see article on page 20. - re-imagining mining to improve people's...

Cover:Sea ice in the Arctic, where Anglo American’s exploration unit is seeking new opportunities. See article on page 20.photo by Stocktrek ImAgeS

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printed by the colourhouse. the paper is produced using a 100% chlorine-free (ecF) bleaching process and contains material sourced from responsibly managed and sustainable forests, together with recycled fibre, certified in accordance with the Forest Stewardship council.

healthcare: hiv/aids support partnerships: the mutual benefits of ngo–industry collaboration africa: unlocking the continent’s potential the resource “curse”: is the theory flawed?

optimaapril 2011

on top ofthe world

keeping Cool with anglo ameriCan’s arCtiC exploration unit

Jim Bulten, Paul Gaw and Justin Pokarier during a routine safety inspection at Thermal Coal’s Callide mine, Australia, June 2010

02 | Optima | april 2011

welcome

Anglo American has a presence in a number of developing countries, where we strive to promote safe and sustainable mining and economic development. Learning from Ngos is critical for building our understanding of the positive impact we can have on local communities, so I was delighted to sign a new agreement with peacekeeping organisation International Alert in January. our Optima feature on partnerships is a good overview of the strides we have made in recent years with similar Ngos.

on the subject of acting responsibly, Dr brian brink has been fundamental to our work to enhance our healthcare programmes. twenty-five years ago, he was part of the small team that first looked at how we would tackle what was then the relatively little known hIV/AIDS epidemic. As our feature shows, he is continuing to make a real difference by raising awareness of health issues and prevention measures.

It’s a privilege to have a contribution from Dambisa moyo, a leading economist and author on African issues. her reflections on the negative effects of international aid and how government policies are preventing the continent from reaching its potential certainly offer food for thought.

Finally, two economists from rhodes University share what they discovered when they re-assessed the “resource curse” theory – and it makes fascinating reading.

contents

cynthia carrollChief exeCutive, anglO ameriCan 04 news digest

reports from Anglo American and around the industry, including updates on minas-rio and barro Alto

32 book reviewgreg mills’ new book argues that Africa’s future can be “utterly different from the failed past”

06 healthCare A look at Anglo American’s programmes to support employees with hIV/AIDS and tuberculosis

14 resourCe CurseNew research suggests that countries rich in resources may be more blessed than first thought

20 arCtiC potentialexploring the harsh, frozen north to unlock some of the world’s greatest mineral deposits

26 afriCa’s promisereflecting on how Africa’s governments can reduce poverty and help the continent fulfil its potential

Editor-in-chief: Norman barber

Anglo American plc 20 carlton house terraceLondon SW1y 5ANenglandTelephone: +44 (0)20 7968 8888E-mail: [email protected]

optima is produced by Redhouse Lane, 14 bedford Square, London Wc1b 3JA, england

redhouse Lane production teamEditor: rob JonesArt director: ross behennaDesigner: Asami matsufujiProject manager: Anthony cockell

Distribution enquiries: emmanuel [email protected]

03 april 2011 | Optima |

Nick cottam is a business writer and communications specialist with more than 20 years’ professional experience. he has written for a number of different media, including client reports, newspapers, magazines, special interest newsletters and the web. he has particular experience in presenting technical topics to a non-specialist readership in areas including mining, the environment, financial markets and It. Nick has recently written a series of short business guides covering a variety of sustainable development topics. see page 36

virginia van der vliet

niCk Cottam paul collier is a professor of economics and Director for the centre for the Study of African economies at the University of oxford. he is the author of three books, The Bottom Billion: Why The Poorest Countries Are Failing And What Can Be Done About It; Wars, Guns And Votes: Democracy In Dangerous Places; and, most recently, The Plundered Planet: How To Reconcile Prosperity With Nature. his research covers the causes and consequences of civil war, the effects of aid and the problems of democracy in low-income and natural-resource-rich societies. see page 32

Dambisa moyo is an international economist and author of the New York Times bestseller Dead Aid: Why Aid is Not Working And How There Is A Better Way For Africa. her new book entitled How The West Was Lost: Fifty Years Of Economic Folly And The Stark Choices Ahead, was published in January 2011. In 2009, she was named by Time magazine as one of the 100 most Influential people in the World and was nominated to the World economic Forum’s young global Leaders Forum. see page 26

paul Collier

dambisa moyo

contributors

34 manganeseIt may be the world’s fourth most used metal, but manganese remains relatively unknown

42 arChive photo Stepping back in time almost 100 years to one of Anglo American’s first ever mining interests

other contributors gavin keeton and Jasi kassami (page 14); JessiCa mcCahon (page 20); greg mills (page 32); John rolinson (page 34)

the opinions expressed by contributors do not necessarily represent the views of Anglo American. provided that permission has been obtained from the editor-in-chief, 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.

Virginia van der Vliet is a social anthropology graduate of the University of the Witwatersrand, and has lectured at both rhodes University (1963-1980) and the University of cape town (1981-1990). her major research fields have been urban African gender relations and, since the 1980s, the global hIV/AIDS epidemic. She is the author of The Politics Of AIDS and has produced a fortnightly hIV/AIDS commentary, AIDSAlert, since 1997, for Anglo American. see page 6

36 partnershipshaving just signed a memorandum of understanding with ngo international alert, anglo american has strengthened its ability to resolve community issues and support local people in the areas in which it operates – from funding new colleges to educating milk farmers

optima news

0504 april 2011 | Optima | | Optima | april 2011

“There are really three different scrambles under way in the Arctic: for companies, for Russia and for other states. There will be plenty of jostling and competition but not necessarily conflict. In some ways, the presence of resources increases the incentives for states to get their act together and cut deals, because no private company will invest without them.”charles emmerson, authOr Of the future histOry Of the arCtiC and a seniOr fellOw at Chatham hOuse

as optima went to press, anglo american’s barro alto nickel project in brazil was preparing to produce its first metal. This project makes use of a proven technology and will produce an average of 36 ktpa of nickel in full production (41 ktpa over the first five years), with a competitive cost position. barro alto has an approved life of mine of more than 25 years from its extensive resource base and will double anglo american’s total nickel production.

Anglo American’s exploration unit has been awarded the Prospectors & Developers Association of Canada’s prestigious Thayer Lindsley Award for the Los Sulfatos copper discovery in Chile.

The Thayer Lindsley Award “recognises an individual or team of explorationists credited with a recent significant mineral discovery or series of discoveries anywhere in the world”.

Graham Brown, Anglo American’s Group head of geosciences and exploration, said: “Years of hard work, dedication and determination made this discovery possible.”

disCoveries in Chile earn reCognition award

final push for niCkel proJeCt

digest a look at recent news from anglo american and the mining industry.

Turn to page 20 to read about Anglo American’s investments in the Arctic.

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Amount of platinum Anglo American expects to produce annually from its newly commissioned Unki mine in Zimbabwe from the fourth quarter of 2013. In development since 2003, the project was commissioned recently, with production ramping up this year.

Anglo American has secured a key licence for the development of its Minas-Rio iron ore project in Brazil. The award of the second part of the Mine Installation Licence (Mine LI part 2) was granted by SUPRAM, the Minas Gerais state agency responsible for environmental licensing, on 9 December 2010 and marks a major achievement on the critical path for delivery of the Minas-Rio project. It means construction of the mine and beneficiation plant can now go ahead – with an expected completion date of late 2013.

“Every day that those ports are not working to capacity, it’s not just a hit on the coal companies themselves but on the economy of Queensland more generally, because we extract significant royalties from the mining of coal. It’s going to take some months to come back fully online.” stephen robertson, mining minister fOr Queensland, refleCts On the impaCt Of flOOds in the australian state, where COal wOrth abOut $100 milliOn is shipped Out Of pOrts every day

top 10countries by adult (aged 15-49) hiV/aids preValence rate 1. swaziland 25.9%

2. botswana 24.8%

3. lesotho 23.6%

4. south africa 17.8%

5. zimbabwe 14.3%

6. zambia 13.5%

7. namibia 13.1%

8. mozambique 11.5%

9. malawi 11.0%

10. uganda 6.5% Source: globalhealth.kff.org, 2009 figures

Amount pledged by Anglo American to help strengthen healthcare in developing economies. The funding was announced at the G20 Business Summit in Seoul, where chief executive Cynthia Carroll called upon the wider business community to give financial support to improving healthcare in the developing world.

Turn to page 6 to read about Anglo American’s work towards combating HIV/AIDS and TB.

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Work on the first phase of the Minas-Rio project is expected to be completed in late 2013

new liCenCe takes minas-rio team to ConstruCtion phase

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dangerous, sexually transmitted infection that could affect more than

20 per cent of the country’s adult population is an alarming prospect,

especially if you are that country’s biggest employer and most of your workers are male and living

away from their families with money in their pockets.

Such a prospect faced Anglo American in South Africa in the mid-1980s. Although the HIV epidemic there seemed largely confined to white, gay men, in countries to the north the toll was rising fast. In the Ugandan capital, Kampala, HIV prevalence was heading towards 30 per cent among pregnant women and a number of Malawian mineworkers in South Africa had tested positive.

In response, Anglo American assembled a heavyweight in-house ‘brainstrust’ to examine ways of tackling

healthy profitsHealthcare is a good investment for any company – but few can vouch for its significance as well as anglo american’s chief medical officer. virginia van der vliet finds out how Dr brian brink and anglo american have spent more than 25 years supporting its southern africa-based workforce and their families since the emergence of HiV and aiDS.

a HIV/AIDS, which was rapidly becoming a pandemic. The incipient team included technical services director Jack Holmes, Chairman’s Fund director Michael O’Dowd, industrial relations consultant Bobby Godsell, scenario-planning expert Clem Sunter, and medical consultants Drs John Laing, Ian Potgieter and Charles Thomas. In 1986, Jenny Crisp was appointed as Anglo American’s inaugural full-time HIV/AIDS education adviser, a first for any large company in South Africa.

