Anglo takes heart from SA citizens

• CEO Mark Cutifani says multinational still has a rosy long-term view of young country under Ramaphosa

Anglo American, the largest mining company in SA, remains positive about the country, maintaining its support of President Cyril Ramaphosa and his efforts to reform the economy to attract investment, despite the recent unrest. CEO Mark Cutifani said Anglo remained positive about the overall trajectory of SA.

Anglo American, the largest mining company in SA, remains positive about the country, maintaining its support for President Cyril Ramaphosa and his efforts to reform the economy to attract investment, despite the recent unrest.

SA’s image as an investment destination was tarnished by apparently unbridled looting, arson and violence for nine days in July that destroyed businesses and infrastructure in KwaZuluNatal and Gauteng, which Ramaphosa described as a failed insurrection.

The unprecedented levels of unrest were sparked by the jailing of former president Jacob Zuma for defying the Constitutional Court and rattled business confidence as Ramaphosa drives structural reforms in an ailing economy and tries to attract R1-trillion of investments.

Anglo, which owns Africa’s largest iron-ore miner, Kumba Iron Ore, and one of the world’s leading producers of platinum group metals (PGMs), Anglo American Platinum, and diamond mining stalwart De Beers, remains positive about the overall trajectory of SA, CEO Mark Cutifani said.

All three of those companies are making multibillion-rand investments in their mines in SA, pouring billions more into the fiscus from higher taxes stemming from bumper world commodity prices.

Anglo reported record interim earnings before interest, tax, depreciation and amortisation (ebitda) of $12.1bn (R177bn) in the six months to end-June compared with $3.4bn a year earlier.

It paid out $4.1bn to shareholders in a $2.1bn dividend, $1bn special dividend and $1bn share buyback.

“We still have a very positive long-term view of SA. Being a relatively young democracy there are tough moments from time to time. If the bad guys do what they did, and you see people of SA standing up ... I think that tells you most South Africans don’t want to go there,” Cutifani said.

“I think the country will come out of this current moment much stronger. I think the leadership is taking steps forward to address the issues and policy issues, and bring everyone along with them,” he said.

“I think, with what we’ve seen with social unrest, it provides Cyril as president and his team an inflection point. Clearly, people of SA are behind Cyril as leader of the country and that leadership team,” he said.

Ramaphosa and his team had spoken to CEOs of businesses shortly after the violence.

“We believe that we have a role with all of business to be part of the solution and certainly, from our point of view, we think the pathway forward is one that should be positive,” Cutifani said.

“If that’s the worst the bad guys could do, then SA can only go from strength to strength,” Cutifani said.

Asked about Ramaphosa’s investment drive and the damage done by the unrest, he said there was a welcome advance in structural reforms and that businesses were “genuinely keen to invest but they want to understand the framework”.

Anglo is heavily exposed to SA, but it has recently divested from its thermal coal business in the country, selling its collieries supplying state-owned power monopoly Eskom to Seriti Resources and then unbundling its export thermal collieries to create Thungela Resources.

Anglo has taken heart from Ramaphosa’s override of his energy minister, Gwede Mantashe, to allow companies to build 100MW of embedded renewable energy to unshackle industry from state-owned Eskom’s high-cost and unreliable electricity supply.

“It’s a big step and a really important indicator,” Cutifani said.

The mining industry and the department of minerals & energy are in court in a legal battle over provisions in the third iteration of the Mining Charter that the Minerals Council SA has said deters deal flow and makes investment in new mines unattractive.

Cutifani reiterated his belief and hope that the dispute could be settled through talks rather than a court case, which industry lawyers have warned could take years to fight all the way up to the Constitutional Court.

THERE ARE TOUGH MOMENTS ... IF THAT’S THE WORST THE BAD GUYS COULD DO, THEN SA CAN ONLY GO FROM STRENGTH TO STRENGTH