Financial Mail Page 1 -05/09/17 10:06:02 AM Financial Mail Page 2 -05/09/17 10:06:16 AM Financial Mail Page 3 -05/09/17 10:10:55 AM

anglo corporate report american

OVERVIEW A pioneer of change in the business world

Post-democracy in SA, the control. Its influence stretches company embarked on huge beyond mining to touch nearly contents change to refocus on its core every part of South Africans’ l iv e s , expertise of mining from their shopping at OK super- markets, Edgars or CNA, to the fer- 3 Pioneer of change tilisers used by farmers or their 4-6 In it for the long haul ý Imagine, for a moment, down- pension investments, with Anglo 7 A journey through 100 town Johannesburg in June 1986. American companies’ shares yea rs The Carlton Centre and the accounting for half the dealings on 8 Leading the fight against neighbouring Carlton Hotel are the Johannesburg Stock Exchange. H I V/A i d s abuzz with well-heeled shoppers Writing in South Africa Inc. The 10 Boosting small businesses and visitors, business conversa- Oppenheimer Empire, David Pallis- 11 Allure of the new tions are dominated by talk of ter, Sarah Stewart and Ian Lepper millennials heightened sanctions against the try to explain the scale of Anglo 12 A new approach to mining apartheid government. American by using employees as a 14 Forever and beyond Around the country, the United b e nc h m a r k . Democratic Front campaigns for According to its 1986 estimates: “p e o p le’s power”. On June 12, gov- ● Anglo American employed about ernment declares another national 305,000 people in the gold mines; state of emergency. ● 25,000 in diamond mines; A few blocks down the road Sir Ernest Oppenheimer, founder of Anglo ● 100,000 in other mines — from the Anglo American-owned A m e r i ca n notably platinum and coal; Carlton Centre sits 44 Main Street, ● 150,000 in manufacturing; the head office of Anglo American, ● 140,000 in the food, beverage which was founded in 1917 by Restricted by sanctions and and retail industry; and Ernest Oppenheimer, to invest in exchange controls, Anglo American ● 50,000 in other businesses. the country’s gold minerals. has used its financial muscle over Fast-forward to 2017, the the years to expand its operations streamlined Anglo American, What it means: inside SA, and by 1986, it is by far though employing 87,000 people A century of innovation and the biggest and most influential today, is still a leader in SA’s busi- pioneering trends that continue company in the country with more ness sector. to sustain and grow the industry than 600 companies under its Years of change followed the fall

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corporate report anglo american

of apartheid to refocus the business 1917 to diamond trading during the on its core expertise of mining. Great Depression in the 1930s, we The Oppenheimers’ mo r e have often made tough choices and enlightened world view was persevered and adapted in the face demonstrated by Anglo American’s of enormous change around us.” strategies in the 1980s and early Anglo American may no longer 1990s around the empowerment of be the “dynamo of the SA econ- black entrepreneurs, granting o my ”, as it was described in So u t h workplace recognition to the Africa Inc. The Oppenheimer National Union of Mineworkers, Em p i r e , but many of the companies and a progressive workplace pol- historically in its stable remain icy programme to test and treat well-known names today, includ- HIV/Aids, long before legislation ing SA Breweries (now owned by required action on these fronts. AB InBev), Tongaat Hulett, Mondi Anglo American chief executive and Gold Fields. Mark Cutifani often speaks about Anglo American’s restructuring the need for mining companies to and empowerment efforts have keep striving for improvement and also led to the birth of a number of progress in a fast-changing world. new companies on the JSE, includ- “The common characteristic ing Exxaro Resources, African that resilient companies have is a Rainbow Minerals and Royal Bafo- relentless focus on innovation, keng Platinum. matched with a firm commitment Today, the Oppenheimers own Continuing the legacy: Harry Oppenheimer in his study to sustainability while investing less than 0.5% of Anglo American, with the future in mind, and there hasn’t been a family rep- even during tough resentative on the board since TRANSFORMATION t i me s ,” he told dele- Nicky Oppenheimer, Ernest’s gates at the Mining grandson, stepped down in 2011. Indaba in Cape Yet the philosophy for Anglo Town earlier this American, as established by In it for the year. “From estab- Ernest Oppenheimer in 1954, lishing the company in remains the same today. “Th e aims of this group are — long haul and will remain — to Anglo make profits for American chief our shareholders, A century later, a streamlined Anglo American believes SA still executive Mark but to do so in offers much opportunity for further growth and investment Cu t i fa n i such a way as to make a real and lasting contribu- ý One wonders what went strikes of 1920 and 1922 — b et t e r tion to the com- through Ernest Oppenheimer’s than some others, he wrote. One of munities in which mind as he went to the UK and US the struggling mining companies we operate,” s ay s during World War 1 to raise capital was De Beers, and with the sup- Cutifani x for a new mining investment com- port of foreign backers, Anglo pany in SA, an exploration hotspot American was able to acquire at the time following the discovery effective control of the diamond of diamonds and gold in the latter miner at the start of the Depression half of the 1800s. in 1929. A diamond trader by profession, The acquisition of De Beers was Oppenheimer, the scion of a rel- one of the early examples of atively wealthy German merchant Op p e n he i me r ’s genius when it family, already owned some gold came to spotting — and success- and coal properties, but — mu c h fully exploiting — opportunities, in like SA’s mining companies today – good times and bad. Using the needed offshore capital to develop financial muscle afforded to it by these resources. its mining operations, Anglo Amer- From the start, Anglo American ican invested in SA’s booming was a profitable venture, Duncan manufacturing sector in the 1930s; Innes wrote in his 1984 book the new gold fields on the West An g l o . Its rich mines allowed it to Rand and in the then Orange Free Where it all began: 44 Main Street, original head office of Anglo American ride out problems — including the State in the 1950s; and the rapidly

