Mining Journal > Production and Markets > Xstrata merger with Anglo concerns SA

Production and Markets

A merger of Xstrata plc and Anglo American plc would be a “big concern” for South Africa, which produces more than three-quarters of the world’s platinum, said Mines Minister Susan Shabangu.
     
“We can’t go back to a situation where a few companies control commodities,” she told reporters in Cape Town. “That’s unhealthy, that’s uncompetitive. It’s just unacceptable.”
    
While Anglo last night rejected Xstrata’s proposed £22.4 billion (US$36.6 billion) “merger of equals,” the mines ministry still wants meetings with both companies to discuss how such a combination would affect South Africa. “We will call for them to explain themselves and what they are trying to achieve,” Ms Shabangu said. “It’s a big concern for us.”
    
During apartheid Anglo American, which was founded in Johannesburg in 1917, grew to dominate the economy and together with Gencor Ltd and Gold Fields of South Africa Ltd, accounted for most of the country’s mining output.
    
A merger of Anglo and Xstrata would give the combined company excessive control of the platinum industry, Sandile Nogxina, director general of the Pretoria-based mines department, which reports to the mines ministry, said in an interview.
    
South Africa is home to all the platinum mines run by Lonmin plc, in which Xstrata has a 25% stake, as well as Anglo’s about 75%-held subsidiary, Anglo Platinum Ltd, the world’s largest producer.

Anglo, now based in London, is the biggest investor in South African mining. Xstrata, based in Zug, Switzerland, is the largest operator of ferrochrome smelters in South Africa and the country’s third-largest coal exporter.
    
South Africa’s largest labour federation, the Congress of South African Trade Unions, welcomed Anglo’s rebuttal of Xstrata’s advances. The merger would have had an impact on the prices of “zinc, copper, coal and platinum, which are all critical for the manufacturing industry”, spokesman Patrick Craven said in an e-mailed statement.
    
One of Anglo’s biggest shareholders, the Public Investment Corp, which oversees the pensions of government workers in South Africa, declined to comment on Xstrata’s proposal. “We haven’t got details of the transaction, we can’t comment,”

Brian Molefe, chief executive of the PIC, told reporters in Cape Town.