An Introduction to Anglo American plc and Mining’s Role...
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Transcript of An Introduction to Anglo American plc and Mining’s Role...
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
2
Agenda
1. Overview of Anglo American2. Challenges in the Mining Sector3. Mining and Development4. Examples of Anglo’s Development
Initiatives
3
About Anglo American
Challenges
Mining and Development
Anglo Initiatives
4
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
5
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
6
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
7
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
9
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
10
• 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
11
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
12
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
13
Why Might Mineral Resources Hinder Development?
Resource Curse
Terms of Trade
DutchDisease
RentSeeking
Impacts of Mining
VolatileMarkets
14
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
15
About Anglo American
Challenges
Benefits from Mining
Anglo Initiatives
16
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
17
Anglo: Distribution of Benefits
In 2008 UK Government Aid to Africa was $1.54 billion
18
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
19
About Anglo American
Challenges
Benefits from Mining
Anglo Initiatives
20
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
21
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
22
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
23
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
24
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
25
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
26
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
27
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
28
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
29
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
30
Thank you