Optima Volume 56

Cover:Tyres destined for haul trucks and earthmoving equipment are stockpiled at the storage facility at Anglo American’s Mogalakwena platinum mine in South Africa. See article on page 18.phoTo by plAneTkb for Anglo AMericAn (plATinuM)

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IntervIew: CYNTHIA CARROLL BrICs: THe gROwINg mIgHT Of bRAzIL, RussIA, INdIA ANd CHINAAustrAlIA: quIeT gROwTH IN meTALLuRgICAL COAL dIsAster support: pRACTICAL ReLIef effORTs IN CHILe

the future a look inside anglo ameriCan’s

platinum business

optimaseptember 2010

an eye on

02 | Optima | september 2010

Welcome

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.

contents

Cynthia CarrollChief exeCutive, anglO ameriCan

04 Optima interview Chief executive Cynthia Carroll on how her open approach is taking Anglo American forward

32 india OutlOOkIndia’s economic and infrastructure transition is a lesson that other nations should take on board

12 BriCs grOwthBrazil, Russia, India and China are in line to gain a larger share of global economic power

18 platinumAnglo American’s platinum business is taking advantage of a reviving market

24 Climate ChangeHow every nation can take action to avoid the worst impacts of climate change

28 COpper prOspeCtsAn exploration and drilling campaign in Chile has revealed significant copper opportunities

Head of publications: Norman BarberAnglo American plc 20 Carlton House TerraceLondon SW1Y 5ANEnglandTelephone: +44 (0)20 7968 8888E-mail: [email protected]

optima is produced by Redhouse Lane, 14 Bedford Square, London WC1B 3JA, England

Redhouse Lane production teamEditor: Rob JonesArt director: Ross BehennaDesigners: Tony Beresford, Asami MatsufujiProject manager: Anthony Cockell

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

03 september 2010 | Optima |

Matthew Stevens has reported on the Australian resources sector for 28 years for The Age, Business Review Weekly and now The Australian. He worked as a correspondent in London for Business Review Weekly from 1985-90 and as European correspondent for The Australian from 1999-2000. He was senior editor of The Australian, and editor of the Saturday edition. He is currently a business columnist, working in Melbourne, where he is a committee member of The Melbourne Mining Club. See page 36

KIM FLeTCHeR

MaTTHeW STeVeNSSir David King is the director of the Smith School of Enterprise and Environment at the University of Oxford. He was the UK government’s chief scientific adviser and head of the Government Office of Science for seven years. In that time, he raised the profile of the need for governments to act on climate change and was instrumental in creating the £1 billion Energy Technologies Institute. In 2008, he co-authored The Hot Topic on this subject. He has chaired the government’s Global Science and Innovation Forum from its inception. See page 24

Jim O’Neill is head of global economics, commodities and strategy research for Goldman Sachs, for which he has worked for 15 years. He has previously worked for Bank of America and International Treasury Management. He is a board member of the UK’s Royal Economic Society and sits on a number of European think tanks and round tables. He is a founding trustee and the chairman of London charity SHINE, which tackles poverty and illiteracy in Africa, and he is on the board of several other charities. See page 12

SIR DaVID KINg

JIM O’NeILL

Contributors

44 NICKeL pROFILeThe past, present and future of a resource that dates back more than 5,000 years

46 DISaSTeR SuppORTThe company’s support after February’s earthquake in Chile has gone beyond a simple financial donation

other Contributors MICHaeL COuLSON (page 18); NICKy McCLuRe(pageS 28 & 44); gReg MILLS (page 32); ROb JONeS (page 46)

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, newspapers and magazines are welcome to reproduce articles in whole or in part and to use illustrative material, except where copyright © is especially reserved.

Kim Fletcher spent 25 years in the UK national newspaper industry as a reporter, columnist and editor. He was industrial correspondent of The Sunday Times, deputy editor of The Sunday Telegraph, editor of The Independent on Sunday and editorial director of the Telegraph Group. He has written and presented programmes for BBC Radio 4. He is chairman of the UK journalists’ training body, the National Council for the Training of Journalists, and is managing director of communications consultancy Trinity Management Communications. See page 4

36 OpTIMISINg auSTRaLIaHaving joined up its disparate units over the past three years, anglo american’s coal business in australia has become one of the country’s leading producers of metallurgical coal. according to its head, Seamus French, the success is down to “people, people and people”.

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DAViD WOOLFALL; ALL Other phOtOs AngLO AmericAn unLess OtherWise stAteD


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.

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t’s early Monday morning and Cynthia Carroll’s week is already in full swing. The Collahuasi copper mine

(44 per cent owned) in Chile has returned to normal working, though some of its sub-contractors continue to strike; miners at associate De Beers, in South Africa, are threatening to walk out over pay; and, in Australia, a big argument is raging between the mining industry and government over the proposed imposition of a so-called resources ‘supertax’.

But in her top-floor office at Anglo American’s headquarters in London, the company’s chief executive is upbeat. She’s recently back from talking to investors in Miami, at the Merrill Lynch Global Metals & Mining Conference in May 2010: “I couldn’t believe the crowds of people who wanted to listen to our story, the kind of people who a couple of years ago just weren’t interested in us.”

Cynthia Carroll talks with the air of a woman who has the company structured and organised as she wants it. In the past year, Anglo American has resolved to concentrate on the seven commodities it believes to be most attractive – copper, iron ore, platinum, metallurgical coal, diamonds, nickel and thermal coal – and sell off other bits of the business.

Now the management teams for each commodity business sit in the commodity’s core geographical area and take responsibility for operational performance, project delivery and reducing costs. As part of changes saving some $120 million a year, Anglo American has stripped away divisional layers of management and pruned the

head office and other corporate offices, challenging it to share around the business the mining and other expert knowledge it has accumulated over the years.

Carroll explains the point of the reorganisation: “We need to get as close as we can to where the action is happening and where the decisions are taken. How do we become as efficient as we possibly can? What does the HQ look like? What is the most efficient way to organise ourselves, given that we have decided to divest some of these businesses?”

Alongside those changes, the company is energetically sweating assets and saving money on its supply chain. It set itself a target of $2 billion uplift by 2011 and, ahead of expectations, achieved $1.6 billion last year. Now, Carroll is confident it will make that $2 billion extra from its core business alone, without taking into account any contribution from the businesses it intends to sell. She’s justifiably pleased: “It’s an absolutely phenomenal result. It’s amazing if you just mobilise people – give them the framework, give them the training, tell them what they need to do and give them leeway to make the right decisions and apply the right judgement.”

How does a miner find efficiencies on such a scale? Carroll leaps up and

i“people talk to me. They tell me their concerns. in the past, it wasn’t culturally acceptable to tap the manager on the shoulder and tell him what you think. When it was the CeO, it was completely unheard of.”

paces to her desk to grab a shoulder bag, pulling out files about new shift patterns, better extraction techniques, single or dual global-supplier deals for tyres and lubricants, and for conveyor equipment – where around a hundred suppliers have been reduced to six...

Cynthia Carroll was not an obvious fit when she arrived from the Canadian aluminium

business Alcan as chief executive three-and-a-half years ago, at the age of 50. Anglo American was very South African, very male and liked to look inside for its leaders. Here was an American, a woman and an outsider.

What did she find? “A company with outstanding capabilities and people, and a desire and a willingness to do great things – that was all on the positive side. Where it was clear that we had to improve was in safety. No matter how much some people talked about it, there wasn’t consistency, there weren’t universal standards and there wasn’t a clear objective of safety being number one.”

She talks passionately on this subject, evidently proud that fatalities last year were 29 per cent down on the year before – and a 55 per cent reduction on January 2007. Some in the industry still argue that mining is inherently dangerous and that safety is a peripheral issue; she believes it goes to the heart of the business: “To put care and respect on the table and say that is a fundamental value for us is a big shift from what it was a few years ago. That means care and respect for everyone in our organisation. We are going to make sure that people are being looked after.”

Those who wondered what her words would mean in practice soon


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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

found out in South Africa when, in the first few months of her being in charge, Carroll brought up 28,000 miners from the Rustenburg platinum mines’ underground operations to instigate a safety training programme. In case anyone remained in any doubt about change, she involved the mining trade unions and the South African government in tripartite talks: “People asked: ‘Are you sure you want to do this? You are going to be exposing Anglo American, you are going to be exposing the industry.’ I said I was absolutely sure:

it would put pressure on us internally to deliver, it would expose us and put pressure on the competition.”

She laughs, making light of what must have been a tough battle: “Initially, I was quite unpopular in certain areas of the business. And we had some people – mine managers, supervisors – who put their hands up and said, ‘I can’t do this. I can’t live by these standards.’ We said, that’s fine, thank you very much. We both need to go our own way.”

And it’s Carroll’s way that has helped bring about a significantly improving

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 going for long periods fatality-free, people are starting to believe that zero harm is achievable.”

Carroll believes the latest improvements in productivity are directly related to care of the workforce: “For me, safety affects what goes on in all aspects of the business in terms of people’s mindsets, their approach, the degree of teamwork that they have, how they look after one another – that consistency of standards flows through to every other aspect of the business.”

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There were other changes of style. Cynthia trained as a geologist before going to business school. She knows her way around a mine: “I’m going to two coal mines next week and I’m going to a couple of concentrators on the platinum side.” Is that unusual for a CEO in the mining business? She laughs again. “It probably is.”

She states firmly that she feels very connected to the operational side. “I understand it very well and, because of my years of experience visiting other mines or operations, I know when things are going well and when they’re not. It’s the only way I can touch the people on the ground and they can tell me what’s going on. I also know the issues, I know where things could crop up and I know where things are going exceptionally well.

“People talk to me. They tell me what their concerns are. That’s a very difficult thing. As you get further up the line, it’s even harder because you are that much more removed from the guy mining the platinum on the ground in South Africa. In the past, it wasn’t culturally acceptable to be tapping the manager on the shoulder and telling him what you think – and when it was the CEO, it was completely unheard of.”

She may talk to anyone, but beneath the smile there’s a hint of the steel that has brought her to where she is: “Of the two mines I’m visiting in South Africa, one of them has had a very poor performance over the last six months and one of them has had a very impressive performance. So I want to go to one mine and congratulate them, and I want to go to the other and remind them where we need to be.”

L ast year, Forbes magazine named Cynthia Carroll as the fourth most powerful woman in the

world. It’s a power that sees her in discussions with presidents and prime ministers – and state governors and mayors. Some have been taken by surprise: “I had one individual who told me he wasn’t accustomed to my approach. ‘We don’t know how to deal with you, we are so used to putting boxing gloves on and fighting. You want to talk, you want to sit down and try and work out a solution together. This is so completely different.’

“That’s definitely something I’ve brought – transparency and openness, no hidden agendas. We’re not going to always agree, but as long as we understand the reasons and make an effort to engage, that’s what’s going to lead ultimately to success.

“I’m really encouraging people in our organisation to connect, to engage, to understand what the issues are so that we know what could be in terms of policy and regulation. We work together to do the right thing for the countries and communities where we operate and, ultimately, for Anglo American.”

