Joburg Indaba: Recent Episodes
BizNews
On the same day that Minister of Mineral Resources Gwede Mantashe lashed out at Neal Froneman of Sibanye-Stillwater for his criticism of the government, Rutherford shared some of his reflections about the SA mining industry and the government’s impact. When a critic with no other agenda calls it as he sees it, his authenticity makes it hard to ignore. Listen to Rutherford’s views in this short clip.
Way before capital allocation was even a thing, a visit to Rutherford’s offices in London would not be complete without a deep and often fractious debate about value creation, sustainability and of course, capital allocation. It’s no surprise that we revisit this topic in this short clip where I ask Rutherford to reflect on how the capital allocation conversation has progressed over the years, both in the industry and at the Joburg Indaba.
During his 15 years as a sell-side analyst, Jim Rutherford emerged as a significant force in the world of mining, including in South Africa, as part of the US-based investment firm Capital Group. Rutherford was largely responsible for the company’s global investments in the metals and mining industry. Then, seven years ago, he made the move to the “dark side” - his words - to take on several board positions, the most prominent one - in the SA context - being Anglo American plc. Listen to this 15-minute clip to find out how Rutherford got involved in mining by accident, and yet managed to make his mark on the industry in a significant way for four decades. As we have come to expect over the years, Rutherford gives some sound and blunt advice to current mining executives and investors alike.
So much of a leader’s role is to engage with her people. Mining makes this even more challenging due to the tough conditions, skeptical audiences and language barriers. Listen to Naidoo’s response to my question about engaging the “manne” at the coal face.
Listen to Naidoo’s insights about what she has learned about leadership from mentors like Cynthia Carroll and Tom Albanese, among others.
Naidoo’s journey from her roots in Phoenix, in KwaZulu-Natal, all the way to the executive suites of the mining industry is a testimony to perseverance, deliberateness and hard work, but also the story of a humble leader who acknowledges the contribution of many others in her success. Listen to Naidoo’s journey to the top in this clip.
While the thought of a “liberal” American vice president may make some readers distinctly uncomfortable, VP-elect Kamala Harris has cracked, if not shattered a significant glass ceiling for women worldwide.
In the days following the US election, TV stations aired stories of emotional parents sharing their daughters crying with joy at seeing someone just like them, about to occupy one of the highest offices in the world. Female leaders who break through the glass ceiling to enter into leadership positions in male-dominated worlds like politics, business and mining, of course, do indeed carry a huge responsibility .
Just over a year ago, I was one of the guests invited to the official opening of the Gamsberg zinc mine in the Northern Cape. What stood out for me was that apart from the expected list of dignitaries (including President Cyril Ramaphosa) Deshnee Naidoo, the young CEO of Vedanta International was accompanied at one of the main tables by her husband, her kids and her parents. Not quite the norm for industry functions.
Sometimes actions speak louder than words: what Naidoo demonstrated that day, without saying a word, was that despite the presence of the president of South Africa, her boss, industry dignitaries, employees and local community leaders, her role as a daughter, a wife and a mother was just as important as her role as CEO.
I will never forget the pride in the eyes of Naidoo’s mother, Ms Kamala Maduramutha, when I met her that day. This “daughter of Kamala” is a role model for all, not least many young women in the mining industry!
Listen to Deshnee’s response about being a role model for women in mining.
The last word goes to Jongisa Magagula of ARM who shares how a diversified SA-based mining company thinks about dividends.
In the gold mining industry that I grew up in, two unquestionable truths predominated. On the one hand you had the mining company executives’ mantra of “anyone who pays dividends doesn’t understand (gold) mining”, and on the other was the mining investors’ response to dividends: “Why are you returning capital, are you ex-growth?” The good old days are no more! Rothschild & Co Snr Advisor Mining, Fiona Perrot-Humphrey, asks Douglas Upton (Investment Analyst & Partner, Capital Global London) and George Cheveley (Portfolio Manager, Ninety One) whether they think mining companies have successfully reinvented themselves as annuity income investments. Not quite yet!
One of my favourite sessions involves former AngloGold Ashanti CEO Srinivasan “Venkat” Venkatakrishnan. Perhaps being in lockdown in London, away from his Joburg-based family, is to blame for his insight and wisdom regarding how this pandemic will impact on capital allocation in the mining industry. He highlights how the scale, duration and global impact of the pandemic will change how mining companies structure their portfolios, think about flexibility and stress-test their plans. I love it when in a moment of reflective wisdom, he echoes Mick Davis’ point that empowered employees are critical in order for companies to increase their creation of capital during uncertain times.
Mike Fraser, the COO of South32, shares the miner’s approach to capital allocation. South32 has a clear framework and all capital allocation is governed by that. He addresses the disposal of the SA coal assets to Seriti, and South32’s plans for ferrochrome and their investment in new mines as part of a portfolio balancing-andoptimisation process.
