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ContributorsKIM FLETCHERKim Fletcher spent 25 years in the UKnational newspaper industry as a reporter,columnist and editor. He was industrialcorrespondent of The Sunday Times, deputyeditor of The Sunday Telegraph, editor ofThe Independent on Sunday and editorialdirector of the Telegraph Group. He haswritten and presented programmes for BBCRadio 4. He is chairman of the UK journalists’training body, the National Council for theTraining of Journalists, and is managingdirector of communications consultancy TrinityManagement Communications. See page 4JIM O’NEILLJim O’Neill is head of global economics,commodities and strategy research forGoldman Sachs, for which he has workedfor 15 years. He has previously worked forBank of America and International TreasuryManagement. He is a board member of theUK’s Royal Economic Society and sits on anumber of European think tanks and roundtables. He is a founding trustee and thechairman of London charity SHINE, whichtackles poverty and illiteracy in Africa, andhe is on the board of several other charities.See page 1236 Optimising AustraliaHaving joined up its disparate units overthe past three years, Anglo American’scoal business in Australia has becomeone of the country’s leading producersof metallurgical coal. According to itshead, Seamus French, the success isdown to “people, people and people”.SIR DAVID KINGSir David King is the director of the SmithSchool of Enterprise and Environment atthe University of Oxford. He was the UKgovernment’s chief scientific adviser andhead of the Government Office of Science forseven years. In that time, he raised the profileof the need for governments to act on climatechange and was instrumental in creating the£1 billion Energy Technologies Institute. In2008, he co-authored The Hot Topic on thissubject. He has chaired the government’sGlobal Science and Innovation Forum fromits inception. See page 24MATTHEW STEVENSMatthew Stevens has reported on theAustralian resources sector for 28 yearsfor The Age, Business Review Weekly andnow The Australian. He worked as acorrespondent in London for BusinessReview Weekly from 1985-90 and asEuropean correspondent for The Australianfrom 1999-2000. He was senior editor ofThe Australian, and editor of the Saturdayedition. He is currently a business columnist,working in Melbourne, where he is acommittee member of The MelbourneMining Club. See page 3644 nickel profileThe past, present andfuture of a resource thatdates back more than5,000 years46 Disaster supportThe company’s supportafter February’s earthquakein Chile has gone beyonda simple financial donationOther contributorsMichael 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. Providedthat 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.september 2010 | Optima | 03

optima INTERVIEWDAVid WOOLFALL; all other photos anglo american unless otherwise stated04 | Optima | september 2010

ThrivingunderpressureIn three years, Cynthia Carrollhas turned the tide. Initially not seenas the obvious choice for the numberone job, she now has results to back upher ambition – from delivering significantcost savings and operational performanceto a much improved safety record and morewomen coming in to the organisation.Exclusively for Optima, Kim Fletcherasks the chief executive how shereally measures success.september 2010 | Optima | 05

david woolfall01 Cynthia Carroll,June 2010, shortlyafter returning fromthe Merrill LynchGlobal Metals &Mining Conference:“I couldn’t believe thecrowds who wantedto listen to our story.”02 Making a point atDawson Central coalmine in Australia,February 20070102 03found out in South Africa when, in thefirst few months of her being in charge,Carroll brought up 28,000 miners fromthe Rustenburg platinum mines’underground operations to instigate asafety training programme. In caseanyone remained in any doubt aboutchange, she involved the mining tradeunions and the South Africangovernment in tripartite talks: “Peopleasked: ‘Are you sure you want to do this?You are going to be exposing AngloAmerican, you are going to be exposingthe industry.’ I said I was absolutely sure:it would put pressure on us internallyto deliver, it would expose us and putpressure on the competition.”She laughs, making light of whatmust have been a tough battle: “Initially,I was quite unpopular in certain areas ofthe business. And we had some people –mine managers, supervisors – who puttheir 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. Weboth need to go our own way.”And it’s Carroll’s way that has helpedbring about a significantly improving03 Reviewing miningplans during a visit toMantos Blancos inChile, April 2009safety trend, not only within theAnglo American Group, but across theSouth African mining industry, wherefatalities have declined by around25 per cent. “I like to think that Iopened people’s eyes to the possibilitythat mindsets can be changed as faras safety is concerned. With AngloAmerican’s annual fatality figure downmore than half over the past threeyears, and with really big undergroundoperations such as our platinum minesgoing for long periods fatality-free,people are starting to believe that zeroharm is achievable.”Carroll believes the latestimprovements in productivity aredirectly related to care of theworkforce: “For me, safety affectswhat goes on in all aspects of thebusiness in terms of people’s mindsets,their approach, the degree ofteamwork that they have, how theylook after one another – thatconsistency of standards flowsthrough to every other aspect ofthe business.”september 2010 | Optima | 07

optima INTERVIEWThere were other changes of style.Cynthia trained as a geologist beforegoing to business school. She knowsher way around a mine: “I’m going totwo coal mines next week and I’mgoing to a couple of concentrators onthe platinum side.” Is that unusual fora CEO in the mining business? Shelaughs again. “It probably is.”She states firmly that she feels veryconnected to the operational side.“I understand it very well and, becauseof my years of experience visitingother mines or operations, I knowwhen things are going well and whenthey’re not. It’s the only way I cantouch the people on the ground andthey can tell me what’s going on. I alsoknow the issues, I know where thingscould crop up and I know wherethings are going exceptionally well.“People talk to me. They tell mewhat their concerns are. That’s a verydifficult thing. As you get further upthe line, it’s even harder because youare that much more removed from theguy mining the platinum on theground in South Africa. In the past,it wasn’t culturally acceptable to betapping the manager on the shoulderand telling him what you think – andwhen it was the CEO, it wascompletely unheard of.”She may talk to anyone, butbeneath the smile there’s a hint of thesteel that has brought her to whereshe is: “Of the two mines I’m visitingin South Africa, one of them has hada very poor performance over thelast six months and one of them hashad a very impressive performance.So I want to go to one mine andcongratulate them, and I want to goto the other and remind them wherewe need to be.”Last year, Forbes magazine namedCynthia Carroll as the fourthmost powerful woman in theworld. It’s a power that sees her indiscussions with presidents and primeministers – and state governors andmayors. Some have been taken bysurprise: “I had one individual whotold me he wasn’t accustomed to myapproach. ‘We don’t know how to dealwith you, we are so used to puttingboxing gloves on and fighting. You wantto talk, you want to sit down and try andwork out a solution together. This is socompletely different.’“That’s definitely something I’vebrought – transparency and openness,no hidden agendas. We’re not going toalways agree, but as long as weunderstand the reasons and make aneffort to engage, that’s what’s going tolead ultimately to success.“I like to think that Iopened people’s eyesto the possibility thatmindsets can bechanged as far assafety is concerned.”“I’m really encouraging people in ourorganisation to connect, to engage, tounderstand what the issues are so thatwe know what could be in termsof policy and regulation. We worktogether to do the right thing for thecountries and communities wherewe operate and, ultimately, forAnglo American.”It should be said that this is not adescription of the business that isrecognised by its detractors. Theactivities of big mining companiesremain controversial. Manyenvironmental groups have AngloAmerican in their sights. The Americanonline magazine Grist is typical; itrefers to the chief executive as ‘CyanideCynthia’ in its coverage of Pebble,Alaska, where the company isinvestigating a large copper, gold andmolybdenum deposit. It’s the usualdebate: jobs and tax revenues versusthe threat to a pristine wilderness,particularly to local fish populations,if mining effluents escape.She addresses the point withoutrancour: “No question about it, they canmake a lot of noise and I think there’sgoing to be even more noisesurrounding companies in theextractives industry. And if such acompany gets things wrong in a big wayand mistakes are made… then there aregoing to be that many more NGOs andenvironmental groups coming outagainst national resource development.“We have to engage first andforemost with the representatives andpotential future employee base andthe people we are going to impactmost directly. At Pebble, the localmayor has requested that we continuedoing development work, so that wecan all take a view when the facts areon the table.“We won’t ever be in a position tosatisfy everybody. There will always bea degree of scepticism and oppositionto mining development. On the otherhand, the people whom we really haveto be listening to are those people inthe regions where we are operating.“You have to be working with thegovernments, from the presidentor prime minister all the way downthrough ministries, local governments,mayors and all the levels at which we01 Cynthia Carrollgoes undergroundwith employeesat Thermal Coal’sGoedehoop collieryin South Africa,February 200702 On the platformof one of the hugeore-carrying trucksat Los Bronces03 During a visit toLos Bronces coppermine in Chile in 20070308 | Optima | september 2010

01TimelineCynthia Carroll’scareer1956Born, New Jersey, US1978Graduates from Skidmore College,Saratoga Springs, New York, with abachelor of science in geology021982Gains a masters of science degreein geology from the University ofKansas, before joining Amoco,now part of BP, as a petroleumgeologist, working in gas and oilexploration across the US1989Completes an MBA at HarvardBusiness School. In the sameyear, she joins aluminiumcompany Alcan Inc., based inMontreal, Canada1996Appointed managing director ofAlcan’s Aughinish Alumina division,based in County Limerick, Ireland2006Leaves Alcan as president andchief executive officer of thecompany’s Primary Metal Group,which, by that time, had becomeAlcan’s biggest and mostprofitable division2007Joins the board of Anglo Americanplc in January, becoming chiefexecutive two months later.Appointed a non-executive directorof BP in May2008Appointed a member of theBusiness Council for Britainseptember 2010 | Optima | 09

optima INTERVIEWoperate. Engage with them, get them tounderstand what we are about, whatwe stand for, what we are going to do,not only for Anglo American but for theemployee base and the community, andhow we can build on a sustainable basisfor the long term.“When I think about going into aparticular location, I’m thinking notabout 10 or 20 years out. I’m thinkingabout generations – and the impact andthe legacy that we will leave in thoseplaces. That’s the way we all have tothink about things if we are going to bewelcome, if we are going to build arelationship that is one where we allfeel that we are adding and benefitingfrom the presence of the mine and thatpeople feel that they want us. Thattakes hard work.”As evidence in support of herproposition, she describes thework that Anglo American hasbeen doing in South Africa: the Zimeleenterprise development programmethat will see the development of 25,000new jobs in 1,500 new businesses;pioneering work on HIV/AIDS; awardsfor workplace programmes.“You have to think whether you canactually improve the current situation,as opposed to having a negative impacton it,” muses Carroll. “On the Witbankcoalfield, in South Africa, we’vedeveloped a $44 million water recyclingplant. Together with BHP Billiton, weare recycling mine water into drinkingwater – 80,000 people from the localcommunity now have drinking waterevery day. That’s fantastic – and we arenow planning to expand the facility.”And in Brazil, the company isworking with NGOs: “We will create afarm environment on a like-for-like01 Listening to alocal resident’s viewson the proposedPebble project –Alaska, 200802 During a visitto Australia inSeptember 2009,Cynthia Carrolldelivers the keynotespeech at theBrisbane Mining Club03 PeruvianPresident AlanGarcia and CynthiaCarroll meet in thePresidential Palace,Lima, June 200801basis on acreage that we are impactingin the area we are likely to mine. It’s avery interesting and innovative thingthat we are doing there.”Is there a danger that she pursuespublic good at the expense ofshareholders’ profit? “Well, there is abalance. We also have to have priorities.We have to know where the value is. Wecan’t do everything, but we can do agreat deal. We’ve got to do the rightthings, day in, day out, year after year,decade after decade.”And to what extent has sheapproached this job differentlybecause she is a woman? “I’m not verypreoccupied with being female. I amwhat I am. I’ve always worked in amale-dominated environment – startingwith oil and gas, then moving intoalumina; I ran an alumina refinery inIreland. I think that was a big shockon the ground when it was firstannounced, but after a couple of weeksI don’t think anybody was thinking anymore about it.03“We need a lot more women. I thinkwomen do support a different mindsetand maybe a different culture,particularly around safety. Caring forone another, prompting people to thinkdifferently, is one thing that women doparticularly well.”The number of women working inAnglo American has increased fastsince she took over. In South Africa,women now occupy about 20 per centof the management ranks, while manynow work underground in jobsformerly reserved for men. In Australia,where managers were initially tooembarrassed to discuss the absence of10 | Optima | september 2010