Thinking back to those early days as a medical officer at Ernest Oppenheimer Hospital, which served the company’s Free State gold mines in South Africa, Brink recalls Gavin Relly, chairman of Anglo American from 1983 to 1990, being among the first to recognise that an HIV/AIDS epidemic in southern Africa was unavoidable and that business had to

rightMamoraka Mmutlane, then an HIV/AIDS peer educator, discusses prevention methods with staff at the Waterval Smelter, part of Anglo American’s Platinum business


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deCades of ChangeThe South African government’s response was to pass legislation in October 1987 to keep infected people out and make employing them illegal. This forced the country’s Chamber of Mines to stop recruiting if, like in the case of Malawi, their home governments refused to pre-test them. The legislation was quietly dropped in 1991, but it was a low point for an industry grappling with the outbreak.

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01 Residents living in Kathu, near Kumba Iron Ore’s Sishen mine, hear healthcare messages about HIV/AIDS and TB

02 Brian Brink is tested during a voluntary counselling and testing session

It was a far cry indeed from the point in June 2009 when the Global Business Coalition (GBC) on HIV/AIDS, Tuberculosis and Malaria presented Anglo American’s Thermal Coal with its Business Excellence Award for Best Workplace Program. This honour followed a series of awards, presented to Anglo American over a 15-year period, for its work on HIV and AIDS.

It has been a bumpy ride between the early 1980s and today. Ante-natal surveys saw South Africa’s HIV prevalence rocket from less than one per cent in 1990 to more than 22 per cent in 1998. The following year, Brink and Crisp set out the problem for Anglo American’s top executives: they were facing a situation where 25 to 30 per cent of the country’s productive adults could sicken and die. What implications would this have for labour supply, productivity, markets, healthcare costs and communities crippled by broken families, orphans and growing despair?

respond. In 1986, the company launched two initiatives: an education and awareness programme aimed at the entire workforce; and the provision of more than $5 million in funding over the next few years to prominent researchers in Europe and the US to investigate treatment possibilities using decoy CD4 proteins inserted into red blood cells. Anglo American was also one of the first companies to publish an AIDS policy, which explicitly stated that HIV testing would not be a requirement of pre-employment medical examinations.

During 1986, Brink together with Professor Reuben Sher and Dr Lavinia Clausen, led a mining industry initiative to survey the prevalence of HIV in the entire South African mining industry workforce. Out of 18,450 South African mineworkers tested, only four were HIV-positive – 0.02 per cent! At that time, 3.8 per cent of Malawian mineworkers were HIV-positive, and only 0.34 per cent of mineworkers from Botswana. Brink can’t help but reflect on how things have changed since then, and on the near-complete failure of South Africa’s HIV prevention efforts over two decades.

effects of anti-retroViral therapy (art) at an indiVidual leVel –the anglo american experience

Cost savings (usd per month)

Cost of art decline in absenteeism

note: the overall impact of hiv/aids is equivalent to 3.4% of payroll

reduction of healthcare utilisation

decrease in staff turnover

and benefit payments–126 96

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“we need zero new infections each year to sustain our treatment response... we’re churning in the white water rather than getting ahead of the wave.”brian brink

The message hit home. The company was going to have to provide anti-retroviral (ARV) drugs for its workers. Nevertheless, there followed three years when Anglo American blew hot and cold on taking on such a costly and complex exercise.

Pressure for treatment was also coming from outside. At the International AIDS Conference in July 2002, activists demanding companies provide anti-retroviral therapy (ART) targeted just two: Coca-Cola and Anglo American. The latter’s headquarters were feeling the heat from financial analysts who wanted to know how the company would manage the epidemic.

Other firms, too, were beginning to formulate treatment plans – even the South African government was

grudgingly conceding that ARVs might have value under “certain conditions”. However, there were no indications of them being made generally available in the public sector, and South Africa’s then minister of health, Dr Manto Tshabalala-Msimang, continued to label them “toxic”.

In an article by Fast Company senior editor Charles Fishman (see Optima, Volume 50, No. 1, March 2004), he recounts how Brink kept plugging away at the need for Anglo American to act – an endeavour in which Brink is keen to point out he had a formidable ally in Sunter, who had recently published the bestelling book AIDS: The Challenge for South Africa, co-authored with Alan Whiteside.

Eventually, all the effort paid off, with then chief executive Tony Trahar (who headed the company from 2000 to 2007) acknowledging that Brink, whom he once described as a “relentless pest”, had been right. Treatment, he decided, was “absolutely the right thing to do”.

In August 2002, Anglo American announced it would be making ART available to all its workers. An article on the decision by Claire Bisseker in South Africa’s Financial Mail quoted Brink admitting: “It is a leap of faith… I don’t think the benefits will exceed the costs. There’ll be a gap, but the size of the gap will be affordable.”

Eight years later, Brink’s July 2010 summary report on the economics of ART in Anglo American’s southern African workforce vindicates that leap of faith. While the overall impact of HIV/AIDS on the company, including the cost of the ART programme, is equivalent to 3.4 per cent of payroll, without treatment the company would be in a far worse situation. The benefits of ART far outweigh the costs: at an individual level, the monthly ART cost of $126 resulted in monthly savings of $219. For Brink, the bald figures represent progress, but there have also been some disappointments.

He knows where he wants the programme to go. In an article he and Dr Jan Pienaar of the company’s Thermal Coal’s Highveld Hospital published in the journal AIDS in 2007, it is as crisply formulated as any good business strategy.

“The company currently strives to achieve an ambitious target for its HIV/AIDS programme of three zeroes (which has since been adopted by UNAIDS, the Joint United Nations Programme on HIV/AIDS): zero new infections; zero employees falling sick or dying from AIDS; and zero babies born HIV-positive in employees’ families.” This must be achieved with zero tolerance of discrimination, stigmatisation or breaches of human rights.

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prevention and testingA cornerstone of the programme is voluntary counselling and HIV testing (VCT). In 2003, VCT uptake among the entire southern Africa-based Anglo American staff was less than 10 per cent; by year-end 2010, 94 per cent of employees were checking their status every year. The success of the testing programme means HIV prevalence can be accurately calculated at 16.5 per cent, and the incidence of new infections at about 1.2 per cent.

The government currently has a campaign to test 15 million South Africans by June 2015. Brink confesses to a love-hate relationship with this much-hyped initiative. He greatly admires the leadership shown by the present minister of health, Dr Aaron Motsoaledi, and the dramatic increase in the number of South Africans who now know their HIV status.

“However, if South Africa tests 15 million and 17 per cent test HIV-positive, which seems likely, that means more than 2.5 million people, of whom about a third, or 850,000, would need to go on ARVs at once,” he says. “Anglo American’s testing policy has had an immediate follow-through on care. I doubt that the public-health

system would manage that. It’s not the numbers you test, but the percentage you care for that matters.”

In his report, Brink notes: “Our prevention outcomes, while better than most, are nevertheless disappointing and the HIV incidence remains unacceptably high. We need to target zero new infections each year if we want to have any hope of being able to sustain our treatment response to the existing burden of HIV disease.”

There is an edge of frustration in his voice as he adds: “We’re churning in the white water rather than getting ahead of the wave.”

treatment take-upClosing the loop on prevention was one reason the programmes were extended to workers’ dependants. This was a complex exercise given that many are scattered around southern Africa, often in remote villages with little access to healthcare. Among the female employees and worker dependants who are managed through Anglo American health services, HIV transmission to babies is virtually zero – but it’s a challenge where they must rely on the creaking healthcare system in rural areas. So far it has been a somewhat

disappointing exercise; only 400 dependants are currently enrolled in the HIV Wellness Programme, with 75 per cent of them on ART. This number is far below the estimates of those in need.

The HIV Wellness Programme is offered to all employees and dependants from the time they test HIV-positive, providing ongoing counselling and immune-system monitoring and enabling treatment to start at the optimal time.

At year-end 2010, of the approximately 12,000 employees who were HIV-positive, nearly 4,000 were on ART. The programme also tries to put all enrollees on Isoniazid (INH) drug tuberculosis (TB) prevention therapy, which has reduced AIDS mortality by 50 per cent in the programme. Another frustration is that, by the end of 2010, only 60 per cent of those believed to be HIV-positive had enrolled, though a concerted effort is being made to improve this take-up in 2011.

Brink’s report adds: “Our greatest challenge is to reduce the dropout rate from the AIDS treatment programme and to ensure good long-term adherence to ART. The first year of treatment is the most challenging; thereafter, treatment tends to stabilise.”

There has been progress here, too: annual losses have dropped from more than 40 per cent in the 2004 cohort to below 20 per cent for 2010.

Brink believes Anglo American’s experience raises serious questions about the government’s data on the number of people on ARVs in the country. “While officially over a million South Africans have been put on the drugs, the problem is that we don’t have sound data in many cases,” he says. “Motsoaledi is demonstrating extraordinary leadership in reshaping

01 Sister Devagi Naidoo explains the use of the oral swab rapid HIV test to South Africa’s minister of health, Dr Aaron Motsoaledi, before he volunteered to undertake a confidential HIV test at Thermal Coal’s Goedehoop colliery clinic in March 2011

02 “There’s still a long way to go to meet my standards.” Brian Brink on Anglo American’s continued efforts to control the HIV/AIDS epidemic, October 2010

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1972is awarded an anglo american group vocational scholarship to support his studies at the university of the witwatersrand medical school

1975Qualifies as a medical doctor – mb bCh (witwatersrand)

1981Joins anglo american as a medical officer at the ernest Oppenheimer hospital in welkom, becoming medical superintendent in 1986, a position he holds for seven years

1993relocates to anglo american’s then head office in Johannesburg, south africa, where he is actively involved in the creation of the southern healthcare joint venture with united healthCare and southern life

1993 to presentacts as a trustee and/or chairman of various medical schemes. is also elected chairman of south africa’s board of health Care funders, a position he holds from 2000 to 2003

1995 to presentis appointed as anglo american’s senior medical consultant (subsequently renamed chief medical officer) and chairs the anglo american hiv/aids policy and strategy Committee, which is addressing the challenges that hiv/aids poses to business units in southern africa

2002 to presentserves as alternate board member and, more recently, board member, representing the global private sector on the board of the global fund to fight aids, tb and malaria. also serves on the board of several health and human-rights organisations, and in 2008 was appointed chair of the international women’s health Coalition

timeline brian brink’s career

“ improving access to healthcare in developing countries is good for business growth. health is an extraordinarily good long-term investment.” brian brink

02 chArLeS beSt

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the country’s HIV/AIDS programme, but we need more reliable statistics; for instance, on how many have dropped out of ART.”

