TRANSLATING OPPORTUNITIES INTO SUSTAINABLE VALUE FOR THE SOCIETIES IN WHICH WE OPERATE

AFRICAN RESOURCE MANAGEMENT FOR

SUSTAINABLE DEVELOPMENT

YZ SimelaneAugust 2010

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AngloGold Ashanti…a global company

AngloGold Ashanti is unique in the world of mining…

...diversity and our Vision for the future demands a different approach.

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KEY STRATEGIES

“The directional approaches and specific actions that will deliver on our objectives:

• Grow the business – be opportunistic looking for value accretion targets.• Manage the business as an “asset portfolio” - use capital deployment

optimisation approaches to support delivery of return targets.• Maximise margins – manage both revenues and costs to ensure delivery and

protection of returns through the price cycle.• Embrace sustainability principles – understand and focus on creating value for

both business and social partners to manage risk and opportunity.• Recognise people are the business – organization development will be a

strategic value driver for the business.

STRATEGY – SETTING DIRECTION

To deliver our objectives we will focus on some critical actions…

…that will help us integrate and coordinate our activities.

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Defining a Starting Point

In developing our strategy…

…we must be aligned on where we start and how we go forward.

Level 1No sustainability issue will negatively impact an operation, a

project or an exploration venture.

Level 2

Sustainability will provide the a basis upon which we increase

value through balancing cost reduction and value enhancement.

Level 3Sustainability will be a long term competitive advantage for

AngloGold Ashanti – supporting our efforts to acquire properties

and to manage them so that we create enduring value for the

communities in which we operate.

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SCOPE• Safety and Health

• Environment

• Community relations

• Government relations

• Corporate communications (including AGA branding)

• Product marketing and stewardship

BUSINESS SUSTAINABILITY

PRIMARY PURPOSE: To develop the strategy, incorporating the policy and systems framework, to create the relationships necessary to create a long term competitive advantage.

…to create a relationship model that defines how we engage the future.

Global Trends in the mining Industry

1. Increase Resource Nationalism

2. Increasing focus on sustainability issues in mining

3. Role of China as a major mining investor in the developing world – particularly in AFRICA

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1. Increasing Resource Nationalism

Has manifested itself in some of the following :

1.A move towards greater state ownership using state owned mining companies

2.Review of mining codes/acts, mining charters and mining development agreements

3.Tougher tax regimes and royalty agreements

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Case Studies: Some selected global case studies

Co Co Country

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Country Issue Detail

Mongolia Windfall taxes and mining law review

Following three years of negotiations over the Oyu Tolgoi (OT) investment agreement (IA), the Mongolian parliament in late August 2009 decided to cancel a proposed 68% windfall profit tax that was expected to kick in starting in 2011. The tax was the biggest obstacle to completing the OT deal. The government’s April decision to suspend the issuance of new mining exploration licenses is unlikely to be retroactively applied to large mining projects like Oyu Tolgoi (OT) and Tavan Tolgoi, but the government may revisit a plan to change the mining law regime during parliament's spring session. If the changes are eventually approved, it could make the mining license regime more onerous.

Zambia Windfall taxes Zambia approved sweeping windfall profit taxes in 2008--only to rescind them several months later when copper prices plummeted, as negotiating leverage shifted back to miners. This policy reversal was politically difficult, having passed unanimously in parliament to great fanfare, but the Levy Mwanawasa administration felt it had no alternative and was facing a potential exodus of mining investment.

Tanzania Mining law review The government has signaled a tougher mining policy line over the last two years, which will likely culminate in new mining legislation to be tabled in the parliament in October. The precise terms of the law are not yet clear, but Minister of Mines William Njeleja has hinted that the government will seek 15% equity in mining projects. The law may also close tax loopholes, limit capital expenditure allowances, and end some incentives that date back to when metals prices were well below their current levels.

Venezuela Nationalisation President Hugo Chavez’s government announced in November 2008 that the state would take over Canadian gold miner Crystallex’s giant Las Cristinas gold deposit.

Case Studies: Some selected global case studies - continued

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Country Issue Info

ArgentinaExport taxes

Following the decision to increase duties on agricultural and oil exports, which the Fernandez de Kirchner administration did in order to reverse the decline in fiscal accounts and consolidate its political power, the government in December 2007 repealed tax exemptions for mining operations. As a result, the mining sector was required to pay export duties ranging from 5% to 10%—even though the repeal violated the guarantee of tax stability granted to companies in 1993 under the country’s mining law.

