Following the gold
Newmont is a golden opportunity for Natascha Viljoen, but losing her comes as an unpleasant surprise for Amplats
The impending departure of Anglo American Platinum (Amplats) CEO Natascha Viljoen came as no small surprise to the market not least because she has been in the job for only three years.
It also comes at a rather delicate time. Amplats is navigating a volatile market for platinum group metals (PGMs). And it is undertaking a review of its best mine, Mogalakwena, a process Viljoen has made her mission.
Mogalakwena’s expansion has been delayed nearly two years while Viljoen weighed up complex community relations and market trajectories. Amplats is assessing the mine’s geology with the largest diamonddrilling campaign the world has seen, while at the same time exploring, refurbishing the mining fleet and sinking declines. About R7bn is being spent before a single ounce from the expansion is delivered.
So when Viljoen announced her resignation from Amplats on February 15 for a senior post at Newmont, the world’s largest gold producer, there was understandable shock. “Definitely a surprise, especially given the challenges the company has right now,” says Arnold van Graan, an analyst at Nedbank Securities. “Given the uncertainty it’ll create, I think it may weigh on sentiment a bit.”
Viljoen says she wasn’t actively looking for a new job. In fact, it appears as if Newmont was looking for her. Its CEO, Tom Palmer, was in Cape Town at the Mining Indaba, where the hire may have been wrapped up. Certainly it caught Amplats by surprise as there was no mention of Viljoen’s departure in its trading statement issued on February 13.
“It’s not something I went to the market looking for. But it is one of those opportunities of a size you don’t see very often,” Viljoen tells the FM.
The job description is for COO at Newmont’s Denver headquarters. Viljoen has a 12month notice period, which she says she’ll work while a replacement is found, but this won’t be as long as might be expected for other companies seeking CEOs.
Van Graan says: “Anglo being Anglo, it’ll have a replacement lined up. Amplats is like a five-year secondment to further your career at Anglo.”
Given the extreme pressures of South Africa’s energy problems — Amplats is an energy-intensive user — it looks like Viljoen is ducking out at exactly the right time. But she says: “One of my biggest fears is that it will be perceived as my perspective on South Africa, which it’s not. None of us are blind to the challenges we have in the country. But I will be sad to walk away from the amazing things we are doing in mining, which is at the heart of the future viability of the country.”
That viability, however, is seriously threatened by Eskom, the failure of which reaches into every part of South African life. Having adjusted PGM production guidance in December, Amplats said again this week that guidance could change given the current rate of power curtailments it is being asked to make, equal to about 200MW a week.
In terms of household load-shedding schedules, these curtailments approximate to two days of stage 4 load-shedding and one day of stage 6 every week. Production might now fall 5% below the upper end of its guidance of 3.6-million ounces to 4-million ounces for financial 2023.
Perhaps that is why the company’s fullyear dividend was kept — conservatively, some analysts say — at 40% of earnings before interest, tax, depreciation and
amortisation, its policy. Though the total dividend equalled a 68% payout for the financial year, UBS analyst Steve Friedman was underwhelmed. “Disappointingly, the board declared a final dividend per share of R34, missing our forecast by 50% as we expected a special dividend,” he said in a report.
According to Amplats CFO Craig Miller, there will be no let-up in inflation this year, which resulted in Amplats reporting double-digit increases in cash costs in nearly everything for financial 2022, including electricity (11%), oil (44%), chemicals (22%) and maintenance costs (16%).
There are even darker threats facing Amplats, literally. Viljoen says the company has provided for an Eskom blackout
a chilling prospect that would result in the company losing production for two or three weeks. “It’s a bigger risk now than a year ago,” she says. “It’s big enough for us to have business continuity management kept alive to this on a continuous basis.”
Precautions include making sure there is enough backup power to get employees out of the underground areas and to tap the smelters so there’s no lockup. The process is to “close down the mines in a controlled manner”.
A year from now Viljoen will have exchanged the rarefied air of Joburg for that of “mile-high” Denver. It’s an impressive assignment and may get even better there is talk of Viljoen as a possible replacement for Palmer. Asked about this, Viljoen starts to speak, hesitates, then continues: “I wouldn’t mind that.”