Business Day
*Anglo boss urges tough line to halt mine unrest*** *Allan Seccombe, Business Day, Johannesburg, 22 October 2012*THE mining sector will remain in turmoil until the government takes a firm stance to ensure that normality returns, says Anglo American CE Cynthia Carroll.
Ms Carroll was in South Africa last week for a series of high-level meetings with government ministers and officials to impress on them the damage the unrest is doing to South Africa's image among investors abroad, and to make the point that "law and order" had to take priority.
She said on Friday the labour unrest could not have come at a worse time for the platinum industry, and it would take a fresh and collaborative approach by all mining companies to resolve underlying causes.
Of the world's biggest diversified mining companies, Anglo has the greatest exposure to South Africa. Two of its key operations in South Africa --- Anglo American Platinum and Kumba Iron Ore --- have been hit by the strikes flaring since August, leading to billions of rand in revenue losses. Thousands of jobs have also been cut.
Ms Carroll met Finance Minister Pravin Gordhan and Mineral Resources Minister Susan Shabangu. She said the two ministers understood the seriousness of the damage being done.
"What we are looking for right now, the starting point, and what we've been really reinforcing in our meetings with the government, is law and order. It starts with law and order," Ms Carroll said, in her first public comments on the strikes.
Mr Gordhan and Reserve Bank governor Gill Marcus have warned of the negative effect the strikes would have on South Africa's growth outlook and jobs. Ms Shabangu has said investor sentiment is being damaged by the strikes.
*Engagement*"We are very committed to this continent and South Africa. This is where our roots are and where we have our largest concentration of employees. Fundamentally, I believe in the country and the ministers I'm dealing with are great. They want to do the right thing," Ms Carroll said.
"They have a sense of urgency and they understand this is ultra-serious and that the solutions will not come from one organisation or the private sector ... and we need to get on with dealing with these issues together. It will be about engagement," she said.
Asked what was behind the well-organised strikes that flared up quickly and in similar fashion at a variety of mines, she said: "I don't know. I don't think anybody really knows. This is a very unusual set of illegal strikes that are happening. There's got to be some element of politics at play."
Amplats, 80% owned by Anglo, has fired 12,000 staff from its Rustenburg mines for refusing to return to work and said they would not be reinstated, a message Ms Carroll hammered home.
*"We will not accept criminals"*"We will not accept criminals in our organisation. We will not accept people intimidating or killing people, burning them alive. We had that happen last week. It's brutal and it's gruesome. It's completely, completely outrageous to suggest the mining industry is doing all the wrong things. This is just not right," she said.
"We (the mining industry) need to do more but it's not going to happen under these kinds of circumstances. We will not have open, constructive, collaborative sort of dialogue and thinking. It is combative, it's pure intimidation and threatening in every sense," she said.
Rating agency Standard & Poor's last week revised its outlook on Anglo to negative from stable.
"Our view is that Anglo American's business risk profile is weakening because of rising South African country risks," the rating agency said. "Our reassessment of South African country risk follows the recent series of strikes and increased underlying social tensions and inequalities, which translate into a weaker business and investment climate in our view."
Ms Carroll said the first question she heard from investors now was about South Africa and how the matter would be resolved, making it one that could not be answered "with a lot of ease".
"It's top of mind and they are very preoccupied, wondering where this is going to lead, how do things get back under control and how we regain confidence and credibility? The S&P and Moody's ratings are not at all helpful in this regard," she said.
*SA platinum sec**tor was already loss-making*The South African platinum sector was in a loss-making position before the labour unrest started at Lonmin and spread to other mines in the Rustenburg area before spilling over into gold, iron ore and chrome.
Commodity markets are weak, with a slowing Chinese economy, and poor performances in the US and European economies.
"That's the environment today for all of us. Prices are way down for the most part ," she said. "More specifically on platinum, this is not the time to be fooling with the platinum industry.
"My biggest worry, and I've said this to the government, is that it puts the platinum sector at risk. We need to ensure a long-term, competitive industry. We can't have a situation where an operation is here today and gone tomorrow. We can't accept that or tolerate it," she said.
"We can't have customers wondering what is going on in South Africa, with all these people walking out and not going back to their jobs. How dependent on this industry can they be if that's how it's going to be," she said.
BHP Billiton, the world's largest resources company, has warned that demand for commodities that go into making steel is slowing as growth in China cools, lowering its estimates to 7%-8% this year.
"In effect, what this means is that the record prices we experienced over the past decade, driven by the 'demand shock', will not be there to support returns over the next 10 years," CE Marius Kloppers said last week.
*From: http://www.bdlive.co.za/business/mining/2012/10/22/anglo-boss-urges-tough-line-to-halt-mine-unrest*
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