O ptima september 2010 Optima

Volume 56 Number On e september 2010 an eye on

Cover: Tyres destined for haul trucks and the future earthmoving equipment are stockpiled a look inside anglo american’s at the storage facility at Anglo American’s platinum business Mogalakwena platinum mine in South Africa. See article on page 18. photo by planetkb for anglo american (platinum) Interview: CYNTHIA CARROLL BRICs: the growing might of brazil, russia, india and china ISBN 00304050 Australia: quiet growth in metallurgical coal disaster support: practical relief efforts in chile Welcome

Contents

Jim Bulten, Paul Gaw and Justin Pokarier during a routine safety inspection at Thermal Coal’s Callide mine, Australia, June 2010

In this issue of Optima, you’ll notice that some changes have been made to the overall look and feel of the publication. These align with our new brand identity, which has been designed to reflect what makes Anglo American unique and what makes it stand out from the competition. It forms part of our clear aim to secure strategic advantage and realise our ambition to be the leading global mining company. Over the years, Anglo American has earned a well- deserved reputation for thought leadership by engaging in the international debate about the major public issues of the day. Continuing in that vein, in this issue, Sir David King, formerly the UK government’s chief scientific adviser, looks at the urgent task ahead in the wake of last December’s Climate Change Conference in Copenhagen; Goldman Sachs’ Jim O’Neill examines the prospects for the BRIC countries; and Greg Mills, who heads the influential Johannesburg-based Brenthurst Foundation, highlights the actions India is taking to see the country compete on a global scale in the future. Turning to our own business, I was delighted to be interviewed by highly respected journalist Kim Fletcher on how I want to take Anglo American forward – while the features on our Metallurgical Coal and Platinum businesses show just how much work has been done on the ground to turn these companies around. 04 Optima interview 12 BRICs growth 18 Platinum Cynthia Carroll Chief executive Cynthia Brazil, Russia, India and Anglo American’s China are in line to gain Chief executive, Anglo American Carroll on how her open platinum business is approach is taking Anglo a larger share of global taking advantage of American forward economic power a reviving market Head of publications: Norman Barber Anglo American plc 20 Carlton House Terrace London SW1Y 5AN England Telephone: +44 (0)20 7968 8888 E-mail: [email protected] www.angloamerican.com

Optima is produced by Redhouse Lane, 14 Bedford Square, London WC1B 3JA, England 24 Climate change 28 Copper prospects 32 India outlook Redhouse Lane production team Editor: Rob Jones How every nation can An exploration and drilling India’s economic and Art director: Ross Behenna take action to avoid the campaign in Chile has infrastructure transition is Designers: Tony Beresford, Asami Matsufuji worst impacts of climate revealed significant copper a lesson that other nations Project manager: Anthony Cockell change opportunities should take on board

02 | Optima | september 2010 Contributors

KIM FLETCHER JIM O’NEILL Kim Fletcher spent 25 years in the UK Jim O’Neill is head of global economics, national newspaper industry as a reporter, commodities and strategy research for columnist and editor. He was industrial Goldman Sachs, for which he has worked correspondent of The Sunday Times, deputy for 15 years. He has previously worked for editor of The Sunday Telegraph, editor of Bank of America and International Treasury The Independent on Sunday and editorial Management. He is a board member of the director of the Telegraph Group. He has UK’s Royal Economic Society and sits on a written and presented programmes for BBC number of European think tanks and round Radio 4. He is chairman of the UK journalists’ tables. He is a founding trustee and the training body, the National Council for the chairman of London charity SHINE, which Training of Journalists, and is managing tackles poverty and illiteracy in Africa, and director of communications consultancy Trinity he is on the board of several other charities. Management Communications. See page 4 See page 12

36 Optimising Australia SIR DAVID KING MATTHEW STEVENS Having joined up its disparate units over Sir David King is the director of the Smith Matthew Stevens has reported on the the past three years, Anglo American’s School of Enterprise and Environment at Australian resources sector for 28 years coal business in Australia has become the University of Oxford. He was the UK for The Age, Business Review Weekly and government’s chief scientific adviser and now The Australian. He worked as a one of the country’s leading producers head of the Government Office of Science for correspondent in London for Business of metallurgical coal. According to its seven years. In that time, he raised the profile Review Weekly from 1985-90 and as of the need for governments to act on climate European correspondent for The Australian head, Seamus French, the success is change and was instrumental in creating the from 1999-2000. He was senior editor of down to “people, people and people”. £1 billion Energy Technologies Institute. In The Australian, and editor of the Saturday 2008, he co-authored The Hot Topic on this edition. He is currently a business columnist, subject. He has chaired the government’s working in Melbourne, where he is a Global Science and Innovation Forum from committee member of The Melbourne its inception. See page 24 Mining Club. See page 36

Other contributors Michael Coulson (page 18); Nicky McClure(pages 28 & 44); 44 nickel profile 46 Disaster support Greg Mills (page 32); Rob Jones (page 46) The past, present and The company’s support future of a resource that after February’s earthquake The opinions expressed by contributors do not necessarily represent the views of Anglo American. Provided that permission has been obtained from the editor and on condition that acknowledgement is made to Optima, dates back more than in Chile has gone beyond newspapers and magazines are welcome to reproduce articles in whole or in part and to use illustrative material, 5,000 years a simple financial donation except where copyright © is especially reserved.

september 2010 | Optima | 03 optima INTERVIEW

DAVid WOOLFALL; all other photos anglo american unless otherwise stated

04 | Optima | september 2010 Thriving under pressure In three years, Cynthia Carroll has turned the tide. Initially not seen as the obvious choice for the number one job, she now has results to back up her ambition – from delivering significant cost savings and operational performance to a much improved safety record and more women coming in to the organisation. Exclusively for Optima, Kim Fletcher asks the chief executive how she really measures success.

september 2010 | Optima | 05 optima INTERVIEW

t’s early Monday morning head office and other corporate offices, paces to her desk to grab a shoulder bag, and Cynthia Carroll’s week challenging it to share around the pulling out files about new shift is already in full swing. The business the mining and other expert patterns, better extraction techniques, Collahuasi copper mine knowledge it has accumulated over single or dual global-supplier deals for I(44 per cent owned) in Chile has the years. tyres and lubricants, and for conveyor returned to normal working, Carroll explains the point of the equipment – where around a hundred though some of its sub-contractors reorganisation: “We need to get as close suppliers have been reduced to six... continue to strike; miners at as we can to where the action is associate De Beers, in South Africa, happening and where the decisions are ynthia Carroll was not an are threatening to walk out over taken. How do we become as efficient obvious fit when she arrived pay; and, in Australia, a big as we possibly can? What does the HQ C from the Canadian aluminium argument is raging between the look like? What is the most efficient business Alcan as chief executive mining industry and government way to organise ourselves, given that three-and-a-half years ago, at the age over the proposed imposition of a we have decided to divest some of of 50. Anglo American was very South so-called resources ‘supertax’. these businesses?” African, very male and liked to look But in her top-floor office at Anglo inside for its leaders. Here was an American’s headquarters in London, “People talk to me. They tell me American, a woman and an outsider. the company’s chief executive is What did she find? “A company upbeat. She’s recently back from their concerns. In the past, it wasn’t with outstanding capabilities and talking to investors in Miami, at the culturally acceptable to tap the people, and a desire and a willingness Merrill Lynch Global Metals & Mining manager on the shoulder and tell to do great things – that was all on the Conference in May 2010: “I couldn’t him what you think. When it was the positive side. Where it was clear that believe the crowds of people who CEO, it was completely unheard of.” we had to improve was in safety. No wanted to listen to our story, the kind matter how much some people talked of people who a couple of years ago just about it, there wasn’t consistency, there weren’t interested in us.” Alongside those changes, the weren’t universal standards and there Cynthia Carroll talks with the air of company is energetically sweating wasn’t a clear objective of safety being a woman who has the company assets and saving money on its supply number one.” structured and organised as she wants chain. It set itself a target of $2 billion She talks passionately on this subject, it. In the past year, Anglo American has uplift by 2011 and, ahead of evidently proud that fatalities last year resolved to concentrate on the seven expectations, achieved $1.6 billion last were 29 per cent down on the year commodities it believes to be most year. Now, Carroll is confident it will before – and a 55 per cent reduction on attractive – copper, iron ore, platinum, make that $2 billion extra from its core January 2007. Some in the industry still metallurgical coal, diamonds, nickel business alone, without taking into argue that mining is inherently and thermal coal – and sell off other account any contribution from the dangerous and that safety is a peripheral bits of the business. businesses it intends to sell. She’s issue; she believes it goes to the heart of Now the management teams for justifiably pleased: “It’s an absolutely the business: “To put care and respect each commodity business sit in the phenomenal result. It’s amazing if you on the table and say that is a commodity’s core geographical area just mobilise people – give them the fundamental value for us is a big shift and take responsibility for operational framework, give them the training, tell from what it was a few years ago. That performance, project delivery and them what they need to do and give means care and respect for everyone in reducing costs. As part of changes them leeway to make the right decisions our organisation. We are going to make saving some $120 million a year, Anglo and apply the right judgement.” sure that people are being looked after.” American has stripped away divisional How does a miner find efficiencies Those who wondered what her layers of management and pruned the on such a scale? Carroll leaps up and words would mean in practice soon

06 | Optima | september 2010 dav i d woolfall

01 Cynthia Carroll, June 2010, shortly after returning from the Merrill Lynch Global Metals & Mining Conference: “I couldn’t believe the crowds who wanted to listen to our story.”

02 Making a point at Dawson Central coal mine in Australia, February 2007

03 Reviewing mining plans during a visit to Mantos Blancos in Chile, April 2009 01 safety trend, not only within the Anglo American Group, but across the South African mining industry, where fatalities have declined by around 25 per cent. “I like to think that I opened people’s eyes to the possibility that mindsets can be changed as far as safety is concerned. With Anglo American’s annual fatality figure down more than half over the past three years, and with really big underground operations such as our platinum mines 02 03 going for long periods fatality-free, found out in South Africa when, in the it would put pressure on us internally people are starting to believe that zero first few months of her being in charge, to deliver, it would expose us and put harm is achievable.” Carroll brought up 28,000 miners from pressure on the competition.” Carroll believes the latest the Rustenburg platinum mines’ She laughs, making light of what improvements in productivity are underground operations to instigate a must have been a tough battle: “Initially, directly related to care of the safety training programme. In case I was quite unpopular in certain areas of workforce: “For me, safety affects anyone remained in any doubt about the business. And we had some people – what goes on in all aspects of the change, she involved the mining trade mine managers, supervisors – who put business in terms of people’s mindsets, unions and the South African their hands up and said, ‘I can’t do this. their approach, the degree of government in tripartite talks: “People I can’t live by these standards.’ We said, teamwork that they have, how they asked: ‘Are you sure you want to do this? that’s fine, thank you very much. We look after one another – that You are going to be exposing Anglo both need to go our own way.” consistency of standards flows American, you are going to be exposing And it’s Carroll’s way that has helped through to every other aspect of the industry.’ I said I was absolutely sure: bring about a significantly improving the business.”

september 2010 | Optima | 07 optima INTERVIEW

There were other changes of style. ast year, Forbes magazine named remain controversial. Many 01 Cynthia Carroll Cynthia trained as a geologist before Cynthia Carroll as the fourth environmental groups have Anglo goes underground with employees going to business school. She knows L most powerful woman in the American in their sights. The American at Thermal Coal’s her way around a mine: “I’m going to world. It’s a power that sees her in online magazine Grist is typical; it Goedehoop colliery in South Africa, two coal mines next week and I’m discussions with presidents and prime refers to the chief executive as ‘Cyanide February 2007 going to a couple of concentrators on ministers – and state governors and Cynthia’ in its coverage of Pebble, 02 the platinum side.” Is that unusual for mayors. Some have been taken by Alaska, where the company is On the platform of one of the huge a CEO in the mining business? She surprise: “I had one individual who investigating a large copper, gold and ore-carrying trucks laughs again. “It probably is.” told me he wasn’t accustomed to my molybdenum deposit. It’s the usual at Los Bronces

