Q&A: Cynthia Carroll

2013-02-09 10:00

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No other mining companies have caught the headlines like Lonmin and Anglo American in recent months. The events at Lonmin’s Marikana mine was the precursor to a wave of strikes which in late 2012 brought large parts of the industry to a grinding halt, while Anglo American’s decision to restructure its platinum business, impacting 14 000 jobs, placed the industry on a collision course with government.

Andre Janse van Vuuren caught up with the two companies’ CEOs, Cynthia Carroll and Simon Scott, during this week’s Invest in African Mining Indaba in Cape Town.

Cynthia Carroll, outgoing CEO, Anglo American

Trevor Manuel remarked that miners will always go to countries where the minerals are, notwithstanding the country’s policy measures. To what extent is this true?

Miners will go where the minerals are, but they have choices as well. What we’re looking for is a regulatory environment that is predictable, that is consistent, that supports investment, that is fair and that allows for businesses and investments to thrive.

To what extent did the ANC’s national policy conference provide reasonable certainty on mineral policy?

I think the National Development Plan is great and exactly what the country needs to pursue. The proposal for (new) taxes is something we have to challenge because this country has so many other things, like inflation, that are very high.

Input costs are going sky high; electricity is up by over 19%, labour costs by 8%. One’s got to be very careful not to burden the industry in such a way that it becomes uncompetitive.

Did the response from Mining Minister Susan Shabangu surprise you when Anglo American Platinum announced its restructuring plans in January?

The platinum industry is struggling and it is just not sustainable. She (Shabangu) was part of the conversation in June with the platinum industry representatives to debate this. Was her reaction surprising?

I would say no, because she is worried about people and she’s struggling to make sure that we’re moving in the right direction where we’re supporting and creating jobs. What we’re saying on the platinum side is that we’re protecting 45 000 jobs. We’re not displacing people; we’re supporting those jobs we can support for the long term, and ensuring a profitable and sustainable business.

Anglo American Platinum also retrenched more than 20 000 people in 2009, yet you never had a big announcement about it at the time. Why has your approach changed? Was it because the markets were now expecting a bold announcement that you’re taking drastic steps to fix the business?

No, but I think there has been a misunderstanding over where the market is going and what the demand (for platinum) will be. We’ve now done a very complete and detailed analysis of the market and it is our view now that demand growth will be 2.5% as opposed to 3% to 4% many years ago.

We need to be very disciplined about what we can afford to produce. The approach is also different than in 2009. Then we took an approach of natural attrition and voluntary packages. This has been done. Now we need to go to the next step which is a Section 189 process.

We’re sitting with a situation where there is an oversupply of platinum at the moment, but it is very likely that in a couple of years we can have a shortage again.

We’re trying to strike the right balance. We want to make sure the market is in balance and that it is neither undersupplied nor oversupplied.

We will still be spending over R100 billion over the next ten years on our platinum business. We’re continuing to invest in our platinum business, we’re not just stopping everything, but we need to be very deliberate about what we’re going to produce.

Simon Scott, acting CEO, Lonmin

Your chairman (Roger Phillimore) has announced the company is making a fundamental change in the way it will in future deal with labour and communities. Is it really a fundamental change, or just a different emphasis on issues you’ve had to deal with before?

These issues have been there all along but the way we’re approaching it is fundamentally different. It is an acknowledgement that the issues we have to deal with are not easy issues and not a tick-box exercise. We need (for instance) to get a union recognition agreement in place.

The challenge is that it is something that has to be negotiated. From our perspective we want it to be all-inclusive so that we don’t have a situation where a group of employees feel they need to go outside the bargaining arrangement in order to get the attention they feel they may deserve.

Lonmin is also placing a new emphasis on the provision of accommodation. Will your employees be prepared to sacrifice their living-out allowance in return for housing built of bricks and mortar?

I don’t know; that’s why it’s got to be a collaborative approach. We may or may not build traditional houses, but we cannot make the decision unilaterally. We have to do this with the employee’s representatives, the local municipalities and other mining houses.

The solution on the table won’t be a solution if it is not shared.

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