Duncan Wanblad, Anglo American’s chief executive. Photo: Ian Waldie/Getty Images
Multinational mining group Anglo American announced it will demerge its platinum, diamond and steel-making coal businesses by 2025, but denied this was driven by BHP’s unsolicited takeover bid.
The London headquartered company said the demerger had been accelerated because the company has been working on a turnaround plan since the middle of last year.
Anglo has rejected two proposals from BHP — the latest, turned down on Monday, being worth £34 billion (R785 billion) — saying the offers undervalued the company and its future prospects.
“Anglo had a portfolio review earlier in the year and the purpose of it was to look at assets and the portfolio in multiple layers. We looked at the interaction of these assets in a portfolio and from a value and risk perspective,” Anglo chief executive Duncan Wanblad told a media briefing on Tuesday.
“It is very difficult for the company to be performing really well at the top of the cycles and always struggling at the bottom of the cycles. This [demerger] is the conclusion of that work as opposed to something we’ve just put together in response to a BHP bid.”
In the 2023 financial year the company lost $5.5 billion in revenue as a result of platinum group metals (PGMs) and diamonds being at cyclical lows.
The PGM basket has seen low prices over the past 18 months and diamond sales have also been muted.
Sales of rough diamonds by Debswana — which is equally owned by Botswana and Anglo American’s De Beers — fell by 25.1% in 2023. Debswana sells 75% of its output to De Beers.
“I think PGMs are important in the context of the just energy transition and so is De Beers but the value of them within the Anglo portfolio is compromised,” Wanblad said on Tuesday.
He said Anglo demerging some of its assets was different from what was proposed by Australian mining giant BHP.
“Us demerging and the demerger proposed by BHP are completely different both in terms of time and complexity. There is a set of regulatory approvals that will have to be sought under a demerger and there is a different set of regulatory approvals under a takeover,” said Wanblad.
“So, when you are doing both of those together you end up with a very complicated set of interrelated regulatory processes and conditions. That risk is all disproportionately borne by the Anglo American shareholder.”
He reiterated that Anglo is not leaving the country, something that would have happened under the BHP offer.
“We remain in South Africa, BHP doesn’t. They make us do the work and they leave. The only thing BHP did was accelerate what we were already doing,” he said.
Wanblad said if it were up to him, he would have held off making the announcement so that all the stakeholders were in the loop and because it was “disrespectful to the South African government who is in the middle of elections in the next few weeks”.
South Africa will hold general elections on 29 May.
Wanbald said Anglo American was reshaping quite radically and simplifying its business to unlock its full value and that leading to the demerger, the company would slow down operations which might “possibly” lead to mine workers losing their jobs.
But, the chief executive said, by the time the restructuring is complete, Anglo will be a robust business that is run with the best capabilities in terms of development.
“The company is going to be extremely highly valued and if anybody wants to buy it, they are going to pay an enormous amount of money for it,” Wanblad said.
Anglo’s share price was down almost 5% in Tuesday trade.