The name game - Nick Holland

David McKay | Tue, 05 Aug 2008 08:43
[miningmx.com] -- NICK Holland's first day on the job as Gold Fields CEO was marked by a horrific accident that killed nine people. He tells us, in this the final of our eight-part series, what his strategies for the company are and how that accident has coloured his vision.

THE QUIET REVOLUTIONARY

Name: Nick Holland

Age: 49

Was: CFO Gold Fields

Now: CEO Gold Fields Ltd

There's no good day for a fatal accident at a gold mine in South Africa. But to have nine employees die at Gold Fields’ Driefontein mine, west of Johannesburg, on Workers’ Day (1 May) was particularly damaging. More so for Nick Holland, since it was also his first day as CEO of the gold group.

He’s clearly marked by the event, as it colours so much of what he says when talking about his own plans for Gold Fields.

“If we can’t mine safely we won’t mine at all,” he says, adding that safety has become a top strategic priority. His mine managers are currently trawling through mining plans in what’s a company-wide audit and extending to its operations overseas. “The principle we’ve got to adopt is: ‘Would I go there?’ If not, then we don’t mine.”

Shutting down production in South Africa was controversially backed by Cynthia Carroll at Anglo Platinum, a decision that may have ultimately led to the departure last year of the platinum subsidiary’s then CEO Ralph Havenstein.

However, Holland doesn’t mind it. It also forms part of another strategy to build critical mass in three other regions: Australasia, West Africa and Australia.

Holland says production can be built to 1m oz/year, possibly in each, with South Africa becoming a 2m oz/year producer. No region dominates over another and a degree of decentralisation will occur in the group.

Its Parktown head office goes, although Holland hastens to add that decentralisation shouldn’t sacrifice “common standards”. “I’m in a hurry,” he says of his strategy.

Holland is considered a controversial appointment in some quarters. One analyst says it’s folly to appoint a non-mining engineer as CEO. Holland is described as a supremely brilliant chief financial officer. Whether that will translate into an equally good CEO is open to question.

Tell that to David Brown (account CEO at Impala Platinum), Bobby Godsell and Barry Davison (both BAs), and the string of Oxford PPE graduates that Anglo American appointed as CEOs.

Obviously, Holland thinks he can crack it. His manner is quieter than predecessor Ian Cockerill, which may put him at an initial disadvantage. It means he’ll be judged more closely on his aims and outcomes, one of which is to narrow the 50% plus discount on Gold Fields relative to its North American rivals. “We’re way, way undervalued. So what do we do?” he asks.

One is stabilise the operations following the power crisis in South Africa. He thinks getting quarterly production up to 4m oz/year is possible (3,3m oz in the past quarter on an annualised basis). Second, getting smarter on the type of underground mining in South Africa.

South Deep, the enormous west Rand mine, can support mechanised mining and enough production that will allow Gold Fields to shut the unsafe South Africa mines in its portfolio. Third, achieving free cash flow – that’s money after capital expenditure – is another aim.

There are also a few other interesting items. Gold Fields would consider operating standalone copper production. “We’re a gold company, not a precious metals company. But we’re not afraid of having other metals,” Holland says.

And the uranium in Gold Fields’ portfolio stays. There’s an estimated 30m pounds of uranium in tailings owned by Gold Fields, plus two million ounces of gold. “I’m accelerating reviews to come up with an investment decision – probably by March next year,” says Holland of the uranium.