JOHANNESBURG (miningweekly.com) - Diversified mining major Anglo American already has scale, its CEO Cynthia Carroll said at the weekend, reiterating the company's rejection of Xstrata's scale-and-size-providing merger of equals.

Mining Weekly Online asked Carroll if Anglo's current scale-and-size could match that of a combined Anglo-Xstrata, which would refrain from cutting any operational jobs, Carroll said that Anglo's target of 19 000 retrenchments remained.

"We do not want to reduce headcount, but this is about ensuring the sustainability of our business. Our focus right now is on delivering the 19 000," Carroll replied.

Asked whether Anglo Platinum's intention of closing two more high-cost shafts could mean more retrenchments than the 19 000, Carroll reiterated that, "right now, what I can tell you, is we have no plans to do anything further."

Continuing to pursue the question of the potential benefit of scale-and-size, Mining Weekly Online pressed Carroll once more as to whether Anglo's current scale-and-size was sufficient to match Xstrata's commitment that the combined entity would establish an educational institution that would graduate between 2 000 and 3 000 engineering students in South Africa a year, to which she replied that Anglo already had the benefits of scale, as its latest results had demonstrated, but avoided ccmmitting a standalone Anglo to such an undertaking.

Macquarie mining analyst Sam Catalano had asked Carroll earlier, after the presentation of results that were characterised by a strong financial focus, for her view on the scale-and-size of a company in the mining sector leading to better returns over the longer term. Catalano asked whether an Anglo twice its currrent size would, for instance, need to look for a partner to help it fund phases two and three of the repeatedly-queried Minas-Rio iron-ore project in South America.

Carroll replied that Anglo would consider a partner if it decided to combine and to accelerate the next two Minas-Rio phases, but she avoided specifically dealing with the issue of whether the company would have needed to do so, as a combined Anglo-Xstrata entity.

Xstrata GM strategy and corporate affairs Thras Moraitis had earlier made the point that Anglo and Xstrata together would have the scale-and-size to compete "toe-to-toe" with BHP Billiton, currently the world's largest mining company, which created a 389% return for shareholders by merging.

"We hope we can do exactly the same thing in this combination, and we want South African shareholders to enjoy the benefits of that also," Moraitis added to Mining Weekly Online.

SOUTH AFRICAN TRANSFORMATION

On whether the replacement for former Anglo American South Africa CEO Kuseni Dlamini would be a black South African, Carroll replied: "First of all, I haven't said that we are going to replace that position, or have that position for that matter, and we are considering all options."

Rothschild mining analyst Dr Fiona Perrott-Humphrey asked Carroll to comment on the media's characterisation of her as "old Anglo, arrogant, ivory tower" - therefore, refusing to talk to the so-called "upstart of Xstrata", even though there might be some "value-creating opportunities to discuss".

Carroll replied: "I won't tell you everything at this time, but I'll just simply say that, if you are referring specifically to the offer tabled by Xstrata, we're not having conversations about that.

"Our position is very clear. The board considered the offer put down in front of us, and we rejected it unanimously, on the basis of the strategic case.

"In terms of our continuing engagement and discussions, and meeting up with our peer group at Xstrata, we do that all the time.

"I see Mick Davis, I see Tom (Albanese), I see Marius (Kloppers) on a regular basis, as do other members of our business units see the Xstrata team, in the case particularly, in Cerrejon and in Collahuasi. So, we continue to engage, and to have discussions about work on the ground," Carroll said.

Davis is CEO of Xstrata, Albanese is CEO of Rio Tinto, Kloppers is CEO of BHP Billiton, and Anglo has joint ventures with Xstrata at the Cerrejon and at Collahuasi mining operations in South America.

After the Anglo presentation, mining analysts posted various comments on line.

Société Generale mining analyst William Alain said: "We still expect Xstrata management to seek to engage with the board of Anglo."

ING analyst Nick Hatch said some investors might be disappointed that Anglo had not increased its savings target (of $2-billion by 2011), but it could be holding that in reserve, in case Xstrata launched a formal bid.

Catalano said further that he expected Xstrata to reiterate its belief in the strategic rationale of a combination with Anglo.

Carroll promised cost cuts of more than $1-billion in the 2009 financial year, and remained firm in her rejection of any reference to Xstrata.

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