She states firmly that she feels very approach. ‘We don’t know how to deal debate: jobs and tax revenues versus 03 During a visit to connected to the operational side. with you, we are so used to putting the threat to a pristine wilderness, Los Bronces copper “I understand it very well and, because boxing gloves on and fighting. You want particularly to local fish populations, mine in Chile in 2007 of my years of experience visiting to talk, you want to sit down and try and if mining effluents escape. other mines or operations, I know work out a solution together. This is so She addresses the point without when things are going well and when completely different.’ rancour: “No question about it, they can 03 they’re not. It’s the only way I can “That’s definitely something I’ve make a lot of noise and I think there’s touch the people on the ground and brought – transparency and openness, going to be even more noise they can tell me what’s going on. I also no hidden agendas. We’re not going to surrounding companies in the know the issues, I know where things always agree, but as long as we extractives industry. And if such a could crop up and I know where understand the reasons and make an company gets things wrong in a big way things are going exceptionally well. effort to engage, that’s what’s going to and mistakes are made… then there are “People talk to me. They tell me lead ultimately to success. going to be that many more NGOs and what their concerns are. That’s a very environmental groups coming out difficult thing. As you get further up “I like to think that I against national resource development. the line, it’s even harder because you “We have to engage first and are that much more removed from the opened people’s eyes foremost with the representatives and guy mining the platinum on the to the possibility that potential future employee base and ground in South Africa. In the past, mindsets can be the people we are going to impact it wasn’t culturally acceptable to be changed as far as most directly. At Pebble, the local tapping the manager on the shoulder mayor has requested that we continue and telling him what you think – and safety is concerned.” doing development work, so that we when it was the CEO, it was can all take a view when the facts are completely unheard of.” “I’m really encouraging people in our on the table. She may talk to anyone, but organisation to connect, to engage, to “We won’t ever be in a position to beneath the smile there’s a hint of the understand what the issues are so that satisfy everybody. There will always be steel that has brought her to where we know what could be in terms a degree of scepticism and opposition she is: “Of the two mines I’m visiting of policy and regulation. We work to mining development. On the other in South Africa, one of them has had together to do the right thing for the hand, the people whom we really have a very poor performance over the countries and communities where to be listening to are those people in last six months and one of them has we operate and, ultimately, for the regions where we are operating. had a very impressive performance. Anglo American.” “You have to be working with the So I want to go to one mine and It should be said that this is not a governments, from the president congratulate them, and I want to go description of the business that is or prime minister all the way down to the other and remind them where recognised by its detractors. The through ministries, local governments, we need to be.” activities of big mining companies mayors and all the levels at which we

08 | Optima | september 2010 01 Timeline Cynthia Carroll’s career

1956 Born, New Jersey, US

1978 Graduates from Skidmore College, Saratoga Springs, New York, with a bachelor of science in geology

1982 Gains a masters of science degree in geology from the University of 02 Kansas, before joining Amoco, now part of BP, as a petroleum geologist, working in gas and oil exploration across the US

1989 Completes an MBA at Harvard Business School. In the same year, she joins aluminium company Alcan Inc., based in Montreal, Canada

1996 Appointed managing director of Alcan’s Aughinish Alumina division, based in County Limerick, Ireland

2006 Leaves Alcan as president and chief executive officer of the company’s Primary Metal Group, which, by that time, had become Alcan’s biggest and most profitable division

2007 Joins the board of Anglo American plc in January, becoming chief executive two months later. Appointed a non-executive director of BP in May

2008 Appointed a member of the Business Council for Britain

september 2010 | Optima | 09 optima INTERVIEW

operate. Engage with them, get them to understand what we are about, what we stand for, what we are going to do, not only for Anglo American but for the employee base and the community, and how we can build on a sustainable basis for the long term. “When I think about going into a particular location, I’m thinking not about 10 or 20 years out. I’m thinking about generations – and the impact and the legacy that we will leave in those places. That’s the way we all have to think about things if we are going to be welcome, if we are going to build a relationship that is one where we all feel that we are adding and benefiting from the presence of the mine and that people feel that they want us. That 01 takes hard work.” 01 Listening to a basis on acreage that we are impacting local resident’s views in the area we are likely to mine. It’s a on the proposed s evidence in support of her Pebble project – very interesting and innovative thing proposition, she describes the Alaska, 2008 that we are doing there.” work that Anglo American has Is there a danger that she pursues A 02 During a visit been doing in South Africa: the Zimele to Australia in public good at the expense of enterprise development programme September 2009, shareholders’ profit? “Well, there is a Cynthia Carroll that will see the development of 25,000 delivers the keynote balance. We also have to have priorities. new jobs in 1,500 new businesses; speech at the We have to know where the value is. We Brisbane Mining Club pioneering work on HIV/AIDS; awards can’t do everything, but we can do a 03 for workplace programmes. 03 Peruvian great deal. We’ve got to do the right “We need a lot more women. I think “You have to think whether you can President Alan things, day in, day out, year after year, women do support a different mindset Garcia and Cynthia actually improve the current situation, Carroll meet in the decade after decade.” and maybe a different culture, as opposed to having a negative impact Presidential Palace, And to what extent has she particularly around safety. Caring for Lima, June 2008 on it,” muses Carroll. “On the Witbank approached this job differently one another, prompting people to think coalfield, in South Africa, we’ve because she is a woman? “I’m not very differently, is one thing that women do developed a $44 million water recycling preoccupied with being female. I am particularly well.” plant. Together with BHP Billiton, we what I am. I’ve always worked in a The number of women working in are recycling mine water into drinking male-dominated environment – starting Anglo American has increased fast water – 80,000 people from the local with oil and gas, then moving into since she took over. In South Africa, community now have drinking water alumina; I ran an alumina refinery in women now occupy about 20 per cent every day. That’s fantastic – and we are Ireland. I think that was a big shock of the management ranks, while many now planning to expand the facility.” on the ground when it was first now work underground in jobs And in Brazil, the company is announced, but after a couple of weeks formerly reserved for men. In Australia, working with NGOs: “We will create a I don’t think anybody was thinking any where managers were initially too farm environment on a like-for-like more about it. embarrassed to discuss the absence of

10 | Optima | september 2010 stu ri stu l ey

number of ‘megadeals’ fall through, and there are all sorts of challenges for companies, not least from an anti-trust point of view, in trying to reach even less formalised arrangements than a full-blown merger or takeover.” So where is she going to spend the $1.3 billion Anglo American has just made from the sale of its zinc business? “We’ll see. That’s the next step. It’s about delivering on our commitments, bringing our significant near-term projects on stream, driving that performance and ensuring it’s sustainable. Not just in 2010, but year after year. Then we’ll think about organic growth and how the upside 02 looks relative to other investments. women with her, there are now women “I’ve brought transparency and “I don’t want people to be involved in all aspects of the business. openness. One individual told me he distracted by having money through Carroll’s been looking after global the door and wanting to get on to businesses for the past 12 years. With wasn’t accustomed to my approach. something else. We always have to be four children, aged between 10 and 16, He said: ‘We are used to putting boxing aware of what is out there and what she’s grateful to have an accountant gloves on and fighting. You want to sit an investment – an excellent husband who works from home. “It’s down and work out a solution.’” investment – looks like compared to a matter of having someone who growing organically.” is enormously supportive and willing and the Kolomela iron ore project in How, exactly, will she measure to do these sorts of things. South Africa. It is these projects that success? The business has announced “I also have a lot of energy, and sleep will be driving production growth over its ambition: to become the investment, well – if not enough! It helps.” the next three years, beginning with the partner and the employer of choice Barro Alto early in 2011. in the mining industry – in short, to be n 2009, reflecting the impact of the Having fended off Xstrata’s the leading global mining company. global downturn on commodity approach to the company – “We’d Is that realistic? “The biggest I demand and prices, Anglo done our homework and had a very doesn’t translate necessarily to being American’s operating profit halved to complete fact base. We knew where the most profitable. The aim of our $5 billion, with underlying earnings of they sat relative to us in the industry. investment strategy is to outperform $2.6 billion. Crucially, however, it kept It was very clear in terms of the offer the competition on a sustainable basis, faith in its project pipeline – one of the on the table that it was a non-starter” and that is an achievable goal. strongest in the industry. In 2010, it – does the chief executive expect “I am fairly modest, but there’s no is investing $4.2 billion on its major further consolidation? “I’m not sure question we are seen as the company growth projects, notably the that I do see that much. The small on the move in the industry.” Minas Rio iron ore and the Barro Alto miners, the junior miners, will be And with that, it’s time for her to nickel projects, both in Brazil, the picked up, along with some of the be on the move. She has a business Los Bronces copper expansion in Chile mid-sized players. But we’ve seen a to run.

september 2010 | Optima | 11 optima report

Monumental growth In 2001, Goldman Sachs’ Jim O’Neill coined the BRIC acronym for the four countries that looked most likely to challenge the US and the world’s big economic players. Here, he reflects on howB razil, Russia, India and China and other advancing nations are carving lack coffee project their place as the new beasts on the block. ons B by i Illustrat

12 | Optima | september 2010 september 2010 | Optima | 13 optima report

t is now almost a decade since Like the rest of the world, the BRICs regarded as a BRIC and it could still Goldman Sachs introduced have faced a severe crisis in the past become bigger than Japan. the BRIC acronym for the two years, but, if anything, their current What seems clear is that the global four countries that represent health suggests that our long-term credit crisis and its aftermath have the most rapidly growing part projections are more, rather than less, caused more damage to the major of the global economy. likely to be realised. developed economies than to the BRICs Collectively, Brazil, Russia, Brazil, China and India have handled and the N11 countries, the ‘Next 11’ India and China have reached 16 per the crisis well. Russia, on the other emerging economies1. Consequently, Icent of global GDP and will be as big hand, has struggled, but there is little our projection that China could become as the US by the end of this decade. reason why it should not still be as big as the US by 2027 – and the BRICs collectively as large as the G72 by 2032 – now looks more likely. Overall, the BRICs and N11 saw much sharper contractions than developed countries, but they also saw much stronger rebounds. However, within the two groups, the differentiation in the magnitude and speed of rises and falls is extraordinary. A number of countries are already back at their pre-2007 levels on a number of metrics, while others are recovering more slowly. Brazil, China, India, Egypt, Indonesia and the Philippines, for example, have experienced a relatively mild slowdown and shown an impressive rebound in growth and activity. At the other end of the spectrum, Iran, Mexico, Pakistan and Russia have suffered, with deep recessions and a sluggish recovery.

Global contribution The relative importance of the BRICs and G7 for the global economic landscape has changed dramatically.

“It is interesting to assess how our predictions have fared versus actual outcomes over time. Each of the BRIC countries has grown to a size we didn’t expect to see until much later.” Jim O’Neill

14 | Optima | september 2010 Between 2000 and 2008, the BRICs BRICs: POWERING INTO THE TOP 10 contributed almost 30 per cent to global growth in US dollar terms, compared Where the four BRIC countries are ranked globally, out of 192 countries. with approximately 16 per cent in the Brazil Russia India China previous decade. At the same time, the Population* G7’s contribution fell from more than 5th 9th 2nd 1st 70 per cent in the 1990s to around GDP (nominal)** 8th 12th 11th 3rd 40 per cent during the first decade External debt*** 26th 20th 25th 22nd of the 21st century. The BRICs’ Exports*** 21st 12th 23rd 1st contribution has risen particularly Imports+ 24th 14th 15th 2nd since 2007, with China contributing Vehicle production++ 6th 19th 7th 1st more than any of the advanced Number of mobile phones 5th 4th 2nd 1st economies, including ‘Euroland’. *World Monetary Fund figures, 2009 The BRICs’ share of global trade **The World Factbook, 2009. Second-quarter GDP figures published in August 2010 suggest that China has now overtaken Japan to become the world’s second largest economy has continued to rise sharply and now ***World Trade Organisation/The World Factbook +Estimate, UN Department of Economic and Social Affairs, 2009 stands at 13 per cent, almost two per ++Organisation Internationale des Constructeurs d’Automobiles cent higher than two years ago, with China accounting for almost two-thirds of the BRICs’ share. developing economies have been able its introduction in 2005, we have used Interestingly, though, the N11 to cut their policy rates in response to the GES to track growth conditions in countries, South Korea and Mexico adverse external shocks. Previously, 180 countries, with a particular focus on especially, are now more important for during such crises, capital outflows key developing economies. global trade than Brazil, Russia and from emerging markets generally Technology, particularly the use of India. Moreover, there are non-BRICs meant that local central banks had to mobiles and the internet, has seen the and non-N11 developing and emerging hike rates to maintain financial largest gains and was the main category markets – including other countries in stability. Such counter-cyclical that consistently offset the deterioration Africa, developing Asia, Central and monetary policies often put even more in other components. Macro-economic Eastern Europe, the Commonwealth of pressure on local economies, thus conditions, which include gross fixed Independent States (excluding Russia), aggravating the original crisis. capital formation and openness, have the Middle East, Mongolia and the also improved in the BRICs and N11, western hemisphere – that, collectively, What’s the score? significantly exceeding the developed- still account for a larger share of global Given the challenges that the BRIC and and developing-country average. The trade than either the BRICs or the N11. N11 economies and markets have faced BRICs made notable political progress, Turning to interest rates in the BRICs over the past two years, has their especially with respect to corruption and the N11, these have declined potential to grow further and spread and the rule of law. For human capital – dramatically over the past two years, in their dominance in a number of areas including life expectancy and schooling line with other developing and – including global demand for – the N11 posted modest gains, while the advanced economies. In many places, resources and spending patterns – BRICs made little progress. they stand at all-time lows. Brazil, changed? Has our original ‘dream’ of The main setback occurred in the Russia and India have each cut their the BRICs collectively overtaking the macro-economic stability category, policy rates dramatically. The reduction G63 by around 2050 passed the test which includes inflation, external debt has been less aggressive in China, where provided by this difficult environment? and government deficit. Both the BRICs currency and other unconventional Goldman Sachs uses a Growth and N11 lost out by the same magnitude, measures have played a bigger role in Environment Score (GES) to measure far below the declines in developed and the easing of financial conditions, as the strength of a country’s sustainable developing countries on average. they have in many parts of Asia. growth. It includes 13 variables and is The major mover in the BRICs during This general easing episode marks an important driver of our assumptions 2009 was Brazil, one of the 35 best the first time in history that many for long-term productivity trends. Since performers globally. Its gain was broad

