Anglo American's future: Out of the minefield IN AN industry noted for its conservatism, Anglo American stood out. Even more than other global miners, it was stuck in its ways. So the appointment of Cynthia Carroll as its boss in 2007 was unexpected. Unlike all her forerunners, she was neither South African, nor an insider, nor a man. For a firm that trailed its rivals and was missing out on an extraordinary commodities boom, she seemed just the tonic. Granted, some managers were irked, and remained so throughout her tenure. Lately more shareholders have joined the grumbling. Anglo's ills are multiplying. Its South African mines have been racked by strikes. Its copper assets in Chile are contested. Its iron-ore projects are delayed. On October 26th Mrs Carroll announced that she would quit after a successor is chosen. Some of the barbs aimed at Mrs Carroll are unfair. She made Anglo's mines safer places to work and improved relations with governments. Operationally, Anglo did fairly well. But compared with other mining giants, such as BHP Billiton and Rio Tinto, it has lagged badly. Since 2007, when all three got new bosses, Anglo's shares have fallen by 25% whereas Rio's are up by 40% and BHP's by 115% (see chart). Slow-moving Anglo failed to strike transformational deals of the sort that built BHP and Rio into immense, diversified mining groups. As Ben Davis of Liberum Capital, a bank, points out, Anglo didn't have the right mix of commodities to take advantage of Chinese growth. And Mrs Carroll failed to decide whether to ape Rio and BHP or make the most of Anglo's distinctiveness. Rio and BHP have huge and lucrative iron-ore operations - an area where Anglo had failed to bulk up. To put this right Mrs Carroll did her biggest deal - the acquisition for $5.5 billion of Minas Rio, a giant Brazilian iron-ore mine, in 2008. Alas, this was at the top of the commodities cycle. And Brazilian red tape has led to delays and spiralling costs for a mine that may not produce ore until 2015. Meanwhile, China's slowdown means that iron-ore prices may never regain their recent heights. Anglo's attitude to platinum also takes some explaining. It hardly fits the Rio-BHP model of running large low-cost expandable mines - often big open pits. Platinum has high fixed costs (two-thirds are wages), low margins and mainly comes from deep underground. Rather than straining to keep Anglo as the global market leader, Mrs Carroll might have invested the cash more profitably in another metal, or in a country other than South Africa. Mrs Carroll's successor may slim the platinum business down or spin it off. The new boss will probably have to keep trying with Minas Rio, however. And he or she will have to decide what to do about South Africa. Anglo's shares are weak partly because some two-fifths of its assets are in a country where strikes are sometimes lethal and politicians talk airily of nationalising mines. The next boss needs a free hand, says Jeff Largey of Macquarie, a bank. That might be tricky under the chairman, Sir John Parker, who is a forceful character and deeply involved in running the company. Instead of restructuring, a better plan might be to buff up Anglo for the sort of mega-merger it has so far eschewed. The firm that was once South Africa's biggest is now the prey, not the hunter.