stu rileywomen with her, there are now womeninvolved in all aspects of the business.Carroll’s been looking after globalbusinesses for the past 12 years. Withfour children, aged between 10 and 16,she’s grateful to have an accountanthusband who works from home. “It’sa matter of having someone whois enormously supportive and willingto do these sorts of things.“I also have a lot of energy, and sleepwell – if not enough! It helps.”In 2009, reflecting the impact of theglobal downturn on commoditydemand and prices, AngloAmerican’s operating profit halved to$5 billion, with underlying earnings of$2.6 billion. Crucially, however, it keptfaith in its project pipeline – one of thestrongest in the industry. In 2010, itis investing $4.2 billion on its majorgrowth projects, notably theMinas Rio iron ore and the Barro Altonickel projects, both in Brazil, theLos Bronces copper expansion in Chile“I’ve brought transparency andopenness. One individual told me hewasn’t accustomed to my approach.He said: ‘We are used to putting boxinggloves on and fighting. You want to sitdown and work out a solution.’”02and the Kolomela iron ore project inSouth Africa. It is these projects thatwill be driving production growth overthe next three years, beginning withBarro Alto early in 2011.Having fended off Xstrata’sapproach to the company – “We’ddone our homework and had a verycomplete fact base. We knew wherethey sat relative to us in the industry.It was very clear in terms of the offeron the table that it was a non-starter”– does the chief executive expectfurther consolidation? “I’m not surethat I do see that much. The smallminers, the junior miners, will bepicked up, along with some of themid-sized players. But we’ve seen anumber of ‘megadeals’ fall through,and there are all sorts of challenges forcompanies, not least from an anti-trustpoint of view, in trying to reach evenless formalised arrangements than afull-blown merger or takeover.”So where is she going to spend the$1.3 billion Anglo American has justmade from the sale of its zinc business?“We’ll see. That’s the next step. It’sabout delivering on our commitments,bringing our significant near-termprojects on stream, driving thatperformance and ensuring it’ssustainable. Not just in 2010, but yearafter year. Then we’ll think aboutorganic growth and how the upsidelooks relative to other investments.“I don’t want people to bedistracted by having money throughthe door and wanting to get on tosomething else. We always have to beaware of what is out there and whatan investment – an excellentinvestment – looks like compared togrowing organically.”How, exactly, will she measuresuccess? The business has announcedits ambition: to become the investment,the partner and the employer of choicein the mining industry – in short, to bethe leading global mining company.Is that realistic? “The biggestdoesn’t translate necessarily to beingthe most profitable. The aim of ourinvestment strategy is to outperformthe competition on a sustainable basis,and that is an achievable goal.“I am fairly modest, but there’s noquestion we are seen as the companyon the move in the industry.”And with that, it’s time for her tobe on the move. She has a businessto run.september 2010 | Optima | 11

optima reportMonumentalgrowthIllustrations by Black coffee projectIn 2001, Goldman Sachs’ Jim O’Neill coined the BRICacronym for the four countries that looked most likelyto challenge the US and the world’s big economicplayers. Here, he reflects on how Brazil, Russia, Indiaand China and other advancing nations are carvingtheir place as the new beasts on the block.12 | Optima | september 2010

september 2010 | Optima | 13

optima reportIt is now almost a decade sinceGoldman Sachs introducedthe BRIC acronym for thefour countries that representthe most rapidly growing partof the global economy.Collectively, Brazil, Russia,India and China have reached 16 percent of global GDP and will be as bigas the US by the end of this decade.Like the rest of the world, the BRICshave faced a severe crisis in the pasttwo years, but, if anything, their currenthealth suggests that our long-termprojections are more, rather than less,likely to be realised.Brazil, China and India have handledthe crisis well. Russia, on the otherhand, has struggled, but there is littlereason why it should not still beregarded as a BRIC and it could stillbecome bigger than Japan.What seems clear is that the globalcredit crisis and its aftermath havecaused more damage to the majordeveloped economies than to the BRICsand the N11 countries, the ‘Next 11’emerging economies 1 . Consequently,our projection that China could becomeas big as the US by 2027 – and theBRICs collectively as large as the G7 2by 2032 – now looks more likely.Overall, the BRICs and N11 sawmuch sharper contractions thandeveloped countries, but they also sawmuch stronger rebounds. However,within the two groups, thedifferentiation in the magnitude andspeed of rises and falls is extraordinary.A number of countries are already backat their pre-2007 levels on a number ofmetrics, while others are recoveringmore slowly. Brazil, China, India, Egypt,Indonesia and the Philippines, forexample, have experienced a relativelymild slowdown and shown animpressive rebound in growth andactivity. At the other end of thespectrum, Iran, Mexico, Pakistan andRussia have suffered, with deeprecessions and a sluggish recovery.Global contributionThe relative importance of the BRICsand G7 for the global economiclandscape has changed dramatically.“It is interesting to assesshow our predictionshave fared versus actualoutcomes over time.Each of the BRICcountries has grown to asize we didn’t expect tosee until much later.”Jim O’Neill14 | Optima | september 2010

Between 2000 and 2008, the BRICscontributed almost 30 per cent to globalgrowth in US dollar terms, comparedwith approximately 16 per cent in theprevious decade. At the same time, theG7’s contribution fell from more than70 per cent in the 1990s to around40 per cent during the first decadeof the 21st century. The BRICs’contribution has risen particularlysince 2007, with China contributingmore than any of the advancedeconomies, including ‘Euroland’.The BRICs’ share of global tradehas continued to rise sharply and nowstands at 13 per cent, almost two percent higher than two years ago, withChina accounting for almost two-thirdsof the BRICs’ share.Interestingly, though, the N11countries, South Korea and Mexicoespecially, are now more important forglobal trade than Brazil, Russia andIndia. Moreover, there are non-BRICsand non-N11 developing and emergingmarkets – including other countries inAfrica, developing Asia, Central andEastern Europe, the Commonwealth ofIndependent States (excluding Russia),the Middle East, Mongolia and thewestern hemisphere – that, collectively,still account for a larger share of globaltrade than either the BRICs or the N11.Turning to interest rates in the BRICsand the N11, these have declineddramatically over the past two years, inline with other developing andadvanced economies. In many places,they stand at all-time lows. Brazil,Russia and India have each cut theirpolicy rates dramatically. The reductionhas been less aggressive in China, wherecurrency and other unconventionalmeasures have played a bigger role inthe easing of financial conditions, asthey have in many parts of Asia.This general easing episode marksthe first time in history that manyBRICs: POWERING INTO THE TOP 10Where the four BRIC countries are ranked globally, out of 192 countries.developing economies have been ableto cut their policy rates in response toadverse external shocks. Previously,during such crises, capital outflowsfrom emerging markets generallymeant that local central banks had tohike rates to maintain financialstability. Such counter-cyclicalmonetary policies often put even morepressure on local economies, thusaggravating the original crisis.What’s the score?Given the challenges that the BRIC andN11 economies and markets have facedover the past two years, has theirpotential to grow further and spreadtheir dominance in a number of areas– including global demand forresources and spending patterns –changed? Has our original ‘dream’ ofthe BRICs collectively overtaking theG6 3 by around 2050 passed the testprovided by this difficult environment?Goldman Sachs uses a GrowthEnvironment Score (GES) to measurethe strength of a country’s sustainablegrowth. It includes 13 variables and isan important driver of our assumptionsfor long-term productivity trends. SinceBrazil Russia India ChinaPopulation* 5th 9th 2nd 1stGDP (nominal)** 8th 12th 11th 3rdExternal debt*** 26th 20th 25th 22ndExports*** 21st 12th 23rd 1stImports + 24th 14th 15th 2ndVehicle production ++ 6th 19th 7th 1stNumber 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 hasnow 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’Automobilesits introduction in 2005, we have usedthe GES to track growth conditions in180 countries, with a particular focus onkey developing economies.Technology, particularly the use ofmobiles and the internet, has seen thelargest gains and was the main categorythat consistently offset the deteriorationin other components. Macro-economicconditions, which include gross fixedcapital formation and openness, havealso improved in the BRICs and N11,significantly exceeding the developedanddeveloping-country average. TheBRICs made notable political progress,especially with respect to corruptionand the rule of law. For human capital –including life expectancy and schooling– the N11 posted modest gains, while theBRICs made little progress.The main setback occurred in themacro-economic stability category,which includes inflation, external debtand government deficit. Both the BRICsand N11 lost out by the same magnitude,far below the declines in developed anddeveloping countries on average.The major mover in the BRICs during2009 was Brazil, one of the 35 bestperformers globally. Its gain was broadseptember 2010 | Optima | 15

optima reportbased across several components,with particularly strong advances intechnology, mainly mobiles, as well asmacro and political conditions.China’s GES improved mildly; likeBrazil, gaining mainly on technologyand political conditions, but it made noprogress on human capital. A biggergovernment deficit, higher inflationand a lower degree of opennesspartially offset the improvement.India’s result declined modestly; itis now the only BRIC country whoseGES remains below the developingcountryaverage. Russia’s GES hasfallen by the same amount as India’s,with most of the deterioration centredaround macro-economic stability.The overall GES improvement inthe N11 was actually higher than in theBRICs. Eight countries posted gains,with Indonesia and Turkey advancingmost on the back of developmentsacross a number of components. Onlyinflation and government debt showeddeterioration in both countries. If theirscores continue to rise, we might haveto consider them becoming part ofthe BRICs.South Korea and Mexico still havethe highest GES, although last yearthey saw the smallest increases in theirscores. The areas of particularweakness in both were politicalconditions and macro-economicstability, while other categories postedmodest gains.Vietnam registered the biggestlosses. Its deterioration in macroeconomicstability pulled down itsGES in 2009, mainly as a result ofmuch higher inflation.Past predictionsSince Goldman Sachs first publishedits BRICs growth and incomeprojections in 2003, we have updatedthem four times. It is interesting toassess how our projections have faredversus actual outcomes over time.Each of them has grown to a size wedidn’t expect to see until much later.For example, although Russia’s growthmay be lower than predictedpreviously, it could still grow enoughto overtake Japan – a move we didnot foresee in 2003. And China, whichis about to overtake Japan six years earlierthan we first thought, may become as bigas the US within 20 years. Brazil is poisedto overtake Italy next year, and India andRussia are not far behind.In the global car market, China willbecome the main driving force over thenext decade, likely to account foralmost 42 per cent of sales growth,with the BRICs together accountingfor 70 per cent. And by 2050, India’s carpenetration could leap to around490 cars per 1,000 people. This is morethan 100 cars per 1,000 people higherthan we estimated before. India couldbecome the biggest auto market of thefour by 2050.“The BRIC economiesappear to have withstoodthe financial crisis betterthan developed countries.Indeed, their contributionto world economic activityhas increased.”Jim O’NeillThe energy market, and crude oilin particular, look likely to be influencedgreatly by Chinese and Indian demand –especially in the next 20 years.These days, energy markets are oftendominated by the importance of China,which has committed to reducing itscarbon intensity – the amount of CO 2emitted per unit of GDP – by between40 and 45 per cent by 2020, comparedwith 2005 levels.mobile phone usageCommunications are improving in the BRIC countries.Brazil, Russia, India and China rank 5th, 4th, 2ndand 1st respectively on the list of number of mobilephones per country (with the US in 3rd), though thatfigure as a percentage of the population variesdramatically – from just over half in India to almost150 per cent in Russia.INDIA52.3%CHINA59.6%BRAZIL96.6%RUSSIA146.8%8.29milliontonnesChina’s iron ore imports from India in June 2010 –down 21 per cent month on month, as a result oflower demand and supply disruption resulting fromthe Indian monsoon season. China’s total iron oreimports fell 14.7 per cent in June, although importsfrom Brazil were up one per cent.According to Gerald Conway,co-chair of the China Council forInternational Cooperation onEnvironment and Developmenttaskforce, the Chinese leadership hasbeen presented with a plan thatwould reduce energy consumptionper unit of GDP by 75 to 80 per centby 2050. To achieve this, the planenvisages 50 per cent of new energyusage from now until 2030 comingfrom nuclear and renewable sources,and that all new power sources willbe in these forms by 2050. Incrude-oil terms, millions of thebarrels-per-day projected globallymight not occur.If India were to commit tosomething similar, this wouldobviously be a very exciting initiativeand stimulus for alternative energies.16 | Optima | september 2010