It should be said that this is not a description of the business that is recognised by its detractors. The activities of big mining companies

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01 Cynthia Carroll goes underground with employees at Thermal Coal’s Goedehoop colliery in South Africa, February 2007

02 On the platform of one of the huge ore-carrying trucks at Los Bronces

03 During a visit to Los Bronces copper mine in Chile in 2007

“i like to think that i opened people’s eyes to the possibility that mindsets can be changed as far as safety is concerned.”

remain controversial. Many environmental groups have Anglo American in their sights. The American online magazine Grist is typical; it refers to the chief executive as ‘Cyanide Cynthia’ in its coverage of Pebble, Alaska, where the company is investigating a large copper, gold and molybdenum deposit. It’s the usual debate: jobs and tax revenues versus the threat to a pristine wilderness, particularly to local fish populations, if mining effluents escape.

She addresses the point without rancour: “No question about it, they can make a lot of noise and I think there’s going to be even more noise surrounding companies in the extractives industry. And if such a company gets things wrong in a big way and mistakes are made… then there are going to be that many more NGOs and environmental groups coming out against national resource development.

“We have to engage first and foremost with the representatives and potential future employee base and the people we are going to impact most directly. At Pebble, the local mayor has requested that we continue doing development work, so that we can all take a view when the facts are on the table.

“We won’t ever be in a position to satisfy everybody. There will always be a degree of scepticism and opposition to mining development. On the other hand, the people whom we really have to be listening to are those people in the regions where we are operating.

“You have to be working with the governments, from the president or prime minister all the way down through ministries, local governments, mayors and all the levels at which we


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1956Born, New Jersey, US

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

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

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

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

2006Leaves 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

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

2008Appointed a member of the Business Council for Britain

Timeline CynThia Carroll’s Career

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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 takes hard work.”

as evidence in support of her proposition, she describes the work that Anglo American has

been doing in South Africa: the Zimele enterprise development programme that will see the development of 25,000 new jobs in 1,500 new businesses; pioneering work on HIV/AIDS; awards for workplace programmes.

“You have to think whether you can actually improve the current situation, as opposed to having a negative impact on it,” muses Carroll. “On the Witbank coalfield, in South Africa, we’ve developed a $44 million water recycling plant. Together with BHP Billiton, we are recycling mine water into drinking water – 80,000 people from the local community now have drinking water every day. That’s fantastic – and we are now planning to expand the facility.”

And in Brazil, the company is working with NGOs: “We will create a farm environment on a like-for-like

basis on acreage that we are impacting in the area we are likely to mine. It’s a very interesting and innovative thing that we are doing there.”

Is there a danger that she pursues public good at the expense of shareholders’ profit? “Well, there is a balance. We also have to have priorities. We have to know where the value is. We can’t do everything, but we can do a great deal. We’ve got to do the right things, day in, day out, year after year, decade after decade.”

And to what extent has she approached this job differently because she is a woman? “I’m not very preoccupied with being female. I am what I am. I’ve always worked in a male-dominated environment – starting with oil and gas, then moving into alumina; I ran an alumina refinery in Ireland. I think that was a big shock on the ground when it was first announced, but after a couple of weeks I don’t think anybody was thinking any more about it.

“We need a lot more women. I think women do support a different mindset and maybe a different culture, particularly around safety. Caring for one another, prompting people to think differently, is one thing that women do particularly well.”

The number of women working in Anglo American has increased fast since she took over. In South Africa, women now occupy about 20 per cent of the management ranks, while many now work underground in jobs formerly reserved for men. In Australia, where managers were initially too embarrassed to discuss the absence of

01 Listening to a local resident’s views on the proposed Pebble project – Alaska, 2008

02 During a visit to Australia in September 2009, Cynthia Carroll delivers the keynote speech at the Brisbane Mining Club

03 Peruvian President Alan Garcia and Cynthia Carroll meet in the Presidential Palace, Lima, June 2008

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women with her, there are now women involved in all aspects of the business.

Carroll’s been looking after global businesses for the past 12 years. With four children, aged between 10 and 16, she’s grateful to have an accountant husband who works from home. “It’s a matter of having someone who is enormously supportive and willing to do these sorts of things.

“I also have a lot of energy, and sleep well – if not enough! It helps.”

in 2009, reflecting the impact of the global downturn on commodity demand and prices, Anglo

American’s operating profit halved to $5 billion, with underlying earnings of $2.6 billion. Crucially, however, it kept faith in its project pipeline – one of the strongest in the industry. In 2010, it is investing $4.2 billion on its major growth projects, notably the Minas Rio iron ore and the Barro Alto nickel projects, both in Brazil, the Los Bronces copper expansion in Chile

and the Kolomela iron ore project in South Africa. It is these projects that will be driving production growth over the next three years, beginning with Barro Alto early in 2011.

Having fended off Xstrata’s approach to the company – “We’d done our homework and had a very complete fact base. We knew where they sat relative to us in the industry. It was very clear in terms of the offer on the table that it was a non-starter” – does the chief executive expect further consolidation? “I’m not sure that I do see that much. The small miners, the junior miners, will be picked up, along with some of the mid-sized players. But we’ve seen a

“i’ve brought transparency and openness. One individual told me he wasn’t accustomed to my approach.

he said: ‘We are used to putting boxing gloves on and fighting. You want to sit

down and work out a solution.’”

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 looks relative to other investments.

“I don’t want people to be distracted by having money through the door and wanting to get on to something else. We always have to be aware of what is out there and what an investment – an excellent investment – looks like compared to growing organically.”

How, exactly, will she measure success? The business has announced its ambition: to become the investment, the partner and the employer of choice in the mining industry – in short, to be the leading global mining company.

Is that realistic? “The biggest doesn’t translate necessarily to being the most profitable. The aim of our investment strategy is to outperform the competition on a sustainable basis, and that is an achievable goal.

“I am fairly modest, but there’s no question we are seen as the company on the move in the industry.”

And with that, it’s time for her to be on the move. She has a business to run.

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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 how brazil, russia, India and China and other advancing nations are carving their place as the new beasts on the block.

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Like the rest of the world, the BRICs have faced a severe crisis in the past two years, but, if anything, their current health suggests that our long-term projections are more, rather than less, likely to be realised.

Brazil, China and India have handled the crisis well. Russia, on the other hand, has struggled, but there is little reason why it should not still be

regarded as a BRIC and it could still become bigger than Japan.

What seems clear is that the global credit crisis and its aftermath have caused more damage to the major developed economies than to the BRICs and the N11 countries, the ‘Next 11’ emerging economies1. Consequently, our projection that China could become 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 contributionThe relative importance of the BRICs and G7 for the global economic landscape has changed dramatically.

t is now almost a decade since Goldman Sachs introduced the BRIC acronym for the four countries that represent the most rapidly growing part of the global economy. Collectively, Brazil, Russia,

India and China have reached 16 per cent of global GDP and will be as big as the US by the end of this decade.

“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

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Between 2000 and 2008, the BRICs contributed almost 30 per cent to global growth in US dollar terms, compared with approximately 16 per cent in the previous decade. At the same time, the G7’s contribution fell from more than 70 per cent in the 1990s to around 40 per cent during the first decade of the 21st century. The BRICs’ contribution has risen particularly since 2007, with China contributing more than any of the advanced economies, including ‘Euroland’.

The BRICs’ share of global trade has continued to rise sharply and now stands at 13 per cent, almost two per cent higher than two years ago, with China accounting for almost two-thirds of the BRICs’ share.

Interestingly, though, the N11 countries, South Korea and Mexico especially, are now more important for global trade than Brazil, Russia and India. Moreover, there are non-BRICs and non-N11 developing and emerging markets – including other countries in Africa, developing Asia, Central and Eastern Europe, the Commonwealth of Independent States (excluding Russia), the Middle East, Mongolia and the western hemisphere – that, collectively, still account for a larger share of global trade than either the BRICs or the N11.

Turning to interest rates in the BRICs and the N11, these have declined dramatically over the past two years, in line with other developing and advanced economies. In many places, they stand at all-time lows. Brazil, Russia and India have each cut their policy rates dramatically. The reduction has been less aggressive in China, where currency and other unconventional measures have played a bigger role in the easing of financial conditions, as they have in many parts of Asia.

This general easing episode marks the first time in history that many

developing economies have been able to cut their policy rates in response to adverse external shocks. Previously, during such crises, capital outflows from emerging markets generally meant that local central banks had to hike rates to maintain financial stability. Such counter-cyclical monetary policies often put even more pressure on local economies, thus aggravating the original crisis.

what’s the score?Given the challenges that the BRIC and N11 economies and markets have faced over the past two years, has their potential to grow further and spread their dominance in a number of areas – including global demand for resources and spending patterns – changed? Has our original ‘dream’ of the BRICs collectively overtaking the G63 by around 2050 passed the test provided by this difficult environment?

Goldman Sachs uses a Growth Environment Score (GES) to measure the strength of a country’s sustainable growth. It includes 13 variables and is an important driver of our assumptions for long-term productivity trends. Since

its introduction in 2005, we have used the GES to track growth conditions in 180 countries, with a particular focus on key developing economies.

Technology, particularly the use of mobiles and the internet, has seen the largest gains and was the main category that consistently offset the deterioration in other components. Macro-economic conditions, which include gross fixed capital formation and openness, have also improved in the BRICs and N11, significantly exceeding the developed- and developing-country average. The BRICs made notable political progress, especially with respect to corruption and the rule of law. For human capital – including life expectancy and schooling – the N11 posted modest gains, while the BRICs made little progress.

The main setback occurred in the macro-economic stability category, which includes inflation, external debt and government deficit. Both the BRICs and N11 lost out by the same magnitude, far below the declines in developed and developing countries on average.

The major mover in the BRICs during 2009 was Brazil, one of the 35 best performers globally. Its gain was broad

BRiCs: POWeRiNG iNTO THe TOP 10

Where the four BRIC countries are ranked globally, out of 192 countries.

Brazil Russia India China

Population* 5th 9th 2nd 1st

GDP (nominal)** 8th 12th 11th 3rd

External debt*** 26th 20th 25th 22nd

Exports*** 21st 12th 23rd 1st

Imports+ 24th 14th 15th 2nd

Vehicle production++ 6th 19th 7th 1st

Number of mobile phones 5th 4th 2nd 1st

*World Monetary fund figures, 2009**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***World trade organisation/the World factbook+estimate, un Department of economic and social affairs, 2009++organisation Internationale des constructeurs d’automobiles

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based across several components, with particularly strong advances in technology, mainly mobiles, as well as macro and political conditions.

China’s GES improved mildly; like Brazil, gaining mainly on technology and political conditions, but it made no progress on human capital. A bigger government deficit, higher inflation and a lower degree of openness partially offset the improvement.

India’s result declined modestly; it is now the only BRIC country whose GES remains below the developing-country average. Russia’s GES has fallen by the same amount as India’s, with most of the deterioration centred around macro-economic stability.

The overall GES improvement in the N11 was actually higher than in the BRICs. Eight countries posted gains, with Indonesia and Turkey advancing most on the back of developments across a number of components. Only inflation and government debt showed deterioration in both countries. If their scores continue to rise, we might have to consider them becoming part of the BRICs.

South Korea and Mexico still have the highest GES, although last year they saw the smallest increases in their scores. The areas of particular weakness in both were political conditions and macro-economic stability, while other categories posted modest gains.

Vietnam registered the biggest losses. Its deterioration in macro-economic stability pulled down its GES in 2009, mainly as a result of much higher inflation.

