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CUTIFANI URGES S.AFRICAN MINING INDUSTRY TO REBUILD SOCIAL RELATIONS – by Trust Matsilele (CNBC Africa.com – October 8, 2014)

http://www.cnbcafrica.com/

He said a five month strike experienced in the Rustenburg platinum mines was a reflection of the broken relationship with its employees.

While speaking at the Joburg Indaba in Johannesburg, Cutifani added that most parties outside South Africa were not vested towards the country’s forward looking success, which at the moment was at crossroads. “We have to make our own future as we cannot rely on anyone else,” warned Cutifani.

“We are ranked outside the top 50 mining countries besides having over a trillion US dollars’ worth of reserves, and the largest in the world.”

Cutifani said policy conversations will continue to stifle investment in Africa’s second largest economy. The Anglo American executive decried the past decade, as a ‘lost decade’. “Real values in terms of our companies have declined by 30 per cent,” said Cutifani.

Cutifani said the mining sector was the country’s important industry with about 1.3 million people directly employed in the sector. On transformation, Cutifani said changes to the mining charter target were inevitable. “There is no doubt with regards to the required transformation however uncertainty is in what is not being said.”

Earlier in the day the mineral resources minister Ngoako Ramatlhodi said penalties for non-compliance could be as extreme as withdrawing an operating licence.

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End of the Iron Age – by James Wilson and Neil Hume (Financial Times – September 29, 2014)

http://www.ft.com/home/us

A collapse of ore prices throws miners’ strategies into doubt and threatens an industry shakeout

Iron is one of the most abundant elements on earth but pulling it out of the ground efficiently can be a daunting undertaking. Snaking through the low, green hills of southern Brazil is a 530km pipeline, the decisive link in Anglo American’s $8.2bn Minas-Rio project to extract iron ore in the Brazilian interior and ship it from a new Atlantic port. Way over its original $3.6bn budget and two years late, Minas-Rio is finally close to the point of “first ore on ship”.

For years, huge mining projects such as these have formed the backbone of global economic expansion. The world’s most important commodity after crude oil, iron ore has been devoured by Chinese steel mills, emerging as the raw material for an infrastructure-led growth spurt.

But Minas-Rio is about to deliver its first ore into a much less welcoming world. The price of iron ore has plunged more than 40 per cent this year, the worst performance across metals and bulk commodities in 2014. From an average price of $135 per tonne last year, the benchmark iron ore contract sank last week to less than $80 for the first time since the global financial crisis.

“The iron ore market is in the midst of a transition without precedent in recent commodity history,” says Macquarie, the Australian bank.

Behind the change is a big increase in iron ore exports – and not just the 26.5m tonnes that Minas-Rio will bring to market when fully operational in 2016.

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AngloGold sets about ‘new’ old strategy – by David McKay (MiningMx.com – September 25, 2014)

http://www.miningmx.com/

[miningmx.com] – THE flight from gold amid expectations of rising rates and a stronger dollar have to some extent masked the impact of AngloGold Ashanti’s aborted rights issue and de-merger strategy on the gold firm’s share price.

The share was already under pressure from September 1 losing about 7% over seven days as the dollar gold price sank – now down to its lowest levels for the calendar year . On September 9, however, it shed 15% as investors took a dim view of the $2.1bn rights issue proposal.

It regained ground by September 15 when the de-merger was formally rejected by management, but has since fallen another 4% as the pressure on it and all other South African gold stocks has intensified.

Not even Harmony Gold or Sibanye Gold, which have seen the rand gold price strengthen whilst the dollar gold price has fallen 6% this month, have been immune from the selling.

“I don’t anyone thinks the gold sector has been over-bought, there is just negativity about the outlook with most people expecting a stronger dollar, with rising interest rates but with no real inflationary pressures,” an analyst said. “Investors are obviously concerned about cash flows and future impairments. And there are quite a lot of redemptions from funds,” he said.

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Anglo ‘reaping benefits’ of diversified base – by Paul Garvey (The Australian – September 18, 2014)

http://www.theaustralian.com.au/business

ANGLO American chief executive Mark Cutifani says the downturn in coal and iron ore prices has reinforced his faith in the mining giant’s diversified asset base, in contrast to the efforts by BHP ­Billiton to jettison its non-core commodities.

Speaking to The Australian, Mr Cutifani said a “tough” outlook for iron ore and coal contrasted with the improved conditions in other Anglo American commodities such as diamonds and platinum.

As a result he said he had ruled out Anglo following a similar path to BHP, which last month announced it would spin off its aluminium, manganese, nickel and silver operations and some of its coal mines into a new vehicle.

