{"id":1492,"date":"2016-05-13T15:24:48","date_gmt":"2016-05-13T20:24:48","guid":{"rendered":"https:\/\/blogs.iwu.edu\/factrack\/?p=1492"},"modified":"2025-03-01T08:41:42","modified_gmt":"2025-03-01T14:41:42","slug":"last-day-in-johannesburg","status":"publish","type":"post","link":"https:\/\/blogs.iwu.edu\/factrack\/2016\/05\/13\/last-day-in-johannesburg\/","title":{"rendered":"Last day in Johannesburg"},"content":{"rendered":"
\"We<\/a>
We went to Anglo Ashanti gold where someone told me I\u2019m worth my weight in gold so I tried to get on the assayers balance.<\/figcaption><\/figure>\n

Today is our last day in Johannesburg, and we\u2019re leaving with a much better picture of \u201cdoing business in South Africa\u201d especially after our two visits today, both to multinational corporations.<\/p>\n

The first was to Anglo Ashanti Gold, the first South African company to be listed on the New York Stock Exchange, and the third largest gold mining company in the world.\u00a0 That seemed appropriate because more than half of the gold mined in history has come from South Africa.\u00a0 It seemed appropriate for another reason as well\u2014the importance of mining in opening up Africa.\u00a0 The discovery of diamonds at Kimberley and the Witwatersrand gold in 1886 were drivers in the colonial expansion into the continent of South Africa.\u00a0 Johannesburg really owes its birth to the Gold Rush.\u00a0 And mining has become a major employer in South Africa, affecting housing, race relations, and South Africa\u2019s place in the world.<\/p>\n

The current company is fairly recent, having been born in a merger between Ashanti Goldfields and Anglo American.\u00a0 The professor leading the tour told me that the roots go back to a joint venture early in the 20th<\/sup> century between a South African named Oppenheimer and JP Morgan.\u00a0That branch went off to become Anglo American, a company that deals with a variety of mining operations (copper and platinum, for example), while AngloAshanti is only as good as gold.<\/p>\n

In fact, that was very much the tack our speaker took in explaining the company to us; it\u2019s only as good as gold, and operates in a volatile environment that has had the price of gold plummet to under $900 from about $1600 in the last few years, and resulted in a major contraction in the industry; Anglo has cut over 10,000 jobs, and sold off a number of mines to reduce its financial exposure and reduce its debt. Like most gold mining companies, he said, Anglo had predicted the price of gold would never decline, and had purchased, explored, and expanded\u2014hence the need to contract.\u00a0 He used the word \u201csustainability\u201d in a rather unusual way\u2014arguing that the company needed a \u201csustainable cash flow\u201d!<\/p>\n

He articulately laid out the risks in this industry\u2014in addition to the usual ones all industries face, such as weather and currency fluctuations, but also the growing political risks of being in a dangerous and sometimes environmentally conscious world in an activist and connected world; he admitted he could only explain away as fate the deaths of two miners caught underground in an earthquake, but pointed out the company had made safety one of its goals, but closed with a quotation from Mark Twain: \u201cMines are dirty holes in the ground with a liar on top.\u201d\u00a0\u00a0 Small wonder that one of the messages over the urinals was, \u201cYou always have a choice\u2014let our ethics be your guide.\u201d<\/p>\n

The business is inherently risky, and becoming riskier. \u00a0Mines are increasingly deep he noted\u2014some are over 2 miles underground, and it takes nearly four hours of an eight-hour shift to get to and from work (even worse than a commute in rush hour Chicago!).\u00a0 Small wonder that the company is spending $50 million on developing a robotic gold extractor\u2026.especially with the tight connections between unions and the government of South Africa.<\/p>\n

He painted, in other words, an interesting picture of a company in a dangerous industry, with plummeting prices, focusing on efficiency and cost cutting, compensation for the days when good as gold was an optimistic phenomenon.<\/p>\n

\"At<\/a>
At South African Brewery which will soon be part of Anheuser Busch<\/figcaption><\/figure>\n

