transformation in anglo american south africa · a major contributor to south africa’s economy...

Martha SekaboaneThabazimbi Mine, South Africa

Joshua BurnsCapcoal Colliery, Australia

Alvaro VegaLos Bronces Mine, Chile

Nelson SilvaLos Bronces Mine, Chile

Emma CoombsCapcoal Colliery, Australia

Sizwe MdikaneNew Vaal Colliery, South Africa

TRANSFORMATION IN ANGLO AMERICAN SOUTH AFRICA

Godfrey Gomwe

PRESENTATION TO THE PORTFOLIO COMMITTEE ON MINERAL RESOURCES

Lindiwe Zikhali

02 November 2011

CONTENTSCONTENTS

1. Anglo American in South Africa Today

2. Mining Charter Progress to Date

3. Contributions beyond the Mining Charter

4. Appendices

1. Ownership and Joint Ventures – List of Transactions

2. Anglo American’s Commitment to South Africa

2

1 ANGLO AMERICAN IN SOUTH1. ANGLO AMERICAN IN SOUTH AFRICA TODAY

3

Founded in Johannesburg Anglo American has

A NATIONAL CHAMPIONFounded in Johannesburg, Anglo American has a 94-year history in South Africa

• Today, a global company with operations in >40 countries; however South Africa remains the single most important country to the Group

• 3 out of the Group’s 7 Commodity Business Units are globally managed from South Africa

• 4 Business unit CEOs based in South Africa and 8 out of 15 ExCo members are South African

• In 2010, c.43% of the Group’s operating assets, c.48% of its revenue and c.51% of its operating profit had their origin in Southern Africa

• Anglo American is an employer of choice to c. 91 500 employees in South Africa

Presentation to the Portfolio Committee on Mineral Resources, 02 November 2011

91,500 employees in South Africa

4Anglo American South Africa Today

Roof bolt installation using a remotely controlled drill at Tumela mine

The Group has a number of assets whichSouth Africa Simplified Structure

(as at 31 December 2010)

BUSINESS OVERVIEW

The Group has a number of assets which are strategic to South Africa:

• Anglo Platinum (c.79% owned) – the world’s leading platinum producer, accounting for c.39% of global supply

(as at 31 December 2010)

Anglo American South Africa Ltd

(AASA)

global supply

• Kumba Iron Ore (c.65% owned) – the world’s 4th largest iron ore producer in the seaborne iron ore market

Anglo SA (Proprietary) Ltd

Anglo SA Capital Anglo Operations

• Thermal Coal (100% owned) – one of the world’s largest private sector coal producers and exporters

• De Beers (45% owned) – the world’s leading diamond business

(Proprietary) Ltd Operations Ltd

Anglo American Platinum

KumbaIron Ore De Beers

Thermal CoalThermal Coal is a division of AOL

• Other: Samancor Manganese (40% owned) – the world’s largest integrated producer of manganese ore; Exxaro – flagship BEE mining company in South Africa (9.7%)

Platinum

Other:Samancor 40%

79.7% 65.3% 45.0% of “B”

shares

100%

division of AOL


• Anglo American South Africa Limited (AASA) is the holding company for all of Anglo American’s interests in South Africa

Samancor – 40%Exxaro – 9.7%


THERMAL COAL

OPERATING FOOTPRINTIn 2010 Anglo American had over 30 mines and shared access to 3

Zimbabwe

1. Greenside

2. Goedehoop

3. Kleinkopje

4. Landau

5. KrielPLATINUM

1. Dishaba 13. Mogalakwena

In 2010 Anglo American had over 30 mines and shared access to 3 ports in South Africa

Western Limb Eastern Limb

Mozambique1

2

Botswana1

6. New Denmark

7. New Vaal

8. Mafube

9. Isibonelo

10. Zibulo1

1314

1516

17

2. Tumela

3. Union

4. Bafokeng/Rasimone (JV)

5. Khuseleka

6. Thembelani

7 B th l

14. Bokoni

15. Ga-Phasha (JV)

16. Twickeham Mine

17. Modikwa

18. Mototolo (JV)

7 2 1

34 5

69

1021

IRON ORE AND MANGANESE1. Sishen

2. Thabazimbi

3. Hotazel

12

3

4

56

7

187. Bathopele

8. Khomanani

9. Siphumelele

10. Kroondal

11. Marikana

12. Pandora9

810

1112

3

SOUTH AFRICA

OTHER MINING AND

DIAMONDS1. Venetia

2. Kimberley

3. Voorspoed

212

Richards Bay

3


6

INDUSTRIALS1. Palabora

2. Scaw Metals

Saldanha Bay

Port Elizabeth

Anglo American South Africa Today

A MAJOR CONTRIBUTOR TO SOUTH AFRICA’S ECONOMYAnglo American is:

A significant investor in South Africa• Invested c. R148bn (c.$21.1bn) in Capex in South Africa since 1999 (till 2010)

One of the largest contributors to the South African fiscus• In 2010, Anglo American group companies paid c.R14.3bn (c.$1.95bn) in direct and indirect taxes

A major contributor to South African foreign earnings• c.50% of South Africa’s foreign earnings are generated from commodity exports• Since its London listing in 1999, Anglo American’s foreign shareholding has increased from about 17% to c.66%,

resulting in a total of c. R124.5bn (c. US$21.5bn) of capital inflow. Generated export revenues of c.R105bn (c.$14.3bn) in 2010

A significant contributor to the South African economy• In 2010 Anglo American produced some 2.5% of South Africa’s GDP

One of the largest components of the JSE (together with its controlled companies)• Combined market capitalisation of c.R770bn (c. US$90bn), representing c.18% of the value of JSE top 100 as of 31

December 2010December 2010• South African shareholders make up c. 34% of AA plc Share Register

A key partner to some of South Africa’s most important state-owned enterprises• Eskom: In 2010, Anglo American spent c.R3.1bn (c. US$423m) with Eskom, and delivered 32 million tonnes of thermal

coal ~R4.6bn (c. US$630m) to Eskom for South Africa’s electricity needs• Transnet: c. R4.1bn (c.US$560m) Anglo American spend on Transnet in 2010


7

( ) g

Anglo American South Africa Today

A CONSIDERABLE PROJECT PIPELINE IN SOUTH AFRICA

Anglo American has a c R30bn (US$4 4bn)Anglo American has a c. R30bn (US$4.4bn)project pipeline to be delivered over the next 3 years in South Africa

• Iron Ore: – Kolomela project 94% complete, hot

commissioning started in Q3 2011

• Thermal Coal: – 6.6 million tonnes of coal per annum Zibulo

project is on ramp-up, with full production expected in Q4 2012

– New Largo project (to supply Eskom’s Kusilepower station) is in feasibility stage with Boardpower station) is in feasibility stage, with Board approval to be sought by Q3 2012

• Platinum:– Capital expenditure of c. R1.6bn (US$223m) in Kolomela Iron Ore Project Commissioning, Postmasburg,

Northern Cape


the first half of 2011 on various expansion projects at Thembelani, Mogalakwena, Twickenham, Khuseleka and Dishaba mines

p


2 MINING CHARTER2. MINING CHARTER PROGRESS TO DATE

9

OWNERSHIP AND JOINT VENTURESVENTURES

10

Mine planning office, TumelaPlatinum Mine

OWNERSHIP AND JOINT VENTURES ANGLO AMERICAN EMPOWERMENT TRANSACTIONS

Business Unit Transaction Empowerment partners

Thermal Coal 26% of current Pamodzi Women’sAnglo American has completed all necessary

Thermal Coal- Anglo American Inyosi Coal

26% of current and future production

Pamodzi, Women s Development Bank, Lithemba, workforce, communities and Eyesizwe Coal

Iron Ore - Kumba Iron Ore

26% of equity Exxaro, workforce, communities

% f

empowerment transactions, and hasreceived its conversions to new order miningrights

R60b i BEE t ti l d d i Manganese- Samancor

26% of equity Exxaro, Ntsimbintle, Ncab, Iziko, workforce, communities

Platinum- Anglo Platinum

Greater than 26% of production

Mvelaphanda, Anooraq, Royal Bafokeng, ARM, workforce, communities

Other Mining and 26% of equity Exxaro, Izingwe Holdings,

• c.R60bn in BEE transactions concluded since 1994 across all business units

• Significant facilitation provided• Broad-based participation ensured: strategic

shareholders, communities, employees Other Mining and Industrial- Scaw Metals- Black Mountain- Gamsberg

26% of equity Exxaro, Izingwe Holdings, Shanduka Resources, Southern Palace Holdings, workforce, communities

Diamonds- De Beers

26% of equity Ponahalo (inc. communities), workforce

All group company employees are ESOP participants

Anglo American’s empowerment transactions have led to the creation of flagship black-owned mining companies e.g. Exxaro Resources, ARM , Mvelaphanda/Afripalm and ShandukaResources.