A major challenge in managing HIV/AIDS prevention is tackling the disconnection between migrant labourers working on the mines and their families, who often live hundreds of kilometres away. The migrant-labour system, which the mining industry of old was instrumental in creating, still accounts for a high percentage of the workforce in the South African mining industry.

It’s an ongoing problem, adds Brink: “I am concerned by the rising incidence of TB, a disease that is inextricably linked to the incidence of HIV, and a disturbing number of cases with multi-drug-resistant and extremely drug-resistant TB.” With South African rates of TB/HIV co-infection and TB incidence being the highest in the world, he believes “the escalating TB epidemic is almost more worrying than the HIV/AIDS epidemic”.

Anglo American’s TB-control programme is based on similar principles to its HIV/AIDS programme and is designed to ensure the disease is actively managed and properly controlled. As the TB problem demonstrates, the health of mineworkers does not stop at the mine. It is closely tied to the health problems of the communities around the mines and, for migrants, the towns and villages in South Africa and the surrounding countries they come from, and where their dependants live.

The paradox is that the closer one looks at the problem, the wider one’s vision needs to be. In a recent memo looking at future interventions, Brink notes: “It is increasingly evident that a

in numbers stand-alone response to HIV/AIDS will never succeed unless it is supported by a broad-based strengthening of the health system, particularly at a primary care level.”

For this to work, the public and private sectors and civil society must co-ordinate their efforts for the benefit of the entire population. Health is ultimately a sustainable development issue.

Community exCellenCeAnglo American has been actively involved in community projects since the launch of the Anglo American Community HIV/AIDS Partnership Programme in 2003. It has supported youth programmes and HIV/AIDS initiatives and clinics, and has engaged in public/private partnerships. These include the building of a community health centre at Lillydale in the Bushbuckridge municipality, Mpumalanga province, and a clinic in Kathu township, Northern Cape province – both of which provide access to life-saving ARV therapy.

Currently, Anglo American is sponsoring the writing of a business plan to revitalise primary healthcare in four sub-districts of the Eastern Cape. The plan aims to establish “models of excellence for primary healthcare delivery in some of the most challenging circumstances”. Brink states that Anglo American has a vested interest in seeing healthcare in the region improve: it is a ‘labour-sending area’ that is home to many of its workers and their dependants.

Like Anglo American’s HIV/AIDS programme, the business plan will set clear outcome measures for improving the basic indicators of health, including HIV/AIDS, TB and maternal and child health, along with plans “to harness the

100,000+Number of HIV tests carried out on Anglo American employees and contractors in 2010

94%Percentage of southern African-based employees who participated in voluntary HIV counselling and testing in 2010

4,000Number of HIV-positive employees who are receiving anti-retroviral drugs to manage their HIV disease

60%Percentage of the estimated 12,000 HIV-positive employees at Anglo American’s southern African business operations who are participating in HIV wellness programmes

33%Percentage of the world’s population that is currently infected with the tuberculosis (TB) bacillus – although the TB bacilli can lie dormant for years, with people only becoming sick when the immune system is weakened

1%Percentage of TB infections among Anglo American’s South Africa-based employees in 2010. This is similar to the incidence in South Africa’s general population, but seven times higher than the global incidence


best of what the public, private and civil society sectors have to offer into a co-ordinated whole”. The project will be government-owned and government-led. Anglo American’s role will be as a facilitator in getting the plan written and implemented.

The broad-based strengthening Anglo American envisages will require better health information systems, using modern technology that will allow data accessibility even in remote areas. Anglo American’s Thermal Coal business has developed such a system, the HealthSource, which is currently being piloted in two poor areas; and the Eastern Cape Department of Health has shown an interest.

“This is a great example of how some of our business skills and resources might be used in a sustainable way for the benefit of the community,” says

Brink. He is now on a mission to persuade businesses that are not yet convinced that what was once a leap of faith now makes hard business sense.

“Improving access to healthcare in developing countries is good for business growth,” he insists. “Health is an extraordinarily good long-term investment.”

For Brink, the Anglo American experience has demonstrated that the spread of HIV can be contained, and the sickness and death that AIDS threatened can be managed, so that “the epidemic does not affect the profitability and sustainability of our business. It justifies a similar response by all businesses to protect the economies of countries with a high burden of HIV/AIDS.”

getting industry on boardBrink currently represents the private sector on the Board of the Global Fund to Fight AIDS, TB and Malaria. As the economic recession has dug deeper into the world’s pockets, funding for the Global Fund, as well as other organisations that supported HIV/AIDS programmes, has flatlined. Brink is now actively working to induce the private sector to provide broad-based support for the Fund. “Our target is that the private sector should become one of the top ten donors to the Global Fund,” he says.

Anglo American recently participated in the G20 Business Summit in Seoul with this goal in mind – which had the full backing of chief executive Cynthia Carroll. At the Business Summit, which preceded the full G20 meeting, she pledged $1 million per year on behalf of Anglo American to the Global Fund for the next three years to help meet the healthcare challenges in developing

economies. The company has demonstrated a clear business case for the investment and Carroll asked the assembled business leaders, from more than 100 of the top global companies, to match Anglo American’s commitment. Brink admits that their initial response was disappointing. In the current economic climate, it was perhaps not the ideal time to press business for money. But he will undoubtedly keep trying.

It has been a long road from those first HIV cases among workers in the early 1980s. Does Brink feel frustrated that problems continue? He laughs and explains that the frustrating times were those early years when he could not persuade Anglo American to take action to institute treatment. He seriously considered leaving and he was investigating other options when Trahar made his about-turn. “Once treatment was possible,” he says, “we never looked back.”

Brink comes across as passionately committed to getting this right. But he can be Anglo American’s own harshest critic: “There’s still a long way to go to meet my standards,” he maintains.

The edge goes out of his voice, however, when he talks of how far they have come, and recalls particular cases where the company’s programme has literally pulled people back from death’s door.

A doctor first of all, he has been given the resources and support by Anglo American to act on a grand scale. He has the vision to see business taking on, and helping tame, the HIV/AIDS epidemic.

As the July report concludes: “All that is required is the leadership and the will to get the job done.” And, of course, Brink, the indispensable “relentless pest”.

01 The Swissray Expert 4000 digital X-ray machine at RPM Bleskop Hospital, Johannesburg, has greatly enhanced checking and monitoring for TB and silicosis

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a blessing or Curse?


For the past decade, it has been generally accepted that an abundance of natural resources is an economic curse, thanks in

part to research conducted by two Harvard academics a decade ago. Now, in a challenge to this received wisdom, rhodes university’s

gavin keeton and Jasi kassami wonder whether natural resources could be considered a blessing after all.

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For the past decade, it has been generally accepted that an abundance of natural resources is an economic curse, thanks in

part to research conducted by two Harvard academics a decade ago. Now, in a challenge to this received wisdom, rhodes university’s

gavin keeton and Jasi kassami wonder whether natural resources could be considered a blessing after all.

optima report


hat an abundance of natural resources should be a boon to a country seems so obvious that we still today speak of “sitting on a

gold mine”. For a long period, economists attributed the United States’ overtaking of Britain as the world’s largest economy in the 1800s to the former’s superior natural resources. Australia and Canada’s economic prosperities were also initially founded on strong mining and other natural resource industries. South Africa’s position as Africa’s largest economy was clearly the result of the discovery of diamonds and gold in the late 1800s, while neighbouring Botswana’s impressive economic performance can be attributed to its position as the world’s leading diamond producer.

In the 1960s and 1970s, however, resource-starved Japan emerged as the world’s second largest economy. Dramatic growth was achieved in equally resource-poor economies such as Taiwan and South Korea, as well as the “city states” of Hong Kong and Singapore. Oil wealth in the Middle East, by contrast, seemed to do little for the economic well-being of most of that region’s citizens, and struggles for control of natural resources sparked violent conflict and even civil war in several African countries.

In 1997 and 2001, Harvard University’s Jeffrey Sachs and Andrew Warner confirmed the growing scepticism surrounding the benefits of abundant natural resource endowment in two seminal academic papers that showed a clear negative relationship between countries’ per capita GDP growth and the resource intensity of their exports over the period 1970-1989. Far from being a “blessing”, a high degree of natural resource endowment was, they concluded, a “curse”.

other industries Crowded outSachs and Warner identified a number of reasons for this outcome. First, natural resources provide a concentrated source of economic “rent” (profits, jobs and buying power) that politicians and interest groups often seek to exploit to

their own, rather than society’s, advantage. Secondly, natural resources may “crowd out” other industries because skilled workers and entrepreneurs choose to work in the higher-paying jobs available in natural resource firms rather than elsewhere in the economy. This undermines the development of alternative industries and reduces overall economic growth.

High foreign-exchange earnings from natural resource exports may also lead to overvalued exchange rates that hinder the development of other export industries – the so-called “Dutch disease”, first recognised in Holland, whereby booming exports from the discovery of North Sea oil caused dramatic exchange-rate appreciation that undermined the global competitiveness of other traditional export industries.

