get away from the fact that South Africa is a very onerous environment for big mining companies in which to invest, let alone explore new resources,” said Michael Cardo, author of Harry Oppenheimer: Diamonds, Gold and Dynasty, a biography of the son of Anglo’s founder who chaired Anglo for 25 years.

“What’s under way now almost has the feeling of the sun setting on a corporate empire.”

Foreign investors last year perceived South Africa to be in the bottom 10 — lower than Mali and Burkina Faso — out of 62 mining jurisdictions, according to a survey from Canadian think-tank Fraser Institute.

Delays by the government in setting up industry basics such as a mining cadastre — a public

The full article is available here. This article was published at FT Markets.