Anglo hires new debt-slashing finance director

ANGLO American has appointed Fortescue Metals’ chief financial officer Stephen Pearce as its new finance director to replace Rene Medori as it forges ahead with a huge sale of assets to cut its debt by half to about $6bn, writes Allan Seccombe.

Anglo will bring Pearce into the company at the end of January and he will take over as finance director on April 24 to replace the retiring Medori.

Pearce has been with Australian iron ore miner Fortescue since 2010.

“We believe an external appointment is a positive for Anglo American, particularly given critics have pointed to a lack of real change in management and strategy over the past few years,” said JP Morgan Cazenove. “Mr Pearce is widely well-regarded by the Australian investment community as an open and honest executive who is prepared to take tough decisions; we feel those qualities will be positive additions to the Anglo American management team,” it said.

Pearce had been “integral” in cutting Fortescue’s net debt to about $5bn by the middle of in 2016 from a peak of $10.5bn three years earlier, JP Morgan said. “In this context, we see the announcement as a positive for Anglo American as it continues its portfolio restructuring and business improvement [and] efficiency programmes, and targets net debt, reducing to about $6bn in the medium term.”

Anglo CEO Mark Cutifani said: “Stephen brings proven financial and commercial experience gained across the extractive and related industries.

“His strong relationships with the debt and equity capital markets have proven immensely valuable in his role at Fortescue, as has his work across complex cost and other efficiency performance programmes.”

Pearce, 52, has worked in mining, oil and gas industries for the past 30 years.

Medori will continue to oversee Anglo’s divestment programme to cut $13bn of debt by selling a range of bulk commodity assets as the company switches its focus to just diamonds, platinum and copper.

“It’s interesting that the very businesses that Anglo intended to dispose of have proved its salvation in the last nine months. Shareholders might have been disappointed had the company sold coal and iron ore assets earlier this year,” said Investec mining analyst Jeremy Wrathall.

“Fortunately, they have benefited from better-thanexpected cash flow, which has now transformed the group. They can now proceed to sell assets, if they wish, at better prices than would have previously been the case,” he said.

Medori leaves Anglo at the end of 2017, but will depart from the board at the annual general meeting on April 24 2017.

“Through the portfolio restructuring and business improvement and efficiency programmes, we will create a very different investment proposition for Anglo American’s shareholders,” said Pearce.

Mr Pearce is widely well-regarded by the Australian investment community