Consequently, notwithstanding the continued economic success of leading resource-rich countries such as Chile and Botswana, Sachs and Warner concluded that these adverse factors resulting from high natural resource endowment had mostly led to poor economic performance.

arguing against the resourCe CurseCritics of Sachs and Warner’s conclusions argued that, by examining the share of natural resources in exports, they had not examined resource endowment per se. Thus, a country like the United States, which has among the highest endowments of natural resources of any country globally, has a low proportion of natural resources in its exports. This is because much of its natural resource production is consumed locally and the remaining natural resource exports are dwarfed by exports of other goods.

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“sachs and warner’s message was so powerful that it became de rigueur to view an abundance of resources as a bad thing. dutch disease became part of everyday economic policy analysis.”


Other countries, which actually have a relatively low natural resource endowment, might appear as highly natural-resource-intensive by Sachs and Warner’s measure, simply because they export so little of anything else. This would bias the results in a negative direction.

Other critics argued that it is unfair to lump all natural resources in the same basket and that removing oil, for example, from the analysis would result in a more favourable outcome for natural resource exporters.

Despite these reservations, Sachs and Warner’s message was so powerful that it became de rigueur to view an abundance of natural resources as a negative thing. Development agencies such as the World Bank put in place special investment guidelines to deal with the perceived harmful economic impact of developing natural resource projects. “Dutch disease” became part of everyday economic policy analysis.

Several resource-rich countries established special stabilisation or sovereign wealth funds into which export earnings could be funnelled to reduce their impact on the

exchange rate during times of booming natural resource prices. Chile, for example, invested its copper windfall from the six-year resources boom of the early years of this century into two specially created funds that by mid-2008 had accumulated savings of almost $22 billion. These would also provide a pool of funds to be used in the future when natural resource prices and export earnings might be lower. In 2003, the major private natural resource companies – including Anglo American – established the Extractive Industries Transparency Initiative (EITI), which committed these companies to making public all the taxes they paid to governments so they could no longer be easily siphoned into the accounts of corrupt politicians, political parties or officials.

To test whether these measures had improved the economic growth performance of resource-exporting countries, we updated Sachs and Warner’s findings by comparing economic growth and the resource intensiveness of exports for 126 countries during the periods 1990-2000 (Figure 1) and 2000-2007 (Figure 2).

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eConomiC turnaround Our findings continue to show a slightly negative relationship between the natural resource intensity of exports and economic growth over the period 1990-2000. While, inevitably, there were exceptions, in general the more natural-resource-intensive were a country’s exports, the lower its economic growth. Importantly, however, the extent of this negativeness was much less than what Sachs and Warner had found for their earlier time period. Lessons regarding the dangers of misusing natural resources appear to have been learned and these translated into a better overall growth performance for countries with high natural resource intensity of exports over the period 1990-2000 than had been the case from 1970-1989.

For the period 2000-2007, the relationship between economic growth and the resource intensity of exports proved to be more positive, with a higher natural resource intensity of exports generally translating into higher growth. Far from being a “curse”, natural resources over this period were a blessing. Why this turnaround?

better finanCial management Possibly, countries with high natural resource export intensity had managed their exchange rates better in recent times to avoid the problem of Dutch disease. Rent-seeking could have been reduced because of industry initiatives, the focus of global NGOs on exposing such activities and the attention given to preventing such activities by multilateral organisations such as the World Bank. Countries with high reliance on natural resource exports may therefore have been better managed economically than in the earlier Sachs and Warner period.

As importantly, since 2003 we have witnessed the start of a strong rise in commodity prices that appears to have reversed the steep decline in prices in real

inflation-adjusted terms that began in the 1970s (Figure 3). When the prices of a country’s principal exports are rising, it is unsurprising that its economic growth performance should improve. But, equally, the sharp decline in real commodity prices in the periods 1970-1989 and 1990-2000 surely accounted for at least part of the poor growth performance of commodity exporters over those periods – so should it not have played a far more prominent role in the “resource curse” analysis?

Critics might argue that the prices of many different types of goods (for example, electronics, clothing and textiles) also fell during those periods, without having the

“between 2000 and 2007, the relationship between economic growth and the resource intensity of exports proved to be more positive than previously, with a higher natural resource intensity of exports generally translating into higher growth.”


same negative impact on economic growth. But prices in these other industries fell mainly because of cheaper production techniques, so lower prices were possible without reduced profit margins for producers. Production in these industries generally expanded as markets grew rapidly. In capital-intensive extractive industries, existing technologies are, literally, sunken costs; thus the productivity enhancements that are available to, say, new mines are often not easily transferable into existing mines. As a result, falling real commodity prices most commonly translated into declining profit margins and production volumes, with negative consequences for exports and economic growth in commodity exporting countries.

stronger Commodity priCes The weaker negative relationship between growth and resource intensity of exports over the period 1990-2000 can therefore also be explained by the fact that commodity prices fell less rapidly over this period than they did in the 1980s. Possibly, resource-exporting countries eventually also stopped hoping for a return to the boom prices of the 1970s and early 1980s and adjusted their fiscal and export expectations accordingly. As a result, economic policies were better attuned towards growth.

Conversely, rising commodity prices since 2003 have resulted in improved export earnings, significantly higher production volumes and often very large new investments in natural resource production. These have contributed to generally higher growth rates in natural-resource-exporting countries than in resource-poor or resource-importing countries.

superCyCleThis discovery that the relationship between economic growth and the resource intensity of exports has been positive in recent years – and, hence, that the “resource curse” link does not necessarily hold – is encouraging for commodity-producing countries. It is widely believed that the rise in commodity prices is structural – part of a “supercycle” in which prices will remain high, perhaps for several decades, on the back of high demand from rapidly urbanising countries such as China and India. The results show that with continued appropriate

standards of governance and policies to mitigate against negative spillovers from higher export earnings – such as the Dutch disease and increased rent-seeking from higher tax receipts – commodity producers can indeed reap the benefits of commodity price booms.

This conclusion is especially significant for Africa, whose growth relative to other regions has improved markedly over the past decade on the back of higher natural resource prices, as well as much improved standards of economic and political governance. Africa can be considered the last global treasure trove of undeveloped commodity deposits. As traditional Western producers and emerging Chinese, Indian and Russian natural resource companies seek to unlock these deposits in response to continued high commodity prices, Africa’s growth performance can continue to benefit from such investments.

The economic lessons of earlier time periods when prices were falling are now well known – so sound economic management can go hand in hand with good governance that is reinforced by private producers aligned to the EITI guidelines. As a result, strong natural resource prices and natural resource development can once again become one and the same catalyst for sustained economic growth and development.

figure 3: real Crb Commodity priCe index in us inflation-adJusted terms

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Gavin Keeton is an associate professor in the Economics Department at Rhodes University in South Africa and was formerly Group economist at Anglo American.

Jasi Kassami is a student in the Rhodes Economics Department and worked on the “resource curse” for his honours degree research project.

authorsgaVin keeton jasi kassami

business profile


inus 30-degree temperatures, discussions with local reindeer herders and commuting to work on a snowmobile or helicopter may not be a typical day at the office for most people, but for Anglo American’s Arctic

exploration team, it’s all in a day’s work.The company’s presence in the Arctic is, as technical

assistant Mattias Johansson puts it, “not just because we like snow”. Some of the greatest mineral deposits in the world are in the high Arctic, which offers the potential for significant discoveries. “The Arctic is one of the last great frontiers,” Johansson adds, “and well worth Anglo American’s effort.”

the final frontieranglo american is gradually pushing back what may be one of the world’s last unexplored regions: the frozen north. respect for local communities is as crucial to the effort as respect for the harsh conditions. jessica mccahon finds out why.

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The company has tough competition in this frontier region. Norilsk Nickel, Vale, Rio Tinto, BHP Billiton, ArcelorMittal, Teck Resources and Agnico Eagle are all active, looking for base and precious metals, iron ore, coal and diamonds.

Associate De Beers opened its first two diamond mines outside of Africa in Canada’s Arctic. The Snap Lake mine in the Northwest Territories is Canada’s first completely underground diamond mine. Through advanced exploration and construction, it is the only mine in the area that certified its environmental management systems to the international ISO 14001 standard before operations began. In 2010, Snap Lake produced 925,000 carats, while De Beers’ second Canadian mine, Victor in Northern Ontario, yielded 826,000 carats.

the final frontier

01 Camping at the Gahcho Kué diamond project in Canada’s Northwest Territories, a joint venture between De Beers and Mountain Province Diamonds Inc.

02 Regional head of exploration (Arctic) Jim Coppard inspects drill cores in Finland

03 Drilling teams are enhancing techniques used elsewhere to make them even more innovative. Here, a driller operates a diamond drill rig in northern Finland

04 Transport in regions with a harsh climate, such as Alaska (pictured), is a constant challenge

The quality of an asset is a key criterion for all of Anglo American’s work in the region. Once a particular area has been identified through desktop studies as having potential, and the required licences and permits have been obtained from the local regulatory authorities, airborne and ground geological, geochemical and geophysical information is gathered. If positive, initial drill testing is undertaken and a decision made to determine if additional, more extensive exploration is warranted.

“We must always remember what Anglo American requires in terms of Tier 1 (or world-class) assets,” says Jim Coppard, regional head of exploration, Arctic. “The discovery must be of sufficient quality and size to be worth

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which, in turn, create inland snow and ice covering and restrict shipping access.

In the north of Canada, work is done in the summer because it’s simply too cold at other times of the year, while in Finland, first-phase exploration drilling mainly takes place in the winter when ice and snow cover ensures there is minimal impact on the environment.

Senior project geologist Rob Mackie is based in Canada’s high Arctic, where the company’s focus is on nickel and copper exploration. For the past few years, Mackie has been working with small crews on early-stage projects doing initial screening of large areas to determine if they have sufficient potential for Anglo American to commit to longer-term projects.

