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Anglo American streamlines business; Ian Cockerill to go; Fred Roux sacked: Barry Sergeant – Moneyweb

Day of the long knives at Anglo and Impala.




ALEC HOGG: Our Barry Sergeant is in the studio. Apart from being investigations editor here for Moneyweb, he is also the Africa editor for Mineweb, our international mining operation. Barry, big news on the mining front today. Let’s start with the story that you have written on Fred Roux, the chairman of Impala. The annual general meeting is coming up very soon and he’s been fired ahead of it.

BARRY SERGEANT: What he did today, Fred Roux, he released an email that was sent to him on Sunday by Niall Carroll, who is of course chief executive officer of Royal Bafokeng Holdings. And that entity for many years has earned a royalty from Impala.

ALEC HOGG: Well, they own the mineral rights, don’t they?

BARRY SERGEANT: Yeah. And it is also the biggest shareholder – round about 13%. So over the years it has earned billions of rand from Impala. The gist of it was Niall Carroll saying that he’s spoken to three of the four big shareholders in Impala, and most of the non-executive directors, and: “Mr Roux, you are fired. So “Let’s keep it out of the public domain, and why don’t you resign, and it’ll all go away quietly?” There was also a reference to Niall Carroll saying that he was referring to David Brown, CEO of Impala, in a personal relationship with Mark Wilcox of Mvelaphanda Resources. Of course, that’s all in the public domain. We know that over a year Mvela has been interested in selling Northam, its majority stake owned platinum company to Impala for the Booysendal project. But as far as Fred Roux is concerned, that’s a complete red herring. What he thinks it’s all about is what he said in this year’s annual report, a couple of months ago. And of course Impala is one of the only companies in the world that publishes annual results and annual reports on the same day. He openly criticised Impala executives for under-delivering. He used the word “underwhelming”. And he also took on a bit of a political slant where – I’ll give you a taste of it. He referred to difficulties associated with managing in the present day environment of enlightened democracy in South Africa, and said the situation is somewhat exacerbated by an entitlement attitude that now seems pervasive in society.

ALEC HOGG: So politically incorrect and he’s had not only his fingers slapped but his head chopped off.

BARRY SERGEANT: Ja. What happened is that he refused to resign and the board met yesterday and they sacked him.

ALEC HOGG: Unusual to see a chairman of a company sacked. We saw just the other day a few of the executives at a small company, African Dawn, getting kicked out of the door.
    But at Anglo American it’s even longer knives.

BARRY SERGEANT: Ja, very much so. Cynthia Carroll now’s been chief executive of Anglo American for 31 months. And in conversation with people today, they referred to her immediately on becoming chief executive removing one layer of the management structure. So they are saying this is part of a process that’s been going on for nearly three years. And, as we said earlier, 2 700 jobs in the layered upper area going, an annual saving of about $120m.

ALEC HOGG: So nearly R1bn worth of salaries. So those are expensive jobs we are talking about here.

BARRY SERGEANT: Yes, exactly. And today what they did – the headline announcement was basically about dissolving the divisions, and they’ve now set up seven commodity CEOs around the world, basically in the countries where the commodities are dominant. So copper in Chile. Some of them get a bit overlapped – coal in South Africa, coal in Australia, and so on. And then they have five executives in London who look after the different units – for example, global procurement.

ALEC HOGG: The … streamlining. Ian Cockerill was recently the chief executive of Gold Fields Limited, highly respected, poached by Anglo American to go over there – and now he’s been given the axe too.

BARRY SERGEANT: What happened was he was in charge of coal based in London, and the main assets, Anglo Coal assets, are South Africa, Australia, and Colombia. And that job has just been made redundant. So it’s a sign that Anglo American still doesn’t look like it’s quite finished with its transformation – not just in South Africa, but globally.

ALEC HOGG: What about David Shapiro’s suggestion that Cynthia Carroll herself was teetering a little while ago, and that Ian Cockerill was amongst those suggested to take over? Do you think this could be some payback?

BARRY SERGEANT: Well, ja, it could be related also to Xstrata making a bid for Anglo this year, which has been dropped. But the transformation process is not complete. I checked with Anglo American today – their wine estate down in the Western Cape, Vergelegen, is still on the books. And apparently that washes its own face because it sells wine. And the Gulfstream jet, which is used by certain executives in Anglo American, that’s still on the books because that washes its face as well, because it’s hired out when it’s idle. I remember almost a decade ago Brian Gilbertson of Billiton, before the merger with BHP in South Africa, was almost tearful when he gave up the Billiton fleet, the aircraft. And at the same time he gave up that game park – and look at how BHP Billiton has done since then. So today we’ve still got Anglo keeping its not game farm but wine farm and its fleet. And are shareholders going to be prepared to say: “Is this is the Anglo American that we expected when Cynthia Carroll came on board, and why have so many executives left either voluntarily or otherwise?”

ALEC HOGG: Barry Sergeant is Moneyweb’s investigative editor, and you can read more about the Anglo American night of the long knives or day of the long knives on the website right now or on Mineweb.com.

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