Anglo American CEO 1

Count the last decade as a loss – Anglo American CEO

The last ten years should be regarded as a lost decade for the South African mining industry, said Anglo American CEO Mike Cutifani, as he addressed delegates at the 2014 Joburg Indaba which began on Wednesday.

Anglo American CEO 1 “We have the single largest measured minerals inventory in the world here (but) in the course of the last ten years, real values in terms of the prices for our (mining) companies listed on the JSE have declined by 30%. At the same time, the rest of the JSE has performed exceptionally well…” he said. For an industry that is the most important driving force of the local economy, (directly and indirectly contributing 18% to GDP), this is simply not good enough, he said.

He believes that the key to turning the industry’s fortunes around, is relooking at the development pricing framework – which along with market fluctuations places additional pricing risk on mining companies – and efficient management of increasing costs (specifically, labour, utilities and transport), the uncertainty of which is a major cause for concern.

Anglo American CEO 1Transformation is another issue that makes international investors wary of the South African mining landscape. Investors understand the need for transformation, but when it becomes a dominating topic of conversation, they get nervous, Cutifani said.

Putting it bluntly, Cutifani said that the economy needs to get money from international investors as it cannot generate growth internally. Investors are driven by returns and if the returns are negative, they will pull out and there will be no investment to speak of. All stakeholders, workers and government included, need to be made aware that this should be the ultimate focus. The situation, where $6 billion invested in mining over the last ten years, has been accompanied by negative returns, cannot continue.

Anglo American CEO 1Cutifani commended the Minister of Mineral Resources, Ngoako Ramatlhodi (who gave the keynote address at the conference), on his candid approach to his new post in the cabinetry. He listed Ramatlhodi’s resolve towards ending the platinum strike and willingness to engage mining companies in developing policy, as an indication that the industry is fortunate to have him representing it at government level.