IT is characteristically ‘front-foot’ of Chris Griffith, the CEO-elect of Gold Fields, that he takes up duties at the gold company the day after his 12-month ‘gardening leave’ expires, on March 31.
When Gold Fields last year announced the impending departure of Nick Holland, on the basis the CEO of 13 years would turn the mandatory age of retirement in 2021 of 63, the plan was for ‘a handover’ period, possibly of up to six months. Now, however, Holland has agreed to leave earlier than planned. There doesn’t appear to any objection to this, it’s just typical of Griffith that he would want to start ASAP.
There are, though, some differences in Griffith’s Gold Fields’ posting compared to his previous executive turns.
Griffith was CEO of Anglo American Platinum (Amplats) for eight years until 2020, and before that CEO of Kumba Iron Ore for four – both companies in the Anglo American stable. In both positions, he stepped into companies experiencing cyclical lows in the pricing of platinum and iron ore respectively.
As a result, both companies were in need of lifting and, in the case of Amplats, significant restructuring. That, however, is not the case at Gold Fields which is benefiting from sky-high gold prices and stable management.
Holland leaves Gold Fields having transformed the group from a South African-focused company to one largely internationalised; his much-derided venture into Australia, fully vindicated. At about 2.2 million ounces a year in gold production, and with an $860m Chile project Salares Norte awaiting implementation, Gold Fields is a premier gold company.
Quite how Griffith’s natural ambitiousness combines with this ‘state of arrival’ in which Gold Fields itself will be an interesting watch this year. How does he make an impact; how does he move dial?
Another difference in Griffith’s posting is that will not have the constraint of a parent company. At Kumba and Amplats, strategy was an Anglo American group deliberation. As a result, he’s in a position of greater influence on company direction, but potentially less opportunity to make changes. Except in one regard.
The major strategic decision at Gold Fields will be what to do about South Deep, a 20-year investment that sits on Gold Fields’ books at around R40bn. As the CFO who signed off on the transaction, it’s thought Holland has deep-seated loyalty to the mine. But Griffith might feel less sentimental about it.
“The biggest question is what he will do with South Deep,” said Nedbank Securities analyst, Arnold van Graan. “That remains to be seen, but what we have said previously is that he would be in a position to take some hard decisions that may not have seemed possible under current management,” he added.
Griffith’s view is that he will keep “an open mind” on South Deep. Regardless of its loss-making past, South Deep is a sizeable asset that Holland said last year could be profitably ramped up to as much as 400,000 oz/year in production. That’s nearly as much as the 450,000 oz/year Salares Norte.
For his part, Griffith turned up at a conference call following the announcement of his appointment in fairly non-commital mode, as you would expect of somehow who hasn’t yet formally started work.
“There are always opportunities,” he said when asked if he thought Gold Fields could be a vehicle for, say, industry consolidation. “But there are opportunities for consolidation that have not turned out well at all,” he said.
One shouldn’t expect ambivalence of this register for long, however.
