Anglo American ‒ may sell up in South Africa

London, England --- MININGREVIEW.COM --- 24 November 2010 - Mining giant Anglo American plc could sell Anglo Platinum Limited ‒ the world’s largest producer of the metal ‒ and other South African assets to improve its valuation and become more attractive to potential acquirers.

Pointing out this possibility in a note here, Liberum Capital Limited analysts led by Michael Rawlinson said that, while such as sale had been unthinkable a few years ago, the idea could have merit now.

“Anglo has weighty exposure to South Africa where issues with power, labour, rail and corruption all contribute to a worsening business environment,” Liberum added.

The analysts pointed out that South African mine production had been disrupted in 2008 because of a shortage of electricity generation, and the state-owned power utility was struggling to expand. Labour unions had won pay increases of more than 10% this year, raising mining company costs, and the country’s mines department had revealed in August that it had found mal-administration in the award of prospecting rights, and had placed a six-month moratorium on issuances, they added.

Anglo, which is based in London, could sell its Kumba Iron Ore Limited. unit, Liberum said. The company also has diamond and coal mines in South Africa.

Anglo spokesman James Wyatt-Tilby declined to comment.

Shares in Anglo have gained 4.5% on the London Stock Exchange this year. Australia’s BHP Billiton Ltd., the world’s largest mining company, advanced 14% during the period; and Swiss-based Xstrata plc, which last year proposed a takeover, increased 13%.