an introduction to anglo american plc and mining’s role...

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An Introduction to Anglo American plc and Mining’s Role in Development All-party Parliamentary Group on Earth Sciences June 2009 Jonathan Samuel Social and Community Development Manager Anglo American plc

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Page 1: An Introduction to Anglo American plc and Mining’s Role …/media/Files/A/Anglo-American-PLC... · 2014-10-20 · An Introduction to Anglo American plc and Mining’s Role in Development

An Introduction to Anglo American plc and Mining’s Role in Development

All-party Parliamentary Group on Earth Sciences

June 2009

Jonathan SamuelSocial and Community Development Manager

Anglo American plc

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Agenda

1. Overview of Anglo American2. Challenges in the Mining Sector3. Mining and Development4. Examples of Anglo’s Development

Initiatives

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About Anglo American

Challenges

Mining and Development

Anglo Initiatives

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Anglo American plc

• Founded in 1917 in South Africa• Moved head office and primary listing

to London in 1999• 140,000+ employees and contractors,

~$28.6 billion turnover• A sector leader in sustainable

development• Predominantly an emerging market

footprint – development issues are particularly important for us

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What Do We Mine?

• Core businesses:• Base metals – copper, nickel and zinc • Platinum – world’s leading producer• Diamonds – 45% of De Beers (non-

managing)• Ferrous metals – growing presence in

South Africa and Brazil• Coal – thermal and coking coal

• Also own Tarmac: planned disposal

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Base Metals

Base Metals

Base Metals

Coal

Base Metals

Coal

Coal

CoalIron Ore

Coal

Iron OrePlatinum

Base Metals

Diamonds

Diamonds

Diamonds

Base Metals

Active in 40+ countries. Major operations and projects include:

Where Do We Operate?

Base Metals TarmacTTaTaTarmrmrmrmrmacacacacacTarmac

TarmacTTaTaTarmrmrmrmacacacacTarmac

Coal

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About Anglo American

Challenges

Benefits from Mining

Anglo Initiatives

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• Location determined by geology• Resources owned by host governments• Volatility of prices / earnings / revenues• Less labour intensive, increasingly skills intensive

and an ageing workforce• Strategic political dimension (new sources of

competition)• Immobile assets with up-front capital investments• Long-term investment horizons

Distinctive Characteristics of Mining

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Timeline of a Typical Mine

Exploration Feasibility Development Operation Closure

Year from acquiring exploration permits (assumes continuous intention to develop)1 3 6 9 30+

• Only approx 1% of exploration targets are ever developed into mines• Capital Expenditure for “Anglo-size” mine typically between US$500

million and $3-4 billion plus• Some of World’s biggest deposits have been mined for over 100 years

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• World class mineral deposits are increasingly found in emerging markets– Infrastructure, governance, economic risks

• Socio-economic and political environments can change significantly over the life of a mine

• Difficult to respond meaningfully to short-term political crises• Mining can often be one of the first viable investments in

post-conflict countries– No domestic market needed, often provides own infrastructure

• Regulation over the business cycle– Ownership requirements, tax regimes etc

• Conflict and socio-economic dislocation are very difficult to manage and damaging to profitability

Political Challenges

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Major SD Issues in the Extractive Sector

ResourceScarcity

HIV/AIDS

Corruption Pollution

Biodiversity

ClimateChange

Mine Closure

Security

PovertyAlleviation

Diversity

LabourRights

Accessto Land

Human RightsWater

Healthand

Safety

Benefit Sharing

Returns toShareholders

CorporateGovernance

Political RiskReporting

Resettlement

CommunityHealth

ArtisanalMining

ConflictPotential

FairCompetition

IndigenousPeoples

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Resource Curse or Endowment?

• Credible academic literature on growth of resource dependent economies

• Conceptual/data problems:– Timeframes – over economic cycle and longer term– Definitions of minerals dependent– Mineral dependent economies may simply have failed to develop

other industries• Real world experience:

– The wealthiest (Chile, Botswana) and most powerful (Brazil, South Africa) economies in South America and Africa are all major mining countries

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Why Might Mineral Resources Hinder Development?