Community participation a key focus• Direct participation of communities affected by

mining operations in the benefits they generate• Transactions aimed at sustainable, long term

economic uplift of mining areas


economic uplift of mining areas

11Original / Revised Mining Charter

In many cases, Anglo American has contributed directly towards vendor financing for empowerment partners to ensure financial viability and long-term success of the transaction

COMMUNITY SHARE OWNERSHIPProject Lefa La Rona – Anglo American Platinum : Sishen Iron Ore Community Trust:

• Anglo American Platinum has committed to concluding a groundbreaking multi-billion rand broad-based economic empowerment ownership transaction

• Beneficiary communities: Twickenham, Mogalakwena, Rustenburg and Amandelbult operations as well as key

• As part of the Sishen Iron Ore (SIOC) Black Economic Empowerment transaction, the company empowered the communities surrounding its mining operation with a 3% Rustenburg and Amandelbult operations as well as key

Labour Sending Areas• New approach that emphasises broad-based economic

empowerment and engagement with the beneficiary communities

• Taking Anglo American Platinum beyond legislative

g g pshareholding, held by the SIOC Community Development Trust.

• The key objective was to help the comm nities to become both empo ered and

“Zuma unveils R3,5 billion share scheme in Limpopo”

Apr 07,2011,6:46:00 PM, SABC

Taking Anglo American Platinum beyond legislative compliance

communities to become both empowered and economically active in a way that would be sustainable even after mining ceased.

• The community’s stake was paid up in 2010President Jacob Zuma unveiled a groundbreaking R3,5 billion share scheme in Anglo Platinum in Limpopo. This to benefit communities in its mining lands… The R3,5 billion Project Alchemy is a community share scheme. Its been set up to drive sustainable socio-economic development for people living in the mining areas

y p p

• Current community shareholding is estimated to be worth R6.3bn, with money flowing to the communities for development projects in 2010 and 2011 standing at R668m


mining areasArticle printout courtesy of the South African Broadcasting Corporation

Copyright © 2000 – 2007 SABC

12Revised Mining Charter

and 2011 standing at R668m.

• The initiatives benefit about 600 000 people.

EMPLOYEE SHARE OWNERSHIP

Kumba workers to get R2.3bn payoutBrendan Ryan | Mon, 08 Aug 2011 14:30

“CHRISTMAS In the Northern Cape will arrive during November this year when Kumba Iron Ore’s Envision broad-based employee share participation scheme isparticipation scheme is set to pay out up to R500,000 to each of its 5,000 employees.”

S


13

Source: MiningMX

Revised Mining Charter

EMPLOYMENT EQUITYEMPLOYMENT EQUITY

14

54%51%

44%

52%50%

60%HDSA WIM

Progress from 2005 – 2009

EMPLOYMENT EQUITY HDSA Women in Mining

60%

44%

16% 15%20%

30%

40%40% HDSA* Target 10% Women in Mining Target

HDSA’s in ManagementW i Mi i

34%39%

42%45% 47%

52%

40%

50%

60% 12%15%

12%

0%

10%

Platinum Thermal Coal Kumba Iron Ore

AASA

Women in Mining

Total

8% 9% 11% 12% 12% 12%10%

20%

30%

54%51%

44%

52%

45%

38%42%

40%

50%

60%Including white women Excluding white women

8%

0%

10%

2005 2006 2007 2008 2009Excl. Jnr

Mgt

2009Incl. Jnr Mgt

34%

10%

20%

30%

40%


0%

10%


AASA15

Original Mining Charter

* HDSA = Historically Disadvantaged South AfricansTotal

25%As at 31 December 2010

EMPLOYMENT EQUITY (continued) Women in Mining

Total Women Women in Management

20%

13%

17% 18%

12%

16% 16%13%

10%

15%

20%

70%

40% HDSA* Target 10% Women In Mining Target

Top ManagementMiddle Management

Senior ManagementJunior Management

0%

5%


AASA

52%

46%50% 50%

60%

41%

47%

58%

50%

60%

Total

30%33%

29%

38%

28%

33% 31%

20%

30%

40% Aggregate %HDSA in Management by Business Unit

55%

47%51%

45%50%

60%Including White Women Excluding White Women

0%0%

10%

Platinum Thermal Coal Kumba Iron Ore AASA

42%%45%

37% 36%42%

10%

20%

30%

40%

50%

Total



* HDSA = Historically Disadvantaged South Africans

0%

10%


AASATotalAll transformation reports for 2010 to the Department of Mineral

Resources submitted ahead of original March 2011 headline

Total Women Women in Management

20% 19%

25%As at 30 September 2011

EMPLOYMENT EQUITY (continued) Women in Mining

12%

17% 16%13%

20%18% 19% 19%

10%

15%

20%

70%

Top Mgt (Band 2&3) Senior Mgt (Band 4&5)

Middle Mgt (Band 6) Junior Mgt (Band 7)

40% HDSA* Target 10% Women In Mining Target

Top ManagementMiddle Management

Senior ManagementJunior Management

0%

5%

Platinum Thermal Coal

Kumba Iron Ore

AASA44%

55%

49%52% 54%

63% 62%

52%

61%

50%

60%

70%

Total

33% 35%

40%

28%

37%34%

20%

30%

40%

53%54%

61%55%60%

70%

Aggregate %HDSA in Management by Category

Including White Women Excluding White Women

0%0%

10%

20%

Platinum Thermal Coal Kumba Iron Ore AASATotal

35%

25%

42%45%

35%34%

10%

20%

30%

40%

50%



* HDSA = Historically Disadvantaged South Africans

Total

0%

10%

Top Senior Middle Junior Total

HUMAN RESOURCES DEVELOPMENTDEVELOPMENT

18

Employee training at New Vaal Colliery, Gauteng

72478000

ABET LearnersHUMAN RESOURCES DEVELOPMENT

2504

3955 3831 3692

5754

4000

60002005-2009 Highlights:

• Scaw Metals provided training in welding and computing skills to 114 school leavers who normally could not afford further education (in

0

2000

2004 2005 2006 2007 2008 2009

normally could not afford further education (in partnership with the Mayor and the Department of Social Welfare of the local municipality) in 2005

• R26m spent on education support for secondary and tertiary institutions across South Africa in

579

746707

600

800

and tertiary institutions across South Africa in 2007

• Training and development for employees accounted for c. 6% spend of payroll in 2006

Bursars

395346

486

200

400• R19m spent on education support for secondary

and tertiary institutions across South Africa in 2009


02004 2005 2006 2007 2008 2009

19Original Mining Charter

ABET LearnersHUMAN RESOURCES DEVELOPMENT (continued)

29828595444

2500

3000

2010-2011 Highlights:

• In 2010 training and development accounted for c. 5% spend of total employee costs– c.R810m spent on employee training

initiatives, bursaries, ABET, management

2358

1500

2000

2500

, , , gprogrammes and re-training from core businesses alone (approximately c.R530m or US$63m) despite headcount reduction [Target = 3% of payroll]– Platinum – c. R441 million (US$60m),

4.3% of total payroll0

500

1000

Platinum Thermal Coal Iron Ore Other Total

Bursars

3% o o a pay o– Thermal Coal – c. R202 million

(US$28m), 8.2% of total payroll– Kumba Iron Ore – c. R167 million

(US$23m, 6.8% of total payroll• c.2 600 employees received portable skills

training to be employable outside the mining

39755 793

600

700

800

training to be employable outside the mining industry in South Africa

• Anglo American operates a global world-class technical centre in South Africa, the Technical Business Coordination Group, which employs 883 personnel in South Africa and the budgeted cost for 2011 is R 946 million