september 2010 | Optima | 15 optima report

based across several components, assess how our projections have fared with particularly strong advances in versus actual outcomes over time. technology, mainly mobiles, as well as Each of them has grown to a size we mobile phone usage macro and political conditions. didn’t expect to see until much later. Communications are improving in the BRIC countries. China’s GES improved mildly; like For example, although Russia’s growth Brazil, Russia, India and China rank 5th, 4th, 2nd and 1st respectively on the list of number of mobile Brazil, gaining mainly on technology may be lower than predicted phones per country (with the US in 3rd), though that and political conditions, but it made no previously, it could still grow enough figure as a percentage of the population varies progress on human capital. A bigger to overtake Japan – a move we did dramatically – from just over half in India to almost government deficit, higher inflation not foresee in 2003. And China, which 150 per cent in Russia. and a lower degree of openness is about to overtake Japan six years earlier partially offset the improvement. than we first thought, may become as big India’s result declined modestly; it as the US within 20 years. Brazil is poised INDIA CHINA BRAZIL RUSSIA is now the only BRIC country whose to overtake Italy next year, and India and 52.3% 59.6% 96.6% 146.8% GES remains below the developing- Russia are not far behind. country average. Russia’s GES has In the global car market, China will fallen by the same amount as India’s, become the main driving force over the with most of the deterioration centred next decade, likely to account for around macro-economic stability. almost 42 per cent of sales growth, million The overall GES improvement in with the BRICs together accounting tonnes the N11 was actually higher than in the for 70 per cent. And by 2050, India’s car 8.29 BRICs. Eight countries posted gains, penetration could leap to around China’s iron ore imports from India in June 2010 – with Indonesia and Turkey advancing 490 cars per 1,000 people. This is more down 21 per cent month on month, as a result of lower demand and supply disruption resulting from most on the back of developments than 100 cars per 1,000 people higher the Indian monsoon season. China’s total iron ore across a number of components. Only than we estimated before. India could imports fell 14.7 per cent in June, although imports inflation and government debt showed become the biggest auto market of the from Brazil were up one per cent. deterioration in both countries. If their four by 2050. scores continue to rise, we might have to consider them becoming part of “The BRIC economies According to Gerald Conway, the BRICs. appear to have withstood co-chair of the China Council for South Korea and Mexico still have the financial crisis better International Cooperation on the highest GES, although last year Environment and Development they saw the smallest increases in their than developed countries. taskforce, the Chinese leadership has scores. The areas of particular Indeed, their contribution been presented with a plan that weakness in both were political to world economic activity would reduce energy consumption conditions and macro-economic has increased.” per unit of GDP by 75 to 80 per cent stability, while other categories posted by 2050. To achieve this, the plan Jim O’Neill modest gains. envisages 50 per cent of new energy Vietnam registered the biggest The energy market, and crude oil usage from now until 2030 coming losses. Its deterioration in macro- in particular, look likely to be influenced from nuclear and renewable sources, economic stability pulled down its greatly by Chinese and Indian demand – and that all new power sources will GES in 2009, mainly as a result of especially in the next 20 years. be in these forms by 2050. In much higher inflation. These days, energy markets are often crude-oil terms, millions of the dominated by the importance of China, barrels-per-day projected globally Past predictions which has committed to reducing its might not occur.

Since Goldman Sachs first published carbon intensity – the amount of CO2 If India were to commit to its BRICs growth and income emitted per unit of GDP – by between something similar, this would projections in 2003, we have updated 40 and 45 per cent by 2020, compared obviously be a very exciting initiative them four times. It is interesting to with 2005 levels. and stimulus for alternative energies.

16 | Optima | september 2010 Indeed, their contribution to world economic activity has increased even mobile phone usage rail transport network size more through the crisis, and since. This is likely to continue in the near, US 226,500 km medium and long term. Russia 128,000 km But the world’s economy remains China 86,000 km 611 unpredictable. Lately, for example, 64,000 km India there have been concerns that China is million 0 50,000 100,000 150,000 200,000 250,000 poised for a double dip, its economy Approximate number of vehicles Only the United States has a rail transport network larger having grown year on year by 11 per expected on India’s roads than Russia, China and India. Brazil is 10th in the global list, with a rail network of nearly 30,000 kilometres. cent in the first quarter of this year, Primary source: International Union of Railways, 2007 but more recent monthly data hinting by 2050 at some flattening off. The stock market making it the world’s leader by number of airports certainly supports this. After making of the automobile production Rank Country Number of airports solid gains in 2009, the Shanghai industry. It is currently the 1 US 15,079 composite index has fallen by as much seventh largest – and fourth 2 Brazil 4,072 as 24 per cent since the start of the year. largest in Asia, behind Japan, 3 Mexico 1,819 The N11 countries, meanwhile, are a South Korea and Thailand – having produced 2.9 million 4 Canada 1,404 very diverse group, as we have always units in 2009. Worldwide, only 5 Russia 1,213 emphasised, at many different stages China, Taiwan and Romania 6 Argentina 1,141 of development. We don’t think any increased in production by a 7 Colombia 990 of them currently has enough greater percentage year on year 8 Bolivia 881 justification to be considered as big than India in 2009. 9 Paraguay 800 as a BRIC, but some are showing 10 Indonesia 684 encouraging signs. Primary source: The World Factbook, 2010 Among many aspects of the world economic scene, the BRIC – and N11 – Currency affairs worry about potential changes in the countries will become increasingly Based on our forecast of higher oil prices, macro-economic policy framework important and the upward trend we we expect rouble appreciation in Russia, ahead of the presidential elections this have seen this past decade will be even as export revenues would increase, October; and uncertainties relating to more pronounced. Judging by current encouraging capital inflows. the tightening of monetary policy in escalations, by 2020 the BRICs’ In the near term, we believe two other advanced economies. combined economy will have overtaken BRIC currencies will appreciate through Over a longer-term horizon, we that of the US and could account for a 2011. In India, as growth and inflation pick would expect currencies to converge third of the global economy in PPP up, we expect the rupee to appreciate on with purchasing power parity (PPP) terms. Individually, Brazil will be larger the back of an effective tightening in estimates. As the BRICs grow over the than Italy, India will be outpacing Spain, policy rates in 2010. Meanwhile, the ‘fair next few decades, and productivity and Russia will have charged ahead of value’ of the Chinese yuan has appreciated terms of trade improve, we expect their Canada. While these developments will the most against the dollar since 2000, currencies to converge with PPP and undoubtedly lead to many complexities primarily owing to productivity gains, and continue to appreciate. and issues in the future, they are very our current forecast is that the yuan will In conclusion, while the 2007-2009 exciting and offer considerable be allowed to appreciate by five per cent financial crisis has been a major opportunities for us all. over the next year. challenge for the world economy, the 1 Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, The Brazilian real is the exception. BRIC and N11 economies collectively Pakistan, the Philippines, South Korea, Turkey We expect it to start depreciating for appear to have withstood the crisis and Vietnam. 2 The US, the UK, France, Germany, Italy, Japan and three reasons: the current account deficit better than many of their developed- Canada. could widen rapidly; investors will likely country counterparts. 3 The G7 (see 2) minus Canada.

september 2010 | Optima | 17 company profile

As the world’s largest platinum producer, Anglo American has enviable high-quality reserves and a flexible portfolio that allow it to expand faster than its competitors. Michael Coulson reports on how the restructure of its Platinum business and the promise of new projects are helping the company steal a march in a resurgent market. Shaping up for the future 18 | Optima | september 2010 Shaping up for the future september 2010 | Optima | 19 company profile

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arrying out a major elsewhere – and throughout the eastern wing corporate restructuring is – the platinum mines are among the primary painful at any time. To do employers and generators of income. so while the market for a Platinum has accepted a responsibility company’s main product is for these communities way in excess of passing through the biggest South Africa’s Mining Charter1 and other

recession in living memory black economic empowerment (BEE) PREVIOUS PAGE is doubly so. That Anglo requirements. Nicolau says: “We have to A decline shaft at American’s Platinum commodity business unit create communities that will still be viable Bathopele mine in Rustenburg, where an C(“Platinum”) subjected itself to, and has come when the mines are gone.” array of technological through, this ordeal in good shape to take advantage It reflects the importance attached to this community equipment, including signage and signalling of the reviving platinum market speaks volumes support and the investment made by Mary-Jane Morifi, devices, has been for the calibre of its management and commitment Platinum’s head of corporate affairs, who bears the ultimate installed to avert safety incidents of its staff. responsibility for the business’s enterprise development In July 2008, the basket price – the price of all the work, sits on the company’s executive committee and 01 Platinum-bearing business unit’s products expressed as the equivalent of an reports directly to Nicolau. She is no lightweight: before ore from South Africa’s Bushveld ounce of platinum – peaked at about $4,165. At this point, joining Platinum in November 2007, she spent 17 years Igneous Complex Neville Nicolau, previously the head of asset optimisation with BP, ending up as director of audit and risk 02 at Anglo American and former chief operating officer management in London. Platinum CEO Neville Nicolau responsible for Africa at AngloGold Ashanti, had just (second left), Unki taken over the CEO’s seat. Barely five months later, the Difficult cuts general manager Walter Nemasasi basket price was hovering around $1,300, a decline of Even in depressed times, Platinum’s ability to cut back on (left) and Platinum’s almost 70 per cent and less than half the level that had social spending is limited. As an example, the policy is to executive head of mining Pieter Louw prevailed before the spike of July 2008. spend one per cent of pre-tax profit on community and inspect a shuttle That sort of movement would usually force cutbacks at infrastructure development. In 2009, as profits collapsed, van used to safely transport miners in any company, but at Platinum it’s not so easy. Its mines are the $33 million spent in this area represented eight per cent and out of the soon- located in the western and eastern limbs of South Africa’s of pre-tax profit. to-open Unki mine Bushveld Igneous Complex and, while there are sizeable The axe thus fell heavily on other items. Capital towns like Rustenburg and Brits in the western wing, expenditure was cut by 22 per cent and the workforce was

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photos by planetkb for anglo american (platinum), except 01 (Andreas Koschate/Westend61/Corbis)

20 | Optima | september 2010 04 The platinum collection

An 80 per cent-owned subsidiary with a view to enhancing black of Anglo American, the Platinum economic empowerment, especially business unit is the world’s largest at communities near the mines. primary producer of platinum, The company is committed to responsible for about 40 per cent of the sustainable development of the world newly mined production. While it communities in which it operates will open the Unki mine in Zimbabwe and makes substantial contributions later this year and is exploring towards this, both on its own account in Brazil, and with joint-venture and through the Anglo American exploration projects in Canada, China Chairman’s Fund. and Russia, all current operations Platinum has a market capitalisation are in South Africa, on the Bushveld of around $26 billion, ranking it as Igneous Complex, the world’s richest the sixth-largest company on the source of platinum group metals Johannesburg Stock Exchange. Despite (PGM)-bearing ores. the downturn in world commodity The company wholly owns markets, net sales revenue in 2009 10 mines, as well as smelting and was just under $4.4 billion, from sales refining operations that treat of 4.75 million ounces of refined PGMs, concentrates not only from its own of which 2.45 million ounces were mines, but also from joint ventures platinum. The company currently and third parties. In recent years, it has employs about 54,000 people, which taken joint-venture partners into a on widely accepted ratios means it is number of previously wholly owned the primary support of close on mines. These have generally been 400,000 people.