611millionApproximate number of vehiclesexpected on India’s roadsby 2050making it the world’s leaderof the automobile productionindustry. It is currently theseventh largest – and fourthlargest in Asia, behind Japan,South Korea and Thailand –having produced 2.9 millionunits in 2009. Worldwide, onlyChina, Taiwan and Romaniaincreased in production by agreater percentage year on yearthan India in 2009.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 otherBRIC currencies will appreciate through2011. In India, as growth and inflation pickup, we expect the rupee to appreciate onthe back of an effective tightening inpolicy rates in 2010. Meanwhile, the ‘fairvalue’ of the Chinese yuan has appreciatedthe most against the dollar since 2000,primarily owing to productivity gains, andour current forecast is that the yuan willbe allowed to appreciate by five per centover the next year.The Brazilian real is the exception.We expect it to start depreciating forthree reasons: the current account deficitcould widen rapidly; investors will likelyrail transport network sizeUSRussiaChinaIndia86,000 km64,000 km128,000 km0 50,000 100,000 150,000 200,000 250,000Only the United States has a rail transport network largerthan 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, 2007by number of airportsRank Country Number of airports226,500 km1 US 15,0792 Brazil 4,0723 Mexico 1,8194 Canada 1,4045 Russia 1,2136 Argentina 1,1417 Colombia 9908 Bolivia 8819 Paraguay 80010 Indonesia 684Primary source: The World Factbook, 2010worry about potential changes in themacro-economic policy frameworkahead of the presidential elections thisOctober; and uncertainties relating tothe tightening of monetary policy inadvanced economies.Over a longer-term horizon, wewould expect currencies to convergewith purchasing power parity (PPP)estimates. As the BRICs grow over thenext few decades, and productivity andterms of trade improve, we expect theircurrencies to converge with PPP andcontinue to appreciate.In conclusion, while the 2007-2009financial crisis has been a majorchallenge for the world economy, theBRIC and N11 economies collectivelyappear to have withstood the crisisbetter than many of their developedcountrycounterparts.Indeed, their contribution to worldeconomic activity has increased evenmore through the crisis, and since.This is likely to continue in the near,medium and long term.But the world’s economy remainsunpredictable. Lately, for example,there have been concerns that China ispoised for a double dip, its economyhaving grown year on year by 11 percent in the first quarter of this year,but more recent monthly data hintingat some flattening off. The stock marketcertainly supports this. After makingsolid gains in 2009, the Shanghaicomposite index has fallen by as muchas 24 per cent since the start of the year.The N11 countries, meanwhile, are avery diverse group, as we have alwaysemphasised, at many different stagesof development. We don’t think anyof them currently has enoughjustification to be considered as bigas a BRIC, but some are showingencouraging signs.Among many aspects of the worldeconomic scene, the BRIC – and N11 –countries will become increasinglyimportant and the upward trend wehave seen this past decade will be evenmore pronounced. Judging by currentescalations, by 2020 the BRICs’combined economy will have overtakenthat of the US and could account for athird of the global economy in PPPterms. Individually, Brazil will be largerthan Italy, India will be outpacing Spain,Russia will have charged ahead ofCanada. While these developments willundoubtedly lead to many complexitiesand issues in the future, they are veryexciting and offer considerableopportunities for us all.1Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria,Pakistan, the Philippines, South Korea, Turkeyand Vietnam.2The US, the UK, France, Germany, Italy, Japan andCanada.3The G7 (see 2 ) minus Canada.september 2010 | Optima | 17

company profileAs the world’s largest platinum producer, Anglo Americanhas enviable high-quality reserves and a flexible portfoliothat allow it to expand faster than its competitors.Michael Coulson reports on how the restructure of itsPlatinum business and the promise of new projects arehelping the company steal a march in a resurgent market.Shaping upfor the18 | Optima | september 2010

future19september 2010 | Optima | 19

company profile01Carrying out a majorcorporate restructuring ispainful at any time. To doso while the market for acompany’s main product ispassing through the biggestrecession in living memoryis doubly so. That AngloAmerican’s Platinum commodity business unit(“Platinum”) subjected itself to, and has comethrough, this ordeal in good shape to take advantageof the reviving platinum market speaks volumesfor the calibre of its management and commitmentof its staff.In July 2008, the basket price – the price of all thebusiness unit’s products expressed as the equivalent of anounce of platinum – peaked at about $4,165. At this point,Neville Nicolau, previously the head of asset optimisationat Anglo American and former chief operating officerresponsible for Africa at AngloGold Ashanti, had justtaken over the CEO’s seat. Barely five months later, thebasket price was hovering around $1,300, a decline ofalmost 70 per cent and less than half the level that hadprevailed before the spike of July 2008.That sort of movement would usually force cutbacks atany company, but at Platinum it’s not so easy. Its mines arelocated in the western and eastern limbs of South Africa’sBushveld Igneous Complex and, while there are sizeabletowns like Rustenburg and Brits in the western wing,elsewhere – and throughout the eastern wing– the platinum mines are among the primaryemployers and generators of income.Platinum has accepted a responsibilityfor these communities way in excess ofSouth Africa’s Mining Charter 1 and otherblack economic empowerment (BEE)requirements. Nicolau says: “We have tocreate communities that will still be viablewhen the mines are gone.”It reflects the importance attached to this communitysupport and the investment made by Mary-Jane Morifi,Platinum’s head of corporate affairs, who bears the ultimateresponsibility for the business’s enterprise developmentwork, sits on the company’s executive committee andreports directly to Nicolau. She is no lightweight: beforejoining Platinum in November 2007, she spent 17 yearswith BP, ending up as director of audit and riskmanagement in London.Difficult cutsEven in depressed times, Platinum’s ability to cut back onsocial spending is limited. As an example, the policy is tospend one per cent of pre-tax profit on community andinfrastructure development. In 2009, as profits collapsed,the $33 million spent in this area represented eight per centof pre-tax profit.The axe thus fell heavily on other items. Capitalexpenditure was cut by 22 per cent and the workforce wasPREVIOUS PAGEA decline shaft atBathopele mine inRustenburg, where anarray of technologicalequipment, includingsignage and signallingdevices, has beeninstalled to avertsafety incidents01 Platinum-bearingore from SouthAfrica’s BushveldIgneous Complex02 Platinum CEONeville Nicolau(second left), Unkigeneral managerWalter Nemasasi(left) and Platinum’sexecutive head ofmining Pieter Louwinspect a shuttlevan used to safelytransport miners inand out of the soonto-openUnki mine0203photos by planetkb for anglo american (platinum), except 01 (Andreas Koschate/Westend61/Corbis)20 | Optima | september 2010

The platinum collection04An 80 per cent-owned subsidiaryof Anglo American, the Platinumbusiness unit is the world’s largestprimary producer of platinum,responsible for about 40 per cent ofworld newly mined production. While itwill open the Unki mine in Zimbabwelater this year and is exploringin Brazil, and with joint-ventureexploration projects in Canada, Chinaand Russia, all current operationsare in South Africa, on the BushveldIgneous Complex, the world’s richestsource of platinum group metals(PGM)-bearing ores.The company wholly owns10 mines, as well as smelting andrefining operations that treatconcentrates not only from its ownmines, but also from joint venturesand third parties. In recent years, it hastaken joint-venture partners into anumber of previously wholly ownedmines. These have generally beenwith a view to enhancing blackeconomic empowerment, especiallyat communities near the mines.The company is committed tothe sustainable development of thecommunities in which it operatesand makes substantial contributionstowards this, both on its own accountand through the Anglo AmericanChairman’s Fund.Platinum has a market capitalisationof around $26 billion, ranking it asthe sixth-largest company on theJohannesburg Stock Exchange. Despitethe downturn in world commoditymarkets, net sales revenue in 2009was just under $4.4 billion, from salesof 4.75 million ounces of refined PGMs,of which 2.45 million ounces wereplatinum. The company currentlyemploys about 54,000 people, whichon widely accepted ratios means it isthe primary support of close on400,000 people.reduced from 80,500 to 65,000. There were no forcedredundancies among the permanent staff, though thenumber of contract workers was slashed. Nicolau is thefirst to admit: “These people had to move back into thecommunity and join the unemployed. We offeredvocational training courses in areas like plumbing andbricklaying for the whole community.”Savings went all the way to the top, and an assetoptimisation 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 ofplatinum group metals (PGMs) rose five per cent to4.75 million ounces a year, the inference of a significantimprovement in productivity must be that there had been afair amount of fat that had been waiting to be cut out.A recent authoritative review of the platinum sector byJP Morgan’s Johannesburg office points out that Nicolauis the first mining engineer to head the company indecades; again, the inference must be that he can bettergauge than some of his predecessors where cutbacks canbe made without damaging the fabric of the business.03 The RustenburgBase Metals Refinery,which is expandingits nickel processingcapacity by about50 per cent04 Shaft-sinkingoperations at thebottom of the newThembelani 2 shaftwill enable accessto the Merensky reefbelow the existingThembelani shaftAnalysis of safetyOne area where no compromise can be made is safety. Thevision is ‘zero harm’ and, though there were 14 fatalities in2009, the trend is down, from 25 in 2007 and 18 in 2008. Inearly 2009, a new safety strategy and plan were adoptedfollowing extensive analysis of existing programmes.Allied to safety is health, not least the HIV/AIDSpandemic. Platinum offers AIDS counselling and antiretroviraltreatment (ART) to workers and their families. Atpresent, some 4,000 people benefit from this programme,though only 24 per cent of employees requiring ART are ontreatment. TB, alcohol and drug abuse and teenagepregnancy are other social and health areas of concern, butMorifi poses the dilemma: “We have big in-houseprogrammes, but what happens when people go home?”Platinum was appalled to find that on-mine fatalitiesare dwarfed by the average 50 employees a month whodie off-mine owing to illness, crime, road accidents orsimply natural causes. Good health can qualify people tobe economically active; however, it doesn’t automaticallygenerate income. Social and labour plans are determinedin participation and in accordance with those ofseptember 2010 | Optima | 21

company profile01Anglo American, but the varying circumstances of differentcommunities require flexible application of such plans.Thus, Platinum engages directly with communities andlocal authorities to determine their needs, in conjunctionwith South Africa’s Department of Mineral Resources.Commitment to social issuesFor years, Platinum had been spending the equivalent attoday’s current exchange rate of about $4.5 million a year oneducation. When Morifi arrived, she assessed the efficacyof this and held an education summit last year. It becameclear that earlier programmes had concentrated on laterstages of learning, whereas the greatest need was more basic.There was also a need to train teachers and schoolgoverning bodies.Housing is another key element. Platinum has embarkedon a programme to build 20,000 houses to be offered for saleto its employees, which Nicolau says could cost $194 millionover the next seven or eight years.It all adds up to an impressive social programme. Buteven a company as strong as Platinum would not be able to01 Today, roof-boltingis a far safer operationthan in the past asminers routinely useremotely operatedroof-bolting drills02 Rustenburgcommunity membersmake use of aPlatinum-sponsoredmobile clinicsustain 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 thehistorical five per cent annual rate of growth (this growthhas left the market in deficit for 10 of the past 13 years).As the world’s largest producer, Platinum will want toparticipate in this growth – and it has the resources to do so.Its 2009 annual report puts the company’s reserves at170.5 million ounces and its resources (exclusive ofreserves) at 632.3 million ounces. There surely can’t bemany resource companies in the world with this backing;moreover, most of it is high quality and/or closeto the surface.JP Morgan reckons that it is the only producer that canrespond quickly to an improvement in demand, with theability to increase mine production across the board by upto 10 per cent within six months at little cost.But that isn’t the whole story. No miner wants to letreserves sit idle for 100 years if there are opportunities to22 | Optima | september 2010

