MACIG Connect Series
Anglo American has enhanced productivity and safety at its sites through the implementation of new technologies.
Anglo American Chief Executive, Mark Cutifani, recently declared that the relationship between the mining sector and the South African government needed to modernize. What are your comments on this?
We think about modernization in a number of dimensions based on the quality of relationships that you want to have. The business we do in South Africa is an opportunity to make a sustainable, measurable and positive difference in the lives of everyday people. Our collective task is to demonstrate how responsible mining can be a catalyst for South Africa’s growth and development. With the South African government in particular, it is important to assert that we are committed to the country’s transformation and that we want to make sure that we generate the appropriate conditions that will sustain our business. To achieve this, we have to work with institutions in matters of local development, community engagement, equality and fair and sustainable wages. We believe that the welfare of our employees is very important, as is the state of society as a whole. We look at these things as an ecosystem in which we operate.
Anglo American has delineated plans to focus on core commodities such as copper and platinum, what would be the implications of this strategy?
First, it is important to understand why we had to dispose of certain assets. At the time, we were faced with a number of challenges, with commodity prices going down at a very fast pace. These developments were impacting our cash flow and we needed to take action to repair our balance sheet. We needed to pay off our debt and restructure the company so that it could survive in the medium term. This was achieved with the sale of certain assets.
We have been clear strategically that our attention is focused primarily on those businesses in which we hold leading positions – De Beers, PGMs and copper, while recognising that we also have a portfolio of other high quality assets across iron ore, coal and other commodities. We continue to actively manage our iron ore, coal and other commodities to further improve their operating and financial performance – to generate cash and returns and to enhance value for all our stakeholders-while we continue to prepare the businesses in a manner that preserves flexibility to exit at the most appropriate time and in an appropriate manner, subject to strict value criteria being met.
Will this strategy have implications in your iron ore operations in South Africa?
The strategy is global. We are disposing of our iron ore assets in South Africa as well as of our coal business in Australia. It is a decision that is taking place across countries.
Anglo American has previously stated that the decision to exit its shareholding in Kumba Iron Ore was driven by its focus on a portfolio of core assets in which the company has leading positions. Kumba is an attractive and high-quality business that will benefit from more capital investment and management attention under new owners.
We continue to consider all options to dispose of our non-core assets in South Africa in a manner that delivers optimal value for our stakeholders.
On the operational side, how are you working to reduce costs and make operations more efficient?
The current environment is very competitive and therefore we are enhancing our productivity levels and implementing cost-cutting strategies. We are doing this without compromising safety in our operations.
In regards to technology, it seems that Africa has been lagging behind, do you think this is accurate?
There are a range of business improvement initiatives that have been implemented which have resulted in productivity and efficiency gains. A lot of those are rooted in the use of technology. We need to demystify the notion that technology implementation automatically results in job losses. Technology is not a direct substitute for labour, instead, it is a catalyst for greater worker productivity and enhanced safety. As a sector, we need to communicate this rationale more clearly with our labour counterparts.
Regarding labour relations, how have these changed since the major protests in 2014?
I do not think that we have experienced any more disturbances than others in the sector. I think there is an expectations gap between employers and employees, therefore, I think the starting point is to improve communications. There is also an issue of inter-union rivalries, with new unions delivering often-unrealistic promises. We have improved our communications with employees by settling agreements and engaging on their wellbeing. At the beginning, unions were sceptical but we now find them increasingly receptive.
What are your expectations for the coming year?
I would like to see improvements in the processing times for licensing and permits, as this will ultimately benefit the industry by attracting new investments and creating jobs. We need a countrywide vision for the mining industry in South Africa that incorporates an agenda on sustainability, work relations, modernization and policies that would allow companies to operate in the long term.