Anglo American 2012 SRI Analyst Presentation
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Anglo American’s presentation to socially responsible investment analysts, July 2012. You can find out more about Anglo American here: http://www.angloamerican.com/ http://www.facebook.com/angloamerican http://www.twitter.com/angloamerican http://www.youtube.com/angloamerican http://www.flickr.com/photos/angloamerican http://www.linkedin.com/company/anglo-american
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Anglo American 2012 SRI Analyst Presentation
- 1. PRESENTATION TO SOCIALLY RESPONSIBLE INVESTMENT ANALYSTS 5 JULY 2012
- 2. AGENDA • Safety briefing • Chairman’s welcome • 2011 performance • Q&A
- 3. WELCOME SIR JOHN PARKER, CHAIRMAN
- 4. OVERVIEW OF PERFORMANCE CYNTHIA CARROLL, CHIEF EXECUTIVE
- 5. 2011 RESULTS HIGHLIGHTS A consistent strategy and simplified organisation delivering value • Record operating profit of $11.1bn, underlying Operating profit 1 ($bn) earnings $6.1bn and underlying EPS $5.06 • Final dividend of $0.46 per share, up 15% 9.6 11.1 9.3 8.6 • Asset optimisation and supply chain delivered value in excess of targets 4.7 • Successful project execution – 3 major projects commissioned on or ahead of schedule • Maintaining momentum into next phase of growth 2007 2008 2009 2010 2011 with six growth projects approved Underlying EPS ($) • Industry leading exploration discoveries replenishing our Tier 1 resource base 5.06 4.40 • Establishing our commercial operating model 4.36 4.13 2.14 2007 2008 2009 2010 2011 1 Excludes operations which are no longer part of the Group, including Zinc operations, AngloGold Ashanti, Mondi, Scaw International, Highveld, Tongaat Hulett/Hulamin, Namakwa Sands and certain Tarmac international businesses 5
- 6. A CHALLENGING AND EVOLVING SUPPLY LANDSCAPE Key risks Taxes / royalties Canada Availability of human resources Mongolia Access to infrastructure Community opposition Licensing / permitting Guinea Access to water Electricity supply USA Philippines Indonesia Brazil Peru DRC Chile Australia South Africa Source: Company Reports; Newsmedia 6
- 7. STRATEGY Sustainable and responsible mining is at the heart of our strategy 7
- 8. SAFETY Zero harm is our number one priority • Group Safety Leadership Summits in April 2011 and 2012 – Focus on leadership and accountability • Tragically, the number of people who lost their lives at our operations increased from 15 to 17, with 12 from Platinum • With the exception of Platinum, our overall safety performance improved • Over 90% of our operations are fatality-free, almost half are LTI- free: – Kolomela mine and project had worked a total of 22 million hours LTI and fatality-free for 2011 – Barro Alto commissioned with no fatalities and 3 million LTI-free hours during 2011 – Copper’s Mantoverde mine, Nickel’s Barro Alto and Codemin Thermal Coal’s Zibulo colliery were all LTI-free during 2011 • Group-wide strategic safety review completed in 2011: – 42 site assessments – Opportunities identified in leadership, accountability, competency and standards. • Strengthened incident investigation • Introduction of new Group Technical Standard for Integrated Risk Management Recognised with Visible Management Commitment Award at the DuPont Safety Awards for the Tripartite Health and Safety Initiative in South Africa 8
- 9. HEALTH Zero harm to health during working life and in retirement • Workplace health hazards, mainly dust and noise: – Working with our suppliers to minimize health hazards from equipment – Group-wide dust and noise communication and engagement programme • Burden of disease in developing countries: – Recognised leader in workplace HIV/AIDS and TB programmes – Over 90% of employees voluntarily check their HIV status each year. 110,000 employees and contractors tested in 2011 – Over 5,000 employees receiving HIV treatment, another 3,000 employees participating in HIV wellness programmes – Our TB incidence in South Africa is well below the industry average and is reducing – Treatment costs are just 5% of the cost of AIDS if HIV infection is unmanaged – Partnership with GAVI and the Global Fund • Community health: – Strengthening health systems in underserved rural areas in partnership with government Improving access to quality healthcare and building partnerships are at the heart of our approach to health 9
- 10. ENVIRONMENT A focus on operational excellence, technology and partnership • Climate change: Carbon emissions (million tonnes) – 23% of energy now from renewable sources – ECO2MAN tool used to set new targets and create marginal abatement cost curves for every site – Carbon neutral mine study with University of Queensland – Engaged South African government on carbon tax, preparing for carbon pricing to start in Australia • Water: – Almost 70% of our total operational water requirements were met by recycling/re-using water – 80% of operations and projects are in water stressed basins – WETT tool used to set targets for water use at every site Water use (million m3) – Water neutral mine study with University of Queensland – Increasing focus on becoming a net contributor to fresh water supply: eMalahleni, Limpopo, Mantoverde, CapCoal. In South Africa, over 2 million residents are benefiting from Anglo American sponsored schemes • From biodiversity to ecosystem services: – 15,000 ha of disturbed land rehabilitated across the Group – Integrating biodiversity and ecosystem services into our operational and project risk assessments • Beyond the mine: – Working to develop community-level projects that increase energy and water efficiency in host communities – Launch of Zimele Green Fund 10
