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Mergence Corporate Solutions veteran mining director Peter Major dissects Anglo American and BHP Billiton’s sale of its Colombian thermal coal assets to Ivan Glasenberg’s Glencore for R8.3bn. Major highlights that there are many factors at play here with Anglo and BHP disinvesting from coal assets given their diverse and universal shareholder base calling for environmental best practice. According to Alec Hogg and Peter Major, Glasenberg having a large shareholding in Glencore was critical to the acquisition, putting monetary interests ahead of ESG considerations. Major regards this as a big win for Glencore shareholders. – Justin Rowe-Roberts
Peter Major on Anglo American and BHP Billiton sale of its thermal coal assets to Glencore for R8.3bn:
Anglo American and BHP Billiton are disinvesting (from coal), they have been for years. Ivan (Glasenberg) has been pretty clear, they are not going to disinvest if it doesn’t make economic sense and he understands the long-term, so this has been going on for a couple years.
On Ivan Glasenberg ensuring a good deal for shareholders:
They (Anglos and BHP) want out at almost any cost, Ivan does things for economic value. He does things like a good fund manager. You know, what’s my IRR (internal rate of return) – I think he’s getting a good deal on those. Now he’s going to have full ability to manage, to hedge, to barter – he controls it 100%. He couldn’t be happier and shareholders are really going to benefit by him getting those stakes.
On the principle-agent issue at play here (Anglo American controlled by managers, whilst Glencore is controlled by owners):
I think pretty similar to Ivan, when it is your asset – whether it’s an old car in the garage, whether it’s a hunting rifle – you’ve got it, you’ve acquired it, you’ve fixed it up, you know what the thing is worth. You’ve got this personal attachment and you are not going to give it away below fair market value. Whereas when we’re managing assets, how often do we hear managers say ‘this might not look like it may make sense economically but it’s a strategic move’. I’ve heard that come out of African Rainbow Minerals and Exxaro so many times. An owner wants to get value for every nut and bolt in his workshop.
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