The $140 billion Australian mining group BHP’s proposed $39 billion acquisition of its rival Anglo American has put South Africa and its mining sector in a precarious position. If the deal goes through, it would see one of South Africa’s most well-known companies largely withdraw from the country, more than a century after it was founded.
The South African government’s response to the deal has been mixed so far. Mining Minister Gwede Mantashe has said he “wouldn’t support” the deal, while President Cyril Ramaphosa’s spokesperson described the approach as “normal market activity”.
The South African government has several reasons to be wary of the deal. The country’s mining sector has been in decline, with its contribution to GDP falling from 21% in 1980 to 7.5% in 2022. Moreover, South Africa’s key mineral resources, such as platinum, diamonds, coal, and iron ore, are not seen as integral to the global energy transition.
Additionally, the country has been plagued by corruption scandals at state utility Eskom and issues at freight carrier Transnet, leading to frequent electricity blackouts and problems for miners trying to export their products.
Pretoria faces a dilemma – whether to try and stop the BHP-Anglo American deal, and if so, whether it should. The government must weigh the potential impact on the country’s mining sector, which has been a significant contributor to the economy, against the broader challenges facing the industry.
The outcome of this proposed acquisition will have significant implications for the future of South Africa’s mining industry and its broader economic landscape. The government’s handling of this situation will be closely watched by both domestic and international observers.