Past PredictionsSince Goldman Sachs first published its BRICs growth and income projections in 2003, we have updated them four times. It is interesting to

assess how our projections have fared versus actual outcomes over time. Each of them has grown to a size we didn’t expect to see until much later. For example, although Russia’s growth may be lower than predicted previously, it could still grow enough to overtake Japan – a move we did not foresee in 2003. And China, which is about to overtake Japan six years earlier than we first thought, may become as big as the US within 20 years. Brazil is poised to overtake Italy next year, and India and Russia are not far behind.

In the global car market, China will become the main driving force over the next decade, likely to account for almost 42 per cent of sales growth, with the BRICs together accounting for 70 per cent. And by 2050, India’s car penetration could leap to around 490 cars per 1,000 people. This is more than 100 cars per 1,000 people higher than we estimated before. India could become the biggest auto market of the four by 2050.

The energy market, and crude oil in particular, look likely to be influenced greatly by Chinese and Indian demand – especially in the next 20 years.

These days, energy markets are often dominated by the importance of China, which has committed to reducing its carbon intensity – the amount of CO2 emitted per unit of GDP – by between 40 and 45 per cent by 2020, compared with 2005 levels.

According to Gerald Conway, co-chair of the China Council for International Cooperation on Environment and Development taskforce, the Chinese leadership has been presented with a plan that would reduce energy consumption per unit of GDP by 75 to 80 per cent by 2050. To achieve this, the plan envisages 50 per cent of new energy usage from now until 2030 coming from nuclear and renewable sources, and that all new power sources will be in these forms by 2050. In crude-oil terms, millions of the barrels-per-day projected globally might not occur.

If India were to commit to something similar, this would obviously be a very exciting initiative and stimulus for alternative energies.

“the bric economies appear to have withstood the financial crisis better than developed countries. indeed, their contribution to world economic activity has increased.”Jim O’Neill

mOBile PHONe usaGe

8.29

China’s iron ore imports from India in June 2010 – down 21 per cent month on month, as a result of lower demand and supply disruption resulting from the Indian monsoon season. China’s total iron ore imports fell 14.7 per cent in June, although imports from Brazil were up one per cent.

milliON TONNes

Communications are improving in the BRIC countries. Brazil, Russia, India and China rank 5th, 4th, 2nd and 1st respectively on the list of number of mobile phones per country (with the US in 3rd), though that figure as a percentage of the population varies dramatically – from just over half in India to almost 150 per cent in Russia.

china59.6%

russia146.8%

india52.3%

braZil96.6%


currency affairsBased on our forecast of higher oil prices, we expect rouble appreciation in Russia, as export revenues would increase, encouraging capital inflows.

In the near term, we believe two other BRIC currencies will appreciate through 2011. In India, as growth and inflation pick up, we expect the rupee to appreciate on the back of an effective tightening in policy rates in 2010. Meanwhile, the ‘fair value’ of the Chinese yuan has appreciated the most against the dollar since 2000, primarily owing to productivity gains, and our current forecast is that the yuan will be allowed to appreciate by five per cent over the next year.

The Brazilian real is the exception. We expect it to start depreciating for three reasons: the current account deficit could widen rapidly; investors will likely

worry about potential changes in the macro-economic policy framework ahead of the presidential elections this October; and uncertainties relating to the tightening of monetary policy in advanced economies.

Over a longer-term horizon, we would expect currencies to converge with purchasing power parity (PPP) estimates. As the BRICs grow over the next few decades, and productivity and terms of trade improve, we expect their currencies to converge with PPP and continue to appreciate.

In conclusion, while the 2007-2009 financial crisis has been a major challenge for the world economy, the BRIC and N11 economies collectively appear to have withstood the crisis better than many of their developed-country counterparts.

Indeed, their contribution to world economic activity has increased even more through the crisis, and since. This is likely to continue in the near, medium and long term.

But the world’s economy remains unpredictable. Lately, for example, there have been concerns that China is poised for a double dip, its economy having grown year on year by 11 per cent in the first quarter of this year, but more recent monthly data hinting at some flattening off. The stock market certainly supports this. After making solid gains in 2009, the Shanghai composite index has fallen by as much as 24 per cent since the start of the year.

The N11 countries, meanwhile, are a very diverse group, as we have always emphasised, at many different stages of development. We don’t think any of them currently has enough justification to be considered as big as a BRIC, but some are showing encouraging signs.

Among many aspects of the world economic scene, the BRIC – and N11 – countries will become increasingly important and the upward trend we have seen this past decade will be even more pronounced. Judging by current escalations, by 2020 the BRICs’ combined economy will have overtaken that of the US and could account for a third of the global economy in PPP terms. Individually, Brazil will be larger than Italy, India will be outpacing Spain, Russia will have charged ahead of Canada. While these developments will undoubtedly lead to many complexities and issues in the future, they are very exciting and offer considerable opportunities for us all.

1 Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam.

2 The US, the UK, France, Germany, Italy, Japan and Canada.

3 The G7 (see 2) minus Canada.

mOBile PHONe usaGe 611 milliONApproximate number of vehicles expected on India’s roads

by 2050

making it the world’s leader of the automobile production industry. It is currently the seventh largest – and fourth largest in Asia, behind Japan, South Korea and Thailand – having produced 2.9 million units in 2009. Worldwide, only China, Taiwan and Romania increased in production by a greater percentage year on year than India in 2009.

Rail TRaNsPORT NeTWORk size

Only the United States has a rail transport network larger than Russia, China and India. Brazil is 10th in the global list, with a rail network of nearly 30,000 kilometres.Primary source: International Union of Railways, 2007

us

russia

china

india

226,500 km

128,000 km

86,000 km

64,000 km0 50,000 100,000 150,000 200,000 250,000

1 us 15,079

2 brazil 4,072

3 Mexico 1,819

4 canada 1,404

5 russia 1,213

6 argentina 1,141

7 colombia 990

8 bolivia 881

9 Paraguay 800

10 indonesia 684

By NumBeR Of aiRPORTsRank Country Number of airports

Primary source: The World Factbook, 2010


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

company profile



Shaping up for the future


company profile


C arrying out a major corporate restructuring is painful at any time. To do so while the market for a company’s main product is passing through the biggest recession in living memory is doubly so. That Anglo

American’s Platinum commodity business unit (“Platinum”) subjected itself to, and has come through, this ordeal in good shape to take advantage of the reviving platinum market speaks volumes for the calibre of its management and commitment of its staff.

In July 2008, the basket price – the price of all the business unit’s products expressed as the equivalent of an ounce of platinum – peaked at about $4,165. At this point, Neville Nicolau, previously the head of asset optimisation at Anglo American and former chief operating officer responsible for Africa at AngloGold Ashanti, had just taken over the CEO’s seat. Barely five months later, the basket price was hovering around $1,300, a decline of almost 70 per cent and less than half the level that had prevailed before the spike of July 2008.

That sort of movement would usually force cutbacks at any company, but at Platinum it’s not so easy. Its mines are located in the western and eastern limbs of South Africa’s Bushveld Igneous Complex and, while there are sizeable towns like Rustenburg and Brits in the western wing,

03

elsewhere – and throughout the eastern wing – the platinum mines are among the primary employers and generators of income.

Platinum has accepted a responsibility for these communities way in excess of South Africa’s Mining Charter1 and other black economic empowerment (BEE) requirements. Nicolau says: “We have to create communities that will still be viable when the mines are gone.”

It reflects the importance attached to this community support and the investment made by Mary-Jane Morifi, Platinum’s head of corporate affairs, who bears the ultimate responsibility for the business’s enterprise development work, sits on the company’s executive committee and reports directly to Nicolau. She is no lightweight: before joining Platinum in November 2007, she spent 17 years with BP, ending up as director of audit and risk management in London.

DiffiCult CutSEven in depressed times, Platinum’s ability to cut back on social spending is limited. As an example, the policy is to spend one per cent of pre-tax profit on community and infrastructure development. In 2009, as profits collapsed, the $33 million spent in this area represented eight per cent of pre-tax profit.

The axe thus fell heavily on other items. Capital expenditure was cut by 22 per cent and the workforce was

preViouS page A decline shaft at Bathopele mine in Rustenburg, where an array of technological equipment, including signage and signalling devices, has been installed to avert safety incidents

01 Platinum-bearing ore from South Africa’s Bushveld Igneous Complex

02 Platinum CEO Neville Nicolau (second left), Unki general manager Walter Nemasasi (left) and Platinum’s executive head of mining Pieter Louw inspect a shuttle van used to safely transport miners in and out of the soon-to-open Unki mine

02

01

photos by planetkb for anglo american (platinum), except 01 (andreas koschate/Westend61/corbis)


analySiS of SafetyOne area where no compromise can be made is safety. The vision is ‘zero harm’ and, though there were 14 fatalities in 2009, the trend is down, from 25 in 2007 and 18 in 2008. In early 2009, a new safety strategy and plan were adopted following extensive analysis of existing programmes.

Allied to safety is health, not least the HIV/AIDS pandemic. Platinum offers AIDS counselling and anti-retroviral treatment (ART) to workers and their families. At present, some 4,000 people benefit from this programme, though only 24 per cent of employees requiring ART are on treatment. TB, alcohol and drug abuse and teenage pregnancy are other social and health areas of concern, but Morifi poses the dilemma: “We have big in-house programmes, but what happens when people go home?”

Platinum was appalled to find that on-mine fatalities are dwarfed by the average 50 employees a month who die off-mine owing to illness, crime, road accidents or simply natural causes. Good health can qualify people to be economically active; however, it doesn’t automatically generate income. Social and labour plans are determined in participation and in accordance with those of

An 80 per cent-owned subsidiary of Anglo American, the Platinum business unit is the world’s largest primary producer of platinum, responsible for about 40 per cent of world newly mined production. While it will open the Unki mine in Zimbabwe later this year and is exploring in Brazil, and with joint-venture exploration projects in Canada, China and Russia, all current operations are in South Africa, on the Bushveld Igneous Complex, the world’s richest source of platinum group metals (PGM)-bearing ores.

The company wholly owns 10 mines, as well as smelting and refining operations that treat concentrates not only from its own mines, but also from joint ventures and third parties. In recent years, it has taken joint-venture partners into a number of previously wholly owned mines. These have generally been

reduced from 80,500 to 65,000. There were no forced redundancies among the permanent staff, though the number of contract workers was slashed. Nicolau is the first to admit: “These people had to move back into the community and join the unemployed. We offered vocational training courses in areas like plumbing and bricklaying for the whole community.”

Savings went all the way to the top, and an asset optimisation programme at the corporate office, expected to bring savings of a staggering $20 million, is nearing completion.

As the tonnage milled was static, and production of platinum group metals (PGMs) rose five per cent to 4.75 million ounces a year, the inference of a significant improvement in productivity must be that there had been a fair amount of fat that had been waiting to be cut out.

A recent authoritative review of the platinum sector by JP Morgan’s Johannesburg office points out that Nicolau is the first mining engineer to head the company in decades; again, the inference must be that he can better gauge than some of his predecessors where cutbacks can be made without damaging the fabric of the business.

04The plaTinuM ColleCTion

with a view to enhancing black economic empowerment, especially at communities near the mines.

