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Anglo American South Africa – Presentation to the Portfolio Committee on Minerals and Energy May 20071

Anglo American South AfricaAnglo American South Africa

Representation on the Mineral and Petroleum Resources Development

Amendment Bill to the Portfolio Committee on Minerals and Energy

May 2007


Agenda

1. Anglo American – a global leader in mining2. Progress on Transformation 3. General provisions of Bill4. Environmental provisions of Bill


Agenda



A focussed global mining company

Platinum DiamondsFerrous Metals

Paper and Packaging

Base Metals Coal

Industrial minerals Gold

Precious metals and minerals

Mondi to be

separately listed

in 2007

Plan to exit within 2 years

Bulk and Base Metals


South Africa: A central pillar of the Group’s operations

Net Assets 2006Operating profit* 2006

* Before special items & remeasurements


… and its future

SA: Gross fixed capital formation(annual)

50

75

100

125

150

175

200

225

250

99 00 01 02 03 04 05

1999

= 1

00

South Africa – Gross Fixed Capital Formation

Anglo American –investment in South Africa

Source: SA Reserve Bank & Anglo American SA

• From 1999-June 2006 Anglo American invested R129bn (R154bn in 2006 Rands) in South Africa.

• This makes Anglo by far the largest private sector investor in SA over this period.

• To put this investment in perspective, the total investment in the new motor vehicle manufacturing industry, for example, was R20bn over the same period*.

* Naamsa Annual Report, 2006


Supported by a strong project pipeline in South Africa and the rest of the world

Zondagsf’tnHeidelbergNew Largo MacWestElders

Anglo American’s investment project pipeline 2006-2009

• Anglo American plc has an approved project pipeline of R44 billion ($6.7 billion) from 2006-2009

• R23 billion ($3.5 billion or 52%) of the total approved project pipeline is to be invested in South Africa


Agenda



Ownership: Major BEE Transactions and Joint Ventures

• Anglo BEE transactions: African Life (R0.3bn), JCI (R5.6bn), Johnnic (R2.6bn), Mondi ShandukaPackaging and Newsprint (R3.3bn), Scaw Metals (R1.3bn), Tongaat-Hulett (R3.9bn), Hulamin (R1.8bn), Anglo Inyosi Coal (R7bn)

• Anglo American has been the catalyst in the formation of today’s leading BEE South African mining houses with an estimated market capitalisation of R43bn

ARM

Gold & PlatinumMarket cap

R15.3bn

Eyesizwe

CoalEquity value

R1.6bn

Mvelaphanda

Gold & PlatinumMarket cap

R5.6bn

Exxaro

Coal, heavy minerals,zinc, iron oreMarket cap

R20bn


Anglo’s HDSA Ownership Progress

26% 26%

81%100%

21%20%15%

24%8%

6%6% 5%

7.2%

0%

10%

20%

30%

40%

50%

60%

Angl

o Pl

atin

um

Angl

oGol

dAs

hant

i

Angl

o C

oal

De

Beer

s

Kum

ba Ir

onO

re Exxa

ro

Base

Met

als

Con

solid

ated

% H

DSA

ow

ners

hip

Transactions concluded Transactions under negotiation Historical HDSA empow erment transactions

2014 target : 26%

2009 target : 15%

+

23% 26%26% 26%26%

38%

Anglo has surpassed the 2009 15% ow nership

target and is on track to significantly exceed the

2014 26% target

The HDSA ownership graph includes a 1.5% ESOP for Anglo Platinum, 6% for AngloGold Ashanti and 3% for Exxaro

Anglo is considering an additional ESOP for those SA employees not included in the above schemes. This has NOT been taken into account in the HDSA ownership graph

Historical BEE transactions constitute around 7% of current market capitalisation of Anglo’s SA assets

100% 81%

- Anglo has achieved aggregate HDSA ownership nearly 25% to date, with Anglo Platinum being the last major remaining initiative in terms of the Mining Charter

- This is an internal assessment that is still subject to DME approval


Employee Share Ownership Plans

• Anglo is committed to ensuring that employees are an integral part of its transformation strategy

• ESOPs are being implemented across the Group as specific circumstances dictate:

Mondi ESOP enables employees to participate in 4% of Mondi ShandukaNewsprint and 5% of Mondi Packaging in South Africa

De Beers’ HDSA empowerment deal includes 13% ownership by employees and pensioners

Kumba’s HDSA empowerment deal includes 3% ESOP in Exxaro and Kumba Iron Ore

AngloGold Ashanti’s HDSA empowerment deal includes 1.4% ESOP of its issued share capital

Tongaat-Hullet’s HDSA empowerment deal includes 7% ESOP and MPSOP

Hulamin’s HDSA empowerment deal includes 5% ESOP and MSOP

Anglo Platinum is currently considering a 1.5% ESOP

Anglo is considering an ESOP for those South African employees not included in above schemes

The ESOP percentages

vary depending on the

enterprise value of the business and the number

of employees


Employment Equity

• Anglo is committed to employment equity as a strategic imperative of doing business in South Africa and will meet the Mining Charter’s target for 40% HDSA participation in management.

• Currently there are two black South Africans on the Anglo American plc Board.

