Cutifani looks for silver lining

2013-01-13 10:00

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André Janse van Vuuren and Andile Ntingi speak to Mark Cutifani, the newly appointed chief executive of Anglo American and outgoing chief executive of AngloGold Ashanti

How can South Africa undo the reputational damage it suffered in 2012?

The industry, government and unions need to get together – all three of us – and work out a new framework for our relationships. It’s not going to help anyone if companies and the unions are fighting, or if we battle with the government.

I firmly believe it’s in everybody’s interest to talk and work together. The second point is that while it is great that the nationalisation debate has been resolved, we also need to finalise the discussion around taxes. The industry is struggling and to be talking about additional taxes without an end-point in that conversation is going to be very damaging. If there is to be a change, let’s get it on the table and move on.

Investors also want comfort that the existing mining charter targets will not change. Still, I’m an optimist and if we have the right dialogues this will be a good year for South Africa.

What did you tell your investors at AngloGold Ashanti who needed reassurance during the strikes of 2012?

The greatest concern I had was the violence. All countries have strikes. For AngloGold Ashanti this was only the second major strike in 25 years.

People recognise these things can happen. But the violence, intimidation and destruction caused by a small minority was something I’ve never seen in any country I’ve worked in. We need to come together to get rid of this sort of thing.

I know people are frustrated, and we’re obviously not hearing each other properly, but you cannot allow individuals to resort to violence and sit-ins underground where people are taken hostage. We need to work out how we can all come together and treat each other with respect and rebuild trust.

How would you describe your relationship with government role- players?

I think it is pretty constructive. We’ve had our moments when we had some tough conversations but in the main it’s been honest and open. Where we’ve had safety problems, the department of mineral resources has acted tough but I can’t complain about their actions when it comes to safety.

I’ve got great respect for the minister, her deputy minister and the chief inspector of mines. We all tend to complain about politicians but not too many are prepared to put up their hands and do the job. If you do get a slap on the wrist at times, it is probably because you deserve one.

Has the ANC’s national conference provided reasonable clarity on South Africa’s mineral regulatory framework?

I think it has, but it still remains a bit opaque for the rest of the world. People don’t understand the nuanced nature of politics in South Africa and we’ve had to do a lot of the interpreting for them. The tax issue is the one thing that is worrying.

How does one balance the demand of investors against the desire of the mining host country to get a fair deal from its natural resources?

The way I have the conversation with shareholders is that, in South Africa, our effective tax on earnings when you take royalties and anything else into account, is somewhere between 35% and 40%. In the lowest taxing jurisdictions the rate is about 20% and in the highest it is 50%.

Now those countries who are hitting their miners with 50% are killing their industries. I don’t want to see South Africa moving into that territory because our industry has already been shrinking for the past seven years.

Those countries that have done really well have actually been cutting their taxes. In Australia, where the effective tax rate was pushed to 50%, some 40% of their major mining projects were cancelled after the tax was announced. I say let’s not make the same mistake.

The National Union of Mineworkers (NUM) has slammed your appointment, saying Anglo American should’ve appointed a black South African instead. What is your take on this?

I’ve got a very respectful relationship with Frans (Baleni, general secretary of NUM).

I understand exactly what he is saying and I do empathise with that comment. I think he is frustrated. I understand that.

One of the great tragedies of apartheid, I guess, is we really haven’t started developing young black South Africans until the early 1990s.

This probably is an overly simplistic view, but I’ve got 35 years of experience, I’ve worked across six continents and in 25 countries. It really is difficult for a South African who didn’t have the start in life I had to be able to compete with someone like myself.

The one thing I’m committed to is to try to make a difference in the next five to 10 years so that young South Africans can compete for these positions in future.

Will your relationship with government be tested by unresolved issues, such as the ongoing dispute over ArcelorMittal’s former mineral right at Sishen Mine? (Sishen belongs to Kumba Iron Ore, a subsidiary of Anglo American)

I’m only taking up the role on April 3 so I don’t want to comment on specific issues. Generally, though, I hold the view that I have two ears and one mouth, and I try to use them in that proportion.

Whatever the situation is, I’ll try to listen as much as I can and try to find solutions that can work for all parties.

You’ve been living in South Africa and Joburg since 2007. What have you come to love about the place?

Johannesburg allows everybody to be who they are. If you smile and you’re pleasant and you say “please” and “thank you” people treat you well, almost universally. I love the diversity and that it is such a busy city. Cape Town is also a wonderful city and really beautiful but people tend to look at the label on your jeans, whereas in Johannesburg they tend to take you as you are.

Where will you be based in your new position?

London.

How much time will you be spending in South Africa?

South Africa represents about 40% of our operations so I reckon it will translate into 40% of my time. I’ll judge those things as they happen.

Fortunately South Africa is a great place to be, so quite frankly, I won’t mind spending time here.

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