African Minerals surprised the market on Tuesday when it said chief executive Alan Watling intended to retire after just three years at the helm, following completion of an early stage in its key Sierra Leone iron ore project.
News of Watling’s planned retirement hit shares in the miner, the largest of West Africa’s emerging iron ore producers, as analysts fretted over the consequences of his departure before the mine hits its production rate of 20-million tonnes per year of iron ore, expected by the year-end.
Watling, an industry veteran, joined African Minerals from Australian iron ore miner Fortescue, a producer which has built up a major market position from scratch. He will be replaced on an interim basis by executive chairperson Frank Timis, while a permanent replacement is sought.
A team from engineering firm SNC Lavalin has been appointed to oversee the completion of the remaining element of the ramp up of the Tonkolili mine project by the year-end and the transition from construction to full-scale operations, the company said.
The company did not give a specific reason for Watling’s departure but indicated in Tuesday’s statement that he would not be remaining for the second three-to-four year phase of the company’s growth beginning next year, after three years in Sierra Leone.
“The company is now making large scale commitments which relate to the next stage of expansion and entering a new chapter,” Watling said in the company statement. “It is therefore appropriate for me to pass the torch for Phase 2 and beyond to a new CEO.”
African Minerals shares were down 5.34% at 492.25 pence at 11.48am GMT
“It was a more sudden departure than people had expected and I don’t think that anybody had really anticipated that he would be leaving now,” Renaissance Capital analyst Jim Taylor said.
“He was fairly high profile and well regarded so I don’t think anybody had been prepared or forewarned that this was likely to happen.”
Canaccord analysts said the departure was “less than ideal”, coming after recent unrest among workers at the mine, and expressed concern over other senior ex-Fortescue managers that followed Watling to West Africa.
“With the mine yet to reach full stated run rate of 20 million tonnes per year … the shares are likely to be weak with the CEO … to retire aged 58,” they said in a note.
“Whilst it is entirely plausible that no other ex-Fortescue employees will leave, as Mr Watling is not departing for a rival project, it will likely depend on the incoming CEO.”
The Tonkolili project is key to the company but also to the economy of Sierra Leone, emerging as an iron ore producer.
Billionaire Timis, who has been executive chairperson at African Minerals since December 2006, owns a 12.4% stake in the company that is valued at roughly $340-million.
Timis is also non-executive chairperson of African Petroleum and a director at International Petroleum. He is the largest shareholder of both companies.
Watling, who joined African Minerals in 2009, is a veteran with nearly 30 years experience in the iron ore industry, over 20 years of which was spent with Rio Tinto.
African Minerals, sitting on one of the continent’s largest iron ore deposits, was in the news a few weeks ago after two days of rioting by workers from the mine over pay, left one woman dead and at least six injured. — Reuters