“There is certainly a lot of potential in the north, and that’s drawing a lot of competition, so we have to be there first, whenever and wherever we can,” he says. “The long history of exploration and mining in less remote areas lessens our chances of finding an Anglo American-sized deposit, so we have to push further afield into areas that haven’t been explored as much. The Arctic is that region.”

One of the main challenges for Mackie and his colleagues is the extremely short summer window for this early-stage work. But when there is light, it can seem perennial. Not for nothing is the region called the Land of the Midnight Sun.

“We have about three months to progress a project before the winter arrives and makes it impossible to carry on out there,” he explains. “We work long days to take advantage of good weather... and timing is everything – you have to decide when field work must be postponed due to poor weather and when to end a project and get out before the weather turns. It’s heartbreaking when you end a project and then summer continues for a good few weeks. Then again, I’ve been snowed in during the middle of summer.”

our while to develop and, if it’s not, we can still add value through divestment.

“The industry average is one discovery of a potential mine for every thousand exploration targets – it’s quite common for geologists to have worked in this industry for 30 years or more and not to have developed a project beyond the initial drill testing. Everything we do is a balance between risk and geological prospectivity, with our overriding objective being to make discoveries safely. The success rate of the Anglo American exploration unit is much better than the industry average and, over the years, that has earned us an industry-wide reputation as successful explorers.”

Challenging ConditionsAnglo American’s standards aren’t the only things that dictate a project’s viability – the location and climate are important factors in this region of the Northern Lights. In fact, the main reasons it is so unexplored are the remote locations and unique light and temperature conditions,

01 Jim Coppard (centre) and senior tenure and government relations geologist Bo Langbacka meet a reindeer herder in Finland. Many drilling opportunities in the Arctic are in grazing areas

02 During the short summer ‘window’, geologists map out an area in the Canadian Arctic

03 The Arctic Exploration unit’s safety training helps in dealing with everything from the threat of polar bears to extreme temperatures

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safety awareness

When Anglo American’s exploration teams first ventured into the Arctic some 40 years ago, safety procedures in the mining industry were very rudimentary in comparison with today’s standards.

Today, safety is seen as a top priority, with safety procedures being absolutely crucial – especially in such remote regions as the Arctic. Many contractors support Anglo American staff on exploration ventures, so considerable effort is expended to communicate the company’s safety culture. Only by ensuring Anglo American has the right people, the right equipment and the right training can the company fulfil its “Safe Discovery” goal.

The exploration team of geophysicists, geologists, drillers and technicians in the Arctic is in training almost constantly, covering everything from coping with freezing temperatures, extensive survival techniques and first aid, to off-road driving and the safe use of helicopters. Its people are even taught how to cope with the surprisingly acute problem of Arctic mosquitoes in the short summer months.

Canada-based senior project geologist Rob Mackie explains: “Everyone has a safety induction at the start of each project and then attends weekly safety meetings to openly discuss any issues. Last season, due to the level of risk, we brought a polar bear expert to a remote community to provide training on managing that threat, because the area we were working in is a known habitat for them.”

Despite the many dangers and challenges of his Arctic office, Mackie can recall only one hairy moment, when four of his colleagues had to spend an unplanned night out in the field, tens of kilometres from base camp. “The weather turned bad on them very quickly and the helicopter couldn’t get in to pick them up. Luckily, they had plenty of emergency training and safety kits – which we all have to carry – with enough rations and equipment to see them through the night.”

transportation issuesTransport in these harsh climates is another high-risk factor for Anglo American – and not just where people are concerned. Ensuring vital fuel supplies reach projects in the northern tip of Canada is a particular challenge, and petrol drums have to travel thousands of miles via truck, boat, plane, and by helicopter slinging (transporting cargo in nets underneath the aircraft). But that alone isn’t the main difficulty; the drums must be picked up and set down at least nine times en route to their far-flung destinations, and finding skilled people and appropriate equipment to handle them at each pit stop is crucial – but far from easy.

To ensure the fuel arrives intact and without incident, the company’s suppliers use the highest quality fuel drums and scrupulously audit all of their contractors to ensure, for example, they are fully insured in case of a spill. Mechanics are also on site at the pick-up and set-down locations to maintain the machinery needed to haul the drums from one mode of transport to the next.

Finland is covered by more than 150,000 lakes and even more bogs, which makes it virtually impossible to get around in certain parts during the summer months, without frozen ground and the thick covering of snow. For this reason, November to April is the busy period for exploration in this part of the Arctic, but teams must keep one eye on the clock at all times as the sun does not rise above the horizon. The average temperature at the end of January may be around -30ºC,

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where is the arctic?66˚ 33’N or, more generally, “the top of the world”. The northernmost part of the earth, the Arctic takes in Canada, Greenland, Iceland, Russia, Alaska, Finland and the Scandinavian peninsula.

Temperature: The coldest temperature recorded in the northern hemisphere in a populated place was in Oymyakon, in Russia’s Sakha Republic, at -71.2˚C. The Arctic’s average winter temperature is a little warmer at -30˚C. In July, the warmest month, it doesn’t get much above 10˚C.

business profile


but the thaw comes quickly in April and, within a week, areas that were waist-deep in snow can be flooded. Timing is critical to get all the equipment out of the field before this happens.

Community relations“One thing that sets us apart is doing things right for the benefit of the environment and the local communities,” says Johansson. “It not only makes sense from a societal and sustainability point of view, but also because, if you don’t do everything right from the very beginning, you will not get a licence to operate.”

Long before the exploration teams arrive at a site, they start doing their homework on the local communities that may be affected by a project; building and maintaining the social licence to operate are crucial to the development of any new project. Community relations are part of Anglo American’s values of care, respect and integrity. They are so important, in fact, that a new position has been created within the exploration unit to support local teams.

Frøydis Cameron has taken up the role of manager of government and community relations. “Developing positive and constructive relationships with our host communities is key to our success,” she stresses, “not just for exploration but for the whole mining lifecycle. Our exploration teams are often the ‘first boots on the ground’ and how we conduct ourselves when we first engage with the local communities can make or break a project.”

Building relationships and trust takes time and, for exploration geologists, this means anything from sharing a traditional meal of reindeer or seal or meeting with community elders over coffee, to being granted the honour of being invited on a traditional hunting or fishing trip. From a personal perspective, Cameron adds, “I am privileged to have had the opportunity to work with communities in various countries and cultures. I have found that, regardless of geography, fundamentally communities want similar things, none of which is very different to what we would want for ourselves. They want to be treated with honesty, integrity and respect. They want to know what the impacts and benefits of our operations are for them and, ultimately, what will be left for their children and the next generations.”

The Sakatti project is situated in Finnish

Lapland, about 150 kilometres within the Arctic Circle. Working this far north means dealing with cold temperatures, down to -40˚C, and very short periods of twilight, especially in December and January, as the sun never gets above the horizon.

The climate we’re working in helps us to overcome environmental challenges, but also leads to new ones.

Most of our exploration activity – geophysical ground surveys, base-of-till drilling and diamond drilling – takes place in the winter months, November to April. The project lies partly within a sensitive bog area, which is an additional challenge, but the frozen land and snow cover help to minimise our environmental footprint when we’re working with heavy machinery on the bog.

All employees and contractors take part in training on driving cars and snowmobiles, rescue and evacuation

inside View stephanie klatt ›› project geologist at anglo american’s sakatti exploration project in finland

and Arctic survival, as well as various other courses. We repeat this training before each new season of fieldwork so that we are prepared for potential emergency situations.

It’s important to us that we invest time in building relationships and keeping communications open with local communities. We have a close and respectful relationship with local reindeer herders and Sami people – they’re often the contact or landowner for the ground we want to work on – and we hold regular meetings to show affected stakeholders who we are and what we do.

The majority of people employed by the exploration team are Finnish, and we also work with local contractors. This way we build up trust with our various stakeholders – including the national and regional government.”

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“the industry average is one discovery of a potential mine for every thousand exploration targets. anglo american’s success rate is much better.”jim coppardregiOnal head Of explOratiOn, arCtiC


The Arctic is no different, she continues, but there is the added dimension of working with reindeer herders and subsistence hunters, as well as local urban communities.

“In the Arctic of Finland, for example, we have to consider where we are drilling in terms of reindeer grazing areas. On a recent project, we wanted to drill test a particular area, but the herders asked us not to as it was their winter grazing ground for that particular season. The team agreed to drill other targets first and come back to that location after the reindeer had been moved.”

To ensure they are well versed in local customs, the exploration teams spend a significant amount of time listening to and understanding the cultures and traditions of an area. “We always need to remember we are the guests,” says Cameron. Whenever possible, the exploration team includes employees who are native to the area.

“The Arctic is still a frontier region,” adds Johansson. “The only presence we have there is our exploration team, so we have to think of ourselves as Anglo American’s ambassadors. It’s important for us to listen to people’s concerns about what’s happening in their backyard and explain what we will be doing at each stage of a project. We have to be sociable and genuinely care about the community where we work.”

environment and innovationNecessity breeds invention and nowhere does this ring more true than in the Arctic, where conditions and a “minimal footprint” approach demand superior technology.

“We have to be the smartest, because we’re definitely not alone out there and we have to stay a few steps ahead of the

competition,” says Coppard. “Fortunately, we have a competitive advantage through technology developed in-house by people who know precisely what environments we work in and the challenges we need to overcome. It also means we have sole rights to a number of the innovations.”

Low Temperature SQUID (Superconducting Quantum Interference Device) technology, for example, is exclusive to Anglo American, having been developed by researchers in Germany. The technology uses one-centimetre-diameter super-conductive sensors, cooled to cryogenic temperatures, to find buried deposits and minute magnetic fields, specifically weak fields and anomalies below the detection levels of conventional geophysical sensors.

The development of Closed-System Drilling is another case in point. On a drilling project in Finland, the team noticed drill cuttings – ground-up rock – were being left behind on the surface, so the Closed-System Drilling innovation to collect the cuttings was developed in conjunction with the drilling contractor, working with an improved version of the system used by former Anglo American entity Hudson Bay Mining Company in Canada 20 years ago. One project alone was able to collect and carry away more than 50 tonnes of drill cuttings that would otherwise have been left in the area, potentially affecting the local environment.

