Shares in Anglo American rose strongly on Friday after the firm announced that its Chief Executive Officer (CEO) Cynthia Carroll called it quits after five years on the job.
Carroll, who joined the Anglo American board in January 2007 and took up the CEO position in March of that year, is thought to have been under intense pressure from investors on the back of a declining share price and the company's significant exposure to the volatile South African mining industry which has been hit by countless strikes this year.
Chairman John Parker has quashed rumours that Carroll was pushed out but said that there had been "difference of opinion" with shareholders.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"Ultimately, running Anglo is one of the toughest jobs around and, although Cynthia made a good start as CEO, the feeling is the company has gone backwards in the last two to three years," he said.
The shares, down over 18% over the last six months, were up nearly 4.0% in afternoon trade at 1,931p.
She is also to relinquish her position as Chairman of Anglo American Platinum (Amplats) and of De Beers when she steps down. However, she will retain her respective positions until a successor has been found and an appropriate transition has taken place, Anglo said. The company has commenced the look-out for another CEO.
Carroll's exit a surprise, says analyst
Analyst Michael Shillaker from Credit Suisse admitted that the timing of the resignation came as a "slight surprise".
"An area of strength for Carroll had been safety and government relationships in South Africa (SA) and we expected her to see through the platinum restructuring where a plan was expected to be released to the market by year end. A successor could take some time so still may see this through," Shillaker said.
Explaining her decision to step down, Carroll said: "It has been a great honour to lead Anglo American. I am extremely proud of everything we have achieved during my period as Chief Executive and I will always retain enormous admiration and affection for this great company and its outstanding people.
"It is a very difficult decision to leave, but next year I will be entering my seventh year as Chief Executive and I feel that the time will be right to hand over to a successor who can build further on the strong foundations we have created," she said.
Credit Suisse thinks that her departure could mean that Anglo's Minas Rio iron ore project in Brazil is performing worse than expected.
"Latest capex [capital expenditure] guidance is $5.7bn but the project continues to struggle on licensing/permitting issues and capex could rise to over $7bn. We remain of the view that any restructuring of AAL to unlock the SOTP [sum-of-the-parts] discount will be difficult to enact as many of the fundamentals (SA exposure and difficulty to spin out assets, weak growth, Minas Rio) will remain the same with or without Carroll," Shillaker said.
He suggested that De Beers, the company's 85%-owned diamond producer, is an "obvious divestment option".
The group said in a statement: "Under Cynthia's leadership, after a record year in 2008, the group successfully weathered the global financial crisis.In 2011, Anglo American again achieved record profits, for the group as a whole and in four of its seven Business Units, as well as delivering three major projects from its substantial project pipeline, enabling it to enter the current economic downturn in a strong position."
