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Problems weigh on Anglo American

The South African mining giant needs to find a new chief executive - but that's the least of its problems.
November 8, 2012

The resignation of Anglo American's (AAL) chief executive, Cynthia Carroll, certainly played well with the stock market. Shares in the South Africa-focused mining giant ticked up nearly 4 per cent after Ms Carroll said she was leaving. Despite this upwards blip, the group has entered a transitional phase at a time of heightened industrial and social unrest in South Africa. So, although Anglo's share price is 34 per cent off its 12-month high, there are factors that could push it much lower.

IC TIP: Sell at 1935p
Tip style
Sell
Risk rating
High
Timescale
Long Term
Bull points
  • Wildcat strikes
  • Lost platinum production
  • Problems at Minas Rio
  • Debt rating downgraded
Bear points
  • Change in leadership
  • First-class mines

Apart from its timing, news of Ms Carroll's resignation caught few industry analysts completely by surprise. The mining giant's share price fell during her nigh-on six-year tenure. So, after years of underperformance, a change of leadership was predictable, particularly considering the growing dissatisfaction of some of Anglo's major shareholders, such as BlackRock.

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