[miningmx.com] — ANGLO American’s annual general meeting on
Thursday at no point became a heated affair, but some shareholders did speak their
minds over various issues; most notably the group’s handling of its dispute with
Chile’s state-owned copper producer Codelco.
Sir John Parker, Anglo’s chairman, also had to face questions over CEO Cynthia
Carroll’s remuneration, the strategy for platinum, construction delays at Minas Rio,
Anglo’s responsibilities towards silicosis sufferers as well as environmental concerns
over a proposed Alaskan pebble project.
Parker and Carroll chose to highlight the group’s operational achievements of 2011 in
their addresses, most notably the commissioning of three of Anglo’s four major
growth projects. These are the Barro Alto nickel project in Brazil, the Kolomela iron
ore mine close to Sishen and the Los Bronces expansion project in Chile. The three
projects had a combined capex figure of around $5.7bn.
Another highlight mentioned was the acquisition of the Oppenheimer family’s stake in
De Beers.
Branding the sale of a 24.5% interest in Anglo American Sur to Mitsubishi for $5.4bn
as a “major value-enhancing divestment’ – the transaction that gave rise to the
dispute with Codelco – Parker said the decision to do the transaction was considered
with the “utmost care’.
“We have acted to deliver very significant value to our shareholders, in full
compliance with what is a very clear legal contract between ourselves and . Codelco,’
Parker said. “We have also made it clear, from the outset, that we are wholly
amenable to working with Codelco to find a commercial solution for the benefit of
Codelco and for Chile, though such a solution must recognise our rights within the
contract.’
Said Carroll: “We are open to sensible negotiations conducted in good faith, but we
will not be moved from defending our very clear rights and protecting value for our
shareholders.
“Codelco’s management knew what our alternatives were – we made them very clear
on a regular basis – in terms of selling down our holdings to a third party prior to any
valid exercise of the option, and it sought to prematurely exercise the option.’
However, one shareholder accused the board and management of being “arrogant’
over the matter, saying Anglo faulted by committing $2.8bn to the expansion of Los
Bronces before speaking to Codelco, while another shareholder commented Anglo
stood the danger of “winning the battle but losing the war’.
Parker responded that Codelco had the opportunity to acquire 24.5% in January but
opted not to do so.
“They [rather] chose to make a lot of noise in the system,’ Parker said. “We would be
happy to resolve this, but on a commercial basis. The quicker we resolve this the
better it is.’
He said Chile’s government has indicated it would not become involved in the dispute.
Turning to Anglo American Platinum (Amplats), Carroll said the review of this business
would be completed by year-end.
“.returns have declined in recent years, and are not acceptable to us for the medium
to long term,’ she said. “As a result, we are embarking on this review to assess the
optimal configuration of the platinum portfolio.’
On Minas Rio, Anglo’s largest strategic growth project, Carroll said earthworks at the
beneficiation plants were 86% complete. More than 94% of land access has been
secured along the pipeline, compared to 86% a year ago, while more than 200km
(38%) of the pipeline has been installed.
“As to be expected, we are encountering environmental realities such as caves, while
land access and permitting in an ever-changing regulatory environment adds
complexity,’ she said.
“Since the start of activities at Minas Rio, we have experienced seven state legal
interruptions relating to different environmental licences and permitting processes.
“In March, work was suspended for three days on parts of the beneficiation plant,
following a legal interruption on archaeological studies that had been carried out in
the mine area.
“We are currently in discussions about another legal interruption notification on a
power-transmission line licence, and we are confident construction activity . will
resume soon.’
Carroll said the project would still deliver according to its initial cash cost projections
of around $45 to $50 a tonne; the delivered cash costs to China.
“ALL IN THIS TOGETHER’
Carroll’s remuneration was another subject of discussion, with one shareholder
commenting on Anglo’s “appalling’ return on investment record.
“I fail to see how a CEO can be given a pay rise from £1.5m to £2.1m [under such
circumstances]’, he said. “It seems we’re not all in this together.’
Parker responded: “We had a record year,’ referring to Anglo’s financial performance.
“That is the driver of Ms Carroll’s remuneration.’
Rebuffing calls of attendees representing silicosis sufferers from South Africa for the
payment of compensation, Parker said Anglo was not responsible for these sufferers’
plight.
“Anglo believes it is not responsible,’ he said, adding that not everybody suffering
from silicosis had worked in Anglo American mines. A hearing on this issue would take
place in the British High Court on May 9.
