The Multinational Monitor

September 1988 - VOLUME 9 - NUMBER 9

C O R P O R A T E    P R O F I L E S


By John Summa
THE SOUTH AFRICA-BASED Anglo-American Corporation has long been a central pillar of apartheid. The company is growing rich buying the holdings of foreign multinationals that are reducing exposure in South Africa. According to Anglo's chairman, Gavin W. H. Relly, the company is playing a "stabilizing" role in the wake of multinational corporate disinvestment. Anglo-American has taken advantage of the sell-off of South African holdings by many foreign firms, some that have felt the pressure of the anti-apartheid movement, others merely protecting the parent company's bottom line.

Anglo-American's pool of cash reserves, estimated to be about $1 billion, has fuelled this binge. Anglo-American has become South Africa's largest banking concern by purchasing a controlling interest in Barclays National Bank operations in South Africa. And it has reportedly bought into Ford's South African operations by merging its Amcar facilities into a new company in which Ford will have a minority share. In 1975, Chrysler Corporation merged its operations in South Africa with an Anglo-American subsidiary. Anglo-American controls 85 percent of the companies quoted on the Johannesburg Stock Exchange, and about 60 percent of the exchange's total value. The company's holdings are so vast that it controls "47 percent of the country's gold production, a quarter of its coal, more than half its platinum, virtually all its diamonds and crucial parts of the South African banking, insurance, food-processing, brewing, steel, auto, electronics and other industries," according to a 1987 report.

One of Anglo-American's most valuable assets is De Beers Consolidated Mines, which controls four-fifths of the world's rough diamond trade. The company's worldwide assets total at least $15 billion. Today, De Beers owns almost 40 percent of Anglo, and Anglo owns a large share of De Beers. Diversification is seen as a hedge against political upheaval. According to Milton Moskowitz's The Global Market Place, Anglo- American accumulated more than one hundred companies during the 1970s, including some U.S. financial and mining interests. The money for this expansion came from the Luxembourg-based Anglo subsidiary Minorco, a $2 billion international holding company. Anglo and De Beers, operating through Minorco, "pump ... money into a myriad of enterprises, from zinc mines in the Yukon (Hudson Bay Mining) to natural gas deposits in Texas (Adobe Resources) to investment banking on Wall Street (Salomon Brothers).

Some studies have identified Anglo-American as the largest foreign investor in the United States; but given the incestuous nature of the mining business, where many of the investments lie, the trail is not easy to follow," Moskowitz writes. Anglo owns 39 percent of Minorco's stock and De Beers another 21 percent. Minorco has a 30 percent stake in Engelhard, an international producer of platinum with sales of over $18 million annually. Through the company's New York headquarters, Engelhard buys gold, silver and platinum from South African mines and refines them at plants in the United States and abroad. Power appears to be shared with U.S.-based Philipp Borthers, a multinational trading firm that possesses a CIA-like communications and intelligence network, and is involved heavily in South African metals.

Anglo also has a presence in the United States, which extends to minerals such as copper, zinc, gold, silver, nickel and coal, by way of the Inspiration Resources Company, in which it has a 59 percent share. Minorco previously had a 14 percent stake in Salomon Brothers, Inc., a U.S. investment bank, which it sold last year. Minorco has offered $4.9 billion to acquire Britain's Consolidated Gold Fields Plc., the world's second largest gold producer. Purchasing Consolidated Gold would greatly expand Anglo-American's mineral holdings, particularly in the United States. Consolidated Gold owns 30.7 percent of Peabody Holding, the United State's biggest coal producer, and 49 percent of the U.S.-based Newmont Mining Corp. Almost a third of Consolidated Gold's profits are generated in North America.

Anglo-American's character is a reflection of the designs of South Africa's Oppenheimer family. Sir Ernest Oppenheimer took over the mining enterprise from late 19th century English mining magnate Cecil Rhodes. He built a diversified company out of initial investments in diamonds and other gems, which he passed on to his son, Harry Frederick Oppenheimer. When Anglo-American was set up in 1917, half of the initial capital supplied came from U.S. investors, with the condition that Oppenheimer's first choice for the company's moniker, "African-American," be changed to Anglo-American, because "African-American would suggest on this side our dark-skinned fellow countrymen and possibly result in ridicule," a cable from the U.S. investors stated. The company in 1929 bought De Beers from successors of Cecil Rhodes.