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growing industrial sector during number of joint ventures, such as the 1960s. Modikwa Platinum, a 50/50 joint At its roots, however, Anglo venture with ARM. Anglo Ameri- American remained a mining firm, can also concluded a number of and its offshore expansions, which empowerment transactions related started in the 1960s, focused large- to companies outside the mining ly on the mining sector. sector which have since been By the 1980s, Anglo American unbundled from the group, includ- was by far the biggest company in ing Tongaat Hulett, Mondi and the country, accounting for an esti- Hu l a m i n . mated 60% of the value of the JSE. As part of its latest restructur- Again, the company — by then led ing, when it streamlined its port- by Ernest’s son Harry Oppen- folio to focus on world-class, low- heimer — predicted the coming cost assets, a new series of winds of change. It became a pio- empowerment transactions are neer on many fronts, ranging from under way. The group is selling its its policies around HIV/Aids and Eskom-tied coal mines to empow- workplace recognition for trade erment group Seriti Resources, and unions to leading the way on its 85% stake in its Union platinum Support system: Anglo American also had a stake in Exxaro Resources as part of its BEE empowerment transactions and mine to black-controlled Siyanda. d ea l s supporting black entrepreneurs. In addition, Anglo American has concluded BEE transactions to the BEE pioneer value of more than R67bn over the ond mining charter, Anglo Amer- external help.” At the time, there were no BEE years, with subsequent dividends ican exceeded the target for black In order to attract investors, the regulations in place, and Anglo of more than R40bn accruing to ownership, after black sharehold- political rhetoric in the country American pioneered a number of the BEE shareholders. Ca p it a l ers acquired more than 26% of needs to be addressed. “I think the different types of transactions and growth for the BEE shareholders is Anglo American’s businesses in SA. political rhetoric is loud and very joint ventures. “We looked for estimated to be in the tens of bil- ne g at iv e . We need to think about opportunities that would be able to lions of rand. Investment climate the message we want to send to grow scale, step away and do As one of the first companies to The mining industry is often the world, and what we want to something on their own, like Royal offer shares to communities and accused of not doing enough on achieve. SA is in danger of giving Bafokeng Platinum, like Exxaro, employees as part of an employee transformation. However, without empowerment a bad name, saying like African Rainbow Minerals share ownership programme a growing industry, further trans- it is bad for investment. We can’t (A R M ) ,” says Norman Mbazima, a (ESOP), Anglo American sub- formation efforts will be hampered. allow that, given where we started. long-time Anglo American execu- sidiaries have since paid more than For the industry to grow, much So we have to think about how to t iv e . R860m in dividends to employees, work needs to be done around make empowerment compatible “There wasn’t a single regula- and more than R3.5bn in dividends creating an attractive investment with a good investment climate.” tion that said ‘this is the way you to community trusts and commu- c l i m at e . SA mining stocks were sent should do transformation’. I nity shareholders. At the end of A lack of capital remains a plummeting earlier this year fol- remember the thinking was that 2014, the closing date for the sec- major constraint, particularly in an lowing the publication of the third we want to do this, and we want to environment where commodity mining charter, which set do it well, and we want to do it prices are subdued. “In order to increased targets for black owner- sustainably. We wanted to build enable us to be more inclusive, we ship and introduced a 1% levy on something that we could show to need to crack the problem of cap- revenue, payable to black share- our grandchildren one day.” ital. That’s really the long and the holders, among other issues, and Anglo American’s BEE efforts short of it,” says Mbazima, who was published with minimal con- have certainly paid off. In addition serves as deputy chairman of sultation with stakeholders. to the companies above — all now Anglo American SA and chairman Uncertainty also remains over listed majors in their own right — of the Anglo American Chairman’s the “once empowered, always the company’s deals also helped Fund. The fund was established e mp o w e r e d ” principle and the create empowerment compa- in the 1970s to focus on char- implied imposition of additional nies that have since been itable giving, and is particularly conditions for retaining existing unbundled to shareholders, or active in supporting primary licences. Investors were left jittery taken over by other groups, education initiatives in SA’s after the minister of mineral notably Mvelaphanda poor, rural areas. resources unexpectedly imposed Resources and Shanduka. It “This economy cannot (and then withdrew) a moratorium continues to participate in a produce the amount of on the transfer and sale of mineral capital that we need to rights following a legal challenge of

