[miningmx.com] – SHARES in Anglo American gained nearly 3% following confirmation of a widely-held expectation that the UK group’s new CEO from April would be Mark Cutifani, the CEO of AngloGold Ashanti.
The upbeat sentiment Cutifani generates is well-founded, especially given his achievements at AngloGold. In addition, to dealing with the ‘must-do’ issues of having to remove AngloGold’s $6bn hedge book, and severing the last vestiges of Anglo’s stake in the company (the extant 16.3% was sold in 2009), Cutifani also partly addressed safety standards at AngloGold. In the five years of his management, fatalities at the group’s mines fell 63%.
Technical skills and management skills are not mutually exclusive; nonetheless, for a bred-in-the-bone miner, Cutifani has remarkably strong people acumen. Backed by an interest in psychology and management theory, Cutifani has worked hard to instill values of mutual respect in AngloGold Ashanti.
In an interview for Finweek in October, 2011, AngloGold’s Charles Carter, who at the time was head of AngloGold’s corporate strategy, and who is now tipped as a possible replacement for Cutifani, said: “He’s [Cutifani] a remarkable guy. I’ve never once seen him “dress down’ an employee, or lose his cool’.
If that sounds sentimental, then look no further than what happens when an organisation loses touch with its members as is the case with the National Union of Mineworkers. (Incidentally, the NUM has expressed its disappointment at Cutifani’s appointment and criticised the mining sector for remaining “… lily white at the top and at board level with a sprinkle of black here and there.”)
It’s not a foregone conclusion the palm-waving at Cutifani’s arrival at Anglo American will end with a ticker-tape parade. The so-called South African discount that sat so prodigiously on AngloGold’s share price was only ever ameliorated, never removed. In fact, those sovereign risks are probably more entrenched in the minds of Anglo American’s shareholders, especially in respect of the outright distress at Anglo American Platinum (Amplats), than at AngloGold.
Analysts say Cutifani will have sight of the conclusions regarding the review into Amplats’s mines, due shortly, which means then that the decisions will not just be inherited. In any event, Cutifani has dealt with difficult starts before. Remember Eskom, and how it switched off the power to the South African mining industry, only months after Cutifani had started at AngloGold?
On the positive side, Cutifani will be able to act with purpose and momentum when it comes to Minas Rio, the iron ore development in Brazil that helped deliver the fatal blow to the Anglo career of his predecessor, Cynthia Carroll.
The last injunction, one that was preventing construction of an electrical transmission line from the proposed site of Minas Rio, was lifted by the Brazilian authorities in December. This will allow Minas Rio to proceed. As for the capital overruns, it’s likely Cutifani will merely preside over hefty write-downs.
Thereafter, analysts say, he will probably manage the implementation of the mine’s first phase, then seek a partner for development of phase two.
According to SBS Securities analyst, Peter Davey, Cutifani will earmark people and portfolios for attention during his first few months at Anglo. This will almost certainly involve some executive changes. As for broader structural or asset changes, shareholders may be kept waiting.
In some respects, Cutifani is a conservative; almost defensive appointment for Anglo’s chairman, Sir John Parker. Whereas Carroll was the first outsider to run Anglo, Cutifani is something of a known quantity. He’s certainly well known in South Africa, doubtless a major factor in his appointment given the emphasis the South African government placed on home talent at Anglo.
As such, Cutifani is the closest Parker can get to meeting the demands of Government, and those of shareholders who will value in Cutifani his broad industry experience, which extends beyond North America, and his technical competence, which extends beyond gold.
Cutifani is also defensive in that he’s naturally restrained; cautious even. His reluctance to “dress down’ errant employees seems as much a feature of a desire for control as his humanity.
Similarly, he refrained from splitting out AngloGold’s South African assets from its international ones preferring always to exhaust his company’s and his executive’s ingenuity first.
It’s likely he’ll adopt a similar approach at Anglo, although he’s sure to be tested by the group’s restive shareholders.