reduced from 80,500 to 65,000. There were no forced 03 The Rustenburg Analysis of safety redundancies among the permanent staff, though the Base Metals Refinery, One area where no compromise can be made is safety. The which is expanding number of contract workers was slashed. Nicolau is the its nickel processing vision is ‘zero harm’ and, though there were 14 fatalities in first to admit: “These people had to move back into the capacity by about 2009, the trend is down, from 25 in 2007 and 18 in 2008. In 50 per cent community and join the unemployed. We offered early 2009, a new safety strategy and plan were adopted vocational training courses in areas like plumbing and 04 Shaft-sinking following extensive analysis of existing programmes. bricklaying for the whole community.” operations at the Allied to safety is health, not least the HIV/AIDS bottom of the new Savings went all the way to the top, and an asset Thembelani 2 shaft pandemic. Platinum offers AIDS counselling and anti- optimisation programme at the corporate office, will enable access retroviral treatment (ART) to workers and their families. At to the Merensky reef expected to bring savings of a staggering $20 million, below the existing present, some 4,000 people benefit from this programme, is nearing completion. Thembelani shaft though only 24 per cent of employees requiring ART are on As the tonnage milled was static, and production of treatment. TB, alcohol and drug abuse and teenage platinum group metals (PGMs) rose five per cent to pregnancy are other social and health areas of concern, but 4.75 million ounces a year, the inference of a significant Morifi poses the dilemma: “We have big in-house improvement in productivity must be that there had been a programmes, but what happens when people go home?” fair amount of fat that had been waiting to be cut out. Platinum was appalled to find that on-mine fatalities A recent authoritative review of the platinum sector by are dwarfed by the average 50 employees a month who JP Morgan’s Johannesburg office points out that Nicolau die off-mine owing to illness, crime, road accidents or is the first mining engineer to head the company in simply natural causes. Good health can qualify people to decades; again, the inference must be that he can better be economically active; however, it doesn’t automatically gauge than some of his predecessors where cutbacks can generate income. Social and labour plans are determined be made without damaging the fabric of the business. in participation and in accordance with those of

september 2010 | Optima | 21 company profile

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Anglo American, but the varying circumstances of different 01 Today, roof-bolting sustain it if profits were to remain at 2009’s depressed levels. communities require flexible application of such plans. is a far safer operation Fortunately, that isn’t the case. than in the past as Thus, Platinum engages directly with communities and miners routinely use local authorities to determine their needs, in conjunction remotely operated taking opportunities roof-bolting drills with South Africa’s Department of Mineral Resources. Longer term, demand for platinum should return to the 02 Rustenburg historical five per cent annual rate of growth (this growth Commitment to social issues community members has left the market in deficit for 10 of the past 13 years). make use of a For years, Platinum had been spending the equivalent at Platinum-sponsored As the world’s largest producer, Platinum will want to today’s current exchange rate of about $4.5 million a year on mobile clinic participate in this growth – and it has the resources to do so. education. When Morifi arrived, she assessed the efficacy Its 2009 annual report puts the company’s reserves at of this and held an education summit last year. It became 170.5 million ounces and its resources (exclusive of clear that earlier programmes had concentrated on later reserves) at 632.3 million ounces. There surely can’t be stages of learning, whereas the greatest need was more basic. many resource companies in the world with this backing; There was also a need to train teachers and school moreover, most of it is high quality and/or close governing bodies. to the surface. Housing is another key element. Platinum has embarked JP Morgan reckons that it is the only producer that can on a programme to build 20,000 houses to be offered for sale respond quickly to an improvement in demand, with the to its employees, which Nicolau says could cost $194 million ability to increase mine production across the board by up over the next seven or eight years. to 10 per cent within six months at little cost. It all adds up to an impressive social programme. But But that isn’t the whole story. No miner wants to let even a company as strong as Platinum would not be able to reserves sit idle for 100 years if there are opportunities to

22 | Optima | september 2010 02

budget of just over $5 billion (about $1 billion will be spent in Author each of 2010 and 2011) and incremental production capacity Michael coulson of almost one million ounces. On top of that are four more projects on each limb of the Bushveld Igneous Complex. Some are wholly and some partly owned, some are at the feasibility stage and some still pre-feasibility – and they all vary in terms of the size of their reserves and resources. The ability to speed up or delay these in response to changed market conditions Michael Coulson is a gives Platinum a unique advantage in the industry. former deputy editor When the prospector Hans Merensky first traced the of the Financial Mail in Johannesburg. He platinum deposits in the 1920s, he could have had no idea has been described as the doyen of financial that this then obscure metal would replace gold as South journalism in South Africa; Africa’s most important mineral product. For decades except for spells as an analyst with stockbrokers after, the companies that came together to form in Johannesburg and Platinum’s predecessor, Rustenburg Platinum Mines, London, he’s been writing about the South African exploit them. A 10 per cent production increase is little had a monopoly in the industry. Although that’s no longer economy and financial markets for more than more than making the existing operations sweat a little. the case, Platinum is still the leading producer. 45 years. In a recent presentation, Nicolau outlined Platinum’s Operating in many areas in which it is not so much the claimed key competitive advantages: extensive high-quality major employer, but one of the only employers, is a status reserves, a flexible portfolio of long-life assets, superior that brings responsibilities on a scale experienced by few market intelligence and wide experience of transformation. companies. While companies must never neglect their Flexibility is, again, a key word. The largest mines have investors, Platinum, more than most, cannot simply look to been restructured into smaller, more manageable units. the bottom line as the measure of its success. It may not be The old Rustenburg mine has been split into five, and perfect – indeed, a catalogue of disputes with local Amandelbult into two. But flexibility is even more significant communities contained in the 2009 Sustainable in relation to new projects, such as Mogalakwena North, Development Report testifies to this – but, on the whole, it worth 350,000-400,000 ounces of refined platinum a year can be proud of how it balances the interests of its diverse and due to reach full production in 2012. range of stakeholders while entrenching its position as the world’s leading PGM company. A strategy of expansion Platinum’s strategy is to maximise value by understanding and developing the market for PGMs and expanding 1The Mining Charter is the South African mining industry’s version production safely, cost-effectively and competitively. of the charters agreed between employers and other stakeholders in several sectors of the economy, whose aim is broad-based economic Platinum has six major projects under way – two empowerment. A key component is the mining scorecard, which has three core elements: direct empowerment through ownership and replacement and four expansion – designed to come on control, human resource development and employment equity, and stream between 2012 and 2019, with a combined capital indirect empowerment through procurement and enterprise development.

september 2010 | Optima | 23 optima report

Turning points from Copenhagen Many of us hoped the UN’s Climate Change Conference in Copenhagen in December would come up with the answers, firmly moving the global political community in one direction to act on reducing emissions. More than six months later, the issues are still mired in uncertainty. Here, Sir David King, director of the Smith School of Enterprise and the Environment at Oxford University, reviews the “urgent task” ahead.

BOB STRONG/Reuters/Corbis

24 | Optima | september 2010 s the global population did agree to some very important and, to avoid the worst impacts of climate rises towards nine indeed, groundbreaking commitments: change. This needs to change. We billion – likely by n They endorsed the limit of two need more certainty and perhaps 2050 – a continued degrees’ warming as the benchmark even more ambition. dependence on fossil for global progress on climate change, fuels A for energy generation and on the figure first agreed during the 2005 A community of scientists deforestation to create additional G81 Heads of State at Gleneagles. The science of climate change has farmlands will lead to global n Unlike every previous agreement, it come under a lot of media attention temperatures increasing by up to wasn’t just developed countries, but lately, with the most recent landmark 6°C and average sea levels rising also all leading emerging economies, reviews of the Intergovernmental Panel by up to one metre by the end of that agreed to make specific on Climate Change (IPCC) on the state MAIN IMAGE of climate science being at the heart Horns Rev 2 near the century. The impact on societies commitments to tackle emissions. Esbjerg in Denmark would be severe, driven by heat and n For the first time, these countries have of this lobby-driven storm. Following is the world’s largest drought in some areas and flooding signed up to a comprehensive leaked e-mails from the University of wind farm. Although wind power currently in others – especially coastal cities. measurement, reporting and East Anglia and some poor referencing accounts for less There is worldwide recognition that verification of progress agreement. in the IPCC’s 2007 report, through the than one per cent of global electricity cutting greenhouse gas emissions and efforts of well-paid US lobbyists the production, the moving to a defossilised economy is “Getting an agreement work of thousands of remarkable figure rises to about 20 per cent in the the right thing to do. The question is: was always going to be scientists is now being questioned. case of Denmark how do we achieve it on a global scale? tough, but I believe that The climate science community is It is more than six months since the vast: palaeo-climatologists studying 01 The plenary no protocol is better session of the 2009 15th meeting of the Conference of the the planet’s past climate behaviour; Climate Change Parties in Copenhagen. There is much than a weak one.” analysts determining sea-level rises; Conference in Copenhagen, to do ahead of the meeting in Cancun Sir David King scientists taking detailed measurements Denmark in Mexico in December. in tropical forests; scientists studying Despite the unfortunate level to Significantly, though, the group the loss of ice on mountain peaks in 02 A house model at an exhibition which expectations were raised, includes only Brazil from South America Greenland and on Antarctica; those of pollution-free I believe that Copenhagen was a step and just six out of 55 African countries. analysing changes in levels of technology in Qingdao in China. forward. We must acknowledge that a In all, 137 (out of a total of 192) countries greenhouse gases in the atmosphere The country has group of 55 developed and developing have not made pledges. Independent and the acidification of the oceans; and committed to stringent reduction countries, which together account for analyses indicate the pledges as they those modelling the potential impacts targets on carbon almost 80 per cent of global emissions, stand are about half of what is required of global warming in different regions intensity by 2020

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OLIVIER MORIN/AFP/Getty Images WU HONG/epa/Corbis

september 2010 | Optima | 25 optima report

james barber 01 around the world. Their progress is agreement was always going to be tough untouched by the hullabaloo in the because we are seeking consensus media. They challenge each other, among almost 200 countries. We all debate and push back the frontiers knew that that it would be messy and of their science in the process. complicated. In particular, without The urgent task is now to move backing from his Senate, President forward and broaden, deepen and Obama could not have signed up to such strengthen the commitments made a deal and, without the US, no lasting Gary Braasch/CORBIS in Copenhagen, drawing on the large deal could be reached on a protocol. 01 Rechargeable developed, will have an impact on what coalition of countries that wanted I believe that no protocol is better electric cars are the energy system will look like in 2030 already becoming more from the agreement. than a weak one. Signing up to a familiar sight in and beyond. This will have significant something that could not deliver the many cities, such implications for industry, businesses as London The struggle for consensus cuts needed would, in the long term, and consumers. Therefore, it is critical Greater certainty about emissions is have presented more problems than 02 New policies are that we develop a shared understanding necessary to provide the strongest it solved. being called for to of what technologies are available now reduce deforestation incentive to business, through the As part of moving towards a and increase and potentially coming on stream in the establishment of a long-term carbon low-carbon economy, we need a reforestation – as is near future, as well as the practical being undertaken in price. I am not going to suggest what step-change in driving through new Costa Rica challenges and constraints we need to such a figure will be, but it needs to low or zero-carbon technologies. manage and the implications for society. provide assurances to the global market Throughout the world, we need to This global shift has not yet found while ensuring that renewables and develop new technologies and international legal form, but scientific other low-carbon technologies can be implement policies that will improve evidence, public opinion and business competitive. The Smith School of energy efficiency, increase investment opportunity will ensure that it emerges Enterprise and Development is in low-carbon power, develop hybrid over the coming years. currently developing optimal strategies and electric vehicles and smart grids, for moving forward, using existing and reduce deforestation – and, in Community involvement international processes, such as doing so, provide a stimulus to grow It is particularly noteworthy that the G202 meetings, UN meetings and the our economies. US, as well as the emerging powers – World Trade Organisation (WTO), The changes we need to make by such as China, India, Brazil and South as appropriate instruments. 2050 are large and complex. Many of Africa – have added their voices very Looking back at Copenhagen, we the decisions that need to be made now, clearly and constructively to the must bear in mind that getting an and the innovations that must be debate, demanding action from the

26 | Optima | september 2010 rather than large developments. Five years later, the whole world is Similar schemes, in which people are now engaged in the issue. We do need encouraged to join forces to create a a solution that involves everybody – renewable energy supply, can be found industrialised, rapidly emerging and in The Netherlands and Germany. developing countries alike – or The poorer nations, the small island emissions will simply ‘leak’ from the

states and African countries are making countries where CO2 rules apply to their concerns and demands clear. those that are not part of the agreement. Many are already setting examples for By 2050, average global emissions

others to follow. In Tanzania, for of CO2 must fall to around two tonnes instance, the Mwanza Rural Housing per person per year if we are to Programme trains villagers to set up mitigate against the worst effects of enterprises to make high-quality bricks climate change. One response might from local clay, fired with agricultural be for each nation in the industrialised residues rather than wood, which world to be assigned a straightforward helps reduce deforestation. downward trajectory to this figure. The key to the success of these This has, in effect, been accepted by initiatives is the buy-in of the local the EU, and is a personal commitment community and making them part of from President Obama for the US. the economic and practical solutions – Emerging economies such as China a bottom-up approach. The UK has and India, which have relatively low recognised this, with its innovation body, levels of emissions per head, could 02 NESTA, leading a yearly challenge with temporarily increase their emissions advanced economies. For example, the a £1 million (c. $1.5 million) prize fund before these too would start to fall US and Chinese governments have each to reward collaborative community towards the designated figure of two pledged their commitment by setting efforts. This year’s four winners have all tonnes per person. Again, this is now stringent reduction targets on, reduced carbon emissions – and, in the a formal commitment by China. respectively, greenhouse gases and case of a project on Scotland’s Isle of Inaction over the coming decades carbon intensity by 2020. Eigg, by as much as 32 per cent. could disrupt economic and social Brazil is committed to ending activity as we approach mid-century – deforestation by 2025, and is thinking A commitment from everyone making the financial downturn of the practically about how it can more In many respects, the move towards a past two years pale in comparison. effectively supply energy. CRERAL, a new paradigm began at Gleneagles in Tackling climate change is the co-operative in the south of the country, 2005. The process started in January pro-growth strategy and it can be done supplies electricity to a mainly rural of that year at the Met Office in Exeter, in a way that does not cap the customer population of around 6,300, which the then Prime Minister Tony aspirations for real growth of rich or using river-based, low-tech and Blair asked me to oversee. A meeting poor countries. The earlier effective low-cost mini-hydro plants, which of the world’s leading climate scientists action is taken, the more advantageous increase both capacity and reliability. was convened to address the topic of the outcome will be. In Europe, progress in wind energy is ‘Avoiding dangerous climate change’. growing steadily. Denmark has proved This was the first time that a consensus particularly successful; its model of was reached on the need to limit global 1 Canada, France, Germany, Italy, Japan, Russia, ownership has led to community groups warming beyond a certain limit, and the UK and the US. 2 provided an important backdrop to the Argentina, Australia, Brazil, Canada, China, France, owning half the country’s private wind the European Union, Germany, India, Indonesia, Italy, farms. Around 85 per cent of the first meeting of the G8+53 grouping Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the US. nation’s wind-generation capacity is later that year to discuss climate change 3 The G8 (see 1) plus Brazil, China, India, Mexico and made up of small clusters of turbines, and African development. South Africa.

september 2010 | Optima | 27 country report

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Tunnel vision finds copper potential Two new prospects are expanding the resource base of the Los Bronces mine, already one of the largest concentrations of copper mineralisation in the world. Nicky McClure reports.

