Anglo investors warm to remuneration policy

The days of embarrassingly large votes against its remuneration policy appear to be well behind Anglo American. At its AGM this week a mere 8% of shareholders voted against the executive remuneration policy. This reflected continued improvement on the previous year’s 10%, which in turn was a massive improvement on the 42% opposition at the 2016 AGM.

The latest vote was particularly impressive given that CEO Mark Cutifani’s total package more than doubled in 2018 thanks to the vesting of shares awarded to him three years ago.

The recent hefty increase in the Anglo share price meant Cutifani’s long-term incentive package was worth £10.2m (about R193m), versus £3.2m the previous year. It would have been considerably higher had it not been for the introduction in 2017 of a cap on the value of 2016 long-term awards. This cap lobbed a hefty £6.4m off Cutifani’s award. Without it, his long-term portion would have been a staggering £16.6m.

No doubt shareholders were impressed by evidence of a commitment to ensuring executives don’t unduly benefit from share price volatility, which in mining is extreme. It must also help that shareholders are benefiting from share price strength

just as they suffered from its weakness in 2016.

Although some shareholders were disappointed with the final dividend payment for 2018 and others may have been worried about the five fatal mining incidents, management believes the fundamental progress it has made improving productivity justifies its remuneration policy. Unit costs have decreased significantly and mining margins have increased to 42% from 30% in 2012.

BUSHVELD AND THAKADU

Flying largely beneath the radar, SA is stepping up its importance in the global batteries and steel markets.

First, there’s Bushveld Minerals, a company traded in London

but with complete vanadium production exposure to SA.

Vanadium is largely used in the making of steel, but there is an increasingly important vanadium redox flow battery market developing, which Bushveld is targeting using its primary vanadium production from its mine and processing plants.

Bushveld is an extremely rare business in this regard. It has the capacity to mine, process and, soon, to beneficiate its vanadium, not only tapping into a mine-to-market strategy but also ticking a big box in the government’s drive to add value.

Bushveld is building a $10m plant in East London to produce vanadium electrolytes, which is the core of the battery technology. Assuming it wins big orders for these batteries from Eskom and other power utilities in Africa and elsewhere, Bushveld will build a battery manufacturing plant in SA, offering a complete package that few if any other companies have.

Second, there’s Thakadu Group, a new company that is in a nickel off-take deal with platinum miner Lonmin. Thakadu will supply 25,000 tons of highquality nickel sulphate into the global market, tapping into the makers of lithium-based batteries. The low-cost supply of nickel from Lonmin as a by-product of its platinum group metals business sets Thakadu apart and makes it globally competitive.

It would be an opportunity for SA investors if both or either of these companies list on the JSE, giving locals a chance to benefit from these low-key but important assets.