South Africa is a focal point of Anglo American’s much-publicised, across-the-board operational review, which was fleshed out in an investor day media conference call hosted by Anglo American CEO Mark Cutifani.

The investor presentation, which took place from London, was webcast live on the Anglo American website.

Cutifani, who took over as CEO from Cynthia Carroll in April, told Mining Weekly last July that at the top of his to-do list was to lift the current 11% success rate on delivery of operational targets to a better-than-75% success rate.

He said after reporting 28%-lower $1.3-billion underlying earnings for the first half and a 15%-lower underlying operating profit of $3.3-billion that the currently lowly ranked diversified major had the potential to become “a cash flow engine”.

At the time, the company had been running on an 8% return on capital employed, while 15% was breakeven, which meant it needed to find $3.5-billion in savings.

Some $1.3-billion was found in the areas outside the operations and the balance, plus more in the operations, was being sought.

“That’s where the focus of our work will be as we finish off the operating reviews,” Cutifani told Mining Weekly at the time.

The company’s operations have delivered on their budgets only 11% of the time over eight quarters and Cutifani is looking for a 75%-plus success rate on a quarter-by-quarter basis, which demands a different way of running the operations to deliver the remaining $1.3-billion to the bottom line.

“It’s a big number, it’s important and it’s the most fundamental thing we can do to deliver on our potential,” Cutifani said at the time.

The second critical step is to deliver on major projects – work in progress – that are taking up 30% of the balance sheet but not delivering commensurate returns.

Cutifani complained of the project pipeline being “constipated” as a result of several projects being advanced to prefeasibility stage too quickly, which then required a high level of commitment of resources to optimise.

Anglo American, under Cutifani, has taken steps to work collaboratively with the South African government to determine what government is looking for from Anglo American.

The hope was to strike up a constructive partnership with government to be able to deliver value to all the company’s stakeholders.

“If we can get that right, then the South African mining industry will go a long way towards improving its position and performance in the global mining industry. If we don’t get it right, then, in my view, South Africa won’t get it right,” Cutifani told Mining Weekly at the time.

Anglo has probably been the least aggressive of the diversified majors in optimising sales prices and estimated that there was a $500-million improvement opportunity that should be implementable as a profit uplift.

Its former 16 levels of management have been reduced to 11.

While CEOs tend to emphasise the strong points of their mining businesses, Cutifani has promised, in future, to also be far more transparent about the risks that the company faces.

“What we’re going to try to do is to let you know where the risks are and what we’re doing to minimise the potential disruptions to the business,” he promised, adding that the company has introduced a risk scorecard.