Anglo American Plc Chief Executive Officer Cynthia Carroll, the first woman, external hire and non-South African to hold the job, will quit after Anglo lost $14 billion in value in the more than five years she was in charge.
Carroll, 55, born in Princeton, New Jersey, will stay until a successor has been appointed, London-based Anglo said today in a statement. Carroll will also step down as chairman of Anglo American Platinum Ltd. and De Beers. Anglo’s biggest shareholder said Carroll made bad decisions.
“Anglo missed opportunities in Africa and invested in poorly performing companies,” Dan Matjila, chief investment officer of the Pretoria, South Africa-based Public Investment Corp., said by phone. “The performance was more about poor decision making than it was about tough markets.” The PIC holds 5.58 percent of Anglo, data compiled by Bloomberg show.
Anglo declined to a three-year low in September as the CEO, appointed in 2007, struggled with cost overruns at the Minas-Rio iron-ore project in Brazil and a legal battle with Codelco in Chile, while its platinum mines missed targets. The company has slumped 22 percent in London trade during 2012, while Rio Tinto Group gained 0.8 percent and BHP Billiton Ltd. rose 6.3 percent.
“For us, it’s about how quickly the board gets an appropriate replacement to drive shareholder value,” said Matjila. “Anglo’s performance has been poor.”
Anglo advanced 4.1 percent to 1,933.5 pence by the close in London, the highest since Sept. 21. Anglo had a market value of about 35.3 billion pounds ($56.9 billion) on March 1, 2007, when Carroll took charge, compared with 26.9 billion pounds today.
Carroll is one of only four female CEOs among companies making up the FTSE 100 Index. Of those, Pearson Plc said Oct. 3 CEO Marjorie Scardino will be replaced in January after almost 16 years in the role. A European Union plan to set a 40 percent quota for women on company supervisory boards by 2020 stalled after EU commissioners failed to agree on the measures at a Oct. 23 meeting.
Anglo Chairman John Parker is leading the search for a replacement. Alex Vanselow, a former BHP chief financial officer, “seems the most obvious candidate,” Deutsche Bank AG said in a note to clients. While Chris Griffith, made CEO of Anglo Platinum in July, is the strongest potential internal successor, his critical new role may remove him from contention, the bank said.
Xstrata Plc’s CEO Mick Davis, set to leave after Glencore International Plc’c proposed $33 billion takeover, may be a candidate, John Meyer, a Fairfax IS Plc analyst in London, said in an interview on Bloomberg Television.
“On the search process which will start from today, our aim will be to secure the best candidate,” Parker said on a conference call. “I wouldn’t really want to comment on any individual, except I think it wouldn’t be unreasonable for me to say that we couldn’t afford Mick Davis.”
South Africa’s PIC cited Anglo’s decision to boost its stake in Kumba Iron Ore Ltd. and the $560 million acquisition of a stake in the Revuboe coal project in Mozambique in July as poor uses of capital that had eroded value in the company.
“We also see this poor capital allocation as limiting dividend paying potential for the group,” PIC said in a later statement. Anglo had shown disappointing operational performance in copper, coal and platinum group metals and struggled to deliver growth projects on time and to budget, PIC said.
Carroll shook up the hierarchy at Anglo within weeks of her appointment, eliminating a layer of three business-unit chairmen that stood between her and managers running operations. In the next two years, she also replaced 12 of the 13 senior executives reporting directly to the CEO.
In 2009, the holder of bachelor’s and master’s degrees in geology began an efficiency drive the company says created $3.2 billion in value, partly by consolidating purchasing operations and tailoring products more closely to clients’ needs. Carroll, ranked the world’s fourth most-powerful woman by Forbes magazine that year, also reduced costs by cutting 26,000 jobs.
She reorganized Anglo around the mining of seven core metals and minerals: iron ore, metallurgical coal, thermal coal, copper, nickel, platinum and diamonds, with a plan of putting Anglo in a position to double output across these areas by 2020.