28 | Optima | september 2010 all photos american anglo

Timeline Los Sulfatos

1920s The Andes Mining Company documents the presence of porphyry copper-style mineralisation in the area

1960s and 1990s Short-lived exploration and drilling campaigns are carried out, but prove insufficient to determine the true potential of the prospect

2002 Anglo American acquires CMDLC for $1.3 billion – including the Los Bronces mine and surrounding mineral concessions

2005-2008 Four field seasons culminate in the discovery of the Los Sulfatos deposit – of a size and grade that rank 04 it as one of the top copper discoveries in the past 30 years

he Andean region hosts prospective areas near the recently 01 Drilling activity to 2007 one of the world’s most acquired Los Bronces operation. install rock support SRK Consulting is contracted to in the eight-kilometre engineer an eight-kilometre-long prospective copper Anglo American’s Los Bronces exploration tunnel exploration tunnel to access the belts, and two recent copper operation is 60 kilometres starting from the Los Bronces operation Los Sulfatos deposit exploration projects, north-east of Santiago, in central Chile, T San Enrique-Monolito and at altitudes of between 3,000 and 3,500 02 An operator from 2009 Italian tunnel firm SELI Los Sulfatos, could be among Anglo metres above sea level. Exploration Italian tunnel firm SELI ships the monitors activity in the 290-tonne tunnel boring machine American’s most significant and activity here led to the discovery of tunnel boring machine’s (TBM’s) control cabin from Italy to Chile in 70 containers. highest-quality copper prospects yet. promising new deposits; one a Excavation with the tunnel boring After initially being drawn to kilometre away from Los Bronces at 03 The TBM cutter machine starts in August Chile in the early 1980s in a search for San Enrique-Monolito (SEM), and the head and shield are gold, Anglo American’s focus soon other, Los Sulfatos, about six kilometres assembled at SELI’s 2010 workshop in Italy switched to copper, following a series south of the mine, at elevations of over The total tunnel advance at the end of July is 1,800 metres in difficult of deals that were born after 4,000 metres above sea level. 04 Workers carrying out surface exploration ground conditions establishing a local foothold. And Graeme Lyall, advanced exploration travelled on horseback when the company acquired Compañía projects manager in Chile, says that the through the surface 2011 exploration campsite Tunnel development expected to Minera Disputada de Las Condes Los Sulfatos area showed potential at the Los Sulfatos (CMDLC) for $1.3 billion in December early on: “There is evidence of prospect be completed by the end of 2011 2002, it began exploring highly small-scale exploratory activities that

september 2010 | Optima | 29 country report

date back perhaps 100 years. Over A new approach 01 A helicopter and above the geology of the prospect, The world-class copper deposit that lands at the surface exploration campsite, which showed promising signs of a these exploration and drilling efforts more than 4,000 significant copper deposit, two had revealed extended to depths of at metres above sea level. Helicopter- drilling campaigns were undertaken least 1,000 metres below the surface. supported drilling by previous owners; the first at the However, significantly more drilling campaigns started at Los Sulfatos in 2005 end of the 1960s, and the second at was needed to determine the full the beginning of the 1990s. Both characteristics of the deposit before 02, 03 Assembly campaigns showed that there was mine development options could be of the TBM cutter copper mineralisation in the area, but considered. Extreme conditions meant head and shield nears completion in an failed to demonstrate the true the only alternative was to carry out the underground cavern potential of the prospect.” drilling from underground. 04 The steel tunnel And what potential there was. In 2007, SRK Consulting was lining is installed in 02 While SEM could contain up to contracted to engineer the broken ground behind 25 million tonnes of copper, early development of an eight-kilometre the TBM shield using a mechanised tunnel boring indications show Los Sulfatos may exploration tunnel, starting from the machine (TBM). Despite its have substantially more. Los Bronces operation and heading marginally higher cost, TBM south, to provide underground access technology had advantages in terms Difficult terrain from which to drill out the resource. of development timeframe, safety and Exploration at Los Sulfatos began Conventional drill and blast methods overall project risk. with a geological reconnaissance were discarded in favour of tunnelling “Our investigations showed that the of the area in 2004, followed by TBM was not only feasible, it was helicopter-supported drilling “Our investigations showed that potentially must faster and significantly campaigns between 2005 and the tunnel boring machine was safer than the alternatives,” explains 2008. The difficult terrain, harsh Graeme. “This was undoubtedly the climate and environmentally not only feasible, it was potentially best method.” challenging conditions meant that much faster and significantly safer A TBM development project was field activities were restricted and than the alternatives.” awarded to Chilean construction firm could only be carried out over the Graeme Lyall, advanced exploration Besalco in association with Spanish limited summer periods between projects manager firm Dragados, a company with

December and March. 01 The exploration drilling campaigns were carefully planned. Two field camps, housing up to 30 people, were set up in the high mountains using both modern and more traditional methods of transportation. Movement of all the equipment, personnel, food and fuel was done by helicopter, with mules carrying the team between the camps and the drill sites. During the four field seasons, 22 holes were drilled. All the holes intersected potentially economic copper mineralisation, indicating that the Los Sulfatos deposit was substantially bigger and better quality than had been previously estimated.

30 | Optima | september 2010 03 04 extensive experience in this sort process. The first two-kilometre drive This will help to develop a model for Author Nicky of tunnelling. This led to the anticipated the most difficult ground the deposit that will be used in mine McClure manufacture of a new Double Shield conditions, and progress has indeed planning and engineering studies. Universal Compact TBM with Italian been slow and challenging during this “We should finish tunnelling by the firm SELI. Others participating in the initial drive. By the end of July 2010, end of 2011. Exploration drilling is project include H+E Logistik, which the tunnel had advanced 1.8 kilometres expected to last at least three more supplied the system that removes towards Los Sulfatos. years and then there are mining and material from the tunnel, and Schöma, engineering studies before mine which provided locomotives for Looking ahead development. It will be at least another Nicky McClure is a business journalist with material and personnel transport. Using a TBM, the tunnel has an 10 years before we can expect to start more than 16 years’ estimated advance rate of 400 metres extracting copper from the ground.” experience writing for and editing titles on machine assembly per month – more than double the Graeme concludes: “The subjects ranging from Commissioning of the TBM created its progress that is expected using Los Sulfatos deposit promises to public-sector activities to computer gaming. own challenges. SELI completed and conventional methods. become one of the most long-lived and She currently works for Redhouse Lane tested the TBM in Rome in early 2009, The team is considering excavating profitable operations in the world, communications agency before taking it apart to be shipped in at least 20 drill stations to carry out lasting well beyond my lifetime. So on publications for Glenmorangie and RBS. 70 containers to Chile – itself a exploration drilling. Graeme says: “We really this is just the beginning.” massive undertaking. The TBM have planned for up to eight drill rigs weighs 290 tonnes, measures operating in the tunnel, drilling in 91 metres and the tunnel excavation various directions. Information diameter is 4.5 metres. The largest from these drill samples will be component – the main bearing – characterised geologically and more For more information, info weighs nearly 50 tonnes. This and analytically for copper contents. visit: www.anglochile.cl both segments of the cutter head were shipped separately. To prepare for the TBM, an initial acknowledgements advance tunnel was created to enable The Los Sulfatos area had been The company’s former leader, by and came to fruition through the machine to be assembled by SELI explored for nearly a century the much admired and respected current head of Andes exploration technicians. After initial testing and there is no doubt that this late Nigel Grant, former consulting Vicente Irarrazaval. Chief project discovery is the result of a number geologist for Anglo American geologists who lived through the showed that it was working properly, of contributions. South America, was key to harsh conditions on site included Timing is perhaps a key promoting the exploration potential Cristian Spröhnle and then William the green light was given to initiate factor, as technology, conditions and value of the Disputada assets Robles. Juan Carlos Toro was tunnel boring. and world demands change. during the acquisition process instrumental in providing valuable For this particular deposit, in 2002, and this was perhaps geological contributions. TBM excavation commenced in Anglo American was fortunate a significant factor that led to The team also included August 2009, almost one year after to be there at the right time with completing the winning bid. a number of geologists and the right strategy and with the Chris Carlon followed and, supporting staff who are proud initiating the design and manufacture right people. eventually, the discovery was led of this achievement.

september 2010 | Optima | 31 optima report Levelling the playing field In just two decades, India has made great strides, from a stagnant and bureaucratic socialist-style economy to finding itself on the verge of breaking in to the world’s top 10 countries by GDP. The populous country’s unique approaches to finance, technology and rural poverty now see it competing on a global scale, says Greg Mills.

never imagined that I would find myself cross-legged Friedman’s book owes its title to a meeting he had with among a group of Indian women farmers – the so- Nandan Nilekani, co-founder of Infosys, India’s second- called poorest of the poor, in a country besotted with largest IT company. Nilekani said countries like India could categorisation – learning how financial access had now compete for the global knowledge industry as never transformed their lives. It’s not as if banking is new before, since the world had been levelled by the internet Ito India, however. After all, these are the people who gave and market forces. the world the mathematical zero. India is at once dynamic and chaotic, and quite In The World is Flat, Pulitzer Prize-winning author inspirational. It shows what can be achieved if people are Thomas Friedman argues that increasingly affordable given half a chance by government. Until the early 1990s, telecommunications are erasing obstacles to international India’s economic development was stunted by its isolation competition, ‘flattening’ the world for those adaptable and from the world economy, and by the inefficient control of its skilled countries and entrepreneurs. government systems, the so-called Licence Raj. 01 In 1991, then prime minister PV Narasimha Rao, finance minister P Chidambaram and Manmohan Singh, who is now prime minister, initiated reforms based on the partial withdrawal of the government from interference in the economy. The rupee was partially floated, state subsidies were reduced and the economy was opened up to foreign investment attracted by the large pool of people, talent and low incomes. The overall results of India’s liberalisation have been spectacular. More than six per cent annual average real

P hotoshot GDP growth since 1991 has bumped about 100 million people from poverty into the middle classes. India has moved on light years in little more than a decade. Until the mid-1980s, the main choice of cars in India

FRISO GENTSCH/UPPA/ FRISO was between a Hindustan Ambassador, which was based on

32 | Optima | september 2010 greg m i ll s

02

01 Volkswagen’s has stiff competition from private airlines. “The best thing plant in Chakan – that the government did was to get out of business,” says inaugurated in 2009, creating 2,500 Prakesh Rao, the head of the Electronics Industry jobs – is expected Association of India. “And the best example of this is in to produce 110,000 units per year the IT sector.”

