AngloGold's African ex­pert ap­pointed to run Vedanta

Financial Chronicle - - COMPANIES - THOMAS WIL­SON, FELIX NJINI & THOMAS BIESHEUVEL

ANIL Agar­wal hired AngloGold Ashanti’s Srini­vasan Venkatakr­ish­nan (in pic) to run his Vedanta Re­sources in a move that may hint at his plans for his global com­mod­ity port­fo­lio.

Venkatakr­ish­nan, 53, has been CEO of Jo­han­nes­burg­based AngloGold for five years and spent much of his ca­reer work­ing in Africa. That’s a first for a Vedanta CEO and points to the grow­ing im­por­tance of the In­dian group’s in­vest­ments on the con­ti­nent, where its as­sets in­clude Zam­bian cop­per and South African zinc.

Agar­wal, who is also min­ing giant An­glo Amer­i­can’s big­gest share­holder, high­lighted Venkatakr­ish­nan’s African ex­pe­ri­ence in a state­ment on Mon­day.

"It is in­ter­est­ing that Vedanta so clearly seems to be tar­get­ing South Africa as a key part of their strat­egy," said San­ford C Bern­stein an­a­lyst Paul Gait. "Hav­ing a South African back­ground, South African ex­pe­ri­ence and the abil­ity to ne­go­ti­ate in a South African en­vi­ron­ment is clearly some­thing that Agar­wal and Vedanta value."

Venkatakr­ish­nan was CFO of Ashanti Gold­fields be­fore its merger with AngloGold, where he served as fi­nance chief for eight years un­til his pro­mo­tion to CEO. Dur­ing that time, he worked for six years along­side then-CEO Mark Cu­ti­fani, who now holds the top job at An­glo Amer­i­can.

Agar­wal sur­prised An­glo Amer­i­can’s man­age­ment last year when he took a 21 per cent stake in the com­pany, a move that has left the mar­ket spec­u­lat­ing over his long-term in­ten­tions for the blue chip min­ing com­pany. In 2016, he pro­posed a tieup be­tween An­glo and the zinc unit of Vedanta, and he said last year the com­bi­na­tion would have been a good match.

"It’s hard not to see these events as some­how con­nected," Bern­stein’s Gait said. Agar­wal, who has been hunt­ing for a new Vedanta CEO for more than a year, has con­sis­tently sought tal­ent from the world’s big­gest min­ers. He hired for­mer Rio Tinto Group CEO Tom Al­banese as chief ex­ec­u­tive in 2014 and for­mer An­glo Amer­i­can head Cyn­thia Car­roll worked as an ad­viser un­til last year.

Venkatakr­ish­nan’s South African ex­pe­ri­ence looks more im­por­tant than his cor­po­rate ex­pe­ri­ence, Gait said. Agar­wal has been a vo­cal sup­porter of the coun­try, ar­gu­ing that An­glo Amer­i­can should re­main com­mit­ted to its as­sets there.

“Africa is to­mor­row’s ris­ing sun,” Agar­wal said in an in­ter­view last week in the Zam­bian cap­i­tal Lusaka. He’s told An­glo Amer­i­can that “you have to look at Africa, you have to in­vest in Africa,” he said.

Still, Venkatakr­ish­nan’s ten­ure as chief ex­ec­u­tive of An­glo-Gold hasn’t all been smooth sail­ing. The com­pany was forced to scrap a $2.1 bil­lion share sale and plan to split its South African and in­ter­na­tional as­sets in 2014 af­ter an in­vestor re­volt.

And even though that plan failed, the com­pany has con­tin­ued to re­duce its foot­print in South Africa, where ag­ing in­fras­truc­ture, re­serve de­ple­tion and ac­ci­dents raised costs and put pres­sure on out­put. Last year AngloGold agreed to sell two mines in a deal that halved the gold pro­ducer’s South African pro­duc­tion.

That doesn’t re­flect poorly on Venkatakr­ish­nan, said Yatish Chowthee, an an­a­lyst at Mac­quarie Group.

"He in­her­ited a com­pany that was nav­i­gat­ing through dif­fi­cult times and sell­ing the South Africa as­sets was prob­a­bly the best de­ci­sion given the en­vi­ron­ment," Chowthee said. "He should fit in there, given the way Agar­wal wants the com­pany to go for­ward."

Vedanta de­clined 3.9 per cent by 1:57 PM in Lon­don on Mon­day. The shares have lost 11 per cent this year, valu­ing the com­pany at about $2.8 bil­lion. The com­pany also has iron ore, alu­minum and oil as­sets in In­dia and plans to dou­ble its In­dian cop­per ca­pac­ity by 2020. AngloGold’s stock has dropped 13 per cent in the same pe­riod.

Vedanta, which is set to be­gin pro­duc­tion at its new Gams­berg zinc mine in South Africa, had been search­ing for a new CEO since Al­banese’s de­par­ture last year.

His hir­ing points to the grow­ing im­por­tance of the group’s in­vest­ments on the African con­ti­nent

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