341

200

300

400

500

600



cost for 2011 is R 946 million.• Anglo American views human resource

development as a strategic tool to achieve employment equity targets by 2014 0

100

200

Platinum Thermal Coal Iron Ore Total

MINE COMMUNITYMINE COMMUNITY DEVELOPMENT

21

Patients in the waiting room at the UGM Community Clinic in Kathu, Northern Cape, which services 35,000 people in the area

MINE COMMUNITY DEVELOPMENT

2007-2011 YTD Mine • Collectively, since 2007 Anglo American h t R1 1b i

500

Community Development Spend* (Rm)

has spent c. R1.1bn on various community development initiatives (including corporate social investment)

• Community development initiatives di tl t ib t t i i l

Education

Infrastructure

Health

300

400 directly contribute to progressing social labour plan commitments which are aligned to municipal integrated development plans (IDPs)

Health

100

200

0Anglo

American Platinum

Anglo American

Thermal Coal

Kumba Iron Ore

AASA


Platinum Thermal Coal


Students learning about electric circuitry at Kathu High School, Northern Cape* Excluding corporate social investment expenditure

MINE COMMUNITY DEVELOPMENT (continued)2007-2011 Sample of Community Development Initiatives Supported

Road/Bridge construction & upgrading

InfrastructureCommunity Centres

• 7 areas and 3 villages immediately benefited

• 16 schools and crèches constructed and upgraded

• 15 classrooms upgraded• 4 science labs constructed

and upgraded

• 4 community halls / centres built

• 1 sports ground built• 1 multipurpose

i Centres immediately benefited(incl. a bus/taxi rank)

and upgraded• 11 computer centres

constructed and upgraded

community centre constructed

• 2 traditional courts and offices built

Health Water SupplyMine Community Development Initiatives

• 9 areas supplied with fresh water

• 6 wellness clinics constructed

• 1 areas provided with

EducationElectricity

• R250m annual spend on R&D• 9 areas in Limpopo, N. C d M l

1 areas provided with mobile clinics


SanitationR250m annual spend on R&D

• R128m spent on education support (incl. educator training, Maths/Science support and early childhood development)• 6 areas received

sewage works upgrades

Cape and Mpumalanga supplied with electricity infrastructure

• Bethal substation upgrade benefited c. 100 000 people


ENTERPRISE DEVELOPMENT

Olivia Jacobs at the Butterfield Bakery in Kathu. Northern Cape. The business was founded th h i t f A l

24

through assistance from Anglo American Zimele.

ENTERPRISE DEVELOPMENT/JOB CREATION: ZIMELE

Zimele*

Supply Chain Fund

S l h i

Anglo American Khula Mining Fund

J i l

Community Fund

F di

Olwazini Fund

F l t i i

Anglo American Green Fund(Approved)

F d· Supply chaininvestments

· Support· Minorityequity and loansM R /d l

· Junior scale mining investments· R200m Fund· Support· Minority equity and

· Funding entrepreneurs around Anglo American’s

mines and labour sending areas

· Formal training and development

· Support· Max R20k/deal· Loans only @ 6% p.a.

· Fund environmentally sustainable projects.

· Support· Minority equity

d l

Management Services

· Max R5m/deal· Loans @ Prime + 1% p.a.

q yloans

· Max R40m/deal· Loans @ Prime p.a.

sending areas· Support· Max R1m/deal · Loans only @ 6% p.a.

and loans· Max R10m/deal· Loans @ Prime

p.a.

Presentation to the Portfolio Committee on Mining, 02 November 2011

gManagerial / Legal / Company Secretarial / Accounting / Corporate Governance / Safety, Health & Environment /

Marketing / PR, etc* Established 1989


25

31 August 2011

ENTERPRISE DEVELOPMENT/JOB CREATION: ZIMELE (continued)31 August 2011

Total Supply Chain Fund

Anglo American

Khula Mining Fund

Community Fund Olwazini Fund

Number of transactions 1,301 42 20 1,176* 63*

People employed 18,267 7,119 1,014 9,957 177

Turnover – Rm 1,940 994 491 438 17

Funding - Rm 519 96 164 258 0.56

Female entrepreneurs supported 35% 26% 6% 36% 40%

Youth supported 48% 10% 36% 49% 65%

* Companies 972 42 20 848 62

Repeat transactionswith the same companies 329 0 0 328 1

T t l 1 301 42 20 1 176 63


Total 1,301 42 20 1,176 63

Average loan repayment rate 86% 90% 90% 84%


26

JOB CREATION: BUSINESS CALL TO ACTION

The Call:

• Anglo American has committed to create 25,000 employment opportunities (preserved and new jobs) with 1 500 companies by 2015 –

The Call:

and new jobs) with 1,500 companies by 2015 18,267 jobs already created since 2008

• 32 small business hubs to be created (29 already in place) in Anglo American’s miningalready in place) in Anglo American s mining communities and poverty stricken laboursending areas


Richard Olifant, an Anglo American Zimeleentrepreneur in training


27

LOCAL PROCUREMENT

28Local artisans maintain and repair large buckets and bowls from trucks close to Platinum’s Mogalakwena mine

LOCAL PROCUREMENT

• Group BEE spend and business development has grown significantly: from c. R1.1bn ($133m) in 2000 to c R23 5bn

24.623.5

30

Anglo American Historical BEE Procurement Spend 1999-2009 (Rbn)

($133m) in 2000 to c.R23.5bn (c.$2.8bn) in 2009

• Excluding procurement spend 17.320

25

with state owned enterprises and municipalities, this represented c. 40% of total spend 5.8

9.0

12.3

10

15

p

• In 2009 a dedicated local procurement function was also initiated with Supply Chain to

1.1 1.11.5

2.43.6

0

5


initiated with Supply Chain to drive local procurement in Anglo American

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


LOCAL PROCUREMENT (continued)

• In 2010, BEE local procurement spend was c.R21bn (US$2.4bn) in 2010 ti 44%

2010 BEE Procurement Spend by Category and Business Unit (%)Lines = Revised Mining Charter Targets

ServicesConsumablesCapital goods

2010, representing 44% of total spend (excluding state owned enterprises and municipalities) 50% 51%

43%43%

50%59%

47%

67%

42%50%

60%

70%

80% Capital GoodsServicesConsumables

• In H1 2011, 42% of total spend of managed businesses was with

25%

43%43%35%

31%

42%

10%

20%

30%

40%

businesses was with historically disadvantaged South Africans (excluding state owned enterprises

0%

Anglo American Platinum Anglo American Thermal Coal

Anglo American Kumba Iron Ore

Anglo American South Africa


and municipalities)


HOUSING AND LIVING CONDITIONS

Pensfontein employee housing, Kolomela, Northern CapeLakhutshona LHC Phase 2 housing at Sishen, Northern Cape

31Completed hostel conversion, Thabazimbi, North West Seraleng Project for 924 employees in Rustenburg, North West

HOUSING

• Hostel occupancy has been reduced from 19 895Hostel occupancy has been reduced from 19 895 in 2004 to 12,547 in 2009/2010

• c. R2 billion committed to employee housing initiatives to be implemented by 2014

• Memorandum of Understanding between Anglo American’s Platinum Business Unit and National Department of Housing in place (Limpopo and North West Provinces)

Completed hostel conversions External viewCompleted hostel conversions – External view, Thabazimbi, North West


Completed hostel conversions – Kitchen & bedroom, Thabazimbi, North West

HOUSING (continued)

• The target occupancy rate of 1 person per room by 2014 will g p y p p ybe met through a combination of hostel conversions andfacilitating home ownership by employees:

• Employee housing allowances and subsidies range from c. R1,000-R7,000 per employee, , p p y

• In total, c. 28,000 housing units to be built (20,000 units in partnership with the national Department of Human Settlements in the Limpopo and North West Provinces) New employee housing – External view, Aloe

