"Create the world’s best mining company.” That was the mandate from the board of Anglo American to incoming chief executive Mark Cutifani.
“We’ve certainly got the assets, the people and the will,” he said, after the company announced his appointment .
Was that all it would take?
“I’m a mining engineer, I have to keep it simple,” was his wry reply.
Mr Cutifani, a 54-year-old father of seven, joins Anglo American from Johannesburg-based AngloGold Ashanti (Other OTC: AULGF - news) , the world’s third biggest gold producer. Nonetheless, his appointment represents a step up into mining’s major leagues. And with the new post and salary a cool £1.2m basic a year come major problems, too.
The City sees three key areas for Cutifani to tackle the delicate situation in South Africa, where Anglo American has major exposure; its flagship Minas-Rio iron ore project running over-budget and behind schedule in Brazil; and poor performance at its copper business.
These issues are not unique to Anglo, but the scale of its exposure arguably is.
In South Africa, where the platinum belt has in recent months been the backdrop for the worst violence since apartheid, the company is the largest private sector employer, with its subsidiary Anglo American Platinum (Amplats) the world’s largest producer of the metal.
It seems the situation in South Africa is the most likely to offer some immediate news, with Anglo poised to announce the outcome of its review of Amplats in the next few weeks.
Anglo is under pressure to move down the cost curve, by mothballing or cutting production at mines that are more expensive to run, but there would be political difficulties around this given the current incendiary atmosphere.
The ability to smooth relations with local politicians will be key, with Carroll having won ground by improving Anglo’s safety record. Cutifani is as well-prepared as anyone can be. He is president of the South African industry body Chamber of Mines, and on Tuesday said he had a “good, open and honest relationship” with the mining minister.
One solution could be to spin off Amplats so that it becomes an independent entity, removing the South Africa shadow from Anglo’s own stock. However the company’s appointment of a man who is a seasoned operator in South Africa and deep mining suggests that might not be the favoured plan.
Navigating local relationships will also be crucial to the vast Minas-Rio project. Analysts suggest that while Anglo puts the value of its troubled iron ore growth effort in Brazil at more than $10bn (£6.2bn), the market puts it at precisely zero.
Carroll’s October resignation followed yet another cost overrun at the project, which marked the fourth increase in expected spending since it was bought in 2008, amid legal problems and bureaucratic delays over permits.
Cutifani has been grilled by the board on his experience in Brazil, responding that he has a 15-year association with the country and a “pretty good experience in understanding South America in all his complexities.”
But here sentiment is more negative. The Barclays team put a radical suggestion on the table walk away. “Simply abandoning it and thereby saving at least $5bn in capex could begin to look like a viable option if a local partner cannot be found,” they advise.
Then there is the disappointing production from the copper business, long a source of headaches for Anglo, which only recently settled an embarrassing spat with Chile’s state-backed miner Codelco over valuable copper assets in the Andes at the Los Bronces mine. That operation is still causing issues, as is the Collahuasi mine, which Anglo operates with rival Xstrata (Other OTC: XSRAF - news) .
It has been the story familiar to mining of problems snowballing high employee churn, equipment failures leaving production under potential. Simply offering achievable guidance would be seen as an improvement here.
In addition to tackling these operational issues, Cutifani has one more route to shareholders’ hearts. As Anglo, like the rest of the majors, pulls back on capital expenditure in the face of a waning commodity price boom, a dividend increase from its cash pots would be a way to offer investors some hope of change.
They might take more cheer, however, from the prospect of Anglo being talked of as a potential takeover target for predators such as the newly born Glencore Xstrata giant. Cutifani would have to work wonders to put Anglo’s share price on such an upwards climb that the chatter is silenced.
He was careful on Tuesday to not commit to certainties as he had not yet got his “feet under the table”. But he did signal a readiness to tackle threats head-on as he outlined the challenge ahead.
“It’s about key stakeholders, both social and business. In the end, if we don’t create value for all our key stakeholders we don’t have a future.”