“The diversity in our portfolio is working for us today. Everyone else is struggling in iron ore and coal in particular, but we’ve got a diamonds business that is going really well, our platinum portfolio looks like it’s starting to rise from the ashes, and nickel,” he said.

“While like everyone we’re suffering a little in the bulks, we’re doing very well in other areas.” Mr Cutifani said Anglo American had a more even spread of quality throughout its various ­assets than the other diversified miners such as BHP and Rio Tinto.

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AngloGold says asset split will add value – by Allan Seccombe (Business Day Live – September 11, 2014)

http://www.bdlive.co.za/

ANGLOGOLD Ashanti is the latest mining company in SA to split its assets, creating a debt-free local company that will become a multi-commodity player, and a large London-listed gold-focused company holding a suite of international mines and growth assets.

Two large operators in the South African mining sector have split their assets in the past two years. Gold Fields unbundled three deep-level, labour-intensive mines into a new JSE-listed company, Sibanye Gold, to allow Gold Fields to focus more fully on its international portfolio.

BHP Billiton has cherry-picked its best assets to retain in its portfolio and is creating a separate company to house the balance of its assets, which are largely in SA and comprise coal, manganese and aluminium.

AngloGold operates the deepest mine in the world — its Mponeng mine is 4km deep.

As part of its division process, which needs shareholder approval, AngloGold will need to raise $2.1bn, which will primarily go towards clearing most of its debt, which CEO Srinivasan Venkatakrishnan described on Wednesday as “too high”. AngloGold has about $3.5bn in gross debt.

The South African Reserve Bank, in its approval of the restructuring, demanded that the company housing the South African assets start debt-free.

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Glencore CEO Rebuffs Anglo American Bid Speculation – by Paul Burkhardt and Jesse Riseborough (Bloomberg News – September 3, 2014)

http://www.bloomberg.com/

Glencore Plc (GLEN) Chief Executive Officer Ivan Glasenberg rebuffed speculation about a possible takeover of Anglo American Plc (AAL), saying the world’s third-biggest miner is only interested in assets it already trades.

“With Anglo, we don’t trade diamonds, if that gives you a good idea, and we don’t trade platinum,” Glasenberg told reporters in Johannesburg today. “We will only look at assets which we trade, which we market,” he said in response to a separate question.

Glencore, the world’s biggest exporter of power-station coal, completed the $29 billion all-share takeover of Xstrata last year to add coal, copper and nickel mines. Anglo American, the largest platinum producer, also controls copper, coal, iron ore, nickel and diamond mines and has a market value of about $36 billion. CEO Mark Cutifani is open to takeover offers, the Wall Street Journal reported yesterday, citing an interview with the Australian.

“Cutifani said someone’s going to take him over, he’s happy,” Glasenberg quipped. A Glencore bid for Anglo American is increasingly possible next year as the stock widens its outperformance over its smaller rival, Jefferies LLC analyst Chris LaFemina wrote in a report today.

“This outperformance, combined with Glencore’s completion of the full integration of the Xstrata acquisition and a strong strategic rationale for Glencore to acquire Anglo, should make Anglo a compelling target for Glencore some time next year,” LaFemina said.

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Anglo warns of ore price torpor – by Matt Chambers (The Australian – July 26, 2014)

http://www.theaustralian.com.au/business

MINING giant Anglo American says iron ore prices are set to remain depressed for the rest of the year as growing supply exceeds demand that is being tempered by a fragile Chinese housing market.

But the outlook is better for coking coal, with the British miner’s Wollongong-born chief executive Mark Cutifani expecting contract prices to rise from six-year lows of $US120 a tonne and change the fortunes of the company’s metallurgical coal unit, where first-half profits fell 86 per cent.

Anglo released first-half earnings last night, reporting a $US2.9 billion ($3.08bn) profit, in line with expectations. Net debt of $US11.5bn was lower than forecasts of $US12bn because of lower capital expenditure.

Anglo is the first of the big miners to deliver its June-half profit report and the first to offer its assessment of the global markets, with Rio Tinto and BHP Billi­ton both having stopped giving their views on economics and fundamentals in quarterly production reports.

“Uncertainty is likely to persist for the balance of 2014, though there are some encouraging signs that activity is strengthening in our key markets,” Mr Cutifani said. “Over the long term, we expect new supply to be constrained and to see tightening market fundamentals and a recovery in price performance.”

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Will Cutifani answer call for Anglo change? – by David McKay (Miningmx.com – July 24, 2014)

http://www.miningmx.com/

[miningmx.com] – A YEAR ago, at Anglo American’s 2013 interim results presentation, the group’s then relatively new CEO, Mark Cutifani, set out the broadest of blue-prints for winning back investor interest.