exploit them. A 10 per cent production increase is littlemore than making the existing operations sweat a little.In a recent presentation, Nicolau outlined Platinum’sclaimed key competitive advantages: extensive high-qualityreserves, a flexible portfolio of long-life assets, superiormarket intelligence and wide experience of transformation.Flexibility is, again, a key word. The largest mines havebeen restructured into smaller, more manageable units.The old Rustenburg mine has been split into five, andAmandelbult into two. But flexibility is even more significantin relation to new projects, such as Mogalakwena North,worth 350,000-400,000 ounces of refined platinum a yearand due to reach full production in 2012.A strategy of expansionPlatinum’s strategy is to maximise value by understandingand developing the market for PGMs and expandingproduction safely, cost-effectively and competitively.Platinum has six major projects under way – tworeplacement and four expansion – designed to come onstream between 2012 and 2019, with a combined capital02budget of just over $5 billion (about $1 billion will be spent ineach of 2010 and 2011) and incremental production capacityof almost one million ounces.On top of that are four more projects on each limbof the Bushveld Igneous Complex. Some are wholly andsome partly owned, some are at the feasibility stage andsome still pre-feasibility – and they all vary in terms of thesize of their reserves and resources. The ability to speedup or delay these in response to changed market conditionsgives Platinum a unique advantage in the industry.When the prospector Hans Merensky first traced theplatinum deposits in the 1920s, he could have had no ideathat this then obscure metal would replace gold as SouthAfrica’s most important mineral product. For decadesafter, the companies that came together to formPlatinum’s predecessor, Rustenburg Platinum Mines,had a monopoly in the industry. Although that’s no longerthe case, Platinum is still the leading producer.Operating in many areas in which it is not so much themajor employer, but one of the only employers, is a statusthat brings responsibilities on a scale experienced by fewcompanies. While companies must never neglect theirinvestors, Platinum, more than most, cannot simply look tothe bottom line as the measure of its success. It may not beperfect – indeed, a catalogue of disputes with localcommunities contained in the 2009 SustainableDevelopment Report testifies to this – but, on the whole, itcan be proud of how it balances the interests of its diverserange of stakeholders while entrenching its position as theworld’s leading PGM company.1The Mining Charter is the South African mining industry’s versionof the charters agreed between employers and other stakeholders inseveral sectors of the economy, whose aim is broad-based economicempowerment. A key component is the mining scorecard, which hasthree core elements: direct empowerment through ownership andcontrol, human resource development and employment equity, andindirect empowerment through procurement and enterprise development.AuthorMichaelcoulsonMichael Coulson is aformer deputy editorof the Financial Mailin Johannesburg. Hehas been described asthe doyen of financialjournalism in South Africa;except for spells as ananalyst with stockbrokersin Johannesburg andLondon, he’s been writingabout the South Africaneconomy and financialmarkets for more than45 years.september 2010 | Optima | 23

optima reportTurningpointsfromCopenhagenMany of us hoped the UN’s ClimateChange Conference in Copenhagenin December would come upwith the answers, firmly movingthe global political community inone direction to act on reducingemissions. More than six monthslater, the issues are still mired inuncertainty. Here, Sir David King,director of the Smith School ofEnterprise and the Environmentat Oxford University, reviews the“urgent task” ahead.BOB STRONG/Reuters/Corbis24 | Optima | september 2010

As the global populationrises towards ninebillion – likely by2050 – a continueddependence on fossilfuels for energy generation and ondeforestation to create additionalfarmlands will lead to globaltemperatures increasing by up to6°C and average sea levels risingby up to one metre by the end ofthe century. The impact on societieswould be severe, driven by heat anddrought in some areas and floodingin others – especially coastal cities.There is worldwide recognition thatcutting greenhouse gas emissions andmoving to a defossilised economy isthe right thing to do. The question is:how do we achieve it on a global scale?It is more than six months since the15th meeting of the Conference of theParties in Copenhagen. There is muchto do ahead of the meeting in Cancunin Mexico in December.Despite the unfortunate level towhich expectations were raised,I believe that Copenhagen was a stepforward. We must acknowledge that agroup of 55 developed and developingcountries, which together account foralmost 80 per cent of global emissions,did agree to some very important and,indeed, groundbreaking commitments:n They endorsed the limit of twodegrees’ warming as the benchmarkfor global progress on climate change,the figure first agreed during the 2005G8 1 Heads of State at Gleneagles.n Unlike every previous agreement, itwasn’t just developed countries, butalso all leading emerging economies,that agreed to make specificcommitments to tackle emissions.n For the first time, these countries havesigned up to a comprehensivemeasurement, reporting andverification of progress agreement.“Getting an agreementwas always going to betough, but I believe thatno protocol is betterthan a weak one.”Sir David KingSignificantly, though, the groupincludes only Brazil from South Americaand just six out of 55 African countries.In all, 137 (out of a total of 192) countrieshave not made pledges. Independentanalyses indicate the pledges as theystand are about half of what is requiredto avoid the worst impacts of climatechange. This needs to change. Weneed more certainty and perhapseven more ambition.A community of scientistsThe science of climate change hascome under a lot of media attentionlately, with the most recent landmarkreviews of the Intergovernmental Panelon Climate Change (IPCC) on the stateof climate science being at the heartof this lobby-driven storm. Followingleaked e-mails from the University ofEast Anglia and some poor referencingin the IPCC’s 2007 report, through theefforts of well-paid US lobbyists thework of thousands of remarkablescientists is now being questioned.The climate science community isvast: palaeo-climatologists studyingthe planet’s past climate behaviour;analysts determining sea-level rises;scientists taking detailed measurementsin tropical forests; scientists studyingthe loss of ice on mountain peaks inGreenland and on Antarctica; thoseanalysing changes in levels ofgreenhouse gases in the atmosphereand the acidification of the oceans; andthose modelling the potential impactsof global warming in different regionsMAIN IMAGEHorns Rev 2 nearEsbjerg in Denmarkis the world’s largestwind farm. Althoughwind power currentlyaccounts for lessthan one per centof global electricityproduction, thefigure rises to about20 per cent in thecase of Denmark01 The plenarysession of the 2009Climate ChangeConference inCopenhagen,Denmark02 A house modelat an exhibitionof pollution-freetechnology inQingdao in China.The country hascommitted tostringent reductiontargets on carbonintensity by 202001 02OLIVIER MORIN/AFP/Getty ImagesWU HONG/epa/Corbisseptember 2010 | Optima | 25

optima reportjames barber01around the world. Their progress isuntouched by the hullabaloo in themedia. They challenge each other,debate and push back the frontiersof their science in the process.The urgent task is now to moveforward and broaden, deepen andstrengthen the commitments madein Copenhagen, drawing on the largecoalition of countries that wantedmore from the agreement.The struggle for consensusGreater certainty about emissions isnecessary to provide the strongestincentive to business, through theestablishment of a long-term carbonprice. I am not going to suggest whatsuch a figure will be, but it needs toprovide assurances to the global marketwhile ensuring that renewables andother low-carbon technologies can becompetitive. The Smith School ofEnterprise and Development iscurrently developing optimal strategiesfor moving forward, using existinginternational processes, such asG20 2 meetings, UN meetings and theWorld Trade Organisation (WTO),as appropriate instruments.Looking back at Copenhagen, wemust bear in mind that getting anagreement was always going to be toughbecause we are seeking consensusamong almost 200 countries. We allknew that that it would be messy andcomplicated. In particular, withoutbacking from his Senate, PresidentObama could not have signed up to sucha deal and, without the US, no lastingdeal could be reached on a protocol.I believe that no protocol is betterthan a weak one. Signing up tosomething that could not deliver thecuts needed would, in the long term,have presented more problems thanit solved.As part of moving towards alow-carbon economy, we need astep-change in driving through newlow or zero-carbon technologies.Throughout the world, we need todevelop new technologies andimplement policies that will improveenergy efficiency, increase investmentin low-carbon power, develop hybridand electric vehicles and smart grids,and reduce deforestation – and, indoing so, provide a stimulus to growour economies.The changes we need to make by2050 are large and complex. Many ofthe decisions that need to be made now,and the innovations that must beGary Braasch/CORBIS01 Rechargeableelectric cars arealready becominga familiar sight inmany cities, suchas London02 New policies arebeing called for toreduce deforestationand increasereforestation – as isbeing undertaken inCosta Ricadeveloped, will have an impact on whatthe energy system will look like in 2030and beyond. This will have significantimplications for industry, businessesand consumers. Therefore, it is criticalthat we develop a shared understandingof what technologies are available nowand potentially coming on stream in thenear future, as well as the practicalchallenges and constraints we need tomanage and the implications for society.This global shift has not yet foundinternational legal form, but scientificevidence, public opinion and businessopportunity will ensure that it emergesover the coming years.Community involvementIt is particularly noteworthy that theUS, as well as the emerging powers –such as China, India, Brazil and SouthAfrica – have added their voices veryclearly and constructively to thedebate, demanding action from the26 | Optima | september 2010

advanced economies. For example, theUS and Chinese governments have eachpledged their commitment by settingstringent reduction targets on,respectively, greenhouse gases andcarbon intensity by 2020.Brazil is committed to endingdeforestation by 2025, and is thinkingpractically about how it can moreeffectively supply energy. CRERAL, aco-operative in the south of the country,supplies electricity to a mainly ruralcustomer population of around 6,300,using river-based, low-tech andlow-cost mini-hydro plants, whichincrease both capacity and reliability.In Europe, progress in wind energy isgrowing steadily. Denmark has provedparticularly successful; its model ofownership has led to community groupsowning half the country’s private windfarms. Around 85 per cent of thenation’s wind-generation capacity ismade up of small clusters of turbines,02rather than large developments.Similar schemes, in which people areencouraged to join forces to create arenewable energy supply, can be foundin The Netherlands and Germany.The poorer nations, the small islandstates and African countries are makingtheir concerns and demands clear.Many are already setting examples forothers to follow. In Tanzania, forinstance, the Mwanza Rural HousingProgramme trains villagers to set upenterprises to make high-quality bricksfrom local clay, fired with agriculturalresidues rather than wood, whichhelps reduce deforestation.The key to the success of theseinitiatives is the buy-in of the localcommunity and making them part ofthe economic and practical solutions –a bottom-up approach. The UK hasrecognised this, with its innovation body,NESTA, leading a yearly challenge witha £1 million (c. $1.5 million) prize fundto reward collaborative communityefforts. This year’s four winners have allreduced carbon emissions – and, in thecase of a project on Scotland’s Isle ofEigg, by as much as 32 per cent.A commitment from everyoneIn many respects, the move towards anew paradigm began at Gleneagles in2005. The process started in Januaryof that year at the Met Office in Exeter,which the then Prime Minister TonyBlair asked me to oversee. A meetingof the world’s leading climate scientistswas convened to address the topic of‘Avoiding dangerous climate change’.This was the first time that a consensuswas reached on the need to limit globalwarming beyond a certain limit, andprovided an important backdrop to thefirst meeting of the G8+5 3 groupinglater that year to discuss climate changeand African development.Five years later, the whole world isnow engaged in the issue. We do needa solution that involves everybody –industrialised, rapidly emerging anddeveloping countries alike – oremissions will simply ‘leak’ from thecountries where CO 2 rules apply tothose that are not part of the agreement.By 2050, average global emissionsof CO 2 must fall to around two tonnesper person per year if we are tomitigate against the worst effects ofclimate change. One response mightbe for each nation in the industrialisedworld to be assigned a straightforwarddownward trajectory to this figure.This has, in effect, been accepted bythe EU, and is a personal commitmentfrom President Obama for the US.Emerging economies such as Chinaand India, which have relatively lowlevels of emissions per head, couldtemporarily increase their emissionsbefore these too would start to falltowards the designated figure of twotonnes per person. Again, this is nowa formal commitment by China.Inaction over the coming decadescould disrupt economic and socialactivity as we approach mid-century –making the financial downturn of thepast two years pale in comparison.Tackling climate change is thepro-growth strategy and it can be donein a way that does not cap theaspirations for real growth of rich orpoor countries. The earlier effectiveaction is taken, the more advantageousthe outcome will be.1Canada, France, Germany, Italy, Japan, Russia,the UK and the US.2Argentina, 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.3The G8 (see 1 ) plus Brazil, China, India, Mexico andSouth Africa.september 2010 | Optima | 27

country report01 0203Tunnel vision findscopper potentialTwo new prospects are expanding the resource baseof the Los Bronces mine, already one of the largestconcentrations of copper mineralisation in the world.Nicky McClure reports.28 | Optima | september 2010