Resource Curse

Terms of Trade

DutchDisease

RentSeeking

Impacts of Mining

VolatileMarkets

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But… Doesn’t Have to be the Case

ResourceCurse

Terms of Trade

DutchDisease

RentSeeking

Impacts of Mining

VolatileMarkets

The price of manufacturedgoods is also falling

Productivity improvements can increase benefits to local economies

Volatility can and has been managed by instruments such as hedging and stabilisation funds

Reallocating factors of production to resource sector may be efficient

Only a problem if adjustment after resource boom is difficult or impossible

Well managed mining projects should have minimalnegativeimpacts

EITI and governance reform should help manage this

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About Anglo American

Challenges

Benefits from Mining

Anglo Initiatives

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Anglo: Distribution of Benefits

2008 Financial Year• By far the largest

share of benefits goes to suppliers and contractors

• Company taxes exceeded dividends

• Effective corporation tax rate is about 33 percent (UK rate = 28%)

* Includes income and other taxes paid by employees, but excludes taxes paid by shareholders on dividends

Turnover = $28,642

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Anglo: Distribution of Benefits

In 2008 UK Government Aid to Africa was $1.54 billion

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Core Business• Employment• Taxes and royalties• Procurement• Environmental

stewardship

Core Business• Employment• Taxes and royalties• Procurement• Environmental

stewardship

Core Business• Employment• Taxes and royalties• Procurement• Environmental

stewardship

Core Business +• Pre-employment

training• Local hiring and skills

development• Local procurement• Beneficiation• Technology transfer

Core Business +• Pre-employment

training• Local hiring and skills

development• Local procurement• Beneficiation• Technology transfer

Core Business +• Pre-employment

training• Local hiring and skills

development• Local procurement• Beneficiation• Technology transfer

Community Development• Benefit sharing

frameworks• Alternative livelihoods• Proactive enterprise

development• Partnerships• Local government and

NGO capacity building

Community Development• Benefit sharing

frameworks• Alternative livelihoods• Proactive enterprise

development• Partnerships• Local government and

NGO capacity building

Community Development• Benefit sharing

frameworks• Alternative livelihoods• Proactive enterprise

development• Partnerships• Local government and

NGO capacity building

Governance• Revenue transparency• National capacity

building• Advocacy on aid and

trade rules

Governance• Revenue transparency• National capacity

building• Advocacy on aid and

trade rules

Governance• Revenue transparency• National capacity

building• Advocacy on aid and

trade rules

StrengtheningInfrastructure• Transport• Water• Power / electricity• Public services

StrengtheningInfrastructure• Transport• Water• Power / electricity• Public services

StrengtheningInfrastructure• Transport• Water• Power / electricity• Public services

Social Investment• Education• Health• Livelihoods• Welfare• Environment• Humanitarian

assistance

Social Investment• Education• Health• Livelihoods• Welfare• Environment• Humanitarian

assistance

Social Investment• Education• Health• Livelihoods• Welfare• Environment• Humanitarian

assistance

Mining Companies as Development Actors

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About Anglo American

Challenges

Benefits from Mining

Anglo Initiatives

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Robust Management SystemsRobust Management SystemsRobust Management Systems

Leveraging strengths:• SEAT

• Social investment

• HIV/AIDS and health programmes

:Leveraging strengths:• SEAT

• Social investment

• HIV/AIDS and health programmes

Leveraging strengths:• SEAT

• Social investment

• HIV/AIDS and health programmes

Scaling-up:• Enterprise

development

• Capacitydevelopment

Scaling-up:• Enterprise

development

• Capacitydevelopment

Scaling-up:• Enterprise

development

• Capacitydevelopment

New initiatives:• Mentoring and

volunteering

• Targetedprocurement(geographic or social)

New initiatives:• Mentoring and

volunteering

• Targetedprocurement(geographic or social)

New initiatives:• Mentoring and

volunteering

• Targetedprocurement(geographic or social)

Social / Development Strategy

PartnershipsPartnershipsPartnerships

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Comprehensive Framework of Management Systems

Good Citizenship Business Principles Anglo American Guiding Values

Good Citizenship Business Principles Anglo American Guiding Values

Good Citizenship Business Principles Anglo American Guiding Values

Policies and StandardsAnglo Social Way, Policies on Security and Human Rights,

Community Engagement etc

Policies and StandardsAnglo Social Way, Policies on Security and Human Rights,

Community Engagement etc

Policies and StandardsAnglo Social Way, Policies on Security and Human Rights,

Community Engagement etc

Guidance Documents and ProceduresNew Project Impact Assessment Guidelines, Socio-Economic Assessment

