AngloGold seeking safe hands in future CEO

● A succession plan to choose who will carry on Srinivasan Venkatakrishnan’s work at the world’s third-biggest gold miner, AngloGold Ashanti, is already under way.

CEO Venkatakrishnan, who will leave the group at the end of August to take the helm at Vedanta Resources, is leaving behind a miner that is now well positioned to survive low commodity cycles and maintain reasonable capital allocation.

In his five-year tenure as CEO, Venkatakrishnan reduced AngloGold’s $3.7-billion (about R44-billion) to total debt of $2.2-billion according to Bloomberg data. He has also improved cash flow and been prudent with capital allocation.

The new CEO must be able to carry on the good work that Venkatakrishnan had done, said AngloGold chairman Sipho Pityana this week.

“We want someone with an appreciation of our strategic focus, disciplined capital allocation and management, ensuring that we are a self-sustaining gold mining company and that we build and create more value for our shareholders,” Pityana said.

AngloGold’s strategy is to reduce its reliance on tapping into the market to raise capital.

The CEO position is open to internal and external candidates, and the company has already identified a number of internal candidates.

Thobela Bixa, an analyst at Mergence Investment Managers, said the new CEO needed to ensure that AngloGold found a way to manoeuvre through the regulatory uncertainties in Africa. There have been regulatory challenges for miners in Tanzania, the Democratic Republic of Congo, Ghana and South Africa.

Africa is still the largest contributor to the company’s production and revenue, contributing 36% of group production.

“One has to understand the type of environment they invest in, especially within the African context,” Bixa said. “The quality of management is key for the next CEO. You need quality management that can better navigate the different regions in times of government changes in those countries.”

AngloGold, which now produces only 13% of its gold in South Africa, down from about 30% five years ago, has gone through a rigorous restructuring process in which it shut down or sold four of its gold assets in South Africa. Mponeng mine in Gauteng and a tailings treatment plant are the remaining AngloGold assets in the country.

Australia now contributes the most to its gold production, followed by South Africa.

In 2014, AngloGold proposed splitting its South African assets from its international ones, but the proposal was rejected by shareholders as being too costly. But Pityana said: “It’s one of the options that will always remain on the table; no door is closed.”

Since Cyril Ramaphosa became president and changes were made in key ministries, investors have been reconsidering their options in South Africa.

Capricorn Fund Managers analyst Seten Naidoo said AngloGold was a “well-capitalised”, quality asset but mining costs were relatively high. Therefore, “long term it may follow the fate of Moab Khotsong”.

But Bixa said Mponeng and other South African assets would be sold if AngloGold could get the right price.

“In the absence of a buyer, AngloGold can run Mponeng profitably in the medium term,” he said.

In Ghana, Pityana said the group’s Obuasi mine was now well positioned after the regulatory and structural problems it had faced in the past three years.

We want someone with an appreciation of our strategic focus Sipho Pityana AngloGold Ashanti chairman