Anglo: all eyes still on Anil Agarwal
Billionaire’s plans for the company still a mystery
● Some of the most attentive audience members during Indian billionaire Anil Agarwal’s appearance on stage at the Mining Indaba were members of Anglo American’s executive team — sitting in anticipation, they hung on every utterance of the Vedanta Resources chairman.
Seeming to continue the opaque game of cat and mouse between the two mining companies, Agarwal remained mum about what he intends to do with his stake in Anglo American.
Known as a go-getter, a charming but impatient man — some even say sneaky — Agarwal is the founder and owner of the company and has bought up to 21% of Anglo American, making him the biggest shareholder of the business through his family investment company, Volcan Investments.
Vedanta, which employs about 80 000 people at its operations globally, is known for its entrepreneurial and calculated risktaking approach to mining, which is quite rare.
The family-run and owned company, which is being branded to be run similarly to the old Anglo of the Oppenheimers, has its roots in India and has become a mining champion in its home country.
Unlike many globally diversified miners such as BHP Billiton and Anglo American, Vedanta works on a decentralised model of managing the business, where CEOs are accessible to employees.
For Agarwal, Anglo is something to aspire to and while he has said that his stake in the company was bought simply because he likes Anglo, the market believes he has grand plans.
In 2015, during the commodities downturn, when Anglo American was struggling with debt, Agarwal saw an opportunity for a merger between the two businesses. But the proposal, which did not amount to much, was rejected by Anglo CEO Mark Cutifani and the board.
However, since March last year, when Agarwal acquired a stake in Anglo, the market has been anticipating a merger.
A UK-based mining analyst said that it was not a question of synergies between Anglo and Vedanta, but more about Agarwal wanting to become a major player and wanting a mining empire.
Sitting in her Johannesburg head office with a team of fewer than 20 people at Vedanta’s Zinc International, CEO Deshnee Naidoo, a former Anglo American employee, said Vedanta prided itself on emulating some of its best mining practices from multinational and diversified miners such as Anglo American.
Naidoo said that perhaps the only obvious similarity between Vedanta and Anglo, and which had encouraged her to join Vedanta, was that Vedanta had acquired Anglo American assets and she had known the set-up of the assets.
She added that because of Agarwal’s admiration and respect for Anglo, and for how Anglo conducted its technical work and systems, it was Agarwal who, after acquiring the Anglo assets, said: “It’s an Anglo American business; don’t touch it, just run it.”
Since Vedanta had purchased assets from Anglo, the company has come to veteran Anglo employees for advice every now and again. Former Anglo American CEO Cynthia Carroll is one example.
“The respect comes from the fact that he [Agarwal] is trying to grow, emulate what Anglo American did 100 years ago, [but] in India,” said Naidoo.
“We are India’s natural resource champion but, unlike this country [South Africa], India does not have a natural mining culture, so the respect comes from looking at what he has loved, what Anglo has done, and looking at the technical skills that Anglo has populated the rest of the world with.”
Naidoo said Agarwal was trying to leverage Anglo skills and expertise from former Anglo employees.
“This is a man who is incredibly impatient to get this company to where it needs to be to grow. That strategy can only be unlocked if we start having access to the right skills in the industry. He sees this country as really assisting us in India with that growth,” she said.
The UK analyst said the appointment of Tom Albanese as CEO of Vedanta Resources in 2014 had done a great deal to improve the public image of Vedanta, which was “horrible” in terms of the social and environmental problems the company had faced, which included 40 deaths at its Korba plant in Chhattisgarh when a chimney collapsed on top of workers in 2009.
Albanese, during his time at the helm, was able to improve the public perception of Vedanta and gave the group international competency that it had lacked.
Naidoo said that unlike other mining management practices, the decentralised management model drove behaviour in the business.
She said the chairman’s charismatic approach of wanting to connect with his seven CEOs on any Saturday through a teleconference played a significant role in the ownership mentality and structure of the business from a management point of view.
“You just change the way you work. In this company you are being incentivised [to be] risk-taking. Our chairman loves to say, ‘waste anything, just don’t waste time’. One of the [other] things he is known to say is, ‘I will support you if you get the decision wrong, but I will fire you if you don’t make the decision’.”
Naidoo said the emulation of Anglo American’s culture at Vedanta was actually an evolution, because with Vedanta’s own entrepreneurial flair the business was keeping the technical and governance culture from Anglo while maintaining Vedanta’s agile and risk-taking approach.
“Vedanta loves the Anglo American depth and technical experience, which we took leverage of, and I think from a safety and sustainability point of view, Anglo American will always be a benchmark,” she said.
Naidoo, who said she was unaware of Agarwal’s plans with regard to his Anglo stake, added that had a merger occurred in 2015, when it was proposed by Vedanta, the cultures were perhaps a part of Agarwal’s reasoning to merge.
If a merger did occur, it was Anglo that should be worried about its culture being diminished by Vedanta, not the other way around. “I would flip that and say: Anglo American — are you ready to become a more entrepreneurial culture if a merger of this nature would happen?”
Naidoo said that none of the Vedanta CEOs knew about Agarwal’s plans regarding his Anglo stake and it was probably best that none of them did.
Norman Mbazima, Anglo American’s chairman for its South African operations, speaking on the sidelines of the indaba, said that Agarwal was happy and supportive.
Both Agarwal and Mbazima confirmed that Agarwal had been speaking to Cutifani and Anglo chairman Stuart Chambers, although Mbazima said he was not privy to what the discussions were about.
It’s an Anglo American business; don’t touch it, just run it Anil Agarwal Vedanta chairman