- 11. RESOURCE NATIONALISM Mining experience will remain different to oil and gas, but requires careful management • Ongoing pressure from governments to see greater developmental benefits from mining • Anglo American is supportive of this desire, and believe it can best be achieved through partnerships between mining companies and host governments • There has been a growing discussion of whether nationalisation could occur in the mining sector as it has in oil and gas • Price rises in oil followed nationalisation, as state ownership of highly concentrated reserves enabled concerted OPEC action to raise prices: – In 1960 85 percent of oil reserves were controlled by private companies, and two thirds were in OPEC countries – By 1980 two third of reserves were in state hands, and two thirds were still in OPEC nations – Most mining commodities do not OPEC-led experience such concentrations of oil market reserves • Research suggests that upfront capex is a smaller share of total project costs in mining • Easier for governments to secure extra benefit through taxes, free carry, local content and indigenisation policies • National responses are highly context- specific, and excellence in government relations and community development ? have become critical Source: OPM 11
- 12. GOVERNMENT RELATIONS Increasing expectations beyond business-as-usual contributions • Relationships with governments have become more Government relations planning important as resource nationalism and community activism around mining have grown • All significant countries must produce annual • Enhanced capability at both BU and Corporate level plans GOVERNMENT • Follow standard process • Positioning as a constructive partner, whilst always RELATIONS protecting our rights and shareholder value • Training in government HANDBOOK relations provided to all • Critical to understand national and local public policy BU leadership teams and objectives, and to see how mining can contribute to fulfilling relevant corporate these: functions – Major focus of host governments is on socio-economic • Process covers home and development (jobs, growth, taxes) host countries as well as – Home countries particularly concerned about multilateral agencies corruption, human rights, revenue transparency – Anglo American seeks to play a constructive role in policy debates to ensure policy objectives are sound and met effectively and efficiently South African nationalisation debate • New country entry requires thorough understanding of local • Strong stance on the damage that would be done socio-political conditions: to South Africa – Dedicated country access team formed • Contributed evidence to ANC review team – Supported by government relations specialists for each • Helped the government map out possible roles for region (Africa, Americas, Asia-Pacific and Europe) state mining company • Active in debates with government about how to revive mining sector 12
- 13. SOCIAL PERFORMANCE Increasing expectations beyond business-as-usual contributions Social way compliance improves Quellaveco dialogue table • Established in context of growing conflict around mining projects in Peru • Backed by regional and national governments • Focus areas: environmental impact and community development • Although it has taken time, most concerns have been addressed to the satisfaction of the majority • Now negotiating social contribution Community development peer reviews SEAT 3 finalised and made freely available • 8 reviews to be completed by end-2012 • SEAT v3 reflects • Focus is on local procurement, enterprise developments in business development, local workforce development and social and human rights, and investment focuses on core business • Peer review process brings in Group and external role in development expertise on community development • Inputs from Partner NGOs • Objectives are to: CARE, FFI and – Improve practice at reviewed sites International Alert – Build internal expertise and capacity • Freely available on website – Spread best practice across Anglo American 13
- 14. HUMAN RESOURCES Addressing the skills challenge to support our current operations and growth plans Workforce planning and labour relations Talent management and employee development • Continued pressure in certain skill areas from within • Further embedded our global capability framework our sector and from related sectors in key markets (The People Development Way) • Significant work undertaken to improve our ability to • Our investment in employee and community training identify current and future skills requirements and to and development during 2011: proactively source the skills needed to respond to our – $79.2m (2.2% of total employee costs) in direct anticipated growth training costs; • Sound labour relations continue to be a key area of – 3,122 bursars, graduates and other trainees; focus as evidenced in the relatively low number of – Portable skills training to 3,712 people industrial disputes – Enrollment of 1,693 people in ABET training in • Voluntary turnover has further reduced, from 5.3% in South Africa 2010 to 3% in 2011 Transformation and diversity • Gender diversity has continued to improve from 2010 to 2011, with women in the workforce increasing from 14% to 15% and women in management increasing from 21% to 22% • Further progress has been made on transformation in South Africa, with the number of managers from HDSA communities exceeding the original Mining Charter target of 40% Reward and performance management • We have continued the roll-out of the performance management standard and system, placing strong emphasis on aligning individual objectives with the company’s strategy and plans • We continue to benchmark our remuneration schemes against our peers and have comprehensive performance- based reward systems in place 14
