By Jason McLure, January 2013
Published Jan 10, 2013
In 2007, Anglo American PLC’s new chief executive officer Cynthia Carroll had just finished touring the mining company’s massive platinum operation in Rustenberg, South Africa, when one of her managers tapped her on the shoulder. “I’m sorry,” he said. “We’ve had another fatality.”
The news came as a slap to Carroll’s efforts to rapidly improve worker safety at the world’s fifth-largest mining company, which had been averaging about 45 worker deaths annually at the time. The most dangerous of the company’s mines are its platinum operations, where workers often labor in tunnels thousands of feet underground in wet and slippery spaces too small to stand in. “I said, ‘this is it,” Carroll told a group of Tuck students Jan. 9, during a discussion sponsored by the school’s Center for Global Business and Government and the Center for Business and Society. “This is out of control, we do not have a handle on it.”
Carroll’s response was swift: she halted operations at the world’s largest platinum mine, which employed 30,000 people. Anglo’s Rustenberg mines stayed closed for seven days while the company worked to improve its safety procedures—a closure that cost the company millions of dollars and opened Carroll to criticism from executives that felt that some worker deaths were an unavoidable consequence of platinum mining.
In a wide-ranging discussion with Phillip Stocken, a professor of accounting at Tuck, Carroll, 56, said the effort to improve safety resulted in 60 percent fewer deaths and was one of the main accomplishments of her six-and-a-half-year tenure. The American-born Carroll announced her resignation in October and in April will depart the 96-year-old London-based company, where she had been the first woman and first non-South African chief executive.
Stocken, a South African native, led a group of Tuck students to South Africa last year as part of a for-credit Learning Expedition, where they met with managers from Anglo American, McKinsey, and retailer MassMart. Carroll responded to a number of questions from Stocken and students about her company’s relationship with South Africa, where the metals, coal, and diamond company has about 40 percent of its mining assets.
Members of the ruling African National Congress party’s youth league have recently called for the nationalization of mines, and the industry was crippled late last year following a wave of wildcat strikes that followed the August killing of 34 striking workers from a rival company’s platinum mine by South African police.
“It’s pretty bad. I think there’s a lot of unease,” she says of the current unrest in South Africa. “It’s about unemployment, poverty, indebtedness, and people who have just been on the street too long. Those problems aren’t going to go away.”
The problems that have led to the unrest extend beyond the mining sector, but the company has been forced to respond. “It has been a wake-up call and we do recognize there is no room for complacency,” she said. “The way we were doing business a year ago is no longer the case today.”
She says that nationalization of South Africa’s mines appears to be off the table—at least for now. “If they want to take on ownership [of mines], we would expect them to take it on in a business-friendly sort of way,” said Carroll. “They shouldn’t just come in and claim they own 51 percent. I’ve said repeatedly to [President] Jacob Zuma, I’ve said to multiple ministers: we will not be anywhere with a government that does not subscribe to a free enterprise economy and capitalism.”
Nor is political risk unique to South Africa, particularly in an industry where companies invest in mining projects that they plan to operate for 30 or more years. The company also faces risks in other mining hubs, including Peru, Brazil, and Chile, Carroll added. Maintaining local support for mining is a key to the industry’s long-term health, Carroll said. To do this, the company spent about $130 million last year on social initiatives that included testing 110,000 workers and family members for HIV/AIDS, distributing anti-retroviral drugs, and supporting the development of small and medium-sized businesses in mining areas. Carroll counts Anglo-American’s social responsibility initiatives as among her achievements.
“Whether it’s Peru, Brazil, or Namibia, we’ve got to be thinking broadly about what the communities need and how we’re going to serve them,” says Carroll. “Because we’re going to need their support for the very long term.”