Through Anglo, the Oppenheimers own shares in all of South Africa's mining houses. In fact, the houses have cross-holdings with each other, making the block of capital quite formidable. But the extent of Oppenheimer wealth and power does not stop there. They are owners of the nation's largest steel works, travel agency, brick factory, discount house, auto dealership and computer software firm. The Oppenheimers are not afraid to employ their power to get what they want. On the issue of apartheid they have ostensibly taken a reformist position and have crafted an image for themselves as defenders of the rights of black workers by supporting abolition of the pass laws and the Group Areas Act, the cornerstones of the apartheid political structure.

But on questions of economic justice, such as the price of black labor, sharp contradictions emerge. Anglo-American has an anti-labor history that involves the use of the repressive services of the apartheid security apparatus, as well as its own security personnel, to control and exploit workers. Being the world's largest private employer of black labor and the world's largest producer of gold and diamonds means Anglo is also one of the world's biggest exploiters of cheap black mine labor.

Anglo aims to cultivate a progressive image by supporting urban improvement projects for black South Africans, by calling for reform measures and by taking a conciliatory approach toward the African National Congress (ANC) (the most notable example being a meeting between ANC president Oliver Tambo and white business leaders led by Gavin Relly). Nonetheless, the company clearly has a financial stake in the economic realities of apartheid. The ANC charter calls for nationalization of the mining and banking sectors. Anglo operations are prime targets for nationalization should a black-majority government come to power. As the ANC has said, "The boards of directors of these companies can't make decisions for the whole nation," a reference to Anglo and two other conglomerates that control major productive centers of the South Africa economy.

Anglo has about 250,000 black employees in South Africa. Anglo's power was challenged by South Africa's relatively new black miners union last year during a strike that was the worst mine owners have experienced. Anglo had originally encouraged the growth of the black National Union of Mineworkers (NUM) as a way of weakening the all-white labor unions. This strategy failed. In August, 1987, five years after the formation of NUM, 340,000 miners walked out and demanded major pay increases and other, non-economic changes. The strike shut down over 40 mines. As both sides hardened their positions, Anglo and other mining operations began mass firings to try to break the strike. To show that it "meant business," Anglo-American gave dismissal notices to some 60,000 of its black workers. After Anglo's final offer was rejected by NUM, "thousands of would-be new miners were lining up at recruiting stations in Lesotho, Swaziland and South Africa's so-called independent homelands, eager to escape crushing rural poverty, whatever the proffered terms," one news account reported. Black miners earn as little as one-fifth the salary of their white counterparts, sometimes being paid only $200 a month. In addition, many are migrant workers who must leave their homes and live in overcrowded, dilapidated, single-sex housing units. As one U.S. magazine noted, Anglo's "entire structure rests on cheap labor and apartheid's migrant labor system. Like the other South African mining concerns, it pays wages that are among the world's lowest and its black employees earn a quarter of what whites are paid. And while white miners are given heavily subsidized modern homes, utilities and schools, blacks are crowded into stark compounds that resemble prison camps." About 78 percent of Anglo's profits are made inside South Africa.

In addition to buying more foreign companies, Anglo is pouring money into reorganizing its coal operations. About 40 percent of Anglo's South Africa profits come from gold mining, in which the company is planning to invest $1 billion to merge four of its properties into a "mega mine." The merger will create a mine capable of producing 113 tons of gold annually for the next 20 years. It will also be a huge tax shelter, according to business reports about the deal. The "mega mine" is expected to generate operating profits of over $250 million per year. Anglo's sales have netted record profits over the last several years, but with the collapse of the value of the rand, the dollar value has actually fallen, which resulted in a reduction in dividend payments.

After the strike last year, repression against all groups fighting for a more just economic system and the abolition of apartheid was stepped up by the state security apparatus. Anglo- American, meanwhile, is increasingly being viewed as the "flip side of the same coin," one of the many wheels that grease the apartheid machinery through tax payments and growing productive industrial, mining and financial power. "The firm's long record of backing apartheid laws that suit its purposes but remaining silent about those that do not and repeatedly bludgeoning unionists into submission" as one news account put it, has made Anglo-American's reformist posture seem ever more specious. While Anglo has not always rubbed apartheid officialdom the right way, both the company and the white-minority regime are keenly aware that they are on common ground in preventing a change of state power to a black majority committed to reducing the gap between the few wealthy, and always white, property owners and the majority of workers who have nothing.