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Carroll: Every single life lost killed me

Dec 05 2012 09:45 David McKay - Miningmx


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GOLD FIELDS LIMITED [JSE:GFI]

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Anglo American Plat Ltd [JSE:AMS]

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Last Updated: 18-12-2014 at 04:35. Prices are delayed by 15 minutes. Source: McGregor BFA

ANGLO AMERICAN PLC [JSE:AGL]

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Last Updated: 18-12-2014 at 04:36. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - Speaking at the Gordon Institute of Business Science (Gibs) today, Anglo American's departing CEO, Cynthia Carroll, spoke passionately of her hopes and fears for South Africa as a mining economy.

And while it may not be a swansong - who knows how long it will take to find a replacement for Carroll at Anglo? - her comments did have something of the valedictory about them. First, though, the headline news.

The long-held view that former Amplats CEO, Ralph Havenstein, ended his career at the company following a clash with Carroll over safety was confirmed. In near narrative style, Carroll recounted an exchange between the two prior to shutting the firm's Rustenburg mine for a week in 2008.

Hearing of another fatality, Carroll said she made an instant decision to shut the mine. Havenstein, not named by Carroll, responded that fatalities were a fact of mining in South Africa's platinum sector. It was dangerous. More dangerous though (at least to Havenstein) was his flippancy. "Not under my watch," Carroll shot back.

Havenstein resigned shortly thereafter. Interestingly, the South African government vigorously and broadly adopted Carroll’s procedure of shutting shafts when an accident had occurred. Until that point, it was virtually unheard of; now, it's a law enthusiastically applied.

It's fitting that questions of mining safety should be a highlight of Carroll’s presentation at Gibs. It will be the hallmark of her tenure at Anglo. "Every single life lost killed me," she said. In 2007, Amplats reported 25 fatalities compared to 11 in its 2011 financial year.

Still, safety improvements don't seem to have been enough on their own to keep Carroll at Anglo beyond the current five-year stint. Shareholders, particularly international ones, don't align with the national interest; not really.

So it's poignant Carroll should warn the listening audience at Gibs, which included Nick Holland, CEO of Gold Fields, the view international investors take of the risks posed by regulatory uncertainty, and lawlessness.

"We need more dialogue, we need to say what we're really thinking. We need transparency," she said in reflection of the last four months in South Africa which has seen fatal protest, job losses, and the suspension of production at Amplats' mines at a cost of R3.4bn in revenue.

"South Africa will only succeed if it fosters an environment that encourages business. International investors will not be comforted ... they will make judgements on reality, on what they can see," she added.

The State Intervention in Mining (Sims) report contained good and bad ideas of which a proposed resource rent tax qualified under the latter category. It was a proposal that to Carroll seemed "unnecessary and unwise".

Also considered unwise was any plan to divide the company. In the wake of Gold Fields' unbundling of its South African assets, it is now deemed appropriate for virtually any mining company operating in the country, and with international assets, to adopt a similar strategy.

"It's not on the agenda; we have a commitment to investing here ... This is where the resources are," Carroll said, and made reference to the $2.5 trillion estimate placed on South Africa's unmined resources. The figure comes from a Citi report, if memory serves, and has been criticised as a distortion because it ignores the fact that resources need to be economic.

Carroll should know. Referring to the business review of Amplats' platinum mines, Carroll said some tough decisions would be made; economic reality could not be defied: unfit businesses collapsed and died, she said.

"We will not shirk from telling the tough choices. For the sake of all our stakeholders - we have to create a business that is competitive for the future. A business with the right size and shape to compete successfully in the global market," she said.

For more mining stories go to Miningmx.com



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