Swiss resource giant Glencore is well primed to make a run for Anglo American assets being spun off after the British multinational mining group rebuffed BHP for the second time this week.
This comes as BHP is running out of time to make a firm offer for Anglo American, with London listing rules stipulating that it has until Wednesday next week.
In any case, Anglo American has already said that it will essentially break itself apart by disposing of its platinum and diamonds businesses, while curtailing investment into its crop nutrients operations as a defence strategy against the BHP offer.
Although BHP is still emboldened, analysts told Business Report yesterday that Glencore was an almost natural fit to go after Anglo American, rocking the boat for the Australian resource giant’s pursuit.
Analysts said Glencore has apparently exhibited a soft spot for South Africa and cares less what everyone else thinks.
“They might be (interested),” markets analyst Simon Brown said in an interview, referring to Glencore.
Roy Topol, portfolio manager at Cratos Asset Management, said Glencore’s current exposure to South Africa was a sweetening factor.
“Yes, I think Glencore would most certainly be interested (in buying out Anglo American),” Topol said.
“They have strong ties with South Africa – the current CEO is South African, and the major shareholder and previous CEO is also South African. They already have some exposure in South Africa.”
While BHP had proposed to spin off Kumba Iron Ore, it was likely that Glencore would be interested in Anglo’s iron ore business.
However, the ultimate kicker for its possible interest to acquire Anglo American would be the opportunities presented by the London- and Johannesburg-listed miner’s copper operations.
“They might be also interested in Anglo’s iron ore in addition to the copper assets,” added Topol.
Glencore CEO Gary Nagle has exhibited a soft spot for South Africa.
Last month, Nagle said Glencore’s lower year-on-year cobalt and ferrochrome volumes for the quarter to March 2024 reflected the previously announced market-related production adjustments in the DRC and the decision to idle the group’s Rustenburg ferrochrome smelter “in the current price” environment.
At a time concerns are rising from within South Africa’s mining industry that headwinds are worsening amid mineral output plummeting in March, Nagle said this week that there was a silver lining to the gloom after all.
In fact, Nagle appeared convinced that it was worse elsewhere but better in South Africa in his address at a Miami conference on Wednesday, suggesting that investors could help South Africa unlock the gridlock of infrastructure inefficiencies.
“Yes it has issues on infrastructure and power but the industry can work together to deal with that. They (South African government) have not touched royalties and taxes,” Nagle was quoted saying from the conference by the Financial Times.
Market watchers have noted Nagle’s comments and confidence in the prospects for South Africa’s mining industry with interest.
The Swiss resource giant bought into the Cape Town oil refinery in 2018, making a commitment in September last year to invest as much as $316 million (R5.8 billion) into the project.
“Glencore’s approach to Anglo American may be different; keep coal, get rid of Woodsmith,” said one market analyst.
Others said the company’s copper assets seemed to be in decline of late, with the acquisition of Anglo American likely to bolster this portfolio for Glencore.
Shares in Glencore rose 0.63% higher at R113.85 on the JSE yesterday.
BUSINESS REPORT