It’s worth listening to Olivia Markham (Managing Director, Natural Resources, BlackRock) sharing her views about how the mining industry has managed to get its house in order. She talks about how the industry progressed from ill-advised capital allocation to M&A projects, to clear policies and consistent behaviour during the boom times of 2017/18. But, in her opinion, most mining companies are not investing enough in growth.
Sir Mick Davis reflects on how major mining companies need to accept the responsibility to convince investors of the need to invest enough capital to continuously replace what is being mined. He argues that the recent focus on cost has made the majors more resilient, but he is not convinced that they get the balance right between satisfying fund managers’ demands for dividends, with the ongoing need to commit to huge capex projects over long time horizons, based on very uncertain assumptions. As a CA, it’s understandable that he blames the ills of the past squarely at the door of mining engineers and geologists!
As is the norm, such an in-depth and comprehensive conversation should conclude on a more serious note. In this short clip Sir Mick shares his view regarding the one priority that the South African mining industry needs to get right.
Sir Mick Davis is a hard-nosed businessman who served as the CEO of the Conservative Party in the UK for some time. So he takes insults, banter, sarcasm and jokes all in his stride. Listen to why I described him (to his face of course) as “at least being a very smart a..hole!” He had a clever answer to what happens when he and the other “Sir Mick” (Jagger) meet up (both being “rock” stars). His reply when asked if he was the equivalent of the “Ace Magashule of the UK”, or who his children vote for, was every inch the polished politician! Listen to this clip to see how, despite being a man of great achievements and well-deserved public recognition, underneath it all, Sir Mick Davis, the boytjie from Port Elizabeth remains true to his roots!
In this clip Sir Mick shares some of his learnings with regards to megamergers. He reflects on how difficult it is to get shareholder support for such mergers and how politicians leverage antitrust issues to extract benefits and strategic advantages for their countries. But he is most critical, by far, of the concept of control premiums that are so “baked into the thinking of the market”
As it generally happens so often with new technologies, we tend to overestimate their impact in the short term, but almost always underestimate their long term impact. Davis believes that there are many technical hurdles, such as storage to overcome, but still clearly believes that South Africa should position itself to participate in the technology of the future.
Sir Mick argues that unlike the skills and healthcare challenges facing South Africa which may require decades to fix, Eskom’s problems are comparatively easier. He expands on his views, which are incisive as well as relevant due to his recent role on one of the many task teams created to fix Eskom. Davis is of the opinion that the task team got to the nub of the issues in Eskom in a very short period of time, and made some insightful and practical suggestions that were unfortunately not implemented. He explains why he believes that all is not lost as far as Eskom is concerned.
Davis shares the obvious point that without a significant local market, South Africa’s obsession with beneficiation is misdirected and does not create value. Instead, he argues that mining companies should focus their attention on increasing efficiencies in mining and logistics, thereby ensuring that they are cost-effective suppliers to international customers that can add value. This view may not get him knighted in South Africa, but he can certainly credibly comment as he has seen energy-intensive beneficiation projects from both the Eskom and Gencor perspectives.
Everyone in the mining industry knows Sir Mick Davis. His amazing career took him from his position as CFO of Eskom, to become Brian Gilbertson’s right hand man during the Gencor/ Billiton days and then culminated at Xstrata, where he really made his mark. And yet, according to Sir Mick, one of the downfalls of his success was arrogance. It was this arrogance which resulted in him misreading the market and investors to the point where the merger between Glencore and Xstrata turned into what he describes as his career’s lowest point. Listen to the full interview at the Joburg Indaba between Fiona Perrot Humphrey (Rothschild & Co’s Senior Advisor Mining) and Sir Mick. In the conversation they discuss his journey to the top and what he learned along the way. He defines leadership more as an attitude than as a specific set of skills, and says that he “went to school on both the good and the bad management practices” that he witnessed at General Mining and Eskom. He describes himself as a natural delegator, his underlying philosophy being that the people who are closest to the action make the best decisions because they have the best information. He expands on his concerns that the very focused approach regarding returning cash to shareholders in the form of dividends, does not account for the need for mining companies to reinvest in their own sustainability and in order to create optionality.
July Ndlovu would not have put his name forward to become the chair of the World Coal Association if he was not prepared to become the public face of coal worldwide. As coal is the commodity everyone loves to hate, take a moment and open your mind before you listen to the case he makes for coal, as well as for the industry’s lobby organisation. As Ndlovu says, coal is much more than just dirty energy.
My corporate-speak radar was set off when Mark spoke about Anglo American’s “License to innovate. No need to worry.” He got practical and explained that it is about reducing one’s footprint, producing more with less, and even approaching communities differently.
The fact that an Anglo American CEO can speak for 30 minutes without reference to De Beers shows how this company has changed in the post-Oppenheimer era. When asked to elaborate on De Beers and the diamond market, Mark was very clear: diamonds are in a very special place with a great future, but the industry needs to innovate, all the way from the resource, through to how it interfaces with customers.
