Intrigue rocks Impala Platinum

[] — I HAVE been covering mining in South Africa for longer than I care to remember, so believe me when I tell you that last week’s dismissal of Impala Platinum (Implats) chairman Fred Roux was extraordinary.

The potential implications go way beyond what has happened so far, raising issues about the future of the Implats board and of CEO David Brown.

Roux made public a document which pointed to various intrigues, disputes and agendas at Implats board level the day after he was fired as chairman of the world’s second-largest platinum producer.

He also confirmed a rift between himself and Implats CEO David Brown which in itself is big news, given their history.

Roux was the prime motivator for the appointment of Brown to the top job in 2006 when he replaced former CEO Keith Rumble a year ahead of Rumble’s planned departure.

All these guys – Roux, Brown, Royal Bafokeng Holdings CEO Niall Carroll, Mvelaphanda director Mark Willcox and Implats acting chairman Michael McMahon – are corporate heavyweights, so when they fall out like this with conflicting opinions you better sit up and pay close attention.

It’s necessary to take a step back in an attempt to try and understand what is really going on here.

There are two critical fundamental issues. The first is that Implats has been performing badly at the operational level for some time and that has to be fixed.

The second concerns the board’s role in that repair process, and its relationship with the executive management.

It appears there has been a breakdown in the relationship between the non-executive directors and the executive directors on the board and, in particular, between the chairman and the CEO.

That has huge implications for the running of the group, because it’s the board that ultimately has the final say.

A platinum industry source suggests there was a major bust-up between Roux and Brown over strategic decisions on Implats’ future such as whether Implats tries to make further acquisitions or sticks to development of its new, deep-level shaft systems.

The source also reckoned another bone of contention was Roux’s style as chairman, which he described as “more executive than non-executive’.

Roux denies the allegation of a bust-up over strategy. Speaking about his business style, he said: “My approach is to be more engaged than disengaged. Certainly, I was more engaged as chairman than my predecessor but any suggestion that I tried to act as the CEO is nonsense.’

He said: “The Implats board has a reputation for being liberal in its approach, but that all changed last Thursday. I have written to the board, telling them I am considering my options and that includes the legal option over my unfair dismissal.’

In his 2009 chairman’s statement published at the end of August, Roux got stuck into management for Implats’ “underwhelming production performance’.

He said: “Management must shoulder a great deal of the blame for this production performance as poor forward planning, substandard delivery against production targets and poor delivery against plan on the new decline shaft projects have been major contributory factors.’

Roux reckoned that was an issue straining his relationship with Brown.

McMahon rejects that and describes the suggestion as “nonsense’.

He said: “The company clearly is under pressure which creates tension at board and executive level but, that’s normal under these kind of circumstances.

“Fred took issues that were manageable and not unusual for a company under stress, and unilaterally turned them into a crisis which required an immediate solution by the board.’

Another view on the way the Implats board operates is that contained in the letter sent by former Implats director Lex van Vught to the board on June 4 2009 after his resignation.

Van Vught is a highly experienced and respected businessman. Miningmx has obtained a copy of this letter. When approached, Van Vught refused to comment.

In the letter he referred to “the endemic and of late increasingly poor relationship between the board and management. An historical “us and them’ rather than a team culture exists and the blame for this cannot be laid at the door of management.’

Van Vught said: “I have also been saddened by the meting out of unnecessary harshness by some of my colleagues towards management at board and subcommittee meetings, bordering at times on public humiliation.

“This bullying style is compounded by a constant stream of requests for more information, detail or work, mostly immaterial to the performance or strategic destiny of the company.

“As a consequence, and I know this for a fact, key members of the executive (as did their predecessors) feel diminished and demotivated and loathe the quarterly board meeting cycles.’

Van Vught added that “I am of the view that a couple of my colleagues have served on the board for too long and that some have not fully made the transition from an executive to non-executive role. Fresh perspectives and relationships are required. King also seems to frown upon too long a tenure. “

Van Vught does not name any names, but there are two obvious directors who were executive and are now non-executive – McMahon and Vivienne Menell.

Roux has declined to comment on Van Vught’s letter.

As for Brown, opinion seems split over his capabilities and future.

An inside source said: “He’s the best man for the job I have come across. He’s passionate and totally committed, but he has not delivered a great performance although that is not necessarily of his own making because he has to answer to the board.’

Another rated Brown as an “excellent’ leader and motivator but questioned his strategic vision and toughness, stating that – in particular – Brown did not take criticism well.

There could be a lot more to come in this particular saga.