Norman Mbazima: Industry build the next gener- the third mining charter, led by the needs commitment from ation of mines; we’re Chamber of Mines. government for growth going to need some “If you look at the reviewed

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corporate report anglo american

posals. Transformation from an ownership point of view means taking some of our equity in mines and selling it to somebody,” he says. “There is no other way of doing it, you have to take equity and sell it, or sell the mine, or do a Anglo joint venture. That means becom- A m e r i ca n ing smaller in terms of physical C h a i r m a n’s footprint. That’s what we’ve done, Fund project manager and that’s where we still are today. Zorina Dharsey The transformation imperative with Grade 6 hasn’t come to an end.” maths & That doesn’t mean, however, science pupils from Westbank that Anglo American isn’t interest- Primary School ed in building new mines in SA in in Delft, future. De Beers recently lamented Western Cape the difficulty in getting exploration permits in the country, which it believes remains one of the most charter, and you were somebody need a charter that is sensible and shareholders bought shares from promising geographies for new who had money but who wasn’t a allows mining to take place. In the South Africans. diamond discoveries. historically disadvantaged individu- meantime, we’re just sending “It was never going to be sus- “We ’ve been operating here for al, what would you do? I can’t find pieces of paper around, and it is tainable that we’d be owning more 100 years. We know the country, anything in the reviewed charter d a m a g i ng .” than 60% of the JSE; that anything we know what’s in the ground. We that will enable or encourage a that moves in SA is owned by know that at some point this min- person like that to start any mine A major contributor to SA Anglo American. So we had to get ing industry will start to grow in SA,” says Mbazima. As one of the big conglomerates back to being a focused mining again, and we want to grow with it, “We must change that. I’m tired that moved its primary listing to group, and in order to do that, we right here in SA,” Mbazima says. of hearing that SA has huge min- London in the late 1990s, Anglo needed capital,” Mbazima says. “But for that to happen, we need eral riches. It’s absolutely useless American has also been accused of Today, about 25% of Anglo to get our investment climate right; to everybody if it’s sitting in the forsaking the country after the Ame r ic a n ’s operating assets are in we need a regulatory regime that ground. We must find a way of get- dawn of democracy. the country. As part of its trans- encourages rands, dollars, pounds ting it out of the ground. The man- Mbazima says the move off- formation imperative, the group and every other currency to flow ner in which you do this needs to shore gave Anglo American access had to sell off some assets and into this industry. When that hap- be good for empowerment and the to cheaper capital, and led to a net i nv e s t me nt s . pens, we’ll be right here, ready to co u nt r y .” inflow of R54bn into SA as foreign “We ’ve had to do a lot of dis- invest more capital.” x The proposed targets in the mining charter and the uncertainty that it created around the legal framework of mining rights would require “s t r at o s p he r ic ” returns on projects before investors would commit capital, Mbazima says. This includes the 30% black ownership target for new rights, which effec- tively needs to be regarded as “f r e e” as any outstanding debts related to the repayment of the stake must be forgiven after 10 years; a 1% revenue levy to go directly to black shareholders; and no certainty that the 30% owner- ship target won’t be increased again in future. “I can assure you 100% that under these conditions, there will be no mine. That cannot be right for the black guy, it cannot be right for the white guy, and it cannot be right for the country,” he says. “We

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TIMELINE: A journey through 100 years 1917 - 2017 over 2,000 SMEs. These SMEs treatment programme to include have had an overall survival rate e m p l oye e s’ family members. of more than 70%, far higher than any comparable programme in SA. 1917 1954 1917 | WE OPEN OUR DOORS contribution to the communities

in which we operate.” Sir Ernest 2003 Entrepreneur Ernest Oppen- Oppenheimer’s philosophy heimer establishes Anglo Amer- 2003 | A POSITION IN IRON remains embedded in our DNA 1994 ican. The company was built to this day. ORE and grown on the principle of 1994 | HISTORY IN THE We acquire a stake in Kumba creating lasting, sustainable val- DEALMAKING Resources, building our iron ore ue for all stakeholders. In 1994, we split Johannesburg capability. In 2006, the company Consolidated Investments to sell is restructured to become Johnnic and JCI to the National Kumba Iron Ore, SA’s iron ore Empowerment Consortium and champion, in which Anglo

1974 the African Mining Group. At the American holds a majority share. time, it was the biggest black 1974 | THE FUND FOR THE 1926 empowerment deal in SA’s P EO P L E corporate history. 1926 | OUR DIAMOND Through its investments in STORY BEGINS education, health-care and job Anglo American becomes the creation, the Anglo American

largest single shareholder in De C h a i r m a n’s Fund has 2008 Beers Consolidated Mines, a contributed positively to the prosperous association that was development of many SA 2008 | PARTNERS IN SA F E T Y cemented in 1929 when co m m u n i t i e s . 1999 Oppenheimer became chairman A partnership between Anglo of De Beers. 1999 | THE GLOBAL ANGLO American, labour organisations, A M E R I CA N and the department of mineral We combine Anglo American resources forms the Tripartite SA and Minorco to form Anglo Health & Safety Initiative. American Plc. With its primary Together we are finding

