[miningmx] — ANGLO American’s main institutional shareholder base in South Africa
met with Cynthia Carroll two weeks ago to explain their objections to her
management decisions – an event that apparently prompted Carroll to tender her
resignation to the company’s Board last week.
The meeting between the SA shareholders and Carroll was chaired by Anglo’s
chairman,
Sir John Parker, and attended by fund managers from Old Mutual, Coronation,
Investec
and the Public Investment Corporation (PIC).
“We made it clear that it’s not only the downturn in the resources cycle that’s causing
Anglo’s problems, but also the group’s operating performance,’ one of these fund
managers told Sake24.
“We agreed with her that the business environment for mining companies over the
past
five years had been difficult, but it’s going to be even more difficult in the next five
years, and we said this to her.’
Shortly before the release of some shocking interim results in July, Anglo said it had
increased its interest in Kumba Iron Ore by 4.5 percentage points to 69.7% – for
$950m (about R7.8bn), or R510 per share.
That was a premium of about 40% on Kumba’s future discounted free cash flow – a
poor capital allocation and the proverbial last straw as far as the institutional
investors
were concerned.
Further delays at Anglo’s Minas Rio iron ore project, along with the poor interim
results,
sealed Carroll’s fate.
“The labour unrest in South Africa has nothing to do with it. The process of removing
her started long before that,’ one of the fund managers said.
Minas Rio’s capital cost would originally have been $3.6bn, but now stands at $5.7bn
and will probably rise again before the mine starts exporting iron ore late in 2014.
The meeting with Carroll in London the week before last was followed by several
meetings between South African institutions and other shareholders in North America
last week.
Anglo’s future options, including the 80% stake in Anglo American Platinum (Amplats),
were discussed in depth.
Fidelus Madavo, head of resources equities at the PIC, said he saw no reason why
Anglo
couldn’t divest from Amplats, as long as Amplats remained listed in South Africa.
“The PIC holds shares in Amplats and in Anglo, because there is no doubt that with a
small change of direction that must still be made, Amplats will be a valuable
investment.
“If Anglo distributes its Amplats shares, it wouldn’t make much difference to us,’
Madavo said.
The PIC, with a 7% shareholding, is the largest single shareholder in Anglo.
– Sake24
