Sir John Parker, Chairman, Anglo American
plc:
First, I want to welcome you all to our 2011 AGM, and especially
to those shareholders who may have travelled some distance to be
with us.
Before I mention some of the many achievements of your company
over the last year, I would like to say just a few words about what
I believe a board of directors should do in terms of leading and
guiding companies. Speaking from my own experience of a large
number of boardrooms – with Anglo American being my 5th FTSE
100 chairmanship – I cannot lay too much emphasis on how
important it is to have a team of directors with a blend of skill
sets and experience that can provide quality leadership in the
boardroom.
As your Chairman, I take considerable care in leading the
process to build the highest quality Board here at Anglo American,
and one where we create the professional openness and culture of
transparency and respect that encourages lively internal debate. It
is in that vein that we endeavour to seek constant improvement in
all our Board management and administrative processes, with the aim
of keeping at the forefront of best boardroom practice.
We are also aiming to increase the proportion of women on the
Board from today’s 20 per cent to around 30 per cent
(excluding the Chairman) by the end of 2012 – well ahead of
the 2015 25 per cent target date recommended in the recently issued
Davies Report, on which committee I served.
At this juncture, I should like to take the opportunity to
acknowledge and thank all the members of the Board team, who
collectively are making a significant contribution to our Board
debates, while also serving individually on the Board’s
vitally important underlying committees.
You will notice a new face here today. I am pleased to welcome
Phuthuma Nhleko, who was appointed a non-executive director last
month. Under Phuthuma’s leadership over the past nine years,
MTN has been transformed from a highly successful South African
mobile operator into a very considerable international force in
mobile telecommunications services in emerging markets. His broad
international business experience and his civil engineering
background will lend further strength to our Board.
It is to our longest-standing member, however, that I especially
want to pay tribute today. Nicky Oppenheimer notified the Board
some months ago of his wish to retire from his position as a
non-executive director, at the end of today’s AGM, after 43
years with the Anglo American Group.
On behalf of the Board, I would like to express our thanks to
Nicky for his significant contribution to the Group over such a
long period. Anglo American’s origins in South Africa more
than 90 years ago lay in the hands of Nicky’s grandfather,
and that legacy lives on. Sir Ernest Oppenheimer’s commitment
that Anglo American should make a positive and sustainable
difference to the communities around its mining operations, and to
wider society, is deeply embedded in the way we do business today.
Personally, I have greatly valued Nicky’s advice and wise
counsel since I became chairman 21 months ago and we will all miss
these qualities, as well as his sound business sense and integrity.
We wish him well and look forward to a continued strong and
productive relationship through our respective interests in De
Beers.
I would also like to pay tribute to the management team under
Cynthia Carroll’s leadership as our chief executive. Cynthia
has worked tirelessly, with a great focus on executing the
Board’s strategy. We not only have a top-class team, with an
impressive record of innovation and leadership in exploration, in
engineering and in our mining operations, but highly skilled
employees across the world who are making a real difference every
day.
I have now had the privilege of visiting all our global business
units and major projects and I am not only deeply impressed by the
commitment of our people, wherever they work, but by their
dedication and professionalism in living out Anglo American’s
values.
This was brought home to me on a recent visit to the disastrous
flood areas in Queensland in Australia. Our people at Metallurgical
Coal carried out heroic acts just after Christmas in evacuating an
entire community threatened with exceptional flood levels. They
took over the local airfield to co-ordinate more than 90 helicopter
flight movements and used trucks from the mine to evacuate 328
residents, put them into Anglo American’s temporary
accommodation, and fed and clothed them for the following two
weeks.
We witnessed similar involvement of our Chilean management and
employees in the 2010 Chilean earthquake, where not only was all
possible assistance offered in the rescue operations, but where our
management took responsibility to rebuild the local schools that
had been devastated in the earthquake.
I speak for the entire Board in saying we are really proud that
the management teams there cared enough and felt empowered to help
the community because they worked with the right Anglo American
values.
Turning to Anglo American’s performance last year.
