JOHANNESBURG Oct 26 Cynthia Carroll's
resignation as chief executive of Anglo American has
highlighted the miner's exposure to South African platinum, an
industry crippled by violent strikes in recent months.
Carroll, who stepped down on Friday under pressure from
investors over the miner's lagging share price and continued
dependence on strike-hit South Africa, spearheaded investments
in iron ore and other resources to diversify beyond platinum.
Anglo's platinum business ties it to South Africa's restive
"platinum belt", which accounts for 80 percent of global output
of the precious metal and has been paralysed by strikes since
Anglo owns 77 percent of Anglo American Platinum (Amplats)
. Although responsible for 24 percent of its parent's
2011 revenue, Amplats brought in just 8 percent of total
operating profit because of soaring costs.
Anglo put the business under review months ago, the result
of which, Carroll said on Friday, will be delivered by year-end.
"Anglo has been far too exposed to Amplats for two decades
now," said Peter Major, mining analyst at Cadiz Corporate
Solutions, a Cape Town-based consultancy.
"The new CEO has got find a way to maximise the value of
what they have got and then reduce exposure."
While Carroll had opposed hiving off Amplats or paring back
Anglo's stake, the review was expected to propose closing
high-cost shafts and even selling assets. Closing shafts would
likely mean more friction between Anglo and unions in the
platinum belt, 120 kilometres northwest of Johannesburg.
South Africa has been gripped by its worst labour unrest in
decades following a violent strike that broke out at Lonmin's
neighbouring Marikana mine in August.
On Aug. 16, police shot dead 34 strikers, the most violent
security incident in post-apartheid history. Since then, strikes
have spread across the mining industry and workers at Amplats
have not returned to work.
Drastic job cuts may be difficult, given South Africa has
been struggling to bring down an official unemployment rate of
around 25 percent.
"Because of the low margins at the Rustenburg operations
they (Anglo) would be justified to mothball those mines but they
do not have the political willingness to have that discussion
with government," said Justin Froneman, platinum analyst at SBG
Securities in Johannesburg.
Some analysts have said the mines run on a cash margin of 1
percent. Mothballing refers to the costly procedure of
maintaining a shaft that is not producing.
Labour leaders in Rustenburg said they did not believe
Carroll's departure would significantly change the six-week
deadlock between strikers and management at Amplats.
"This resignation reflects the confusion and disorientation
in their own ranks," labour activist and community
representative Mametlwe Sebei told Reuters.
While Carroll faced criticism from shareholders over Anglo's
stock price, she was able to build a strong relationship with
South Africa's ANC government - no small feat, given the party
has flirted with nationalising mines.
"It is a sad day to see a dynamic woman like Cynthia Carroll
being relegated once more to a back seat by men," mining
minister Susan Shabangu said on Friday.
"She was a woman who was very vocal, she was a woman
advancing industry - better than men, I will tell you."
Other diversified miners have steadily outperformed Anglo,
in part because they have no major exposure to platinum.
BHP Billiton , the world's top mining
company, reaps just 2 percent of its revenue from southern
Africa. During the past five years, its market value has risen
about $100 billion.
South African platinum miners - Amplats, Impala Platinum
and Lonmin - have been hit by rising labour and power
costs and the expense of safety stoppages that are part of a
government clamp-down on fatalities.
They have also been hammered by a steep drop in the price of
platinum, down about a third from its record high in
2008. Amplats has seen its market value fall about $19 billion
over Carroll's tenure, to $12 billion.
On a conference call to discuss her resignation, Carroll
said: "We are looking for a fundamental shift in performance in
order to ensure creating and sustaining a competitive business
for the long term".
SGB's Froneman said the company was unlikely to cut its ties
to platinum. "Changing the CEO would not necessarily cause them
to have a massive change of heart around Amplats. It has been a
core asset of theirs for so long and I do not think a CEO can
impact that direction substantially."