The company is committed to the sustainable development of the communities in which it operates and makes substantial contributions towards this, both on its own account and through the Anglo American Chairman’s Fund.

Platinum has a market capitalisation of around $26 billion, ranking it as the sixth-largest company on the Johannesburg Stock Exchange. Despite the downturn in world commodity markets, net sales revenue in 2009 was just under $4.4 billion, from sales of 4.75 million ounces of refined PGMs, of which 2.45 million ounces were platinum. The company currently employs about 54,000 people, which on widely accepted ratios means it is the primary support of close on 400,000 people.

03 The Rustenburg Base Metals Refinery, which is expanding its nickel processing capacity by about 50 per cent

04 Shaft-sinking operations at the bottom of the new Thembelani 2 shaft will enable access to the Merensky reef below the existing Thembelani shaft


company profile

Anglo American, but the varying circumstances of different communities require flexible application of such plans. Thus, Platinum engages directly with communities and local authorities to determine their needs, in conjunction with South Africa’s Department of Mineral Resources.

Commitment to SoCial iSSueSFor years, Platinum had been spending the equivalent at today’s current exchange rate of about $4.5 million a year on education. When Morifi arrived, she assessed the efficacy of this and held an education summit last year. It became clear that earlier programmes had concentrated on later stages of learning, whereas the greatest need was more basic. There was also a need to train teachers and school governing bodies.

Housing is another key element. Platinum has embarked on a programme to build 20,000 houses to be offered for sale to its employees, which Nicolau says could cost $194 million over the next seven or eight years.

It all adds up to an impressive social programme. But even a company as strong as Platinum would not be able to

sustain it if profits were to remain at 2009’s depressed levels. Fortunately, that isn’t the case.

taking opportunitieSLonger term, demand for platinum should return to the historical five per cent annual rate of growth (this growth has left the market in deficit for 10 of the past 13 years). As the world’s largest producer, Platinum will want to participate in this growth – and it has the resources to do so.

Its 2009 annual report puts the company’s reserves at 170.5 million ounces and its resources (exclusive of reserves) at 632.3 million ounces. There surely can’t be many resource companies in the world with this backing; moreover, most of it is high quality and/or close to the surface.

JP Morgan reckons that it is the only producer that can respond quickly to an improvement in demand, with the ability to increase mine production across the board by up to 10 per cent within six months at little cost.

But that isn’t the whole story. No miner wants to let reserves sit idle for 100 years if there are opportunities to

01 Today, roof-bolting is a far safer operation than in the past as miners routinely use remotely operated roof-bolting drills

02 Rustenburg community members make use of a Platinum-sponsored mobile clinic

01


exploit them. A 10 per cent production increase is little more than making the existing operations sweat a little.

In a recent presentation, Nicolau outlined Platinum’s claimed key competitive advantages: extensive high-quality reserves, a flexible portfolio of long-life assets, superior market intelligence and wide experience of transformation.

Flexibility is, again, a key word. The largest mines have been restructured into smaller, more manageable units. The old Rustenburg mine has been split into five, and Amandelbult into two. But flexibility is even more significant in relation to new projects, such as Mogalakwena North, worth 350,000-400,000 ounces of refined platinum a year and due to reach full production in 2012.

a Strategy of expanSionPlatinum’s strategy is to maximise value by understanding and developing the market for PGMs and expanding production safely, cost-effectively and competitively.

Platinum has six major projects under way – two replacement and four expansion – designed to come on stream between 2012 and 2019, with a combined capital

budget of just over $5 billion (about $1 billion will be spent in each of 2010 and 2011) and incremental production capacity 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 gives Platinum a unique advantage in the industry.

When the prospector Hans Merensky first traced the platinum deposits in the 1920s, he could have had no idea that this then obscure metal would replace gold as South Africa’s most important mineral product. For decades after, the companies that came together to form Platinum’s predecessor, Rustenburg Platinum Mines, had a monopoly in the industry. Although that’s no longer the case, Platinum is still the leading producer.

Operating in many areas in which it is not so much the major employer, but one of the only employers, is a status that brings responsibilities on a scale experienced by few companies. While companies must never neglect their investors, Platinum, more than most, cannot simply look to the bottom line as the measure of its success. It may not be perfect – indeed, a catalogue of disputes with local communities contained in the 2009 Sustainable Development Report testifies to this – but, on the whole, it can be proud of how it balances the interests of its diverse range of stakeholders while entrenching its position as the world’s leading PGM company.

02

1The Mining Charter is the South African mining industry’s version of the charters agreed between employers and other stakeholders in several sectors of the economy, whose aim is broad-based economic empowerment. A key component is the mining scorecard, which has three core elements: direct empowerment through ownership and control, human resource development and employment equity, and indirect empowerment through procurement and enterprise development.

Michael Coulson is a former deputy editor of the Financial Mail in Johannesburg. He has been described as the doyen of financial journalism in South Africa; except for spells as an analyst with stockbrokers in Johannesburg and London, he’s been writing about the South African economy and financial markets for more than 45 years.

auThorMiChael Coulson

optima report


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

Turning poinTs

from Copenhagen


as the global population rises towards nine billion – likely by 2050 – a continued dependence on fossil

fuels for energy generation and on deforestation to create additional farmlands will lead to global temperatures increasing by up to 6°C and average sea levels rising by up to one metre by the end of the century. The impact on societies would be severe, driven by heat and drought in some areas and flooding in others – especially coastal cities.

There is worldwide recognition that cutting greenhouse gas emissions and moving to a defossilised economy is the right thing to do. The question is: how do we achieve it on a global scale?

It is more than six months since the 15th meeting of the Conference of the Parties in Copenhagen. There is much to do ahead of the meeting in Cancun in Mexico in December.

Despite the unfortunate level to which expectations were raised, I believe that Copenhagen was a step forward. We must acknowledge that a group of 55 developed and developing countries, which together account for almost 80 per cent of global emissions,

did agree to some very important and, indeed, groundbreaking commitments:n They endorsed the limit of two

degrees’ warming as the benchmark for global progress on climate change, the figure first agreed during the 2005 G81 Heads of State at Gleneagles.

n Unlike every previous agreement, it wasn’t just developed countries, but also all leading emerging economies, that agreed to make specific commitments to tackle emissions.

n For the first time, these countries have signed up to a comprehensive measurement, reporting and verification of progress agreement.

Significantly, though, the group includes only Brazil from South America and just six out of 55 African countries. In all, 137 (out of a total of 192) countries have not made pledges. Independent analyses indicate the pledges as they stand are about half of what is required

to avoid the worst impacts of climate change. This needs to change. We need more certainty and perhaps even more ambition.

a CommuniTy of sCienTisTsThe science of climate change has come under a lot of media attention lately, with the most recent landmark reviews of the Intergovernmental Panel on Climate Change (IPCC) on the state of climate science being at the heart of this lobby-driven storm. Following leaked e-mails from the University of East Anglia and some poor referencing in the IPCC’s 2007 report, through the efforts of well-paid US lobbyists the work of thousands of remarkable scientists is now being questioned.

The climate science community is vast: palaeo-climatologists studying the planet’s past climate behaviour; analysts determining sea-level rises; scientists taking detailed measurements in tropical forests; scientists studying the loss of ice on mountain peaks in Greenland and on Antarctica; those analysing changes in levels of greenhouse gases in the atmosphere and the acidification of the oceans; and those modelling the potential impacts of global warming in different regions

01 02

“getting an agreement was always going to be tough, but i believe that no protocol is better than a weak one.” Sir DaviD King

main image Horns Rev 2 near Esbjerg in Denmark is the world’s largest wind farm. Although wind power currently accounts for less than one per cent of global electricity production, the figure rises to about 20 per cent in the case of Denmark

01 The plenary session of the 2009 Climate Change Conference in Copenhagen, Denmark

02 A house model at an exhibition of pollution-free technology in Qingdao in China. The country has committed to stringent reduction targets on carbon intensity by 2020

Wu HONG/epa/CORBiSOLiVieR MORiN/aFp/GeTTy iMaGeS

optima report


around the world. Their progress is untouched by the hullabaloo in the media. They challenge each other, debate and push back the frontiers of their science in the process.

The urgent task is now to move forward and broaden, deepen and strengthen the commitments made in Copenhagen, drawing on the large coalition of countries that wanted more from the agreement.

The sTruggle for ConsensusGreater certainty about emissions is necessary to provide the strongest incentive to business, through the establishment of a long-term carbon price. I am not going to suggest what such a figure will be, but it needs to provide assurances to the global market while ensuring that renewables and other low-carbon technologies can be competitive. The Smith School of Enterprise and Development is currently developing optimal strategies for moving forward, using existing international processes, such as G202 meetings, UN meetings and the World Trade Organisation (WTO), as appropriate instruments.

Looking back at Copenhagen, we must bear in mind that getting an

agreement was always going to be tough because we are seeking consensus among almost 200 countries. We all knew that that it would be messy and complicated. In particular, without backing from his Senate, President Obama could not have signed up to such a deal and, without the US, no lasting deal could be reached on a protocol.

I believe that no protocol is better than a weak one. Signing up to something that could not deliver the cuts needed would, in the long term, have presented more problems than it solved.

As part of moving towards a low-carbon economy, we need a step-change in driving through new low or zero-carbon technologies. Throughout the world, we need to develop new technologies and implement policies that will improve energy efficiency, increase investment in low-carbon power, develop hybrid and electric vehicles and smart grids, and reduce deforestation – and, in doing so, provide a stimulus to grow our economies.

The changes we need to make by 2050 are large and complex. Many of the decisions that need to be made now, and the innovations that must be

developed, will have an impact on what the energy system will look like in 2030 and beyond. This will have significant implications for industry, businesses and consumers. Therefore, it is critical that we develop a shared understanding of what technologies are available now and potentially coming on stream in the near future, as well as the practical challenges and constraints we need to manage and the implications for society.

This global shift has not yet found international legal form, but scientific evidence, public opinion and business opportunity will ensure that it emerges over the coming years.

CommuniTy involvemenT It is particularly noteworthy that the US, as well as the emerging powers – such as China, India, Brazil and South Africa – have added their voices very clearly and constructively to the debate, demanding action from the

01 Rechargeable electric cars are already becoming a familiar sight in many cities, such as London

02 New policies are being called for to reduce deforestation and increase reforestation – as is being undertaken in Costa Rica

01jaMeS BaRBeR

GaRy BRaaSCH/CORBiS


advanced economies. For example, the US and Chinese governments have each pledged their commitment by setting stringent reduction targets on, respectively, greenhouse gases and carbon intensity by 2020.

Brazil is committed to ending deforestation by 2025, and is thinking practically about how it can more effectively supply energy. CRERAL, a co-operative in the south of the country, supplies electricity to a mainly rural customer population of around 6,300, using river-based, low-tech and low-cost mini-hydro plants, which increase both capacity and reliability.

In Europe, progress in wind energy is growing steadily. Denmark has proved particularly successful; its model of ownership has led to community groups owning half the country’s private wind farms. Around 85 per cent of the nation’s wind-generation capacity is made up of small clusters of turbines,

rather than large developments. Similar schemes, in which people are encouraged to join forces to create a renewable energy supply, can be found in The Netherlands and Germany.