Let me start with Safety. 2010 was marked by yet another major
improvement in our safety performance. Over the past four years,
under Cynthia Carroll’s leadership, the number of deaths
recorded across our Group has been reduced by two-thirds. However,
our ultimate aim of zero harm is not just attainable, but is now
being seen to be possible. All of us in this industry need to
remain very committed to this goal.
Now, to touch on a subject that is very dear to us all,.. the
dividend. As you know, last year we restored dividend payments. The
Board believes that it is prudent to provide shareholders with a
dividend they can rely on through the cycles. Against this
background, the Board has proposed a final dividend to this meeting
of 40 cents per share, thereby establishing a new base annual
dividend of 65 cents per share.
From a financial standpoint, we experienced a strong resurgence,
with steadily rising demand and higher prices for all of the
commodities in our mining portfolio, though the strength of local
currencies, and particularly the South African rand, somewhat
dampened our overall performance.
In 2010, Group operating profit almost doubled to $9.8 billion,
while cash flow generation from our operations improved from $4.1
billion to $7.7 billion. In addition, our balance sheet position
improved significantly on the back of the excellent progress we
made in our orderly disposal programme.
Looking ahead, we have one of the strongest near-term project
pipelines in the mining industry, which is set to grow our
production by around 50 per cent by 2015.
I am delighted to report that one of our four largest current
investment projects – the Barro Alto nickel operation in
Brazil – produced its first metal at the end of last month.
Furthermore, our biggest current project, the Minas-Rio iron ore
project in Brazil, has been significantly de-risked by the receipt
of the key mining permit and primary installation licence, as well
as the securing of a long-term port tariff agreement.
At Anglo American, we have now implemented a single, integrated
Group project-management system, including a risk-based method of
capital approval for new projects; this is bringing greater rigour
to the project delivery process.
Operating our businesses in a socially and environmentally
responsible way, and earning trust, are fundamental to our licence
to operate and to delivering long term value to our investors.
Thus, a key focus area in 2010 was the launching of a major
Group-wide project to facilitate greater local procurement by our
operations. Aside from the significant numbers we employ, we firmly
believe that our procurement budget of around $13 billion this year
represents one of our most important opportunities to help further
develop local communities.
During the year we also brought a much greater focus to
measuring our social performance. We have therefore developed a
standardised suite of output key performance indicators for our
social investment programmes that will be used across all our
operations.
We are also re-doubling our efforts on environmental issues,
focusing on new technologies to address the twin challenges around
the world of water scarcity and climate change – global
priorities in relation to which South Africa will be the centre of
world attention as we prepare for the COP 17 conference in Durban
later this year.
As a major coal producer and consumer of energy, we also continue
to play a proactive role in the ongoing international debate around
carbon alleviation, as well as developing our own technological
response. We remain committed to reducing our own carbon emissions
– focusing not only on carbon capture and storage, but also
on new technologies, such as algae, that can be used to produce
sustainable fuels. We are also closely involved in research to
study the role of platinum group metals in a cleaner energy mix,
especially in fuel-cell technologies.
More broadly, we continue to support leading international
initiatives to promote responsible corporate activity. We remain
committed to the UN Global Compact as well as the Extractives
Industry Transparency Initiative, and continue to support the
Investment Climate Facility for Africa. We are also actively
engaged in discussions around the review of the OECD Guidelines for
Multinational Enterprises, and we play an active role in support of
the Voluntary Principles on Security and Human Rights – while
earlier this year we entered a new partnership with peacekeeping
organisation International Alert, one of the world’s leading
conflict-prevention and -resolution organisations.
We are also gaining increasing recognition for our social and
sustainable development performance. In 2010, we received the
prestigious CommunityMark award from Business in the Community for
excellence in community engagement and development, and became the
only mining company to have a commitment to meeting the MDGs
accepted by the UN Development Programme’s Business Call to
Action. We also achieved Platinum status in the Business in the
Community Corporate Responsibility Index. In March this year, our
commitment to sustainability was further recognised in the
announcement that Anglo American was to be included in the
FTSE4Good Index, the index of companies that meet a series of
stringent corporate responsibility standards. This has since been
followed by our inclusion as one of the three mining company
sustainability leaders in the top-tier Gold Class section of the
just-published Dow Jones Sustainability Yearbook.
