02 May 2003
Anglo American disposes of its entire interest in Avmin
Anglo American plc (“Anglo American”) announces the disposal of its entire interest in Anglovaal Mining Limited (“Avmin”) to a consortium comprising African Rainbow Minerals Gold Limited (“ARMgold”) and Harmony Gold Mining Company Limited (“Harmony”).
Anglo American has sold its interests for an aggregate cash consideration of R1.7 billion (US$231 million), equivalent to R43.50 per Avmin share.
Anglo American acquired its strategic shareholdings in Avmin and Kumba Resources Limited (“Kumba”) in March 2002 with a view to: -
- realising the full growth potential of the Northern Cape iron ore assets owned by Avmin, through Assmang Limited (“Assmang”) and Kumba;
- help unlock the significant synergies between the Northern Cape iron ore assets, together with Orex (owner of the Sishen Saldanha railway line) and the Saldanha Iron Ore Port. Anglo American firmly believed that as anchor shareholder in both Avmin and Kumba, it could facilitate an appropriate combination of the underlying iron ore assets of Assmang (held by Avmin) and Kumba;
- facilitate meaningful and sustainable empowerment in the Northern Cape iron ore assets. Anglo American re-emphasised its commitment to a substantial black economic empowerment initiative around these assets on 17 December 2002 at the time of signing the Memorandum of Understanding with the South African Government (“the MOU”).
Anglo American notified the acquisitions of Avmin and Kumba to the Competition Commission on 20 June 2002. On 6 September 2002, the Competition Commission recommended that the notifications be approved unconditionally. Subsequently it became apparent to Anglo American that there were concerns about it owning an effective interest in both the Assmang and Kumba iron ore assets and combining the iron ore assets in the Northern Cape. Under these circumstances it became clear that it would be more acceptable if Anglo American was invested only in Kumba. Kumba as the largest iron ore producer in South Africa (and the fifth largest in the world) is the most important component of the South African iron ore assets and is the primary focus for Anglo American to achieve its iron ore objectives as set out above.
Harmony and ARMgold's recent unsolicited approach to Anglo American for its entire interest in Avmin allows Anglo American to exit Avmin for value, whilst simultaneously introducing meaningful empowerment in both Avmin and the Northern Cape iron ore assets in a manner consistent with Anglo American's black economic empowerment objectives for the assets.
In view of the sale of its entire interest in Avmin, Anglo American will withdraw its notification currently before the Competition Tribunal in respect of Avmin. Anglo American will continue to seek approval from the Competition Tribunal in respect of Kumba. The Competition Tribunal is scheduled to consider the Kumba notification in late May 2003.
Regardless of the current ownership of Avmin, Assmang and Kumba, Anglo American believes there is still opportunity for meaningful operational synergies to be unlocked over time between the Northern Cape iron ore assets. Anglo American will continue working with all parties to determine how best to unlock the synergies for the benefit of all stakeholders.
Tony Trahar, Chief Executive of Anglo American said “Should Anglo receive Competition Tribunal approval in respect of Kumba, Anglo American will have secured a significant shareholding in Kumba whose major business is in the iron ore sector. Anglo American will continue to discuss with the South African Government and other interested parties the opportunities to further develop South Africa's iron ore potential so as to create a globally competitive iron ore mining industry in the Northern Cape. Anglo American remains fully committed to the principles agreed with the South African Government in the MOU and will continue to support Kumba in the implementation of its empowerment strategies as envisaged by the Mining Charter”.
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