When asked the question as to the direction he is taking Anglo American in the next few years, Mark expanded on why they are considering demerging their SA coal assets, but importantly also why they are keen to invest more in the SA mining industry. Put differently, demerging from coal does not mean divesting from SA
Blunt and honest conversations are a hallmark of all Joburg Indaba events. As well prepared as a keynote is, it often smacks of the corporate spin easily accessible through the company’s website. It is when one engages directly with the real person, not only the “prepared CEO”, that the difference between an authentic leader and a charlatan gets exposed. Mark Cutifani, CEO of Anglo American is clearly the former. This straight-shooting Australian came through the ranks of the mining industry and after a successful stint as CEO of AngloGold Ashanti, he was recruited to restore some of Anglo American’s former glory, following in the footsteps of Cynthia Carroll. Not surprisingly, Mark made a well prepared case for the future of mining in his keynote address. Cutifani’s keynote address is 25 minutes long but it’s a clip worth listening to.
The South African government’s new economic recovery plan continues to emphasise beneficiation. This obsession is indeed one policy that the ANC government is at least as passionate about as was the previous Apartheid government! Globally, it is acknowledged that in order to successfully beneficiate the raw materials a country mines, a combination of three key factors need to be considered. Listen here.
Similarly, Martyn Davies has established himself over 20 years as an expert on China’s critical role in terms of the demand for SA-mined commodities. He argues that we have missed out on the greatest industrial revolution in China over the last 20 years as a result of bad policy choices and regulatory uncertainty. Listen to his detailed views!
Claude Baissac of Eunomix caused quite a stir recently when he predicted that SA is on a trajectory that will result in it being a ‘failed state’ in the foreseeable future. In this clip he shares some more detail on the choices the country faces right now.
Roger Baxter is uniquely positioned to comment on the recently released economic recovery plan and the detailed planning that went into it, especially for the side of the mining industry. Roger’s insightful comments are definitely worth listening to!
Mark Cutifani is indeed uniquely positioned to discuss the issues facing the SA mining industry. After a very successful stint as the CEO of AngloGold Ashanti, he has his hands full overseeing the process of restoring Anglo American to some of its former glory. In his address, he talks about South Africa’s next decade of promise, and outlines three key themes. Listen to them here.
Benny Oeyen, Executive Head, Market Development at Anglo American discusses the PGM market with Anton Berlin, VP Sales at Norilsk Nickel and Kevin Eggers, Partner at AP Ventures. They were joined by Trevor Raymond, Director of Research of the World Platinum Investment Council, Matthias Dohrn, SVP at BASF and Tim Schlick, COO of the Platinum Guild International. There are not many other places where you could learn from such a distinguished panel about the prospects for PGMs so succinctly. But be warned…you would want to buy some exposure to PGMs after listening to this!
Neal Froneman has taken Goldfields’ cast off SA gold assets and converted them into a significant precious metals company. In 2018, during safety incidents, he feared for the company’s survival as it was caught with huge debt post its acquisition of Stillwater, the Montana based palladium mine. Now he is ready to diversify, even beyond PGMs and gold.
Nico Muller, CEO of Implats, and Natascha Viljoen, CEO of Anglo American Platinum put forward convincing arguments for why being in Zimbabwe at this time still makes sense.
Natascha Viljoen, Anglo American Platinum’s new CEO is clear about where she is taking the company and what she needs to do. Here is her response when asked by Joburg Indaba Chairman, Bernard Swanepoel, about her new role and how she plans to reimagine the future of mining at Anglo American Platinum.
It is amazing that despite so many passionate anti-coal crusaders on social media, it is difficult to get these ‘activists’ to leave the comfort of their echo-chambers to engage with the coal mining industry. Even in a clear area that will require multi-stakeholder participation, like a just transition from fossil fuels to renewables, we prefer to talk about each other rather than with each other! The upcoming Joburg Indaba on 7 and 8 October will take this topic forward with a keynote address by André de Ruyter. At the recent Coal Day, John Smelt, an ex Rio Tinto executive responsible for Investor Relations, shared some sober views about how ESG investors are causing major mining companies and funders to avoid coal mines and projects.
Two months ago, at the Joburg Indaba Coal Day, panel leader, Ian Cockerill asked the panelists about their views on the challenges facing the coal industry, and their specific company’s responses to these. Hear what CEOs Mike Teke (Seriti Resources), Lucky Kgatle (Sasol Mining), Vuslat Bayoglu (Menar) and Bontle Aphane (Arnot OpCo) have to say.
It's not often that erudite, articulate and dapper Stephen Forrest goes on a rant… but when he does it’s worth listening to!
It is not surprising that the mining industry has responded both speedily and efficiently to both the pandemic as well as the subsequent lockdown restrictions. At last month’s PGMs day, Roger Baxter, CEO of the Minerals Council of SA gave an insightful overview regarding why the mining sector is leading our country’s Covid-19 response.