Anglo American’s annual shareholder meeting next week will mark the end of an era as chief executive Mark Cutifani steps down after almost a decade at the top of one of the world’s biggest mining groups.
The affable but pugnacious Australian has turned the London-listed miner from an industry laggard to a leader that many now reckon has better growth prospects than its larger peers Rio Tinto and BHP.
None of this was obvious when the former engineer took charge in 2013, and much less so in late 2015, when a brutal downturn in commodity markets brought the debt-laden company, which owns De Beers and is a major producer of copper, iron ore and platinum, to the brink of collapse.
But the 63-year-old insists he never lost faith even when Anglo’s market capitalisation, which now stands at £55bn, slumped to less than £4bn in early 2016. In fact, the debt crisis that engulfed the group gave him the “burning platform” needed to shake it up.
“I tried to use the urgency of what was going on and turn it into a real ambition for us, which is what I think we have done,” Cutifani said in an interview.
Anglo is certainly a very different company today. Although it now has 37 mines, compared to 68 in 2013, its output is 10 per cent higher and will climb further this year when a big new copper mine in Peru comes online.
Surging commodity prices over the last couple of years have helped Anglo repair its balance and pay chunky dividends. Total shareholder returns — with dividends reinvested — have averaged 15.7 per cent a year during Cutifani’s tenure. That rises to almost 18 per cent when the recent demerger of its South African coal business is taken into consideration.
Cutifani, who joined the company from South African gold producer AngloGold Ashanti, has been handsomely rewarded, with his pay package swelling to almost £15mn in 2018. He took home almost £10mn last year.
“Under Mark’s leadership Anglo has undergone a dramatic turn around — both in operating performance and culture — with significant returns for shareholders,” said one top 20 investor. “He led a rebuilding of trust with financial markets, and he will be missed by investors.”
Reflecting on his early days at Anglo, Cutifani points to a couple of key changes. One was to define the company’s business model more clearly — a subject colleagues say he has a religious zeal for.
“Being clear about how you are making money in mining is really, really important. That’s why Harry Oppenheimer [son of Ernest] was so successful,” he said. “But when I arrived I don’t think many of the executives really understood it. They didn’t see how or where to make money.”
The second was to take back control from the general managers of its mines.
“I told the GMs, Tony [Tony O’Neill, Anglo’s technical director], will tell you how to mine the ore body through its life and you are responsible for executing and improving that,” he added. “If you have a better idea great but you don’t get to screw up our ore body.”
It has not all been smooth sailing for Cutifani, who forged a strong bond with Anglo’s former chair Sir John Parker. Cutifani was criticised in 2016 for backtracking on a plan to focus on just copper, diamonds and platinum and sell its bulk commodity assets. “I wouldn’t call it a U-turn, more of a hard left [turn],” he said at the time.
He also had to see off predatory interest from Indian metals tycoon Anil Agarwal and the jury is still out on Anglo’s 2020 purchase of Sirius Minerals, owner of a huge deposit polyhalite — a type of nutrient-rich fertiliser — that lies 1,500 meters below a National Park on the North Yorkshire moors.
Anglo warned in December warned that it will take another year to figure out the costs and schedules for the multibillion-pound project, which some analysts reckon already has the “air of a capex overrun.”
Cutifani professes to be very happy with the project, arguing it will have more production capacity than envisaged by its previous owner.
Duncan Wanblad, who will officially succeed Cutifani as chief executive after the AGM on Tuesday, insists that even though the “low hanging fruit has dropped” there is “still an enormous prize if we can get all our operations working to their full potential and consistently so.”
Wanblad, who will become the first South African to run Anglo since Tony Trahar left in 2007, says his immediate priorities are safety, delivering Anglo’s pipeline of organic growth projects, keeping costs under control and honing the operational model introduced by Cutifani and O’Neill.
It is not just Anglo’s financial performance that has improved under Cutifani. In the latest Responsible Mining Index, a widely followed industry assessment, Anglo scored the highest marks in five out six categories, including economic development, community wellbeing and environmental responsibility.
Done responsibly, Cutifani says mining can help lift communities and countries out of poverty.
“The people who we will impact most when we do our business and our work are local communities,” he said. “You have to get those relationships right otherwise you don’t have a future as an industry because no one is going to want us mining next door.”
The strength of those relationships was evident during a farewell dinner at Vergelegen, the company’s South African wine estate, where the dignitaries included the Archbishop of Cape Town and the country’s mining minister Gwede Mantashe.
“Mark, you are an honorary citizen of South Africa, your passport is being processed,” Mantashe quipped during his speech.
Vergelegen was one of the assets Cutifani was under pressure to sell during the 2015 debt crisis, but mindful of the company’s presence and roots in South Africa — Sir Ernest Oppenheimer founded Anglo 105 years ago in Johannesburg — he resisted. Anglo instead offloaded its niobium and phosphates business for $1.5bn to a Chinese buyer.
Cutifani was less sentimental about the company’s corporate jet, which he sold, and its former headquarters near Buckingham Palace. Anglo is now based in the former De Beers head office on the outskirts of London’s financial district.
“He has transformed Anglo American from an industry laggard into an industry leader,” said Jim Rutherford, who served as a non executive director at Anglo for just over seven years from November 2013. “He has very deliberately set the tone from the top and that tone in turn has permeated throughout the entire company.”
As for life after Anglo, Cutifani intends to stay on the board of TotalEnergies, the French energy group which has resisted calls to sell its Russian gas assets. Cutifani says he supports Total’s stance.
The mining sector is off limits to the Australian until the middle of 2023 because of a non compete clause in his contract. “That gives me time to look at other stuff,” says Cutifani, though he refused to comment on whether he was approached to be the chair of Rio.
After 40 years in the industry, Cutifani says mining will always remain close to his heart and he remains a cheerleader for it.
“Most people don’t realise that mining is absolutely critical to almost everything we do as a society,” he said. “So anybody who says we can do without mining or divests out of mining hasn’t got a good grip on reality.”