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Annual report suite 2012

Mark Cutifani
Chief Executive Officer
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Letter from CEO,
Mark Cutifani

Reflections on 2012

Looking back at our sustainability journey and performance in the past year gives us an important view of progress in our longer-term business journey. I have been privileged to have been part of the team that built the foundation for systemic changes in the way we do business, and how we consider sustainability across all areas of our business. The continuing challenge we face is how to turn great ideas into actions on the ground. The building of systems and processes that are well understood provides the boundaries within which we operate. They must be embraced and adopted across all our operations so that we not only support effective knowledge management but also foster cross learning between the different geographic areas and disciplines. As reported in 2011, we have developed a sustainability framework that laid the foundations for the development of our sustainability strategy. In June 2012, we appointed our Executive Vice President: Sustainable Development, David Noko.

How we report

There has been continued improvement in our reporting processes to bring them in line with changing regulatory requirements, and to make sure that we give a transparent and holistic view of the company to our business and social partners. Reference is made in this report to information that is available and best placed in our other annual reports: the Integrated Report; Annual Financial Statements; and the Mineral Resource and Ore Reserve Statement. We have improved our processes to better align our reporting. For example, our process for determining the company’s material issues is aligned with the way we identify our sustainability issues in order to integrate our strategic approach with how we identify, address and mitigate those material issues that impact on different parts of the business. At a strategic level, that integration is crucial because sustainability is not a standalone discipline but an integral part of our business, across disciplines and geography. By seeking to understand how the issues are interconnected and by collaborating with partners not necessarily in the mining industry, we hope to find common solutions that originate beyond our own mining industry.

Our performance in 2012

On the global front, AngloGold Ashanti has made significant strides in performance across the different dimensions of sustainability, including improvements in safety and environmental management in line with our business strategy. In addition, improvements and successes continue to be evident in the area of health, from fatigue management in Australia to tuberculosis (TB) and HIV care in South Africa, and malaria control in Ghana and Tanzania.

Legacy issues on silicosis remain a challenge in South Africa as we continue to work through the legal cases brought against the company. We are committed to co-operating with industry partners and government to find a holistic approach to this issue. As a company, we are also working hard to manage the work environment with programmes for dust control, improved drilling and blasting methods, and in-house support for our employees.

We have seen an improvement in our environmental incidents and reportable incidents within communities. There were 16 reportable environmental incidents during 2012, a 41% drop from the 27 that occurred in 2011, and 69% fewer incidents than the 51 in 2009. The improvement that has occurred in Ghana, with reportable environmental incidents declining from 14 in 2011 to three in 2012 (a drop of 79%), is evidence of the encouraging work completed in this area.

During 2012, 58 community incidents occurred with the majority of these reported at our African operations. In most cases, these incidents relate to communications and the need for us to reach out more effectively in these areas. In many cases, we are not able to use electronic communications so the knowledge penetration of key programmes needs to be considered in local context.

We continue to address our key risks in a systematic way. We are busy with the development of stakeholder identification and mapping plans, and will develop stakeholder management plans from that base. This will allow us to improve our interaction with our diverse stakeholder universe. We believe this will help us in our engagements and improve identification of issues from a stakeholder perspective.

The changing landscape

The tragic incident at Marikana was a devastating end to the year. While the event itself happened at a particular mining house in the platinum sector, it was one that reverberated across South Africa and the world. It has had a huge impact in how government, the mining industry and individual companies engage to find a common solution to the underlying causes that fuelled this incident. As the contagion spread across the mining industry, it was important for us to act quickly to avoid similar tragic consequences, and build partnerships in the interest of the industry and society at large. I personally commend the leadership shown by the management team who navigated the South African operations through this unprecedented event; keeping in line with our company values and showing leadership that will set the stage for a different industrial relations environment.

We remain committed to respecting our employees’ rights in terms of freedom of association but had to set clear boundaries to ensure all our people were able to come to work without fear for their lives. We took drastic action in closing operations in South Africa in the interests of the safety of every single employee, and to avoid intimidation and coercion. The incident has fundamentally changed and challenged the status quo that had held us in good stead for the better part of the past two decades. We understand we need to continue to work hard to navigate the rather precarious situation and learn from it to improve our performance, and find sustainable solutions to the evil triplets of poverty, inequality and unemployment. We have all learned difficult but important lessons from it. In the face of a fragile situation, we remain committed to our employees, industry partners, representative unions, communities and government in finding long-term sustainable solutions.

We continue to work on our strategy for artisanal and small-scale mining (ASM). We have learned important lessons from the involvement with institutions such as the World Bank and International Council on Mining and Metals (ICMM) on how we tackle the issue. While the Communities and Small-scale Mining (CASM) project with the World Bank might have stopped, we continue with our own work as the threats are immediate and a concerted effort needs to be made to ensure we find sustainable solutions, such as alternative livelihoods and supporting local skills development. Great work has been done in some of the countries in which we have a presence, such as Australia (with indigenous people), Brazil (with local communities), Colombia (tackling sustainability issues around our projects), and Argentina (in local development programmes), and this is recognised across the group.

Looking forward

Our strategic intervention through the Technology Innovation Consortium (TIC) demonstrates our belief that, through effective investment in research and development and innovative use of technology, we can unlock future potential, both in terms of production and in the way we improve not just the working environment and removal of people from harm but also in skills training and improving capability. We are in the process of testing some of the concepts that will allow us to do the work. Our consortium is unique in the partners it involves and how these partnerships are structured for a win-win in the long term for all involved. We are also looking at how this will affect our current workforce and what we have to do to manage the situation, and work with both unions and employees to discover potential and create future value. The TIC clearly demonstrates that the answers will lie beyond the mining industry.

Other challenges like water and energy, require us to make systemic changes to the way we run our operations in the long term. For example, we seek to minimise our demand on resources such as water and look at alternative energy sources so that we leave as light a footprint as we can on the environment.

We still have a long way to go in defining appropriate metrics for measuring our sustainability performance that will have meaning across the group and that take into account the different operating environments.

We continue to engage communities and governments on broader policy developments to make sure we are part of defining a sustainable pathway to value for both business and society.

We continue to actively support the objectives of the ICMM, the United Nations Global Compact (UNGC), the Extractive Industries Transparency Initiative (EITI), and the Voluntary Principles on Security and Human Rights (VPSHR). We are signatories to the Cyanide Code, and are supporters of a number of standards promoting Responsible Gold. Our online report has been produced in accordance with the G3.0 guidelines of the Global Reporting Initiative (GRI), and we continue to be an organisational stakeholder of the GRI.

In conclusion

Finally, I would like to congratulate my colleagues for the important strides we have made in defining our strategic sustainable development objectives and in making the continued improvements across the business. This is a tribute to all 65,822 employees (including contractors) across the group and the many communities from where they come. Their diverse experiences and circumstances give us a learning opportunity and a challenge to use those experiences in creating robust systems and processes that transcend change and time, and create important links with the different communities.

Mark Cutifani
CEO
19 March 2013