Parker hints at independence for Anglo

D. McKay & A. Seccombe | Fri, 10 Jul 2009 09:00
[miningmx.com] -- ANGLO American unveiled Sir John Parker as its new chairman after more than a year seeking a suitable replacement for Sir Mark Moody-Stuart who will step down from the diversified miner’s board on August 1.

The appointment is viewed as an important step in Anglo American’s attempts to protect itself from a proposed merger of equals with Xstrata, its London-listed rival.

In the group press announcement, Parker spoke of Anglo’s “great many strengths” including its “high quality mining assets” and “unique position in precious commodities” – hardly the language of an individual likely to press Anglo into a merger.

Parker also said he looked forward to working with Cynthia Carroll, Anglo’s embattled CEO. “Anglo has undergone a major transformation in recent years and I look forward to my new role leading the board through the next stage of the company’s development.”

Anglo's search for a new chairman has been fraught. Its directors rejected Parker as a suitable replacement to Moody-Stuart about a year ago. The possible appointment of Fred Phaswana, the chairman of Anglo Platinum, to Anglo’s chair was then rejected by City institutions – a development that led to claims of racism by the South African government.

The government then pressed actively for a black South African to take Anglo’s chairmanship and most recently Cyril Ramaphosa, a former politician and now chairman of Mondi (jointly with Parker) was suggested as new chairman.

"As part of the global search, a number of South African candidates were considered but due to other commitments and conflicts of interest these candidates were unable to proceed," said Anglo spokesman Pranill Ramchander.

South African mines minister Susan Shabangu said the government looks forward to working with Parker, but it's understandable that if behind the scenes there was disappointment a black South African was not selected.

"We did express our preference for a black chairman, but Anglo American made its decision and we now look forward to working with Sir John, especially given the role the company plays in South Africa's economy and the good working relationship that exists between Anglo and the government," Shabangu's spokesman Jeremy Michaels said.

The country's largest union, the National Union of Mineworkers, is disappointed with Parker's appointment, said Frans Baleni, general-secretary of the union.

"From our understanding of John Parker, we feel he is someone we can work with, but we will still register our disappointment with Anglo American that they did not appoint a black South African and raise issues of outstanding transformation," Baleni told Miningmx.

"At the end of the day, government is not a shareholder of Anglo American," said Simon Brown, held of online trading at Standard Bank. "The market is likely to say great and then move on from this announcement," he said. Brown was speaking on Fin24.com's morning webcast AM Stocktake.

Anglo gained 1.16% in the early morning and was last trading at R218.50/share on the JSE.

According to the TimesOnline, Parker will substantially boost Anglo’s chances of remaining independent at a time when the company is being criticised for its lack of depth in management expertise.

Xstrata declined any comment on Parker's appointment.

There has been speculation in the market that the change in Anglo chairman could possibly lead to engagement between the two companies along the lines of what happened between BHP Billiton and Rio Tinto.

BHP had proposed an all-share takeover bid for of all of Rio, something the smaller company rejected. However, they later reached a joint venture agreement on Australian iron ore assets after BHP's Don Argus approached newly appointed Rio chairman Jan du Plessis in April.

Parker is well respected in the City having been chairman of the UK’s National Grid, a position he is expected to retain. However, he will drop other chairmanships including that of Mondi, once part of the Anglo empire but spun out in a separate listing two years ago.

Said Carroll: “He [Parker] will bring significant insight and experience to the board as we deliver value for all our stakeholders through the group’s growth and efficiency strategies embedded across our portfolio of world class mining assets”.

This is a second boost in as many days for Anglo’s chances of remaining independent after it emerged on Thursday that Anglo shareholders wanted Xstrata to deliver a premium which TimesOnline said should be in cash.

However, South African shareholders told Miningmx that such a premium could be simply an alteration of the share ratio and not involve cash at all. Xstrata said it was unable to comment on such a development but that it was meeting with Anglo shareholders this week, and may do so again.

This is hardly the end of the matter, however. It’s thought Xstrata will bide its time with its bid for Anglo. It spent more than a year stalking one of its former quarry Falconbridge before succeeding in buying the company.