1985 listing in London, we also enter solutions to address the health the FTSE 100 index, marking and safety challenges facing the 1985 | ADVANCING 1938 the start of a significant global mining industry. WO R K E R S’ R I G H TS chapter of our business. 1938 | THE FIRMEST We become the first major SA FO U N DAT I O N S company to formally grant black The foundations of the trade unions recognition. co m p a ny ’s SA headquarters at 44 Main Street in Johannesburg

are laid. The “Jewel of the City” 2017

still stands as a landmark of our 2002 partnership with the city of 2017 | CREATING A MORE Jo h a n n e s b u rg . 2002 | PEOPLE ARE THE RESILIENT BUSINESS B U S I N E SS 1989 We are creating the new Anglo 1954 | A VISION FOR THE In partnership with the American, centred on our FUTURE 1989 | ZIMELE SUPPORTS department of health, Anglo leading positions in De Beers, “The aims of this group are — ENTREPRENEURS TO GROW American becomes the first PGMs and copper, with the and will remain — to make Over the past 28 years, Zimele major employer in SA to provide benefit of high-quality assets profits for our shareholders, but has created in excess of 50,000 free antiretroviral medicine to across the bulk commodities of to do so in such a way as to direct jobs and funding of more our HIV-affected employees. We iron ore and coal as well as make a real and lasting than US$100m (R1.8bn) to well have since expanded this free nickel. x

Thursday September 7 2017 7 Financial Mail Page 8 -05/09/17 10:12:10 AM

corporate report anglo american

HEALTH & WELLNESS Leading the fight against HIV/Aids

The company started the first HIV study in SA’s mining industry in 1986, when four of its 18,450 mineworkers tested positive

Destigmatised: Anglo American was the first private company in SA to adopt a human ý Companies, govern- rights-based policy around HIV/Aids, promoting voluntary testing and free treatment ment and other stake- holders should ramp up communication efforts to The results speak for them- age where employees are also increase prevention and selves. The HIV incidence rate screened for various other dis- combat new HIV infec- across Anglo American in SA has eases, such as TB, diabetes, hyper- t io n s . halved since 2006, and the inci- tension and high cholesterol. “Targeting vulnerable dence of tuberculosis, a common “These other conditions are groups such as young infection in people with HIV, has becoming a serious public health women is also important,” declined by 70%. In 2016, the group i s s u e ,” he says. says Dr Charles Mbekeni, formally committed to the United While Anglo American is health lead for Anglo UNAIDS executive director Michel Sidibé and Anglo Nat io n s ’ 90/90/90 vision: by 2020, spending a “s u b s t a nt i a l ” amount on American SA. American chief executive Mark Cutifani. The two 90% of all people should know its HIV/Aids and other wellness During 2016, 88% of organisations announced a public–private sector their HIV status; 90% of those who programmes, the business ratio- partnership to promote HIV testing worldwide employees in high HIV- are positive should be on anti- nale behind it is clear. burden countries partici - retroviral treatment; and 90% of Various academic studies have pated in voluntary testing those on treatment should have found that workplace provisioning requirement of pre-employment and screening, up from 68% in undetectable viral loads and as such of anti-retroviral treatments can be medical examinations. 2015. be unable to infect others anymore. cost-saving for companies in high Anglo American’s policy The emphasis on testing has “In SA, we continue to partner HIV-prevalence settings, as it ensured no pre-employment contributed to the detection of with government to tackle HIV/Aids reduces health-care costs, absen- HIV/Aids screening. unknown cases, and the success of on an industry-wide scale. teeism and staff turnover. In 2002, the group started treatment programmes has dimin- One way to continue efforts to “Company-sponsored HIV offering free treatment to employ- ished the number of deaths. destigmatise the disease is by using counselling and voluntary testing ees, becoming the largest treat- “To some extent the messaging “c h a mp io n s ” — many of these are with ensuing treatment should be ment programme in the world ini- around HIV nationally and globally people living with the disease at dif- implemented universally at work- tiated by a private company at the has reduced,” Mbekeni says. ferent levels of the company — to places in countries with high HIV t i me . “Part of the reason is that being successfully drive awareness cam- p r ev a le nce ,” according to a study It was expanded in 2008 to also infected with HIV is no longer a paigns and advocate the benefits of published in the academic journal cover employees’ dep e nd a nt s . death sentence, it is now as man- testing, Mbekeni says. PLOS Medicine in 2015. Today, most employees are on ageable as a chronic disease. An Anglo American offers HIV/Aids “The cost-benefit analysis is a medical aid, and HIV treatment is element of complacency has set testing as part of a wellness pack- no - br a i ne r .” x now a prescribed medical benefit. i n .” Initially, the uptake of voluntary With a track record beginning ANGLO AMERICAN counselling and testing was low, in 1986 of supporting HIV/Aids KEY HIV/AIDS STATISTICS (2016) (GLOBALLY) 2016 2015 with fewer than 20% of employees research, progressive workplace participating. Prevalence of the dis- Employees in high HIV-burden countries 51 430 73 909 policies around the disease and ease was also still low. It was only Estimated HIV prevalence rate (%) 16,0 15,8 offering education, testing and by the late 2000s that uptake of counselling services beyond the Number of employee voluntary testing and counselling (VCT) 45 279 50 223 the testing started to grow. workplace in mining communities, cases “We did a lot of things to try to Anglo American has long been at HIV counselling and testing participation (%) 88 68 do away with the stigma, to ensure the forefront of the HIV/Aids battle. Number of new HIV cases 611 349 that employees felt safe to get test- The company became the first ed and that their results will Estimated number of HIV-positive employees 8 331 11 689 in SA to adopt a human rights- remain confidential, and that they Estimated HIV+ employees on anti-retroviral therapy (ART) (%) 68 72 based policy around HIV/Aids. In will not be discriminated against,” AIDS deaths (including tuberculosis cases) 68 91 its initial policy, the company stat- Mbekeni says. ed that HIV testing would not be a Number of contractor VCT cases 38 376 39 643