Now, to our visitors from Alaska… I appreciate that we
may have here today both critics and supporters of the Pebble
project, as well as those who have not yet made up their minds but
support the project’s right to be allowed to go through the
permitting process. We look forward to any questions you may wish
to pose on Pebble. Although I have not had the opportunity of
seeing the project for myself, I would like to say that I am
looking forward to visiting your state as soon as my diary permits,
and to meeting with many of you and listening to a wide
cross-section of opinion. Indeed, I was very privileged that
Cynthia Carroll and myself were able to meet with a delegation from
Alaska yesterday in our offices at Anglo American in London.
Of course, I think all of you know by now the keen interest that
our American CEO has in the project. In fact, Cynthia was there
only last month. And I am delighted that we have with us today the
Pebble Partnership’s CEO John Shively. I think that all of
us, whatever our opinions on the project, will acknowledge
John’s exemplary record and commitment to Alaska and
Alaskans.
Those of you who attended last year’s AGM may recall that,
speaking from the floor through a representative, Alpheos Blom, a
former gold mine worker, shared his story of ill health – he
said he was suffering from silicosis and that he had also
contracted tuberculosis. This week we also received a letter from
an organisation called AIDS & Rights Alliance for Southern
Africa in support of former gold mineworkers.
I would also like to express on behalf of the Board of Anglo
American our sympathy for Mr Blom’s difficulties, as I did
last year. I have personally been following this matter closely for
some time and we want to try to do something about this.
The background to this is that, in 2004, Mr Blom, along with
seven other former gold mine workers, instituted individual legal
actions in South Africa against our wholly owned subsidiary Anglo
American South Africa, and further individual actions have
followed.
Anglo American believes that the claims against it are
ill-founded, and that this will be demonstrated in the course of
the proceedings.
I understood Mr Blom to be concerned about the length of time
that it is taking for his claim to be decided by the Courts in
South Africa, and he has asked for our help. In an effort to
expedite the claims, Anglo American had already taken the unusual
step some time ago of agreeing with Mr Blom and the other initial
claimants upon a way to streamline the progress of their claims
ahead of any trial date, while also attempting to find an
alternative method of resolving the disputes outside of the formal
court process.
Practically, it appears that Mr Blom's claim, brought in 2004, may
only be heard with other claims brought in 2009. In addition,
this month we were notified that Mr Blom's claim is to be amended
by his lawyers for the ninth time. As a result, I am advised
that these claims are still not likely to come to trial for a
considerable period of time.
In the circumstances, Anglo American – despite denying all
liability – will respond positively to Mr Blom's request for
help. Cynthia will provide some further information on what Anglo
American is doing in terms of our humanitarian response in her
address in a few moments.
Finally, turning to the economic outlook. The major emerging
economies continue to grow strongly, with China posting close to
double-digit GDP growth rates and India beating expectations in
recent quarters. The US economy has also strengthened over the past
six months, with signs of a distinct improvement in consumer
spending and business investment.
Several shocks, however, have buffeted the world economy
recently. Political turmoil in North Africa and the Middle East has
pushed oil prices to near-record levels, adding to inflation
worries in many economies. Japan is not only counting a devastating
human cost; it appears the economic costs could also be
considerable. There is also the continuing crisis in Europe, which
has the potential to unsettle financial markets.
While these events could be a drag anchor on the world economy
this year, the medium- to longer-term outlook looks robust.
Japan’s reconstruction and the US’s drive to upgrade
its infrastructure will be important trends in the next five to 10
years for this company. In addition, China and other emerging
economies still have considerable growth potential as their living
standards converge on those of the major advanced economies. China
and India’s continuing development with the emergence of
their huge consumer market is likely to be a defining economic
trend in the next 20 years.
Against that background, we believe your company is well
positioned to benefit in 2011, and well beyond, from the ambitious
growth programmes of the world’s major economies.
I will now with pleasure hand the floor to Cynthia, who will
provide you with further insight.
