Tests Await New Chief at Anglo American ; Choice of Gold Executive to Lead Platinum Giant Gets Nod from Analysts

By Werdigier, Julia | International Herald Tribune, January 9, 2013 | Go to article overview

Tests Await New Chief at Anglo American ; Choice of Gold Executive to Lead Platinum Giant Gets Nod from Analysts


Werdigier, Julia, International Herald Tribune


Mark Cutifani has the operational experience to improve earnings and the political connections in South Africa to navigate contentious topics, some analysts said.

Strikes at mines in South Africa, cost overruns at some projects and a share price that has been lagging rivals are just a few issues Mark Cutifani will have to deal with when he takes over as chief executive at Anglo American, the world's largest platinum producer.

Anglo American on Tuesday said Mr. Cutifani, the chief executive of the South African gold producer AngloGold Ashanti, would succeed Cynthia Carroll as chief executive in April. Ms. Carroll announced her resignation from the company in November after more than five years in the job.

The appointment of Mr. Cutifani won the approval of some analysts. They said he had the operational experience to improve earnings by reducing costs and increasing production, and the political connections in South Africa to be able to navigate contentious topics like the reduction of mining jobs.

The questions are whether Anglo American's powerful board of directors will allow him to push through his strategy and whether he will have enough time to do so before its distressed share price makes it a takeover target, said Paul Gait of Bernstein Research.

Mr. Cutifani has the "operating capability and he speaks very comfortably around technical issues at mining," Mr. Gait said. But "is he going to have the license to do what he wants to do?"

The list of Anglo American's challenges has grown in recent years. Minas-Rio, a large iron ore project in Brazil and one of Ms. Carroll's initiatives, is struggling with rising costs and delays because of licensing problems. In South Africa, the company has been affected by strikes over pay and working conditions. The activities, which had halted production, escalated in August when 34 miners died after the police opened fire at Lonmin's Marikana mine.

Anglo American also embarked on a review of its platinum business, which accounts for about 40 percent of global production but faces increasing costs, including wages. Shrinking the business might be welcomed by investors and analysts but would undoubtedly stir some political objection. As the largest supplier of platinum, Anglo American is an important employer in South Africa, which has the world's largest reserves of platinum. The company is to present the results of its review in coming weeks.

Faced with a share price lagging behind that of rivals, some shareholders have demanded Anglo American separate its South African business. …

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