8 Thursday September 7 2017 Financial Mail Page 9 -05/09/17 10:12:21 AM JHB 59244/OJ

Over Anglo American’s 100 years of operation, our people have walked the journey with us. People like Adelaide Ruiters. She had minimal funds, but was determined to enter the mining industry.

“I am just a working woman, but I was able to research mineral deposits, fi nd locations and apply for prospecting rights. When I was granted the rights, I approached Anglo American’s Enterprise Development Initiative, Zimele.

They funded the exploration phase, to be followed by feasibility studies to build a phosphate mine and a processing plant in the Western Cape.

“I am proof that a black woman with very little can start a mining company. If more women can own rights and benefi ciate our raw materials, we can create jobs for the good of the continent.”

At Anglo American, we are proud to be partners in building businesses for the future, making a positive difference, now and for the next 100 years. Adelaide Ruiters Adelaide Ruiters Mining & Exploration To fi nd out more visit www.angloamerican.co.za 100 YEARS OF MAKING A DIFFERENCE TOGETHER. Financial Mail Page 10 -05/09/17 10:12:33 AM

corporate report anglo american

Anglo American Zimele provided the funds to jump Zethu Tanzi with baby Iminati during the Lambasi Harvest at Lusikisiki Donald Masinga, owner of the oil filtration plant at start this catering company, DNL Foods in the Easten Cape, a project funded by Anglo American Zimele Khwezela Colliery, funded by Anglo American Zimele

SMES communities and key labour-send- of their businesses, according to an ing areas. Its network of walk-in AfDB case study. Zimele also centres around the country enables leverages public/private partner- Boosting small entrepreneurs to easily access ships where possible. In recent knowledge, funding and support. years, it has had partnerships with “We ’re not a commercial bank. likeminded institutions — such as b u s i n e ss e s We won’t disqualify an SME that the National Treasury Jobs Fund, may be listed at a credit bureau, Tiger Brands and Shanduka Black and don’t ask for collateral. Loans Umbrellas — on scalable interven- are issued at subsidised rates, and tions aimed at growing SMEs in Fine-tuned for nearly three decades, Ango American Zimele we give payment holidays or sectors such as agriculture, man- offers a blueprint for enterprise development extensions if required, to help the ufacturing and services. business become sustainable, One example is a R15m agricul- ý Thousands of small businesses offer funding — but integrated sup- alternatively we’ll take an equity tural initiative near Lusikisiki in the have benefited over the years from p o r t ,” says Hlonela Lupuwana- stake to lower the exposure to Eastern Cape, where 900 ha of the financial support and business Pemba, MD of Anglo American de bt ,” she says. arable land was aggregated into a acumen provided by Zimele, Anglo Zimele, which means “to stand on The African Development Bank single commercial farming entity Ame r ic a n ’s renowned enterprise o ne’s own feet” in the Nguni lan- (AfDB) hails Zimele as a best-prac- that represents 490 l a ndo w ne r s . development programme. g uages. tice model of how large corporates Over the years, Anglo American Founded in 1989 — long before SMEs get access to technical can spur the growth of SMEs. has adapted the model for some of legislation in 2004 imposed skills and expertise, and are helped Zimele is successful because its the other countries in which it requirements that mining compa- to access potential markets and core focus is on assisting local operates, including Chile, Brazil nies support black-owned local customers, government incentives entrepreneurs to make a success and Botswana. x suppliers — Zi me le’s aim has been and other sources of capital. to promote small- and medium- The main focus is on ANGLO AMERICAN ZIMELE’S IMPACT FROM 2008 TILL 31 DECEMBER 2016 sized enterprises (SMEs), assisting SMEs that can with a particular focus on provide services to Number of Number Turnover Number of Funding empowering black Anglo American’s transactions of people companies provided e nt r ep r e ne u r s . operations around employed funded In 2016 alone, R121m the country, or cre- 3 360 50 651 R8.824 billion 2 306 R1.807 billion was disbursed to 110 ate jobs in mining companies that collec- tively employed 3,992 people and generated a Success stories turnover of R692m. “When we assist a small A legacy of economic empowerment business, we don’t just Kanyi Ilanga Trading is an agriculture engineering consulting company operating company involved with forestry services in in a number of sectors, including the Bushbuckridge region. Anglo infrastructure and development, electricity American Zimele provided funding of and energy, construction, mining and R1.8m to help it procure equipment for m a n u fa c t u r i n g . Hlonela expansion, enabling it to sustain 442 In 2015, Anglo American Zimele granted Lu p uwa n a - jobs and add 123 new jobs in 2016. the company funding of R1.4m to complete a Pemba, MD of 115 Solutions, headquartered in project in the Eastern Cape. A further R1.5m Anglo A m e r i ca n Midrand with offices in Rustenburg, was advanced in 2016 to purchase two Zimele Nelspruit and Polokwane, is an trucks. The project created 17 new jobs. x

