Chairman’s letter

FOCUS ON ESG Committed to the responsible conduct of our business,
in line with our values

Sipho M. Pityana Chairman
Dear Stakeholder,

The year 2019 started on a tragic note when on 25 January the Brumadinho tailings dam in Brazil suffered a catastrophic failure, wiping everything in its wake and claiming 270 lives. The latter part of 2019 saw the emergence of an infectious ailment caused by a new virus, the coronavirus (covid-19), whose first epicentre was China before spreading across the globe, upending lives, disrupting economic activity and sending markets into a tailspin.

For AngloGold Ashanti, last year marked a record safety performance for the Company and an impressive delivery on our critical strategic objectives. For the first time in the history of this business, we recorded zero fatalities and the all injury frequency rate, the broadest measure of workplace safety, decreased to 3.31 injuries per million hours worked compared to 4.81 injuries per million hours worked in 2018. These unprecedented achievements are a result of cumulative investment, many years of sustained effort and an unwavering commitment to our ambition of zero harm.

Regrettably, in March 2020, a fatal seismic-related incident cost the lives of three colleagues: Johannes Radebe, Lucas Maapea, and Xolani Ngqwemese. This was to be followed soon after by a tramming-related accident in which Thabo Rakometsi died. We extend our sincere condolences to the families, colleagues, friends and communities of the deceased. A serious setback no doubt, but also a rude reminder, if there was ever need for one, that we must constantly guard against complacency while maintaining an emphasis on the constant need for vigilance.

Shaken by the Brumadinho tailings dam collapse in Brazil that resulted in a deluge of toxic mud that inundated people, homes and damaged the environment, we have actively worked with regulators and local communities to ensure confidence in the design and safety of our tailings storage facilities (TSFs), and in our related governance and oversight. Our board site visit to our operations Brazil left us with an increased resolve to do even more to ensure the integrity of our TSFs.

This unfortunate event and other developments that include evolving societal expectations of companies, highlight the importance of environment, sustainability, governance and data stewardship (ESG&D) risks and opportunities across industry sectors in terms of their ability to destroy, create and/or sustain value. Failure to effectively manage these factors risks lost business opportunities and the erosion of investor, employee and societal trust.

ESG&D focus

AngloGold Ashanti is driven by value-accretive strategies to achieve its business and financial objectives and we conduct our business responsibly, in line with our values. We carry a burden of responsibility for environmental stewardship, social justice, good governance, good corporate citizenship, diversity and inclusion and human rights, collectively characterised as ESG&D considerations. Hence our efforts to ensure that host communities share with us the benefits of mining, and that the countries in which we operate see fiscal benefits from the responsible development of their natural resources.

ESG&D is core to the strategy and long-term sustainability and health of our business. We accept the need to drive consistent improvement in this regard, and this is reflected in our commitment to decent work for our employees, enhancing workforce diversity including race and gender in our organisation, and reducing our carbon emissions. For more on these, see <Managing our ESG impacts for sustainability> in this report.

Our ESG&D performance receives constant attention and scrutiny from the Social, Ethics and Sustainability Committee of the board. Equally important, we are a business that is committed to harmonising the needs of all its stakeholders. Similarly, the board Investment Committee has ensured that we allocate our capital responsibly, efficiently and that we invest in the sustainability of the business and create value for all our stakeholders. This integrated report, and the accompanying <SR>, provide an account of our efforts in this regard. While we have made good progress, there remains much more to be done.

We are encouraged that ESG&D considerations have become increasingly important for institutional investors, who are rightly paying ever closer attention to the non-financial aspects of the performance of the companies in which they invest. It is encouraging for us to see private capital being deployed to solve some of society’s most pressing challenges, notably climate change, entrenched social inequality, sustainability and environmental issues, including water security, biodiversity loss, waste and plastics in the ocean. We have anchored our priorities with the targets set out in the United Nations Sustainable Development Goals (the SDGs).

Simultaneously, we seek to ensure that the providers of capital – who have ample alternative placement options – are also well rewarded for investing in our Company. For us to achieve all of those things, we seek to ensure that we allocate our capital responsibly and efficiently and invest in the long-term health of our business.

Ensuring that these often-disparate needs are met to the greatest extent possible – and that expectations are appropriately managed along the way – lies at the heart of our commitment to ensure we maintain and strengthen our licence to operate. Achieving that balance requires honest dialogue and a clear understanding of these often-competing needs.

Capital allocation and asset sales

Our asset rationalisation strategy is driven by a single-minded disciplined asset capital allocation focus. Hence our decision to sell our assets in Mali, Argentina and South Africa while simultaneously recommissioning Obuasi in Ghana. These decisions have inevitably attracted much attention, particularly given our long operating history in each jurisdiction. We are jurisdiction agnostic and asset quality focused.