The poorer nations, the small island states and African countries are making their concerns and demands clear. Many are already setting examples for others to follow. In Tanzania, for instance, the Mwanza Rural Housing Programme trains villagers to set up enterprises to make high-quality bricks from local clay, fired with agricultural residues rather than wood, which helps reduce deforestation.

The key to the success of these initiatives is the buy-in of the local community and making them part of the economic and practical solutions – a bottom-up approach. The UK has recognised this, with its innovation body, NESTA, leading a yearly challenge with a £1 million (c. $1.5 million) prize fund to reward collaborative community efforts. This year’s four winners have all reduced carbon emissions – and, in the case of a project on Scotland’s Isle of Eigg, by as much as 32 per cent.

a CommiTmenT from everyoneIn many respects, the move towards a new paradigm began at Gleneagles in 2005. The process started in January of that year at the Met Office in Exeter, which the then Prime Minister Tony Blair asked me to oversee. A meeting of the world’s leading climate scientists was convened to address the topic of ‘Avoiding dangerous climate change’. This was the first time that a consensus was reached on the need to limit global warming beyond a certain limit, and provided an important backdrop to the first meeting of the G8+53 grouping later that year to discuss climate change and African development.

Five years later, the whole world is now engaged in the issue. We do need a solution that involves everybody – industrialised, rapidly emerging and developing countries alike – or emissions will simply ‘leak’ from the countries where CO2 rules apply to those that are not part of the agreement.

By 2050, average global emissions of CO2 must fall to around two tonnes per person per year if we are to mitigate against the worst effects of climate change. One response might be for each nation in the industrialised world to be assigned a straightforward downward trajectory to this figure. This has, in effect, been accepted by the EU, and is a personal commitment from President Obama for the US. Emerging economies such as China and India, which have relatively low levels of emissions per head, could temporarily increase their emissions before these too would start to fall towards the designated figure of two tonnes per person. Again, this is now a formal commitment by China.

Inaction over the coming decades could disrupt economic and social activity as we approach mid-century – making the financial downturn of the past two years pale in comparison. Tackling climate change is the pro-growth strategy and it can be done in a way that does not cap the aspirations for real growth of rich or poor countries. The earlier effective action is taken, the more advantageous the outcome will be.

02

1 Canada, France, Germany, Italy, Japan, Russia, the UK and the US.

2 Argentina, Australia, Brazil, Canada, China, France, the European Union, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the US.

3 The G8 (see 1) plus Brazil, China, India, Mexico and South Africa.


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.

01 02

03

country report

Tunnel vision finds copper poTenTial


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

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

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

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

2007SRK Consulting is contracted to engineer an eight-kilometre-long exploration tunnel to access the Los Sulfatos deposit

2009Italian tunnel firm SELI ships the 290-tonne tunnel boring machine from Italy to Chile in 70 containers. Excavation with the tunnel boring machine starts in August

2010The total tunnel advance at the end of July is 1,800 metres in difficult ground conditions

2011Tunnel development expected to be completed by the end of 2011

The Andean region hosts one of the world’s most prospective copper belts, and two recent exploration projects,

San Enrique-Monolito and Los Sulfatos, could be among Anglo American’s most significant and highest-quality copper prospects yet.

After initially being drawn to Chile in the early 1980s in a search for gold, Anglo American’s focus soon switched to copper, following a series of deals that were born after establishing a local foothold. And when the company acquired Compañía Minera Disputada de Las Condes (CMDLC) for $1.3 billion in December 2002, it began exploring highly

prospective areas near the recently acquired Los Bronces operation.

Anglo American’s Los Bronces copper operation is 60 kilometres north-east of Santiago, in central Chile, at altitudes of between 3,000 and 3,500 metres above sea level. Exploration activity here led to the discovery of promising new deposits; one a kilometre away from Los Bronces at San Enrique-Monolito (SEM), and the other, Los Sulfatos, about six kilometres south of the mine, at elevations of over 4,000 metres above sea level.

Graeme Lyall, advanced exploration projects manager in Chile, says that the Los Sulfatos area showed potential early on: “There is evidence of small-scale exploratory activities that

01 Drilling activity to install rock support in the eight-kilometre exploration tunnel starting from the Los Bronces operation 02 An operator from Italian tunnel firm SELI monitors activity in the tunnel boring machine’s (TBM’s) control cabin

03 The TBM cutter head and shield are assembled at SELI’s workshop in Italy

04 Workers carrying out surface exploration travelled on horseback through the surface exploration campsite at the Los Sulfatos prospect

04

TiMeliNe los sulfaTos

all p

ho

tos a

ng

lo a

me

ric

an


01 A helicopter lands at the surface exploration campsite, more than 4,000 metres above sea level. Helicopter-supported drilling campaigns started at Los Sulfatos in 2005

02, 03 Assembly of the TBM cutter head and shield nears completion in an underground cavern 04 The steel tunnel lining is installed in broken ground behind the TBM shield

date back perhaps 100 years. Over and above the geology of the prospect, which showed promising signs of a significant copper deposit, two drilling campaigns were undertaken by previous owners; the first at the end of the 1960s, and the second at the beginning of the 1990s. Both campaigns showed that there was copper mineralisation in the area, but failed to demonstrate the true potential of the prospect.”

And what potential there was. While SEM could contain up to 25 million tonnes of copper, early indications show Los Sulfatos may have substantially more.

difficulT TerrainExploration at Los Sulfatos began with a geological reconnaissance of the area in 2004, followed by helicopter-supported drilling campaigns between 2005 and 2008. The difficult terrain, harsh climate and environmentally challenging conditions meant that field activities were restricted and could only be carried out over the limited summer periods between December and March.

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.

a new approach The world-class copper deposit that these exploration and drilling efforts had revealed extended to depths of at least 1,000 metres below the surface. However, significantly more drilling was needed to determine the full characteristics of the deposit before mine development options could be considered. Extreme conditions meant the only alternative was to carry out the drilling from underground.

In 2007, SRK Consulting was contracted to engineer the development of an eight-kilometre exploration tunnel, starting from the Los Bronces operation and heading south, to provide underground access from which to drill out the resource. Conventional drill and blast methods were discarded in favour of tunnelling

using a mechanised tunnel boring machine (TBM). Despite its marginally higher cost, TBM technology had advantages in terms of development timeframe, safety and overall project risk.

“Our investigations showed that the TBM was not only feasible, it was potentially must faster and significantly safer than the alternatives,” explains Graeme. “This was undoubtedly the best method.”

A TBM development project was awarded to Chilean construction firm Besalco in association with Spanish firm Dragados, a company with

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“our investigations showed that the tunnel boring machine was not only feasible, it was potentially much faster and significantly safer than the alternatives.”GraeMe lyall, advanced explOratiOn prOjects manager


extensive experience in this sort of tunnelling. This led to the manufacture of a new Double Shield Universal Compact TBM with Italian firm SELI. Others participating in the project include H+E Logistik, which supplied the system that removes material from the tunnel, and Schöma, which provided locomotives for material and personnel transport.

machine assemblyCommissioning of the TBM created its own challenges. SELI completed and tested the TBM in Rome in early 2009, before taking it apart to be shipped in 70 containers to Chile – itself a massive undertaking. The TBM weighs 290 tonnes, measures 91 metres and the tunnel excavation diameter is 4.5 metres. The largest component – the main bearing – weighs nearly 50 tonnes. This and both segments of the cutter head were shipped separately.

To prepare for the TBM, an initial advance tunnel was created to enable the machine to be assembled by SELI technicians. After initial testing showed that it was working properly, the green light was given to initiate tunnel boring.

TBM excavation commenced in August 2009, almost one year after initiating the design and manufacture

process. The first two-kilometre drive anticipated the most difficult ground conditions, and progress has indeed been slow and challenging during this initial drive. By the end of July 2010, the tunnel had advanced 1.8 kilometres towards Los Sulfatos.

looking aheadUsing a TBM, the tunnel has an estimated advance rate of 400 metres per month – more than double the progress that is expected using conventional methods.

The team is considering excavating at least 20 drill stations to carry out exploration drilling. Graeme says: “We have planned for up to eight drill rigs operating in the tunnel, drilling in various directions. Information from these drill samples will be characterised geologically and analytically for copper contents.

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The Los Sulfatos area had been explored for nearly a century and there is no doubt that this discovery is the result of a number of contributions.

Timing is perhaps a key factor, as technology, conditions and world demands change. For this particular deposit, Anglo American was fortunate to be there at the right time with the right strategy and with the right people.

The company’s former leader, the much admired and respected late Nigel Grant, former consulting geologist for Anglo American South America, was key to promoting the exploration potential and value of the Disputada assets during the acquisition process in 2002, and this was perhaps a significant factor that led to completing the winning bid.

Chris Carlon followed and, eventually, the discovery was led

by and came to fruition through current head of Andes exploration Vicente Irarrazaval. Chief project geologists who lived through the harsh conditions on site included Cristian Spröhnle and then William Robles. Juan Carlos Toro was instrumental in providing valuable geological contributions.

The team also included a number of geologists and supporting staff who are proud of this achievement.

Nicky McClure is a business journalist with more than 16 years’ experience writing for and editing titles on subjects ranging from public-sector activities to computer gaming. She currently works for Redhouse Lane communications agency on publications for Glenmorangie and RBS.

auThorNiCky McClure

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This will help to develop a model for the deposit that will be used in mine planning and engineering studies.

“We should finish tunnelling by the end of 2011. Exploration drilling is expected to last at least three more years and then there are mining and engineering studies before mine development. It will be at least another 10 years before we can expect to start extracting copper from the ground.”

Graeme concludes: “The Los Sulfatos deposit promises to become one of the most long-lived and profitable operations in the world, lasting well beyond my lifetime. So really this is just the beginning.”

For more information, visit: www.anglochile.cl

More iNfo


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.

optima report

I never imagined that I would find myself cross-legged among a group of Indian women farmers – the so-called poorest of the poor, in a country besotted with categorisation – learning how financial access had transformed their lives. It’s not as if banking is new

to India, however. After all, these are the people who gave the world the mathematical zero.

In The World is Flat, Pulitzer Prize-winning author Thomas Friedman argues that increasingly affordable telecommunications are erasing obstacles to international competition, ‘flattening’ the world for those adaptable and skilled countries and entrepreneurs.

Friedman’s book owes its title to a meeting he had with Nandan Nilekani, co-founder of Infosys, India’s second-largest IT company. Nilekani said countries like India could now compete for the global knowledge industry as never before, since the world had been levelled by the internet and market forces.

India is at once dynamic and chaotic, and quite inspirational. It shows what can be achieved if people are given half a chance by government. Until the early 1990s, India’s economic development was stunted by its isolation from the world economy, and by the inefficient control of its government systems, the so-called Licence Raj.

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 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 was between a Hindustan Ambassador, which was based on FR

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a 1950s Morris Oxford, or a Premier Padmini, based on a Fiat 1100 from the same era. Now, there are over 30 marques on offer in glitzy showrooms, from small Hyundai, Ford and Chevy hatchbacks to top-of-the-line BMWs, Porsches and Bentleys.

Fifteen years ago, travel in India was courtesy of government services. Where Air India once inefficiently dominated the skies, today the struggling national carrier

has stiff competition from private airlines. “The best thing that the government did was to get out of business,” says Prakesh Rao, the head of the Electronics Industry Association of India. “And the best example of this is in the IT sector.”

technoLogIcaL revoLutIonIndia’s IT industry grew from $100 million in revenue in 1992 to more than $40 billion in 2007. Infosys’s revenue climbed from $1.5 million in 1992 to more than $4 billion in 2008, with stock options creating more than 2,000 US-dollar millionaires.

