Anglo's Grip Tightens on Gold-Mining

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OTHING Anglo American does is done on impulse, say company watchers in South Africa who have followed the mining giant over the decades.

It is that thought which has been occupying industry minds ever since it emerged this month that the group had swapped its 15% stake in financial services group FirstRand for significant holdings in long-term rivals Gold Fields and Billiton.

The news shook the mining world as people began to digest both the short- and long-term implications.

From a short-term point of view, the $760m deal saw Anglo swap its stake in FirstRand for the Billiton and Gold Fields shares held by Remgro, a South African investment group.

It left Anglo holding 7% in Billiton and 17.35% in Gold Fields, making it the biggest shareholder in South Africa's second-largest gold producer.

"It was a brilliant move," says one long-term Anglo watcher. "It got rid of a stake that was non-core and gave Anglo greater exposure to key resources."

Roger Chaplin, of Canaccord Capital, agrees: "The driver behind the deal was to get rid of a stake that neither the market nor they wanted. It is a good halfway house."

The official line from Anglo is simply that it had promised its institutional investors it would get rid of non-core assets and focus on resources. FirstRand has been on the market for months and analysts say the company tried a number of routes, including selling it to a foreign buyer, to get rid of its stake. However, despite assurances from all sides that no harm is intended, insiders believe the deals could lead to a further restructuring of South Africa's mining industry.

Although the majority do not believe Anglo's stake in Billiton is a precursor to a takeover any time soon - Anglo has promised not to make an unsolicited bid or increase its stake to more than 15% before the end of 2001 - all agree that Anglo's stake in Gold Fields could herald rather more fireworks. On the day Anglo's stake was revealed, shares in Gold Fields soared more than 8% on speculation that the mining giant was contemplating a takeover.

"Bobby Godsell [chairman and chief executive of AngloGold, Anglo's gold subsidiary] is a leading advocate of the need to redraw the boundaries of South Africa's gold mines," says Michael Coulson, deputy editor of South Africa's Financial Mail. "For AngloGold to incorporate Gold Field's [neighbouring] Driefontein and Kloof mines would be a major rationalisation. …