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Former CEO blames 'out-of-touch' American for Amplats bust-up Chris Barron, Sunday Times, Johannesburg, 12 April 2015 Former Anglo Platinum CEO Neville Nicolau says he might have been able to save the world's biggest platinum miner from last year's crippling five-month strike if he had not been given the cold shoulder by Cynthia Carroll. At the time of their disagreement, the US-born Carroll was CEO of Anglo American, which owns 78% of Anglo Platinum, and chairwoman of Amplats. Nicolau, who was CEO of Amplats from 2008 to July 2012, said in an interview that he took a "very significant" proposal to the Amplats board about how it could survive falling platinum prices and looming labour strife - but the board was not interested. "Cynthia Carroll disagreed completely with what I wanted to do with the company," he says. Nicolau's frank admissions mark the first time that the boardroom unhappiness about Carroll's leadership style has spilt out. Carroll left the group in November 2012, shortly after Nicolau, under intense pressure from shareholders. "There were certain actions which I needed to take. Amcu [the Association of Mineworkers and Construction Union] was on its way in and there was a better way to manage that. The metal price was on its way down and there was a better way to manage that. There were opportunities to consolidate the platinum sector." A strike seemed inevitable, Nicolau says, "but with a bit of mature, positive leadership I think the issues could have been resolved within a month and not five months". He says Carroll, the first non-South African to lead Anglo, never wanted him to be the CEO of Amplats in the first place. At the time, Anglo was under huge pressure from the government to improve its safety record - and Carroll apparently believed Nicolau was part of the problem. "Because I was part of the South African mining industry, my own record didn't count. She thought I had blood on my hands. They tried very hard to find someone from overseas to run Amplats," he says. "We crossed swords from the very beginning. As long as Fred Phaswana (above) was the chairman of Amplats, it was possible to resolve differences by using him as the mediator." When Phaswana left in 2010, Carroll "made herself" chairwoman and overruled her more experienced CEO, he says. Nicolau, who now heads Basil Read, was highly rated by analysts who believed that if anyone could fix the badly ailing Amplats, it was him. Carroll, however, fundamentally disagreed with him about how to do it. Her answer to falling prices was to reduce production, a strategy that she believed would boost demand. "For us to have cut huge amounts of production would not have brought metal prices [about $1400 an ounce at the time] up. Just to pay for the cost of cutting labour and shutting shafts, the price would have had to go to $2800," Nicolau says. A quarter of Amplats's production at the time came from joint ventures - half of which were losing money at an operations level. Carroll argued that they could not be touched because they were black empowerment joint ventures. "Even if they were, they needed to be addressed," says Nicolau. "Just because it's an empowerment joint venture doesn't mean it gets away with costing Amplats money. Certainly for Amplats to close its mines down while it was keeping marginal production going for other reasons was, in my view, flawed." For similar reasons, Nicolau (below) says Carroll would not let him consolidate the industry by buying out some of the junior players that were mining the same ore body as Amplats and "triplicating" infrastructure. He says the real problem was that she had told the market that she had launched a review, "from London", of all the assets of Amplats, and that that exercise had until the end of that year (2012) to come up with a proposal. Nicolau told Carroll they could not afford to wait. "By the middle of the year, we hadn't done things we were supposed to do," he says - things such as dealing with the consequences of cutting production. "If you're going to close down production, the right way to do it is to go and talk to government and labour, and look for options to avoid retrenchment." Carroll told him they would wait until the end of 2012 to make the announcement. He left in July that year, and when his successor, Chris Griffith, made the announcement at the end of the year "under Carroll's instruction", the consequences were disastrous. "It put the NUM [National Union of Mineworkers] into a very difficult position. Amcu was knocking at the door; they were all over the place, and this opened the door for them to come into Amplats," he says. It also provoked the wrath of the then mining minister, Susan Shabangu, who said that if Amplats was going to close mines she would take away its licences for those mines. To make it worse, says Nicolau, the mines they were closing were profitable ones. Carroll, he says, was out of touch. "You had [her] running the thing from London bringing American rules to Africa, and it really didn't work out well." After he quit, Anglo American denied there had been any difference of strategy between them - spin that Nicolau says, in effect, was a lie. "We had completely opposite views on strategy in terms of handling labour relations, the market, production levels, joint ventures and black empowerment." Nicolau's views on developing the platinum market, for instance, were profoundly different. "That naive approach, 'We can be strong in this industry, we can just cut production and the price will go up and people will continue to pay for it' - they have options, they don't have to use platinum," he says. Indeed, faced with the prospect of higher prices, major customers such as car manufacturers simply began to recycle platinum. Nicolau says Carroll made sure she was backed by a largely servile board. "But, honestly, I actually do have some experience of South Africa, and I do have some knowledge of running mines in South Africa. "So when I say something different to what Harvard Business School suggests, then you should at least listen to me and debate it with me." Attempts to contact Carroll overseas were unsuccessful. However, she has previously brushed off criticism of her leadership style from certain shareholders, saying you couldn't satisfy everyone. From: http://www.timeslive.co.za/businesstimes/2015/04/12/former-ceo-blames-out-of -touch-american-for-amplats-bust-up -- -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . 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