The head of mining giant Anglo American resigns amid social turmoil

The resignation announced on Friday of Cynthia Carroll, the head of mining giant Anglo American, the world’s number 1 platinum producer, did not surprise insiders, as the group strives to emerge from a violent social crisis in South Africa.”Shareholder discontent had been evident for some time,” Canadian bank BMO noted in an analysis.

Just last week, the CEO had traveled from London to South Africa for high-level talks and to try to extricate the group from the wave of wildcat strikes that continues to paralyze its platinum production. The world’s leading platinum producer, through its subsidiary Amplats, Anglo American is a nearly century-old company, headquartered in London but with the majority of its staff and operations in South Africa. The group employs 76,000 permanent staff in the country, out of 100,000 worldwide, according to its website. On Friday evening, the majority union, NUM, announced that Amplats management had agreed to rehire 12,000 striking miners who were laid off on October 5, as part of an agreement to try to end the strike. The agreement also includes a wage component.

The conflict lasted seven weeks, surpassing the duration of the Lonmin strike in Marikana, where the strike lasted six weeks and resulted in around fifty deaths. Between four and nine deaths were reported in settling of scores on the sidelines of the Amplats strike, including one person burned alive on October 11. Ms. Carroll’s resignation was expected by the markets, which knew that some shareholders and investors were increasingly hostile towards her. “Next year will mark seven years as CEO, and I feel it’s the right time to hand over the reins to a successor who can continue to build on the solid foundations we have laid,” explained the 55-year-old American executive, who had been at the helm of Anglo American since 2007. She also announced that she was stepping down from her positions at Amplats, as well as at De Beers, the South African diamond company, where she had just been appointed chairwoman. She will simply occupy her position until a successor is found.

The annual salary is enticing, with Ms. Carroll earning at least £2.174 million (€2.7 million) per year, according to the group’s 2011 financial report. However, the role is far from easy, and investors, frustrated by the share price in recent months, were clearly criticizing Ms. Carroll for not having fully realized the group’s potential. “Nevertheless, the announcement comes at a time when there is no designated successor and can be considered somewhat premature,” says BMO, which sees it as a negative omen for the Minas Rio project, a Brazilian iron ore mine where Anglo American could suffer further delays. BMO also observes that the absence of a known replacement “will likely increase instability for the company (…).”

Deutsche Bank analysts, on the other hand, clearly welcomed the arrival of a “fresh leadership.” They believe the transition is entirely “appropriate,” while hoping that the progress made thanks to Ms. Carroll’s political connections will not be lost, particularly in South Africa. Ms. Carroll was chosen in October 2006 to head the group and then reappointed by the general meeting in April 2012. The announcement of her resignation came the day after the presentation of the third-quarter 2012 results, at a time when Amplats, its platinum subsidiary, had never been under so much pressure. Platinum is sold to the automotive industry, but prices are tending to fall due to lower global demand, while electricity prices are rising in South Africa, increasing production costs. The first month of the strike cost Amplats 1.1 billion rand (98 million euros).

(AFP)