Presentation to Socially Responsible Investment Analysts
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The presentation outlines Anglo American's vision to create sustainable value through partnerships with stakeholders and emphasizes a turnaround strategy aimed at doubling operating profits by 2020. It highlights the importance of social responsibility, environmental management, and human rights, while also reporting financial performance amidst commodity market challenges. The document details specific operational improvements and strategic initiatives that focus on health, safety, and socio-economic development in host communities.
Presentation to Socially Responsible Investment Analysts
- 1. PRESENTATION TO SOCIALLY RESPONSIBLE INVESTMENT ANALYSTS 17 March 2015 Copper, Los Bronces Change image?
- 2. AGENDA 10:00-11:30 • Safety briefing • 2014 performance • Q&A 11:30-12:30 Break out groups AGENDA
- 3. 3 OUR VISION, MISSION AND VALUES Where we are going, what we do… …and why we do it. Vision… “To be partners in the future”… Our vision reflects our belief that for us to be successful we need to create partnerships with each of our core constituencies. The delivery of returns to shareholders will only endure if we deliver value to society, as seen through the eyes of our key stakeholders. Mission…“Together, we create sustainable value that makes a real difference”… We will lead the industry in resource development, mining and operational innovation to drive margins that support the delivery of exceptional returns from our assets. Our employees ‘are’ the business and we partner with our customers and our broader stakeholders across society to together, deliver sustainable value that makes a real difference.
- 4. 4 THE DIVERSIFIED MINER WE ARE ANGLO AMERICAN HOW WE WORK TOGETHER OUR WORLD OUR AMBITION HOW WE DELIVER The Diversified Miner that takes a values-based approach to business by together, creating sustainable value that makes a real difference to become partners in the future Responding to a changing world in which: • Mining remains important, but demand growth and prices are normalising • Anglo American has not delivered on its potential • A business turn-around is needed alongside long- term continuous improvement and profitable growth Double our 2014 operating profit by 2020 by: • Focusing on core mining assets with long-term value creation • Maintaining a highly competitive mind-set, with innovation and delivery at the forefront • Developing critical core skills to improve our returns Four strategic imperatives: • Deliver Driving Value • Focus the portfolio • Develop core business processes • Create a high performance culture Measure progress through a holistic Business Scorecard The right people in the right roles doing the right work (organisation model) and our structured approach for how we set targets, plan, execute and improve work (operating model) Our strategy and its component parts…
- 5. 5 MEASURING PERFORMANCE We measure performance to shareholders in three parts… …to ensure our results are sustainable. EFFECTIVENESS1 EFFICIENCY2 SUSTAINABILITY3 Total Shareholder Returns (TSR) Return on Capital Employed (ROCE) Seven Pillars of Performance • Reflects returns to shareholders in the form of share price improvement and cash (in the form of dividends and equivalents). • Reflects how well we are using your capital to generate TSR. • Reflects delivery of performance in areas that require ongoing focus to ensure sustainable results and includes… SAFETY & HEALTH ENVIRONMENT SOCIO-POLITICAL PEOPLE PRODUCTION COSTS FINANCIAL RETURNS
- 6. 6 PARTNERS IN THE FUTURE We will only be able to deliver sustainable returns…. …if we deliver a real and lasting contribution to society. Permitting and compliance Gaining and maintaining our licence to operate Relationships with stakeholders Building and maintaining relationships with stakeholders Pillars of value Material Issues Safety and health Safety and health Water security and quality Energy security and climate change Environmental impact management Environment Human rights Socio-economic development Socio-political People Human Resources Custodians of precious resources that enable economic development and raise the living standards of billions of people. We focus on the material sustainability issues identified…with…key stakeholder groups. Ambition to lead fundamental and sustainable change in the mining industry. How our material issues connect to our 7 pillars of value
- 8. 8 FINANCIAL HIGHLIGHTS Despite commodity headwinds our operational improvement continues… …allowing us to confirm our commitment to the dividend and net debt targets. Group underlying EBIT $4.9 bn down 25%, impacted by lower prices and Platinum strike Attributable ROCE 8% (pre impairments) Capital expenditure $6.0 bn, due to efficiencies and project completions Dividend maintained 85 US cents per share, reflects performance improvement momentum Underlying earnings $2.2 bn (EPS $1.73) down 17% Net debt $12.9 bn with $15.1 bn liquidity, reflects operational and capital management Operating cash flow $6.1 bn, continuing operational improvements underpin solid performance
- 9. 9 Sishen exceeds 35Mt production target • Waste on track for 2015 & 16 ore targets. Minas-Rio • FOOS delivered ahead of schedule and budget. • Final capex expected $400m lower than forecast. Platinum restructure • Restructuring ahead of targets. • Divestment process underway. Copper turnaround • Los Bronces & Collahuasi operational stability and improvement underpins performance. De Beers • Integration and delivery of operational improvement Nickel recovery on track DELIVERING ON COMMITMENTS We have delivered on our immediate restructuring milestones… …and we have stabilised operating performance across the business. Minas-Rio
- 10. 10 SAFETY We deeply regret the loss of six colleagues to incidents in Australia and South Africa. If we normalise for the Platinum strike improvement is still significant. Focus on major hazards and associated controls has been key in our most significant single year improvement. Total injury frequency rate continues to decline reflecting focus on leadership, culture and employee involvement. Improvements have generally been achieved across the business. We have seen a significant reduction in fatalities and injuries… …with leadership focus and hazard management central to improvement. 8 12 7 6 3 2014 6 2013 15 2012 13 2011 17 2010 15 Loss of life (by business) Total recordable case frequency rate (TRCFR) 0.81 1.08 1.29 2.01 1.44 20142013201220112010 CoalKumbaIOBBaseOMIPlatinum
- 11. 11 PEOPLE AND HEALTH Our people are as vital to our success as our mining assets… …and are part of our host communities. Completed restructuring of Group functions and some Business Unit corporate centres to create a more efficient organisation. Five month strike in the platinum belt concluded in a three- year settlement agreement on 24 June 2014. The impact was managed by maintaining communications, continuing to support health and well-being, and the provision of humanitarian relief. We have also established a programme to address employee indebtedness. 175 new cases of occupational diseases were reported in 2014, compared to 209 in 2013 – a 19% reduction. We are continuing to improve online electronic health systems to track employee health over time. We are increasing our focus on controlling health risks at source. We continue our TB and HIV/AIDS programmes as well as investing in broader community health-systems.
