New Anglo American CEO aims to create world’s best mining company

8th January 2013

By: Martin Creamer

Creamer Media Editor


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JOHANNESBURG ( – Creating the world’s best mining company is the aim of Mark Cutifani, who takes over the reins of Anglo American as CEO from April 3.

Speaking from London in an international conference call that South African journalists could only enter late as a result of a technical glitch, Cutifani said that the iconic London- and Johannesburg-listed company, which turns 100 in four years, had “the assets, the people and the will” to be the world’s number-one diversified miner, a position BHP Billiton currently holds.

“I’m looking forward to starting with the team in just over two months,” said Cutifani, who has been appointed at a time when Anglo American is seen by some to be poised for potential ascendancy, following its significant streamlining by outgoing CEO Cynthia Carroll, who leaves at the end of April after a six-year stint.

Liberum Capital analyst Ben Davis questioned the amount of traction a turnaround story in Anglo American would gain, however, given the recent company guidance that put 2013 earnings 22% below consensus.

Davis added that the challenges arising from the "structurally defunct" Anglo American Platinum (Amplats) and continuing capital cost increases at the Minas Rio iron-ore project in Brazil had no easy solutions.

South Africa's Public Investment Corporation (PIC), which had initially called for a South African to be appointed to head Anglo American, backtracked and instead commended the board on its choice of Cutifani, who is only the second non-South African to head the company since its inception in 1917.

The PIC said Anglo American's main issues centred on capital allocation, project management and operational challenges, which Cutifani had the experience to meet.

But the National Union of Mineworkers tweeted that it was "disappointed" at the announcement that the incumbent AngloGold Ashanti CEO would take up the top Anglo American job.

At AngloGold Ashanti, long-serving AngloGold Ashanti CFO Srinivasan Venkatakrishnan (Venkat) and executive VP business and technical development Tony O’Neill will act as joint interim chief executives when Cutifani departs.

Australian-born Cutifani has South African clout as president of the Chamber of Mines of South Africa and as an executive council member of Business Leadership South Africa.

A Bachelor of Engineering (mining engineering first class honours) from the University of Wollongong, New South Wales, Australia, in 1982, Cutifani began his working life as a miner, from 1976 to 1982, his first pay packet totalling A$126.

As Anglo American CEO, the father of seven will receive basic pay of £1.2-million (R17-million) a year, plus participate in the yearly bonus share plan incentive, which can add another 87.5% of basic pay and a share element also equal to 87.5% of basic pay, plus benefit from a string of other incentive bonuses and a £2.38-million (R39-million) compensation for AngloGold Ashanti forfeits.

Anglo American will also make a yearly contribution of 30% of basic salary to Cutifani’s pension provision, which can be taken as a cash allowance.

It has been calculated that he could thus earn some $13-million (R111-million) a year.

With 36 years of mining experience, Cutifani currently manages 61 000 people and assets worth more than $16-billion at South Africa’s largest gold-mining company, which was unbundled out of Anglo American in the late Nineties and where he has performed impressively.

Cutifani, who will turn 55 virtually a month to the day after he puts his feet under the table at Anglo American plc, has mined on six continents in 25 countries and in 20 commodities.

His management style is described as “open, transparent and people-focused”.

When elected chamber president, he pledged to restore sound labour relations in labour-roiled South Africa through “effective engagement across the broadest front”.

“It’s about conversations with employees, chamber members, the government and the people of South Africa,” Cutifani said, imploring mining companies to immerse themselves deeply in the affairs of their local communities.

He described the enhancement of the human dignity of the workforces as the chamber’s most important task at hand.

His corporate career path spans CVRD (Vale) Inco, Sons of Gwalia, Normandy Mining, Western Mining Corporation, Savage Resources, Kalgoorlie Gold Mines and Coalcliff and his big hope for the future is a fatality-free mining industry.

As AngloGold Ashanti boss, he teamed up with diamond producer De Beers South Africa to explore and ultimately mine the continental shelf for gold; soon, as Anglo American CEO, he will be in a position to oversee the world’s biggest diamond company in toto.

He also led the drive towards deep, safe, automated gold mining, which is showing encouraging signs of being fully realised.

With the lion's share of run-away costs now probably largely reined in at Minas Rio, Cutifani will be left to concentrate hardest in the near term on the arduous job of restoring profitability at the troubled Amplats, which is due to announce its results on February 4.

Anglo American chairperson Sir John Parker, who personally led the search for a CEO to replace the “tirelessly dedicated” Carroll, described Cutifani as being usefully familiar with both South Africa and the Americas, two crucial Anglo American geographies.

Liberum Capital said further in its note that more operational disruption could be expected in South Africa when wage negotiations took place in mid-year and anticipated both financial and political repercussions in the aftermath of the Amplats’ review, which was likely to reduce production capacity by 200 000 oz of platinum a year.

While supply reduction was needed in the oversupplied platinum industry, a backlash could be expected, Liberum added.

In Brazil, Anglo American was still working on gaining land access for the pipeline that would transport the Minas Rio iron-ore slurry to the export terminal and difficult decisions would have to be made on whether to continue with previously planned expansions.

Cutifani conceded that Anglo American faced challenges, but pointed to the same being true for the entire global mining industry.

Anglo American’s portfolio of mining businesses spans bulk commodities – iron-ore and manganese, metallurgical coal and thermal coal; base metals – copper and nickel; and precious metals and minerals – platinum and diamonds.

Its mines, projects and exploration activities span Southern Africa, South America, Australia, North America, Asia and Europe.

AngloGold Ashanti said in a media release that the company's board, led by chairperson Tito Mboweni, had initiated a formal search for a new CEO from both internal and external candidates.

The media release read that both Venkat and O’Neill had told the board that they were not intending, at this stage, to put themselves forward for the position of CEO.

Since the 2008 launch of AngloGold’s strategy under Cutifani, safety had improved by 70%, the hedge book had been eliminated and the balance sheet rebuilt.

Earnings before interest, tax, depreciation and amortisation had virtually trebled and had outpaced gold-price gains.

Cutifani had also initiated a comprehensive business improvement and people-focused intervention – Project One – which continued to drive stability and improved performance across the business.

Johannesburg-headquartered AngloGold Ashanti is the world’s third-largest gold producer with 20 operations on four continents and exploration in Colombia, Guinea and Australia.

The company produced 4.33-million ounces of gold in 2011 and generated $6.6-billion in gold income.

Edited by Creamer Media Reporter




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