all photos anglo americanTimelineLos Sulfatos1920sThe Andes Mining Companydocuments the presence of porphyrycopper-style mineralisation inthe area1960s and 1990sShort-lived exploration and drillingcampaigns are carried out, but proveinsufficient to determine the truepotential of the prospect2002Anglo American acquires CMDLCfor $1.3 billion – including theLos Bronces mine and surroundingmineral concessions042005-2008Four field seasons culminate inthe discovery of the Los Sulfatosdeposit – of a size and grade that rankit as one of the top copper discoveriesin the past 30 yearsThe Andean region hostsone of the world’s mostprospective copperbelts, and two recentexploration projects,San Enrique-Monolito andLos Sulfatos, could be among AngloAmerican’s most significant andhighest-quality copper prospects yet.After initially being drawn toChile in the early 1980s in a search forgold, Anglo American’s focus soonswitched to copper, following a seriesof deals that were born afterestablishing a local foothold. Andwhen the company acquired CompañíaMinera Disputada de Las Condes(CMDLC) for $1.3 billion in December2002, it began exploring highlyprospective areas near the recentlyacquired Los Bronces operation.Anglo American’s Los Broncescopper operation is 60 kilometresnorth-east of Santiago, in central Chile,at altitudes of between 3,000 and 3,500metres above sea level. Explorationactivity here led to the discovery ofpromising new deposits; one akilometre away from Los Bronces atSan Enrique-Monolito (SEM), and theother, Los Sulfatos, about six kilometressouth of the mine, at elevations of over4,000 metres above sea level.Graeme Lyall, advanced explorationprojects manager in Chile, says that theLos Sulfatos area showed potentialearly on: “There is evidence ofsmall-scale exploratory activities that01 Drilling activity toinstall rock supportin the eight-kilometreexploration tunnelstarting from theLos Bronces operation02 An operator fromItalian tunnel firm SELImonitors activity in thetunnel boring machine’s(TBM’s) control cabin03 The TBM cutterhead and shield areassembled at SELI’sworkshop in Italy04 Workers carryingout surface explorationtravelled on horsebackthrough the surfaceexploration campsiteat the Los Sulfatosprospect2007SRK Consulting is contracted toengineer an eight-kilometre-longexploration tunnel to access theLos Sulfatos deposit2009Italian tunnel firm SELI ships the290-tonne tunnel boring machinefrom Italy to Chile in 70 containers.Excavation with the tunnel boringmachine starts in August2010The total tunnel advance at the endof July is 1,800 metres in difficultground conditions2011Tunnel development expected tobe completed by the end of 2011september 2010 | Optima | 29

country reportdate back perhaps 100 years. Overand above the geology of the prospect,which showed promising signs of asignificant copper deposit, twodrilling campaigns were undertakenby previous owners; the first at theend of the 1960s, and the second atthe beginning of the 1990s. Bothcampaigns showed that there wascopper mineralisation in the area, butfailed to demonstrate the truepotential of the prospect.”And what potential there was.While SEM could contain up to25 million tonnes of copper, earlyindications show Los Sulfatos mayhave substantially more.Difficult terrainExploration at Los Sulfatos beganwith a geological reconnaissanceof the area in 2004, followed byhelicopter-supported drillingcampaigns between 2005 and2008. The difficult terrain, harshclimate and environmentallychallenging conditions meant thatfield activities were restricted andcould only be carried out over thelimited summer periods betweenDecember and March.The exploration drilling campaignswere carefully planned. Two fieldcamps, housing up to 30 people, wereset up in the high mountains usingboth modern and more traditionalmethods of transportation.Movement of all the equipment,personnel, food and fuel was doneby helicopter, with mules carryingthe team between the camps and thedrill sites.During the four field seasons,22 holes were drilled. All the holesintersected potentially economiccopper mineralisation, indicating thatthe Los Sulfatos deposit wassubstantially bigger and better qualitythan had been previously estimated.A new approachThe world-class copper deposit thatthese exploration and drilling effortshad revealed extended to depths of atleast 1,000 metres below the surface.However, significantly more drillingwas needed to determine the fullcharacteristics of the deposit beforemine development options could beconsidered. Extreme conditions meantthe only alternative was to carry out thedrilling from underground.In 2007, SRK Consulting wascontracted to engineer thedevelopment of an eight-kilometreexploration tunnel, starting from theLos Bronces operation and headingsouth, to provide underground accessfrom which to drill out the resource.Conventional drill and blast methodswere discarded in favour of tunnelling01 A helicopterlands at the surfaceexploration campsite,more than 4,000metres above sealevel. Helicoptersupporteddrillingcampaigns started atLos Sulfatos in 200502, 03 Assemblyof the TBM cutterhead and shield nearscompletion in anunderground cavern04 The steel tunnellining is installed inbroken ground behindthe TBM shield“Our investigations showed thatthe tunnel boring machine wasnot only feasible, it was potentiallymuch faster and significantly saferthan the alternatives.”Graeme Lyall, advanced explorationprojects manager0102using a mechanised tunnel boringmachine (TBM). Despite itsmarginally higher cost, TBMtechnology had advantages in termsof development timeframe, safety andoverall project risk.“Our investigations showed that theTBM was not only feasible, it waspotentially must faster and significantlysafer than the alternatives,” explainsGraeme. “This was undoubtedly thebest method.”A TBM development project wasawarded to Chilean construction firmBesalco in association with Spanishfirm Dragados, a company with30 | Optima | september 2010

03 04extensive experience in this sortof tunnelling. This led to themanufacture of a new Double ShieldUniversal Compact TBM with Italianfirm SELI. Others participating in theproject include H+E Logistik, whichsupplied the system that removesmaterial from the tunnel, and Schöma,which provided locomotives formaterial and personnel transport.machine assemblyCommissioning of the TBM created itsown challenges. SELI completed andtested the TBM in Rome in early 2009,before taking it apart to be shipped in70 containers to Chile – itself amassive undertaking. The TBMweighs 290 tonnes, measures91 metres and the tunnel excavationdiameter is 4.5 metres. The largestcomponent – the main bearing –weighs nearly 50 tonnes. This andboth segments of the cutter head wereshipped separately.To prepare for the TBM, an initialadvance tunnel was created to enablethe machine to be assembled by SELItechnicians. After initial testingshowed that it was working properly,the green light was given to initiatetunnel boring.TBM excavation commenced inAugust 2009, almost one year afterinitiating the design and manufactureprocess. The first two-kilometre driveanticipated the most difficult groundconditions, and progress has indeedbeen slow and challenging during thisinitial drive. By the end of July 2010,the tunnel had advanced 1.8 kilometrestowards Los Sulfatos.Looking aheadUsing a TBM, the tunnel has anestimated advance rate of 400 metresper month – more than double theprogress that is expected usingconventional methods.The team is considering excavatingat least 20 drill stations to carry outexploration drilling. Graeme says: “Wehave planned for up to eight drill rigsoperating in the tunnel, drilling invarious directions. Informationfrom these drill samples will becharacterised geologically andanalytically for copper contents.acknowledgementsThe Los Sulfatos area had beenexplored for nearly a centuryand there is no doubt that thisdiscovery is the result of a numberof contributions.Timing is perhaps a keyfactor, as technology, conditionsand world demands change.For this particular deposit,Anglo American was fortunateto be there at the right time withthe right strategy and with theright people.The company’s former leader,the much admired and respectedlate Nigel Grant, former consultinggeologist for Anglo AmericanSouth America, was key topromoting the exploration potentialand value of the Disputada assetsduring the acquisition processin 2002, and this was perhapsa significant factor that led tocompleting the winning bid.Chris Carlon followed and,eventually, the discovery was ledThis will help to develop a model forthe deposit that will be used in mineplanning and engineering studies.“We should finish tunnelling by theend of 2011. Exploration drilling isexpected to last at least three moreyears and then there are mining andengineering studies before minedevelopment. It will be at least another10 years before we can expect to startextracting copper from the ground.”Graeme concludes: “TheLos Sulfatos deposit promises tobecome one of the most long-lived andprofitable operations in the world,lasting well beyond my lifetime. Soreally this is just the beginning.”moreinfoFor more information,visit: www.anglochile.clby and came to fruition throughcurrent head of Andes explorationVicente Irarrazaval. Chief projectgeologists who lived through theharsh conditions on site includedCristian Spröhnle and then WilliamRobles. Juan Carlos Toro wasinstrumental in providing valuablegeological contributions.The team also includeda number of geologists andsupporting staff who are proudof this achievement.AuthorNickyMcClureNicky McClure is abusiness journalist withmore than 16 years’experience writing forand editing titles onsubjects ranging frompublic-sector activitiesto computer gaming.She currently worksfor Redhouse Lanecommunications agencyon publications forGlenmorangie and RBS.september 2010 | Optima | 31

optima reportLevelling theplaying fieldIn just two decades, India has made great strides, froma stagnant and bureaucratic socialist-style economy tofinding itself on the verge of breaking in to the world’stop 10 countries by GDP. The populous country’s uniqueapproaches to finance, technology and rural poverty nowsee it competing on a global scale, says Greg Mills.FRISO GENTSCH/UPPA/Photoshot01Inever imagined that I would find myself cross-leggedamong a group of Indian women farmers – the socalledpoorest of the poor, in a country besotted withcategorisation – learning how financial access hadtransformed their lives. It’s not as if banking is newto India, however. After all, these are the people who gavethe world the mathematical zero.In The World is Flat, Pulitzer Prize-winning authorThomas Friedman argues that increasingly affordabletelecommunications are erasing obstacles to internationalcompetition, ‘flattening’ the world for those adaptable andskilled countries and entrepreneurs.Friedman’s book owes its title to a meeting he had withNandan Nilekani, co-founder of Infosys, India’s secondlargestIT company. Nilekani said countries like India couldnow compete for the global knowledge industry as neverbefore, since the world had been levelled by the internetand market forces.India is at once dynamic and chaotic, and quiteinspirational. It shows what can be achieved if people aregiven half a chance by government. Until the early 1990s,India’s economic development was stunted by its isolationfrom the world economy, and by the inefficient control of itsgovernment systems, the so-called Licence Raj.In 1991, then prime minister PV Narasimha Rao, financeminister P Chidambaram and Manmohan Singh, who is nowprime minister, initiated reforms based on the partialwithdrawal of the government from interference in theeconomy. The rupee was partially floated, state subsidieswere reduced and the economy was opened up to foreigninvestment attracted by the large pool of people, talent andlow incomes. The overall results of India’s liberalisation havebeen spectacular. More than six per cent annual average realGDP growth since 1991 has bumped about 100 million peoplefrom poverty into the middle classes.India has moved on light years in little more than adecade. Until the mid-1980s, the main choice of cars in Indiawas between a Hindustan Ambassador, which was based on32 | Optima | september 2010

greg mills02Sipa Press/Rex Features03a 1950s Morris Oxford, or a Premier Padmini, basedon a Fiat 1100 from the same era. Now, there are over30 marques on offer in glitzy showrooms, from smallHyundai, Ford and Chevy hatchbacks to top-of-the-lineBMWs, Porsches and Bentleys.Fifteen years ago, travel in India was courtesy ofgovernment services. Where Air India once inefficientlydominated the skies, today the struggling national carrier01 Volkswagen’splant in Chakan –inaugurated in 2009,creating 2,500jobs – is expectedto produce 110,000units per year02 The author,Greg Mills (in bluetop), discussesfinancial progresswith Indian womenfarmers and arepresentative fromthe state ministry03 Each year, Indiaproduces more thanone-and-a-half timesas many graduatesas Chinahas stiff competition from private airlines. “The best thingthat the government did was to get out of business,” saysPrakesh Rao, the head of the Electronics IndustryAssociation of India. “And the best example of this is inthe IT sector.”Technological revolutionIndia’s IT industry grew from $100 million in revenuein 1992 to more than $40 billion in 2007. Infosys’srevenue climbed from $1.5 million in 1992 to more than$4 billion in 2008, with stock options creating more than2,000 US-dollar millionaires.Bangalore is the epicentre of this flat world. Its softwareindustry 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 averagingmore than 10 per cent, making it India’s fastest-growingmetropolis and home to more than 10,000 US-dollarmillionaires. Bangalore’s hi-tech advantages stem from thelong-term regional investment made by the government inseptember 2010 | Optima | 33

