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The ANC treats Anglo American as both national champion and national piñata

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Imagine making an offer on a house but only on condition that the owners demolish part of it first. That is a rough analogy for BHP’s £31bn offer for rival miner Anglo American, which includes the stipulation that first it jettisons its South African businesses.

South Africa’s presidency denies this is a vote of no confidence in the country. It is true that the motive for BHP’s offer is to get hold of Anglo’s sought-after copper mines in Peru and Chile. Yet it is hard not to see the proviso that Anglo ditches its South African platinum and iron ore assets as anything other than a comment on the country’s investment landscape.

As supposed evidence that the African National Congress enjoys close relations with business, the presidency this week cited co-operation between the administration and companies in tackling the country’s problems. The private sector has indeed provided expertise and finance to help solve three of the biggest: rolling power cuts, a collapse of rail and ports, and crime.

Yet these “collaborative efforts”, supposed evidence of them working hand in glove, are the result of failed ANC policies that have wrecked much of the country’s infrastructure. Business is helping out as a matter of survival.

Even when it turns to the private sector for help, the ANC has not managed to throttle the party’s old instincts of blaming it for all the country’s ills. When last year, Standard Chartered Bank paid a $2.35mn fine to settle an eight-year-old case of rand manipulation, Khumbudzo Ntshavheni, minister in the presidency, launched a withering attack on the entire private sector. It had “no interest in the development of this country”, she chastised, and was seeking to “engineer” government collapse.

Her remarks revealed the deep suspicion much of the ANC still has of the private sector. The prevailing attitude is that business, even foreign investors with no history or skin in the game, owes South Africa a living for the sins of the past.

Hardly surprisingly, the ANC’s relations with the mining sector have had their ups and downs. When it came to power after the country’s first free elections in 1994, the ANC rightly saw white-dominated businesses as having profited from exploiting cheap black labour. But much as it wanted to blame big business, it also needed its help. Only a profitable and confident private sector could pay enough taxes and provide enough employment to keep the ANC’s dreams of social transformation alive.

In 30 years, the ANC has never resolved those twin impulses. It oscillates between beating up big business and imploring it to invest.

The relationship with Anglo American follows a similar topsy-turvy trajectory. When in 2004, Tony Trahar, then Anglo’s chief executive, said political risk was declining, he was excoriated by Thabo Mbeki, then president, for saying that it existed at all. Trahar was wrong. Political risk was on the rise as the subsequent presidency of Jacob Zuma revealed.

The spectre of nationalisation has long hung, if mostly rhetorically, over the mining sector. The ANC made the state, not individual landowners, the custodians of the nation’s minerals. There was nothing wrong with that. But it did ensnare mining companies in the endless red tape of licence applications.

The mining industry no longer lays golden eggs — nor platinum or iron ones either if BHP’s snub is anything to go by. In 2003, South Africa accounted for 5 per cent of global exploration, a figure that dropped to below 1 per cent by 2023. The industry’s contribution to GDP and employment has dwindled inexorably.

These days, mines struggle to get minerals on freight trains and through backed-up ports. Miners generate their own power because they cannot rely on the state grid. Recently, in co-operation with government, they have provided private security to guard railway lines targeted by criminal gangs. It is co-operation of a sort, but born of desperation.

Anglo has made its own mistakes. It listed in London in search of cheap capital, but was never able to persuade foreign investors that its unwieldy structure made any sense. It splashed out on Brazilian iron ore, but was too timid in bidding for Australian iron ore assets that made its competitors rich.

Whatever errors Anglo made abroad, its battles at home with an ANC that saw it both as national champion and national piñata cannot have helped. Gwede Mantashe, mining minister, last week poured cold water on BHP’s offer, saying the Australian miner had never done much for South Africa. Though he didn’t say it, perhaps the begrudging inference was that Anglo American had.

david.pilling@ft.com

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