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A. EXECUTIVE SUMMARY

1. Introduction

We closed 2016 with a precarious debt burden and the worst losses (US$ 5.8 billion) in the last 10
years -on the back of plunging commodity prices -made worse by a credit downgrade; as the worst
performer on the FTSE 100 equity index –with a market value collapse of 75%, and facing possible
ejection from the index in a month’s time. We need to act fast and decisively –in line with our
mission, values, business model but most especially, our recently published 3 year viability

statement: restructure the portfolio, de-leverage the balance sheet and drive operational discipline.

2. Terms of reference

Commissioned by the Board, this report prioritises and evaluates the strategic threats, opportunities,
weaknesses as well as the embedded ethical dilemmas we face and provides strategic advice.

3. Prioritisation

Taking account of the impact, urgency and the SWOT analysis (Appendix 1), we prioritised the main
issues as follows:

1st Priority: Operational risk and industrial action in Australia

A geotechnical fault has led to a near collapse of a shaft in one of our coal mines in Australia; with 6
reported deaths and many trapped underground but now rescued, adding to an already battered
reputation for safety we have endured the last 5 months. A systematic erosion of our safety culture
has invited a notice of intention to strike by the unions at time a long protected strike over wages in

our copper operations is threatening to engulf the whole group: we risk further production stoppages
as well as harm to our leverage to drive down wages –threatening our US$5.8billion cost reduction
target. Safety is an existential threat -impacting on our license to operate –making this priority 1. We
need to construct a new mine shaft, capitulate to the unions and hire contract staff to break the

strike.

nd
2 Priority: Corporate restructuring and re-organisation

Board disagreements over the long-term direction of commodity demand and prices given the long
slowdown in the Chinese economy and the mooted infrastructure investment plans of the new US
administration has led to a fierce debate over our strategic direction. This is priority 2 because our
strategic direction will determine whether or not, and how our restructuring will proceed including our
asset disposal programme underway –the subject of the remaining issues. Our strategic direction
Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2017'
www.charterquest.co.za | Email: thecfo@charterquest.co.za