Anglo American on Tuesday said Mr. Cutifani, the chief executive of the South African gold producer AngloGold Ashanti, would succeed Cynthia Carroll as chief executive in April. Ms. Carroll announced her resignation from the company in November after more than five years in the job.
The appointment of Mr. Cutifani won the approval of some analysts. They said he had the operational experience to improve earnings by reducing costs and increasing production, and that he had the political connections in South Africa to be able to navigate contentious topics like the reduction of mining jobs.
The questions are whether Anglo American’s powerful board of directors will allow him to push through his strategy and whether he will have enough time to do so before its distressed share price makes it a takeover target, said Paul Gait of Bernstein Research.
Mr. Cutifani has the “operating capability and he speaks very comfortably around technical issues at mining,” Mr. Gait said. But “is he going to have the license to do what he wants to do?”
The list of Anglo American’s challenges has grown over the past few years. Minas-Rio, a large iron ore project in Brazil and one of Ms. Carroll’s initiatives, is struggling with rising costs and delays because of licensing problems. In South Africa, the company has been affected by strikes over pay and working conditions. The activities, which had halted production, escalated in August when 34 miners died after the police opened fire at Lonmin’s Marikana mine.
Anglo American also embarked on a review of its platinum business, which accounts for about 40 percent of global production but faces increasing costs, including wages. Shrinking the business might be welcomed by investors and analysts but would undoubtedly stir some political objection. As the largest supplier of platinum, Anglo American is an important employer in South Africa, which has the world’s largest reserves of platinum. The company is to present the results of its review in the coming weeks.
Faced with a share price lagging behind that of rivals, some shareholders have demanded it separate its South African business. Anglo would not be the first company to consider such a move. In November, GoldFields said it would spin off its South African operation, partly because recent strikes had made it more costly.
But for analysts at Credit Suisse and Citi, the appointment of Mr. Cutifani makes a breakup less likely.
“With his strong operational and South African background, his appointment likely means a commitment to South Africa remains,” a group of Credit Suisse analysts wrote in a note to investors.
In a statement, Mr. Cutifani said Tuesday that he was “delighted to have the opportunity to lead Anglo American at this important stage in its journey, to unlock the company’s very considerable value potential.”
Anglo American’s share price rose 2.8 percent in London on Tuesday.
Mr. Cutifani became chief executive at AngloGold in 2007; before that he was chief operating officer of the Canadian nickel company CVRD. He is also president of South Africa’s Chamber of Mines group.
At AngloGold, Mr. Cutifani is credited with improving the company’s performance despite a raft of problems besetting the South African gold sector in general and AngloGold in particular. Like Anglo American’s platinum mines, AngloGold’s South African mines have become more and more expensive to operate.
For years workers have demanded higher-than-inflation pay raises, and the mines — some of which are a century old — must go deeper and deeper to find gold. He successfully fought to keep cost increases within a manageable range. Last year he used the bully pulpit of the Chamber of Mines to help coordinate the sector’s response to South Africa’s labor challenges.
Mr. Cutifani accelerated the company’s development of mines outside South Africa to reduce its exposure to the country. Among investors he is also famous for ridding AngloGold of a disastrous book of hedge contracts that it had inherited from a merger. Liquidating the hedge book strained the company’s finances for a period, but later allowed the company to reap higher gains from gold.
AngloGold and Anglo American share a common history. AngloGold was spun off from Anglo American in 2005. Anglo American was once South Africa’s largest conglomerate and the source of the fortunes of the country’s Oppenheimer family.
AngloGold said Tuesday that it had started a formal search to replace Mr. Cutifani. Srinivasan Venkatakrishnan, the firm’s finance chief, and Tony O’Neill, vice president for business and technical development, were named as joint interim chief executives.
William MacNamara contributed reporting.
Article source: http://www.nytimes.com/2013/01/09/business/global/challenges-facing-new-chief-of-anglo-american.html?partner=rss&emc=rss