Connect to share and comment

UPDATE 3-Australian mining veteran Cutifani to head Anglo

Thomson ReutersEnlarge
(/GlobalPost)

* Cutifani to take reins at Anglo American on April 3

* Has been CEO of AngloGold Ashanti since 2007

* Anglo shares trade more than 2 percent higher

By Clara Ferreira-Marques

LONDON, Jan 8 (Reuters) - 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.

http://www.globalpost.com/dispatch/news/thomson-reuters/130108/update-3-australian-mining-veteran-cutifani-head-anglo