Amplats' Carroll: Mining companies need more certainty
05 Feb 2013 13:16 - Chantelle Benjamin
Anglo American Platinum outgoing head Cynthia Carroll has told the mining indaba delegation that South Africa was at a pivotal moment. Carroll said mining companies and government had a joint opportunity to make mining viable but said government and labour's contribution to the mining environment was also essential.
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Stable labour relations … and regulatory certainty is important to mines' competitiveness. Mining companies plan 10 years ahead so it needs certainty to plan, or they [companies] will invest elsewhere," she said at the mining indaba, currently running in Cape Town. She said "onerous and unpredictable regulations" would discourage investment.
Carroll said law and order, industrial stability and regulatory stability were among the factors that need to be adhered to for the mining sector to flourish.
The outgoing chief executive said partnership between government, mining, business and labour was essential. "Business is a partner and not a pariah," she said.
Carroll said the plan presented by Anglo America's platinum arm, Anglo Platinum, was a "comprehensive and creative plan not created by any company in South Africa".
Redeployment
The company plans to redeploy 9 000 people and to create jobs for the remainder of 14 000 retrenched staff. "We know how to do it, and have done so through Zimele [an enterprise development fund]."
Anglo American plans to provide high quality training to those retrenched to ensure that it brings benefit to the Rustenburg area and people from labour sourcing areas, she said.
Carroll said talks are presently underway between the department of mineral resources and labour and after that the section 189 consultation process will resume for the required 60 days.
While AngloPlat is presently stuggling with high energy and labour costs against, lower demand and prices for platinum, she said the company has every intention of continuing to invest AngloPlat. "We have a business plan to invest R150-billion in the next decade in platinum," she said.
Carroll said: "Beneficiation has a role to play, but only if based on a sound business case and on sectors where South Africa can have a competitive advantage."
Meanwhile Randgold Resources, a gold mining and exploration company operating in the prospective gold belts of west and central Africa, said on Tuesday that mining code changes proposed by a number of African countries will deter further investment in the continent.
Randgold Resources chief executive Mark Bristow said Africa needed to compete with other developing countries like South America, Asia, the Pacific Rim, Eastern Europe and Russia.
'Great mineral wealth'
"While Africa had the advantage of great mineral wealth, its competitors generally had better infrastructures, greater skills pools and more sophisticated economies," he said.
Bristow said Mali, Cote d'Ivoire and the Democratic Republic of Congo, where Randgold has operations, already handed over a substantial slice of the net revenue pie to the state, despite Randgold's funding of the discovery and development costs and the fact that they carried all the risks.
"It is disturbing that there is a growing tendency among the sub-Saharan mining companies to want more without giving anything back. Even a moderate change in their current codes will dimish these countries' ability to compete for direct fixed investment or to encourage reinvestment," he said.
He said for government to get more from mining operations, they need to participate positively in the value creation process. "As we have seen only too often in the mining industry, mergers and acquisitions seldom deliver value to shareholders, let alone other stakeholders."
He said government's role should be to provide a stable, business-friendly regime that will attract, not drive away investors.
She said that she was pleased to be handing over the company's reigns to Mark Cutifani, who had the same "values and objectives" as she had.
Labels: ANLGO AMERICAN PLATINUM, CYNTHIA CARROLL
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Anglo's hot seat up for grabs
02 Nov 2012 07:39 - Lynley Donnelly
But with so many risks beyond their control, the one question is, who would want to take up Cynthia Carroll's position as Anglo American's CEO?
While the market is awash with speculation over who should replace Carroll it is clear that her successor faces a tough task, particularly in terms of stabilising the company's South African operations.
Susan Shabangu, minister of mineral resources, said she hoped a South African would be appointed after Carroll resigned last week. This chimes neatly with the Public Investment Corporation's call for greater representation of emerging markets on the Anglo American board.
But an industry insider, who did not want to be named, said it remained to be seen whether any chief executive would want to step up to the plate given the challenges Anglo faces, especially in South Africa.