Our other visit was to South African Brewery, one of South Africa\u2019s important industries, but soon to be purchased by the InBev Anheuser Busch company to create the world\u2019s largest brewery; that may in itself cause some major reshuffling as the combination will create almost monopolistic power in some countries.\u00a0 SAB owns Miller in the US for example, and I read something about the probability one of the brands will have to be spun off.\u00a0 The company dates back to the 19th century, and became a fixture in Johannesburg after the gold rush. A few points during the presentation that interested me: 1) Miller owns the whole channel of distribution.\u00a0 In the US, post prohibition required independent wholesalers, such as City Beverage in Bloomington.\u00a0 Our speaker said, \u201cThat\u2019s why AB isn\u2019t as profitable as it could be.\u201d\u00a0 2) she emphasized (as did the video describing the company) \u201ccold affordability,\u201d due in large measure to the demographics\u2014a growing middle class, but with a great deal of uncertainty in the home market.\u00a0 Growth is relatively flat, though South Africans don\u2019t drink as much beer as most of the rest of the world.\u00a0 Growth is coming from premium and flavored beer (note to the wise, Chocolate Milk Stout beer isn\u2019t as good as it sounds). 3) SAB has grown through acquisitions (such as Miller Coors), and also moved into non-beer products, such as Coca-Cola.4) in response to my one word question, \u201cAB InBev,\u201d she was pretty optimistic about the synergies of new markets.\u00a0 I don\u2019t think she\u2019s read the St. Louis papers, which are still whining about the purchase of the All American lager by the \u201cefficient\u201d (read cost cutting) Brazilians who run the Belgian company.<\/p>\n

We also learned a little more about apartheid and its consequences.\u00a0 Blacks could not legally drink until the 1960s, for example, but today, government policies rectifying the past include \u201ctransformation\u201d of businesses to ownership by Africans.\u00a0 SAB distributorships, for one example, are part of that transformation. We made a brief stop at the Museum of Africa\u2014a large building no one seemed to know what to do or could afford to tear down; hence, it has what can at best be described as an \u201ceclectic\u201d combination of displays that you really stumble on.\u00a0 One was a small Scouting exhibit, smaller than the Ottawa museum\u2019s similar collection of Baden Powell artifacts. Another dealt with a question I had regarding Gandhi, who lived for almost 20 years in South Africa, about half the time in Johannesburg. It was here, the exhibit noted, that he began the practice of nonviolent resistance that eventually toppled the Raj in India\u2014here he led protests against the compulsory Asian Immigrant Act which required Asians to register and get passes.<\/p>\n

And finally, we had a tour of downtown Johannesburg, which, except for government buildings, our guide described as a \u201cghost city.\u201d\u00a0 He noted that whites owned the buildings before the end of apartheid, but abandoned it afterwards.\u00a0 It\u2019s not totally abandoned, but once five-star hotels are vacant, and most buildings have no more than shops on the first floor.\u00a0 Everything else is empty, with boarded up or broken windows.\u00a0 As our guide stated, people with money shop at the malls, like the posh Nelson Mandela mall across from our hotel.\u00a0 I saw a McDonald\u2019s, a Burger King, and a Game (one of the Massmart stores) downtown, but mostly locally-owned shops.\u00a0 There\u2019s a lovely old post office building with broken windows surrounded by scaffolding, which our guide said had been in place for three years, with no progress.<\/p>\n

On a more humorous closing note, I picked up a China Daily at the front desk (yes there is a China Daily African edition).\u00a0 I was drawn to an article on a Chinese agricultural mission in rural Ethiopia that complained about the toilets on the farm.\u00a0 They wound up getting a Chinese government grant for new toilets and additional TVs so they would have a better stay at the agricultural station.\u00a0 I hope my experience with the toilets will be better than the Chinese!<\/p>\n","protected":false},"excerpt":{"rendered":"

Today is our last day in Johannesburg, and we\u2019re leaving with a much better picture of \u201cdoing business in South Africa\u201d especially after our two visits today, both to multinational corporations. The first was to Anglo Ashanti Gold, the first South African company to be listed on the New York Stock Exchange, and the third … Continue reading “Last day in Johannesburg”<\/span><\/a><\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[],"class_list":["post-1492","post","type-post","status-publish","format-standard","hentry","category-africa-2016"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/posts\/1492","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/comments?post=1492"}],"version-history":[{"count":8,"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/posts\/1492\/revisions"}],"predecessor-version":[{"id":8416,"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/posts\/1492\/revisions\/8416"}],"wp:attachment":[{"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/media?parent=1492"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/categories?post=1492"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.iwu.edu\/factrack\/wp-json\/wp\/v2\/tags?post=1492"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}