We remain alert to the possibility of further risks developing, including a second wave of infection.
It can be tricky work rising through the ranks of a major organisation like Anglo American. Talent and skills are a base case requirement, but you also need good fortune. As Mkhwanazi can attest, there’s no more serendipitous circumstance than having a market tailwind. The iron ore price has been enormously supportive for Kumba, owing to supply interruptions in South America, and strong China demand. It once seemed a tad bleak for Mkhwanazi following his redeployment from Anglo Coal to Kumba in 2016.
Initially, the move seemed a change of firing squad given that newly-appointed Anglo American CEO, Mark Cutifani, earmarked both Kumba and the group’s thermal coal business for disposal, partly to raise funds to pay down debt. Then, suddenly, iron ore prices and sales volumes started rising again. Kumba subsequently churned profits becoming a hugely important source of income for Anglo. The end-result was Cutifani decided to hang on to Kumba. One of Mkhwanazi’s contributions has been the Tswelelopele campaign, partly aimed at extending the life of the firm’s mines to 2040, and unlocking an additional $10/t in profit margin improvement by 2022. By 2019 - two years after inception of the campaign - Kumba had improved its return on capital employed from 49% to 83%. The key test for Mkhwanazi this year will be advancing Kumba’s growth options.
In June, he unveiled the R7bn expansion of the firm’s Kolomela mine - its Kapstevel South project - whilst reining-in the payout. Overly cautious? Mkhwanazi fears further Covid-19 interruptions. The next step is an aggressive exploration strategy which aims to capitalise on the extensive blue sky potential in the Northern Cape’s iron ore fields.
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