South African Stakeholders Intensify Resistance to Anglo-Teck Deal
Canada will collect most of the benefits from the planned merger between Anglo American PLC NGLOY and Teck Resources Ltd. TECK-B-T while the deal will effectively kill Anglo’s traditional links to South Africa, an economist says.
The criticism by South African economist Duma Gqubule is the latest in a surge of protests against the mining transaction in the African country where Anglo was a dominant player for most of its history.
Anglo, now based in London, announced in September that it would acquire Vancouver-based Teck in an all-stock acquisition valued at about US$20-billion. As part of the deal, Anglo promised to move its global headquarters to Vancouver, along with most of its top executives. The two companies have also pledged to spend about $4.5-billion in Canada over five years.
The final version of the deal could include further concessions from Anglo, since Industry Minister Mélanie Joly is pushing for additional benefits for Canada. Shareholders will vote on the proposed deal next week.
The merger would be “a final death knell” for Anglo’s connections to its birthplace, where it had a labour force of nearly 90,000 people as recently as a decade ago, Mr. Gqubule said in a report on Wednesday.
After the deal, Anglo is likely to divest its last big South African asset, Kumba Iron Ore, along with the De Beers diamond company, he said. “Under this scenario, Anglo could end up having no employees in South Africa. A complete exit would be a sad ending for Anglo.”
He questioned why Canada is having such a strong influence over a merged company that will derive the vast majority of its revenue from Latin America and Africa.
Anglo American, founded in Johannesburg in 1917 by Ernest Oppenheimer, ruled the South African economy for decades at a time when the country was the world’s biggest mining giant. By the 1980s, the Oppenheimer family owned more than 650 companies, employed more than 800,000 people and controlled the majority of stocks on the Johannesburg Stock Exchange.
But as the South African gold-mining industry fell into decline, Anglo shifted its focus abroad and eventually moved its headquarters to London in 1999. The proposed merger would move Anglo even further from its first home.
Anglo CEO Duncan Wanblad has sought to reassure South Africans that the company will maintain its links to the country. He said Anglo has “an enduring commitment” to South Africa, and he promised that it would include South Africans on the board and executive of the newly merged Anglo-Teck company.
The South African government, which owns a reported 8-per-cent stake in Anglo through its state-owned Public Investment Corp., has been relatively muted in its reaction to the planned merger.
A coalition of civil-society groups and mining communities, however, has submitted a petition to the South African parliament, demanding an investigation of the deal. The petition complains that Anglo’s exit from most of its South African holdings “has left workers, municipalities, and the national fiscus exposed to cascading losses and abandoned liabilities.”
Anglo’s taxes and royalties to the South African government have plummeted by about 80 per cent over the past four years, the petition says.The groups are calling for a parliamentary inquiry to “scrutinise the extent of assets and funds shifted abroad, the impact on jobs and revenues, and whether any regulatory or tax provisions were exploited.”
Anglo, in a statement to South African media outlet News24, rejected the criticism. It said it remains deeply committed to South Africa and is maintaining a “substantial” corporate office in Johannesburg.
It also argues that the Anglo-Teck merger would benefit South Africa by creating a larger and more resilient company that will be better positioned to invest in the country in the future.
This article was first reported by The Globe and Mail