Ridge Mpumalanga) Ridge, Mpumalanga


New employee housing – Bathroom, Clewer, Mpumalanga

New employee housing – Kitchen, Aloe Ridge, Mpumalanga

BENEFICIATION ANDBENEFICIATION AND RESEARCH & DEVELOPMENT

The jig technology plant (SEP) at Sishen mine, Northern Cape, upgrading waste material into iron ore and increasing iron ore

34

upgrading waste material into iron ore and increasing iron ore production by 13 million tonnes per annum

BENEFICIATION AND RESEARCH & DEVELOPMENT

• The Original Mining Charter provided little clarification as to the definition and meaning of beneficiation for the mining industry

• Despite this Anglo American continued to conduct extensive work and research intoDespite this, Anglo American continued to conduct extensive work and research into formalising its beneficiation strategy and approach at Business Unit level

• In 2009, position papers for the beneficiation of Anglo American’s core commodities in South Africa (iron ore, platinum and thermal coal) were developed for approval at ExCo level within each respective Business Unit (Kumba Iron Ore, Anglo American Platinum and Anglo American Thermal Coal)

• Since this process was initiated, work has been under way to further develop the initiatives already implemented to enhance beneficiation in line with section 26 of theinitiatives already implemented to enhance beneficiation in line with section 26 of the MPRDA and the new Beneficiation Strategy

• Beneficiation initiatives have been implemented across all of Anglo American’s business units in South Africa and have directly contributed to job creation


y j


BENEFICIATION AND RESEARCH & DEVELOPMENT: PLATINUMKey beneficiation initiatives: “Angloplat unveils R100m PGM fund as part of

b fi i ti t t ”y

• In partnership with various government departments providing input to co-develop a fuel cell strategy for South Africa

beneficiation strategy”

23rd July 2009

“The launch of the (Anglo American Platinum’s beneficiation) strategy came at a time when government

b i h ll d d h i iti ti lik th• Supporting the catalyst manufacturing industry within the Automotive Development Plan

• Investing in a fuel cell company that currently services the mobile communications industry

was being challenged, and when initiatives like these were needed… In the past, PGMs only made up about 2% of the beneficiation figures, but that it had recently reached up to 20% of the total amount of metals beneficiated in South Africa… We hope that as we proceed, we will also be able to increase the PGMs in terms of the percentage that is beneficiated in South Africa…. This will assist in making sure that South Africa becomes an industrialised

• Providing the local jewellery industry access to a metal financing scheme

• Sponsoring annual jewellery and innovation competitions to promote interest excitement and drive creativity and

making sure that South Africa becomes an industrialisedcountry.”

Susan Shabangu, Minister for Mineral Resources

“Platinum in particular is a unique commodity that enables the producers to directly support the demand and thepromote interest, excitement and drive creativity and

innovation across the PGMs sector

• Collaboration with the Department of Science and Technology, providing seed capital through the R100 million PGM Development Fund, connecting international

the producers to directly support the demand and the growth of the market development for the product. Our large reserves in southern Africa mean that is an opportunity to directly inject economic growth and job creation into this economy.”

Neville Nicolau, CEO, Anglo American Platinump g

partners with the local fuel cell development program


BENEFICIATION AND RESEARCH & DEVELOPMENT: PLATINUM (continued)Key research & development initiatives:

• Anglo American Platinum has a number of programmesresearching new applications and uses

• The business engages in projects with our fabricator partners and local research institutions in South Africa to develop local research capacity in the value addition space and assist to develop world-class PGM research competence in South Africa – these include:

E t bli h t f d l t f d t d t Anglo American Platinum fuel cell at• Establishment of a development fund to encourage product development, commercialisation and beneficiation

• Project support provided at local universities

• Jewellery development studios and research support at 6

Anglo American Platinum fuel cell at Lephalale, Limpopo Province

• Jewellery development studios and research support at 6 local institutions

• PGM collaboration workshop to identify opportunities with local and international PGM specialists: 16 project proposals supportedp oposa s suppo ted

• PGM innovation competition to drive innovation into the local industry


Platinum autocatalyst

BENEFICIATION AND RESEARCH & DEVELOPMENT: THERMAL COALKey beneficiation initiatives:y

• Most of the coal mined by Anglo Coal South Africa undergoes a beneficiation “washing process” in order to improve the saleability of the product coal (Eskom’s new-generation power will require washed coal)

• In partnership with Anglo American Platinum, Anglo American Thermal Coal is piloting a stationary fuel cell on an Anglo Coal exploration site near Lephalale in the Limpopo province (thesite near Lephalale in the Limpopo province (the electricity generated will be channelled to support a disadvantaged community project)

• Anglo American Thermal Coal supplies weathered coal for the production of a specialised humic acidcoal for the production of a specialised humic acid based fertiliser. This enhances rehabilitation of the environment, through the use of what would otherwise be a potential pollutant.

Beneficiation plant at Goedehoop Colliery, eMalahleni, Mpumalanga


BENEFICIATION AND RESEARCH & DEVELOPMENT: THERMAL COAL (continued)Key research & development initiatives:

• Anglo American Thermal Coal is a leader in coal-bed methane (CBM) technology in South Africa, which is being considered for potential power generation, and has run a successful pilot looking at the beneficiation of the by-products of CBM

• Thermal Coal in collaboration with government and other major players in the coal industry have established the South African Carbon C t d St C t d d l iCapture and Storage Centre and developing a Carbon Storage Atlas for South Africa

• Anglo Coal is a leader in South Africa in investigating ways to commercially exploit discard coal for power generation purposes

Project Khanyisa (development of a 450MW Independent– Project Khanyisa (development of a 450MW Independent Power Producer /IPP generation project using Anglo American Thermal Coal discards)

• Leading participant in the South African Coal Roadmap (SACRM) initiative and supporter of the Coaltech initiative t at e a d suppo te o t e Coa tec t at e

• Investigating to derive economic value by utilising by-products, such as the gypsum produced as a by-product at the EmalahleniWater Treatment Plant. 39


A water recycling plant at Landau uses bacteria to break down sulphides in the water

and reclaim water for processng.

BENEFICIATION AND RESEARCH & DEVELOPMENT: IRON OREKey beneficiation initiatives:y

• Kumba Iron Ore has invested substantially in downstream value creation, resulting in a share of domestic refinement of iron that is higher than in other major iron ore exporting countries

• More than 20% of KIO’s production is supplied to the domestic market, translating into local steel production capacity of approximately 10 million tonnes per annum

• Kumba has facilitated cooperation between the Industrial• Kumba has facilitated cooperation between the Industrial Development Corporation and Tata Steel in investigating various business models and iron ore sources, as well as setting up a second steel producer in South Africa

• Kumba’s novel jig technology plant is an example of the application of pioneering technology to better utilize current resources as the plant enables the upgrading of lower grade waste material into ore thereby increasing iron ore production by 13 million tonnes per annum

Anglo American Kumba Iron Ore’s jig plant at Sishen mine, Northern Cape

p y p


BENEFICIATION AND RESEARCH & DEVELOPMENT: IRON ORE (continued)Key research & development initiatives:

• KIO and AMSA are 50:50 commercial partners in a commercial venture in the development of the Zandrivierspoort Project to beneficiate iron ore from 35% iron content to 67% iron content through the application of novel technology

• In partnership with Mintek, and the CoegaDevelopment Corporation, Kumba is investigating

t ti Si h C d t i l t i dconcentrating Sishen C-grade material to a required iron ore or pellet grade in order to feed a portion to a proposed Coega Steel plant, which will be located in the Eastern Cape

• KIO is playing an active role with the IDC in• KIO is playing an active role with the IDC in investigating suitable technology to convert fine iron ore into a metal scrap replacement product Anglo American Kumba Iron Ore’s concentration

plant at Sishen mine, Northern Cape


SUSTAINABLE DEVELOPMENTSUSTAINABLE DEVELOPMENT

42Safety and medical training at Mogalakwena platinum mine, Limpopo

A rigorous safety culture with three underlying

SUSTAINABLE DEVELOPMENT: SAFETY

A rigorous safety culture with three underlying principles

• A zero harm mindset • Simple, non-negotiable standards • No tolerance for repeat incidents

Committed to working in partnership to share best practice and raise standards in safety

