CommDev Workshop19 June 2006

Local Business Development

- Anglo American’s experience in South Africa

Edward BickhamExecutive Vice PresidentExternal Affairs

Anglo American: a brief profile

• Founded in 1917 in South Africa

• Moved primary listing to London in 1999

• One-third of assets in Southern Africa; two-thirds in

developing or transition economies

• FTSE UK top 20 company; FTSE Global 103

Anglo Platinum 75%

Base Metals 100%

Anglo American plc

Anglo Coal 100%

AngloGold Ashanti 42%

Ferrous & Industries

Mondi Paper & Packaging 100%

Industrial Minerals 100%

De Beers 45%

History

• 1989: founded as Small Business Initiative

• 2000: renamed ‘Anglo Zimele’

• 2003: Khula Mining Fund

Objectives

• Create access to mainstream business opportunities for

Historically Disadvantaged South Africans

• Create sustainable, commercially viable, enterprises driven

by people with passion and entrepreneurial spirit

• Contribute to the sustainable development of mining

communities

History and Objectives

Structure

• Business Development

• Junior Mining Fund

• Facilitation of BEE procurement

Status

• Invested in 30 companies – end 2005

• Supports over 2,000 direct jobs

• Turnover in 2005 $88.1 million (2004 $41 million)

• Assisted Anglo American to increase its 2005 Black Economic

Empowerment spend to $1.4 billion

• Evaluation carried out in 2005 showed a survival rate of 72% over 8 years

Anglo Zimele – Structure and Status

Business Development

• Minority (20%-30%) equity stake

• Loan finance on ‘commercial’ terms

• Shareholder and loan agreements

• Entrepreneur(s) must also make commitment

(time and financial)

• Board representation

• Skills transfer and mentoring

• Business planning and corporate governance

support

• Performance requirements on corporate

responsibility issues

• Clear exit strategy (3 year time horizon)

Anglo Zimele – the Model (1)

Procurement

• Identifies procurement opportunities with Anglo

divisional supply chain personnel

• Helps to source BEE suppliers based on

commercial principles

– Quality

– Price

– Service and delivery

– Cost savings

• Hands-on support/coaching for access to tenders

• Encourages diversification to supply other

businesses

Anglo Zimele – the Model (2)

• Focus on commercial principles

• Talent, motivation and commitment of entrepreneurs is

key

• Closeness to core business gives better feel for credit

risk

• Aim to diversify as quickly as practicable from sole

dependence upon Anglo supply chain

• Mentoring and support a crucial and flexible element

Lessons Learned

• Contributes to realisation of requirements of South African

Mining Charter

• Increasing involvement in facilitation of BEE deals with pre-

existing ‘non-empowered’ suppliers

• Not involved in micro-finance or sustainable livelihoods initiatives

• Community enterprises handled by division

• Seeking to export model to South America, China and Eastern

Europe

Anglo Zimele – How it fits in