Anglo American is being pressured by its largest investor to spin off its South African operations, a move which could lead to the eventual break-up of the mining giant.
South Africa’s pension fund, the Public Investment Corporation (PIC), reportedly wants Anglo to package and sell its platinum mines there to a state-backed vehicle.
The Times reported that Anglo chief executive, Mark Cutifani, has so far resisted demands. But any such sale could herald the end of Anglo as a major industry player. Multiple bidders would be likely to offer large sums for its copper assets, leaving just the De Beers diamond division.
It comes amid an increasingly tense political environment in South Africa, with rising discontent around the ruling ANC party. It suffered a major setback in last month's municipal elections, conceding ground to its rival the Democratic Alliance.
The PIC is leveraging its recently beefed-up stake in Anglo. The pension fund boosted its holding past 13 per cent in May, up from 8.3 per cent a year ago.
Anglo's shares were the worst performer on the FTSE 100 in 2015, however they've nearly tripled so far this year due to stronger metals prices.
Anglo has already announced its intention to sell its South African thermal coal and iron ore businesses. It comes as the firm seeks to focus on more profitable commodities such as copper, platinum and diamonds.
The heavily indebted miner has also promised to cut its net borrowing below $10bn this year through cost-cutting exercises, operational improvements and the sale of non-core assets.
Anglo is open to the sale of its South African assets to a state-owned vehicle but this must trump a standalone sales process, City A.M. understands.
The company declined to comment, while the PIC couldn't be reached for comment.