Johannesburg - Among the unhappy shareholders firing questions at CEO Cynthia Carroll and chairperson Mark Moody-Stuart at the recent Anglo American annual general meeting (AGM) was none other than Barry Davison - former CEO and chairperson of Anglo Platinum (AngloPlat) and former executive director of Anglo American.
He was given short shrift by both executives, although Anglo spokesperson James Wyatt-Tilby described the exchanges as "polite".
Davison wanted to know the reasons for AngloPlat's poor performance. He cited a drop in output of 559 000 ounces of platinum between 2006 and 2009, as well as a 31% annual rise in costs for the three-year period.
Carroll retorted that AngloPlat had "serially" failed to meet production and cost forecasts for years, and reminded Davison there was a stated production target of 3.5 million oz which was not met when he "was involved".
That target was set by Davison as part of AngloPlat's strategy to grow the overall platinum business and expand its share of the market. He maintained for years that it would be met, despite growing analyst scepticism.
Carroll also pointed out to Davison that AngloPlat met its 2008 production targets despite floods and power problems, and was a safer business for its employees to work in.
It's unprecedented for a retired senior Anglo executive of Davison's stature to quiz current management in such a manner in a public forum like the AGM.
Davison in denial
However, he is the second top ex-Anglo executive to take a swipe at Carroll. Former CEO Tony Trahar sharply criticised the decision to pass the final dividend in an interview with the Financial Mail (FM).
Carroll refused to comment when asked by Miningmx what she thought of Davison's actions.
But, as she effectively implied in her responses, Davison is on thin ice given his history with the group.
The roots of many problems AngloPlat continues to grapple with can be traced back to his watch as long-running executive chairperson and CEO, before he handed over the reins to new CEO Ralph Havenstein in July 2003.
Davison remained non-executive chairperson of AngloPlat until he retired in November 2006, after stepping down as an executive director of Anglo American in December the previous year.
Within a month of taking over, Havenstein confirmed some of the market rumours over production problems at AngloPlat.
In December 2003 he officially announced a delay to AngloPlat's ambitious plans to produce 3.5 million oz of platinum annually. Davison had been denying assessments by various analysts that this might happen for the previous two years.
JP Morgan analyst Steve Shepherd told the FM on December 12 2003 that "on our numbers their (AngloPlat) cost control has been the worst in the peer group. All major mining projects have failed to deliver, in time, quantities of metal anywhere near design output.
"We think management's failure to deliver optimum efficiency from operations and projects is a key reason why the group's strategy appears to be unravelling."
Turning around AngloPlat is clearly similar to the old adage about changing course on a supertanker. It takes a lot of time.
Bust-up with Carroll
Havenstein's honeymoon period eventually ran out. He came in for severe criticism in February 2006 for another year of underperformance, although his detractors at that time made it clear the problems were long-standing.
Shepherd told FM on February 17 2006 that "for 10 years we have been listening to management advising that costs were about to improve - but they have not. AngloPlat has underperformed all its peers in this respect."
Fidelis Madavo - now with the Public Investment Corporation but then an analyst with Citigroup - told Havenstein at the group's results presentation in February 2006 that "we hear year in and year out that things are going to get better, but it's just not happening".
Havenstein abruptly resigned from AngloPlat in August 2007 after a bust-up with Carroll over safety issues on the group's operations.
He was replaced by Neville Nicolau who has been running AngloPlat from the beginning of June 2008, so he's been in the hot seat for just under a year.
But under Nicolau the group's performance has continued to deteriorate. In February, AngloPlat passed its final dividend and announced cutbacks that would shed 10 000 jobs from its mines in 2009.
Also in February, Nicolau announced sweeping management changes including a restructuring of AngloPlat's major mines. He abandoned the target of a 5% annual rise in production to meet forecast increases in long-term platinum demand.
- Miningmx.com
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