optima reportspace, aeronautics, machine tool and electronics firms, whichspawned a legion of sub-contractors and necessary skills.This has promoted growth in other sectors, notablybiotechnology – nearly half of India’s 265 biotechcompanies have headquarters in the province.Taking educational opportunitiesIndia’s ability to take up opportunities presented byglobalisation and domestic liberalisation were related to itsskills base. Despite high levels of illiteracy, its skills base isimpressive. Each year, India produces 2.5 million graduatesand 350,000 engineers, the latter figure more than five timesas many as the US. Whatever the drawbacks of the Indianeducational system, over a billion people striving to make aliving and get ahead provides a certain competitive element.For instance, 400,000 applicants sit the preliminary Indiancivil service exams each year. Less than 10,000 are selectedfor 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 slowdismantling of the caste system. ‘Reservation’ of educationalopportunities for so-called lower castes has pushed up thegrade requirements for others. No student can now beguaranteed a place in the sciences without a score of morethan 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 partof self-help groups instigated by the UN in the 1960s andnumbering about 10 women each. Ten million women from35,000 villages are organised in this way across the state.The scheme has seen monthly income per family growfivefold in a decade to $50.Since 2000, these groups have been part of thegovernment’s Self-Empowerment Rural Poverty (SERP)programme. Better training, enforced savings and access tobanking finance have transformed the women’s lives –improving their economic conditions, giving them morepower in decision-making in their families and ensuringtheir children’s education and better health care.In addition, in the past three years, SERP has beenintegrated with the Community Managed SustainableAgriculture scheme, an organic revolution focusing on thesmall-scale farmer using local rather than imported goods.Before SERP, farmers would have to borrow from lendersat exorbitant interest rates, sometimes 100 per cent. Now,they have scheduled repayment schemes at 12 per centinterest, on which there is zero default. The womenthemselves keep the books, and plan to lease more landand diversify their sources of income.The government can only do so much and, where itcannot help, it is learning to leave it to the private sector,helping reduce corruption and improving transparencyand competition.Of course, much remains to be done in India – fromimproving sanitation and building more and safer roads,to raising literacy and the quality of education, andstamping out corruption.However, the results of the transition from its paltrygrowth rate before its liberal reforms are impressive. Indiais now the fourth-largest economy in the world in PPP terms.Its reforms have encouraged entrepreneurship, the lifebloodof every economy. And the ambition of its entrepreneurshas put it in a better position to benefit from trade with thericher world outside.01 Workers in abiotechnologylaboratory inBangalore researchthe genetic cloning ofplants to improveproductivity02 Evening markettraders use solarpoweredlights, manybought with smallloans, in Ahmedabad,western India01 02AMIT DAVE/Reuters/Corbisrobert wallis/corbis34 | Optima | september 2010

greg mills03 The Texmacorailway carriagefactory produces upto 5,000 wagonsannually, vital forservicing India’sgrowing rail network04 Delhi MetroRail Corporationemployees work atthe construction of aflyover in New Delhi,March 2010Case studyIndia’s rail network gives africa a lesson in infrastructure0304DANISH ISMAIL/Reuters/CorbisAcross the wide Hooghly River, abranch of the great Ganges, is theTexmaco railway carriage factorythat has been building wagons sincethe mid-1950s. It now turns outbetween 4,000 and 5,000 wagons ayear – about a quarter of the nationalrequirement.It is a vast concern. At the maingate, there are hundreds of wheels,mainly imported – owing to ashortage in Indian manufacturingcapacity – from China and Romania.Inside is a foundry melting downscrap steel to mould into couplings,tracks and other specialist bits, whileacross the plant are 6,500 squaremetres of factory where the wagonsare constructed.Not for nothing is this industrialarea around Howrah known as theSheffield of India after the oncepowerhousesteel city in the northof England. Five wagon factoriescongregate in an 11-kilometre radius.Such scale is necessary to serviceIndia’s vast – and growing – railnetwork of 64,000 kilometres.Indian Railways’ 1.6 million workersmake it one of the world’s largestsingle employers. It carries 20 millionpassengers and two million tonnes offreight daily. Construction of the north-toeastand west-to-east dedicated freightcorridors started last year, totalling about2,500 kilometres of new track in a projectworth an estimated $80 billion.By contrast, Africa has neither thedomestic engineering capacity nor fundsto catch up in terms of infrastructure,potentially stunting economic growthand human development.Between 1980 and 1998, Africa’sspending on infrastructure nearly halvedto just over one per cent of GDP.A study on African infrastructure,carried out in 2009 and involving apartnership of African institutionsand the World Bank, estimated thatthe continent needed to spend$93 billion a year to address itsinfrastructure backlog.At independence in the 1960s,southern Africa had the best sub-SaharanAfrican rail and road network. SouthAfrica’s rail network is the 10th largestworldwide, representing about 80 per centof Africa’s total, yet just 13 per cent of allfreight is transported by rail. South Africa’stransport costs amount to 53 per cent ofoverall goods’ costs, well above the globalaverage of 39 per cent.This is not just a South Africanproblem. In the 1970s, Zambia wasconsidered to have one of the best railand road transport networks. Yet within20 years, the Zambian governmentestimated that 80 per cent of the roadnetwork had deteriorated throughvandalism and lack of investment.India’s experience teaches Africathat if governments want to usethe railways as a development andeconomic asset, they have to investsignificant sums. But costs can bereduced by public-private partnership– for instance, the Wagon InvestmentScheme allows Indian companies topurchase rail trucks for use on IndianRailways’ network – or by using existingresources more effectively, partly byincreasing competition and fixing soft(customs, for example) rather thanhard infrastructure.Meeting Africa’s infrastructureneeds is therefore not primarily aboutmoney, as attractive as that ideamay be to those wanting to shift theresponsibility elsewhere. It is aboutputting in place the right systems ofplanning and maintenance. It’s aboutmaking infrastructure a domesticpolitical priority.AuthorGreg MillsDr Greg Mills heads theJohannesburg-basedBrenthurst Foundation,which encouragesinnovative developmentthinking in formulatingstrategies and policiesfor strengthening Africa’seconomic performance.His latest book, WhyAfrica Is Poor – And WhatAfricans Can Do About It,was published by Penguinin August 2010.september 2010 | Optima | 35

company profileThe quietAustralianWithout much ado, Anglo American’s Australian coalbusiness has made giant strides, from a disparate businessin 2007 to one joined-up organisation built on innovation,optimisation and an eye for opportunities. Matthew Stevensspeaks to the head of Metallurgical Coal, Seamus French,who, with his team, is transforming the business.36 | Optima | september 2010

september 2010 | Optima | 37all photos anglo american

company profileAnglo American is the quietPREVIOUS PAGEAustralian. The company is Dragline removingoverburden inAustralia’s fourth biggest coal the open pit atminer and its second biggest Capcoal’s LakeLindsay operationproducer of metallurgicalcoal, one of two mineral 01 Productioncommodities in which the supervisor KenGeall oversees allgreat southern land boasts truly world-class resources, production activityinfrastructure and geographic advantage. But fewat Callide mineAustralians, outside of those who work for the local arm02 Left to right:of the global miner, would likely recognise the name. Seamus French, 01Not that this troubles in the least the boss of AngloQueensland ministerfor natural resources,American’s Metallurgical Coal business, Seamus French, mines and energyand his team. They are too busy linking up its Australian and minister for tradeStephen Robertson,hard coal foundations. Under their Brisbane-basedCynthia Carroll anddirection, a once-disparate collection of Australianthe inventor of thefatigue-monitoringmetallurgical coal assets is meeting the aggressiveSmartCap Dr Danielperformance preconditions expected of this key pillar of Bongers in Moranbah,September 2009Anglo American’s mining world.The team’s challenge, and its success rate, was03 Callide mineacknowledged last September by Anglo American chief environmental officerGrant Staff examinesexecutive Cynthia Carroll. In a speech to the Brisbanea monitor that recordsMining Club, Carroll noted how the company’s Australian dust levels created aspart of normal miningprofile had been created by the acquisitions of geographicallyactivitiesvery distant Shell Australia coal projects, albeit in theabutting states of Queensland and New South Wales.After observing that the operations “frankly never became02joined up”, Carroll went on to say: “We had performancetargets that we never delivered, with mines operating prettymuch independently. This business made only a marginalprofit in 2007, partly because of logistical issues, but alsobecause of operating inefficiencies and being ineffective.We have now turned this situation around substantiallyunder Seamus French’s leadership and his team.”UNLOCKING ASSET VALUETheir success has made the metallurgical coal commoditybusiness unit a key contributor to Anglo American’s assetoptimisation programme. According to Carroll, the theory isall about “unlocking value of our existing assets through costand productivity improvements by identifying anddisseminating best-of-class business solutions”. Carroll’starget for asset optimisation, combined with efficienciesand synergies arising from a rationalised global supply chain,is the delivery of $2 billion 1 of ‘profit enhancement’ by 2011.Certainly, Metallurgical Coal has done its bit to ensure thistarget is achievable, having developed a five-year assetoptimisation plan that has paid quick dividends, generatingabout $500 million of ‘benefit’ to the business’s cash flow inthe first two years.Asset optimisation covers the full spectrum of thebusiness’s activities, from resource definition to sales, butthe 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 onearth, says French. “They want to be winners and hold theirheads up high. The asset optimisation programme has beenboth a great motivator and a great means of recognition forour people. In a sense, it is acting as the glue that binds theorganisation together.”That is why, over the next two years, the business unitexpects to generate further very significant savings througha range of initiatives covering everything from blasting toproduct blending.‘Baby-deck blasting’ instituted by management at theDawson thermal and metallurgical coal project at thesouthern tip of Queensland’s legendary coal belt in theBowen Basin is instructive of the root-and-branch natureof asset optimisation. In 2008, Dawson’s drill and blast38 | Optima | september 2010

03engineers identified that existing blasting methods wereresponsible for the majority of coal loss at the mine.So, a smarter baby-deck blasting system was developedto eliminate damage to the coal seam. It requires two shotsin quick succession in every blast hole to divert pressureupwards and eliminate damage (and value destruction)previously caused to the top of the coal seam.And Dawson’s ‘silver rules’ set visual standards thatspecify what machine operators should be able to physicallysee when they are removing overburden and how theyshould operate machinery when close to the top of thecoal seam to avoid damaging the coal.A STRATEGY OF TRANSFORMATIONNot only do these innovations make a difference to the valueextracted at Dawson, but they are being shared. “We producea single commodity and all our mines are relatively close toeach other. This means best practice can be spread acrossour seven-strong collection of coal operations throughQueensland’s Bowen Basin and the Hunter Valley in NewSouth Wales,” French says.“In asset optimisation, we are delivering one of the manyprogrammes created over the past three years as part of ourstrategy to transform the business.“Phase one of the strategy started in 2008. It was aboutcreating a performance culture, about providing clarityof direction, enforcing accountability and installingperformance management. This set the foundation foreverything we have subsequently achieved.“In phase two, we established improvement processesbit by bit and got the business focused on safety management,on improving business and production processes andremoving bottlenecks.“Then the global financial crisis came along and, well, itwas interesting,” French says with understatement. “As amanagement team, we asked, ‘does this change our plans?’“The answer was, it didn’t. Rather, we had to speed upwhat we were already doing. We ended up improvingproductivity by 24 per cent. From 2003, the Queenslandcoal industry in particular had seen continuous dramaticgrowth. And growth means that sometimes you losesomething in efficiency… you become a little fat, a bit bloated,september 2010 | Optima | 39

company profile01 02you take on people too quickly; and costs increase uncheckedbecause you are chasing production the whole time. So, oddly,the downturn was a welcome half-time, if you like. It gave usa chance to draw breath, refocus and trim the sails. We endedup maintaining production levels with a 20 per centreduction in the workforce – and took out low-marginoperations at the same time.”DOUBLING IN A DECADEAustralia’s coal industry is a diverse and idiosyncratic beastand, to some degree, Metallurgical Coal’s task is defined bythat character. So, while its growth focus is set firm onexpanding the business’s premium metallurgical coal footprint,its legacy – and ongoing business – responsibilities includethermal and PCI (pulverised coal injection) operations.In 2009, attributable production from the suite of AngloAmerican’s Australian coal operations totalled 26.7 milliontonnes (Mt), of which metallurgical coal contributed 12.6 Mtand thermal coal 14.1 Mt. Anglo American has realisticambitions to double that output over the medium term.“We are not a strictly metallurgical coal business,” Frenchsays. “We produce a range of coals, because that is how wehave grown. We have thermal going into the Queenslandpower business. But we have a strategy that expresses ourgrowth ambitions in terms of value – and the high-valueassets here are metallurgical coal. We want to doublebusiness value over the next 10 years, and we have workedout 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, andabout one billion of that is metallurgical coal. We havemapped out a project pipeline for the next decade. We can01 MetallurgicalCoal head SeamusFrench presentsthe quarterlyperformance reviewat Dawson mine,July 201002 Geologyco-ordinator ColinRitchie, coal andpartings co-ordinatorBridget Perkins andmining engineerShane Bellamy studya pre-strip plan03 Clay Stitt, miningco-ordinator forsurface operations,at the open cutoperations atLake Lindsayachieve that doubling of value, which also translates intonearly doubling production.”Growth, though, will depend on more than locking inthe investment required for the four projects MetallurgicalCoal is currently investigating, which include two highqualitymetallurgical coal opportunities in Queenslandcalled Grosvenor and Moranbah South (both of which areclose to the existing Moranbah North operation) and theDartbrook and Drayton South thermal, semi-soft andPCI prospects. The real key to growth is going to besecuring the logistical capacity needed to shift coal to anincreasingly diversified customer base.The second part of that strategy is about customers,Seamus continues. “We have a marketing strategy basedon established economies and higher-growth economieslike China and India. Currently, Japan and South Koreamake up between 60 and 70 per cent of our demand profile,but we expect China and India to be the destinations forabout 90 per cent of our growth volume in the future.“Naturally, like everyone else, we keep an eye on possibleoverseas opportunities for expansion. We are certainlylooking beyond Australia, looking at where else in theworld we can secure growth platforms that will makea meaningful difference to our business.“Like everyone else, we keep an eyeon overseas opportunities. We arecertainly looking beyond Australiato secure growth platforms.”seamus frenchhead of metallurgical coal40 | Optima | september 2010