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GLOBAL TRENDS Allure of the new millennials

New consumer trends presented an opportunity for De Beers and Anglo American Platinum

ý Diamonds may be forever, but consumer habits keep changing — and De Beers’ savvy marketers know just how to tap into the trends. With millennials (defined as people born between the early 1980s and late 1990s) accounting for nearly half of the total retail val- ue in De Beers’ four largest mar- Forevermark: Today’s discerning woman wants more in a wedding band, with much more value and sentiment kets — the US, China, India and Japan — adapting to their shopping preferences is crucial. — increasingly buy for themselves.” doing good as well. And that’s a “The Chinese associate platinum In the US, which accounted for The millennial market also con- new era of marketing,” says Lussier. with love, so platinum is popular slightly more than half of global sumes media about products and for gifting — not in the corporate polished diamond sales last year, services in a different way. “This is The platinum link sense, but boyfriend-to-girlfriend; millennials represent about a third the digital generation; they’re living There is also scope for closer col- husband-to-wife; parents to a of the population, but account for in this world of social media, a laboration between Anglo American daughter who lands her first job.” more than 40% of value, says world of experiential media and Platinum and De Beers to market Pillay says some significant Stephen Lussier, executive vice- marketing. So we have to market platinum diamond jewellery. “We work is under way in China and president of marketing for De to them differently than we have believe a diamond is best set in India, both countries that have Beers and CEO of Forevermark, its before. We have to tell them stories platinum, so there is a lot of oppor- been more familiar with gold than high-end diamond jewellery brand. about our products, rather than just tunity for collaboration,” says Klean- p l at i nu m . “In China, they’re really the drivers tell them that they exist, and we tha Pillay, head of market develop- Platinum Guild International of the market,” he says. have to show how influencers are ment, precious metals at Anglo (PGI) — an industry-funded organ- There are three key trends using our brands and products.” American Platinum. isation that promotes platinum influencing millennial sales: the The third big differentiator is Marketing efforts, which initially jewellery — moved its head office broader trend of female economic m i l le n n i a l s ’ desire for products that focused on developing a market for from London to Hong Kong in 2015 empowerment; the way millenni- were responsibly sourced. “This is bridal jewellery in China, where to reflect the growing importance als consume media about products particularly important in luxury wedding bands are not traditional, of Asia for platinum producers. and services; and their desire to because nobody needs luxury are now focused on nonbridal jew- In gold-loving India, PGI buy goods that have been respon- goods, and if you want to enjoy the ellery and entrenching platinum in launched the Evara brand to grow sibly sourced and make a positive joys that come with owning them, some of the smaller tier 3 and 4 demand for platinum jewellery. contribution to the world, says you want to be pretty sure they’re cities, Pillay says. Evara, which means eternal bless- Lu s s ie r . ings in Sanskrit, created a range of One aspect of female economic bridal jewellery in platinum. empowerment is that people are “Wh at ’s interesting is that it isn’t getting married later, and that they just about the jewellery that the have much clearer ideas of what bride would wear on the day; it they want than was historically the also encompasses male jewellery, case. “They ’re much more interest- which is still a fairly big deal in ed in unique designs,” says Lussier. India. It also includes gifting sets Tied into the trend of female from the in-laws to the bride economic empowerment is the and/or groom; the two sets of par- rise in self-purchase. “Pa r t ic u l a r ly ents to give to one another; and in the West, it’s not about gifting gifts for the extended family. only; it’s also about ‘if you really “Exchanging of gifts between fam- like that diamond ring, buy it’. Kleantha Pillay: Platinum is gaining Stephen Lussier: Millennials have different ilies that are coming together is Women — both single and married popularity in Asian countries tastes that need to be tapped into part of the wedding,” says Pillay. x

Thursday September 7 2017 11 Financial Mail Page 12 -05/09/17 10:13:01 AM

corporate report anglo american

INNOVATION A new a p p ro a c h to mining

The industry needs innovative solutions to address its challenges around safety, productivity and

sustainability into the future Kumba Iron Ore’s Sishen pit, where technology has improved mineral resource production

