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It is a puzzle with a huge prize.
     Anglo American, which hit its hundredth anniversary this year, has bounced back from a near-death experience in the last twelve months, tripling its market cap to £17.5bn ($22bn). But after decades of asset sales, a once sprawling conglomerate spanning everything from paper to breweries has quietly been reduced to a choppy mining stock, now vulnerable to a final breakup.
     The riddle has always been: how could Anglo's remaining pieces be divvied up? But with FTSE mining bosses chatting about a secret trip by India's prime minister to South Africa for high level meetings, the puzzle may have been finally solved. “The play is over,” one London-based chief executive says. “It's done.”

All Over the Place

     Anglo's chief executive, Mark Cutifani, has continually hinted at sweeping changes since joining the group four years ago. “There's a conversation to be had”, if anyone wants to buy the firm, he said one year in. Rivals scoffed and when prices dropped, Anglo unveiled plans to sell or close two-thirds of its mines, drastically cutting its workforce from 135,000 to 50,000.
     The restructure was “bold”, “radical”, “tough” and “aggressive”, Cutifani promised. “We've got that work underway.” It never happened. Prices bounced and Anglo dropped the entire plan. “There is shuffling of paper but very little action,” Hanre Rossouw, a portfolio manager at Investec, spotted at the time.
    As such, Anglo's portfolio remains a varied mess. A legacy of ambitious deals done by its founder Sir Ernest Oppenheimer a century ago, its portfolio covers more than fifty mines and nine different commodities, from diamonds to manganese, lacking any clear intent for the future. “There's no feeling of belonging to a company, there's no corporate culture,” says the former chairman of one of Anglo American's subsidiaries, who now collects Cuban art. “They're all over the place.”
    The group's operations are an unsightly mix of tired assets plus complex new-builds, bound together by overlapping divisions, which have been continually restructured. Its fully-mechanised Mogalakwena platinum mine in South Africa is the world's slickest, but its output only ups pressure on Anglo's high-cost, deep-level platinum mines, where the company faces scrutiny from South Africa's militant government as one of the country's biggest employers.
     Headaches are everywhere. Anglo has stayed in thermal coal as rivals have exited, a no-no for many investors. Its Minas Rio iron ore mine in Brazil meanwhile went horribly over-budget, costing more than $13bn, and is shipping behind schedule with boats leaving half empty, according to research house Bernstein, which follows iron ore shipments by satellite.
     In a freakish show of Anglo's disparate interests, earlier this year it emerged that a three hundred year old vineyard that the company owns had been damaged by wildfires, raising questions about what else is sitting in its portfolio, and how well it all fits together.
     Yet selling assets hasn't helped. Many of the group's spin-offs, from packaging group Mondi

to brewing firms that later became SAB Miller, have gone on to easily eclipse their former parent in value. Profit at Tarmac, which Anglo dumped in 2015, nearly doubled the year after it was sold, according to banking sources.
     It is all dirt in the engine for Anglo's trophy assets, including diamond giant De Beers and the group's South American base metal mines, which churn-out more copper than either Rio Tinto or Antofagasta.

Carved-Up

     If Cutifani is short of ideas, his rivals have plenty. Earlier this month, Indian businessman Anil Agarwal, who owns two-thirds of India's mining champion Vedanta, announced a $2.4bn investment in Anglo's stock, using money borrowed against his Vedanta bonds.
     Agarwal's sudden zeal for Anglo American left the market baffled. Bankers told The Times of India that the investment was “not friendly, though not necessarily hostile.” Vedanta issued a statement saying it was not connected to the move. Agarwal insisted he had no plans to bid

for Anglo American, whilst analysts at Barclays downplayed the deal as a “speculative personal investment.” “I must confess that this took me totally by surprise,” one Anglo veteran told Global Mining Observer.
     But the date had been a long time in the making. Two years ago, Vedanta poached Anglo's former CEO, Cynthia Carroll, to “advise on key strategic initiatives”; Carroll commended Vedanta for its “growing footprint.” When Anglo was reeling, Vedanta then approached Anglo's board, but was rebuffed and discussions were buried. “It was just a friendly idea,” Agarwal later explained. Any deal was “cooking on cold water... It is a transaction that still needs to be digested.”
     In July last year, India's prime minister Narendra Modi paid a public visit to South Africa, which was followed by a private trip alongside Agarwal, according to sources linked to Vedanta, ahead of Agarwal's investment this month. In high level meetings, Anglo American's future was all but carved-up.

Dangerous Alliance

     Agarwal's investment leaves him with 13 per cent of Anglo's shares. PIC, South Africa's state-owned pension fund, holds a further 15 per cent. PIC owns more than 10 per cent of all stock

listed in Johannesburg and is led by Daniel Matjila, a former Anglo staffer, who jumped across to the public sector and now drives a two million rand Maserati ($160,000).
     It is a dangerous alliance for Anglo to face. Acting in concert, its two largest investors could pile pressure on Anglo's board, whilst obstructing any other suitors. If Anglo was split into two, leaving a South African rump and a lucrative international business, either investor could emerge with 20 to 40 per cent of either arm. And that is the plan, according to those working on Anglo's breakup.
     Anglo American says it has no knowledge of Modi's private trip. Modi's personal office and the office of South Africa's president, Jacob Zuma, did not respond to requests for comment.
     Other FTSE bosses violently reject the notion that Vedanta has its foot on Anglo's assets, or that they have been locked out. Even if Agarwal has India's government behind him, they argue, his investment is no different to a 12 per cent stake that China bought in Rio Tinto in 2009. If Agarwal “wants any of these assets he will have to compete like all of us.” Agarwal can take Modi to South Africa as “many times” as he likes. “His stake will not give him any special right.”

Diplomacy

     Agarwal, 63, left school in India when he was 15, moving to Mumbai, where he became a scrap metal dealer. As the government privatised assets he began buying distressed smelters and mines. The business has grown into a behemoth, with revenue of $13bn from electricity and aluminium, iron ore, copper and zinc, which Agarwal has piled up piecemeal.
     A Twitter-using Davos-goer, Agarwal listed his business in London in 2013, renaming it Vedanta. He now lives in London, where Vedanta is headquartered, a block away from Glencore's London office. But as one of India's biggest taxpayers, Agarwal has the clout to drag Modi out on a business trip in aid of creating a truly global Indian mining giant. India's government is also a large investor in Hindustan Zinc, one of Vedanta's key subsidiaries.
     Known for “bold and sometimes seemingly counter-intuitive acquisitions”, Agarwal's latest deal with Anglo “took the stock markets by surprise”, says Metal Bulletin. But the idea of Vedanta gobbling Anglo, which is seven times its size, is “verging on the absurd”. Agarwal is “probably more interested” in getting a seat on Anglo's board.
     So the consensus goes. But like all great dealmakers in the mining industry, Agarwal is a bluffing tactician. He has praised Anglo's “phenomenal” management team and has singled out De Beers as one of Anglo's “world-class assets”. He has also heaped praise on South Africa, saying its government “is on a good mission.” Agarwal has publicly admired every aspect of Anglo, except the one that he is looking to pocket: its high-margin South American copper mines.
     Agarwal's immaculate diplomacy means that as pressure on Anglo's board gets ever more intense, the tone remains amicable at least. “It seems that way,” a source close to Anglo says. “That's how it seems.”