Anglo American will either be successful at reorganising its platinum business and starting production at the Minas-Rio iron-ore mine, in Brazil, or be acquired, research company Sanford C Bernstein said.

The metals producer is reviewing global assets to shore up earnings after CEO Mark Cutifani took over last year amid cost overruns and delays at Minas-Rio.

Cutifani set a goal of improving Anglo’s return on capital employed to at least 15% by 2016, from 8% in July.

“There is a free option on offer for Anglo,” Paul Gait, a London-based Bernstein analyst, said in a recent note. “Either the company outperforms under Mark Cutifani’s leadership, and demonstrates the value of tons in the ground, or it fails to do so and is put out of its misery in fairly short order.”

Anglo, which controls the world’s largest platinum producer, has seen the output disrupted by a strike since January in South Africa. The Association of Mineworkers and Construction Union has called out more than 70 000 miners, including employees at Anglo American Platinum. Government-led talks failed to end the impasse.

Anglo planned to switch to mechanised open-pit mining from labour-intensive underground excavation, Cutifani said in April. The company, which is downsizing its platinum business, has excluded the more mechanised Mogalakwena mine from the review.

“Successful implementation of this strategy could unlock billions of dollars of value for shareholders and mark a step change in the profitability of one of Anglo’s biggest single-commodity exposures,” Gait said.

Minas-Rio, scheduled to ship its first ore by the end of the year after $8.8-billion in capital expenditure, was 88% complete at the end of March and was projected to reach full yearly capacity of 26.5-million tons in 2016.

“We believe that the fundamental basis of the value of any mining company is the quality of its geological endowment,” Gait said. “In this regard, Anglo is on a scale comparable to Rio Tinto Group, yet has a market value two- thirds below that of Rio.

“We believe that Cutifani is leading a change programme unprecedented in Anglo’s history,” Gait said. “We think he is the right man to lead this change and see considerable upside to current stock valuation if the company can successfully execute on its restructuring efforts.”