Return on Capital Employed (ROCE) needed to be 15%, not the 11% that had been previously achieved; the project pipeline, described by Cutifani as ‘constipated’, had to be – for want of a better word – loosened; and any under-performing assets would be culled from the group.

At the time, a mere 11% of the group’s 90-odd assets had met operational targets to which Cutifani provided the gloss: “We have to get our arses into gear”.

The question at the time was how a change in gear would be achieved, and whether Cutifani would be bold and quick enough? A year on, and the answer is becoming clearer.

As with its peer, BHP Billiton, Anglo is taking the scalpel to some of its South African assets starting with the less profitable platinum mines held in the 80%-controlled Anglo American Platinum (Amplats).

“He has made it absolutely, abundantly clear that the Rustenburg and Union assets in Amplats are not priorities for the group’s capital,” said a Johannesburg-based analyst.

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Anglo Will Flourish Under Cutifani Or Be Bought, Bernstein Says – by Firat Kayakiran (Bloomberg News – June 10, 2014)

http://www.businessweek.com/

Anglo American Plc (AAL) will either be successful at reorganizing its platinum business and starting production at the Minas-Rio iron ore mine in Brazil or be acquired, research company Sanford C. Bernstein Ltd. said.

The metals producer is reviewing global assets to shore up earnings after Chief Executive Officer Mark Cutifani took over last year amid cost overruns and delays at Minas-Rio. Cutifani set a goal of improving Anglo’s return on capital employed to at least 15 percent by 2016 from 8 percent in July.

“There is a free option on offer for Anglo,” Paul Gait, a London-based Bernstein analyst, said in a note today. “Either the company outperforms under Mark Cutifani’s leadership, and demonstrates the value of tons in the ground, or it fails to do so and is put out of its misery in fairly short order.”

Anglo, which controls the world’s largest platinum producer, has seen the output disrupted by a strike since January in South Africa. The Association of Mineworkers and Construction Union has called out more than 70,000 miners, including employees at Anglo American Platinum Ltd. Government-led talks yesterday failed to end the impasse.

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Anglo Says Platinum Pay Fight Inevitable on Productivity – by Firat Kayakiran (Bloomberg News – June 6, 2014)

http://www.bloomberg.com/

Anglo American Plc (AAL)’s four-month battle with a labor union at its South African platinum mines was inevitable because the requests by workers are unsustainable, Chief Executive Officer Mark Cutifani said.

“It’s the fight we had to have,” Cutifani said yesterday in a speech in London. “What’s being asked, for us is unsustainable. And at the same time, the productivity in the platinum sector is one tenth the productivity in the Australian mining sector and we are paying one fifth of the wages.”

Anglo controls the world’s largest platinum producer, which has been disrupted by a strike in South Africa since January. The Association of Mineworkers and Construction Union has called more than 70,000 miners out, including employees at Anglo American Platinum Ltd. (AMS)

Union members are on strike over a demand for basic monthly pay excluding benefits for entry-level underground employees to be more than doubled to 12,500 rand ($1,168) by 2017. The producers have said increases of that order would cost too much.

Minister of Mineral Resources Ngoako Ramatlhodi is coordinating talks between the union and Anglo American Platinum, Lonmin Plc (LMI) and Impala Platinum Holdings Ltd. (IMP), which continue in the South African capital, Pretoria, for a third day today.

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Anglo May Sell Brazil Nickel Unit to Vale, Deutsche Bank Says – by Firat Kayakiran (Bloomberg News – May 8, 2014)

http://www.bloomberg.com/

Anglo American Plc (AAL), which is reviewing assets globally as it tries to return to profit, may offer its Brazilian nickel unit to the nation’s largest miner Vale SA as metal prices increase, Deutsche Bank AG said.

Nickel will probably peak at $27,000 a metric ton in 2017, Deutsche analysts Rob Clifford, Anna Mulholland and Paul Young wrote in a report dated yesterday, raising the bank’s forecast of $20,000 a ton in 2018. The metal has surged 40 percent in London trading this year after leading global miner Indonesia barred exports of raw ores in January.

Anglo’s Barro Alto unit, which missed its target of an annual capacity of 36,000 tons at the end of 2012 because of setbacks at its two furnaces, said last month it aims to reach the mark by 2016. It plans to fix one of the furnaces this year and the second one in 2015. The mine produced 25,100 tons of nickel last year, Anglo said in February.

“We would suspect that Vale, having undertaken a similar rebuild program at its Onca Puma, could be interested in acquiring the Barro Alto operations and may consider taking on the assets prior to the completion of any refurbishment program if that were to be reflected in the price,” the Deutsche analysts said in the report.