• Management has been working with government, unions and peers to find common solutions to achieve a breakthrough in safety in the industryg y y– First Anglo American Tripartite Safety Summit

held in Johannesburg in April 2008– Tripartite initiative continues with union and

government officials participating in Anglo American safety training courses including site visits and interaction with employees – now being rolled out to operational level within our own South African business units

– ‘Visible Felt Leadership’ toolkit extended across all operations

Mineworkers receiving safety instructions at Goedehoop colliery, Mpumalanga

4343

– Solidarity Union named Anglo American as employer of choice for its commitment to safety in 2010

Anglo American is committed to addressing key

SUSTAINABLE DEVELOPMENT: ENVIRONMENTAnglo American is committed to addressing key environmental concerns

• Award-winning eMalahleni water reclamation plant currently purifies 25 megalitres of water per day in the Witbank area, supplying c. 80 000 people –the plant will soon enter its second phase, doubling capacity to 50 megalitres per day

• During 2010 Anglo American recycled 53During 2010, Anglo American recycled 53 megalitres of water, including a 60% reduction in potable water achieved by Bafokeng Rasimoneplatinum mine through innovative water re-usage

• Through the Platinum Eastern Limb bulk water supply project we have developed a long term strategy in partnership with governments, other mining companies and key stakeholders to provide 1 9 million people access to clean water

Maintenance work being conducted at the eMalahleni Water Reclamation Plant

4444

provide 1.9 million people access to clean water through the Lebolelo Water Scheme, Flag-Boshiloand De Hoop Dam construction works

SUSTAINABLE DEVELOPMENT: RESEARCH AND DEVELOPMENT

• Anglo American operates a global world-class technical centre in South Africa, the centre is referred to as the Technical Business Coordination Group (TBCG)• TBCG employs 883 personnel in South Africa

and the budgeted cost for 2011 is R 946 million

• The centre employs mainly experienced technical professionals Developmenttechnical professionals Development

• In 2010, Anglo American’s South African business units has spent R404 million on research and development, with c. R250 million spent locally in South Africa

• In 2011, Anglo American’s South African business units has spent R722 million on research and

Anglo American supported research student at the University of Cape Town

4545

units has spent R722 million on research and development, with c. 50% spent locally in South Africa

MIGRANT LABOURMIGRANT LABOUR

46

MIGRANT LABOURSouth Africa Mozambique Lesotho

Anglo American South Africa Workforce by Nationality

• Anglo American South Africa has historically sourced most of its labour from South Africa –however, a significant number of employees have historically been drawn from South 95%

100%

Botswana Swaziland Zimbabwe

have historically been drawn from South Africa’s neighbouring countries, particularly Lesotho, Botswana, Zimbabwe and Mozambique

• Anglo American’s human resources policy has 85%

90%

95%

• Anglo American s human resources policy has always adhered to ensuring that migrant labour from South Africa’s labour sending areas and neighbouring countries is in line with South African labour relations legislation 75%

80%

85%

gto ensure no unfair treatment or discrimination against such employees

70%

75%

Platinum Thermal Coal Iron Ore Total



3. CONTRIBUTIONS BEYOND THE MINING CHARTERTHE MINING CHARTER

48

HEALTHCARE

Th f bi h d Hi h ld H it l M l

49

The refurbished Highveld Hospital, Mpumalanga

HEALTHCARE: EMPLOYEES • Anglo American operates the largest private sector HIV/AIDS treatment g p g p

programme in the world

• Demonstrable leadership in the fight against HIV/AIDS:• 94% of all employees participated in voluntary counseling and

testing c 100 000 peopletesting – c. 100,000 people• c. 4,000 employees on Anglo American’s ARV treatment

programme in 2010• Have been providing HIV/AIDS treatment to not only employees but

dependants and family members of employees since 2008p y p y

• Extending our holistic approach to managing HIV/AIDS and Tuberculosis by integrating these programmes into broader wellness initiatives e.g. iCARE campaign (including testing for Weight, Height, Blood Pressure, Haemoglobin Cholesterol and Blood Glucose)Haemoglobin, Cholesterol, and Blood Glucose)

• Providing occupational healthcare for employees, particularly in preventing noise-induced hearing loss

50Contributions beyond the Charters

HEALTHCARE: COMMUNITIES

• Extending our healthcare provision strategy for• Extending our healthcare provision strategy for employees to our host communities:

• R19m spent on the Batho Pele Mobile Health Units in the John Taolo Gaetsewe municipality in the Northern Cape for benefits of improvedthe Northern Cape for benefits of improved primary and secondary health care

• Bhubezi Community Health Centre in Bushbuckridge, Mpumalanga (established by Anglo American’s Thermal Coal business in 2007 in conjunction with Virgin Unite, US AID/ PEPFAR, and Ndlovu Care Group), providing ARTs to over 3,000 local community members

• Ulysses Gogi Modise Clinic in Kathu, Northern Cape (established by Kumba Iron Ore) providing ART to over 900 affected local community

bmembers• Developing a business plan to revitalise Primary

Healthcare in two districts of the Eastern Cape through Health Systems Strengthening

Sister Jackie Schoeman gives a blood test to patient Mickle Rolsen at the UGM Community clinic in Kathu

• Our latest vision is to help raise a new generation of young South Africans who will be free of AIDS and free of cervical cancer 51

Contributions beyond the Charters

y

SOCIAL INVESTMENT


52

City Year - Service leader supported by Anglo American in classroom teaching learners leadership skills at LekangSchool in Soweto, Gauteng

• Total Corporate Social Investment spend in

SOCIAL INVESTMENTTotal Corporate Social Investment spend in South Africa reached c. R482m (c. US$65.9m) in 2010

• c. 73% of spend directly contributing to our social and labour commitments towards local economic development in the communities around our operations

• Renewing commitment to local communities through direct social investment linked to mine social and labour planssocial and labour plans– c. R14.5m spent upgrading primary

healthcare facilities in various communities around our Platinum mines in the Limpopo province

• Corporate social investment by Business Unit:– Platinum – c. R119m or 1.2% of NOPAT– Thermal Coal – c. R98m or 1.5% of NOPAT– Kumba Iron Ore – c. R134m or 1.5% of

NOPAT


NOPAT


The Blackhill Schoongezicht school, Mpumalanga, donated to the community by Landau Colliery, Mpumalanga

CAPACITY BUILDINGCAPACITY BUILDING

54

eMalahleni Water Reclamation Plant, Mpumalanga, supplying 20% of eMalahleni Municipality’s water needs

CAPACITY BUILDING INITIATIVES• A capacity building initiative between Anglo American and the Development Bank of South Africa has been p y g g p

established to create a sustainable operations and maintenance programme of municipal existing and new infrastructure, capacitating municipalities through deployment of sector experts and apprentices/artisans

• Through the Platinum Eastern Limb bulk water supply project we have developed a long term strategy in partnership with governments, other mining companies and key stakeholders to provide 1.9 million people access to clean water through the Lebolelo Water Scheme, Flag-Boshilo and De Hoop Dam construction works

• The Emalahleni Water Treatment Plant treats water from mining operations and transforms the water to a potable standard meeting about 20% of the local government’s daily requirements in supporting municipal, commercial and industrial growth

• Thermal Coal’s Emalahleni Reclamation Plant produces 200 tonnes of raw gypsum every day as a by-product which is used as a raw material in the construction of homes. This low-cost, high-quality building material has been used to build 66 three-bedroom units with more units planned

• The John Taolo Gaetsewe (JTG) Rural Research Project focuses on identifying evaluating and locating anThe John Taolo Gaetsewe (JTG) Rural Research Project focuses on identifying, evaluating and locating an appropriate socio-economic framework for the communities spanning the JTG District Municipality, KgatelopeleLocal Municipality and the Tsantsabane Local Municipality

• Anglo American's Science, Career Guidance and Information and Communications Technology (ICT) Resources Centre is a R19 million facility, located in eMalahleni, Mpumalanga, providing interactive science, y p g p gcareer guidance and ICT resource facilities for educators and learners throughout the Nkangala district.