- 15. BUILDING CONFIDENCE IN OUR INDUSTRY Investing in telling our story, and building confidence across stakeholder groups • Global advertising campaign: – Aims to tell positive stories through the voices of our employees – Launched in all Anglo American operating geographies, customised to in-country strategic objectives – Now in third year, positions Anglo American as an employer and partner of choice – Articulates the business case for responsible mining – Only miner in South Africa advertising on television • Enhanced level of transparency and engagement by participating in social media, including Facebook and Twitter • Developing better metrics on the things that matter to stakeholders: – Community development and economic impact, safety, environment • Participating in debates around sustainability and mining: – ICMM, WEF, EITI, Voluntary Principles, Rio +20, and at the national level • Building customer and consumer confidence: – Only diversified miner in the Initiative for Responsible Mining Assurance process – Growing customer interest – We want to demonstrate that we operate to high standards, and we want to demonstrate that there are business benefits in doing so 15
- 16. TAKING THE LEAD IN RESPONSIBLE MINING Extensive external recognition for our safety, health, environment and community programmes Anglo American is the only mining company to have achieved platinum status in the UK’s leading benchmark of responsible business – Business in the Community’s Corporate Responsibility Index Tripartite Health and Safety 2011 Sustainable Initiative in South Africa Development Report received Visible Ranked as Best by Management Commitment Radley Yeldar Award at DuPont Safety Awards 47,000 jobs created and 44% reduction in lost-time supported through injury frequency rate since enterprise development 2007 Anglo American Isibonelo received South Occupation Hygiene African national safety specialists won three of awards in 2011 seven national awards in South Africa in June 2012 Project Alchemy - giving Kumba – industry leading local communities equity broad based employee ownership in Platinum share scheme SEAT Toolbox won the 2012 International Association for Highly Commended in BITC’s UK Responsible Business Impact Assessment’s “Corporate Initiative” Award of the Year award, 2012 16
- 17. Q&A
Notas del editor
- Thank you Jason.Good afternoon ladies and gentlemen.It’s very good to see you. I am so pleased to present at the Bank of America Merrill Lynch Global Metals and Mining Conference.
- Zero Harm is my, and Anglo American’s, number one priority.Despite the substantial improvements we have made in our performance since 2007, our overall safety performance declined in 2011 almost exclusively due to the performance in Anglo American Platinum. Safety performance in the majority of our other business units improved, with a number of our operations delivering exceptional performance:Kolomela mine and project had worked a total of 22 million hours LTI and fatality-free for 2011Barro Alto successfully commissioned the plant with no fatalities throughout construction, and 3 million LTI-free hours during 2011Copper’s Mantoverde mine, Nickel’s Barro Alto and Codemin Thermal Coal’s Zibulo colliery were all LTI-free during 2011 Nearly half of our operations were LTI-free in 2011.However, this is not good enough and in 2010 I instigated a Group-wide global safety review throughout all our business units which was completed last year. The review included site and risk assessments, looked at our control mechanisms and auditing, and reporting and learning from incidents. Opportunities were identified to improve our safety leadership, accountability, competency and standards. We used the findings of our safety review to hold in April this year a 2-day Safety Leadership Summit in Johannesburg bringing together leaders from all our operations around the world and focused on the issues of leadership, accountability, risk and integration. We have developed an improved programme involving both the Group and BUs flowing from the Summit. Prevention is better than a cure and we have focused our efforts on understanding the causes of incidents by strengthening our incident investigation and learning from incidents process, with a particular emphasis on High Potential Incident investigations from which we can garner the greatest learnings.We’re also working to improve and develop our safety competencies with the introduction next year of the S&SD People Way, which is part of the Group’s Development Way framework, to up the technical and behavioural competencies of our safety, health and environment personnel.We also have commenced the rollout of a new Integrated Risk Management Group Technical Standard (GTS2) to help us adopt an all encompassing approach to risk management – across all our operations and at every level of the company. The Standard is designed to embed risk management processes into business decisions by providing a framework for better controlling all our critical business risks – whether safety, health, environment, community, HR, supply chain, legal or financial. It defines the minimum mandatory requirements for Integrated Risk Management (from a people, systems and documentation perspective) and consolidates, simplifies and aligns existing risk management processes, tools and techniques.Finally, we were delighted to be acknowledged last year at the Du Pont Safety Awards with a Visible Management Commitment Award for our Tripartite Health and Safety Initiative in South Africa, which is now in its 5th year.