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At helm of Anglo American, consummate miner digs deep for savings – by Eric Reguly (Globe and Mail – April 26, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — Mark Cutifani and I meet in the strangest places. My first encounter with the CEO of Anglo American, one of the world’s biggest mining companies, came last September at a Vatican mining conference in Rome. He and other mining bosses were learning how to inject a bit more of the Holy Spirit into their digging activities.

The second time was two months later at a gold mine in Chelopech, Bulgaria, of all places. The little mine wasn’t Anglo’s. It belonged to Toronto’s Dundee Precious Metals and Mr. Cutifani was there to learn how the Canadians had reduced costs by some 50 per cent through a range of technologies, such as novel underground WiFi and data networks. “This is where the innovations are, in the small mines,” he said at the time, decrying the lack of technology in Anglo’s own mines.

The third meeting came in March, at Anglo’s headquarters in London, near Trafalgar Square, at the heart of what used to be world’s greatest empire. The location is appropriate. Anglo American was founded in 1917 by Sir Ernest Oppenheimer with £1-million ($1.85-million) in capital from British and American sources (hence the name Anglo American). Like Britain, it would establish outposts around the world. From its foundation in South Africa – home to its vast gold, platinum and diamond operations – it would expand into base metals in Canada, coal and manganese in Australia and iron ore, ferronickel and copper in Latin America. At one point, Anglo was the world’s mightiest mining company.

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Anglo to Move Away From Labor-Intensive Platinum Mining – by Firat Kayakiran (Bloomberg News – April 24, 2014)

 http://www.bloomberg.com/

Anglo American Plc (AAL), the world’s biggest platinum producer, plans to switch to mechanized open-pit mining from labor-intensive underground output, as its South African operations remain crippled by a three-month strike.

The company aims to make the transition in five to 10 years to improve productivity, Chief Executive Officer Mark Cutifani said at the company’s annual general meeting in London yesterday. The change would have to be carried out in a way that’s “sensitive to its social ramifications,” he said.

A third day of talks between producers and union officials ended yesterday without a resolution or plans for further negotiations. Output at Anglo American Platinum Ltd. (AMS) dropped 39 percent in the first quarter because of the walkout over pay, Anglo said yesterday. The company reduced its forecast for full-year production by as much as 13 percent, with more cuts possible if the deadlock persists.

Cutifani “is bang on,” Paul Gait, an analyst at Sanford C. Bernstein Ltd. in London, said in an e-mail. “The only way to get safe platinum is to get people out of the stope.

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Anglo seeks buyer for Rustenburg operations – by Staff Writer (Business Day Live – April 14, 2014)

http://www.bdlive.co.za/

ANGLO American is seeking a buyer for its Rustenburg platinum mines as the group looks elsewhere to extract the metal, CEO Mark Cutifani said on Friday. In a BusinessDay TV interview with editor Peter Bruce, Mr Cutifani said the skills within Anglo could be better deployed elsewhere than the deep-level, labour-intensive and technically complex mines that make up Rustenburg.

The mines under consideration are operated by Anglo American Platinum (Amplats), an 80% held Anglo subsidiary. Mr Cutifani has indicated before that Rustenburg was no longer a core asset, but this was the first time he has been explicit about wanting another party to own the mines.

His comments have a deeper resonance as a strike at the mines enters a third month. “The Rustenburg resource is not what it used to be,” Mr Cutifani said. “I don’t think that’s where our best skills set sits.

“That’s why I’ve been quite vocal saying we should consider taking a step back from Rustenburg. We should be focusing on the more mechanised operations, which is what I think we do much better, and allow someone who has a better skills set in those types of mines to run those kinds of assets,” he said.

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Anglo ‘not anywhere near where we need to be’ – Cutifani – by Leandi Kolver (MiningWeekly.com – February 14, 2014)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – While Anglo American’s financial results were encouraging, they were “not yet satisfactory”, said CEO Mark Cutifani at the diversified major’s results presentation on Friday.

“The business improvement is encouraging, but we are not anywhere near where we need to be as a group,” he stated. Anglo reported a 6% increase in underlying profit to $6.6-billion for the 2013 financial year, with the company’s earnings before interest, tax, depreciation and amortisation having increased by 7% to $9.5-billion.

After deducting tax and profits attributable to noncontrolling interests, which represented a greater proportion of profit than in 2012, the company’s underlying earnings decreased by 7% to $2.7-billion. Underlying earnings a share amounted to $2.09.

The company also declared impairments of $1.9-billion, principally in relation to its Barro Alto operation, in Brazil, its platinum portfolio review, the Michiquillay operation, in Peru, and the Foxleigh mine, in Australia. Meanwhile, the group’s net debt increased by $2.14-billion to $10.65-billion, while net debt to total capital at December 31, 2013, was 22.2%, compared with 16.3% at December 31, 2012.

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