This is the first time this technology has been used in the Nordic countries and it has been praised by both the environmental authorities and local communities, reflects Coppard. “This wasn’t something we were required to do by law; it’s something we developed because we are concerned about the environment and minimising our footprint. We’re setting standards out there.”

01 Closed-System Drilling techniques, such as those being used in northern Finland, are better for the environment in collecting drill cuttings from sites

02 Snap Lake, pictured in June 2008, is the first totally underground diamond mine to have been developed in Canada

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Jessica McCahon is a journalist with more than ten years’ experience in the UK and Australia. She currently works for a London publishing agency on a range of corporate titles.

authorjessica mccahon

optima report


from promise to reality


The world’s eagerness to support africa has, argues dambisa moyo, made the continent so dependent that, unless its governments are motivated to take control, it can never truly reform.

from promise to reality

very day around the world, about one billion people go hungry, of which the highest concentration, some 300 million people, lives in sub-Saharan Africa. Yet one-third

of the world’s untilled arable land is also in Africa. Theoretically, these statements suggest three things: first,

that Africa should be able to feed itself; second, that Africa should be a net supplier of food to the rest of the world; and third, we are dealing with a structural problem: a market failure or dislocation. On the last point, I believe the structural problem arises because a culture of foreign aid dependency has led to a situation where African governments are disincentivised from implementing necessary policy reforms that would set Africa on a path of sustained economic growth.

In the past 50 years, Africa has received nearly $1 trillion in international aid intended for healthcare, education, infrastructure and agriculture, among other things. Unfortunately, despite good intentions, much of it has been ineffective. This is because most aid is given without effective conditionality.

The economic development literature is littered with evidence of the shortcomings of foreign development assistance. Aid is associated with several well-documented negative externalities, from spurring inflation, creating untenable debt burdens (with few tangible economic benefits), to being fodder for civil unrest and clashes as political factions try to capture the state and, by extension, unfettered access to millions of ostensibly free aid dollars.

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including well-known reformers such as South Africa and Botswana, make the top 132 countries (i.e. just 10 per cent of the list).

Finally, African countries remain among the most corrupt economies in the world. According to the 2009 Transparency International Corruption Perceptions Index, 40 out of 42 African countries scored below five on a scale where a rank of zero is perceived to be highly corrupt, and 10 is perceived to have low levels of corruption.

Nobel Laureate economist Amartya Sen has observed “there is no such thing as an apolitical food problem”. This could in part explain why, around the world, governments use policy levers to influence both the demand and supply of food.

In China, for example, the one-child policy limits future demand for food. Whereas, by contrast, policies in the US and Europe around agricultural protection, such as subsidies, are designed to encourage an increase in food generation and supply.

poliCy inertiaAcross many countries in Africa, although not all, policy inertia has had negative consequences in relation to food policy. Because the international community underwrites public goods across the board – education, healthcare,

As such, with the African region being the largest recipient of foreign aid, it should perhaps come as no wonder that, in the 1990s, the African subcontinent had more civil wars and unrest than the rest of the world put together or that over the last two years there have been at least four coups d’état or coup attempts across sub-Saharan Africa (Madagascar, Niger, Guinea and Mauritania).

Food production, at its most basic level, depends on quality physical infrastructure – roads, machinery and irrigation tools – and legally enforceable property rights and land title, which are largely absent across African states. Quite rationally, both domestic and international investors are unwilling to invest in these economies with these constraints in place.

Taken together, Africa is caught in a nexus of being long-term aid-dependent, while her governments are not encouraged to carry out essential reforms to attract much-needed investment, in particular in the agriculture sector. The continent’s poor record in putting in place the basic elements to attract investment is demonstrated by three specific points.

First, fewer than half of the countries in Africa have credit ratings. According to 2010 Bloomberg data, only 19 out of 53 African countries have international credit ratings, yet a rating is an absolute prerequisite for governments and corporations to accessing other, better sources of capital privately to finance development.

Then there is the fact that African countries remain among the most difficult places to conduct business. The 2010 World Bank Doing Business Around the World Survey finds that 30 of the world’s worst 50 performers – 60 per cent of the list – are in Africa. And only 14 African countries,

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previous page Intensive agriculture in Rwanda, where 80 per cent of people rely on land for their livelihoods. In many African countries, however, governments have abdicated responsibility for food production

01 Jwaneng, a joint venture between De Beers and the Botswana government, is the world’s richest diamond mine, and work is already under way to extend its life to at least 2025. Prudent management of its substantial diamond revenues has been the major factor behind Botswana’s impressive economic performance in recent years

02 Scenic spots, such as Victoria Falls on the border of Zambia and Zimbabwe, are a vital boost to the economies of both countries, annually attracting hundreds of thousands of tourists

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national security and infrastructure – African governments are able to abdicate their responsibilities in food production.

Furthermore, the pervasive and insidious culture of aid dependency makes it near impossible for Africans to hold their governments accountable for failing to provide the basic requirements to enable food production or to penalise them for bad behaviour, such as corruption.

As is well known, in more developed countries, a (sovereignty) contract exists between governments and citizens. In return for paying taxes, the governments provide a suite of public goods to their citizens. If the incumbent fails to deliver on a promise, then they are voted out of office. Put another way, driven by the desire to stay in office, the government is incentivised to deliver the public goods.

Consider now what happens when foreign aid replaces the need for government to depend on taxpayers’ receipts. African governments spend more time courting and catering to their donors than their constituents. In this case, even if the incumbent does not deliver on the promise to provide public goods, as long as aid donors are happy to continue providing aid, there is often no way for the impoverished population to hold the government accountable for its

failings. In essence, aid severs the connection between the individual and government and undermines the veracity of the contract between them.

More importantly, the international community has become conditioned to approach food security as a recurring emergency concern rather than as the structural problem it is.

Of course, in emergencies, such as the floods in Mozambique or droughts in Ethiopia, there is a moral imperative for the international community to act. But

until African governments come to regard aid as temporary support, as opposed to a right in perpetuity, they will continue to fail to implement the necessary measures for

self-sufficiency, including food production. To be sure, there are some countries across Africa that

are setting themselves apart from the pack by implementing the suite of growth-enhancing policies outlined above.

In 2009, weeks after the World Bank named Rwanda the “world’s top reformer”, the country attracted hundreds of millions of dollars in foreign capital for

“governance issues – corruption, political instability – remain the key logjam in unlocking

africa’s potential.”dambisa moyo

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03 The Amenam-Kpono oil rig, about 40 kilometres off the coast of Nigeria. The country’s oil wealth could help Nigeria to eventually become Africa’s biggest economy – yet an estimated 70 per cent of the country’s population lives below the poverty line

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investment across key sectors. And Ghana continues to be viewed by many international investors as an investment destination of choice, particularly after its $750 million debut bond offering in 2007, which was heavily oversubscribed.

In the political arena, African countries have also made notable strides. Today, the continent boasts that, of 48 sub-Saharan African countries, over 50 per cent hold regular democratic elections that can be deemed free and fair. Unsurprisingly, countries like these that have been the most aggressive at implementing well-designed transparent policies that drive growth, spur entrepreneurs and stimulate job creation have reaped the greatest economic rewards.

But, still, sub-Saharan Africa remains the poorest region in the world, with annual per capita incomes hovering around $500, and the whole continent represents less than two per cent of global trade – less than the trade contribution of Spain. Furthermore, it’s still fair to say that governance issues – the absence of the rule of law, corruption, political instability and a lack of transparency – remain the key logjam in unlocking Africa’s full potential.

With around 60 per cent of Africans under the age of 24, getting this balance right will be critical for the continent’s future prospects and success. On the basis of standard models of economic growth that argue that there are three ingredients that drive such growth – capital, labour and productivity (the ability to use capital and labour effectively) – Africa has lots of scope for upside. This partly explains the positive forecasts for Africa’s economic prospects, such as Standard Chartered bank’s recent forecast that sub-Saharan Africa’s share of the world’s economy will grow from two to

five per cent by 2030 and its investment rate will accelerate to 30 per cent by 2020. The same research source also predicts Nigeria could overtake South Africa as the region’s largest economy by 2023 if it capitalises on its oil wealth. Such euphoria must, however, be tempered by the United Nations warning that Africa must grow by at least seven per cent a year on a sustained basis in order to make a meaningful dent in poverty (today, around 70 per cent of Africans live on less than $2 a day).

realising the potentialWith nearly three decades of emerging-markets success behind us, sadly the number of states from Africa in the winners’ column remains woefully low. And until the structural issues outlined above are remedied, the potential to be realised from Africa’s one billion-plus population will remain just that. Against this backdrop, what ideas should we consider to reverse the current unfortunate state of affairs? Here are three.

First, if one accepts the link between aid flows and disincentivisation, then, clearly, aid to Africa needs to be phased out in a considered and systematic way. Concerns over donors’ budgets have made this necessary shift in thinking more urgent. At a time when leading donor countries such as the US face double-digit unemployment, gaping fiscal deficits – never before seen during peace times – and unsustainable debt burdens that are bound to lower their trend growth, and are themselves borrowing

“the international community has become conditioned to approach food security as a recurring emergency concern rather than as the structural problem it is.”dambisa moyo

01 A cotton factory worker in Mahalla, Egypt. In 2010, a World Bank survey ranked the country an impressive 18th out of 183 countries for starting a business – but a lowly 94th for “ease of doing business”

02 Ghana’s president John Atta Mills joins Chinese president Hu Jintao at a ceremony in Beijing, September 2010, during a six-day visit to China. China’s fast-track development model has proved appealing to many African leaders

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Angus MaddisonA British economist historian and author, Maddison studied the world’s economy

extensively, going back as far as 1 AD. He was a professor at the Faculty of Economics for the University of Groningen in The Netherlands and held several posts at the Organisation for Economic Cooperation and Development in Paris. A self-titled “chiffrephile” – his term for economists who are prone to quantifying the world – Maddison died in 2010, aged 83.