As a board, we are determined to ensure that the Company’s finite capital is appropriately allocated to realise those opportunities that will deliver the best returns through the economic cycle. Given the breadth of our portfolio, we have several options from which to choose.

We firmly believe that by placing these assets in the hands of responsible new owners who have different investment priorities to ours, – Sadiola, Cerro Vanguardia, Mine Waste Solutions and Mponeng – will have longer and more productive lives, thereby securing jobs for our employees for a longer period than they would have had in our hands.

The sale of the South African assets, agreed soon after our financial year end, is a case in point. Harmony Gold Mining Limited (Harmony), a deep-level mining specialist with a long history of operating in South Africa, has already indicated it will do the work and due diligence necessary to extend the life of Mponeng, maintaining desperately needed jobs, tax revenues and associated benefits, well beyond the timespan we had envisaged.

Gold price tailwind and volatile economic environment

The gold price provided a strong tailwind during the year, as investors once again migrated toward its safe-haven qualities. The growing global stock of negative-yielding debt and a steady flow of unsettling macro-economic and geopolitical news from across the world reinforced the attractiveness of gold as a hedge. These factors have only increased in the new year, with heightened Iran-US tensions and the worrying prospect of a global coronavirus pandemic sending bullion to its highest level in more than six years. Additionally, tension between oil producers has put pressure on the oil price and markets are in turmoil with no end in sight.

The board and management remain resolute that we will not replicate the gold industry’s mistakes of the past, in allowing rising costs, poor investment choices and undisciplined acquisitions to erode the margin benefit that the current higher gold price brings. The Investment Committee provides robust oversight to ensure this discipline is maintained.

We will continue to invest in our orebodies to extend their lives, provide much-needed operating flexibility and bring on stream new production. We will lower debt to improve leverage and reduce the overall risk profile of the business. And we will pay dividends to shareholders in line with our policy, while these capital priorities are unchanged.

As regards the covid-19 pandemic, the well-being of all AngloGold Ashanti employees is our priority. Covid-19 is the single biggest risk facing not only our business, but also the world economy. We have extensive experience in managing the Ebola virus in West Africa and other communicable diseases, and we intend to put this invaluable capability to good use during this time. Coupled with our strategy to strengthen our health discipline, every effort will be made to effectively manage its impact. This is a challenge to which we are adapting, and we are working closely with our employees, industry partners and the governments in all the countries in which we operate to manage the crisis and ensure business continuity while complying with applicable regulations and country restrictions during this time.

This pandemic, which is still evolving, has resulted in drastic actions by governments across the world, potentially leading to a global economic recession. To extricate the world from this shock requires a co-ordinated effort by all stakeholders and we are encouraged by the efforts of the World Health Organization in working with authorities and global experts to better understand this virus, its impact and, importantly, in guiding national responses to arrest its spread. In this era of stakeholder capitalism, it is crucial that in the midst of this crisis the livelihoods of the most vulnerable in our societies are protected and that health systems remain intact because, while we are currently pushing back against this virus, other communicable diseases including malaria and TB are also to be kept at bay.

Strategic follow-through

In my letter last year, I spoke of our ongoing work to unlock the latent value that exists within our Company. We remain as committed as ever to that task, with the knowledge that improving our fundamental valuation will be the product of several initiatives, including, among others, consistent delivery on our commitments, optimisation of our orebodies, disciplined allocation of capital, improved cash conversion, having a remuneration approach that enhances delivery on long-term strategy and continuing to strengthen our license to operate. I’m pleased to note that the management team has each of these areas in focus, and the board continues to monitor their progress in each.


Regrettably two board members – Nozipho January-Bardill and Rodney Ruston – will not be standing for re-election at the forthcoming Annual General Meeting (AGM), in accordance with board policies and guidelines. I thank both for their significant contribution over almost a decade in helping steer this company through the commodity downturn in a prudent and responsible way. Their efforts have helped ensure that AngloGold Ashanti is well placed to take advantage of the current upturn.

The board has nominated two new directors for election by shareholders at the 2020 AGM. We are pleased to welcome the newly appointed independent non-executive directors – Maria Ramos and Nelisiwe Magubane – who joined our board of directors with effect from 1 June 2019 and 1 January 2020, respectively. They bring a depth and breadth of financial, technical and corporate experience that will ensure the board retains strong oversight of the Company and is effective in working with the executive leadership in setting the appropriate strategy. See <Leadership: Board and executive management> for further detail.

Finally, I’d like, on behalf of the board, to thank the executive leadership team and every employee across the organisation for their tireless efforts and dedication, not only in achieving our strategic objectives but in upholding the values of the Company while doing so. To my fellow directors, thank you for your counsel, support, and robust engagement with issues that are all invaluable to making a success of this endeavour.

Sipho M. Pityana

27 March 2020