• Anglo analysis at 31 December 2006:-

Overall Equity % excluding C-Band

Overall Equity % excluding white women

Anglo Base 40 28

Anglo Coal 32 25

Anglo Platinum 38 26

ATD / AARL/MinRED 34 17

Corporate Centre 53 26

Mondi 46 35

Ferrous & Industries 39 29

Overall 39 28Definition of HDSA as per the Mining Charter and includes white women

Average skills development spend

by resources companies of 4.5%

of payroll costs (AngloGold Ashanti

with 4.3% and Kumba Resources with 5.7%) exceeds the average spend

by the top 200 listed South African

companies of 2.8%


BEE Procurement and Enterprise Development

• BEE procurement and business development spend (including Anglo Zimele) increased significantly from R0.3 billion in 1998 to R12.3 billion in 2006(excluding De Beers)

• 2006 HDSA procurement as percentage of total available spend continues to increase from 24% (2005) to 28.5% (2006)

* SME’s with turnover <R25m p.a, per definition in BEE Codes

Anglo's BEE Procurement and Business Development Spend Since 1998 (excluding De Beers)

R12.3bn

R9.0bn

R5.8bn

R3.6bnR2.4bn

R1.5bnR1.1bnR0.8bnR0.3bn0

2

4

6

8

10

12

14

16

1998 1999 2000 2001 2002 2003 2004 2005 2006

R b

illio

n

This Anglo initiatives started in 1989

Analysis of BEE Spend

0.0

2.0

4.0

6.0

8.0

10.0

12.0

R b

illio

nBEE Corporate Spend BEE SME Spend

* R1.9 billion(15%)

R9.5 billion(85%)


Enterprise Development

Anglo Zimele• Investments collectively turned over R702 million in 2006 from

R561 million in 2005• Currently invested in 43 businesses employing 3200 peopleAnglo Khula Mining Fund• Investments collectively turned over R217 million in 2006 from

R216 million in 2005On 22 July 2005, President Mbeki, the Minister of Minerals and Energy and the Minister of Communications visited the exhibition of small and medium enterprises hosted by Anglo

”This effort has answered the question that I have been asking about what it is that we can do to assist in the expansion of the South African economy through SME development and BEE”

“It was an inspiration to walk around and get a sense of confidence. It really uplifts all of us”

President Thabo Mbeki


CSI, Special Projects & HIV/AIDS Partnerships

• The Anglo Chairman’s Fund is a dedicated instrument through which the Anglo Group companies are committed to the upliftment and development of South African communities

• Since 1999 the Anglo Chairman’s Fund and the AngloGold Ashanti Fund and Trust have made significant contributions of some R491 million (R600 million in 2006 money) to 5 012 charitable causes and community projects including the following initiatives:-

Special Projects• Rural Schools Programme in Limpopo – R20m over three years• Origins Centre Museum at Wits University – R10m • The Hand Surgery Unit at Chris Hani Baragwanath – R4.5m• Maths & Science Award R3m over3 years in partnership with Deparment of

Education• Leratong Hospice, Gauteng – R2m • KwaZamokhuhle School, KwaZulu-Natal – R1.5m• Dominican Convent School, Gauteng – R1.2m

Community HIV/AIDS Partnership Programme• Anglo’s Community HIV/AIDS Partnership Programme was launched in 2003 – R30m

over three years • Anglo received the ‘Award for Leadership’ in the Global Business Coalition on

HIV/AIDS Business Excellence Awards in 2004• Anglo’s Goedehoop Colliery in Witbank received the top award for its HIV/AIDS

programme at the Mail & Guardian’s ‘Investing in Life Awards’ in 2005

Opening of Leratong Hospice, 2004

Hand Surgery Unit, 2005

Lazarus Zim and Dr. Brian Brink receiving the Investing in Life Award from Ferial Haffajee,

Mail & Guardian’s Editor


Agenda



Promoting Mining Investment

“During 2007, the MPRDA will be amended to remove all identified obstacles to mining investment”

Minister of Minerals and Energy, Buyelwa SonjicaFebruary 2007

• We support these objectives and urge the Portfolio Committee to look at the AASA submission in that light.

• Provisions that are found to either delay or complicate the processing of applications, while not serving a good purpose, should be removed from the MPRDA.

• We support the Chamber of Mines submission and therefore have not covered the same issues as conclusively.


General Provisions

• Anglo welcomes the provisions relating to the extensions of the period of extinctive prescription. It is important that the MPRDA be given time to follow its course.

• Anglo supports the requirement for BEE whether at prospecting ormining stages. A prospecting application should not be rejected simply because the applicant cannot attract a BEE partner. The Minister must retain the discretion to determine on what basis the projects should proceed.

• The proposed changes that any change interest (i.e. shareholding) in a mining or prospecting company (as opposed to a controlling interest) requires Ministerial consent should be reconsidered. Either the current provision should be retained, or, the provision should be extended to only require Ministerial consent for any reduction of BEE equityownership below that which pertained at the time of the grant of the rights in question.


Agenda



Environmental Provisions Bill

• Anglo supports the concept that operators must provide assurance that the necessary funds to ensure any environmental impairments thatremain at the end of the operation are properly provided for. However, we argue that the law should allow for the business to do so in the most cost effective way, taking into account all risks. We accept that at no stage should Government have to carry the buck for irresponsibleoperators.

• Anglo submits that there should be alignment in the environmental provisions of the Bill with the requirements of the national environmental legislation, and removal of provisions that create further delays in the commencement of authorised activities.


Emalahleni Water Reclamation Project

Nominated for Nedbank Green Mining Award: Sustainability

• Main purpose: to remove water from underground workings of four mines and process it for supply to water stressed municipality

• Plant will meet 20% of the local authority’s daily water requirements

• The plant is a R296m capital project


THANK YOU

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