[miningmx.com] – IS Mark Cutifani, the incoming CEO of Anglo American, right to place so much faith in the power of “conversation’?
Cutifani, through the years, has referred so often to the virtue of dialogue with stakeholders (governments and unions) that “conversation’ from his mouth is a coinage.
Asked to explain the factors that have constrained the share price of his former company, AngloGold Ashanti, he named four South African issues, all of them exogenous; that is, outside the control of his management team; all of them manageable through means of “conversations’ – he contends.
They were the threat of a class action relating to alleged silicosis infection of underground workers in South Africa; the threat of nationalisation; the recent labour unrest that reached its nadir in the Marikana shootings; and safety-related closures, not to mention the South African mining industry’s poor safety track record.
Cutifani’s is a very different approach to the one adopted by Gold Fields. It sought to remove the South African discount from its share price by means of financial engineering. What else is the unbundling of Gold Fields’ South African mines into Sibanye Gold but an abandonment by Gold Fields’ core team of dialogue with the local government?
It was a declaration by Nick Holland, Gold Fields CEO, that he can’t dedicate the time it takes to solve union puzzles and run an international business at the same time; nor do shareholders want him to. As such, Holland is responding to offshore shareholders, although whether these same shareholders will stand by him and the new Gold Fields remains to be seen. Maybe they will.
But Cutifani is sticking with his belief that governments and business can discover common grounds.
Most recently, the intervention of mines minister, Susan Shabangu, regarding the unrest at Amplats was hailed by Cutifani as a crucial moment in a new climate of cooperation between the mining sector and government.
In electing not to unbundle AngloGold, he desperately needs proof conditions that hold back AngloGold’s share price can be ameliorated.
He might be right; Anglo American needs him to be right because so much turns on improving working conditions for labour for Amplats, as well as easing the regulatory risks in South Africa.
The world has changed. Host countries have expectations far in excess of what investors might historically have anticipated. This is not an exclusively South African phenomenon; it is a dynamic of rapidly improving developing economies, the response to which may well be dialogue, rather than unbundling.
