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Chairman’s statement

Mining and development

Anglo American was in the vanguard of the companies that signed the Millennium Development Goals ‘Call to Action’ in June 2008. This recognised both the pre-eminent role of governments in defining development frameworks and the importance of other actors, including business, in maximising our own beneficial development impacts. It has long been a core objective for Anglo American to ensure that we produce sustainable benefits for the communities where we work. Indeed, in light of the growth of resource nationalism and concerns about the potential ‘resource curse’, we now need also to be a willing partner, with governments and civil society, in addressing issues relating to the governance of natural resources. Thus we attach importance to our involvement in programmes such as the Extractive Industries Transparency Initiative, the Voluntary Principles on Security and Human Rights and the Investment Climate Facility for Africa. We continue to be committed to participation in the work of the UN Global Compact and adhere to its ten core principles.

We also improved our engagement with our host governments, with the benefits of such an approach being evidenced by the achievement of our mineral rights conversions in South Africa and our Memorandum of Understanding with the China Development Bank about the potential for us to work together, especially in Africa. The management of political risk, however, continues to be a significant factor for our business in judging whether to enter new geographies and in some countries where we have existing activities, such as Venezuela and Zimbabwe. In the latter case, we were erroneously reported in the British media to be making a major new investment in Zimbabwe when, in fact, we have been building the Unki platinum project since 2003. We welcome the recent formation of a unity government and hope that it may create more favourable circumstances for Zimbabwe’s recovery.

In terms of our socio-economic impacts, more than 400 managers within the Group have been trained on the implementation of Anglo American’s unique Socio-Economic Assessment Toolbox (SEAT) process. SEAT enhances our ability to interact with stakeholders and to develop projects which maximise opportunities for local people. We have also adopted a new framework for improving the social and environmental impacts of our suppliers.

We are pleased with the increasing traction of our enterprise development and micro-finance programmes which, in South Africa and Chile, are now generating jobs for more than 13,000 people.

Water availability has emerged as a major constraint. It is a strategic issue which must be addressed through technical innovation, improved stewardship, applying a proper value to our water usage and dialogue about water management with other users. Our commitment to innovate is illustrated by the solution that we have proposed at our Quellaveco copper project in Peru. The project proposes a local saline water source which currently flows into the headwaters of the river system, thereby improving the quality of river water for downstream agriculture opportunities, particularly during times of low rainfall. It is also in evidence at our Los Bronces expansion project in Chile where we plan to reduce water use by approximately 40% per lb of copper produced, and by the Emalahleni water scheme in South Africa which is supplying 20% of the water needs of the municipality of Witbank from treated mine water.

Although we continued to make progress on energy efficiency and improving the measurement of our energy intensity in 2008, our ability to move forward in our management of the current and future impacts of climate change was influenced by three factors. Firstly, much of our energy expertise was absorbed by the need to manage energy security concerns, especially in South Africa and Chile. Secondly, the absence of clarity about the shape of international frameworks to combat climate change and about the regime for regulating carbon capture and storage is a major inhibitor of our ability to take a judgement on potential long term investments, such as the Monash Energy coal-to-liquids project in Australia. Thirdly, the unprecedented escalation in project costs, coupled with rapidly changing oil prices, has made the economics of such projects even less predictable, although the costs of certain key raw materials for the construction of projects can be expected to fall. Coal will remain a critical source of energy for many years but the rapid development of clean coal technologies is vital if this is to occur within an environmentally acceptable framework.

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Expanding enterprise development initiative

3,012 Number of businesses currently supported (2007: 1,312)
13,431 Number of jobs sustained
(2007: 5,850)