Toolbox (SEAT), Mine Closure Planning Toolbox etc

Guidance Documents and ProceduresNew Project Impact Assessment Guidelines, Socio-Economic Assessment

Toolbox (SEAT), Mine Closure Planning Toolbox etc

Guidance Documents and ProceduresNew Project Impact Assessment Guidelines, Socio-Economic Assessment

Toolbox (SEAT), Mine Closure Planning Toolbox etc

Management Education and TrainingInternal and University-led Programmes

Management Education and TrainingInternal and University-led Programmes

Management Education and TrainingInternal and University-led Programmes

Social Development ProgrammesEnterprise Development, HIV/AIDS, Social Investment etc

Social Development ProgrammesEnterprise Development, HIV/AIDS, Social Investment etc

Social Development ProgrammesEnterprise Development, HIV/AIDS, Social Investment etc

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Partnerships

We are active in a range of partnerships, industry bodies and other initiatives to address the challenges faced by mining and other sectors locally and internationally

Plus numerous partnerships with NGOs – including global agreements with CARE and Fauna and Flora International – and local communities

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SEAT: Key Features

• Implemented every three years at all our mines

• 30+ tools, aimed at building internal capacity and improving development outcomes

• Principally aimed at mature operations

• Focus on leveraging core business benefits

• Implemented at 65+ sites in 17 countries

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SEAT: Structure

Step 1 – Profile the Anglo American operation

Step 2 – Profile and engage with the community

Step 3 – Identify and assess social and economic impacts of the operation and key local development issues, and

assess existing management measures/social investments

Step 4 – Improve the management of relationships with local stakeholders

Step 5 – Support community development

Step 6 – Develop a management and monitoring plan

Step 7 – Prepare socio-economic report, feed back to community and assess SEAT process

Profiling and Engagement

Assessment of Impacts and CSI initiatives

Impact and RelationshipManagement

Reporting

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To be used selectively5I Sustainable

EnergyProjects

5J Improving Community

Health5H Small Scale

Water and Sanitation Projects

5F Human Capital

Development

5G Seeking Community

Synergies from Infrastructure Development

5C Micro-credit for SME

Development

5A Establishing Partnerships

5B Leveraging Donor

Resources

5E Alternative Livelihoods

5D Increasing Local

Procurementfor LBD

CommunityDevelopment Tools

5K Institutional Capacity

Development

Access to Funding

Supporting Local

Infrastructure

SEAT Needs Assessment

SEAT

EmploymentCreation

Capacity Development

SEAT – Community Development Tools

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HIV/AIDS

• Groundbreaking programme in Southern Africa• First large company in Africa to provide free

counselling, testing and treatment to employees• Largest workplace programme in the world• Strong human rights and women’s rights focus• Commitment to extend free treatment to

dependants

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Enterprise Development – South Africa

• Anglo Zimele founded 1989• Based on:

- Time-limited equity participation- Access to loans- Access to supply chain opportunities- Mentoring

• Survival rate c. 70% over 8 years • IFC guide based on Zimele model• Zimele sponsored firms currently

supporting 300 new firms, 10,000+ jobs• Similar initiatives under way in Chile

(3,500 jobs) and Brazil (starting in ’09)• Target of 18,000 jobs by end 2009

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Scaling-up: External Capacity Development

ExternalCapacity

Development

NGO Partners:• Funding• Training• Sharing expertise

Local Government:• Mentoring/

Secondments• Training• Infrastructure

Small Businesses:• Finance• Mentoring• Procurement

opportunities

Future Employees:• Pre-employment

training• Scholarships

Universities:• Research funding• Scholarships• Internships• New courses

Schools:• Funding capital projects• Funding – maths and

science/teacher training• Volunteering

DevelopingPeople

DevelopingPartner

Institutions

Tools:• SEAT institutional

capacity building• Enterprise

Development• Secondments• Mentoring

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Aiming for the “Higher Test”

Obey the law

Respond to stakeholders• eg social investment

Design new mines with local development priorities in mind• eg seek net benefits for all

Comply

Respond

Engage

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Thank you