SA’s most dynamic and bluntly outspoken mining CEO, Neal Froneman, has taken a small but considered step back from managing the world’s largest platinum company, Sibanye-Stillwater, as he plots a carefully considered retirement.
Froneman, who recently turned 60 and regularly flies his helicopter to and from his game farm north of Pretoria, has no immediate plans to retire. He says he has “four or five” years still to offer his expertise at Sibanye to continue growing the JSE-listed gold and platinum group metals (PGM) company to “twice its size”, possibly by adding more gold and minerals used to make batteries.
“We need to think about how the company is going to evolve into something bigger, both in gold and battery metals or hi-tech metals,” he says in an interview with Business Day.
“We aim to double our size in the next few years but we are ex-growth in SA. We have a few organic growth projects here, but we can’t double here. We need to diversify our geographic risk.”
Froneman, who does long-range target shooting and drumming in his spare time, says he has already taken a decision to hand over more of the day-to-day management to his team, stepping back to give them space.
“I have very consciously, and in agreement with the executive team and discussed at our meeting, stood back so that they can grow. We need to increase our capacity in the US and we are starting to look towards the model of not having a centralised corporate office,” he says.
“My thinking is to essentially prepare the organisation for new leadership in the next four to five years,” he says. “Through that whole process I must make sure the executive and senior management remain engaged, growing and ready for changes that are upon us.”
He is labelled by some as a “deal junkie”, given the steady deal flow at Sibanye, hoovering up gold and PGM mines and deposits in SA and Zimbabwe, and more recently in the US, snapping up Stillwater Mining, which offered him the COO job in the 1990s.
It is a point Froneman grudgingly concedes, but he points out that all the deals were ones where he and his team saw value for shareholders in time.
“Without those deals we’d just be a small gold company today. I’m very entrepreneurial. I do have an ability to see value and opportunities, but I can’t do it alone. Our team takes the concept to see if it works, and that we’re not doing something stupid. Some things look perfect on paper but will never work. Remember we were once interested in coal, but we weren’t going to play political games,” he says.
“I’ve had my failures, but most of the time we are successful. We look for reasons to do a transaction. You need to have balls. You can’t tick the box on everything.”
The wheeling-dealing nature of Froneman keeps analysts wary that too many deals too soon not only unduly strain the balance sheet but create an overly complex business where different mines, teams and cultures struggle to integrate into a cohesive business.
Big and bold
“Neal is not afraid to take a big view on the market. When he goes in a direction, it’s big and bold,” said an analyst.
One of the successes Froneman sees in his evolution from the CEO of a minor, troubled mining company, Aflease Gold, in 2013 and the dark days at the end of his tenure at the helm of Uranium One to creating and heading the biggest PGM miner, is having a core, trusted team around him.
“Trust is key. You can’t empower people you don’t trust. Many of the individuals in Sibanye, we’ve been to war together. It’s a critical aspect. It brings continuity. There are four or five people in Sibanye that can take over as CEO. We don’t have to look outside,” he says.
At Uranium One, Froneman had to step down on the repeated promises of Dominion, a uranium mine in SA, delivering profit, but never did. Froneman says it was a classic case of “over-promising and underdelivering.”
The undercapitalised mine was rushed into production off a pre-feasibility study on a rising uranium price that quickly turned lower, Froneman says.
“That Uranium One history will always be there in the background, but he’s regarded as a good operator by the market, and investors know what they’re getting into. He stands his ground,” said the analyst. “He was speaking out on government corruption long before it became a fashionable thing to do among CEOs.”
Froneman punted an idea two years ago of holding the equivalent of a Truth and Reconciliation process in the mining industry to address the lack of trust between companies, the government and labour, which has constrained SA’s mineral potential.
Sibanye was willing to go it alone on the process if there was no industry buy-in, particularly by other companies concerned about acknowledging liability for past activities during the height of apartheid. Sibanye employs about 100,00 people, nearly a quarter of SA’s mining workforce.
“The government continues to see the mining industry as one that has not acknowledged its legacy issues. They continue to implement punitive measures to rectify the past. All it’s done is kill investment. That’s not the solution. We have a stalemate,” Froneman says.
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