How South Africa’s anti-trust agencies could influence BHP’s Anglo deal

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BHP’s Proposed Acquisition of Anglo American Faces Regulatory Hurdles in South Africa

By: Samkele Mchunu

BHP Group’s ambitious $39 billion bid to acquire Anglo American has set the stage for a complex regulatory process in South Africa, where both mining giants have significant operations. As BHP considers its next move following the rejection of its initial proposal, attention now turns to the regulatory landscape that will govern any potential merger.

The proposed acquisition, if pursued, could reshape the mining industry landscape, with implications for jobs, competition, and ownership structures in Africa’s most industrialized economy.

Antitrust Agencies

South Africa’s Competition Commission stands as a critical gatekeeper in this process. Any transaction that results in a change of control over Anglo’s businesses in the country must be notified to the Commission. Even if Anglo were to agree to spin off certain assets, such as Anglo American Platinum and Kumba Iron Ore, it would still retain significant interests in South Africa, including the iconic De Beers’ Venetia diamond mine.

Competition Commission Hurdles

The Competition Commission evaluates deals not only from a competition standpoint but also considers broader public interest aspects, such as the impact on small and medium-sized businesses, local ownership, and workers’ equity participation. However, some stakeholders, including law firms like Bowmans, have voiced concerns that certain public interest aspects could deter investment if applied inflexibly.

Mining Rights Transfer

Another layer of regulatory scrutiny comes from South Africa’s Mineral and Petroleum Resources Development Act. Any transfer of mining rights requires approval from the Ministry of Mineral Resources and Energy and the Ministry of Finance. While legal experts like Michelle Le Roux anticipate minimal obstacles in this regard, the ministries have a mandated 90-day period to evaluate the transfer, which can be extended for thorough evaluation.

Labour Unions

South Africa’s registered labour unions play a significant role in merger proceedings. They have the right to access information related to the merger’s impact on employment and can participate in hearings, influencing antitrust agencies’ decisions.

Protracted Process

Navigating South Africa’s regulatory landscape is no swift task. Large mergers, like the proposed BHP-Anglo deal, can take anywhere between six months and three years to conclude. Factors such as stakeholder opposition, complexity of issues, and appeals against regulatory rulings contribute to this protracted timeline.

As BHP evaluates its next steps, all eyes remain on the regulatory process in South Africa. With stakeholders poised to scrutinize every aspect of the proposed acquisition, the final deal’s shape and potential conditions are yet to be determined. The journey ahead promises to be one of meticulous evaluation and robust engagement among diverse stakeholders.

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