Mike Benfield, CFO Metorex: CFOs are internal and external salespeople
“CFOs are actually salespeople,” says Mike Benfield, CFO for mining group Metorex. “We sell our business to financers and shareholders, but also sell it to our own staff and to the outside world. We have to be attractive employers, so we’re also selling the future to current and prospective employees.”
Benfield has a diverse and well-rounded CV and can talk with great insight about the good and bad days of finance professionals. Metorex is owned by the Chinese Jinchuan Group, which provides another interesting perspective. He talks candidly about dealing with "cultural mismatch", the hard decision to hedge against the same metal that pays your bills and his varied career in the cinema, banking, logistics, aviation and mining engineering businesses.
"I was fresh out of the blocks when I joined Ster-Kinekor in 1995," Benfield begins. "It was a lot of fun and I learned about all sorts of things, because we did not only get into cinema, but also into content management, licensing and advertising." Nevertheless, four years later it was time for Benfield to move on. "All my mates were getting into financial services and felt that I needed to a move into the financial sector. I joined Investec, a dynamic and competitive company but having been appointed in a "back office" role I felt stifled and felt that breaking into a role that suited me was not going to happen. I lasted two years, learned a lot about banking but ultimately felt it was time to move on."
At logistics firm Super Group (2001-2005) Benfield learnt about trading in the hyperinflationary environment in Africa, fleet management and the related aspects of proactive managed maintenance. "We were running the fleet for the City of Joburg and doing very nicely, but I started coming up against the governance aspects at Super Group and a culture that was showing cracks. I left at a good time, just before it hit rock bottom a few years later. Super Group has turned things around since then and seems to be on the up". Via a charter business, Norse Air ("If you want to lose a lot of money, start an aviation business"), Benfield ended up at mining engineering firm Bateman. "I wanted to get into operations, away from the out and out accounting roles which didn't suit my need for being involved in both financial management and having a meaningful role in the operational aspects of a business."
Initially in charge of the finances of an division that recovered chrome from chrome slags (through a jigging process), Benfield had high ambitions. "We had plants around the world. It was a fascinating little business. Bateman wanted to diversify from design and contract management and hold on to our technology. We were listed, it was going well and we were buying up slag dumps " In September 2008 commodity prices crashed and all mining activities were suspended. During that time Benfield became CFO for the whole group. "Cutting down, retrenching, bad times I learned every day how to cope with pressure."
After owner Benny Steinmetz sold Bateman, Benfield moved to Metorex, which was recently delisted from the JSE. "That was a whole different dynamic. I had never been exposed to 100s of millions of dollars." Johannesburg-headquartered Metorex has two operating mines in the Democratic Republic of Congo and Zambia, is developing another one and owns two other deposits, both in various stages of development. "It's tough, but Africa is all about mining."
Benfield works directly for Chinese supervisors. "The cultural mismatch is vast. It is all about slowly moving forward, trying to understand how the Chinese engine works. People don't express personal opinions. I have more of a relationship with my translator than with my direct principal!" Benfield says it is important to be respectful of the Chinese culture, but also says the Chinese have learned the hard way that they should not send managers to manage African mines as the cultural mismatch has a major impact. "To their credit, that is why they leave Metorex largely to its own devices."
Metorex is currently mining 50.000 ton of copper per year and wants to grow to five times its size over the next 10 years. Although all operations are in the DRC and Zambia, Johannesburg is still where senior executives operate from, says Benfield. "The skills are still here in South Africa. Our mines have their own autonomy to some extent, but we have taken procurement and administration into the centre. Johannesburg is still a logical springboard. Banks here understand companies that operate in Africa."
At the same time the CFO often travels to the mines, playing his role as internal and external salesman. "I want to be seen by our mining management - and even by our wider staff. I have done presentations on values and strategies. Value integration is important. As a CFO you spend half your day dealing with people issues. If the staff are aligned to the company's values, half of your work is done.
When I visit the operations I try and assess the local climate, get an idea of the issues that are impacting the efficiencies and productivity and also try and get to talk to the political stakeholders - another role of the salesman."
Benfield emphasizes the importance of training local talent as managers, even though Zambia and the DRC have no explicit affirmative action policy. "Expatriates are an expensive resource. The cost of production has to come down. That is why we have to build a base of skilled local staff. It's going to take ten years. But we're always going to be in the DRC, so it's important to plan for the future.."
With the copper price being so volatile - and crucial - as ever, banks are asking mining companies to hedge despite Copper investor wanting to be exposed to this volatility. "We're always optimistic about copper, so we don't like doing that. But we have to consider hedging. I can make plans for what is in my control like costs and cash flow, but if copper price falls through the floor we have a problem. We'll hedge when we can, but only when its make sense."
Through Benfield's long and diverse experience he has learnt how to deal with successes and failures, so the copper price "is not keeping him awake at night", he says. "If you ever have had to beg and borrow for a bigger overdraft to be able to pay salaries, you know how to deal with pressure. Maybe you become a bit conservative as a CFO, so you have to be aware of that. But in the end, being a CFO and a salesman, it's all about credibility."