July 22, 2017

Anglo’s intention to sell half of its mines worries PIC

Public Investment Corporation (PIC), which is owned by the South African government, says it will contest Anglo American’s decision to divest its interests in half of its manganese, coal and iron mines in South Africa.

Anglo American overexposed itself to too much debt during the commodities boom spell and is striving to lighten its load. Efforts to swim out of the debt pool have been hindered by the general sluggish conditions in the mining sector.

On the other hand, PIC, which has a 14.5 stake in the company, is the custodian of R1.795trn worth of pension funds for public servants, has been thrown in a state of panic, fearing that Anglo’s mines might go for a song.

Fin24 Online quoted, PIC head of corporate services, Deon Botha, expressing concern about the ill-timing of the sale. Botha said his organisation had suggested a shareholder vote be held for a verdict to be reached.

The second option, Botha said, would be to bundle together the sale of the non-performing coal, iron ore and manganese mines, together with platinum mines. However, Anglo might not agree with the suggestion, as it considers its platinum unit, Anglo American Platinum, its most prized asset which it won’t let go even to the highest bidder.

Dispelling the fears, Pranill Ramchander, a spokesperson for Anglo in Johannesburg, told Fin24 Online through email: “We are considering a number of options for divestment, whether as individual assets or as packages of assets, but will only divest for value and in the interests of all our shareholders.”

In the past six months, foreign-domiciled mining companies have hinted their intentions of selling their operations.

It remains to be seen how matters pan out in due course.

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