Mark Cutifani stepped down as the chief executive officer of Anglo American last month a happy man, having saved one of the world’s biggest mining companies from almost certain destruction.
But his swift overhaul did more than rescue debt-ridden, accident-prone Anglo. The shakeup helped to position the company for a low-carbon future.
The global mining industry was turned on its head in the past decade. The old formula – gouge great holes in the ground and damn the financial and environmental consequences – worked fine. Until it didn’t.
Mainstream commodities such as coal became environmental pariahs, forcing mining companies to try to clean up their acts and embrace the “green” metals that would power the low-carbon future. Strong shareholder returns and capital discipline went from afterthoughts to necessities. Running companies on environmental, social and governance (ESG) principles went from fad to familiar, and global supply chains went from reliable to potential liabilities.
Mr. Cutifani, 64, saw all these changes and propelled a few of them himself during his tenure at one of the world’s biggest mining companies.
In 2016, Anglo’s market value fell below £3-billion and there were rumours that the affable Australian might ride the coal chute into early retirement. By the time he finished his nine-year term as boss, the company was worth more than £50-billion and had been praised as a market outperformer, one with compelling shareholder returns.
“At first, there was not a great focus on returns. You tried to make some money but the really sharp focus on returns simply wasn’t there,” Mr. Cutifani says. “We changed that.”
Mr. Cutifani is speaking to me from the back of the chauffeured car that is taking him from Anglo’s head office to his home in Surrey, outside of London. He will remain on the Anglo payroll until June 30 to help his replacement, Duncan Wanblad, 54, make the transition. Mr. Wanblad, a South African, is a three-decade Anglo insider whose last position was director of strategy and business development.
Over the past decade, Mr. Cutifani and I met in the most unusual spots. Our first encounter was at a Vatican mining conference in Rome in 2013, the year he was appointed CEO. He and a few other Big Mining bosses were learning how to inject more of the Holy Spirit into their digging activities. Translation: how to use cultural and religious respect and engagement to win the support of Indigenous communities.
He and other mining bosses realized that the strategy, if done with sensitivity, could produce heavenly results. “If you can do a good job in your local communities, invariably, the regional and federal government players will be supportive because, in the end, all politics is local,” Mr. Cutifani says.
The second time I met him was later the same year at a gold mine Anglo did not own in Chelopech, Bulgaria, of all places. The small mine belonged to Toronto’s Dundee Precious Metals and Mr. Cutifani was there to learn how the Canadians had reduced costs by about 50 per cent by installing a range of then-novel (for a mining company) technologies, including automation and underground data networks. From 400 metres below the surface, we connected our phones to the WiFi and were able to make perfectly clear calls. “This is where the innovations are, in the small mines,” he said at the time, decrying the lack of technology in Anglo’s own mines.
But his dreams of investing fortunes to turn Anglo’s coal, copper, iron ore, nickel, palladium and diamond operations – Anglo owns De Beers, the world’s second-largest diamond miner by volume – into tech-laden, low-cost wonders would have be put on hold: Anglo found itself fighting for its life only a couple of years after he joined the company.
In late 2015 and into 2016, a relentless downturn, partly driven by the economic slowdown in China, battered the global commodities markets. Anglo was overleveraged and suffered more than many of its rivals, though the company was already in the doghouse. In the years before Mr. Cutifani took charge, Anglo had alienated investors through massive cost overruns, uninspiring leadership, antiquated technology and a series of labour disputes, including a particularly nasty one at its South African platinum mines.
The existential threat to Anglo gave Mr. Cutifani the excuse he needed to overhaul the company in a hurry. Underperforming mines were shown no mercy and were closed or sold. Of the 68 mines he inherited in 2013, only 37 are left. Yet the company’s output is 10-per-cent higher today and will keep rising when the new US$5-billion Quellaveco copper mine in Peru opens in June. Layers of management were also eliminated, with the top 150 executives whittled down to 90. The surviving mines were stuffed with new technologies and the company took on a more industrial approach, creating, for instance, a trading business to market the commodities.