More than a third of Anglo's assets are based in South Africa. They make up more than half of the group's profits and include Anglo Platinum (Amplats) and Kumba Iron Ore. The local mining sector has been pummelled by violent labour unrest and faces uncertainties as a result of the ongoing debate in the ruling ANC over state intervention in the industry. "The question is, would anyone be keen [on the job] given the ratio of assets exposed to risks that are outside their control?" the source said.
Besides that, the long-standing oversupply in the platinum group metals market means that whoever takes the job has difficult decisions to make in terms of the embattled Amplats. This included rationalising underperforming operations and possible retrenchments at a time when this would be "politically very difficult" to do, the source said.
Finding an individual with a rare blend of extensive commodities experience, the boardroom savvy to inspire international investor confidence and the political cachet to navigate South Africa's unique nexus of business and politics will not be easy. There has been extensive speculation about potential candidates. Chief among them is local-born Mick Davis, chief executive of Xstrata, which is negotiating a merger with commodities trader Glencore.
Previously tipped to head the merged company, Davis is now widely expected to lose out to Glencore boss Ivan Glasenberg, which means he could be available for the post.
Depending on how the planned merger between Xstrata and Glencore unfolds – shareholders still have to approve the deal – speculation is on the rise that the merged giant could make a bid for Anglo.
Kobus Nell, analyst at Stanlib, said should the Glencore-Xstrata merger be successful it was likely that Anglo's South African assets would be unbundled and Davis would be first in line to head the entity.
Although Xstrata's performance had not been stellar when benchmarked against its peers, Davis had experience working with assets that were not necessarily the "best in class", Nell said. Anglo's portfolio, formerly world-class and relatively easy to manage, had been left to deteriorate over time, which suggested that someone with Davis's expertise could benefit the company, he said.
Other names doing the rounds include BHP Billiton's former chief financial officer, Alex Vanselow, and Chris Griffith, newly appointed head of Amplats.
Nell said that, given perceptions of Anglo as an "old boys club with a lot of fat on the table", there appeared to be a great deal of enthusiasm for someone such as Vanselow, who could introduce some of the BHP Billiton management culture to Anglo. But, Nell said, he was not a local and lacked South African exposure, which could count against him.
Peter Major, mining analyst at Cadiz Corporate Solutions, questioned whether Davis would be an appropriate choice for Anglo. Whoever took the helm would need to be adept at managing relations with South African role players such as the government and labour unions, he said.
Davis is from South Africa, but his ambitions have been constrained on home soil before. A former financial director of Eskom, he left the utility in 1994 after it became clear he would not get the top job.
Major said AngloGold Ashanti's Mark Cutifani was closer to what the company needed, given his record of hauling the gold miner up by its bootstraps. "He took over the biggest mess in mining and fixed it," he said.
Although not native to South Africa, Cutifani lived in the country and was respected and trusted by the authorities and labour alike, Major said.
To Carroll's credit, she spent a great deal of time building relationships with the governments of countries in which Anglo operates and had seen Anglo through the transfer of old-order mining rights to new-order rights under South Africa's new legislative regime, Major said.
Nevertheless, under her stewardship Anglo's share price had plummeted by 35% to 40%, Major said, and profitability was under strain.
Vanselow is touted as a man who could turn this around. He is competent and has experience of a multinational, diversified giant that has performed well in recent years.
However, a good deal of BHP Billiton's success could be attributed to good timing, Major said. Very few of the major deals that its chief, Marius Kloppers, planned went ahead, most famously the bid for Rio Tinto, and the largest one that has gone through has already been written down substantially.
Major said the failure to conclude many big deals had worked in the mining giant's favour, because the commodities cycle had slowed down and mining shares the world over had fallen substantially, mainly on the back of the global recession.
Given the dire state of Anglo American's most important asset, Amplats, Major said it was important that Griffith remain there. It would give him the opportunity to double the market capitalisation of a company with more than $1-trillion in "metals in the ground".