Australia Royalties

In November 2008, the government of New South Wales (NSW) announced an increase in coal production royalties, which account for 95% of the state’s royalty revenues, effective 1 January 2009. Open cut mining royalties were raised from 7% to 8.2%, royalties on underground coal mining were increased from 6% to 7.2%, and rates on deep underground mining were hiked from 5% to 6.2%.

CanadaRoyalties

The Ontario Liberal government announced a surprise proposal for a new royalty on diamond production. The royalty affected only one company: DeBeers of Canada, which had the only major diamond mine under development in the province. Following industry and local opposition, the provincial government lowered the maximum royalty from 14% to 10% and introduced a range of exemptions and deductions linked to community investment.

Bolivia NationalisationPresident Evo Morales announced the nationalization of Bolivia’s mining sector in 2006, but has not moved forward with widespread expropriations. However, in February 2007 it nationalized Glencore’s Vinto tin smelter.

Guinea State compensationThe government is seeking compensation for Rusal's alleged dubious acquisition of the Friguia aluminum plant. The government alleges that Rusal owes it $860 million in taxes, following an audit.

2. Increased Focus on Sustainability Issues

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Stock Exchanges which have adopted a Social Responsibility Index (SRI) in the last 5 years include:

India Brazil

Egypt Korea

South Africa FTSE

New York NASDAQ

Hungary Germany

Indonesia Austria

Increased Focus on Sustainability Issues - continued

•The focus on sustainability practices and pressure on sustainability performance has intensified over time as the public becomes better informed.

•Wide spread reporting and commentary on environmental disasters such as Exxon Valdez, BP safety breaches and oil spills

•Widespread use of social media and ease of communication

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3. Role of China as a major mining investor

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Chinese FDI has been a game changer in the global economy

Since 2005, Chinese outbound investment has been approximately $194 billion

Investment could hit $60 billion in 2010 alone

Total Chinese outbound investment 2005 – 2010 (Source Eurasia Group)

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Chinese demand for commodities is fuelling growth and expansion.

China was the second-largest investor in both Australia and Canada in 2009 as well as the second-largest M & A investor in the global minerals sector.

Chinese investment in mining (incl. coal): 2005 – 2010 (Source: Eurasia Group)

3. Role of China as a major mining investor - continued

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Significant deals are being signed by Chinese companies in Africa (e.g. a $3bn iron ore investment in Gabon in 2006; a $1.35bn investment in Guinea in 2010).

Africa grew from less than 3% of China’s total outbound investment in 2003 to almost 10% by 2008.

China/US outbound investment in Africa: 2003-2009(Source: Eurasia Group)

3. Role of China as a major mining investor - continued

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 AngloGold Ashanti assessed its SIX material issues for 2009 using a ‘materiality process’ on an annual basis.

We assess these issues according to a three-stage process: 

1. A review of our key sustainability risks (eg health, safety, environment,

government)

2. Understand key stakeholder issues (using global reporting standards as proxy).

3. Compare the results of this assessment with the sustainability issues identified

by the media in relation to AngloGold Ashanti and mining sector peers during

the year, and with the key issues cited in peer reports.

Material Issues within AGA’s areas of operation

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Material Issues within AGA’s areas of operation - continued

Safety and health

Resource custodianship

Human rights

Delivering economic benefits

Capacity building, transformation and engagement

Closure planning and provision

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Conclusion: Issues for consideration

1. African nations now have a choice

2. Multinational companies can make a positive contribution

3. How do multinational companies (MNCs) demonstrate value add in turning natural resources to long term sustainable value – leaving a legacy for future generation in context of extractive industries?

4. The times are changing and fast – MNCs have to adapt and quickly.

• Focus no longer technical and financial in assessing assets• Competitive edge is in managing the social, economic,

environmental and political• African governments no longer tolerant of carrying “hidden

costs” without tangible long term value creation

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5. Greater responsibility from both sides: • MNCs and African Governments, from exploration stage to the end of

life of an operational mine• True analysis of costs and benefits in all scenarios, price and socio-

political • Ability to review contracts to accommodate changed circumstance ???

6. African Governments to deal with institutional weakness – rule of law, separation of powers, skills etc.

7. Improved transparency – greater responsibility in terms of being accountable to their own people

8. Understanding of a common destiny – This is not about “soft issues” – it is about creating sustainable businesses and societies

Conclusion: Issues for consideration - continued

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Thank you