02 The author, Technological revolution Greg Mills (in blue top), discusses India’s IT industry grew from $100 million in revenue eatures financial progress in 1992 to more than $40 billion in 2007. Infosys’s x F e with Indian women farmers and a revenue climbed from $1.5 million in 1992 to more than ress /R representative from $4 billion in 2008, with stock options creating more than the state ministry P ipa

S 2,000 US-dollar millionaires. 03 03 Each year, India Bangalore is the epicentre of this flat world. Its software a 1950s Morris Oxford, or a Premier Padmini, based produces more than industry accounted for 98 per cent of Karnataka state’s one-and-a-half times on a Fiat 1100 from the same era. Now, there are over as many graduates $13 billion in exports in 2007. About 1,400 hi-tech firms, 30 marques on offer in glitzy showrooms, from small as China as well as almost every major multinational, operate here. Hyundai, Ford and Chevy hatchbacks to top-of-the-line Bangalore has enjoyed annual economic growth averaging BMWs, Porsches and Bentleys. more than 10 per cent, making it India’s fastest-growing Fifteen years ago, travel in India was courtesy of metropolis and home to more than 10,000 US-dollar government services. Where Air India once inefficiently millionaires. Bangalore’s hi-tech advantages stem from the dominated the skies, today the struggling national carrier long-term regional investment made by the government in

september 2010 | Optima | 33 optima report

space, aeronautics, machine tool and electronics firms, which Since 2000, these groups have been part of the spawned a legion of sub-contractors and necessary skills. government’s Self-Empowerment Rural Poverty (SERP) This has promoted growth in other sectors, notably programme. Better training, enforced savings and access to biotechnology – nearly half of India’s 265 biotech banking finance have transformed the women’s lives – companies have headquarters in the province. improving their economic conditions, giving them more power in decision-making in their families and ensuring Taking educational opportunities their children’s education and better health care. India’s ability to take up opportunities presented by In addition, in the past three years, SERP has been globalisation and domestic liberalisation were related to its integrated with the Community Managed Sustainable skills base. Despite high levels of illiteracy, its skills base is Agriculture scheme, an organic revolution focusing on the impressive. Each year, India produces 2.5 million graduates small-scale farmer using local rather than imported goods. and 350,000 engineers, the latter figure more than five times Before SERP, farmers would have to borrow from lenders as many as the US. Whatever the drawbacks of the Indian at exorbitant interest rates, sometimes 100 per cent. Now, educational system, over a billion people striving to make a they have scheduled repayment schemes at 12 per cent living and get ahead provides a certain competitive element. interest, on which there is zero default. The women For instance, 400,000 applicants sit the preliminary Indian themselves keep the books, and plan to lease more land civil service exams each year. Less than 10,000 are selected and diversify their sources of income. for the main exam comprising eight papers and, of these, The government can only do so much and, where it about one-quarter are called for interviews for 900 posts. cannot help, it is learning to leave it to the private sector, Competition has been heightened by the slow helping reduce corruption and improving transparency dismantling of the caste system. ‘Reservation’ of educational and competition. opportunities for so-called lower castes has pushed up the Of course, much remains to be done in India – from grade requirements for others. No student can now be improving sanitation and building more and safer roads, 01 Workers in a guaranteed a place in the sciences without a score of more to raising literacy and the quality of education, and biotechnology laboratory in than 90 per cent. stamping out corruption. Bangalore research But technology is just part of the story. In Konapur village, However, the results of the transition from its paltry the genetic cloning of plants to improve for example, 300 (of 366) families judged to be poor are part growth rate before its liberal reforms are impressive. India productivity of self-help groups instigated by the UN in the 1960s and is now the fourth-largest economy in the world in PPP terms. 02 Evening market numbering about 10 women each. Ten million women from Its reforms have encouraged entrepreneurship, the lifeblood traders use solar- 35,000 villages are organised in this way across the state. of every economy. And the ambition of its entrepreneurs powered lights, many bought with small The scheme has seen monthly income per family grow has put it in a better position to benefit from trade with the loans, in Ahmedabad, fivefold in a decade to $50. richer world outside. western India

01 02 A M IT DAVE/R ro b w ert /C euters a ll / cor is or b b is is

34 | Optima | september 2010 greg

mi lls 03 The Texmaco 04 Delhi Metro railway carriage Rail Corporation factory produces up employees work at to 5,000 wagons the construction of a annually, vital for flyover in New Delhi, servicing India’s March 2010 growing rail network DANISH IS M AI L /R euters /C or b is 03 04 Case study India’s rail network gives africa a lesson in infrastructure

Across the wide Hooghly River, a passengers and two million tonnes of This is not just a South African branch of the great Ganges, is the freight daily. Construction of the north-to- problem. In the 1970s, Zambia was Texmaco railway carriage factory east and west-to-east dedicated freight considered to have one of the best rail that has been building wagons since corridors started last year, totalling about and road transport networks. Yet within the mid-1950s. It now turns out 2,500 kilometres of new track in a project 20 years, the Zambian government between 4,000 and 5,000 wagons a worth an estimated $80 billion. estimated that 80 per cent of the road year – about a quarter of the national By contrast, Africa has neither the network had deteriorated through requirement. domestic engineering capacity nor funds vandalism and lack of investment. It is a vast concern. At the main to catch up in terms of infrastructure, India’s experience teaches Africa gate, there are hundreds of wheels, potentially stunting economic growth that if governments want to use mainly imported – owing to a and human development. the railways as a development and shortage in Indian manufacturing Between 1980 and 1998, Africa’s economic asset, they have to invest capacity – from China and Romania. spending on infrastructure nearly halved significant sums. But costs can be Author Inside is a foundry melting down to just over one per cent of GDP. reduced by public-private partnership Greg Mills scrap steel to mould into couplings, A study on African infrastructure, – for instance, the Wagon Investment tracks and other specialist bits, while carried out in 2009 and involving a Scheme allows Indian companies to across the plant are 6,500 square partnership of African institutions purchase rail trucks for use on Indian metres of factory where the wagons and the World Bank, estimated that Railways’ network – or by using existing are constructed. the continent needed to spend resources more effectively, partly by Not for nothing is this industrial $93 billion a year to address its increasing competition and fixing soft area around Howrah known as the infrastructure backlog. (customs, for example) rather than Dr Greg Mills heads the Sheffield of India after the once- At independence in the 1960s, hard infrastructure. Johannesburg-based powerhouse steel city in the north southern Africa had the best sub-Saharan Meeting Africa’s infrastructure Brenthurst Foundation, of England. Five wagon factories African rail and road network. South needs is therefore not primarily about which encourages innovative development congregate in an 11-kilometre radius. Africa’s rail network is the 10th largest money, as attractive as that idea thinking in formulating Such scale is necessary to service worldwide, representing about 80 per cent may be to those wanting to shift the strategies and policies India’s vast – and growing – rail of Africa’s total, yet just 13 per cent of all responsibility elsewhere. It is about for strengthening Africa’s economic performance. network of 64,000 kilometres. freight is transported by rail. South Africa’s putting in place the right systems of His latest book, Why Indian Railways’ 1.6 million workers transport costs amount to 53 per cent of planning and maintenance. It’s about Africa Is Poor – And What Africans Can Do About It, make it one of the world’s largest overall goods’ costs, well above the global making infrastructure a domestic was published by Penguin single employers. It carries 20 million average of 39 per cent. political priority. in August 2010.

september 2010 | Optima | 35 company profile

The quiet Australian Without much ado, Anglo American’s Australian coal business has made giant strides, from a disparate business in 2007 to one joined-up organisation built on innovation, optimisation and an eye for opportunities. Matthew Stevens speaks to the head of Metallurgical Coal, Seamus French, who, with his team, is transforming the business.

36 | Optima | september 2010 all photos american anglo

The quiet Australian

september 2010 | Optima | 37 company profile

nglo American is the quiet PREVIOUS PAGE Australian. The company is Dragline removing overburden in Australia’s fourth biggest coal the open pit at miner and its second biggest Capcoal’s Lake Lindsay operation producer of metallurgical coal, one of two mineral 01 Production commodities in which the supervisor Ken Geall oversees all great southern land boasts truly world-class resources, production activity infrastructureA and geographic advantage. But few at Callide mine Australians, outside of those who work for the local arm 02 Left to right: of the global miner, would likely recognise the name. Seamus French, 01 Not that this troubles in the least the boss of Anglo Queensland minister for natural resources, American’s Metallurgical Coal business, Seamus French, mines and energy and his team. They are too busy linking up its Australian and minister for trade Stephen Robertson, hard coal foundations. Under their Brisbane-based Cynthia Carroll and direction, a once-disparate collection of Australian the inventor of the fatigue-monitoring metallurgical coal assets is meeting the aggressive SmartCap Dr Daniel performance preconditions expected of this key pillar of Bongers in Moranbah, Anglo American’s mining world. September 2009 The team’s challenge, and its success rate, was 03 Callide mine acknowledged last September by Anglo American chief environmental officer Grant Staff examines executive Cynthia Carroll. In a speech to the Brisbane a monitor that records Mining Club, Carroll noted how the company’s Australian dust levels created as profile had been created by the acquisitions of geographically part of normal mining activities very distant Shell Australia coal projects, albeit in the abutting states of Queensland and New South Wales. After observing that the operations “frankly never became 02 joined up”, Carroll went on to say: “We had performance about $500 million of ‘benefit’ to the business’s cash flow in targets that we never delivered, with mines operating pretty the first two years. much independently. This business made only a marginal Asset optimisation covers the full spectrum of the profit in 2007, partly because of logistical issues, but also business’s activities, from resource definition to sales, but because of operating inefficiencies and being ineffective. the one common ingredient in this programme’s success, We have now turned this situation around substantially in French’s view, is “people, people and people”. under Seamus French’s leadership and his team.” Australians are some of the most competitive people on earth, says French. “They want to be winners and hold their UNLOCKING ASSET VALUE heads up high. The asset optimisation programme has been Their success has made the metallurgical coal commodity both a great motivator and a great means of recognition for business unit a key contributor to Anglo American’s asset our people. In a sense, it is acting as the glue that binds the optimisation programme. According to Carroll, the theory is organisation together.” all about “unlocking value of our existing assets through cost That is why, over the next two years, the business unit and productivity improvements by identifying and expects to generate further very significant savings through disseminating best-of-class business solutions”. Carroll’s a range of initiatives covering everything from blasting to target for asset optimisation, combined with efficiencies product blending. and synergies arising from a rationalised global supply chain, ‘Baby-deck blasting’ instituted by management at the is the delivery of $2 billion1 of ‘profit enhancement’ by 2011. Dawson thermal and metallurgical coal project at the Certainly, Metallurgical Coal has done its bit to ensure this southern tip of Queensland’s legendary coal belt in the target is achievable, having developed a five-year asset Bowen Basin is instructive of the root-and-branch nature optimisation plan that has paid quick dividends, generating of asset optimisation. In 2008, Dawson’s drill and blast

38 | Optima | september 2010 03 engineers identified that existing blasting methods were “In asset optimisation, we are delivering one of the many responsible for the majority of coal loss at the mine. programmes created over the past three years as part of our So, a smarter baby-deck blasting system was developed strategy to transform the business. to eliminate damage to the coal seam. It requires two shots “Phase one of the strategy started in 2008. It was about in quick succession in every blast hole to divert pressure creating a performance culture, about providing clarity upwards and eliminate damage (and value destruction) of direction, enforcing accountability and installing previously caused to the top of the coal seam. performance management. This set the foundation for And Dawson’s ‘silver rules’ set visual standards that everything we have subsequently achieved. specify what machine operators should be able to physically “In phase two, we established improvement processes see when they are removing overburden and how they bit by bit and got the business focused on safety management, should operate machinery when close to the top of the on improving business and production processes and coal seam to avoid damaging the coal. removing bottlenecks. “Then the global financial crisis came along and, well, it A STRATEGY OF TRANSFORMATION was interesting,” French says with understatement. “As a Not only do these innovations make a difference to the value management team, we asked, ‘does this change our plans?’ extracted at Dawson, but they are being shared. “We produce “The answer was, it didn’t. Rather, we had to speed up a single commodity and all our mines are relatively close to what we were already doing. We ended up improving each other. This means best practice can be spread across productivity by 24 per cent. From 2003, the Queensland our seven-strong collection of coal operations through coal industry in particular had seen continuous dramatic Queensland’s Bowen Basin and the Hunter Valley in New growth. And growth means that sometimes you lose South Wales,” French says. something in efficiency… you become a little fat, a bit bloated,

september 2010 | Optima | 39 company profile

01 02 you take on people too quickly; and costs increase unchecked 01 Metallurgical achieve that doubling of value, which also translates into because you are chasing production the whole time. So, oddly, Coal head Seamus nearly doubling production.” French presents the downturn was a welcome half-time, if you like. It gave us the quarterly Growth, though, will depend on more than locking in a chance to draw breath, refocus and trim the sails. We ended performance review the investment required for the four projects Metallurgical at Dawson mine, up maintaining production levels with a 20 per cent July 2010 Coal is currently investigating, which include two high- reduction in the workforce – and took out low-margin quality metallurgical coal opportunities in Queensland operations at the same time.” 02 Geology called Grosvenor and Moranbah South (both of which are co-ordinator Colin Ritchie, coal and close to the existing Moranbah North operation) and the DOUBLING IN A DECADE partings co-ordinator Dartbrook and Drayton South thermal, semi-soft and Bridget Perkins and Australia’s coal industry is a diverse and idiosyncratic beast mining engineer PCI prospects. The real key to growth is going to be and, to some degree, Metallurgical Coal’s task is defined by Shane Bellamy study securing the logistical capacity needed to shift coal to an a pre-strip plan that character. So, while its growth focus is set firm on increasingly diversified customer base. expanding the business’s premium metallurgical coal footprint, 03 Clay Stitt, mining The second part of that strategy is about customers, its legacy – and ongoing business – responsibilities include co-ordinator for Seamus continues. “We have a marketing strategy based surface operations, thermal and PCI (pulverised coal injection) operations. at the open cut on established economies and higher-growth economies In 2009, attributable production from the suite of Anglo operations at like China and India. Currently, Japan and South Korea Lake Lindsay American’s Australian coal operations totalled 26.7 million make up between 60 and 70 per cent of our demand profile, tonnes (Mt), of which metallurgical coal contributed 12.6 Mt but we expect China and India to be the destinations for and thermal coal 14.1 Mt. Anglo American has realistic about 90 per cent of our growth volume in the future. ambitions to double that output over the medium term. “Naturally, like everyone else, we keep an eye on possible “We are not a strictly metallurgical coal business,” French overseas opportunities for expansion. We are certainly says. “We produce a range of coals, because that is how we looking beyond Australia, looking at where else in the have grown. We have thermal going into the Queensland world we can secure growth platforms that will make power business. But we have a strategy that expresses our a meaningful difference to our business. growth ambitions in terms of value – and the high-value assets here are metallurgical coal. We want to double “Like everyone else, we keep an eye business value over the next 10 years, and we have worked out the arithmetic of what that will look like in terms of cost, on overseas opportunities. We are revenues and annual production. certainly looking beyond Australia “We have a resource base of about four billion tonnes, and to secure growth platforms.” about one billion of that is metallurgical coal. We have seamus french mapped out a project pipeline for the next decade. We can head of metallurgical coal