ý The mining industry needs to FutureSmart Mining, Anglo Amer- a stage where an additional 210 Mt cles to be floated at sizes two to radically rethink the way it oper- ican is testing and adapting a num- of mineral resource could be three times larger than normal. ates if it wants to be sustainable, as ber of new and existing technolo- declared at Sishen, according to This has two main benefits. First, it merely scaling up current equip- gies across its operations looking Kumba Iron Ore CEO Themba uses less energy and can therefore ment or automating operations will for safer, more efficient and more Mkhwanazi. The expectation is that increase production rates; and sec- no longer be sufficient. What is sustainable ways to mine, process, the resource potential could be ond, it allows for easier extraction needed, believes Anglo American, move and market its products. increased to more than 1bn t. of water from the process, leaving is a completely new approach to One example is its Rapid Mine FutureSmart Mining is develop- a waste stream that is dry and m i n i ng , one that applies innovative Development System (RMDS), an ing other solutions to address the s t a c ka ble . thinking, enabling technologies, advanced drilling and cutting sys- challenge of precision mining with Dry stacking is an important and broad collaborative partner- tem which was developed by minimal energy, water and capital focus area for Anglo American ships to address mining’s major Anglo American and Atlas Copco, intensity. The Concentrate the Mine because water sent to tailings challenges, including safety, pro- to tackle the challenge of precise, concept is a fully integrated mining ponds often represents the largest ductivity, energy and water. continuous mining at depth. It is systems approach pioneered by water loss at a mine. FutureSmart Speaking at the Society for Min- currently being tested at its under- Anglo American. It integrates a envisages a future in which tailings ing, Metallurgy and Exploration ground Twickenham platinum number of enabling technologies to ponds will disappear and be conference in New York in May, mine in Limpopo. extract more metal, with less waste. replaced with dry tailings stacks. Anglo American’s group technical The RMDS safely excavates At its centre is Coarse Particle Early indicators at their CPR director Tony O’Neill outlined the low-profile tunnels with rapid Recovery (CPR). CPR allows parti- pilot plant in Chile point to a 30% co mp a ny ’s innovation-led access to ore. It causes less dam- increase in throughput, with 30% approach to sustainable mining — age to the overhead walls, thereby less water, 20% less energy and FutureSmart Mining. reducing the risk of collapse, and 2% - 3% recovery loss. “When talking about innovation enables greater ore excavation “The difference is this: Future- at Anglo American, I always start time, as there is no time lost for Smart Mining is about more than with what we’re solving. In the explosive blasting. just delivering technology solu- year 1900, to produce 40 kg of Cu, At Anglo American’s subsidiary tions; it uses technological and 2 t of rock was mined. Today, as a Kumba Iron Ore, the group has broader innovation to directly mit- result of declining grades, to pro- developed a new ultra-high dense- igate some of the sector’s social duce the same 40 kg of Cu, mate- medium separation (HDMS) tech- and environmental effects, includ- rial movement and energy con- nology in partnership with Exxaro ing reducing water and energy sumption has risen 16 times and Resources, which has allowed it to usage. In this way, it not only has water consumption has doubled convert “w a s t e” material to product the potential to transform the way (per unit). Clearly, this trajectory is by lowering the ore body cut-off we mine, but the way we con- unsustainable. Mining innovation grade at its Sishen mine. The ability tribute to society. This is what has to address precision to target to re-process vast quantities of makes our approach unique,” s ay s only the metal or mineral, with waste has allowed the company to O’Neill. x radically less waste, water and release new reserves and increase energy, and a smaller footprint.” the life of the mine, which is cur- Coarse particle recovery is at the heart of As part of its own innovation- rently estimated at 15 years. Anglo American’s Concentrate the Mine led approach to sustainable mining, The technology has improved to p ro g ra m m e

12 Thursday September 7 2017 Financial Mail Page 13 -05/09/17 10:13:12 AM

In a world of rapid change, the future belongs to those who can redefine it: innovators who embrace disruptive technologies and collaborate with a broad range of partners to solve real industry challenges. Today, building on 100 years of technology and innovation leadership, we are taking a fresh approach to innovation. FutureSmart MiningDZ applies cutting-edge technological advances and broad innovative thinking to find safer, more efficient and more sustainable ways to mine the metals and minerals that the world needs. We connect people to find solutions and pioneer the future of mining. At Anglo American, we are redefining our future Ǟ today.

www.angloamerican.com

THE FUTURE IS FUTURESMART MININGDZ Financial Mail Page 14 -05/09/17 10:13:21 AM

corporate report anglo american

INTO THE FUTURE Forever and b eyo n d

In order to thrive, the industry needs to sustain its innovations into the future