03september 2010 | Optima | 41

company profileSo what are the major challenges to the business unit’splans in Australia? French considers.They include infrastructure, attracting the best peopleand government taxation and climate change policies.“When we talk about doubling production,” Frenchcontinues, “it means doubling our logistics capacity,both rail and port. The challenge in Queensland is that itis a very crowded infrastructure space.”POLItical DEVELOPMENTSRecently, two touchstone issues have thrust Australian mininginto the political spotlight: the attempts to introduce a CarbonPollution Reduction Scheme (CPRS) and, more recently, aResources Super Profits Tax (RSPT).Introduction of the CPRS was subsequently delayedby former prime minister Kevin Rudd to 2013. The RSPTwas renegotiated by his successor, Julia Gillard, whoreplaced it with the more agreeable Minerals ResourcesRent Tax (MRRT) 2 . Metallurgical Coal intends to play anactive role in working through the detail of the MRRT withgovernment as well as in the formulation of policy toaddress climate change.“The CPRS was intended to incentivise industry toproduce less carbon,” explains French. “We have noissue with that intent. We acknowledge that pricing carbonand giving people an incentive to reduce its generation waslogical. But there is no point in forcing an incentive onanyone if the industry doesn’t yet have the technology toreduce emissions – and the reality is that such technologydoes not exist for the majority of coalmining emissions,which are fugitive in nature.“Everyone who looks at the coal industry has tounderstand that pricing is global. Everyone gets the sameprice. For an Australian project, we get the same price asour competitors around the world. We can’t reflect ourunique cost increases through pricing. The CPRS, as setout initially, and the RSPT would have left us at a globalcompetitive disadvantage.“We will continue to deal with these externalchallenges as they arise,” concludes French, “but the realchallenge will always be within our business, in continuallymotivating ourselves to outperform the competition andseek new horizons. For us, being part of Anglo Americanmeans continuously improving our performance andcontributing to the objective of it becoming the leadingglobal mining company. And this challenge, I have everyconfidence we can meet.”1All dollar figures in this feature denote US dollars.2Optima went to press before the 2010 federal election.0101 AutomotiveelectricianapprenticeJessica Wustwith colleagueFrank Montanari inthe Callide mineworkshop. In thebackground, trucksare prepared formaintenance work02 MoranbahNorth technicianAndrew McLennanon site at themine’s seamgasoperation42 | Optima | september 2010

Country profileAnglo American’s coal business in Australia02Origins:Anglo American acquired ShellPetroleum Company’s Australiancoal assets in 2000. The Dawsonproject was completed in 2008, whilea 70 per cent stake in Foxleigh coalmine was acquired in the same year.The Lake Lindsay project, part ofthe Capcoal complex, has reachedthe implementation phase ahead ofachieving full production in 2012.Workforce:Anglo American’s Metallurgical Coalbusiness in Australia employs morethan 3,000 people.2 Capcoal operates two undergroundmines and two open-cut mines.Together, they mine around 12 Mtpaof coal to produce in excess of 9 Mtpaof prime-quality hard coking coal, PCIand thermal coal.3 An open-cut mining operation,Dawson spans almost 60 kilometresand produces approximately 7.5 Mtpaof coal.4 Drayton is an open-cut coal mine.It produces around 5 Mtpa of thermalcoal for export and domestic markets.WesternAustralia8NorthernTerritorySouthAustraliaQueensland972 56 13NewSouth WalesVictoria4TasmaniaCore activities/products:The vast majority of metallurgical(i.e. hard coking coal) and pulverisedcoal injection (PCI) coal is exported tosteelworks in China, Japan and SouthKorea, while thermal coal is destinedfor power generation in both thedomestic and export markets.Production divisions:1 The Callide mine provides 9 milliontonnes per annum (Mtpa) of lowsulphur, sub-bituminous thermal coalfrom its open-cut mine.5 Foxleigh is an open-cut mine thatcurrently produces 2.5 Mtpa of premiumquality PCI coal for the steelmakingindustry.6 Jellinbah East is an open-cutmine producing low-volatilebituminous, mainly PCI coal forthe steelmaking industry.7 Moranbah North is an undergroundcoal mine with an output of about4.5 Mtpa of high-quality coking coalused in steelmaking.Other interests:Samancor Manganese is a joint venturebetween BHP Billiton (60%) and AngloAmerican (40%). It owns two operations:8 Located on Australia’s northerncoastline, the Groote Eylandt MiningCompany Pty Ltd (GEMCO) mines andprocesses manganese ore.9 The Tasmanian Electro MetallurgicalCompany Pty Ltd (TEMCO), the onlymanganese ferro-alloy plant in Australia,is located on the north coast of Tasmania.september 2010 | Optima | 43

RESOURCE PROFILETimes ofchangefor nickelNickel pastAlthough nickel has been found inmetallic objects dating back to 3500 BC,it was first identified by Swedish chemistBaron Axel Fredrik Cronstedt in 1751.This silvery-white metal with a goldentinge came to prominence in the 19thcentury when it was used for plating andalloyed with copper and zinc for nickelsilver (German silver). Demand fornickel only really took off, however,following the development of stainlesssteel early in the 20th century.As its Brazilian nickel site nears completion,Anglo American looks to expand in the metal’sglobal market. Nicky McClure reports.44 | Optima | september 201001Nickel presentNickel is the Earth’s fifth most commonelement after iron, oxygen, silicon andmagnesium. It occurs as two maindeposits: sulphides that are foundunderground and laterites that can bemined using open-pit methods.Primary nickel is produced and usedin the form of ferronickel, nickel oxideand other chemicals, and as pure nickelmetal. Nickel is a hard, ductile,ferromagnetic metal with high resistanceto corrosion and oxidation, and can beused in a variety of applications.The Nickel Institute’s Dr Peter Cutlersays one of the least-known uses for themetal is as a finely divided nickel-basedcatalyst. “These catalysts are key to someimportant reactions, including thehydrogenation of vegetable oils, thereforming of hydrocarbons and theproduction of fertilisers, pesticides andfungicides.” Dr Cutler also lists nickel’sbetter-known applications aselectroplating, electroforming,electroless nickel and nickel alloys.Nickel electroplating is used toprovide corrosion-resistant anddecorative finishes, and nickelelectroforming is widely used to produceitems as diverse as moulds for pressingcompact discs and security hologramsand screens for carpet printing.

02A major application of ‘electroless’nickel today, says Dr Cutler, is computerhard discs: “It forms an extremelyuniform, smooth, stable, non-magneticsubstrate for the magnetic recordinglayer, as well as providing corrosionprotection for the underlying disc.”Nickel’s resistance to corrosion is oneof its most valuable properties and it isused in the production of stainless andheat-resisting steel. About 60 per cent ofall refined nickel produced is used bythe stainless steel sector. In a morerecent development, the Chinesestainless steel industry, which has beenabsorbing growing volumes of nickel pigiron (NPI), is looking to a potentialannual offtake of 100,000 tonnes of thenickel in NPI form.Around 25 per cent of nickel goes intoother steel and non-ferrous alloys. Themetal is used to make corrosion-resistantalloys for use in chemical plants and inAnglo American’sferronickel operationssuper-alloys that can withstandextreme temperatures for industriessuch as aviation.Nickel has some other specialcharacteristics. Its low expansionproperties mean it is widely usedas lead-frames in packagingelectronic chips and in shadowmasks in television tubes, while itssoft magnetic properties are idealfor electromagnetic shielding ofcomputers and communicationsequipment.Dr Cutler also notes the importantpart nickel plays in portable powerprovision. “Nickel-cadmiumrechargeable batteries have been inuse for several years. More recently,we have seen higher performance,rechargeable nickel metal-hydridebatteries, leading to improvedperformance from cordless powertools and mobile electronic equipment.”Operation location Start of Average nickelproduction production (ktpa)Morro do Níquel Brazil 1962-1998 2.5Codemin Brazil 1982 10Loma de Níquel Venezuela 2001 17Barro Alto Brazil 2012 36Jacaré Phase 1 Brazil 2015 40Morro Sem Boné Brazil 2015 32anglo american01 Nickel (featuredin its ferronickel form)is a key componentin the productionof stainless andheat-resisting steel02 Anglo American’sBarro Alto nickelproject in Brazil,pictured July 2010,is on track to becomeoperational in the firstquarter of 2011Nickel’s futureNickel is found in about 20 countries,with known reserves estimated tolast around 100 years at presentmining rates. Although its price isvolatile, medium- and long-termdemand for nickel continues to grow.Demand for stainless steel is drivenby the ongoing development of theso-called BRIC nations (Brazil, Russia,India and China).In Brazil, Anglo American whollyowns the ferronickel producer,Codemin, and in Venezuela it has a91 per cent interest in the Loma deNíquel ferronickel operation. Inaddition, the company has a 100 percent interest in the Barro Alto nickelproject in Brazil.Anglo American now has amanagement team dedicated to nickel,which is focused on the successfulexecution of the Barro Alto project.At the end of June 2010, work on BarroAlto was 94 per cent complete and onschedule. Once it becomes operationalin early 2011, the project is forecast toproduce an average nickel output of36,000 tonnes per annum over a minelife of around 26 years. To put that intoperspective, Anglo American’s totalproduction in 2009 was 39,400 tonnes(which comprised the Nickel businessunit’s 19,900 tonnes and the Platinumbusiness unit’s 19,500 tonnes).Beyond Barro Alto, the business unithas the chance to develop the Jacaréand Morro Sem Boné projects, whichwould make Anglo American a growingplayer in the nickel market and one thatis well positioned to ensure that nickelcontinues to contribute to our lives inthe years to come.moreinfoFor more informationabout nickel,visit: www.nickelinstitute.orgseptember 2010 | Optima | 45

optima report46 | Optima | september 2010

Creationamid chaosSince Chile was hit in February by one of the largestearthquakes the world has ever seen, the country’s miningfraternity has given much-needed financial support.Rob Jones reports on how Anglo American’s relief andregeneration efforts go way beyond a cheque handover.STRINGER/CHILE/Reuters/Corbisseptember 2010 | Optima | 47

optima reportPREVIOUS PAGEEven though it was100 kilometres fromthe magnitude-8.8 earthquake’sepicentre, Concepciónsuffered major damageto its buildings01 On the day hetakes over as Chile’spresident, SebastiánPiñera (in red) visitsConstitución, oneof the zones mostaffected by theearthquake02 One of manyboats tossed on tothe street in the porttown of TalcahuanoLying on the so-called Pacific Ringof Fire – along which 90 per centof the world’s earthquakes have occurred because ofan unusually high concentration of plates colliding andoverlapping – Chile is no stranger to the earth’s mostdevastating seismic shifts. The South American countryhas suffered four of the 10 largest earthquakes everrecorded, among them the 90-second convulsion thatshook the region and beyond on 27 February 2010.The earthquake and subsequent tsunami off the coastof the Maule region, 100 kilometres north-north-east ofConcepción, left thousands homeless, and disruptedindustry, with then president Michelle Bachelet declaringa “state of catastrophe” and describing rural areas where“everything has tumbled to the ground”.As supermarkets, chemists and shops were looted, thegovernment and authorities were reported to be overwhelmedby the chaos. Even the death toll was hard to manage, with thefigure registered officially as 800 at one point, before it waseventually recalculated as just over half that.Around 300,000 houses, hospitals, schools and roadsneed to be rebuilt – a process that could take three or fouryears. The country is also counting the cost of emergencyaid and lost production, with bridges and factories0102destroyed in pivotal industrial areas. In the immediateaftermath, public transport services shut down, roads werediverted and Santiago Airport closed because of damage tothe terminal and control tower. Talcahuano port, criticalfor imports and exports for many businesses in the eighthregion, out of which a large number of coastal vesselsoperate and where the army has a base, was significantlyimpacted, with waves tossing more than 20 boats ashoreinto 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’sVICENTE TAPIA/dpa/Corbis“It was terrible. It seemed like acountry in the middle of a war. A lotof buildings were destroyed, peoplewere living in the street and therewas no light or water.”Jorge Poblete, former Anglo Americanfoundation manager for Chile48 | Optima | september 2010