George C Marshall In June 1947, secretary of state George C Marshall called for American

aid to help return Europe to political and economic strength, post-World War Two. Over four years and with $13 billion of assistance,

the Economic Cooperation Act of 1948 – aka the Marshall Plan – restored European agricultural and industrial productivity. By 1952, the economy of each participating state had surpassed pre-war levels. The plan earned General Marshall a Nobel Peace Prize.

Amartya Sen Born in India’s West Bengal, Sen is the professor of economics and

philosophy at Harvard University. He was awarded the Nobel Prize in Economic Sciences in 1998, recognising his work around welfare economics and his interest in poverty; he was nine years old during the Bengal famine of 1943, in which three million people are estimated to have died. He has stated his belief that poverty stems as much from the failings of food distribution as from a lack of food.

from China, it seems folly that for many African countries aid forms upwards of 50 per cent of the public purse. Further, any decrier of this unsustainable system is only too often met with derision and outcry from an ill-informed public.

Indeed, as most donors need to prioritise getting their own house in order, there is a real risk that Africa and African issues will slide down the ranks of priorities. We know that the success of aid programmes such as the Marshall Plan (see right) rested on short, sharp and finite interventions, rather than open-ended commitments as we see across much of Africa today. Phasing out aid to Africa in favour of more sustainable and transparent forms of development financing will take many years, but debate must start in earnest today.

If anything, over 300 years of economic evidence – Angus Maddison’s growth database goes back to the 1500s – has shown us one thing is for sure: no country anywhere in the history of development economics has achieved sustainable long-term economic growth and a reduction in poverty by relying on aid to the extent that African countries rely on it today. The success of the BRIC countries – Brazil, Russia, India and China – and, even closer to home, South Africa and Botswana is just a modern-day manifestation of this point. But, also, the success of these countries is further evidence that more transparent forms of development financing, such as trade, debt financing in the capital markets, remittances, taxes, savings and foreign direct investment, are indisputably key to unlocking credible sustained economic growth and reducing poverty in the long term.

a new aid strategy?Second, greater conditionality needs to be attached to continuing donations. For example, rather than continue to offer up aid in lieu of access to the food markets in developed countries, which decimates African livelihoods (every year, Europe and the US earmark billions of dollars in farm subsidies to their citizens), a more constructive aid strategy with credible conditions should be able to gain more traction. Although the political imperative for this is weak, owing to the sensitivities surrounding aid to Africa, obtaining credit ratings and improving the business environment are clear, measurable objectives that recipient countries should be required to implement and achieve.

Finally, a lot of work needs to be devoted towards changing people’s perceptions, particularly those

profiles

potential investors in the international community, about the African continent. In particular, it will be critical for advocates and champions of the Africa story to transform the message from one of dependency and despair to that of Africa as a potential source of food and a key contributor to, rather than a drag on, the global economy. This is a daunting, but not impossible, task. After all, investment and job creation are desperately needed, but what rational investor would want to risk his capital investing in a continent characterised by death and disease; war; corruption; and poverty – the four horsemen of Africa’s apocalypse?

It may today sound fantastical, that one day Africa might feed itself and the rest of the world. Its enormous area of arable land, although as yet uncultivated, offers great hope. If we were to reframe the terms of the aid debate so that international largesse can become more effective, it is just possible that such aspirations could become a reality.


book review

a s Greg Mills argues, achieving prosperity is all about harnessing comparative

advantage. So it is only fair to ask what advantages Greg Mills brings to the increasingly crowded field of books on Africa’s economic performance. He has four, and he makes the most of them.

First, he brings a private-sector perspective: prosperity is built by business. Second, he has a remarkably wide international experience. He is able to conjure up pertinent examples from across East and South Asia, from Latin America, from the new societies of the former Soviet Bloc and from post-conflict situations such as in Afghanistan, Kosovo, Rwanda and Liberia. For each, he is able to furnish remarkable and telling detail. Third, he has worked on both sides of the fence. He has hands-on experience of African policy-making and its underlying politics. Finally, and crucially, he faces

reality. This is not a book suffocated by political correctness and a bias to optimism: the debilitating curse of all official analyses of Africa.

So, what are the key insights delivered by these substantial advantages? The ground is cleared with a beautifully succinct dismissal of the past half-century of official diagnoses of Africa’s problems: initially a shortage of resources, then mistaken policies, then a lack of capacity and, more recently, back to the beginning – a lack of resources.

There is also a withering critique of the latest official fad for “fixing fragile states”. What Mills proposes in its place is an emphasis upon the responsibility of local leadership. Africa’s leaders have not been trapped in stagnation – they have chosen it.

They have done this because stagnation has often been to their advantage: the retention of power is easier and the rewards of personal plunder have exceeded those of generalised growth. As Mills argues, the most amazing thing is that Africa’s leaders have been allowed by their citizens to get away with such choices. They have been able to do so, he suggests, by the tradition of “big man” rule and by the lazy ideology of victimhood that has enabled the externalisation of responsibility for problems.

transforming the futureSo much for diagnosis, but what about the remedies? Mills is highly sceptical of external solutions; Africans must find their own remedies for the ills of their region. The central positive argument of the book is that the future can be utterly different from the failed past because opportunities for prosperity abound. The power to build this transformed future is in Africans’ own hands.

Chapter after chapter details this message using examples both from the many other societies that have transformed themselves over recent decades and from enterprises in Africa that have prospered against even the regional tide. As Mills stresses, prosperity is built step by step by commercial organisations bringing their managerial skills and determination, networks and money to exploit opportunities that have the potential for profit. This is an

why africa is poor: and what africans can do about itby greg mills penguin, london 2010

review by paul collier

“the future can be utterly different from the failed past because opportunities for prosperity abound. the power to build a transformed future is in africans’ own hands.”paul collier

leading afriCa to prosperity


invigorating message. Why, then, have these opportunities not been seized? Because, Mills argues, through a cascade of examples, they have been impeded by a plundering bureaucracy.

By implication, the price paid for tolerating such a bureaucracy is staggering. So what can be done about it? Mills’ book is essentially a wake-up call to fellow Africans to break free from the neo-Marxist conceptual framework that has protected the plundering state from reform. Profit for business is not intrinsically exploitative; the big state is not the ally of the poor; the global economy is not a threat to be opposed, but a market to be entered.

As an academic economist, I lack Mills’ commanding advantages. Where he forges conclusions from the bitter school of experience, economists deduce them from analytic principles and the evidence of statistics. As the embarrassing failure of economists to spot the global crisis demonstrates, the latter approach has its limitations. But let me share such insights as it might offer, filtered by 40 years of my own African experience.

Modern economics emphasises incentives, selection effects and institutions. Incentives should need little comment except that the official emphasis upon resources, policies and capacity has paid so little attention to them. Economists would largely agree with Mills that Africa has remained poor because African elites have chosen that outcome for their own interest. More specifically, they have

chosen not to invest in the core apparatus of prosperity, an effective tax system and an impartial legal system.

elitist influenCeWithout an effective tax system, the state has little interest in economic growth since it does not capture it; without an effective legal system, contracts, both with other private actors and with the state, cannot be trusted. But economists would add that elites only prefer short-term plunder to investment in future prosperity if the elite is either very insecure or very narrow. After all, Asia did not usually prosper because of the accountability of government to citizen; accountability followed prosperity rather than led it. Rather, Asian elites were sufficiently secure and broad to opt for growth. In Africa, they have been insecure and narrow.

Selection effects are about who rises to positions of power: the honest or the crooked; the qualified or the incompetent? Africa’s patronage

politics has disadvantaged the honest, and its premium upon ethnic identity has devalued competence. Institutions are about checks and balances on the abuse of power. Only by placing credible limits on its own power can the state persuade others to make irreversible investments. Africa’s rulers have been too hungry for short-term power to build such restraints and so have sacrificed investment.

Given the present state of knowledge, we should be relieved when a prescription derived from the bottom-up process of induction from experience coincides with that derived from the top-down process of analytic and statistical deduction. Mills’ wake-up call is, in essence, coincident with the conclusion of my own work: there is no substitute for building a critical mass of economically informed citizens. Africa’s future is hopeful because societies often do learn from failure and, thanks to information technology, societal learning has never been so easy.

01 Primary school students in Kenya’s Dertu, one of 14 Millennium Villages in Africa that are part of a UN-commissioned initiative to help create a sustainable solution to the continent’s extreme poverty

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a mineral to remember

Today, manganese is the fourth most used metal behind iron, aluminium and copper and is mostly obtained from ores mined in South Africa, Australia, Brazil, Gabon, Russia and India.

support to steelmakingAround 90 per cent of all the manganese produced goes into steelmaking. There is no known substitute for the metal.

It was in 1860 when Sir Henry Bessemer was attempting to develop a steelmaking process that he encountered difficulties with excess oxygen and sulphur in the steel. The solution was to add iron with a high manganese content that combines with the sulphur and has a de-oxidation effect. On average, around eight

it is sometimes known as the forgotten metal and is little recognised outside the world of the metallurgist, yet manganese is, quite literally, vital to the structure

of the modern world.The name is derived from Magnesia,

in what is now modern-day Greece, where a mineral called magnes (now known as manganese dioxide) was used in glass-making.

The history of man’s use of manganese goes back thousands of years, but it wasn’t until 1774 that Swedish chemist Johan Gottlieb Gahn isolated it. Nearly 50 years later came the discovery that was to identify a significant use for manganese – that adding it to iron increases its hardness without affecting its malleability.

kilogrammes of manganese are needed to produce a tonne of steel.

