Australian gold mining executive Mark Cutifani, a one-time trainee miner, has been appointed chief executive of Anglo American, taking on what analysts and investors say is one of the toughest jobs in the business.
Cutifani, who will step down as chief executive of South African miner AngloGold in March, had been one of several outsiders in the running for the top job at Anglo after Cynthia Carroll quit in October. He was named as a frontrunner over the weekend.
Shares in Anglo, which have underperformed the sector by almost 20 percent since the start of last year due to strikes, delays and cost overruns, were up more than 2 percent in both London and Johannesburg, as investors welcomed a move many hope will herald a review of its underperforming assets and a restructuring of the portfolio.
“While Cutifani might not be the big profile of (rival miner Xstrata's CEO) Mick Davis, I would still see him as a reasonable appointment - external and with plenty of South African experience,” one of Anglo's 20 largest shareholders said.
“It is fair to say we think his biggest challenge is on the South African front, but we have been very concerned about the Minas Rio (project) in Brazil too.”
Cutifani, who takes over at Anglo on April 3, gave little detail on his plans for a group that has struggled with restive South African unions, budget blow-outs in Brazil and operational woes in Chilean copper.
He hinted at a review of Anglo's portfolio and said he would participate in an annual strategy review in July after three months at the helm, but declined to comment on key details, including whether he might consider splitting off assets such as Anglo's South African operations.
At AngloGold, he never excluded a spin-off of the group's South African operations and did not shy away from complex tasks including increasing exposure to the spot gold price by winding down a loss-making hedge book that could have sunk the company at the height of the crisis.
Anglo, like many of its peers, trades at a discount to the sum of its parts and has long been considered a break-up target, though analysts said an imminent, radical push from the new arrival was unlikely.
SOUTH AFRICAN CHALLENGES
Cutifani, a 54-year-old, straight-talking father of seven, will be only the second non-South African to run Anglo. But it was Cutifani's South African mining credentials - specifically five years at the helm of Johannesburg-based AngloGold - that were critical for the group when considering his appointment.
He was named head of the country's Chamber of Mines last year, and Anglo chairman John Parker said the country's government had responded “positively” to the appointment.
“Cutifani has very strong relations with labour, the various stakeholders ... He is a very strong character in the mining sector in terms of skills,” said Lesiba Seshoka, spokesman for South Africa's National Union of Mineworkers, adding the union would still have preferred a “previously disadvantaged South African” to take on the job.
Anglo, for which South Africa still accounts for more than half its forecast earnings, has battled South Africa's combative unions and faces a year of restructuring at its platinum arm, in a country where one in four people is unemployed, and where general elections are due in 2014.
Cutifani takes over just as Anglo prepares to unveil plans later this month for platinum arm Amplats, the world's largest producer of the precious metal, which has been battered by the wave of strikes that hit the South African industry last year, as well as escalating costs and weak European demand.
South Africa will not, however, be the only item on the to-do list for Cutifani, and his Brazilian experience will be welcomed as Anglo tackles problems at its flagship Minas Rio project, the iron ore unit it took control of in 2008.
Minas Rio, which was bought to diversify the group's operations, has become notorious as a top of the cycle deal that could now cost at least three times the original estimate.
Cutifani ran AngloGold from 2007, when he was plucked from Canadian mining group Inco, now part of Brazil's Vale . Despite facing falling production along with much of the rest of the sector, he turned the gold miner into one of the most efficient in the industry, boosted returns on capital, and introduced quarterly dividends.
AngloGold said that until Cutifani takes over, its chief financial officer and technical development head would act as interim chief executives.
Cutifani will receive a 1.2 million pounds ($1.9 million) basic salary, as well as bonuses tied to earnings per share, plus compensation for loss of incentives on leaving AngloGold. He will be required to invest in Anglo shares to the value of twice his basic salary within five years. - Reuters