Bangalore is the epicentre of this flat world. Its software industry accounted for 98 per cent of Karnataka state’s $13 billion in exports in 2007. About 1,400 hi-tech firms, as well as almost every major multinational, operate here. Bangalore has enjoyed annual economic growth averaging more than 10 per cent, making it India’s fastest-growing metropolis and home to more than 10,000 US-dollar millionaires. Bangalore’s hi-tech advantages stem from the long-term regional investment made by the government in

01 Volkswagen’s plant in Chakan – inaugurated in 2009, creating 2,500 jobs – is expected to produce 110,000 units per year

02 The author, Greg Mills (in blue top), discusses financial progress with Indian women farmers and a representative from the state ministry

03 Each year, India produces more than one-and-a-half times as many graduates as China

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space, aeronautics, machine tool and electronics firms, which spawned a legion of sub-contractors and necessary skills. This has promoted growth in other sectors, notably biotechnology – nearly half of India’s 265 biotech companies have headquarters in the province.

takIng educatIonaL opportunItIesIndia’s ability to take up opportunities presented by globalisation and domestic liberalisation were related to its skills base. Despite high levels of illiteracy, its skills base is impressive. Each year, India produces 2.5 million graduates and 350,000 engineers, the latter figure more than five times as many as the US. Whatever the drawbacks of the Indian educational system, over a billion people striving to make a living and get ahead provides a certain competitive element. For instance, 400,000 applicants sit the preliminary Indian civil service exams each year. Less than 10,000 are selected for the main exam comprising eight papers and, of these, about one-quarter are called for interviews for 900 posts.

Competition has been heightened by the slow dismantling of the caste system. ‘Reservation’ of educational opportunities for so-called lower castes has pushed up the grade requirements for others. No student can now be guaranteed a place in the sciences without a score of more than 90 per cent.

But technology is just part of the story. In Konapur village, for example, 300 (of 366) families judged to be poor are part of self-help groups instigated by the UN in the 1960s and numbering about 10 women each. Ten million women from 35,000 villages are organised in this way across the state. The scheme has seen monthly income per family grow fivefold in a decade to $50.

optima report

01 Workers in a biotechnology laboratory in Bangalore research the genetic cloning of plants to improve productivity

02 Evening market traders use solar-powered lights, many bought with small loans, in Ahmedabad, western India

Since 2000, these groups have been part of the government’s Self-Empowerment Rural Poverty (SERP) programme. Better training, enforced savings and access to banking finance have transformed the women’s lives – improving their economic conditions, giving them more power in decision-making in their families and ensuring their children’s education and better health care.

In addition, in the past three years, SERP has been integrated with the Community Managed Sustainable Agriculture scheme, an organic revolution focusing on the small-scale farmer using local rather than imported goods.

Before SERP, farmers would have to borrow from lenders at exorbitant interest rates, sometimes 100 per cent. Now, they have scheduled repayment schemes at 12 per cent interest, on which there is zero default. The women themselves keep the books, and plan to lease more land and diversify their sources of income.

The government can only do so much and, where it cannot help, it is learning to leave it to the private sector, helping reduce corruption and improving transparency and competition.

Of course, much remains to be done in India – from improving sanitation and building more and safer roads, to raising literacy and the quality of education, and stamping out corruption.

However, the results of the transition from its paltry growth rate before its liberal reforms are impressive. India is now the fourth-largest economy in the world in PPP terms. Its reforms have encouraged entrepreneurship, the lifeblood of every economy. And the ambition of its entrepreneurs has put it in a better position to benefit from trade with the richer world outside.

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Across the wide Hooghly River, a branch of the great Ganges, is the Texmaco railway carriage factory that has been building wagons since the mid-1950s. It now turns out between 4,000 and 5,000 wagons a year – about a quarter of the national requirement.

It is a vast concern. At the main gate, there are hundreds of wheels, mainly imported – owing to a shortage in Indian manufacturing capacity – from China and Romania. Inside is a foundry melting down scrap steel to mould into couplings, tracks and other specialist bits, while across the plant are 6,500 square metres of factory where the wagons are constructed.

Not for nothing is this industrial area around Howrah known as the Sheffield of India after the once-powerhouse steel city in the north of England. Five wagon factories congregate in an 11-kilometre radius. Such scale is necessary to service India’s vast – and growing – rail network of 64,000 kilometres.

Indian Railways’ 1.6 million workers make it one of the world’s largest single employers. It carries 20 million

Case studyIndIa’s raIl network GIves afrICa a lesson In InfrastruCture

passengers and two million tonnes of freight daily. Construction of the north-to-east and west-to-east dedicated freight corridors started last year, totalling about 2,500 kilometres of new track in a project worth an estimated $80 billion.

By contrast, Africa has neither the domestic engineering capacity nor funds to catch up in terms of infrastructure, potentially stunting economic growth and human development.

Between 1980 and 1998, Africa’s spending on infrastructure nearly halved to just over one per cent of GDP.

A study on African infrastructure, carried out in 2009 and involving a partnership of African institutions and the World Bank, estimated that the continent needed to spend $93 billion a year to address its infrastructure backlog.

At independence in the 1960s, southern Africa had the best sub-Saharan African rail and road network. South Africa’s rail network is the 10th largest worldwide, representing about 80 per cent of Africa’s total, yet just 13 per cent of all freight is transported by rail. South Africa’s transport costs amount to 53 per cent of overall goods’ costs, well above the global average of 39 per cent.

This is not just a South African problem. In the 1970s, Zambia was considered to have one of the best rail and road transport networks. Yet within 20 years, the Zambian government estimated that 80 per cent of the road network had deteriorated through vandalism and lack of investment.

India’s experience teaches Africa that if governments want to use the railways as a development and economic asset, they have to invest significant sums. But costs can be reduced by public-private partnership – for instance, the Wagon Investment Scheme allows Indian companies to purchase rail trucks for use on Indian Railways’ network – or by using existing resources more effectively, partly by increasing competition and fixing soft (customs, for example) rather than hard infrastructure.

Meeting Africa’s infrastructure needs is therefore not primarily about money, as attractive as that idea may be to those wanting to shift the responsibility elsewhere. It is about putting in place the right systems of planning and maintenance. It’s about making infrastructure a domestic political priority.

03 The Texmaco railway carriage factory produces up to 5,000 wagons annually, vital for servicing India’s growing rail network

04 Delhi Metro Rail Corporation employees work at the construction of a flyover in New Delhi, March 2010

Dr Greg Mills heads the Johannesburg-based Brenthurst Foundation, which encourages innovative development thinking in formulating strategies and policies for strengthening Africa’s economic performance. His latest book, Why Africa Is Poor – And What Africans Can Do About It, was published by Penguin in August 2010.

authorGreG Mills

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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.

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about $500 million of ‘benefit’ to the business’s cash flow in the first two years.

Asset optimisation covers the full spectrum of the business’s activities, from resource definition to sales, but the one common ingredient in this programme’s success, in French’s view, is “people, people and people”.

Australians are some of the most competitive people on earth, says French. “They want to be winners and hold their heads up high. The asset optimisation programme has been both a great motivator and a great means of recognition for our people. In a sense, it is acting as the glue that binds the organisation together.”

That is why, over the next two years, the business unit expects to generate further very significant savings through a range of initiatives covering everything from blasting to product blending.

‘Baby-deck blasting’ instituted by management at the Dawson thermal and metallurgical coal project at the southern tip of Queensland’s legendary coal belt in the Bowen Basin is instructive of the root-and-branch nature of asset optimisation. In 2008, Dawson’s drill and blast

nglo American is the quiet Australian. The company is

Australia’s fourth biggest coal miner and its second biggest

producer of metallurgical coal, one of two mineral

commodities in which the great southern land boasts truly world-class resources, infrastructure and geographic advantage. But few Australians, outside of those who work for the local arm of the global miner, would likely recognise the name.

Not that this troubles in the least the boss of Anglo American’s Metallurgical Coal business, Seamus French, and his team. They are too busy linking up its Australian hard coal foundations. Under their Brisbane-based direction, a once-disparate collection of Australian metallurgical coal assets is meeting the aggressive performance preconditions expected of this key pillar of Anglo American’s mining world.

The team’s challenge, and its success rate, was acknowledged last September by Anglo American chief executive Cynthia Carroll. In a speech to the Brisbane Mining Club, Carroll noted how the company’s Australian profile had been created by the acquisitions of geographically 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 joined up”, Carroll went on to say: “We had performance targets that we never delivered, with mines operating pretty much independently. This business made only a marginal profit in 2007, partly because of logistical issues, but also because of operating inefficiencies and being ineffective. We have now turned this situation around substantially under Seamus French’s leadership and his team.”

unlOCKinG AsseT VAlueTheir success has made the metallurgical coal commodity business unit a key contributor to Anglo American’s asset optimisation programme. According to Carroll, the theory is all about “unlocking value of our existing assets through cost and productivity improvements by identifying and disseminating best-of-class business solutions”. Carroll’s target for asset optimisation, combined with efficiencies and synergies arising from a rationalised global supply chain, is the delivery of $2 billion1 of ‘profit enhancement’ by 2011. Certainly, Metallurgical Coal has done its bit to ensure this target is achievable, having developed a five-year asset optimisation plan that has paid quick dividends, generating

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PreViOus PAGe Dragline removing overburden in the open pit at Capcoal’s Lake Lindsay operation

01 Production supervisor Ken Geall oversees all production activity at Callide mine

02 Left to right: Seamus French, Queensland minister for natural resources, mines and energy and minister for trade Stephen Robertson, Cynthia Carroll and the inventor of the fatigue-monitoring SmartCap Dr Daniel Bongers in Moranbah, September 2009

03 Callide mine environmental officer Grant Staff examines a monitor that records dust levels created as part of normal mining activities


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engineers identified that existing blasting methods were responsible for the majority of coal loss at the mine.

So, a smarter baby-deck blasting system was developed to eliminate damage to the coal seam. It requires two shots in quick succession in every blast hole to divert pressure upwards and eliminate damage (and value destruction) previously caused to the top of the coal seam.

And Dawson’s ‘silver rules’ set visual standards that specify what machine operators should be able to physically see when they are removing overburden and how they should operate machinery when close to the top of the coal seam to avoid damaging the coal.

A sTrATeGY OF TrAnsFOrMATiOnNot only do these innovations make a difference to the value extracted at Dawson, but they are being shared. “We produce a single commodity and all our mines are relatively close to each other. This means best practice can be spread across our seven-strong collection of coal operations through Queensland’s Bowen Basin and the Hunter Valley in New South Wales,” French says.

“In asset optimisation, we are delivering one of the many programmes created over the past three years as part of our strategy to transform the business.

“Phase one of the strategy started in 2008. It was about creating a performance culture, about providing clarity of direction, enforcing accountability and installing performance management. This set the foundation for everything we have subsequently achieved.

“In phase two, we established improvement processes bit by bit and got the business focused on safety management, on improving business and production processes and removing bottlenecks.

