Cynthia Carroll, CEO, Anglo American
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» Anglo Platinum defends its safety efforts

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Carroll slams Anglo safety, extends buyback by $4bn
Allan Seccombe
Posted: Fri, 03 Aug 2007

[miningmx.com] -- ANGLO AMERICAN’S safety record came under attack by new CEO Cynthia Carroll as the group marked record financial results for the six months to end June and decided to increase its share buyback by a further $4bn this year.

Anglo, which increased its net debt by $2bn to $5.3bn, has completed two thirds of its $3bn share buyback announced in February.

“Given the continued strong cash generation, it has been decided to increase the buyback by a further $4 billion for this year,” Carroll said in her maiden interim results with the company she joined from Alcan.
We are actively looking at other acquisitions
Underlying earnings at the global resources group were 22% higher at $3.1bn.

“The outlook for the majority of the Group’s metals and minerals remains positive as demand growth continues to be vigorous. Slower US economic growth has been offset by strength across the rest of the globe, most notably in the Asian economies, where both China and India continue to grow strongly,” she said.

Seaborne metallurgical coal prices have a lot of upside potential in particular, she said.

As part of a streamlining of the business, a number of non-core businesses are being shed. The latest is Tarmac, the UK construction materials business, which will be sold, Carroll said.

“With the sale of Tarmac we are now a very focussed mining company.”

Anglo is not worried about a takeover play for the company, she said. There has been a lot of speculation in the market that the group could be the subject of a hostile takeover bid, particularly as it had one of the lowest gearing or debt to equity ratios among the large mining houses at the end of 2006.

The gearing ratio has risen sharply from 13% to 20% since the end of the year as the $3bn share buyback scheme was implemented.

“We are on a path to ensure the whole of the company is much more valuable than the sum of its parts. We’ve got huge potential embedded in the group and we are working to extract that,” Carroll said.

Twenty nine people died at Anglo’s operations during the period, the bulk of them at 75% held subsidiary Anglo Platinum, where 12 workers alone were killed at the Rustenburg operations.

Anglo Platinum CEO Ralph Havenstein said this week he was retiring to make way for somebody else to take forward the company’s renewed safety strategy. It is widely felt that he was asked to leave.

“The Group's safety performance for the first half of 2007 has been completely unacceptable. I have taken immediate action to address the safety situation, particularly in Anglo Platinum, and initiated a major new drive to improve safety,” Carroll said.

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“Outstanding safety is indicative of outstanding business performance. It’s the indicator. If you get safety right you can be sure everything else is going right,” she said.

At a safety summit of 130 managers in South Africa in June, Carroll demanded every business unit submit specific implementation plans by October to outline safety strategies that will be closely monitored.

Anglo is looking to exit its 42% stake in AngloGold Ashanti, which has the deepest mines in the world in South Africa. No indication was given of how the process was going. It will be one less concern for Anglo leadership about the safety of workers at its investments once the process is completed.

The process would happen in the “next couple of years”, Carroll said, declining to be any more specific. At AngloGold’s results presentation chairman Russell Edey said the process could be wrapped up this year.

Anglo has make three major acquisitions since Cynthia took the reins of the company, buying into the MMX Minas-Rio iron ore project in Brazil, the Michiquillay copper project in Peru and a 50% stake in the Pebble copper project in Alaska.

“We are actively looking at other acquisitions,” Carroll said. “We have cash available and anything we are looking at has to have a strategic fit as we become more focused on being a leading mining and minerals company.

“My ambition is that we will become the world’s leading mining and minerals company. It’s not about size but value creation. We would look at synergies, strategic fits and value maximisation.”

Anglo is conducting optimisation programmes at its coal and base metals operations and will roll this out into platinum, iron ore and diamonds later in the year.

Capital deployment, maintenance, productivity and energy efficiencies will be scrutinised. “We’ve got a long way to go and we’ve got to tighten up on analysis and we’ve got to tighten up on delivery times. That’s what I’m looking for,” Carroll said.