Still surprised by Trahar exeunt

[] — THE orchestrated departure of Anglo American accountant-CEO, Tony Trahar, some two years before the group imposes its mandatory retirement age, has raised a few eyebrows. Trahar, speaking at the group’s annual general meeting last week – when his impending retirement was formally announced – indicated that his quitting was anticipated. Others were still surprised.

“The question is whether I’m surprised he’s going now,’ said Mike Schroder, fund manager at Old Mutual Asset Management. “Well, I really wouldn’t like to speculate on that.’

David Shapiro, an analyst at Sasfin, said that Trahar seemed to be leaving just as he was gaining some traction in the market. “Don’t guys in their late fifties start to develop some intellectual understanding?’

First, though, Trahar wants to finish the group’s restructuring (unveiled last year), in which a number of non-core assets, such as Highveld Steel & Vanadium, are to be sold. Another aspect of the restructuring is the separate listing or sale of Mondi, the paper and packaging group that Trahar built and on which his reputation was established.

Anglo chairman Mark Moody-Stuart termed the restructuring “the most significant change in the shape of our business since our listing in London’ in 1999. Not all agree with that. Interestingly, the restructuring is considered a microcosm of Trahar’s tenure at Anglo, which dates from 2000.

Anglo has been seen as the less preferred option of the large British mining houses Rio Tinto and BHP Billiton. Even the smaller Xstrata, led by former Billiton financial director Mick Davis, is seen as a more attractive option than Anglo, owing to its aggressive acquisition policy.

By contrast, Anglo has sold non-core assets worth around $9bn since 1999 and added a number of non-mining ones, including industrial minerals, as well as retaining 51% control of AngloGold Ashanti for longer than some liked.

Under Trahar’s watch, it’s thought that Anglo also misread the commodity market. Trahar believed that Chinese demand for commodities, which started to gather momentum in 2001, would result in a “soft landing’. That soft landing never occurred.

In fact, the restructuring of which Moody speaks – in which Anglo is more rigidly developing its mining only profile – is seen as a belated recognition that the commodity boom will take longer to run its course than anticipated by Anglo.

“BHP Billiton definitely had a Brian Gilbertson legacy. I don’t know if Anglo has the same with Trahar. He helped build Mondi. That’s a plus,’ said Des Kilalea, a mining analyst at Nedbank Group.

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An obvious question is whom Anglo will get to run the company, said Kilalea. Interestingly, there are no immediate options raising the possibility that Anglo might have to cast its net externally – for the first time. Normally, Anglo top dogs boast Oxbridge qualifications and “serve penitence on the Anglo committees for years,’ said Shapiro.

This time the group may have to attract an outsider, which introduces more uncertainty into the strategic director of the slimmed down group. One analyst in London reckons that’s a scenario in which Anglo could find itself a target for merger or acquisition strategy by a company with keen and focused management.