Business

Anglo's hot seat up for grabs

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?

Anglo American's former CEO Cynthia Carroll. (Aly Song, Reuters)

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

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