Anglo American – time to change

It is hard to think of a time during Cynthia Carroll’s tenure as boss of Anglo American when she was not under pressure. If it was not grumpy executives ousted in her early cull, it was loose-tongued board members or, more recently, investors such as BlackRock and South Africa’s Public Investment Corporation. Although she safely steered Anglo through the financial crisis and commodities downturn, investors have lost patience with its underperformance – and Ms Carroll has called it a day.

Certainly, she can point to some achievements since her appointment in March 2007. She made safety a priority, pulled Anglo’s fiefdoms into a group with fewer managers, streamlined procurement, and improved relationships with governments. She did the dirty work others had avoided, such as shrinking the workforce at Anglo Platinum. Ms Carroll also risked a public spat with state-owned Codelco to protect Anglo’s Chilean copper interests.

But while her drive to lift earnings outside South Africa (still accounting for a third of net assets and just under half of operating profit) should pay off in copper and nickel, the Minas-Rio iron ore mine in Brazil, a pet project, is late, over budget and out of her control. Worse, her financial scorecard is damning: Anglo’s shares have lost a quarter of their value during her tenure, trailing the market to trade at a discount to peers. Anglo’s net income margin has slumped 17 percentage points. Returns on assets and on equity have halved. Bosses have left for less.

If Ms Carroll has made Anglo more cohesive, her successor may end up breaking it up to make it less South African. Finding a new boss is just the first task for the board. With only one South African heavy hitter and no South Americans, the board is not configured for tough decisions about Anglo’s shape, or for the world that has changed around it.

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