New entrant: Hydrogen fuel cell electric vehicles show strong growth potential, and will be a key driver for platinum demand in future, adding another growth dimension for the industry ý For Anglo American, and the mining industry at large, the pres- sure is certainly on. Worldwide nious Technologies, a German asset base, an appropriate business productivity declines over the past company that focuses on the safe model and strategy, then, in my decade are estimated at around storage and transport of hydrogen, view, creating a culture of innova- 30%, driven in part by mineral which is used in fuel cell vehicles. tion and thinking differently about scarcity and declining ore grades, Recent achievements include sustainability are two areas that outdated processes and technolo- the successful development of an can help define a new future for gies, and capital overruns. ethylene scavenger — a small label ourselves and our industry,” he As the global mining industry containing a catalyst — that is used says. The focus on sustainable remains the world’s most impor- in packaging to help keep fruit innovation as a foundation for tant industrial activity, providing fresh for longer, thereby reducing resilience is particularly important the essential raw materials that food waste, and a carbon monox- for the mining sector — an industry enable our modern lifestyles, find- Promise Sambo, a pupil at Sibongamandla ide oxidation mask, which is used which is prone to the market being ing solutions to the industry’s chal- Secondary School in Kriel, Mpumalanga, by emergency responders in tack- u np r e d ic t a ble . lenges is paramount. during the School Water Fountain launch, a ling fires. There is also the challenge of project sponsored by Anglo American Coal Mining represents around 10% For De Beers, which revolu- cultivating better relationships with of the world’s economic activity as tionised the diamond market when host communities and protecting measured by revenues from the remains richly endowed with these it adopted the clever advertising the natural environment — two commodity mining, quarrying and metals and minerals, and Anglo slogan “A diamond is forever” in areas the mining sector is routinely petroleum sectors. American remains by far the 1948, the demand challenge criticised for. For this Cutifani Anglo American, with a long biggest producer of both platinum remains largely a marketing one. refers to the need for “a renewed history of innovation in areas such and diamonds locally. With increased competition from a social contract”. as deep-level underground mining On the platinum group metals wide range of luxury goods and a “There is the need for a and exploration, has renewed its side, Anglo American is focusing preference for experiences rather renewed approach. A partnership focus on finding solutions for the market development efforts in than material goods among built on trust and the common productivity challenges facing the three areas: finding new industrial younger consumers, new good. We must become good industry. Its focus areas go beyond applications for the metal; growing approaches are required to keep neighbours, where every commu- finding ways of extracting metals jewellery and platinum investment millennials interested in diamonds. nity demands a local mine because and minerals more efficiently and demand; and investing in the fuel people know it will mean a better with a reduced environmental cell value chain. Playing the long-term game opportunity for that community to fo o t p r i nt . A good example of this is Anglo American Platinum Speaking at the Mining Indaba ear- develop and grow its commercial the company’s Emalahleni Water believes fuel cell vehicles show lier this year, Anglo American CEO i n f r a s t r u c t u r e ,” he says. Reclamation plant, in Mpumalanga, strong growth potential, and will Mark Cutifani said disruption — “This is not enough. When we which — through reverse osmo- be a key driver for platinum whether social, political, technolog- are better stewards of our natural sis —turns mine water into fresh demand in future. The group is ical or economic — will either environment, mining safely and water for over 80 000 people. forecasting demand from fuel cells make most companies obsolete or responsibly, and operate within Further to this, the gypsum sludge of about 500,000 oz of platinum propel them into the future. thriving communities that own our residue is then turned into gypsum by 2025, equivalent to roughly 20% He says to thrive and become success and have open and co- bricks, which have allowed the of Anglo American Platinum’s cur- more resilient, companies like operative relationships with our company to build 66 3-bedroom rent annual output. Anglo American would have to pay stakeholders, the end result is a houses for its employees working Anglo American Platinum’s careful attention to innovation and company that has a competitive in the SA coal business unit.” venture capital fund has also s u s t a i n a bi l it y . edge — one that will thrive.” x For SA, the future for platinum invested in a number of companies “Resilience, as an end-goal, group metals and diamonds is of in the fuel cell value chain. It has, needs pillars to lean on. If we can Advertising executive: particular interest, as the country for example, invested in Hydroge- assume that you have a sound Michael Anthony

14 Thursday September 7 2017 Financial Mail Page 15 -05/09/17 10:13:31 AM

corporate report anglo american

THE VALUE WE CREATE IN SOUTH AFRICA We want to make a lasting, positive contribution to the people we work with and to communities in which we operate.

OUR FOOTPRINT IN SOUTH AFRICA

29% 23 OF OUR OPERATIONS ARE MINES IN BASED IN SOUTH AFRICA SOUTH AFRICA 73,887 NUMBER OF EMPLOYEES IN SOUTH AFRICA 84% OF OUR WORKFORCE ARE HISTORICALLY DISADVANTAGED SOUTH AFRICANS (HDSAs) 24% WOMEN AT MANAGEMENT LEVEL

42% OF OUR REVENUE IS GENERATED IN SOUTH AFRICA

MAJOR INVESTOR IN SOUTH AFRICA

2016: 4 Amount of capital expenditure Number of business unit CEOs based in invested in South Africa since 1999 South Africa and number of business units managed from South Africa R241.7 billion * Figures as at 2016 year-end

15 Thursday September 7 2017 Financial Mail Page 16 -05/09/17 10:53:08 AM