40 | Optima | september 2010 03

september 2010 | Optima | 41 company profile

So what are the major challenges to the business unit’s and giving people an incentive to reduce its generation was plans in Australia? French considers. logical. But there is no point in forcing an incentive on They include infrastructure, attracting the best people anyone if the industry doesn’t yet have the technology to and government taxation and climate change policies. reduce emissions – and the reality is that such technology “When we talk about doubling production,” French does not exist for the majority of coalmining emissions, continues, “it means doubling our logistics capacity, which are fugitive in nature. both rail and port. The challenge in Queensland is that it “Everyone who looks at the coal industry has to is a very crowded infrastructure space.” understand that pricing is global. Everyone gets the same price. For an Australian project, we get the same price as POLItical DEVELOPMENTS our competitors around the world. We can’t reflect our Recently, two touchstone issues have thrust Australian mining unique cost increases through pricing. The CPRS, as set into the political spotlight: the attempts to introduce a Carbon out initially, and the RSPT would have left us at a global Pollution Reduction Scheme (CPRS) and, more recently, a competitive disadvantage. Resources Super Profits Tax (RSPT). “We will continue to deal with these external Introduction of the CPRS was subsequently delayed challenges as they arise,” concludes French, “but the real by former prime minister Kevin Rudd to 2013. The RSPT challenge will always be within our business, in continually was renegotiated by his successor, Julia Gillard, who motivating ourselves to outperform the competition and replaced it with the more agreeable Minerals Resources seek new horizons. For us, being part of Anglo American Rent Tax (MRRT)2. Metallurgical Coal intends to play an means continuously improving our performance and active role in working through the detail of the MRRT with contributing to the objective of it becoming the leading government as well as in the formulation of policy to global mining company. And this challenge, I have every address climate change. confidence we can meet.” “The CPRS was intended to incentivise industry to

produce less carbon,” explains French. “We have no 1 All dollar figures in this feature denote US dollars. issue with that intent. We acknowledge that pricing carbon 2 Optima went to press before the 2010 federal election.

01

01 Automotive electrician apprentice Jessica Wust with colleague Frank Montanari in the Callide mine workshop. In the background, trucks are prepared for maintenance work

02 Moranbah North technician Andrew McLennan on site at the mine’s seamgas operation

42 | Optima | september 2010 02 Country profile Anglo American’s coal business in Australia

Origins: Anglo American acquired Shell 2 Capcoal operates two underground Petroleum Company’s Australian mines and two open-cut mines. 8 coal assets in 2000. The Dawson Together, they mine around 12 Mtpa project was completed in 2008, while of coal to produce in excess of 9 Mtpa a 70 per cent stake in Foxleigh coal of prime-quality hard coking coal, PCI Northern Territory 7 mine was acquired in the same year. and thermal coal. 2 5 6 The Lake Lindsay project, part of Western Queensland 1 Australia 3 the Capcoal complex, has reached 3 An open-cut mining operation, South the implementation phase ahead of Dawson spans almost 60 kilometres Australia achieving full production in 2012. and produces approximately 7.5 Mtpa New South Wales 4 of coal. Workforce: Victoria Anglo American’s Metallurgical Coal 4 Drayton is an open-cut coal mine. business in Australia employs more It produces around 5 Mtpa of thermal 9 than 3,000 people. coal for export and domestic markets. Tasmania

Core activities/products: 5 Foxleigh is an open-cut mine that Other interests: The vast majority of metallurgical currently produces 2.5 Mtpa of premium Samancor Manganese is a joint venture (i.e. hard coking coal) and pulverised quality PCI coal for the steelmaking between BHP Billiton (60%) and Anglo coal injection (PCI) coal is exported to industry. American (40%). It owns two operations: steelworks in China, Japan and South Korea, while thermal coal is destined 6 Jellinbah East is an open-cut 8 Located on Australia’s northern for power generation in both the mine producing low-volatile coastline, the Groote Eylandt Mining domestic and export markets. bituminous, mainly PCI coal for Company Pty Ltd (GEMCO) mines and the steelmaking industry. processes manganese ore. Production divisions: 1 The Callide mine provides 9 million 7 Moranbah North is an underground 9 The Tasmanian Electro Metallurgical tonnes per annum (Mtpa) of low coal mine with an output of about Company Pty Ltd (TEMCO), the only sulphur, sub-bituminous thermal coal 4.5 Mtpa of high-quality coking coal manganese ferro-alloy plant in Australia, from its open-cut mine. used in steelmaking. is located on the north coast of Tasmania.

september 2010 | Optima | 43 RESOURCE PROFILE

Nickel past Although nickel has been found in metallic objects dating back to 3500 BC, it was first identified by Swedish chemist Times of Baron Axel Fredrik Cronstedt in 1751. This silvery-white metal with a golden tinge came to prominence in the 19th century when it was used for plating and alloyed with copper and zinc for nickel change silver (German silver). Demand for nickel only really took off, however, following the development of stainless for nickel steel early in the 20th century. Nickel present As its Brazilian nickel site nears completion, Nickel is the Earth’s fifth most common element after iron, oxygen, silicon and Anglo American looks to expand in the metal’s magnesium. It occurs as two main deposits: sulphides that are found global market. Nicky McClure reports. underground and laterites that can be mined using open-pit methods. Primary nickel is produced and used in the form of ferronickel, nickel oxide and other chemicals, and as pure nickel metal. Nickel is a hard, ductile, ferromagnetic metal with high resistance to corrosion and oxidation, and can be used in a variety of applications. The Nickel Institute’s Dr Peter Cutler says one of the least-known uses for the metal is as a finely divided nickel-based catalyst. “These catalysts are key to some important reactions, including the hydrogenation of vegetable oils, the reforming of hydrocarbons and the production of fertilisers, pesticides and fungicides.” Dr Cutler also lists nickel’s better-known applications as electroplating, electroforming, electroless nickel and nickel alloys. Nickel electroplating is used to provide corrosion-resistant and decorative finishes, and nickel electroforming is widely used to produce items as diverse as moulds for pressing compact discs and security holograms and screens for carpet printing. 01

44 | Optima | september 2010 Nickel’s future Nickel is found in about 20 countries, with known reserves estimated to last around 100 years at present mining rates. Although its price is volatile, medium- and long-term demand for nickel continues to grow. Demand for stainless steel is driven by the ongoing development of the so-called BRIC nations (Brazil, Russia, India and China). 02 anglo american In Brazil, Anglo American wholly A major application of ‘electroless’ super-alloys that can withstand 01 Nickel (featured owns the ferronickel producer, in its ferronickel form) nickel today, says Dr Cutler, is computer extreme temperatures for industries is a key component Codemin, and in Venezuela it has a hard discs: “It forms an extremely such as aviation. in the production 91 per cent interest in the Loma de uniform, smooth, stable, non-magnetic Nickel has some other special of stainless and Níquel ferronickel operation. In heat-resisting steel substrate for the magnetic recording characteristics. Its low expansion addition, the company has a 100 per layer, as well as providing corrosion properties mean it is widely used 02 Anglo American’s cent interest in the Barro Alto nickel Barro Alto nickel protection for the underlying disc.” as lead-frames in packaging project in Brazil, project in Brazil. Nickel’s resistance to corrosion is one electronic chips and in shadow pictured July 2010, Anglo American now has a is on track to become of its most valuable properties and it is masks in television tubes, while its operational in the first management team dedicated to nickel, used in the production of stainless and soft magnetic properties are ideal quarter of 2011 which is focused on the successful heat-resisting steel. About 60 per cent of for electromagnetic shielding of execution of the Barro Alto project. all refined nickel produced is used by computers and communications At the end of June 2010, work on Barro the stainless steel sector. In a more equipment. Alto was 94 per cent complete and on recent development, the Chinese Dr Cutler also notes the important schedule. Once it becomes operational stainless steel industry, which has been part nickel plays in portable power in early 2011, the project is forecast to absorbing growing volumes of nickel pig provision. “Nickel-cadmium produce an average nickel output of iron (NPI), is looking to a potential rechargeable batteries have been in 36,000 tonnes per annum over a mine annual offtake of 100,000 tonnes of the use for several years. More recently, life of around 26 years. To put that into nickel in NPI form. we have seen higher performance, perspective, Anglo American’s total Around 25 per cent of nickel goes into rechargeable nickel metal-hydride production in 2009 was 39,400 tonnes other steel and non-ferrous alloys. The batteries, leading to improved (which comprised the Nickel business metal is used to make corrosion-resistant performance from cordless power unit’s 19,900 tonnes and the Platinum alloys for use in chemical plants and in tools and mobile electronic equipment.” business unit’s 19,500 tonnes). Beyond Barro Alto, the business unit Anglo American’s has the chance to develop the Jacaré ferronickel operations and Morro Sem Boné projects, which Operation Location sTart of average nickel would make Anglo American a growing production production (ktpa) player in the nickel market and one that Morro do Níquel Brazil 1962-1998 2.5 is well positioned to ensure that nickel Codemin Brazil 1982 10 continues to contribute to our lives in Loma de Níquel venezuela 2001 17 the years to come. Barro Alto Brazil 2012 36 For more information Jacaré Phase 1 Brazil 2015 40 more about nickel, info Morro Sem Boné Brazil 2015 32 visit: www.nickelinstitute.org

september 2010 | Optima | 45 optima report

46 | Optima | september 2010 Creation amid chaos Since Chile was hit in February by one of the largest earthquakes the world has ever seen, the country’s mining fraternity has given much-needed financial support. Rob Jones reports on how Anglo American’s relief and regeneration efforts go way beyond a cheque handover. STRINGER/CHILE/R e u ters /Co r b is

september 2010 | Optima | 47 optima report

ying on the so-called Pacific Ring of Fire – along which 90 per cent of the world’s earthquakes have occurred because of L an unusually high concentration of plates colliding and overlapping – Chile is no stranger to the earth’s most devastating seismic shifts. The South American country has suffered four of the 10 largest earthquakes ever recorded, among them the 90-second convulsion that PREVIOUS PAGE shook the region and beyond on 27 February 2010. Even though it was The earthquake and subsequent tsunami off the coast 100 kilometres from the magnitude- of the Maule region, 100 kilometres north-north-east of 8.8 earthquake’s Concepción, left thousands homeless, and disrupted epicentre, Concepción suffered major damage industry, with then president Michelle Bachelet declaring to its buildings a “state of catastrophe” and describing rural areas where “everything has tumbled to the ground”. 01 On the day he takes over as Chile’s As supermarkets, chemists and shops were looted, the president, Sebastián government and authorities were reported to be overwhelmed Piñera (in red) visits Constitución, one by the chaos. Even the death toll was hard to manage, with the of the zones most figure registered officially as 800 at one point, before it was 02 affected by the eventually recalculated as just over half that. earthquake Around 300,000 houses, hospitals, schools and roads destroyed in pivotal industrial areas. In the immediate 02 One of many need to be rebuilt – a process that could take three or four aftermath, public transport services shut down, roads were boats tossed on to the street in the port years. The country is also counting the cost of emergency diverted and Santiago Airport closed because of damage to town of Talcahuano aid and lost production, with bridges and factories the terminal and control tower. Talcahuano port, critical

01 for imports and exports for many businesses in the eighth region, out of which a large number of coastal vessels operate and where the army has a base, was significantly impacted, with waves tossing more than 20 boats ashore into local streets. The final recovery tally could be as much as $30 billion, which will come largely from government budget savings, debts, tax rises and withdrawals from the country’s

“It was terrible. It seemed like a country in the middle of a war. A lot of buildings were destroyed, people were living in the street and there was no light or water.” Jorge Poblete, former Anglo American foundation manager for Chile VICENTE TAPIA/dpa/Corbis

48 | Optima | september 2010 in numbers 6.6% Decline in economic activity in Chile in March 2010, the month following the earthquake. It was the largest monthly contraction since the country’s central bank began reporting this figure in 1996

AP Photo/Natacha Pisarenko 8.8 substantial sovereign wealth funds built up during the 03 The community of The Richter scale 2002-2008 mining boom. coastal town Dichato, 40 kilometres from reading of the In fact, it’s Chile’s shrewd financial and regulatory Concepción, was hit 2010 earthquake, strategies that mean it is better able to respond to such a by a tsunami caused the world’s third by the earthquake tragedy than, say, Haiti, which just a month before suffered biggest (the largest its own earthquake that, while not as strong as Chile’s, killed 04 Rescue ever recorded workers with heavy was also in Chile, around 230,000 people and left a further million homeless. equipment enter an in Valdivia – Superior infrastructure and construction standards meant apartment building registering 9.5 in Concepción Chile’s newer buildings survived, with mostly older buildings in 1960) destroyed by the 03 KPA/Zuma/Rex Features collapsing. Cautious spending and a robust, well-managed earthquake economy – Chile’s government debt against economic output ratio is among the lowest in Latin America – mean the country requires minimal overseas aid. As the world’s biggest producer of copper, Chile is able to use income from mineral 486 exports, as well as previous copper earnings saved in Official number overseas investments, to finance the recovery. of fatalities from the 2010 Chilean earthquake. The Direct assistance largest share – Bar a brief cut in power supply to sites, including Anglo 87 deaths – was American’s Los Bronces and El Soldado mines, there was in Constitución little impact on the copper mining industry, which mainly 04 PILAR OLIVARES/Reuters/Corbis

september 2010 | Optima | 49 optima report

operates in the northern half of the country, where there 01 Six new schools were only relatively small aftershocks, and mines were have been built using the same model as quick to resume operations. Anglo American’s on- Chile holds one-third of the world’s copper supplies and site accommodation for employees and the copper price being maintained above the $3/lb mark contractors means the sector is in a good position to help the country get back on its feet. More directly, the major mining 02 Certain of the new schools are so players are funding relief efforts. Anglo American pledged large that they cater a donation of $10 million – but has chosen to invest it in a for twice as many pupils as buildings more practical way than merely handing over a cheque. that were destroyed “We wanted to assist directly,” explains Jorge Poblete, who at the time was manager in Chile of the Anglo 03 Despite a lack of materials and a American Foundation, a global endeavour to help poor electricity supply, charitable causes. “The disaster was on such a big scale the new structures were completed on that we wanted to ensure our funding was distributed in schedule angl the best way. We worked with the government to o a m understand what was needed in terms of structures and erican money. We are not the only company working in these 01 areas and we need to avoid allocating money in the same places.” The government had to put the army on patrol because As well as liaising closely with local authorities, Anglo there were a lot of social problems. American employees travelled to the affected zones within “When we arrived, we wondered how we could turn days of the quake to see for themselves the full extent of around something so devastating. We didn’t know the damage and decide how their plans would integrate where to start and even the local authorities were in a with other recovery activity. state of shock. It was difficult to know how many people “I hadn’t seen anything like it before,” said Jorge, who were affected.” visited the area almost every week for some time after the disaster. “It was terrible. It seemed like a country in the A model education system middle of a war. A lot of buildings were destroyed, people Immediately, Anglo American was involved in the clearance were living in the street and there were no lights or water. of debris, despatching about 30 trucks and other items of 02

anglo american

50 | Optima | september 2010 angl

“Most people didn't think it was o a m

possible to build schools so quickly. erican When we said we would rebuild one in four weeks, they said we were crazy – but they've been amazed.” Jorge Poblete

machinery to help with earth-moving works in Constitución, Curanipe, Concepción, Talcahuano and Quirihue. Further, the team planned the core of its support programme in collaboration with the government and local authority representatives, notably education minister Joaquin Lavin. Initial funding was essentially delivered through company employees who volunteered practical support to build five schools in the affected eighth region and one in the seventh, replacing institutions that were destroyed by the earthquake. The construction 03 method followed the same fast-assembly model Anglo American uses to build on-site accommodation inside view for its employees and contractors. Martin elton The company’s six constructions have come together ›› Anglo American Foundation business manager for Chile at impressive speed, says Jorge. “Most people didn’t think it was possible to build schools so quickly. After the earthquake, in order to achieve the They’re not accustomed to our model system. When the whole nation best outcome. we said we would rebuild a school in four weeks, was shocked. There were After coming back, the people said we were crazy, but they’ve been amazed terrible images in every question was how to maintain by the solution. single newspaper and on that support. The situation was “We’ve worked very hard to reach these goals. every TV channel. I offered so complex. Nevertheless, we And it’s not just the schools themselves. We’ve put in my help if any aid was going had one green light. Education to be organised from Anglo is one of the main issues we gardens, furniture, books and other study materials.” American Chile. embrace as a company. After we pledged The first decision was to bring to reconstruct the schools destroyed, Educational and social impact machinery to one of the towns that the government set the challenge and The rebuilt schools have already had an enormous and we knew was in a critical situation, we had only four weeks to build the first instant impact on thousands of schoolchildren. Constitución. We didn’t have much four schools. It was a hard, complicated information about other towns and project. Every single day, there was “You must imagine that the teachers and students cities. As a team, we decided to travel a different problem. For example, lost everything,” Jorge stresses. “One moment, they through the whole affected region to get sometimes we didn’t have materials have schools. The next: none. A lot of students left the a clear overview of the damage. because of the high demand for them or zone, but have returned now that new schools have My first reaction was huge shock. the electricity system had failures. But, in been built and there are classes all day.” Many buildings were completely the end, we did it. People were fascinated In some zones, two destroyed schools that catered destroyed, people were desperate and because these were the first buildings there was a strong putrefaction smell constructed after the disaster and they for 800 children each have been replaced with one everywhere. The biggest problems were became symbols of recovery. more spacious institution. For instance, in Yungay in water distribution and the obstructed I learnt a lot from this experience, but the hard-hit eighth region, the newest of all the schools streets and roads. My role was to match mainly that, if everybody works with the built and kitted out by Anglo American caters for the machinery we distributed to the same goal, the work itself and the results 2,000 pupils, from pre-kindergarten to the final grade needs of the particular towns and cities are much better.” of secondary education. At 2,700 square metres and anglo american

september 2010 | Optima | 51 optima report

“It was a complicated project. Every “The emergency had just happened when we first day there was a different problem. visited. Now, the government needs long-term solutions,” reflects Jorge. “One of the biggest problems is housing. But we did it and these buildings A lot of people are still living in emergency accommodation became symbols of recovery.” and we have been analysing whether to put money into Martin Elton, anglo american foundation that or more new schools.” business manager for chile The number of people identified as affected by the earthquake has gradually increased from initial estimations with 34 classrooms, workshops, a computer room, library, and Jorge believes that, working in partnership with dining area and staffroom, not to mention a playground, government, Anglo American could rehouse a town of it is the largest modular school built in Chile since around 300 families in structures built with the same the earthquake. construction efficiencies as the new schools. What the team did not anticipate was the positive impact The way the country has pulled together has struck the schools would have upon the wider community, says a chord with everyone on the project and, for Jorge Jorge. “Where there is a school, there is a kitchen, which, in particularly, it has been emotional. He was preparing to these rural areas, makes a school a centre for the whole return to work after a long absence when the earthquake community, not just students. Now, once again, people have a struck. “I was very ill in December and almost died. place to stay safe, to have lunch and breakfast.” I returned to my office on 4 March, just a few days after the The impact has not gone unnoticed in the upper echelons earthquake struck. For me, it was a motivating experience 01 Residents from the local community of government. At the official unveiling of the new Enrique to be able to help out others.” clean desks in one Donn Müller school, Joaquin Lavin and Anglo American But why do organisations such as Anglo American feel of the new schools Chile CEO Miguel Angel Duran were joined by Chilean spurred to get involved? “Something like this is hard for the constructed by the company in president Sebastián Piñera, who took office just 12 days after country,” ponders Jorge. “We have a commitment to the Constitución the earthquake struck, as well as the mayor of Constitución, whole of Chile, not just the zones we’re in. Anglo American 02 Pupils return to Hugo Tilleria, and local representatives. has been well known here for the past five years and mining lessons in one of the is the main industry. If the biggest mining companies don’t new buildings constructed by Anglo Long-term solutions do something to help, people will lose faith in us. American employees, Looking ahead, Anglo American will work with the “Within Anglo American, people acknowledge that the Enrique Donn Müller School in community to plan carefully where to invest the next phase we’re doing something important and they feel proud Constitución of money, not to mention company employees’ time and skills. when they see how we’ve responded.”

01 02

anglo american anglo american

52 | Optima | september 2010 03

04 ph o t o s b arr y jo y nes

03 The earthquake devastated the Sichuan province of China, May 2008

04 Clean-up activity after the earthquake

05 Geologist Barry Jones from the Platinum business unit was part of the team supporting relief efforts

06 The completion of the Sichuan province’s Qionglai Shuikou school, donated by Anglo American as part of its aid efforts after the earthquake, was celebrated on International Children’s Day, June 2010 05 06 CASE STudy china earthquake

Anglo American employees provided panic and stampede to get out. Project The team worked with Chengdu’s invaluable help when the Sichuan geologist Barry Jones from the Platinum expatriate community to gather and province in China was hit by a business unit recalls: “I grabbed a distribute food and clothes to areas devastating earthquake on 12 May colleague and we stood against a wall where they were most needed. “Words 2008. On top of the company’s in the airport. The tremors were getting can’t explain the devastation,” says own $10 million donation towards more intense and pieces of the roof Barry. “We realised how futile our reconstruction, Anglo American were starting to fall off, other people had attempt was to distribute what little Author employees’ own resourcefulness and joined us against the wall and I began to we had.” rob jones generosity have helped the area start feel claustrophobic, and fear set in.” A more formal long-term plan was to recover from one of China’s most Barry and two colleagues escaped made to assist in ways the team cannot destructive earthquakes in more than unhurt and made their way home to have possibly imagined, from three decades. the city centre of Chengdu, where co-ordinating five-tonne trucks to deliver Members of Anglo American’s they attempted to make contact with water each day and arranging transport China exploration team were Platinum’s head office in South Africa, for volunteer teachers to hold lessons at Chengdu Airport en route to Anglo American’s Beijing representative in makeshift classrooms, to retrieving Rob Jones is the editorial Xinjiang. At approximately 14:30, an office and Barry’s wife. They heard corpses from the rubble. “Those images adviser on Optima. He earthquake of magnitude 7.9 struck that their colleagues and families were are imprinted on my mind,” says Barry. is an award-winning 90 kilometres west of Chengdu – safe – “The relief of seeing my wife was “It will take years to rebuild the journalist with more than 10 years’ experience killing 70,000 people and leaving a huge stress off my shoulders,” says structures and villages,” reflects Barry. editing and reporting almost four million homeless. Barry – but Anglo American’s partners “Far longer than reported and far for corporate titles on subjects including energy, The exploration team in the were among millions who’d lost team more money will be needed than that resources, construction terminal saw people injured in the and family members and property. provided by donations alone.” and engineering.

september 2010 | Optima | 53 Archive shot

Anglo American: established 1917 Anglo American’s coal interests can be traced back to 1897, when Sammy Marks and Isaac Lewis decided to publicly list The Vereeniging Estates Limited (which eventually came under Anglo American’s control in the 1940s) to facilitate the development of South Africa’s coal mining industry and its broader industrial base. Featured is Cornelia, one of the new company’s two collieries, in the early 1900s. anglo american

54 | Optima | september 2010 Printed by The Colourhouse. The paper is produced using a 100% chlorine-free (ECF) bleaching process and contains material sourced from responsibly managed and sustainable forests, together with recycled fibre, certified in accordance with the Forest Stewardship Council. O ptima september 2010 Optima

Volume 56 Number On e september 2010 an eye on

Cover: Tyres destined for haul trucks and the future earthmoving equipment are stockpiled a look inside anglo american’s at the storage facility at Anglo American’s platinum business Mogalakwena platinum mine in South Africa. See article on page 18. photo by planetkb for anglo american (platinum) Interview: CYNTHIA CARROLL BRICs: the growing might of brazil, russia, india and china ISBN 00304050 Australia: quiet growth in metallurgical coal disaster support: practical relief efforts in chile