Two female bosses left
Anglo American's chief executive, Cynthia Carroll, is stepping down after months of pressure from shareholders and amid wildcat strikes in South Africa.
This will leave only two female bosses in FTSE 100 companies – Angela Ahrendts at fashion group Burberry and Alison Cooper at Imperial Tobacco.
United States-born Carroll, now 55, became the first non-South African, the first woman and the first outsider to take the reins at Anglo when she became chief executive in March 2007. Carroll will stay in the job until a successor is found, which could take up to nine months.
Potential candidates include Alex Vanselow, the Brazilian former chief financial officer of BHP Billiton; Aaron Regent, former boss of Barrick Gold; and Mick Davis, South African-born outgoing chief executive of Xstrata.
Anglo's chairperson, Sir John Parker, said the company would conduct a global search but "could not afford Davis".
One of Anglo's largest shareholders, South Africa's Public Investment Corporation, said the company had missed opportunities in Africa and criticised Carroll's "poor decision making". It called for a swift replacement.
Carroll has been under pressure since her appointment. Some investors were unhappy about the company's share performance and Anglo's exposure to South Africa, where a series of mining disputes have hit output. Anglo American Platinum, a subsidiary, sacked 12000 workers in early October.
Carroll said: "It is a very difficult decision to leave, but next year I will be entering my seventh year as chief executive and I feel that the time will be right to hand over to a successor who can build on the strong foundations we have created."
Parker dismissed suggestions that Carroll had been forced out by shareholders and said the decision to leave was her own. – Julia Kollewe, © Guardian News & Media 2012
Labels: ANGLO AMERICAN CORPORATION, CYNTHIA CARROLL, DEBEERS
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Market responds positively to Carroll's resignation
26 Oct 2012 10:41 - Lisa Steyn
South Africa's markets have welcomed news that Anglo American's chief executive Cynthia Carroll has stepped down, with stock shooting up 1.8%. In a statement, the company said Carroll – at the helm of Anglo America since January 2007 – led the group through the global financial crisis when it achieved record profits in 2008 and again in 2011.
"The board is enormously grateful to Cynthia for her dedication, her hard work and all she has achieved."
But South African platinum analysts say Carroll's resignation is cause to celebrate.
"She has really blown it ... she was probably pushed out," remarked one analyst who asked not to be named.
The key areas of unhappiness around Carroll's leadership are said to include:
* The company's underperformance relative to its peers such as BHP Billiton, Rio Tinto and Vale.
* A high profile dispute where Anglo American Sur, its copper mining operation in Chile, fought over assets with Codelco – Chile's state-owned mining group.
* And iron ore project in Brazil, MMX Minas-Rio, which Anglo bought into but has been plagued by delays and high costs.
* Underperformance of the company's South African operations – especially Anglo Platinum.
But, in a statement, Caroll said she was stepping down simply because the time is right to do so.
"It is a very difficult decision to leave but next year I will be entering my seventh year as chief executive and I feel that the time will be right to hand over to a successor who can build further on the strong foundations we have created," she said.
Peter Major, platinum analyst at Cadiz Corporate Solutions said although Carroll had made mistakes, she was still a positive influence.
"Cynthia made some errors – mainly embarking on big acquisitions at the top of the cycle. Still, she performed better than Xstrata," he said.
Anglo American said: "Cynthia will remain in her post until a successor has been appointed and an appropriate transition has taken place".
Important to consider, said one analyst, was the new chief executive's attitude toward the company's South African operations and whether it was viable to continue them.
The process of recruiting Carroll's successor will commence immediately and will be led by Anglo American chairperson, Sir John Parker.
In stepping down, Carroll will also relinquish her roles as chairperson of Anglo American Platinum and De Beers.
Labels: ANGLO AMERICAN CORPORATION, CYNTHIA CARROLL, DEBEERS
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