Anglo Faces Platinum Test in Possible South Africa Spinoff

(Bloomberg) -- Anglo American Plc is facing a showdown with its biggest investor, South Africa’s state-owned Public Investment Corp., which wants the miner’s prized platinum assets included in any divestment of its local operations. 

PIC, which owns about 14.5 percent of Anglo, is insisting platinum is included in the suite of coal and iron ore assets that the miner is considering spinning off, according to a person familiar with the fund manager’s thinking. That presents a major hurdle to Anglo Chief Executive Officer Mark Cutifani, who says platinum is one of the company’s core commodities, along with copper and diamonds.

Anglo American Platinum Ltd. is the world’s biggest producer of the metal and 70 percent of global production comes from South Africa. The London-based Sunday Telegraph reported yesterday that Anglo had convinced the PIC to drop its platinum request, without saying where it got the information.

Anglo Assets

Anglo favors a spinoff of its iron-ore and thermal-coal assets in South Africa, rather than selling them piecemeal, a person close to the company said Monday, asking not to be identified. The miner still wants to generate cash from any divestment to pay down debt, another person close to the company said.

The PIC, Africa’s biggest fund manager, wants to create a locally owned mining giant to increase black ownership of companies and generate income for the pensions it oversees.

If Anglo went forward with a spinoff, the PIC would own about 30 percent of the company, a person familiar with the matter said in October.

“Our role is to make Anglo more South African-owned and controlled,” PIC CEO Dan Matjila said in an interview on Oct. 10. A PIC spokesman couldn’t immediately respond to a request for comment.

Anglo shares slipped 0.2 percent to 1,207 pence as of 11:56 a.m. in London. The stock has quadrupled this year.

“We continue to work through all the various options for divesting the thermal coal and Kumba iron ore assets in South Africa, which may include packaging them for sale to create a new South African mining company,” Anglo said in an e-mailed statement.

To contact the reporters on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net, Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net, Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net. To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin