More action, not factions
Anglo boss calls for a ceasefire in the ANC as all parties come to the aid of the economy
● SA needs to turn goodwill and good ideas into action on the ground to revive its economy — and business must be part of the solution, while any ANC or other factional interests must be put aside.
That’s the word from Anglo American CEO Mark Cutifani, who was speaking this week after the group reported a 39% fall in its earnings for the half-year to June to $3.4bn (R57.8bn), with the Covid-19 crisis lopping an estimated $1.1bn off earnings as the diamond market took a huge hit and mines were shut in SA.
His comments came in a week in which SA’s first application for an International Monetary Fund (IMF) loan was approved, with the government committing in its letter of intent to the IMF to stabilise its public debt and remove structural constraints to growth. It again promised a “third phase” response to the Covid crisis that would be directed towards “reforms to achieve higher and more durable economic growth”.
In an interview on Thursday, Cutifani praised SA’s political leadership, which he said could compete with any in the world. “What the team is trying to do is to create a new pathway and trajectory for the country and recognising that business has to be inside the tent and be part of those conversations,” he said.
“The fact that you’ve had the Business for SA alignment working with government has been really positive — it’s one of the best models I’ve seen in dealing with the crisis … Recognising that business is part of the solution is certainly very positive and progressive,” Cutifani said.
“If we can get business being direct, honest and constructive it will make a huge difference.”
But the fact that SA has more challenges than most is no excuse and the government has to put strategy into action: “A plan of action has to have people taking it on in each of the government departments, assigning tasks and being accountable for their delivery,” he said.
“Everybody has to be there — if there are factions in the ANC or in other parts of the country, they have to be put aside for the greater good of the people.”
The boss of Anglo, which is one of the world’s largest miners, with just over a fifth of its capital employed in SA, urged a negotiated solution to the long-standing dispute over the controversial third mining charter.
“As the mining industry we need to sit with Gwede [mineral resources & energy minister Gwede Mantashe] and come to a solution on the mining charter. Let’s not battle it out through the courts. We need foreign direct investment to rebuild our industry and you don’t rebuild the industry in the courts — you do it around a table.” Cutifani said.
Unlike in SA, the group’s mines in Chile, Brazil and Australia continued to operate throughout the lockdown period, after agreeing with the governments in those countries on social distancing and other protocols.
If Cutifani has one criticism of the government’s approach here, it is that the closure of mines meant migrant workers went home, spreading the virus to their communities.
Lost time related to Covid shutdowns and operational incidents at Anglo American Platinum and at its Australian metallurgical coal operations saw the group’s production decline by 11%, though it is now back at 90% capacity across its portfolio.
At De Beers, which was hammered by a 45% drop in rough diamond sales in the period, the group is embarking on restructuring.
Factions have to be put aside for the greater good of the people
Though Anglo’s operations in Brazil and Chile posted strong performances in the first half, Cutifani estimates SA accounted for 40% or more of the group’s earnings this time round, mainly thanks to very good iron ore and platinum group metals (PGMs) prices.
That is likely to go back to about 30% as prices normalise and the group expands its other operations — particularly its flagship Quellaveco copper project in Peru, which is on track to deliver its first production in 2022 despite Peru’s national lockdown.
It is also investing in its newly acquired crop nutrients project Woodsmith in the UK, after it bought Sirius earlier this year.
Cutifani emphasised that Anglo is investing new capital into its South African operations, in its Venetia diamond mine and in PGMs as well as in expanding Kumba Iron Ore’s Kolomela mine.
Anglo’s strategy is to get its operations carbon neutral by 2040. It will divest its thermal coal mines in SA within two years. In Australia it expects to sell its last remaining thermal coal operation in the next two to three years.
Shares in Anglo American rose 1.67% to R418.15 on Friday, bringing its gains for the week to about 1%. It is up nearly 5% so far in 2020, while the all share index is down 2.39%.