BUSINESS IMPACTS ON DEVELOPMENT:UNDERSTANDING & ENHANCING IMPACTSJON SAMUEL, HEAD OF SOCIAL PERFORMANCE, ANGLO AMERICAN

10 JULY 2012

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PlatinumDiamondsCopperNickelIron ore and ManganeseMetallurgical CoalThermal Coal

Corporate and rep officesKey

E Exploration offices

OUR FOOTPRINT

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DEVELOPMENT IMPACTS: CONTEXT AND BUSINESS CASE

• Ongoing pressure from governments to see greater developmental benefits from mining

• Communities also understand that mining projects represent a unique opportunity for socio-economic development gains, if managed properly

• More general lack of trust in, and appreciation of, role of big business• Some of the ways countries have sought to enhance development outcomes

from mining and other sectors (eg nationalisation, high tax rates) have been counter-productive and bad for investors

• Growing understanding that good governance of the sector combined with responsible operators represents the best opportunity to secure developmental benefits

• Governments, as resource owners, are therefore looking towards companies that can support broader developmental objectives

• To enhance your impact you need to understand it

WHAT ARE THE LOCAL DEVELOPMENT OPPORTUNITIES FROM MINING?

OPERATION

INFRASTRUCTUREINFRASTRUCTURE

DOWNSTREAM PROCESSING(BENEFICIATION)

DOWNSTREAM PROCESSING(BENEFICIATION)

JOBS / WAGESJOBS / WAGES

CAPACITYBUILDING AND

TRAINING

CAPACITYBUILDING AND

TRAINING

PROCUREMENTPROCUREMENT

TAXATIONTAXATION

SOCIAL INVESTMENT

SOCIAL INVESTMENT

SMALL BUSINESS DEVELOPMENT

SMALL BUSINESS DEVELOPMENT

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HOW DO WE MEASURE IMPACT?

Exploration Planning Construction Operation Closure

Focused mostly on consultation with local stakeholders, plus complaints and grievance procedures

Impacts assessed by stage gate requirements and social impact assessments (typically as a part of SEIA processes)

Monitoring against social management plans plus social investment KPIs. Also complaints and grievance procedures

SEAT* studies, social investment KPIs, complaints and grievance procedures, community development peer reviews

Mine closure planning toolbox, post-closure monitoring

*SEAT: Socio-Economic Assessment Toolbox. Freely available at www.angloamerican.com/seat

• Activity across the mining lifecycle (typically 30 to 50 years per mine):

• We also measure at country level for taxes, procurement, wages etc

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STAGE GATE REVIEWS DURING PROJECT DEVELOPMENT: SETTING UP FOR SUCCESS

• All projects are reviewed at three stage gates:– Concept (option generation phase)– Pre-feasibility (option selection phase)– Feasibility (final go / no go decision)

• Reviews cover all financial and technical requirements, but also key social / community issues:– Identification and management of any

negative impacts– Development of socio-economic benefits,

including local procurement, local hire, enterprise development and social investment

• Complements impact assessments required under the permitting / regulatory regime

1. Education and training2. Health and welfare3. Water and sanitation 4. Capacity development 5. Enterprise development and micro-

credit 6. Alternative livelihoods 7. Housing 8. Other community development9. Environment 10. Energy and climate change 11. Sport, arts, culture and heritage 12. Disaster and emergency relief 13. Other CSI or charitable giving14. Employee matched giving

14 Categories of Programme: 32 Specific KPIs Covering:• Facilities (or sites) built / improved /

maintained• Number of jobs (permanent / temp)• Numbers trained• Number of beneficiaries for each type of

project• Number of businesses supported• Numbers of different kinds of projects

created or supported• Number of houses built / upgraded• Carbon impact• Power generated / saved• Habitats improved / protected• Waste management

CONSISTENT, GROUP-WIDE SOCIAL OUTPUT KPIs BEING IMPLEMENTED ACROSS ANGLO AMERICAN

SEAT – WHAT IS IT?

• A socio-economic impact and management planning process

• Existing Anglo American operations go through the process every three years

• The foundation for social issues management at our mines

• A collection of resources for community professionals and other colleagues to use at any time, including in exploration, development and closure

• Ultimately... designed to help secure our social licence to operate at new and existing operations, and secure competitive advantage

WHY DID ANGLO AMERICAN DEVELOP SEAT?

SEAT’s purpose

A way to identify and manage our impacts at each

operation

Improve understanding of social risks to our

business

Address community concerns

Manage stakeholder perceptions by transparency at

local levelMeet international

commitments

Build our capacity for community

engagement and development

SEAT: STRUCTUREEngagement throughout

Step 1 – Profile your operation, including existing community

development initiatives

Step 2 – Profile and engage with stakeholders

Step 3 – Assess and prioritise impacts

and issues

Step 4 – Improve social performance

management

Step 5 – Deliver enhanced socio-

economic benefits

Step 6 – Develop a social management

plan

Step 7 – Prepare a SEAT report and feed back to stakeholders

SEAT: STEP 5 COMMUNITY DEVELOPMENT TOOLS

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COMMUNITY DEVELOPMENT PEER REVIEWS

• Site level assessment of community development activities at site

• Brings in partner expertise, in particular from CARE International and Tshikululu Social Investments

• Cross-BU teams visit volunteer sites to undertake holistic review of community development activities

• Reports-back shared with site team management and broader peer group within Anglo American

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WHAT HAVE WE LEARNED FROM ASSESSING IMPACTS?

• Importance of a clear developmental vision, owned by local communities

• Stakeholders are most concerned about day-to-day livelihoods and quality of life issues:– Access to jobs and training– Access to alternative livelihoods– Access to supply chain opportunities– Environmental impacts– Quality of public services– Transport issues– Communication and transparency– Housing

MOST EFFECTIVE MEANS TO SUPPORT LOCAL DEVELOPMENT

• Local procurement:– Measure at national, provincial and

community level– $13.8 bn of spend in 2011– $1.13 bn from host communities, up

by $240 mn in 2011 due to growth and local procurement initiatives

• Enterprise development– 47,000 job supported in 2011

• Local recruitment– 145,000 jobs in 2011

• Social investment ($129 mn in 2011), particularly when delivered programmatically by NGOs

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84% of procurement, wages and taxes (= $18.4 billion) spent / paid in emerging markets

CONCLUDING REMARKS

• Different audiences are interested in difference impacts, and that leads to different measurement approaches being required

• In a large multinational, you need both aggregate and site-specific indicators, and both quantitative and qualitative information

• Our work has led us to focus on the core business and enterprise development as drivers of development outcomes

• Anglo American is seeking to improve tracking of key socio-economic variables over the duration of a project, and also articulating contributions at a national level in an engaging manner

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THANK YOU

SEAT v3 is freely available for download at: www.angloamerican.com/seat