“Then the global financial crisis came along and, well, it was interesting,” French says with understatement. “As a management team, we asked, ‘does this change our plans?’

“The answer was, it didn’t. Rather, we had to speed up what we were already doing. We ended up improving productivity by 24 per cent. From 2003, the Queensland coal industry in particular had seen continuous dramatic growth. And growth means that sometimes you lose something in efficiency… you become a little fat, a bit bloated,

company profile


you take on people too quickly; and costs increase unchecked because you are chasing production the whole time. So, oddly, the downturn was a welcome half-time, if you like. It gave us a chance to draw breath, refocus and trim the sails. We ended up maintaining production levels with a 20 per cent reduction in the workforce – and took out low-margin operations at the same time.”

DOuBlinG in A DeCADeAustralia’s coal industry is a diverse and idiosyncratic beast and, to some degree, Metallurgical Coal’s task is defined by that character. So, while its growth focus is set firm on expanding the business’s premium metallurgical coal footprint, its legacy – and ongoing business – responsibilities include thermal and PCI (pulverised coal injection) operations.

In 2009, attributable production from the suite of Anglo American’s Australian coal operations totalled 26.7 million tonnes (Mt), of which metallurgical coal contributed 12.6 Mt and thermal coal 14.1 Mt. Anglo American has realistic ambitions to double that output over the medium term.

“We are not a strictly metallurgical coal business,” French says. “We produce a range of coals, because that is how we have grown. We have thermal going into the Queensland power business. But we have a strategy that expresses our growth ambitions in terms of value – and the high-value assets here are metallurgical coal. We want to double business value over the next 10 years, and we have worked out the arithmetic of what that will look like in terms of cost, revenues and annual production.

“We have a resource base of about four billion tonnes, and about one billion of that is metallurgical coal. We have mapped out a project pipeline for the next decade. We can

“like everyone else, we keep an eye on overseas opportunities. We are certainly looking beyond Australia to secure growth platforms.”SeaMuS french head Of metallurgical cOal

achieve that doubling of value, which also translates into nearly doubling production.”

Growth, though, will depend on more than locking in the investment required for the four projects Metallurgical Coal is currently investigating, which include two high-quality metallurgical coal opportunities in Queensland called Grosvenor and Moranbah South (both of which are close to the existing Moranbah North operation) and the Dartbrook and Drayton South thermal, semi-soft and PCI prospects. The real key to growth is going to be securing the logistical capacity needed to shift coal to an increasingly diversified customer base.

The second part of that strategy is about customers, Seamus continues. “We have a marketing strategy based on established economies and higher-growth economies like China and India. Currently, Japan and South Korea make up between 60 and 70 per cent of our demand profile, but we expect China and India to be the destinations for about 90 per cent of our growth volume in the future.

“Naturally, like everyone else, we keep an eye on possible overseas opportunities for expansion. We are certainly looking beyond Australia, looking at where else in the world we can secure growth platforms that will make a meaningful difference to our business.

01 Metallurgical Coal head Seamus French presents the quarterly performance review at Dawson mine, July 2010

02 Geology co-ordinator Colin Ritchie, coal and partings co-ordinator Bridget Perkins and mining engineer Shane Bellamy study a pre-strip plan

03 Clay Stitt, mining co-ordinator for surface operations, at the open cut operations at Lake Lindsay

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So what are the major challenges to the business unit’s plans in Australia? French considers.

They include infrastructure, attracting the best people and government taxation and climate change policies.

“When we talk about doubling production,” French continues, “it means doubling our logistics capacity, both rail and port. The challenge in Queensland is that it is a very crowded infrastructure space.”

POliTiCAl DeVelOPMenTsRecently, two touchstone issues have thrust Australian mining into the political spotlight: the attempts to introduce a Carbon Pollution Reduction Scheme (CPRS) and, more recently, a Resources Super Profits Tax (RSPT).

Introduction of the CPRS was subsequently delayed by former prime minister Kevin Rudd to 2013. The RSPT was renegotiated by his successor, Julia Gillard, who replaced it with the more agreeable Minerals Resources Rent Tax (MRRT)2. Metallurgical Coal intends to play an active role in working through the detail of the MRRT with government as well as in the formulation of policy to address climate change.

“The CPRS was intended to incentivise industry to produce less carbon,” explains French. “We have no issue with that intent. We acknowledge that pricing carbon

and giving people an incentive to reduce its generation was logical. But there is no point in forcing an incentive on anyone if the industry doesn’t yet have the technology to reduce emissions – and the reality is that such technology does not exist for the majority of coalmining emissions, which are fugitive in nature.

“Everyone who looks at the coal industry has to understand that pricing is global. Everyone gets the same price. For an Australian project, we get the same price as our competitors around the world. We can’t reflect our unique cost increases through pricing. The CPRS, as set out initially, and the RSPT would have left us at a global competitive disadvantage.

“We will continue to deal with these external challenges as they arise,” concludes French, “but the real challenge will always be within our business, in continually motivating ourselves to outperform the competition and seek new horizons. For us, being part of Anglo American means continuously improving our performance and contributing to the objective of it becoming the leading global mining company. And this challenge, I have every confidence we can meet.”

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

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1 All dollar figures in this feature denote US dollars.2 optima went to press before the 2010 federal election.


OriGins:Anglo American acquired Shell Petroleum Company’s Australian coal assets in 2000. The Dawson project was completed in 2008, while a 70 per cent stake in Foxleigh coal mine was acquired in the same year. The Lake Lindsay project, part of the Capcoal complex, has reached the implementation phase ahead of achieving full production in 2012.

WOrKFOrCe:Anglo American’s Metallurgical Coal business in Australia employs more than 3,000 people.

COre ACTiViTies/PrODuCTs: The vast majority of metallurgical (i.e. hard coking coal) and pulverised coal injection (PCI) coal is exported to steelworks in China, Japan and South Korea, while thermal coal is destined for power generation in both the domestic and export markets.

PrODuCTiOn DiVisiOns:1 The Callide mine provides 9 million tonnes per annum (Mtpa) of low sulphur, sub-bituminous thermal coal from its open-cut mine.

country profileanglo aMerican’S coal buSineSS in auStralia

2 Capcoal operates two underground mines and two open-cut mines. Together, they mine around 12 Mtpa of coal to produce in excess of 9 Mtpa of prime-quality hard coking coal, PCI and thermal coal.

3 An open-cut mining operation, Dawson spans almost 60 kilometres and produces approximately 7.5 Mtpa of coal.

4 Drayton is an open-cut coal mine. It produces around 5 Mtpa of thermal coal for export and domestic markets.

5 Foxleigh is an open-cut mine that currently produces 2.5 Mtpa of premium quality PCI coal for the steelmaking industry.

6 Jellinbah East is an open-cut mine producing low-volatile bituminous, mainly PCI coal for the steelmaking industry.

7 Moranbah North is an underground coal mine with an output of about 4.5 Mtpa of high-quality coking coal used in steelmaking.

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OTher inTeresTs:Samancor Manganese is a joint venture between BHP Billiton (60%) and Anglo American (40%). It owns two operations:

8 Located on Australia’s northern coastline, the Groote Eylandt Mining Company Pty Ltd (GEMCO) mines and processes manganese ore.

9 The Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO), the only manganese ferro-alloy plant in Australia, is located on the north coast of Tasmania.

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RESOURCE PROFILE


Times of change for nickel

nickel pasTAlthough nickel has been found in metallic objects dating back to 3500 BC, it was first identified by Swedish chemist 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 silver (German silver). Demand for nickel only really took off, however, following the development of stainless steel early in the 20th century.

nickel presenTNickel is the Earth’s fifth most common element after iron, oxygen, silicon and magnesium. It occurs as two main deposits: sulphides that are found 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.

As its brazilian nickel site nears completion, Anglo American looks to expand in the metal’s global market. Nicky McClure reports.

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nickel’s fuTureNickel 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).

In Brazil, Anglo American wholly owns the ferronickel producer, Codemin, and in Venezuela it has a 91 per cent interest in the Loma de Níquel ferronickel operation. In addition, the company has a 100 per cent interest in the Barro Alto nickel project in Brazil.

Anglo American now has a management team dedicated to nickel, which is focused on the successful execution of the Barro Alto project. At the end of June 2010, work on Barro Alto was 94 per cent complete and on schedule. Once it becomes operational in early 2011, the project is forecast to produce an average nickel output of 36,000 tonnes per annum over a mine life of around 26 years. To put that into perspective, Anglo American’s total production in 2009 was 39,400 tonnes (which comprised the Nickel business unit’s 19,900 tonnes and the Platinum business unit’s 19,500 tonnes).

Beyond Barro Alto, the business unit has the chance to develop the Jacaré and Morro Sem Boné projects, which would make Anglo American a growing player in the nickel market and one that is well positioned to ensure that nickel continues to contribute to our lives in the years to come.

A major application of ‘electroless’ nickel today, says Dr Cutler, is computer hard discs: “It forms an extremely uniform, smooth, stable, non-magnetic substrate for the magnetic recording layer, as well as providing corrosion protection for the underlying disc.”

Nickel’s resistance to corrosion is one of its most valuable properties and it is used in the production of stainless and heat-resisting steel. About 60 per cent of all refined nickel produced is used by the stainless steel sector. In a more recent development, the Chinese stainless steel industry, which has been absorbing growing volumes of nickel pig iron (NPI), is looking to a potential annual offtake of 100,000 tonnes of the nickel in NPI form.

Around 25 per cent of nickel goes into other steel and non-ferrous alloys. The metal is used to make corrosion-resistant alloys for use in chemical plants and in

For more information about nickel, visit: www.nickelinstitute.org

super-alloys that can withstand extreme temperatures for industries such as aviation.

Nickel has some other special characteristics. Its low expansion properties mean it is widely used as lead-frames in packaging electronic chips and in shadow masks in television tubes, while its soft magnetic properties are ideal for electromagnetic shielding of computers and communications equipment.

Dr Cutler also notes the important part nickel plays in portable power provision. “Nickel-cadmium rechargeable batteries have been in use for several years. More recently, we have seen higher performance, rechargeable nickel metal-hydride batteries, leading to improved performance from cordless power tools and mobile electronic equipment.”

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01 Nickel (featured in its ferronickel form) is a key component in the production of stainless and heat-resisting steel

02 Anglo American’s Barro Alto nickel project in Brazil, pictured July 2010, is on track to become operational in the first quarter of 2011

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operaTion locaTion sTarT of average nickel producTion producTion (ktpa)

morro do níquel Brazil 1962-1998 2.5

codemin Brazil 1982 10

loma de níquel venezuela 2001 17

Barro alto Brazil 2012 36

Jacaré phase 1 Brazil 2015 40

morro sem Boné Brazil 2015 32

ANglo AMeriCAN’s ferroNiCkel operAtioNs

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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.

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ying on the so-called Pacific Ring of Fire – along which 90 per cent

of the world’s earthquakes have occurred because of 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 shook the region and beyond on 27 February 2010.

The earthquake and subsequent tsunami off the coast of the Maule region, 100 kilometres north-north-east of Concepción, left thousands homeless, and disrupted industry, with then president Michelle Bachelet declaring a “state of catastrophe” and describing rural areas where “everything has tumbled to the ground”.

