Anglo will not leave SA, says CEO Wanblad
Anglo American says that it will retain a corporate office in SA and continue to work in the interests of South Africans even though the group’s only SA assets after its restructuring will be Kumba Iron Ore and its manganese business.
Anglo CEO Duncan Wanblad was speaking after the group’s first set of financial results since it fended off a takeover bid from Australian rival BHP in May.
Strong margins in Anglo’s core copper and iron ore business helped to counter weak prices for platinum group metals and diamonds, but the group posted a $672m loss for the six months to June because of a writedown of its controversial UK crop nutrient project, Woodsmith, where development was slowed to preserve the group’s balance sheet.
Wanblad confirmed that Anglo was on track to complete the streamlining of its portfolio by the end of 2025, as promised. It is making progress on plans to unbundle its stake in Anglo Platinum to its shareholders and to sell its steelmaking coal and nickel businesses, as well as to sell or unbundle its 85% of diamond giant De Beers. It has already achieved $500m of cost savings, and an additional $800m will come as it completes its ‘portfolio transformation’, which will narrow the group’s focus to copper, iron ore and fertiliser.
The far-reaching restructuring was announced in the midst of the battle with BHP, which had insisted that Anglo unbundle Kumba and Anglo Platinum as conditions for the deal, and had said it would review the De Beers stake — prompting detractors to accuse it of seeking to shed Anglo’s exposure to SA, just as BHP had shed its own exposure to SA over the past decade.
But Wanblad, who described himself as bullish on SA, said that Anglo was not leaving.
“I’m not pessimistic about the presence of Anglo American in SA, just realistic about the fact that it will, of course, be smaller than it is today,” said Wanblad.
“We’re not leaving SA at all ... and to the extent that there are other opportunities for us within SA, we want to be able to exploit those and we will still have the representation here that allows us to do that in time,” he said.
The people in government with whom he had discussed Anglo’s plans understood the rationale, which is that diamonds and platinum group metals were a different and specialised asset class, and the valuation of those businesses was not recognised because they were in a diversified mining company, making it difficult to attract capital, said Wanblad.
“We’ve divested many, many businesses over the life of Anglo American, and we’ve always done it responsibly.” Though the restructuring aimed to unlock
value and lift Anglo’s rating, which lagged peers for more than a decade, its share price has fallen since May.
But Wanblad said a look at other businesses indicated the rerating generally took place much closer to the completion of the restructure than the announcement, and he was optimistic that Anglo would get rerated.
The group had said little about what it had in mind for its manganese joint venture in SA, but Wanblad said on Thursday that the manganese business in
SA was doing extremely well; it was not a priority focus for the portfolio restructuring, but the group would get to it.
“All our focus is on the divestment and demerger of those four businesses that we spoke about in May,” he told journalists.
De Beers is expected to be the last of the four divestments or demergers, and the group has not yet decided whether it will be a demerger or trade sale. It will not have to make a definitive decision before the end of this year.
Its decision to temporarily slow down the Woodsmith project and push out the timing of production had resulted in a $1.6bn impairment of the project. The group is looking for a partner for the project, but Wanblad said it was still possible Woodsmith could start production in 2030.
Anglo’s revenue dropped 8% to $14.4bn for the six months to June, with underlying ebitda down 3% at $5bn, reflecting a 10% fall in the price of the group’s basket of products.