THANK YOUTHANK YOU

APPENDIX

57

OWNERSHIP AND JOINTOWNERSHIP AND JOINT VENTURESTRANSACTION HIGHLIGHTSTRANSACTION HIGHLIGHTS

58

OWNERSHIP AND JOINT VENTURESTransactions

Anglo American South Africa ValueAnglo American South Africa ValueBEE transaction summary (at transaction date) Key Broad based Broad based Broad based

Rm Date Empowerment % partner partner interest beneficiariesAnglo American Platinum 25 634 Northam 423 Aug-2000 17.5% Mvela None Modikw a JV w ith ARM 2 423 Aug-2001 50.0% ARM ARM BBBEE Trust 13.5% of ARM See notes

% f f S BRPM JV w ith RBN 3 141 Aug-2002 67.0% Bafokeng Bafokeng See notes 300 000 people Pandora JV 205 Feb-2003 15.0% Mvela Bapo Ba Mogale

community 7.5% in JV 35 000 people

Ga-Phasha JV w ith Plateau 990 Aug-2004 50.0% Anooraq

Western Bushveld 249 Oct-2004 26.0% Africa Wide

Elandsfontein 120 Dec-2005 26.0% Ngazana 26% in mine Union JV 491 Nov-2006 15.0% Bakgatla Bakgatla 15% in mine 350 000 people Lebow a 7 905 Jun-2009 51.0% Anooraq Pelew an

Investments65% in Anooraq See notes

Northam (second sale) 2 655 Aug-2008 22.4% Mvela Resources

Booysendal 3 480 Jun-2009 100.0% Mvela Resources ESOP 2 490 Jun-2008 1.5% Employees 1.5% of APL 50 000 people

59

p y p p Western Bushveld JV 1 062 Dec-2008 37.0% Wesizw e Bakubung

community + BEE consort.

(Bakubung share ~16% in Wesizw e)

OWNERSHIP AND JOINT VENTURESTransactions (continued)

Anglo American South Africa ValueBEE transaction summary (at transaction date) Key Broad based Broad based Broad based

Rm Date Empowerment % partner partner interest beneficiariesAngloGold 1 831Vaal Reefs 38Bokamoso & Izingw e 665 Oct-06 1.90% Bokamoso ESOP

Trust and Izingw eEmployees and Izingw e

1.4% Bokamoso and 0.5% Izingw e

30000 Employees and Izingw e

of AngloGoldWestern Holdings 28Free State Assets 1 100 Nov-01 50% ARM ARM 50% ARM

Anglo Coal 2 902New Coal 360 Dec-00 16% Eyesizw eKZN coal assets 6 LeeuwKZN coal assets 6 LeeuwCoal rights 17 HDSA generalCoal rights 268 ShandukaRBCT rights 0 HDSA generalAnglo Coal - ESOP 251 Employees 9000 employees

(7000 HDSA)Anglo Inyosi Coal - ESOP 111 EmployeesAnglo Inyosi Coal 1 890 Feb 07 27% Pamadozi Community Trust Community TrustAnglo Inyosi Coal 1 890 Feb-07 27% Pamadozi,

Lithemba, Woman's Development Bank

Community Trust and see note

Community Trust (15% of 27%) and see note

Mondi 1 675SAFCOL 100Ramana 35

60

Ramana 35Shanduka - New sprint 550 Aug-04 58% ShandukaShanduka - Packaging 990 Aug-04 42% Shanduka Employees 6400 employees



Rm Date Empowerment % partner partner interest beneficiariesKumba Iron Ore 11 735Kumba - at SIOC level 11 735 Nov-06 26% Exxaro Envision employee

share scheme and Community Trust

6% 4000 employees + community

Community Trust

Scaw Metals 1 378Scaw Metals 1 378 Apr-07 26% Izingw e Employee share 5% 5 600 employees

trust

De Beers 3 710De Beers (DBCM) 3 710 Apr-06 26% Ponahalo See notes 19% Employees,

disadvantaged w omen, disabled persons and pcommunities

Samancor 4 117 0.26 HEMP 1 1 370 Aug-07 9% Ntsimbintle Community HEMP2 1 065 Aug-07 7% Ncab Community HEMP 3 825 Aug-07 5% NzikoHEMP 4 825 Dec 09 5% Other nominees

61

HEMP 4 825 Dec-09 5% Other nominees ESOP 32 Employees 750 employees



Rm Date Empowerment % partner partner interest beneficiariesOther Mining & Industrial 10 324Avmin 844 Oct-06 50% ARM 50% ARMSouthern Life 163 51% African LifeJ h i 2 655 A 96 35% Th N ti l 35% f J h i ' HDSAJohnnic 2 655 Aug-96 35% The National

Empow erment Consortium (NEC)

35% of Johnnic's issued share capital

HDSAs

JCI 2 474 Nov-96 30% Saflife Ltd See notesIkageng 601 Apr-97 6% The National

Empow erment Consortium (NEC)

6% of Johnnic's issued share capital

32000 HDSAs

De Beers 38Conlog 39Boschendal 323Hulamin 990 Jun-07 10% Imbew u and

Makana

Tongaat Hulett 2 197 Jun-07 18% Sangema, Masithuthukisane Trust, Mphakathi Trust, Ayavuna and a ESOP/MSOP

62

BENEFICIATION STRATEGYBENEFICIATION STRATEGY AND APPROACH

63

BENEFICIATION

Anglo American Platinum’s beneficiation strategy emphasises a holistic and balanced portfolioAnglo American Platinum s beneficiation strategy emphasises a holistic and balanced portfolio approach to local platinum market development

Market Development Overview Key Levers

Fundamental Research

Commercialisation• Maintaining strong

links with universities, fabricators and end-users is critical

Improving Creating viable

Product Development

Providing solutions

Development Phase

• Integration of government and beneficiation initiatives into the R+D program

Improving understanding of the physical world

• Universities and

Focus

Creating viable market for new product

• Fabricators• Fabricators

Providing solutions to customer problems

• The establishment of a development fund to encourage product d l t

Key Partners

Examples of k t

• Universities and scientific institutions

• In-house R&D

R h G t

• Marketing Support

• Seed funding

• Fabricators

• Entrepreneurs• Entrepreneurs

• End Users

• Third party R&D grants

IP li i

64

development, commercialisation and beneficiation

market development tools

• Research Grants

• Scholarships

• Advocacy

Seed funding

• PGM pricing

• IP licensing

• Advocacy

• IP licensing

• Seed funding

• Advocacy


1 ANGLO AMERICAN IN SOUTH1. ANGLO AMERICAN IN SOUTH AFRICA TODAY

65

ANGLO AMERICAN’S COMMITMENT TO SOUTH AFRICAFor the 12 months ended 31 December 2010For the 12 months ended 31 December 2010

ANGLO AMERICAN IN SOUTH AFRICA:

• A national champion

• A major contributor to South Africa’s economy

• A considerable project pipeline in South Africa

• A conscious approach to safety is delivering results

• A promoter of broad-based empowerment participation in its South African operationsA promoter of broad based empowerment participation in its South African operations

• A comprehensive and far-reaching approach to transformation

• An employer of choice to around 91,000 people in South Africa

• A responsible corporate citizen

• A partner of choice

67

• A national thought leader

A NATIONAL CHAMPION• Founded in Johannesburg, Anglo American has a 94-year history in South Africag, g y y• Today a multinational company with operations in >40 countries• However South Africa remains the single most important country to the Group

– 3 out of the Group’s 7 commodity business units are globally managed from South Africa– 4 business unit CEO’s based in South Africa and 8 out of 15 ExCo members are South African

In 2010 c 43% of the Group’s operating assets c 48% of its revenue and c 51% of its operating– In 2010, c.43% of the Group’s operating assets, c.48% of its revenue and c.51% of its operating profit had their origin in South Africa

Operating assets by geography (2010)

South Africa

f f

Revenue by geography (2010)

South Africa

Operating profit by geography (2010)

