Knives are coming out for Carroll
WHEN the CE of a big mining company dispenses with a succession of senior managers, questions are inevitable. Cynthia Carroll has been CE of Anglo American plc since March 2007, a tad longer than five years.
In that period she has seen off three of the men running Anglo American Platinum (Amplats) — first Barry Davison, a member of the corporation’s executive committee, Anglo’s long-standing platinum supremo and unlikely to have viewed Carroll’s appointment with much favour. He would have had to depart irrespective of performance.
Then there was Ralph Havenstein. He was brought in from Sasol, where he was CE of Sasol Chemical Industries, and took over under Davison at Amplats in July 2003. Carroll had not been at the helm very long before she ousted Havenstein — he left at the end of August 2007, six months into Carroll’s reign.
It took a year to replace Haven- stein and no one yet knows quite why he went. It’s thought that Carroll was incensed by the deaths of 12 men in six months and wanted to close entire shaft sections for retraining.
Between his departure and the appointment of Neville Nicolau, Amplats was run for a year by two men, Norman Mbazima and Duncan Wanblad, an unfair duopoly trying to come to managerial terms with a company rapidly proving to be a death posting. It was generally reckoned that Nicolau would be the man to change that reputation. “If Neville Nicolau can’t fix Anglo Platinum, no one can,” Peter Major of Cadiz Corporate Solutions was quoted as saying. But Major had to swallow his words. He later said he doubted that Nicolau had been sacked and pointed instead at the cocktail of stalled product prices, falling productivity, rising costs and union aggression.
Of course, if these factors are indeed those that dominate the industry, then Nicolau’s successor, Chris Griffith, will face the same problems. Griffith has had a good run at Kumba and is being mentioned as a successor to Carroll, but the question is whether he will survive that same cocktail, which some regard as lethal.
It is also said in management circles that CEs should never stay longer than five to seven years.
Carroll is now exactly within that cycle and for some the question is not whether she should go, but whether she should have been appointed in the first place.
Much of this is unfair to her. For some reason, Anglo persuaded itself it should relinquish its prime position in SA and Southern Africa and head instead into the great wide world. Within a few years of that decision being carried out, Carroll found herself selected to lead a corporation with a long and illustrious history, deep uncertainty about its future and a jaded confidence.
The numbers tell their own tale. When she took over, capital employed was $29bn; it is now $45bn. Return on capital employed was 38%; it is now 26%. The dividend was 124c; it is now 74c and a dividend was missed in 2009 for the first time in Anglo’s history. Gearing is now extraordinarily small (3%). The share price has lost nearly a third of its value since Carroll took over. Its nearest rival, with which it should properly be compared, is BHP Billiton, whose counter has gained 6% over the five years, but which has grown immeasurably bigger.
Under Carroll, the group has removed itself entirely from gold, concentrated heavily on platinum and diamonds, and on base metals: copper in South America, coal in Australia, and iron ore in Brazil (Minas Rio, Anglo’s biggest problem). About $25bn has been spent on new projects.
Carroll certainly isn’t all things to all men. In 2009 she was labelled “Cyanide Cynthia, the world’s biggest Scrooge” for her role in the Pebble Mine copper project in Alaska. Pebble is reckoned to be the world’s largest (known) undeveloped copper resource and, when developed would be similar in size to the giant Chuquicamata in Chile.
Carroll, 56, is an American woman captaining an unusual ship whose compass is somewhat awry. When she leaves, the question will be whether the journey was worth it.
E-mail: david@gleason.co.za Twitter: @TheTorqueColumn