- Our approach to health is the same as safety: Zero Harm to health, during working life and retirement.We see our major health risk being workplace health hazards: in particular dust, which can lead to occupational lung disease, and noise. We are intensely focused on managing these hazards and associated risks. We strive to reduce all exposure to be within occupational exposure limits, before personal protective equipment, and work with our suppliers to minimize health hazards at source. This year we launched a Group-widedust and noise engagement programme throughout the organisation to educate our leaders and workers on the importance of preventing these risks.[acknowledgement of silicosis litigation]I’m proud to say that Anglo American is the recognised leader in workplace HIV/AIDS and TB programmes. Our health team [Chief Medical Officer Brian Brink] is regularly approached by the UN, World Health Organisation, as well as communities and governments around the world, for advice on how business can contribute to improving health in developing nations. We conducted more than [110,000] people were tested for HIV/AIDS under our watch in 2011, [5,000] have been provided with treatment and [3,000] under care.We are using our expertise in establishing and maintaining health information systems, learned from our experience in treating HIV/AIDS and TB, to assist rural communities. Helping them strengthen their existing health systems, which is one of the key interventions in improving health. We have made available our ‘Health Source’ software and are assisting community health clinics in South Africa’s Limpopo and Mpumalanga Provices, and are in discussions with other local authorities looking to expand further.All our operations in South Africa, which account for 2/3rds of our headcount, have health clinics on site and we run hospitals at a number of operations (Plats and Thermal Coal). We offer health service to all our employees and their families, [as well as contractors].We’ve moved beyond treatment and recognise that immunisation makes a simple and profound difference. Last year we announced our partnership with the Global Alliance for Vaccines and the Global Fund, partnerships which are driven by our believe that we have a responsibility to deal with the burden of disease in developing countries in order to ensure economic growth and development. We understand this well because so many of our operations are in developing countries and how the impact of disease limits development. It is important for Anglo American to invest in health. Vaccines are the best and most cost effective investment to prevent disease.Undiagnosed and unmanaged health problems in our employees is an ongoing risk we manage via our Health and Wellness programmes. We provide a wide range of health advice and support for health issues including obesity, diabetes, high blood pressure and substance abuse. We endeavour to identify health issues early and initiate effective management of those problems to ensure continued health and wellness for all employees. We believe our zero harm to health approach renders us the partner of choice....Q&AWhat is the Health Source?The Health Source, allows for the real-time, confidential tracking of individuals and their health information. At a glance, health professionals can see when an employee became HIV-positive, when treatment commenced, their current viral load and CD4 count. The system also prompts certain actions, for example flagging the record of a patient who has not come in to have their CD4 count checked.
- Production and carbon water use
- But where there is risk, there is also opportunity. What sets us apart is our leadership in sustainable mining.I believe the best way to drive value in a challenging and evolving landscape is to conduct ourselves to the highest standards and to build strong partnerships with our stakeholders including governments, trade unions and local communities.Mining companies that demonstrate genuine commitment to promoting the development and well-being of their host communities, and to engaging in frank dialogue and partnership with stakeholders, are better positioned to access high quality resources.Our leadership in social and sustainable development has been recognised once again by Business in the Community, the UK’s leading benchmark of corporate responsibility. We are the only mining company to achieve the top Platinum ranking and we have now done so for three years running.We have taken the view that supporting the communities in which we operate and plan to operate through sustainable contributions is the only way to secure and maintain our licence to operate.