End of an era at Anglo American with the departure of Mark Cutifani

Anglo American’s annual shareholders’ meeting next week will mark the end of an era as chief executive Mark Cutifani steps down after nearly a decade at the helm of one of the world’s biggest mining groups.

The affable but pugnacious Australian has transformed the London-listed miner from an industry laggard into a leader that many now believe has better growth prospects than its big peers Rio Tinto and BHP.

None of this was evident when the former engineer took over in 2013, let alone in late 2015, when a sharp downturn in commodity markets brought the debt-ridden company, which owns De Beers and is a major producer of copper, iron ore and platinum, on the verge of collapse.

But the 63-year-old insists he never lost faith even when Anglo’s market capitalization, which now stands at £55billion, fell to less than £4billion. sterling at the start of 2016. In fact, the debt crisis that engulfed the group gave it the ‘platform’ to shake it up.

“I tried to use the urgency of what was happening and make it a real ambition for us, which I think we did,” Cutifani said in an interview.

Anglo is certainly a very different company today. Although it now has 37 mines, compared to 68 in 2013, its production is 10% higher and will increase further this year when a large new copper mine in Peru comes on stream.

Soaring commodity prices over the past two years have helped Anglo restore its balance and pay large dividends. Total shareholder return – with dividends reinvested – has averaged 15.7% per year during Cutifani’s tenure. This figure rises to nearly 18% if the recent spin-off of its South African coal business is taken into account.

Cutifani, who joined the company from South African gold producer AngloGold Ashanti, has been handsomely rewarded, with his salary package reaching almost £15m in 2018. He won almost £10m l ‘last year.

Share price line chart (£) showing Anglo American shares rose after a tough start for Cutifani

“Under Mark’s leadership, Anglo has experienced a dramatic turnaround – both in operational performance and culture – with significant returns for shareholders,” said one of the top 20 investors. “He led a rebuilding of confidence with the financial markets, and he will be missed by investors.”

Looking back on his early days at Anglo, Cutifani points to some key changes. One was to more clearly define the company’s business model – something his colleagues say he has a religious zeal for.

“It’s really, really important to be clear about how you make money in mining. This is why Harry Oppenheimer [son of Ernest] was such a hit,” he said. “But when I arrived, I don’t think a lot of executives really understood it. They did not see how or where to make money.

The second was to regain control from the general managers of its mines.

“I said to the GMs, Tony [Tony O’Neill, Anglo’s technical director], will tell you how to operate the ore body throughout its life and you are responsible for execution and improvement,” he added. “If you have a better idea, that’s fine, but you can’t screw up our ore body.”

It hasn’t all been easy for Cutifani, who has forged a strong bond with former Anglo chairman Sir John Parker. Cutifani was criticized in 2016 for backtracking on a plan to focus solely on copper, diamonds and platinum and sell off its commodity assets in bulk. “I wouldn’t call it a U-turn, more like a left turn [turn]“, he said at the time.

He also had to fend off predatory interest from Indian metals tycoon Anil Agarwal and the jury is still out on Anglo’s 2020 purchase of Sirius Minerals, owner of a huge deposit of polyhalite – a type of nutrient-rich fertilizer – which sits 1,500 meters below a National Park in the North Yorkshire moors.

Anglo warned in December that it would take another year to work out the costs and timetables for the multi-billion pound project, which some analysts said already “looks like a capex overrun”.

Cutifani says he is very satisfied with the project, arguing that it will have a production capacity greater than that envisaged by its previous owner.

Duncan Wanblad, who will officially succeed Cutifani as chief executive after Tuesday’s AGM, insists that while the “low-hanging fruit has dropped” there is “still a huge price tag if we can do operate all of our operations to their full potential and consistently.” so.”

Wanblad, who will become the first South African to lead Anglo since the departure of Tony Trahar in 2007, says his immediate priorities are security, completing Anglo’s pipeline of organic growth projects, controlling costs and improvement of the operational model introduced by Cutifani and O’Neill. .

It’s not just Anglo’s financial performance that has improved under Cutifani. In the latest Responsible Mining Index, a widely followed industry assessment, Anglo achieved the highest scores in five of six categories, including economic development, community wellbeing and environmental responsibility.

Done responsibly, Cutifani says mining can help lift communities and countries out of poverty.

“The people we will have the most impact on when we do our business and our work are the local communities,” he said. “You have to build these good relationships or you don’t have a future as an industry because nobody wants us to operate next door.”

The strength of those relationships was evident at a farewell dinner at Vergelegen, the company’s South African winery, where dignitaries included the Archbishop of Cape Town and the country’s mines minister, Gwede Mantashe.

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

Vergelegen was one of the assets Cutifani was under pressure to sell during the 2015 debt crisis, but aware of the company’s presence and roots in South Africa – Sir Ernest Oppenheimer founded Anglo 105 years ago years in Johannesburg – he resisted. Anglo instead sold its niobium and phosphates businesses for $1.5 billion to a Chinese buyer.

Cutifani was less sentimental about the company’s business jet, which he sold, and its former headquarters near Buckingham Palace. Anglo is now based in the former De Beers headquarters on the outskirts of London’s financial district.

“He transformed Anglo American from an industry laggard to an industry leader,” said Jim Rutherford, who served as Anglo’s non-executive director for just over seven years from November 2013. “He very deliberately set the tone from the top and that tone in turn permeated the whole company.

As for life after Anglo, Cutifani intends to stay on the board of TotalEnergies, the French energy group that has resisted calls to sell its Russian gas assets. Cutifani says he supports Total’s position.

The Australian is banned from mining until mid-2023 due to a non-competition clause in his contract. “It gives me time to look at other things,” Cutifani said, although he declined to say if he had been approached to be Rio’s president.

After 40 years in the industry, Cutifani says mining will always remain close to her heart and she remains a cheerleader.

“Most people don’t realize that mining is absolutely essential to almost everything we do as a society,” he said. “So anyone who says we can do without mining or divest from mining doesn’t have a good grip on reality.”

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