May 10 (Reuters) – BHP Group BHP.AX is weighing its next move after its initial $39 billion proposal to buy Anglo American AAL.L was rejected.

The world’s No. 1 miner could table a formal offer on or before May 22 or seek an extension. It may also insist that Anglo un-bundles the South African platinum and iron ore units that BHP doesn’t want in a merged company.

Anglo is a household name in Africa’s most industrialised economy with its links to South African mining enduring for more than a century.

Here is how South Africa’s regulatory processes will operate if BHP goes ahead with the proposed acquisition:

ANTITRUST AGENCIES

South Africa’s Competition Commission has said it must be notified of any transaction that results in a change of control over Anglo’s businesses in the country.

Even if Anglo agrees to spin off Anglo American Platinum AMSJ.J and Kumba Iron Ore KIOJ.J, it would still have assets in South Africa including De Beers’ Venetia diamond mine and a 40% shareholding in Samancor, a manganese joint venture with South32.

The Competition Tribunal adjudicates on matters referred to it by the Competition Commission. The Competition Appeal Court could also be involved if decisions of the Commission and Tribunal are contested.

COMPETITION COMMISSION HURDLE

The Commission examines aspects of a deal it considers anti-competitive, and also the impact on the operations of small and medium-sized businesses, jobs, local ownership and workers’ equity participation in business entities.

Law firm Bowmans said in a recent note that some of these public interest aspects “undermine” investment in South Africa, especially if applied in an inflexible manner.

WHO ELSE IS INVOLVED?

The transfer of mining rights would need to comply with Section 11 of South Africa’s Mineral and Petroleum Resources Development Act, requiring the holder of mining titles to notify the Ministry of Mineral Resources and Energy and the Ministry of Finance of its intention to transfer them.

The ministries have 90 days to decide whether to allow the transfer of rights, after considering factors such as the new owner’s capacity to comply with mining law and government mining policies. The period can be extended under certain circumstances, to ensure “thorough evaluation”.

South African competition lawyer Michelle Le Roux told Reuters she does not foresee significant obstacles over mining rights should BHP’s proposed acquisition go ahead.

LABOUR UNIONS

South Africa’s registered labour unions have a legal right to information from the parties involved in the merger, including details of the impact on employment.

Trade union representatives participate in merger hearings and can make submissions for anti-trust agencies to consider when ruling on a transaction.

PROTRACTED PROCESS

The Competition Commission has 40 business days to investigate large mergers and can seek a 15-day extension with the consent of both parties and the Competition Tribunal.

However, competition lawyer Le Roux said that for large mergers the process could ultimately take between six months and three years to reach a conclusion, depending on appeals against the Commission’s ruling.

“It really is a very variable time-frame and it’s normally determined by how much opposition there is, how complicated the issues are, how many stakeholders and participants need to be heard and have their concerns addressed,” she told Reuters.

Walmart’s WMT.N $2.3 billion purchase of a 51% stake in South Africa’s Massmart took 16 months before the Competition Appeal Court gave the deal a green light, with conditions, in March 2012.

The merger was bogged down by objections from labour unions and the South African government over its effect on employment and small businesses.

“The real question is what the final deal looks like and what potential package of remedies, conditions would be put on the table,” Le Roux said of BHP’s proposed Anglo deal.

“From the reaction to the initial announcement, it’s clear that the deal is going to have a lot of scrutiny and is likely to attract quite a lot of participation from different stakeholders.”

(Reporting by Nelson Banya; Additional reporting by Felix Njini; Editing by Kirsten Donovan)