South Africa has thrown a £31bn bid for mining titan Anglo American into immediate doubt after its mineral resources minister criticised the deal.
Gwede Mantashe said he was against the takeover of Anglo by rival BHP Billiton just hours after the proposal was announced.
A string of Anglo’s shareholders also attacked the approach, describing it as opportunistic and claiming that BHP had undervalued the company.
Mr Mantashe said that South Africa’s previous experience with Australian business BHP was “not positive”.
It suggests that the takeover bid – which would create the world’s largest copper miner – is likely to face fierce political opposition in Johannesburg during an election year.
South Africa’s Public Investment Corporation (PIC) is the biggest shareholder in Anglo and the miner runs operations across the country.
Anglo also controls De Beers, one of the most powerful players in the global diamond market and a South African national champion.
BHP merged with South African miner Billiton in 2001 but Mr Mantashe said the transaction, which led to the formation of BHP Billiton, “never did much for South Africa”.
Speaking to the Financial Times, he said: “What we saw is that it dumped coal and then created a small company called South32, which is now marginal.”
Anglo American shares jumped as much as 13.6pc after BHP’s bid, adding £3.7bn to its valuation and pushing the FTSE 100 as much as 0.8pc higher to a record high of 8,102.14 points.
Meanwhile, PIC warned that the mining sector remains a “critical part of the South African economy”.
A spokesman for the investor said it will “assess any offers that are presented to shareholders and will engage directly with the investee companies”.
He added: “The PIC is a long-term investor and any transaction presented will be assessed to ensure value creation for our clients.
“In addition, the mining sector remains a critical part of the South African economy, impacting a wide variety of stakeholders, therefore, new opportunities that may arise in the sector need to take these factors and long-term sustainability into account.”
Other shareholders have more overtly criticised the potential BHP deal.
Nick Stansbury, head of climate solutions at Legal & General Investment Management (LGIM), which is Anglo American’s 11th largest shareholder, described the bid as a “highly opportunistic approach”.
He said: “As with many other UK listed companies, we believe the valuation of Anglo American to be depressed and regard the proposed exchange ratio as an unattractive proposition for long term investors.
“The mining industry has a vital role to play in the energy transition.
“The industry is extremely concentrated today, and further consolidating it will not contribute to accelerating investment in the way we believe is needed.
“If the industry is not able to develop the significant new supply of critical minerals the world urgently requires our transition to a low carbon economy may be placed at risk.”
BHP, the world’s largest listed miner, said it will offer Anglo American shareholders £25.08 per share.
The proposal includes plans to spin off Anglo’s iron ore and platinum assets. Anglo American earlier today said it had received an unsolicited, non-binding and highly conditional combination proposal from BHP, which it was currently reviewing. The company is considering a sale of De Beers to release cash as part of its defence, according to a report in the Wall Street Journal.
If the deal goes through, it would give BHP access to more copper, one of the most sought-after metals for the clean energy transition, and potash, which are its key strategic commodities, as well as more coking coal in Australia.
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