Outgoing CEO delivers passionate plea for mining certainty

Clear message

Clear message from outgoing CEO
Cynthia Carroll

The Anglo American mining group will not spin off its South African assets into a separate entity to please some investors, but along with the rest of the mining industry needs regulatory certainty from the government from a future investment point of view when the ruling ANC party holds its congress in Mangaung later this month.

This was the clear message from outgoing Anglo American chief executive Cynthia Carroll on 4 December when she addressed a packed Gordon Institute of Business Science (GIBS) audience with a speech that was critical of government policies in some instances, but passionate about South Africa, its future and the mining industry in others. It drew much applause.

Carroll said that South Africa was a country that had achieved miracles – above all, the miracle of a “successful transition from the dark night of apartheid to the new dawn of democracy". She hoped the country would arrive at a post-Marikana solution to its economic problems, to which her company was also completely committed.

“The naysayers and the doomsdayers constantly forecast disaster, but in response I say loud and clear: South Africa has done it before. It will do it again.” 

Carroll, who announced her resignation in October, said unbundling of the group was not an option for Anglo because of South Africa’s $2.5-trillion unmined mineral endowment and its historical ties to the country where it drew about half its earnings.

"It’s a continuing question I get asked around the world and even here in this country: why don’t you just split the company apart?

"This is not on the agenda of Anglo American," she said. "We are committed to this country."

Having provided facts and figures about mining’s contribution to the South African economy, the sector had a critical role to play in supporting the aspirations of the New Growth Path and the objectives of the National Development Plan, Caroll said.

It was an industry with long-term horizons and “when making investments, mining companies have to think decades ahead. They need certainty as to the rules under which they will operate. They will not invest if there is a fear of arbitrary and unpredictable regulatory change," she said.

“The regulatory debate in South Africa has been going on for a very long time and it is still not completely resolved. The spectre of nationalisation has been laid to rest, but the need to guard against damaging regulatory changes remains."

Carroll referred specifically to the proposal for a new resource rent tax, which she labelled as “both unnecessary and unwise".

“The combination of the corporation tax system and the existing royalty regime also already ensures the state takes its fair share from the profits the mining industry earns. A resource rent tax – added to all the other burdens on the industry – that would make South Africa internationally uncompetitive.

“This country has a world-leading mineral endowment, and with the right policy choices it will retain a world-leading mining industry. As policy-makers approach the moment of decision, I pray that they will make the right choices for this great nation’s future."

She warned that South Africa had to restore stable labour relations and foster a business environment attractive to international investors.

“As can be seen from the international reaction to the turmoil of recent months, the maintenance of law and order, and the restoration of stable labour relations are critical to perceptions of South Africa as a place to do business. And international investors will not be comforted by well-meaning reassurances that fly in the face of the facts. They will make their judgements on the basis of the reality they can see. We need to change the reality to change the perceptions."

Carroll is stepping down after six years at the helm, “and with firm foundations in place", she feels it is the right time to pass the baton to a successor.

“But even though I will be stepping down, I want to assure you that my passion – for Anglo American, for the mining sector and for South Africa – continues to burn brightly. Anglo American is in my heart… Mining is in my blood… and South Africa is in my soul.”

 

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