- 12. 12 ENVIRONMENTAL IMPACT MANAGEMENT AND WATER Reductions in environmental incidents reflects focus… …and recognition of our responsibilities to communities…the work continues. Environmental incidents (levels 3 to 5) 30 2011 2012 15 2013 27 2014 22 Focus on hazards and management disciplines reflects alignment with safety approach. One Level 4 and 14 Level 3 environmental incidents in 2014 shows a significant reduction from 2013. 70% of our mines are in water-stressed areas, exacerbated by recent droughts: • Additional, non-competing supplies being sought in Chile and Brazil • In 2014, efficiency projects saved 36 million m3 of water, ahead of target Ongoing focus on land rehabilitation, respect for biodiversity and management of waste. Continuing the implementation of good-practice “now” technologies as well as developing innovative new practices. Platinum NNP KIO IOB OMI Exploration CoalDe Beers Copper
- 13. 13 CLIMATE CHANGE AND ENERGY Protect our business and host communities… …from the impacts of climate change. On track to meet our energy efficiency and GHG targets. In 2014, energy savings of 4.3m GJ were made, equivalent to a 5% reduction against projected consumption. Total GHG emissions avoided were 4.2Mt (3.4Mt in 2013), equivalent to a 22% reduction against projected consumption. Piloted guidance for sites on adapting to extreme weather and climate change at De Beers’ Venetia mine Launched FutureSmart – our new collaborative drive to accelerate our ability to use innovation to address critical challenges. One of its open forums is dedicated to sustainability. We accept the science of climate change but continue to advocate for the sustainable use of coal, including CCS. We believe in the responsible mining of coal We have assessed that the “stranded asset” risk in respect of our existing coal assets is low due to their asset life, quality and cost curve positions. Will be developing coal demand forecasts informed by climate change scenarios, to inform our coal project investment decisions as part of our portfolio of commodities. Platinum and copper could benefit on the upside.
- 14. 14 STAKEHOLDER RELATIONSHIPS Developing trust by building mutually beneficial relationships… …to make a lasting and positive difference The game has changed and we need to adapt. Our business faces a growing set of expectations as well as a more challenging legislative and permitting environment. As an industry, we need to nurture our relationships, do things differently and respond to the long term aspirations of stakeholders: • Kellogg Innovation Network’s Development Partner Framework • Dialogue with faith groups Minimum permitting requirements have been established to review current practice and retain social and legal licences to operate by demonstrating compliance with permits, responsible environmental management, and the equitable distribution of economic value. Work to strengthen sense of partnership with host Governments and participate in public policy issues such as the UN’s post 2015 development agenda. Insert picture
- 15. 15 DEVELOPMENT PARTNER FRAMEWORK Our ambition is spread across three time horizons… …as we believe this work is “Mission Critical” in our industry. We aim to… …reset global conversations. 20162030+ 2030 Do No Harm Provide safe and healthy workplaces Respect the rights of local stakeholders Honour our licensing commitments Net positive impact… Change in mining approach to achieve community support Shared Purpose Employees are moved to realise our vision Relationships with business and social partners Delivering on all of our commitments Flourishing Ecosystems… Competitive companies, communities and countries all win together Clean, effective and efficient mines. From “extractive industry” to development partner Support employee wellbeing Employ leading designs and technology Work with others to reshape perception of mining To be a valued part of society Have a net positive impact on local communities Integrated into operating model Environmental and social responsibility
- 16. 16 SOCIO-ECONOMIC DEVELOPMENT Maximise the local benefit of our presence and build on local capacity… …to create long term development beyond our mines. Strategic focus on job creation through local procurement, enterprise development and workforce development. This also depends on fostering robust partnerships and on ensuring governance and accountability in implementing initiatives. 2014 marked 25 years of delivering enterprise development, supporting over 96,000 jobs via our established programmes, Zimele and Emerge, in South Africa and Chile, and new programmes in Brazil, Peru and Botswana. Parallel focus on social sector performance through social investment, government capacity building and infrastructure. We are assessing our approach to health and education programmes to ensure maximum impact.
- 17. 17 HUMAN RIGHTS Upholding the corporate responsibility to respect human rights… …through integrating requirements into core business processes. Incorporating human rights into regular business practice is both a moral and business imperative. Launched our new Group Human Rights Policy, in line with UN Guiding Principles on Business and Human Rights, and updated the Anglo American Social Way. Working with Danish Institute for Human Rights and Shift’s Business Learning Programme to pilot and build capacity for human rights due diligence. This will also inform the development and implementation of prevention and mitigation measures where required. Insert image
- 18. 18 CONCLUSIONS To be “Partners in the Future” demands a positive contribution… …for and with the countries and communities in which we operate. Our performance is improving across our key performance pillars. During a challenging time for the industry we have focused on ensuring that sustainability is incorporated into our business at every level. We are working towards a long term goal of transformation of the industry that is built on the establishment of trusting relationships with all of our stakeholders. Our aim is for host communities and countries to be left better off than they were before we arrived.