Veteran’s return sparks Gold Fields succession talk

Goodlace appointed director and could be fit successor to CEO Holland

POTENTIAL: The mechanised South Deep mine is the crown jewel in South Africa’s faltering gold-mining industry, but has failed to reach its full potential THE return of Terence Goodlace — who worked for Gold Fields for close on three decades — after an eight-year hiatus raises the prospect that his appointment may be part of a broader succession plan.

He was a highly regarded CEO during his four-year tenure at the world’s second-biggest platinum miner, Impala Platinum, and some analysts believe that should Gold Fields’ Nick Holland step down, Goodlace would be a good candidate to replace him.

Cadiz Corporate Solutions mining analyst Peter Major said although Goodlace had probably been getting close to “burnt out” at Impala, he would make a good CEO.

“Here is a mining exec that appreciates all the problems of mining and he knows how to operate under a constrained budget, he knows how to deal with government and labour, and one thing about a mining guy is that it is harder to dupe a mining executive than it is a financial executive.”

Holland has been CEO of Gold Fields since May 2008, having taken over from Ian Cockerill. A few months after his appointment, Goodlace, who at the time was chief operating officer at the company, left to take over Metorex.

The copper producer was delisted in 2012 after being taken over by the Jinchuan Group. That year, Goodlace took over Impala, but he relinquishes that position at the end of this year.

Last week, Gold Fields announced the appointment of Goodlace as a nonexecutive director as of next month.

This position “gives him a little bit of a breather . . . he did need a break from Impala as the pressure might have been unbearable”, Major said.

Gold Fields’ South Deep is the only operation the company has in South Africa after unbundling its assets to form Sibanye Gold in 2012. South Deep is the crown jewel in South Africa’s declining gold-mining industry because of its mechanised nature, but has failed to reach its potential and has been through a series of management changes.

Gold Fields chairwoman Cheryl Carolus said Goodlace would definitely assist in ensuring the mine reached its full potential, and that he had the right skills and would add value to the company. “He understands mining, particularly with South Deep, which is a key challenge for us.”

Asked whether the appointment of Goodlace was a strategic move in succession planning, Carolus said: “I think the last thing Terence wants is another job. I don’t think that it’s on Terence’s [schedule] or on our radar at all.”

Holland has managed to survive both the 2007-08 crisis and the end of the commodity super-cycle, triggered by China’s insatiable appetite for raw materials. Both AngloGold Ashanti, Africa’s biggest gold miner, and Harmony, the third-biggest, have seen changes to their C-Suite.

The biggest criticism of Holland’s tenure has been about the management of South Deep. Major said Holland had been there long enough for shareholders to determine whether he added value or not.

Holland should wait out the decisions he had made at South Deep to see whether they had worked, instead of passing the baton to any successor, Major said, comparing some of the choices made at the mine to those LOOKING AHEAD: Cheryl Carolus made when cracking a safe or solving a Rubik’s cube.

“For years you have been trying and now you think you have found a way to get the colours to line up . . . That’s why you need a good board to stand back enough to be objective, but also close enough to know what’s makebelieve and what’s real.”

Since his appointment as CEO, Holland has overseen a 26% fall in the company’s valuation, still better than Harmony’s more than 44% fall.

AngloGold Ashanti’s shares, over the same period, have declined just under 8.5%.

The price of gold has risen about 50% in that time.

BP Bernstein portfolio manager Makwe Masilela said Holland had stayed on longer than his rivals because he had made some good decisions, especially by unbundling Sibanye, which is one of the successful gold-mining companies on the JSE.

Since listing in February 2013, its value has more than tripled.

“That [Sibanye unbundling] helped to unlock a lot of shareholder value . . . That to me is one of the outstanding things Holland did and the shareholders realised the value and at the right time — when everybody was still struggling, when shareholders were bleeding,” said Masilela.

If Holland considered stepping down right now, Masilela said, it would be timeous as he would be remembered positively because of the Sibanye experience.

While mining analysts were largely positive on Goodlace, many doubt whether he would be open to an executive appointment at the moment.

Izak van Niekerk, an analyst at Mergence Investment Managers, said Goodlace had “taken a lot of strain” as Impala CEO and he was not sure whether Goodlace would be interested at being Holland’s successor.

“He was under a lot of stress in that role. I think his purpose is to get something less demanding, especially with fatalities in the mines. He takes it quite personally.”

A day after Impala announced that two employees were missing in a fall of ground last month, the company announced Goodlace’s departure.

Goodlace said he was not in a position to comment on his appointment at Gold Fields and questions should be directed at the company.

Carolus said Gold Fields would not want to frighten Goodlace away, because he was not looking for an executive job at the moment. It was only doing succession planning for the board at this time.