in numbers6.6%Decline in economicactivity in Chile inMarch 2010, themonth followingthe earthquake.It was the largestmonthly contractionsince the country’scentral bank beganreporting this figurein 1996substantial sovereign wealth funds built up during the2002-2008 mining boom.In fact, it’s Chile’s shrewd financial and regulatorystrategies that mean it is better able to respond to such atragedy than, say, Haiti, which just a month before sufferedits own earthquake that, while not as strong as Chile’s, killedaround 230,000 people and left a further million homeless.Superior infrastructure and construction standards meantChile’s newer buildings survived, with mostly older buildingscollapsing. Cautious spending and a robust, well-managedeconomy – Chile’s government debt against economic outputratio is among the lowest in Latin America – mean thecountry requires minimal overseas aid. As the world’s biggestproducer of copper, Chile is able to use income from mineralexports, as well as previous copper earnings saved inoverseas investments, to finance the recovery.Direct assistanceBar a brief cut in power supply to sites, including AngloAmerican’s Los Bronces and El Soldado mines, there waslittle impact on the copper mining industry, which mainly03 The community ofcoastal town Dichato,40 kilometres fromConcepción, was hitby a tsunami causedby the earthquake04 Rescueworkers with heavyequipment enter anapartment buildingin Concepcióndestroyed by theearthquake0304AP Photo/Natacha PisarenkoKPA/Zuma/Rex FeaturesPILAR OLIVARES/Reuters/Corbis8.8The Richter scalereading of the2010 earthquake,the world’s thirdbiggest (the largestever recordedwas also in Chile,in Valdivia –registering 9.5in 1960)486Official numberof fatalities fromthe 2010 Chileanearthquake. Thelargest share –87 deaths – wasin Constituciónseptember 2010 | Optima | 49

optima reportoperates in the northern half of the country, where therewere only relatively small aftershocks, and mines werequick to resume operations.Chile holds one-third of the world’s copper supplies andthe copper price being maintained above the $3/lb markmeans the sector is in a good position to help the countryget back on its feet. More directly, the major miningplayers are funding relief efforts. Anglo American pledgeda donation of $10 million – but has chosen to invest it in amore 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 AngloAmerican Foundation, a global endeavour to helpcharitable causes. “The disaster was on such a big scalethat we wanted to ensure our funding was distributed inthe best way. We worked with the government tounderstand what was needed in terms of structures andmoney. We are not the only company working in theseareas and we need to avoid allocating money in thesame places.”As well as liaising closely with local authorities, AngloAmerican employees travelled to the affected zones withindays of the quake to see for themselves the full extent ofthe damage and decide how their plans would integratewith other recovery activity.“I hadn’t seen anything like it before,” said Jorge, whovisited the area almost every week for some time after thedisaster. “It was terrible. It seemed like a country in themiddle of a war. A lot of buildings were destroyed, peoplewere living in the street and there were no lights or water.01 Six new schoolshave been built usingthe same model asAnglo American’s onsiteaccommodationfor employees andcontractors02 Certain of thenew schools are solarge that they caterfor twice as manypupils as buildingsthat were destroyed03 Despite a lackof materials and apoor electricity supply,the new structureswere completed onschedule01The government had to put the army on patrol becausethere were a lot of social problems.“When we arrived, we wondered how we could turnaround something so devastating. We didn’t knowwhere to start and even the local authorities were in astate of shock. It was difficult to know how many peoplewere affected.”A model education systemImmediately, Anglo American was involved in the clearanceof debris, despatching about 30 trucks and other items ofanglo american02anglo american50 | Optima | september 2010

“Most people didn't think it waspossible to build schools so quickly.When we said we would rebuild onein four weeks, they said we werecrazy – but they've been amazed.”Jorge Pobletemachinery to help with earth-moving works inConstitución, Curanipe, Concepción, Talcahuano andQuirihue. Further, the team planned the core of itssupport programme in collaboration with thegovernment and local authority representatives, notablyeducation minister Joaquin Lavin.Initial funding was essentially delivered throughcompany employees who volunteered practical supportto build five schools in the affected eighth region andone in the seventh, replacing institutions that weredestroyed by the earthquake. The constructionmethod followed the same fast-assembly modelAnglo American uses to build on-site accommodationfor its employees and contractors.The company’s six constructions have come togetherat impressive speed, says Jorge. “Most people didn’tthink it was possible to build schools so quickly.They’re not accustomed to our model system. Whenwe said we would rebuild a school in four weeks,people said we were crazy, but they’ve been amazedby the solution.“We’ve worked very hard to reach these goals.And it’s not just the schools themselves. We’ve put ingardens, furniture, books and other study materials.”Educational and social impactThe rebuilt schools have already had an enormous andinstant impact on thousands of schoolchildren.“You must imagine that the teachers and studentslost everything,” Jorge stresses. “One moment, theyhave schools. The next: none. A lot of students left thezone, but have returned now that new schools havebeen built and there are classes all day.”In some zones, two destroyed schools that cateredfor 800 children each have been replaced with onemore spacious institution. For instance, in Yungay inthe hard-hit eighth region, the newest of all the schoolsbuilt and kitted out by Anglo American caters for2,000 pupils, from pre-kindergarten to the final gradeof secondary education. At 2,700 square metres andinside viewMartin elton›› Anglo American Foundation business manager for ChileAfter the earthquake,the whole nationwas shocked. There wereterrible images in everysingle newspaper and onevery TV channel. I offeredmy help if any aid was goingto be organised from AngloAmerican Chile.The first decision was to bringmachinery to one of the towns thatwe knew was in a critical situation,Constitución. We didn’t have muchinformation about other towns andcities. As a team, we decided to travelthrough the whole affected region to geta clear overview of the damage.My first reaction was huge shock.Many buildings were completelydestroyed, people were desperate andthere was a strong putrefaction smelleverywhere. The biggest problems werewater distribution and the obstructedstreets and roads. My role was to matchthe machinery we distributed to theneeds of the particular towns and cities03in order to achieve thebest outcome.After coming back, thequestion was how to maintainthat support. The situation wasso complex. Nevertheless, wehad one green light. Educationis one of the main issues weembrace as a company. After we pledgedto reconstruct the schools destroyed,the government set the challenge andwe had only four weeks to build the firstfour schools. It was a hard, complicatedproject. Every single day, there wasa different problem. For example,sometimes we didn’t have materialsbecause of the high demand for them orthe electricity system had failures. But, inthe end, we did it. People were fascinatedbecause these were the first buildingsconstructed after the disaster and theybecame symbols of recovery.I learnt a lot from this experience, butmainly that, if everybody works with thesame goal, the work itself and the resultsare much better.”anglo americanseptember 2010 | Optima | 51

optima report01 Residents fromthe local communityclean desks in oneof the new schoolsconstructed bythe company inConstitución02 Pupils return tolessons in one of thenew buildingsconstructed by AngloAmerican employees,the Enrique DonnMüller School inConstitución“It was a complicated project. Everyday there was a different problem.But we did it and these buildingsbecame symbols of recovery.”Martin Elton, anglo american foundationbusiness manager for chilewith 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 sincethe earthquake.What the team did not anticipate was the positive impactthe schools would have upon the wider community, saysJorge. “Where there is a school, there is a kitchen, which, inthese rural areas, makes a school a centre for the wholecommunity, not just students. Now, once again, people have aplace to stay safe, to have lunch and breakfast.”The impact has not gone unnoticed in the upper echelonsof government. At the official unveiling of the new EnriqueDonn Müller school, Joaquin Lavin and Anglo AmericanChile CEO Miguel Angel Duran were joined by Chileanpresident Sebastián Piñera, who took office just 12 days afterthe earthquake struck, as well as the mayor of Constitución,Hugo Tilleria, and local representatives.Long-term solutionsLooking ahead, Anglo American will work with thecommunity to plan carefully where to invest the next phaseof money, not to mention company employees’ time and skills.“The emergency had just happened when we firstvisited. 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 accommodationand we have been analysing whether to put money intothat or more new schools.”The number of people identified as affected by theearthquake has gradually increased from initial estimationsand Jorge believes that, working in partnership withgovernment, Anglo American could rehouse a town ofaround 300 families in structures built with the sameconstruction efficiencies as the new schools.The way the country has pulled together has strucka chord with everyone on the project and, for Jorgeparticularly, it has been emotional. He was preparing toreturn to work after a long absence when the earthquakestruck. “I was very ill in December and almost died.I returned to my office on 4 March, just a few days after theearthquake struck. For me, it was a motivating experienceto be able to help out others.”But why do organisations such as Anglo American feelspurred to get involved? “Something like this is hard for thecountry,” ponders Jorge. “We have a commitment to thewhole of Chile, not just the zones we’re in. Anglo Americanhas been well known here for the past five years and miningis the main industry. If the biggest mining companies don’tdo something to help, people will lose faith in us.“Within Anglo American, people acknowledge thatwe’re doing something important and they feel proudwhen they see how we’ve responded.”01 02anglo americananglo american52 | Optima | september 2010

0304photos barry jones03 The earthquakedevastated theSichuan provinceof China, May 200804 Clean-up activityafter the earthquake05 GeologistBarry Jones from thePlatinum businessunit was part of theteam supportingrelief effortsCASE STudychina earthquake05 0606 The completionof the Sichuanprovince’s QionglaiShuikou school,donated by AngloAmerican as partof its aid effortsafter the earthquake,was celebratedon InternationalChildren’s Day,June 2010Anglo American employees providedinvaluable help when the Sichuanprovince in China was hit by adevastating earthquake on 12 May2008. On top of the company’sown $10 million donation towardsreconstruction, Anglo Americanemployees’ own resourcefulness andgenerosity have helped the area startto recover from one of China’s mostdestructive earthquakes in more thanthree decades.Members of Anglo American’sChina exploration team wereat Chengdu Airport en route toXinjiang. At approximately 14:30, anearthquake of magnitude 7.9 struck90 kilometres west of Chengdu –killing 70,000 people and leavingalmost four million homeless.The exploration team in theterminal saw people injured in thepanic and stampede to get out. Projectgeologist Barry Jones from the Platinumbusiness unit recalls: “I grabbed acolleague and we stood against a wallin the airport. The tremors were gettingmore intense and pieces of the roofwere starting to fall off, other people hadjoined us against the wall and I began tofeel claustrophobic, and fear set in.”Barry and two colleagues escapedunhurt and made their way home tothe city centre of Chengdu, wherethey attempted to make contact withPlatinum’s head office in South Africa,Anglo American’s Beijing representativeoffice and Barry’s wife. They heardthat their colleagues and families weresafe – “The relief of seeing my wife wasa huge stress off my shoulders,” saysBarry – but Anglo American’s partnerswere among millions who’d lost teamand family members and property.The team worked with Chengdu’sexpatriate community to gather anddistribute food and clothes to areaswhere they were most needed. “Wordscan’t explain the devastation,” saysBarry. “We realised how futile ourattempt was to distribute what littlewe had.”A more formal long-term plan wasmade to assist in ways the team cannothave possibly imagined, fromco-ordinating five-tonne trucks to deliverwater each day and arranging transportfor volunteer teachers to hold lessonsin makeshift classrooms, to retrievingcorpses from the rubble. “Those imagesare imprinted on my mind,” says Barry.“It will take years to rebuild thestructures and villages,” reflects Barry.“Far longer than reported and farmore money will be needed than thatprovided by donations alone.”Authorrob jonesRob Jones is the editorialadviser on Optima. Heis an award-winningjournalist with more than10 years’ experienceediting and reportingfor corporate titles onsubjects including energy,resources, constructionand engineering.september 2010 | Optima | 53

Archive shotAnglo American:established 1917Anglo American’s coal interests can be traced backto 1897, when Sammy Marks and Isaac Lewis decidedto publicly list The Vereeniging Estates Limited (whicheventually came under Anglo American’s controlin the 1940s) to facilitate the development of SouthAfrica’s coal mining industry and its broader industrialbase. Featured is Cornelia, one of the new company’stwo collieries, in the early 1900s.anglo american54 | Optima | september 2010

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Cover:Tyres destined for haul trucks andearthmoving equipment are stockpiledat the storage facility at Anglo American’sMogalakwena platinum mine inSouth Africa. See article on page 18.photo by planetkb for anglo american (platinum)ISBN 00304050