London - Anglo American [JSE:AGL] CEO Cynthia Carroll
stepped down on Friday after more than five years in the job, under increased
pressure from investors over the miner’s lagging share price and continued
dependence on troubled South Africa.
A geologist by training, Carroll became the first non-South
African, the first woman and the first outsider to take the top job at Anglo
when she became CEO in 2007.
Brushing aside suggestions she was pressured to leave,
Carroll and chairperson John Parker, her long-standing supporter, said the
decision was her own, as she entered a seventh year in a “very gruelling and
Carroll’s efforts to streamline what was a sprawling
conglomerate, to cut billions in costs and to shift Anglo’s centre of gravity
away from South Africa initially won support.
But her relationship with investors became more troubled
after acquisitions like the Minas Rio iron ore project in Brazil, an early bid
to diversify Anglo’s portfolio, became mired in cost overruns and delays.
Anglo has yet to give a final cost estimate for the project
but analysts say they could rise to $8bn from current figures of $5.8bn.
“Institutional pressure has been building for some time to
replace Cynthia, so the news will be welcomed,” one of Anglo’s 15 largest
“Ultimately, running Anglo is one of the toughest jobs
around and, although Cynthia made a good start as CEO, the feeling is the
company has gone backwards in the last two to three years.”
Other investors also pointed to a mixed record at the top.
“Her strategic moves didn’t always hit the mark. The
acquisition of Minas Rio, promptly followed by a dividend cut, was a particular
low point,” another of Anglo’s 15 biggest investors said.
Crippling strikes in platinum and iron ore mines in South
Africa over the last weeks have revived long-standing worries over Anglo’s
exposure to the country, aggravating concerns about a share price that has
underperformed its peers.
Despite cost cuts, analysts at Macquarie say that under
Carroll, Anglo has lost one-third of its value on a US dollar market
capitalisation basis and is now worth $25bn less.
Other major miners are worth at least the same as they were
at the start of 2007.
So far this year, Anglo stock has lagged the sector by
almost 20%. Shares jumped on news of Carroll’s departure and at 08:25 GMT were
up 1.6% at 1887.5 pence, while the European basic resources index was down
0.7%. On the JSE Anglo shares opened 2.3% higher to R268.50.
The board said it would not rush to pick a successor for
Carroll and that the 55-year-old would stay in place until a replacement was
appointed, which could take months.
“For whoever comes in, the challenge of Minas Rio and the
challenge of restructuring the platinum industry in South Africa doesn’t go
away,” said analyst Des Kilalea at RBC in London. “To some extent, it’s
probably the most difficult mining company to manage at the moment.”
Industry analysts, industry sources and investors point to
at least two likely successors for Carroll - Brazilian Alex Vanselow, the
former chief financial officer of BHP Billiton [JSE:BIL] and South African-born
Mick Davis, the outgoing chief executive of Xstrata.
Parker - in a reference to a storm over Davis’ pay, one of
the highest on Britain’s FTSE - said Anglo could not afford him.
The biggest immediate challenge for Carroll’s successor is
likely to be South Africa, where strikes have spread to Anglo Platinum
[JSE:AMS], the world’s top producer of the precious metal. The unrest has
revived talk of a split or a cut in Anglo’s stake in Amplats - something
Strikes also hit Anglo’s Kumba Iron Ore [JSE:KIO] unit,
which alone accounted for almost half the group’s operating profit in the first
half of the year.
Kumba’s Sishen mine has begun to ramp back up, but Amplats
workers have not yet returned to the Rustenburg, Union and Amandelbult
operations, which include some of its most labour intensive shafts, and those
that have suffered deepest margin compression since 2008.