Listen to the Anglo American chief executive’s careful explanation of the mining group’s strategy and you might think you were listening to Lewis, not Cynthia Carroll. Like Alice in Wonderland, Ms Carroll sometimes sounds as though she’d like to be bigger, sometimes smaller (or at least leaner); she wants to be broader but more focused; and she doesn’t need to do a transformational deal, but is keeping her options open in case one comes along.
Ms Carroll seems to be succeeding in these apparently contradictory aims. Anglo’s bolt-on acquisitions in 2007 increased the group’s exposure to iron ore. Talks to gain control of two projects from MMX Mineracao of Brazil aim to further that objective, and would, as a side-effect, improve Anglo’s global breadth. Meanwhile, the spin-off of Mondi, the paper business, and the gradual cut in Anglo’s stake in AngloGold Ashanti, have sharpened the group’s focus. The sale of Tarmac — now deferred — would have helped, but if the division’s operating profit continues to grow strongly, as it did last year, shareholders cannot complain about its continued presence in the portfolio.
The looking-glass logic is a little more fragile when it comes to consolidation. With BHP Billiton set on taking over Rio Tinto, and Vale in talks with Xstrata, there is not much left for Anglo. It is therefore convenient to imply that such a large acquisition is unnecessary. In the long term, though, investors don’t need to worry whether that position is intentional — as Anglo says — or accidental. Anglo could go after a big rival if either of the currently mooted deals fell through, though the price would have to be right. Alternatively, it could continue to concentrate on cutting costs, pursuing smaller but still substantial deals (the MMX projects would cost the group $5.5bn), and building political bridges in South Africa. None of these initiatives will light a fire under the share price in the same way that talk of consolidation can. But the lack of takeover temptation could be positive. Of the chief executives of the world’s biggest mining groups, only one can credibly claim that she is fully committed to the day-to-day running of the business, undistracted — for now — by the lure of mega-merger wonderland.