SOCIAL WELFARE Jon Samuel - Head of Social Performance

AGENDA • The importance of employee, contractor and community welfare issues to

Anglo American • Anglo American’s approach to managing social performance

– Risk management – Efficient utilisation of resources – Delivering socio-economic benefits

• Our requirements • Opportunities for collaboration

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• In recent years employee, contractor and community welfare issues have become increasingly important for our business

• Group-wide key issues of concern for Anglo American include:

– Growing expectations from communities and our host governments for an increasing share of the benefits of mining to go to host communities and countries

– High levels of in-migration to mining areas and associated social ills, including informal settlements, crime, community health impacts and tensions between resident and migrant communities

– Inadequate provision of basic services by local governments, especially when they are confronted with rapid growth driven by mining investments

– Failure to maintain positive relationships with host communities and governments

IMPORTANCE OF WELFARE ISSUES TO OUR BUSINESS

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• These issues are leading to direct impacts on our ability to operate profitably, including:

– More challenging permitting processes, including politicisation of the permitting process with delays becoming more common and significant socio-economic contributions increasingly required, often under the umbrella of mitigation

– Governments seeking to secure extra benefits through increased taxation, free carry equity interests, indigenisation requirements, local content rules etc

– Increasingly stringent / onerous regulation, and increasing legal challenges from various sources

– Disruption to operations

IMPORTANCE OF WELFARE ISSUES TO OUR BUSINESS

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OVER-ARCHING ‘SOCIAL PERFORMANCE’ OBJECTIVES

Manage socio-political risks to our projects

and operations

Ensure we utilise the resources we have available for social

performance effectively

Create opportunity for Anglo American by

becoming a partner of choice, in particular through delivery of

enhance socio-economic benefits

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DELIVERING OUR SOCIAL PERFORMANCE OBJECTIVES

• Clear link between the prosperity and welfare of host communities and the success of our operations

• Our ambition is lead the mining industry on social performance issues, so that we are the employer of choice, and the partner of choice for host communities and governments

Anglo American Values and Good Citizenship Business Principles

Group Social Strategy: Partner of Choice for Host Governments and Communities

Policies and Standards: the Anglo American Social Way

1. Education and Training:

• SEAT training • Post-grad

diplomas • Advanced Social

Management Programme

• ABET

2. Guidance Documents:

• SEAT • Mine Closure

Planning Toolbox

3. Social Initiatives:

• Enterprise

Development • Social Investment • Capacity

development • HIV/AIDS • Housing

6. External Engagement:

• Communities • Governments and

multi-laterals • Industry

associations • Multi-lateral

initiatives

5. Internal Alignment:

• Business Units • Functional liaison

4. Leverage Core Business:

• Local

procurement • Local workforce

development • Synergies from

infrastructure provision

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MANAGING SOCIAL RISK

Respect human rights

Deliver lasting, positive net benefit

Identify and manage social impacts

Efficiently utilise resources

Obey all laws and regulations

Ensure contractors follow our standards

Set targets, review performance

Develop staff competencies

Engage employees and stakeholders

Report and investigate incidents

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OUR GUIDANCE ON MANAGING RISK AND USING RESOURCES EFFICIENTLY

• Socio-Economic Assessment Toolbox (SEAT) is at the heart of our management of social performance issues SEAT is an award-winning manual that provides extensive guidance on: – Profiling and engaging with host communities – Assessing positive and negative impacts – Managing relationships with host communities – Contributing to community development

• SEAT Tool 4F presents our approach to contractor management. But many other tools are relevant to our contracting partners

• Hard copies are available here today (and on your USBs). Also freely available at www.angloamerican.com/seat

• Anglo American willing to provide training on SEAT to contractors. Plan to run two free sessions in 2013, and can arrange a tailored session for your business at cost

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EXAMPLE GUIDANCE IN SEAT

All of these tools cover circumstances where contractors may be active

4A Complaints and

Grievance Procedures

4B Stakeholder Engagement in

Emergency Planning

4E Managing the Social

Dimensions of Mine Closure

4C Conflict Assessment

and Management

4D Resettlement Planning and

Implementation

4G Indigenous Peoples

4F Contractor Management

4H Voluntary Principles on Security and

Human Rights

Relationship Management

Tools

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DELIVERING SOCIO-ECONOMIC BENEFIT

Our approach to enhancing the welfare of host communities is based on leveraging our core business to create sustainable economic opportunity

• Leveraging our $13.8 billion supply chain (approximately 100 x social investment budget each year)

• Ensuring that host communities have the best possible chance of securing increasingly skilled jobs on our operations

• Focusing in particular on how local municipalities can use tax revenues to provide effective public services

• Offering equity and loans on a commercial basis to support local entrepreneurs, both within and outside our supply chain

• Providing grants to welfare-enhancing initiatives where more market-based approaches are not possible.

Local Procurement

Local Training and

Recruitment

Governmental Capacity

Development

Enterprise Development

Social Investment

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SOCIO-ECONOMIC DEVELOPMENT AND WELFARE: POTENTIAL COLLABORATION OPPORTUNITIES

Employee Housing • Commitment to build

approx. 23,000 homes for employees

• Looking at enterprise development and micro-credit options for other stakeholders

Social investment: • Driven at both Anglo

American and site level • Often driven by SLPs in SA • Focus on support where there

isn’t a more commercial option to provide upliftment

Local procurement: • Ring-fencing • Targets • Supplier development • Localising suppliers • Supplier development toolkit

being piloted across Anglo American

Enterprise development: • Equity provision • Loans at concessionary rates • Mentoring and technical

assistance

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HOUSING

• Decent housing for employees and their families is the foundation for healthy, stable workforces and communities

• Committed to building approximately 20,000 homes for lower income employees in our Platinum business, and approximately 3,000 in our Kumba Iron Ore and Thermal Coal business units

• Unable to make similar commitments to communities in general, and recognise that most contracting companies will not be able to afford the type of commitment that Anglo American has made

• We are exploring options to widen the availability of home ownership in our mining communities

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HOUSING

Anglo American is developing a low-income home ownership model aimed at those who aren’t eligible to benefit from company housing programmes: • The fund: finance smaller, sustainable houses with room renting facilities that

can be transformed into part of the main house or other small businesses once the loan is repaid (targeting a 10 year repayment period)

• Greater access to finance for households: the scheme would be funding a revenue generating business (i.e. room rental) and not personal consumption, so is an easier financing proposition than a mortgage as less reliant on households being employed

• How contractors can participate: help us to test the model, provide additional finances for the fund, commit to renting rooms for your workers or provide in-kind contributions

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CONCLUDING REMARKS

• Anglo American has developed an extensive suite of policies and initiatives to help improve the welfare of employees and host communities

• Some of these apply to our contractor partners, while other represent potential opportunities for collaboration

• Prepared to share our resources on social welfare: – to ensure that contracting companies can meet our standards – to help raise standards in the industry, and to strengthen our collective licence to

operate • Given the rising importance of these issues to the mining industry, we believe that the

offer to share some of our resources is in the interests of our contractors and should be attractive you

• We are also looking to learn from good practices that our contractors have. We have done so in the past and hope to continue to do so

• We look forward to discussing some of these issues with you in more detail this afternoon

THANK YOU