Market

End of an period at Anglo American as Mark Cutifani steps down

Anglo American’s annual shareholder assembly subsequent week will mark the tip of an period as chief government Mark Cutifani steps down after nearly a decade on the high of one of many world’s largest mining teams.

The affable however pugnacious Australian has turned the London-listed miner from an business laggard to a frontrunner that many now reckon has higher progress prospects than its bigger friends Rio Tinto and BHP.

None of this was apparent when the previous engineer took cost in 2013, and far much less so in late 2015, when a brutal downturn in commodity markets introduced the debt-laden firm, which owns De Beers and is a serious producer of copper, iron ore and platinum, to the brink of collapse.

But the 63-year-old insists he by no means misplaced religion even when Anglo’s market capitalisation, which now stands at £55bn, slumped to lower than £4bn in early 2016. In truth, the debt disaster that engulfed the group gave him the “burning platform” wanted to shake it up.

“I tried to use the urgency of what was going on and turn it into a real ambition for us, which is what I think we have done,” Cutifani mentioned in an interview.

Anglo is actually a really totally different firm in the present day. Although it now has 37 mines, in comparison with 68 in 2013, its output is 10 per cent greater and can climb additional this 12 months when a giant new copper mine in Peru comes on-line.

Surging commodity costs over the past couple of years have helped Anglo restore its steadiness and pay chunky dividends. Total shareholder returns — with dividends reinvested — have averaged 15.7 per cent a 12 months throughout Cutifani’s tenure. That rises to nearly 18 per cent when the latest demerger of its South African coal enterprise is considered.

Cutifani, who joined the corporate from South African gold producer AngloGold Ashanti, has been handsomely rewarded, along with his pay bundle swelling to nearly £15mn in 2018. He took house nearly £10mn final 12 months.

Line chart of Share price (£) showing Anglo American shares have risen following rocky start for Cutifani

“Under Mark’s leadership Anglo has undergone a dramatic turn around — both in operating performance and culture — with significant returns for shareholders,” mentioned one high 20 investor. “He led a rebuilding of trust with financial markets, and he will be missed by investors.”

Reflecting on his early days at Anglo, Cutifani factors to a few key adjustments. One was to outline the corporate’s enterprise mannequin extra clearly — a topic colleagues say he has a spiritual zeal for.

“Being clear about how you are making money in mining is really, really important. That’s why Harry Oppenheimer [son of Ernest] was so successful,” he mentioned. “But when I arrived I don’t think many of the executives really understood it. They didn’t see how or where to make money.”

The second was to take again management from the final managers of its mines.

“I told the GMs, Tony [Tony O’Neill, Anglo’s technical director], will tell you how to mine the ore body through its life and you are responsible for executing and improving that,” he added. “If you have a better idea great but you don’t get to screw up our ore body.”

It has not all been easy crusing for Cutifani, who cast a robust bond with Anglo’s former chair Sir John Parker. Cutifani was criticised in 2016 for backtracking on a plan to concentrate on simply copper, diamonds and platinum and promote its bulk commodity property. “I wouldn’t call it a U-turn, more of a hard left [turn],” he mentioned on the time.

He additionally needed to see off predatory curiosity from Indian metals tycoon Anil Agarwal and the jury continues to be out on Anglo’s 2020 buy of Sirius Minerals, proprietor of an enormous deposit polyhalite — a sort of nutrient-rich fertiliser — that lies 1,500 meters under a National Park on the North Yorkshire moors.

Anglo warned in December warned that it’ll take one other 12 months to determine the prices and schedules for the multibillion-pound venture, which some analysts reckon already has the “air of a capex overrun.”

Cutifani professes to be very pleased with the venture, arguing it would have extra manufacturing capability than envisaged by its earlier proprietor.

Duncan Wanblad, who will formally succeed Cutifani as chief government after the AGM on Tuesday, insists that although the “low hanging fruit has dropped” there may be “still an enormous prize if we can get all our operations working to their full potential and consistently so.”

Wanblad, who will develop into the primary South African to run Anglo since Tony Trahar left in 2007, says his rapid priorities are security, delivering Anglo’s pipeline of natural progress tasks, retaining prices below management and honing the operational mannequin launched by Cutifani and O’Neill.

It isn’t just Anglo’s monetary efficiency that has improved below Cutifani. In the most recent Responsible Mining Index, a broadly adopted business evaluation, Anglo scored the best marks in 5 out six classes, together with financial growth, neighborhood wellbeing and environmental accountability.

Done responsibly, Cutifani says mining will help raise communities and international locations out of poverty.

“The people who we will impact most when we do our business and our work are local communities,” he mentioned. “You have to get those relationships right otherwise you don’t have a future as an industry because no one is going to want us mining next door.”

The energy of these relationships was evident throughout a farewell dinner at Vergelegen, the corporate’s South African wine property, the place the dignitaries included the Archbishop of Cape Town and the nation’s mining minister Gwede Mantashe.

“Mark, you are an honorary citizen of South Africa, your passport is being processed,” Mantashe quipped throughout his speech.

Vergelegen was one of many property Cutifani was below stress to promote in the course of the 2015 debt disaster, however aware of the corporate’s presence and roots in South Africa — Sir Ernest Oppenheimer based Anglo 105 years in the past in Johannesburg — he resisted. Anglo as an alternative offloaded its niobium and phosphates enterprise for $1.5bn to a Chinese purchaser.

Cutifani was much less sentimental concerning the firm’s company jet, which he offered, and its former headquarters close to Buckingham Palace. Anglo is now primarily based within the former De Beers head workplace on the outskirts of London’s monetary district.

“He has transformed Anglo American from an industry laggard into an industry leader,” mentioned Jim Rutherford, who served as a non government director at Anglo for simply over seven years from November 2013. “He has very deliberately set the tone from the top and that tone in turn has permeated throughout the entire company.”

As for all times after Anglo, Cutifani intends to remain on the board of TotalEnergies, the French vitality group which has resisted calls to promote its Russian fuel property. Cutifani says he helps Total’s stance.

The mining sector is off limits to the Australian till the center of 2023 due to a non compete clause in his contract. “That gives me time to look at other stuff,” says Cutifani, although he refused to touch upon whether or not he was approached to be the chair of Rio.

After 40 years within the business, Cutifani says mining will all the time stay near his coronary heart and he stays a cheerleader for it.

“Most people don’t realise that mining is absolutely critical to almost everything we do as a society,” he mentioned. “So anybody who says we can do without mining or divests out of mining hasn’t got a good grip on reality.”

Source hyperlink

Leave a Reply

Your email address will not be published.