Nelson Mandela is gone, but South Africa will thrive says Anglo
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Friday 13 December 2013
Anglo American's links with South Africa are so entrenched that it has been described as running like a spine through the country's history. The founder of the FTSE 100 mining titan, Sir Ernest Oppenheimer, established it there in 1917, sowing the seeds of a giant empire in diamonds, gold and minerals.
Like most mining groups, the company made billions of dollars during the apartheid years, and remains one of the country's biggest investors today. But, as the killings of miners by police last year highlighted, these are uneasy times for the mining world in South Africa. The death of Nelson Mandela has focused minds on the country's troubles: poor industrial relations, economic sluggishness, corruption and, for miners, depletion of resources. This has led to increasing speculation that Anglo may follow other mining groups and reduce its operations in the country.
But the new chief executive, Mark Cutifani, hosting an investor conference yesterday, said fears of the country's demise were overdone. "I am starting to feel more optimistic about South Africa – optimistic but cautious as well," he said. "South African democracy is only 20 years old – it's still like a teenager, really – but they will get through it. It might be noisy at times, but I believe they will."
He pointed out that the South African Government had compromised on eight of the ten grievances raised by his industry over the forthcoming Mining Act as evidence of a spirit of cooperation.
Mr Cutifani was more measured in his words than one of his his predecessors (in April he became the underperforming company's third chief executive in the past decade). In 2004 Tony Trahar triggered an angry response from Thabo Mbeki, the then president, after he said "political risk" in the country remained.
Mr Cutifani said specifically that he was not considering reducing the company's activities in the country, which these days makes up a quarter of Anglo's global business.
"South Africa is above our 15% target for return on capital. It has been a good deliverer for us."
His words will be closely heeded, as will his vow to improve the company's performance, which he has previously described as "unacceptably poor". That will involve making $3.5bn (£2.1bn) of extra profits – suggesting big redundancy programmes.
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