Her goals shook up operations, and Anglo lost almost a quarter of its value between March 1, 2007, when Carroll started, and Oct. 23, 2012, compared with a 16 percent jump in the Bloomberg World Mining Index.
The shakeup also extended the company’s long-standing aim of returning to roots it lost when currency controls during apartheid forced it to diversify beyond mining.
Ernest Oppenheimer, son of a German-Jewish cigar merchant, founded Anglo in 1917 to mine gold in South Africa’s East Rand, near Johannesburg. The country’s isolation during the apartheid era and currency controls forced it to invest mostly within South Africa and become a conglomerate with divisions in a dozen fields, from brewing to banking. Following apartheid’s 1994 collapse, it began selling non-mining assets.
In 1998, Anglo also began spinning off gold mining and buying more assets outside South Africa, acquiring mines in South America and Australia. It moved headquarters and its primary stock listing to London in 1999 to attract global investors.
Carroll’s tenure has been marked by a commitment to cut the number of deaths at Anglo’s mines. Carroll said in 2007 that the company’s performance on safety was “completely unacceptable.” In 2006, Anglo reported 44 fatalities, a figure that dropped to 17 last year.
“She did a wonderful job in safety,” Frans Baleni, secretary-general for the National Union of Mineworkers, said today. “She was a good South African ambassador because she really never badmouthed South Africa.”
Carroll’s championing of four international mega projects including Chile’s Los Bronces, one of the world’s richest copper mines, represented a wager in excess of $1 billion each on the global importance of emerging markets such as China and India.
At the same time, the Los Bronces and Brazilian Minas-Rio mines are among Anglo’s toughest challenges. Los Bronces was at the center of a legal battle with Codelco, Chile’s state-owned miner.
The dispute -- over whether Anglo could block Codelco from exercising an option to buy half of Anglo’s Chilean unit --was settled in August. Anglo was left with 50.1 percent of the unit, with a Codelco-Mitsui & Co. venture buying 29.5 percent.
Minas-Rio has had delays and budget overruns since Anglo bought it in 2008. Anglo has revised costs for its largest project at least four times to as much as $5.8 billion and pushed back the completion date to the second half of 2014. Anglo said yesterday it was increasing its cost estimate for the venture again.
Anglo Platinum yesterday cut its production forecast for this year, citing the impact of wildcat strikes over pay that have spread through South Africa’s mining industry.
“We believe overall she has done a good job of transforming the company since taking the helm in 2007,” Cailey Barker, an analyst at Numis Securities Ltd. in London, said in an note to investors. “Only in the recent year or so have things started to falter, mainly around the platinum sector and the recent industry problems endemic in South Africa. In our view, she should leave with her head held high.”
Anglo angered some shareholders by suspending its 2009 dividend rather than delaying spending on the mega projects: Los Bronces, its nickel and iron-ore mines in Brazil and a South African iron-ore venture. The dividend was reinstated later.
The company also paid $5.2 billion to almost double its diamond business, expanding its stake in De Beers to 85 percent from 45 percent in a deal completed in August, just as rough-diamond demand has fallen.
On July 27 it reported that first-half underlying earnings, excluding one-time items, dropped 46 percent to $1.69 billion from a year earlier as metal prices declined and costs rose.
Carroll moved to Anglo after almost two decades at Canada’s Alcan Inc., where the mother of four rose to become president of the primary metals group, a business with $10 billion in sales, and operations in 21 countries. She built and ran aluminum smelters, oversaw ingot sales and sold smelting technology. She spent five years prospecting for oil and gas for Amoco Corp. before enrolling in Harvard University’s MBA program in 1987.
Asked on today’s conference call what she planned to do next, Carroll said her focus remains on Anglo. “I’m going to be around for quite some time into next year and it’s all about continuing on and tackling the issues and getting through this difficult time.”