Anglo American Mining is resisting an attempt by PIC, South Africa’s Public Investment Corporation, to take its platinum business. PIC is a major shareholder in Anglo American Mining (AAM), and is making a bid to take Anglo’s platinum business, combine it with its own platinum interests, and creating a new company specifically focused on platinum.
PIC wants to combine Anglo’s South African platinum business with its own to create a new national mining firm. It will then sell shares in the company to investors. This arises from a plan of the ANC (South Africa’s ruling political party) to gain public support by creating its own diversified mining business. The ANC election results at the beginning of this month were not as good as the party leaders hoped them to be. The ANC lost ground to the Democratic Alliance, their closest political rivals.
In spite of the politics, or perhaps because of them, Anglo American Mining is not likely to agree to this. Platinum mining is a large part of AAM operations, and it is very unlikely that the company will agree to such a plan. Platinum, along with copper and diamonds, forms the firm’s three core areas of business. Why sell off one to weaken the company?
There are other options available for PIC that may work almost as well without any bad blood. For a start, PIC has a 30% stake in Lonmin, the former mining division of Lonrho plc. It could include this stake into creating a new company that is based upon other businesses that AAM may be more willing to offload.
One example is Kumba Iron Ore and thermal coal company, which is currently being sold to help Anglo American raise cash. PIC could take a stake in this. However, although AAM has traditionally been receptive to offers from state-backed companies, it is unlikely that it would agree to any deal that offers them less than what was available on the open commercial market.