As supermarkets, chemists and shops were looted, the government and authorities were reported to be overwhelmed by the chaos. Even the death toll was hard to manage, with the figure registered officially as 800 at one point, before it was eventually recalculated as just over half that.

Around 300,000 houses, hospitals, schools and roads need to be rebuilt – a process that could take three or four years. The country is also counting the cost of emergency aid and lost production, with bridges and factories

destroyed in pivotal industrial areas. In the immediate aftermath, public transport services shut down, roads were diverted and Santiago Airport closed because of damage to the terminal and control tower. Talcahuano port, critical 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

LPReVioUs PaGeEven though it was 100 kilometres from the magnitude- 8.8 earthquake’s epicentre, Concepción suffered major damage to its buildings

01 On the day he takes over as Chile’s president, Sebastián Piñera (in red) visits Constitución, one of the zones most affected by the earthquake

02 One of many boats tossed on to the street in the port town of Talcahuano

“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

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substantial sovereign wealth funds built up during the 2002-2008 mining boom.

In fact, it’s Chile’s shrewd financial and regulatory strategies that mean it is better able to respond to such a tragedy than, say, Haiti, which just a month before suffered its own earthquake that, while not as strong as Chile’s, killed around 230,000 people and left a further million homeless.

Superior infrastructure and construction standards meant Chile’s newer buildings survived, with mostly older buildings collapsing. Cautious spending and a robust, well-managed 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 exports, as well as previous copper earnings saved in overseas investments, to finance the recovery.

diReCt assistanCeBar a brief cut in power supply to sites, including Anglo American’s Los Bronces and El Soldado mines, there was little impact on the copper mining industry, which mainly

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

The Richter scale reading of the 2010 earthquake, the world’s third biggest (the largest ever recorded was also in Chile, in Valdivia – registering 9.5 in 1960)

Official number of fatalities from the 2010 Chilean earthquake. The largest share – 87 deaths – was in Constitución

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03 The community of coastal town Dichato, 40 kilometres from Concepción, was hit by a tsunami caused by the earthquake

04 Rescue workers with heavy equipment enter an apartment building in Concepción destroyed by the earthquake

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operates in the northern half of the country, where there were only relatively small aftershocks, and mines were quick to resume operations.

Chile holds one-third of the world’s copper supplies and the copper price being maintained above the $3/lb mark means the sector is in a good position to help the country get back on its feet. More directly, the major mining players are funding relief efforts. Anglo American pledged a donation of $10 million – but has chosen to invest it in a more practical way than merely handing over a cheque.

“We wanted to assist directly,” explains Jorge Poblete, who at the time was manager in Chile of the Anglo American Foundation, a global endeavour to help charitable causes. “The disaster was on such a big scale that we wanted to ensure our funding was distributed in the best way. We worked with the government to understand what was needed in terms of structures and money. We are not the only company working in these areas and we need to avoid allocating money in the same places.”

As well as liaising closely with local authorities, Anglo American employees travelled to the affected zones within days of the quake to see for themselves the full extent of the damage and decide how their plans would integrate with other recovery activity.

“I hadn’t seen anything like it before,” said Jorge, who visited the area almost every week for some time after the disaster. “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 were no lights or water.

01 Six new schools have been built using the same model as Anglo American’s on-site accommodation for employees and contractors

02 Certain of the new schools are so large that they cater for twice as many pupils as buildings that were destroyed

03 Despite a lack of materials and a poor electricity supply, the new structures were completed on schedule

The government had to put the army on patrol because there were a lot of social problems.

“When we arrived, we wondered how we could turn around something so devastating. We didn’t know where to start and even the local authorities were in a state of shock. It was difficult to know how many people were affected.”

a modeL edUCation systemImmediately, Anglo American was involved in the clearance of debris, despatching about 30 trucks and other items of

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After the earthquake, the whole nation

was shocked. There were terrible images in every single newspaper and on every TV channel. I offered my help if any aid was going to be organised from Anglo American Chile.

The first decision was to bring machinery to one of the towns that we knew was in a critical situation, Constitución. We didn’t have much information about other towns and cities. As a team, we decided to travel through the whole affected region to get a clear overview of the damage.

My first reaction was huge shock. Many buildings were completely destroyed, people were desperate and there was a strong putrefaction smell everywhere. The biggest problems were water distribution and the obstructed streets and roads. My role was to match the machinery we distributed to the needs of the particular towns and cities

inside view martin elton ›› anglo american foundation business manager for chile

in order to achieve the best outcome.

After coming back, the question was how to maintain that support. The situation was so complex. Nevertheless, we had one green light. Education is one of the main issues we

embrace as a company. After we pledged to reconstruct the schools destroyed, the government set the challenge and we had only four weeks to build the first four schools. It was a hard, complicated project. Every single day, there was a different problem. For example, sometimes we didn’t have materials because of the high demand for them or the electricity system had failures. But, in the end, we did it. People were fascinated because these were the first buildings constructed after the disaster and they became symbols of recovery.

I learnt a lot from this experience, but mainly that, if everybody works with the same goal, the work itself and the results are much better.”

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 method followed the same fast-assembly model Anglo American uses to build on-site accommodation for its employees and contractors.

The company’s six constructions have come together at impressive speed, says Jorge. “Most people didn’t think it was possible to build schools so quickly. They’re not accustomed to our model system. When we said we would rebuild a school in four weeks, people said we were crazy, but they’ve been amazed by the solution.

“We’ve worked very hard to reach these goals. And it’s not just the schools themselves. We’ve put in gardens, furniture, books and other study materials.”

edUCationaL and soCiaL imPaCtThe rebuilt schools have already had an enormous and instant impact on thousands of schoolchildren.

“You must imagine that the teachers and students lost everything,” Jorge stresses. “One moment, they have schools. The next: none. A lot of students left the zone, but have returned now that new schools have been built and there are classes all day.”

In some zones, two destroyed schools that catered for 800 children each have been replaced with one more spacious institution. For instance, in Yungay in the hard-hit eighth region, the newest of all the schools built and kitted out by Anglo American caters for 2,000 pupils, from pre-kindergarten to the final grade of secondary education. At 2,700 square metres and

“most people didn't think it was possible to build schools so quickly. When we said we would rebuild one in four weeks, they said we were crazy – but they've been amazed.”Jorge Poblete

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with 34 classrooms, workshops, a computer room, library, dining area and staffroom, not to mention a playground, it is the largest modular school built in Chile since the earthquake.

What the team did not anticipate was the positive impact the schools would have upon the wider community, says Jorge. “Where there is a school, there is a kitchen, which, in these rural areas, makes a school a centre for the whole community, not just students. Now, once again, people have a place to stay safe, to have lunch and breakfast.”

The impact has not gone unnoticed in the upper echelons of government. At the official unveiling of the new Enrique Donn Müller school, Joaquin Lavin and Anglo American Chile CEO Miguel Angel Duran were joined by Chilean president Sebastián Piñera, who took office just 12 days after the earthquake struck, as well as the mayor of Constitución, Hugo Tilleria, and local representatives.

LonG-teRm soLUtionsLooking ahead, Anglo American will work with the community to plan carefully where to invest the next phase of money, not to mention company employees’ time and skills.

“The emergency had just happened when we first visited. Now, the government needs long-term solutions,” reflects Jorge. “One of the biggest problems is housing. A lot of people are still living in emergency accommodation and we have been analysing whether to put money into that or more new schools.”

The number of people identified as affected by the earthquake has gradually increased from initial estimations and Jorge believes that, working in partnership with government, Anglo American could rehouse a town of around 300 families in structures built with the same construction efficiencies as the new schools.

The way the country has pulled together has struck a chord with everyone on the project and, for Jorge particularly, it has been emotional. He was preparing to return to work after a long absence when the earthquake struck. “I was very ill in December and almost died. I returned to my office on 4 March, just a few days after the earthquake struck. For me, it was a motivating experience to be able to help out others.”

But why do organisations such as Anglo American feel spurred to get involved? “Something like this is hard for the country,” ponders Jorge. “We have a commitment to the whole of Chile, not just the zones we’re in. Anglo American has been well known here for the past five years and mining is the main industry. If the biggest mining companies don’t do something to help, people will lose faith in us.

“Within Anglo American, people acknowledge that we’re doing something important and they feel proud when they see how we’ve responded.”

“it was a complicated project. every day there was a different problem. But we did it and these buildings became symbols of recovery.”martin elton, anglO american fOundatiOn business manager fOr chile

01 Residents from the local community clean desks in one of the new schools constructed by the company in Constitución

02 Pupils return to lessons in one of the new buildings constructed by Anglo American employees, the Enrique Donn Müller School in Constitución

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Case study China earthquake

Anglo American employees provided invaluable help when the Sichuan province in China was hit by a devastating earthquake on 12 May 2008. On top of the company’s own $10 million donation towards reconstruction, Anglo American employees’ own resourcefulness and generosity have helped the area start to recover from one of China’s most destructive earthquakes in more than three decades.

Members of Anglo American’s China exploration team were at Chengdu Airport en route to Xinjiang. At approximately 14:30, an earthquake of magnitude 7.9 struck 90 kilometres west of Chengdu – killing 70,000 people and leaving almost four million homeless.

The exploration team in the terminal saw people injured in the

panic and stampede to get out. Project geologist Barry Jones from the Platinum business unit recalls: “I grabbed a colleague and we stood against a wall in the airport. The tremors were getting more intense and pieces of the roof were starting to fall off, other people had joined us against the wall and I began to feel claustrophobic, and fear set in.”

Barry and two colleagues escaped unhurt and made their way home to the city centre of Chengdu, where they attempted to make contact with Platinum’s head office in South Africa, Anglo American’s Beijing representative office and Barry’s wife. They heard that their colleagues and families were safe – “The relief of seeing my wife was a huge stress off my shoulders,” says Barry – but Anglo American’s partners were among millions who’d lost team and family members and property.

The team worked with Chengdu’s expatriate community to gather and distribute food and clothes to areas where they were most needed. “Words can’t explain the devastation,” says Barry. “We realised how futile our attempt was to distribute what little we had.”

A more formal long-term plan was made to assist in ways the team cannot have possibly imagined, from co-ordinating five-tonne trucks to deliver water each day and arranging transport for volunteer teachers to hold lessons in makeshift classrooms, to retrieving corpses from the rubble. “Those images are imprinted on my mind,” says Barry.

“It will take years to rebuild the structures and villages,” reflects Barry. “Far longer than reported and far more money will be needed than that provided by donations alone.”

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

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Rob Jones is the editorial adviser on Optima. He is an award-winning journalist with more than 10 years’ experience editing and reporting for corporate titles on subjects including energy, resources, construction and engineering.

authorrob Jones

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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.

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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.

Cover:Tyres destined for haul trucks and earthmoving equipment are stockpiled at the storage facility at Anglo American’s Mogalakwena platinum mine in South Africa. See article on page 18.phoTo by plAneTkb for Anglo AMericAn (plATinuM)

ISBN 00304050

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IntervIew: CYNTHIA CARROLL BrICs: THe gROwINg mIgHT Of bRAzIL, RussIA, INdIA ANd CHINAAustrAlIA: quIeT gROwTH IN meTALLuRgICAL COAL dIsAster support: pRACTICAL ReLIef effORTs IN CHILe

the future a look inside anglo ameriCan’s

platinum business

optimaseptember 2010

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Optima Volume 56