Saturday 17 February 2018

Anglo American’s Cynthia Carroll quits after more than five years in job

Clara Ferreira-Marques and Sinead Cruise

ANGLO American's Chief Executive Cynthia Carroll has quit after more than five years in the job, under pressure from investors over the mining group's lagging share price and continued dependence on strike-hit South Africa.

A geologist by training, New Jersey-born Carroll ruffled feathers when she moved from the aluminium industry to become the first non-South African, the first woman and the first outsider to take the top job at Anglo in 2007.

Rejecting suggestions Carroll was pushed out, Chairman John Parker, her long-standing supporter, said there had been "differences of opinion" with shareholders but the decision to step down was Carroll's own, as she approached her seventh year in a "very gruelling and demanding role".

"Institutional pressure has been building for some time to replace Cynthia, so the news will be welcomed," one of Anglo's 15 largest shareholders said.

"Ultimately, running Anglo is one of the toughest jobs around and, although Cynthia made a good start as CEO, the feeling is the company has gone backwards in the last two to three years."

Carroll's efforts to streamline a mining group with colonial roots that became a sprawling conglomerate, her campaign to cut billions in costs and efforts to shift Anglo's centre of gravity away from South Africa have won her support among investors.

A campaign to improve ties with South Africa's government has also won praise - South Africa's mines minister, Susan Shabangu, said Carroll's departure was a "disappointment".

But Carroll's relationship with investors became troubled after big-ticket acquisitions such as the Minas Rio iron ore project in Brazil - an early bid to diversify Anglo's portfolio, which suffered cost overruns and delays.

Anglo has yet to give a final cost for Minas Rio, bought in a $5.5bn deal at the top of the commodities cycle, but analysts say spending could rise to $8bn from current forecasts of $5.8bn, already twice original estimates.

"Her strategic moves didn't always hit the mark. The acquisition of Minas Rio, promptly followed by a dividend cut, was a particular low point," another of Anglo's 15 top investors said. Anglo scrapped its 2008 dividend to preserve cash.

Crippling strikes in platinum and iron ore mines in South Africa in recent weeks have revived long-standing worries over Anglo's exposure to the country, aggravating concerns about a share price that has underperformed its peers.

Despite her cost cuts, according to analysts at Macquarie, under Carroll Anglo has lost one-third of its value on a U.S. dollar market capitalisation basis and is now worth $25bn less. Other major miners are worth at least the same as they were at the start of 2007.

Anglo's recent deals - including its decision to take control of diamond mining giant De Beers, raising its stake in Kumba Iron Ore and a July coal deal in Mozambique - have arguably done little to move away from a region that has held back its shares and, earlier this month, prompted an outlook downgrade from rating agency Standard & Poor's.

So far this year, Anglo stock has lagged the sector by almost 20 percent. Shares rose on news of Carroll's departure and at lunchtime were up 4.4pc at 1939.5p, while the broader UK mining sector was up 0.8pc..

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