South AfricaRest of Africa

Europe

North America

South America

Australia and Asia

Rest of Africa

Europe

North America

South America

Australia and Asia

South Africa

Rest of Africa

North America

South America

Australia and Asia

43%

38%

10%

7%

48%23%

13%

7%2%8%

51%33%

10%

5%

The group has a number of assets which are strategic to South Africa• Anglo Platinum (c.79% owned) – the world’s leading platinum producer, accounting for c.39% of global

supply

1%1%1%

68

pp y• Kumba Iron Ore (c.65% owned) – the world’s 4th largest iron ore producer in seaborne iron ore• Thermal Coal – one of the world’s largest private sector coal producers and exporters• De Beers (45% owned) – the world’s leading diamond business • Samancor Manganese (40% owned) – the world’s largest integrated producer of manganese ore

A MAJOR CONTRIBUTOR TO SOUTH AFRICA’S ECONOMYAnglo American is:

A significant investor in South Africa• Invested c. R148bn (c.$21.1bn) in Capex in South Africa since 1999 (till 2010)

One of the largest contributors to the South African fiscusOne of the largest contributors to the South African fiscus• In 2010, Anglo American group companies paid c. 14bn (c.$1.95bn) in direct and indirect taxes

A major contributor to South African foreign earnings• c.50% of South Africa’s foreign earnings are generated from commodity exports• Since its London listing in 1999, Anglo American’s foreign shareholding has increased from about 17% to

c 66% resulting in a total of c c R124 5bn (US$21 5bn) of capital inflow Generated export revenues ofc.66%, resulting in a total of c. c. R124.5bn (US$21.5bn) of capital inflow Generated export revenues of c.R105bn (c.$14.3bn) in 2010

A significant contributor to the South African economy• In 2010 Anglo American produced some 2.5% of South Africa’s GDP

One of the largest components of the JSE (together with its controlled companies)One of the largest components of the JSE (together with its controlled companies)• Combined market capitalisation of >US$90bn (c.R770bn), representing c.18% of the value of JSE top 100• South African shareholders make up c. 34% of AA plc Share Register

A key partner to some of South Africa’s most important state-owned enterprises• Eskom: In 2010, Anglo American spent US$423m (c.R3.1bn) with Eskom, and delivered 32Mt of thermal coal

$

69

(US$630m or c. R4.6bn) to Eskom for South Africa’s electricity needs• Transnet: c.US$560m (R4.1bn) Anglo American spend on Transnet in 2010

A CONSIDERABLE PROJECT PIPELINE IN SOUTH AFRICA

Anglo American has a c R30bn (US$4 4bn)Anglo American has a c. R30bn (US$4.4bn)project pipeline to be delivered over the next 3 years in South Africa

• Iron Ore: – Kolomela project 94% complete, hot

commissioning started in Q3 2011

• Thermal Coal: – 6.6 million tonnes per annum Zibulo project (to

supply Eskom’s Arnot power station) is on ramp-up, with full production expected in Q4 2012

– New Largo project (to supply Eskom’s Kusilepower station) is in feasibility stage with Boardpower station) is in feasibility stage, with Board approval to be sought by Q3 2012

• Platinum:– Capital expenditure of c. R1.6bn (US$223m) in Kolomela Iron Ore Project Commissioning, Postmasburg,

Northern Capethe first half of 2011 on various expansion projects at Thembelani, Mogalakwena, Twickenham, Khuseleka and Dishaba mines

p


A rigorous safety culture with three underlying principlesANGLO AMERICAN’S APPROACH TO SAFETY IS DELIVERING RESULTS

• A zero harm mindset • Simple, non-negotiable standards • No tolerance for repeat incidents

Committed to working in partnership to share best practice and raise standards in safety• Management has been working with government unions and peers to find common solutions to achieve a• Management has been working with government, unions and peers to find common solutions to achieve a

breakthrough in safety in the industry– First Anglo American Tripartite Safety Summit held in Johannesburg in April 2008– Tripartite initiative continues with union and government officials participating in Anglo American safety training

courses including site visits and interaction with employees – now being rolled out to operational level within our own South African business unitsown South African business units

– ‘Visible Felt Leadership’ toolkit extended across all operations– Solidarity Union named Anglo American as employer of choice for its commitment to safety in 2010

Improved safety standards mean saving peoples’ lives• Under Cynthia Carroll’s leadership, fatalities in SA have reduced by 58% over the past 4 years to 11; LTIFR by 51%Under Cynthia Carroll s leadership, fatalities in SA have reduced by 58% over the past 4 years to 11; LTIFR by 51%

to 0.57 (up to December 2010) – this places us among the best performers in our peer group– Anglo American’s lost-time injury rate, excluding our deep-level hard-rock mining operations, is 0.22 YTD in 2011

– a sector-leading performance– Anglo American’s fatal-injury frequency rate at end-October was 0.008 – 53% lower than at the end of 2006– Anglo American Thermal Coal completed its first ever fatality-free calendar year in 2010

7171

– Thermal Coal's Isibonelo Colliery has been awarded the Department of Mineral Resources' safety flag for 2010/11 - the most prestigious award given to a mine with an excellent safety record

– ‘Train-the-Trainer’ (TTT) Zero Harm orientation programme rolled out across our Platinum operations to address the ‘hearts and minds’ aspect of effective leadership in safety

OWNERSHIP AND JOINT VENTURESANGLO AMERICAN EMPOWERMENT TRANSACTIONSAnglo American has completed all necessary Business Unit Transaction Empowerment partners

Thermal Coal- Anglo American Inyosi Coal

26% of current and future production

Pamodzi, Women’s Development Bank, Lithemba, workforce, communities and Eyesizwe Coal

g p yempowerment transactions

• c.R60bn in BEE transactions concluded since 1994 across all business units

• Significant facilitation provided y

Iron Ore and Manganese- Kumba Iron Ore- Samancor

26% of equity Exxaro, Ntsimbintle, Ncab, Iziko, workforce, communities

PlatinumAnglo Platinum

Greater than 26% of production

Mvelaphanda, Anooraq, Royal Bafokeng ARM workforce

• Broad-based participation ensured: strategic shareholders, communities, employees

- Anglo Platinum of production Bafokeng, ARM, workforce, communities

Other Mining and Industrial- Scaw Metals

Black Mountain

26% of equity Exxaro, Izingwe Holdings, Shanduka Resources, Southern Palace Holdings, workforce, communities

All group company employees are ESOP participants

Community participation has been a key - Black Mountain- Gamsberg

communities

Diamonds- De Beers

26% of equity Ponahalo (inc. communities), workforce

Anglo American’s empowerment transactions have led to the

focus• Direct participation of communities affected

by mining operations in the benefits they generate g

creation of flagship black-owned mining companies e.g. ExxaroResources, African Rainbow Minerals and Shanduka Resources.

• Transactions aimed at sustainable, long term economic uplift of mining areas


H i

A COMPREHENSIVE AND FAR-REACHING APPROACH TO TRANSFORMATION

Housing• In 2010 Anglo American provided 17,286 employees with company accommodation as part of a c.R2.5bn

($300m) programme, in partnership with government, providing 20,000 houses are being constructed to 120,000 people in the Limpopo and North West provinces

BEE E l t E it d T f tiBEE procurement spend (Rbn)

30BEE, Employment Equity and Transformation• Largest private sector employer in the country –

c. 70,500 full-time employees and c. 21,000 contractors employed (as of December 2010)

• Created rigorous safety culture and hence 9

12.3

17.3

24.623.5

20.9

15

20

25

30

• c 47% of Anglo American employees at management level in South Africa are HDSA

positively impacted the mining industry • Group BEE spend grew from c. R1.1bn

(US$133m) in 2000 to c.R21bn (US$2.4bn) in 2010, representing c.44% of total spend

1.1 1.11.5 2.4

3.6

5.8

9

0

5

10

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

c.47% of Anglo American employees at management level in South Africa are HDSA• Women now make up c.13% of South African employees, exceeding the 10% Mining Charter target

– c.19% of management positions held by women– Increasing number of women in core mining jobs – 5,282 in 2010, representing 11% of the total mining

workforce

73

Enterprise development• Anglo American Zimele has a 20-year track record in supporting and developing black entrepreneurs, and as at

December 2010 has invested invested c. R482 ($54m), to date, in 637 businesses, creating over 15,000 employment opportunities

Social Investment

A RESPONSIBLE CORPORATE CITIZEN...