Anglo’s shares rose. In the past two years, they surged as everything from metallurgical coal to iron ore prices took off, allowing the company to pay fat dividends. Total shareholder returns, including dividend payments, have averaged 22 per cent a year during the Cutifani era. None of the Big Mining companies has performed better.
Mr. Cutifani looks and talks like a miner, with his short, stocky build, crew cut and penchant to speak his mind. He is the father of seven children from two marriages, loves Aussie Rules football and is fond of Led Zeppelin.
The son of a working-class Italian father and an Irish mother, he knows mines from the bottom up – unlike some rival mining bosses who never toiled in underground or open-pit operations. He worked his way through university in the coal mines near his hometown of Wollongong, about 80 kilometres south of Sydney, and did so again after graduating with a mining engineering degree.
Mr. Cutifani later worked in Canada at the nickel operations of Inco from 2003 and 2007, then moved to South Africa to become CEO of AngloGold Ashanti.
Six years later, he replaced Cynthia Carroll, Anglo’s Canadian CEO, who was the first woman boss since the company was founded in 1917 in Johannesburg by Sir Ernest Oppenheimer. Mr. Cutifani’s arrival was essentially a rescue mission. Ms. Carroll had struggled with certain mines, notably the Minas-Rio iron ore project in Brazil that went years behind schedule and billions of dollars over budget. A US$4.9-billion charge against the project in 2012 turned Anglo into a money loser that year.
After sparing Anglo from the scrap heap, Mr. Cutifani found himself shaping the company to meet the new realities of ESG investing.
The big ESG move happened a year ago, when Anglo spun off its climate-unfriendly South African thermal coal business into a new company called Thungela Resources, whose shares have climbed eightfold. He views the move as a double win. “We have two lots of happy shareholders – those who are happy we got rid of thermal coal and those are happy they own Thungela, which has been a spectacular success.”
Mr. Cutifani pushed hard elsewhere on the decarbonization front. The company vowed to achieve carbon-neutrality in its operations by 2040 and set a goal of cutting its Scope 3 emissions by 50 per cent by then as well. Mining companies’ Scope 3 reductions are exceedingly difficult to achieve because they cover the indirect emissions from their value chains, notably the use of the commodities processed by their customers.
Anglo is moving toward the net-zero target, though the early gains are always the easiest. Soon, fully half of the power used in its operations will come from renewables. This month the company is rolling out the first of a fleet of massive – and clean – hybrid haulage trucks, each powered by a hydrogen fuel cell and a battery pack. Ballard Power Systems of Burnaby, B.C., was one of the partners on the project.
He pinned the company’s growth on copper and platinum – two metals essential for the low- or zero-carbon energy future – and polyhalite, a sulfate mineral that is used in organic fertilizers. He is convinced that there are not enough of the metals to produce the electric-car batteries, wind vanes and solar panels needed to accelerate the energy transition, and that a lot more will have to be found.
Mr. Cutifani has no plans to retire. He’s on the board of French energy giant TotalEnergies and intends to join the board of a big construction company. He is also rather obsessed with supply chains and how to make them more resilient. It’s a hot topic. Because of the pandemic, many manufacturers have trouble finding crucial components, such as computer chips. Because of the war in Ukraine and the embargoes and sanctions that are being used to punish Russia, oil, natural gas and fertilizers are in suddenly short supply.
“We need to think differently about value and supply chains,” he says. “Companies need to watch them so they don’t run short of critical materials and I think that is starting to play out now. We might have to go back to the model of the sixties or seventies, where companies often managed their whole supply chain, just like the Chinese are doing now.”
Mr. Cutifani doesn’t know exactly how he will get involved in supply chain design, but he knows it will happen. The golf course is simply not on his agenda: “No one will allow me to retire because no one wants me around the house all day,” he says. “Those are the ground rules.”
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