Teck Resources’ Highland Valley Copper Mine near Logan Lake, B.C., on Thursday. Vancouver-based Teck has reached a friendly deal to be acquired by London-based Anglo.DARRYL DYCK/The Canadian Press
Ernest Oppenheimer, who founded the Anglo American mining empire in 1917, became so fabulously wealthy that he would sometimes casually slip a diamond into the palms of the wives of his business friends after dinner parties at his lavish Brenthurst estate in Johannesburg.
The son of a German cigar merchant, he built a sprawling network of companies in South Africa’s gold reefs and diamond fields. He and his son Harry ruled the country’s economy at a time when South Africa dominated the global mining sector, making Anglo American one of the world’s biggest and most powerful corporations.
For decades, even in the depths of the apartheid era, Anglo American Corp. was the symbol of South Africa’s mining might. And then, facing new struggles and losses, it became something else: a symbol of the slow decline of the country’s mineral industry as costs soared, mines closed, production dropped and investors relocated.
Today the iconic Anglo American brand is on the verge of disappearing forever, merging with Teck Resources Ltd. to become a new US$50-billion entity, Anglo Teck. The new company will be headquartered in Vancouver, with most of its top executives moving to Canada.
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While the Teck transaction could be a lifeline for the 108-year-old company, it represents yet another setback for South Africa, whose former mining giants are increasingly focused elsewhere in the world.
South Africa’s political and business elites seem resigned to the latest move. The government issued no statements about it this week. Anglo had already moved its headquarters to London in 1999, spinning off its gold mines into a separate company and maintaining only a secondary listing in Johannesburg.
While Anglo still controls several major assets in South Africa – including the diamond mines of De Beers and the country’s biggest iron ore producer, Kumba Iron Ore – the company has long preferred to chase copper projects in Latin America, a trend that will accelerate if the merger is approved. After recently spinning off its South African platinum assets, Anglo is now seeking even to divest from De Beers itself if it can find a buyer.
Teck Resources’ Highland Valley Copper Mine near Logan Lake, B.C. The new company will be headquartered in Vancouver, with most of its top executives moving to Canada.DARRYL DYCK/The Canadian Press
South Africa’s state-owned Public Investment Corp., one of the biggest single shareholders in Anglo with a reported 8-per-cent stake, was actively opposed to an attempt by BHP to purchase the company last year. South African Mining Minister Gwede Mantashe strongly criticized the BHP takeover bid. But both have been muted on the latest deal, implicitly suggesting that they support the Anglo-Teck transaction.
South African media have reported the Teck deal in neutral terms, seeing it as just another example in the country’s marginalization in the global mining sector. “The latest deal should benefit Anglo’s SA shareholders,” the respected Business Day newspaper said in an editorial. “But it is another loss for mining in SA.”
Anglo CEO Duncan Wanblad has tried to reassure South Africans by insisting that the company has “an enduring commitment” to the country and its “national priorities,” despite the planned relocation of its headquarters to British Columbia. He pledged that the new company would include South Africans on its board and executive team, and he promised financial contributions to the country’s junior mining exploration fund. He also declared that Kumba Iron Ore will remain “core and pivotal” to the merged company.
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But the reality is that South Africa’s mining industry is in relentless decline, and Anglo’s long history in the country is fading.
Once the biggest gold producer in the world, South Africa now ranks just 12th, behind countries such as Mali and Uzbekistan, according to the World Gold Council. As a destination for mining investment, it now ranks 68th among the 82 jurisdictions covered in the latest survey of investment attractiveness by the Fraser Institute.
A century ago, foreign investors were much more intrigued by South Africa’s mining prospects. Ernest Oppenheimer collected capital from British and U.S. financiers, including Herbert Hoover and J.P. Morgan, to help him create Anglo American, its name reflecting the nationalities of its main funders. (He briefly contemplated calling it “African-American Corp.” until the idea was sharply rejected by his U.S. partners.)
The company soon grew into a leviathan. Ernest and Harry Oppenheimer were often listed among the world’s wealthiest people. They developed lucrative gold fields in the Orange Free State and the Witwatersrand, branched into diamond and coal mines, and then sank money into steel, insurance, banks, newspapers, pulp and paper, property development, platinum, copper, uranium and iron ore. Critics called it “the Octopus.”
De Beers, founded by Cecil Rhodes, was acquired by Ernest Oppenheimer in the late 1920s after a protracted board battle. The Oppenheimers turned it into a global cartel, controlling the world diamond trade. In 1947, their ad agency created the slogan “A Diamond is Forever” – still considered the greatest marketing tagline of the 20th century − and the company soared into the stratosphere.
In 1961, Anglo acquired a major Canadian company, Hudson Bay Mining, and then continued to expand internationally. By the 1980s, the Oppenheimer empire contained more than 650 companies, employed more than 800,000 people and controlled the majority of all stocks traded on the Johannesburg Stock Exchange.
Harry Oppenheimer was more progressive than some of his rival tycoons in South Africa. He criticized apartheid and supported the creation of trade unions at Anglo’s mines. But he also benefited from apartheid, which entrenched an exploitative system of cheap labour from migrant Black mineworkers, making his mines more profitable. During a 1987 strike by a mineworkers union – led by Cyril Ramaphosa, today the President of South Africa − Anglo sacked about 45,000 labourers.
After moving its headquarters to London in 1999, Anglo failed to keep pace with the world’s top mining conglomerates, reflecting the decline of South Africa’s mining sector. But South Africa has maintained its global influence in one key area: It provides many of the geologists, managers and executives who dominate the mining sector around the world, including in Canada.
One of Canada’s mining giants, Barrick Mining Corp., is headed by a South African CEO, Mark Bristow. And if the latest merger is approved, Anglo Teck’s CEO will be Mr. Wanblad – another South African.