An acknowledged leader in corporate social spend in South Africa• Total Corporate Social Investment spend in South Africa reached c.$65.9m in 2010 – over 60% of global spend,

and an increase from c. R512m (US$54m) in 2009, through the Anglo American Chairman’s Fund and other delivery vehicles such as the Epoch scheme and the Optima Trust, with c. 73% of spend directly contributing to our social and labour commitments towards local economic development in the communities around our operations

$– Platinum – c. R119m (US$16m), 1.2% of NOPAT– Thermal Coal – c. R98m (US$13m), 1.5% of NOPAT– Kumba Iron Ore – c. R134m (US$19m), 1.5% of NOPAT

• In addition, Anglo American is renewing its commitment to local communities through direct social investment linked to mine social and labour plans

c R14 5m spent around Sishen in the Northern Cape on 9 mobile health units to assist the provincial Department– c. R14.5m spent around Sishen in the Northern Cape on 9 mobile health units to assist the provincial Department of Health to render a quality and frequent primary and secondary health care service in the rural communities in the Joe Morolong Municipal Area

– c. R14.5m spent upgrading primary healthcare facilities in various communities around our Platinum mines in the Limpopo province (Twickenham, Rustenburg and Mogalakwena areas)

Addressing key environmental concerns• Award-winning eMalahleni water reclamation plant currently purifies 25 megalitres of water per day in the Witbank

area, supplying c. 80 000 people – the plant will soon enter its second phase, doubling capacity to 50 megalitres per day (the project, already internationally recognised, has recently been selected as the winner of the 'best community project in Africa' category of the Asia Mining Global Sustainability Awards)

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p j g y g y )• During 2010, Anglo American recycled 53 megalitres of water, including a 60% reduction in potable water achieved

by Bafokeng Rasimone platinum mine through innovative water re-usage• Through the Platinum Eastern Limb bulk water supply project we have developed a long term strategy in

partnership with governments, other mining companies and key stakeholders to provide 1.9 million people access to clean water through the Lebolelo Water Scheme, Flag-Boshilo and De Hoop Dam construction works

Projects of National importance being evaluated

A RESPONSIBLE CORPORATE CITIZEN (ctd)j p g

• Primary health care initiatives in the Eastern Cape in partnership with Provincial Government, communities and other NGO’s – Bhubezi Community Health Centre in Bushbuckridge, Mpumalanga (established by Anglo American’s Thermal

Coal business in 2007 in conjunction with Virgin Unite, US AID/ PEPFAR, and Ndlovu Care Group), providing ART to over 3,000 local community members – the project won the Frontline Heroes for Health award and received their award from Cynthia Carroll and Richard Branson in New York in June 2011

– Ulysses Gogi Modise Clinic in Kathu, Northern Cape (established by Kumba Iron Ore), providing ART to over 900 affected local community members

– Anglo American’s Platinum business is developing a business plan with the Eastern Cape Department of Health Partnership to revitalise primary healthcare services in four sub-districts of that province.

• Provision of integrated development programmes in the labour sending areas• Provision of integrated development programmes in the labour sending areas• Capacity building in selected municipalities in the provinces where we operate and major labour sending areas, in

partnership with the Development Bank of South Africa• Evaluating the feasibility of low-cost solar water-heating for low-income households• All of Anglo American’s South African operations achieved 100% compliance with the Anglo American Social Way,

including compliance with International Finance Corporation compliance standards on community resettlementincluding compliance with International Finance Corporation compliance standards on community resettlement, interactions with indigenous people and accommodating cultural heritage.

Post-graduate diplomas• Anglo American has supported the development of a new post-graduate diploma in Strategic Stakeholder

Engagement Practice (SSEP) at the University of Cape Town (UCT) Graduate School of Business in 2009

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g g ( ) y p ( )– One of only two university courses to address community engagement and development in the mining industry

(the other is at University of Queensland)– From 2011 Anglo American will support the participation of traditional leaders on the programme in

partnership with the South African government

AN EMPLOYER OF CHOICE TO ~91 000 EMPLOYEES IN SOUTH AFRICA

Local workforce developmentSkills development is an integral part of the group’s human resource process• In South Africa, where currently almost two thirds of our global workforce is located (c. 64% in 2010, including

contractors), training and development remains a key focus area, accounting for c. 5% spend of total employee costs– c.R810m (US$111m) spent on employee training initiatives, bursaries, ABET, management programmes

and re-training in South Africa from core businesses alone – up 26% in Rand terms from 2009 (approximately c.R530m or US$63m) despite headcount reduction [Target = 3% of NOPAT]– Platinum – c. R441m (US$60m), 4.3% of total BU payroll– Thermal Coal – c. R202m (US$28m), 8.2% of total BU payroll

K b I O R167 (US$23 6 8% f t t l BU ll– Kumba Iron Ore – c. R167m (US$23m, 6.8% of total BU payroll• c.3 600 employees, contractors and community members currently enrolled in ABET programmes• c.2,500 employees received portable skills training to be employable outside the mining industry in South Africa

HIV/AIDSHIV/AIDSDemonstrable leadership in the fight against HIV/AIDS:• c.94% of the group’s South African employees have participated in voluntary counseling and testing programmes,

representing >100,000 employees and contractors in 2010 (up from 82% in 2009)• 3,965 employees on Anglo American’s ARV treatment programme• c 59% of all HIV positive employees at our Southern African operations participating in HIV disease management

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c.59% of all HIV positive employees at our Southern African operations participating in HIV disease management programmes (up from 51% in 2009)

• Offer for free ART treatment extended to employees’ families since 2008 – a milestone development for the industry

Eskom both a key supplier and customer

A PARTNER OF CHOICEy pp

• Anglo American is one of the largest Eskom clients with c.R3.1bn (c. US$423m) spend in 2010 • Anglo American Thermal Coal Coal continues to be a major supplier to Eskom, supplying 32Mtpa coal to Eskom

(c.30% of Eskom’s coal requirements in 2010 and in 2009)• In September 2008 Anglo American signed an MOU with Eskom to conceptualise and implement energy efficiency

programmes and promote skills development• In May 2008 Anglo American seconded Kumba CEO Ras Myburgh to Eskom to assist the utility in solving its coal

procurement problems• Participate in the Task team with the Department of Energy

Long-standing relationship with Transnet supporting South Africa’s infrastructure development G i j f th T t’ il d t i f t t ith $560 ( R4 1b ) d• Group companies are major users of the Transnet’s railway and port infrastructure with c.$560m (c.R4.1bn) spend in 2009

PIC and IDC are key shareholders• The PIC holds c.5.46% in Anglo American, c.5.5% in Anglo Platinum and c.3.8% in Kumba Iron Ore – investments

carrying a combined value of c R33bn (c US$4 5bn)carrying a combined value of c.R33bn (c. US$4.5bn)• The IDC holds c.12.95% in Kumba Iron Ore, currently valued at c.R14.6bn (c. US$2.0bn)

BEE partners are important stakeholders• Transactions aimed at sustainable mutual value creation

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Communities benefit from upliftment programmes• Community engagement and development seen as a key element of the group’s contribution to South Africa

An active and long standing participant in a multitude of key industry forums at CEO/Executive level

A NATIONAL THOUGHT LEADER

An active and long-standing participant in a multitude of key industry forums at CEO/Executive level

• Chamber of Mines• Energy Intensive Users Group and support for IRP task team• Business Leadership South Africa• Business Unity South Africa• Business Unity South Africa• Business Against Crime South Africa • Industry alignment Forum• UN Global Impact• Extractive Industries Transparency Initiative• Global Reporting InitiativeGlobal Reporting Initiative • Voluntary Principles on Security and Human Rights • Investment Climate Facility for Africa

A key contributor to innovation and national policy transformation

• Working alongside government, unions and peers in developing a strategy for the sustainable growth and meaningful transformation of South Africa’s mining sector through senior representation in the Mining Industry Growth, Development and Employment Task Team (MIGDETT)

• Working alongside government, unions and peers in improving safety in South Africa’s mining industry through the establishment of the Tripartite safety initiative

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the establishment of the Tripartite safety initiative

transformation in anglo american south africa · a major contributor to south africa’s economy...

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