Manganese is the 12th most abundant element in the earth’s crust, but it rarely exists in sufficient quantities to give an economically retrievable ore. Significant reserves are largely confined to the southern hemisphere – particularly South Africa, where around 80 per cent of the known world deposits are located, as well as in Australia, Brazil and Gabon. A potential future source of manganese lies on the ocean floor some 5,000 metres down. Nodules can contain up to 25 per cent manganese, but deepwater mining would be difficult and expensive.

With global steel production rising by 16 per cent in 2010 , the manganese

it has heritage in Greece and Sweden and is mostly mined in ores spanning five continents – but, still, the world knows relatively little about manganese. John rolinson reports.

anglo american’s manganese operationsoperation

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hotazel, south africa. final product is exported worldwide from port elizabeth

near Johannesburg, south africa

Queensland, australia. it is one of the world’s leading suppliers of manganese ore

tasmania. it is the only manganese ferro-alloy plant in australia

samancor manganese samancor manganese the groote eylandt mining Company the tasmanian electro– south african mines – south african alloy Joint venture, part of samancor manganese metallurgical Company Joint venture, facilities part of samancor manganese

36.4% 40% 40% (bhp billiton: 60%) 40% (bhp billiton: 60%)

open cut and underground metalloys processing open-cut mine processing plant plant

138 mtu 404 kt 190 mtu 270 kt


a mineral to remember

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01 Nodules such as this one from the sea floor (shown in full and sectioned) can contain up to 25 per cent manganese – though deepwater mining would be difficult and expensive

market likewise grew. In 2010, global manganese ore production increased to an estimated 14.8 million tonnes (Mt) from 11.5 Mt in 2009. Demand is set to continue increasing, especially in Asia, with China, the world’s largest steel producer, still a key market and India’s annual steel production forecast to rise by 50 Mt by 2012. New uses for manganese – for example, as a substitute for cobalt in lithium batteries – will also boost demand.

30,000 years of usageManganese is alloyed with aluminium to provide corrosion resistance. It is used in batteries and in agricultural pesticides and fungicides.

Manganese is essential to maintaining human health. It helps the body to use nutrients and maintain strong bones, and aids the synthesis of fatty acids and cholesterol. It assists in regulating blood sugar levels and promotes optimal function of the thyroid gland and nerves. Foods providing a good source of manganese include pineapples, bread, nuts, cereals, green vegetables and tea.

Manganese use goes back 30,000 years to the Stone Age, when it was used as a pigment in cave paintings. Ever since ancient Roman and Greek times, it has been used in glassmaking, both to remove green tinges produced by impurities during manufacture and, through its various oxide forms, giving colour to glass.

a modern marketAnglo American has a 40 per cent stake in a partnership with BHP Billiton in Samancor, which is investing in and expanding manganese operations in South Africa and Australia. In 2010, Samancor’s saleable manganese production was 3 Mt, while its manganese alloys output amounted to 312,000 tonnes.

Anglo American’s manganese business is managed by head of Thermal Coal Norman Mbazima, supported by Mohammed Samad, Thermal Coal’s chief financial officer, Paul Dempsey from the mining and technology unit and Ian French from corporate finance.

“Most of Samancor’s production is sold as ore to alloy producers in China, South Korea and India,” says Samad. “A smelter in Tasmania supplies alloy to European and Middle Eastern markets. When there is a downturn in steel production, the stockpiles are used and we see the market for manganese falling ahead of the steel market.”

The market picked up considerably in 2010, largely led by China and India steelmakers, to the extent that mining and smelting are now operating at full capacity.

“In the South African manganese operations, a key consideration is how best to get product to sea ports,” says Samad. “Rail routes to Port Elizabeth are general freight lines and transportation is both low-capacity and expensive. While the main challenge facing the Australian operation is to maintain or improve the current low-cost production while accessing future resources and keeping good relationships with local governments and populations.”

A graduate biologist, John Rolinson’s writing background spans corporate and agency communications. His sector experience includes mining, construction, oil and pharmaceuticals.

authorjohn rolinson

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partnerships between the private sector and non- governmental organisations can be quite a balancing act to ensure both organisations, as well as local communities, get the value they are looking for. nick Cottam discovers that a sound strategy where all parties learn from each other is the only way forward.

the balanCe of partnerships


ife is rarely black and white and the relationship between business and the NGO community is no exception. On one end of the scale, a company and an NGO may have different objectives that put them in direct

opposition to each other over a particular project proposal. At the opposite end is a constructive and co-operative NGO business relationship based on agreement and common cause, where concerns are aired and shared interests bring about real and lasting value on the ground. Finding the balance can be extremely beneficial to both sides.

Anglo American’s productive relationships with the NGO community have demonstrated that the most interesting interactions come where there are collaborative attempts to solve problems. Notable in this respect are the still-evolving relationships Anglo American has forged with aid agency

lCARE International UK and conservation group Fauna & Flora International (FFI), both of which have developed into strategic partnerships off the back of limited but successful initial projects. The company’s newest partnership, announced this January, with conflict prevention and peace-building organisation International Alert will allow Anglo American to promote human rights and further its own understanding of conflict issues.

“In our view,” says Anglo American’s international social and community development manager, Jon Samuel, “a good partnership of this kind should set out to achieve something that just can’t be managed through a commercial transaction. In the case of biodiversity, for example, we have introduced a requirement for Biodiversity Action Plans, and FFI has been instrumental in helping to ensure that we have got both the structure and the content right.”

above Ango American funded CARE International’s Kupfuma Ishungu project in the drought-prone densely populated Chivi district of Zimbabwe. The project worked to cushion families from both soaring inflation and the shocks and stresses of the HIV/AIDS pandemic by creating local savings and loans groups

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influenCing wider industryWhat began two years ago with FFI reviewing Anglo American’s Biodiversity Action Plans at operations in South Africa, Brazil, Namibia and the UK has turned into a three-year strategic commitment on biodiversity and conservation. In practice, this means finding areas of mutual geographic interest – in Brazil, for example – identifying projects that fit the overall model and then working together to do more and better conservation.

For Pippa Howard, FFI’s director of business & biodiversity programme, this particular arrangement is about achieving organisational change. “It’s about influencing sectors and improving practice across an industry with a major footprint,” she says.

The same applies, she adds, in the case of FFI’s partnerships with other mining majors, the aim being to help instil best practice at both an operational and a strategic level. “This could amount to preserving a piece of forest or improving water availability to communities. At a more strategic level, we’re helping the company develop policies, practices and tools to support long-term commitment. Internally, it’s also really important that Anglo American understands what it’s doing and why.”

Anglo American’s head of sustainable development and energy, Samantha Hoe-Richardson, agrees: “FFI is working closely with us as we seek to better understand and address biodiversity-related risks. Biodiversity is such a complex and multifaceted area and FFI’s unique perspective on it is important to us.”

“good partnerships should set out to achieve something that can’t be

managed through a commercial transaction. we’re inclined to see them

as a way of helping solve problems.”jon samuel, anglO ameriCan’s internatiOnal sOCial and COmmunity develOpment manager

01 Marcelo Vilela Galo (left), sustainable development manager at Codemin and Barro Alto – which form part of Anglo American’s Nickel business – and CARE International UK chief executive Geoffrey Dennis during a visit to rural entrepreneurs in Brazil

02 A Fauna & Flora International (FFI) Biodiversity Action Plan team at Anglo American’s Mogalakwena platinum mine in South Africa

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As an example, FFI was asked to review the biodiversity performance standard that was included in the recently issued Anglo American Environment Way.

problem-solving in the CommunityAccording to Hugh Elliott, Anglo American’s international government relations manager, “We can be a multiplier for what an NGO like FFI or CARE wants to do. As an example, Anglo American controls around 100,000 hectares of land, and a priority for FFI is to help ensure that we manage land in such a way that it supports biodiversity.”

This could cover everything from the macro goal of improving forest conservation and resource use to creating a nature reserve as part of the rehabilitation of mining land in South Africa. A big challenge for any broad-based, non-commercial partnership, believes Elliott, is to be as specific as possible about deliverables.

This is evident when you look at some of the projects that have emerged from Anglo American’s now formalised Memorandum of Understanding (MoU)-based partnership with CARE International UK. In the past six years or so, Anglo American has made funding available for projects to develop technical colleges for rural entrepreneurs in Brazil, reduce HIV/AIDS in Lesotho and support emergency cholera and wider healthcare relief in Zimbabwe, to name a few.

“These days, we’re much more inclined to see our relationship with NGOs as a way of helping solve problems,” says Jon. “In the case of CARE, it wants to understand more about our business and the way it can impact positively on what it does.”

All parties agree that relationships such as those Anglo American has with FFI and CARE go much further than simply dishing out money.

“What’s working particularly well is the way we can learn from each other about community-engagement issues,” says Tim Bishop, who heads up private-sector engagement for CARE International UK. “This means trying to be more holistic in areas such as project funding, shared learning and social development. Among other things, we help Anglo American facilitate discussions to better understand the priorities of local communities.”

As one of the world’s three largest aid agencies, with a mission to fight poverty and injustice in more than 70 countries, CARE International is well qualified for the task. Like some of the most enduring marriages, the relationship between CARE and Anglo American began informally – in this case, around a single project at the beginning of 2004 – before slowly developing into the strategic partnership it is today. A key milestone came at the end of 2007, when the two parties signed a global Memorandum of Understanding, leading to annual

work plans and a raft of new projects in such countries as Brazil, Lesotho, Peru and Zimbabwe.

Unlike a conventional marriage, the CARE-Anglo American partnership hasn’t set out to be exclusive – Anglo American works with other NGOs on a variety of country-by-country projects – but it is a strategic first in its field, just like the partnership with FFI.

“From CARE’s point of view, it’s a priority to ensure we have an engagement strategy,” says Bishop. This applies not only to Anglo American, but also to other high-profile CARE business partners such as Barclays, Cadbury, Diageo and

Anglo American’s new partnership with International Alert will allow the mining company to enhance its focus on safety in the environments in which it operates.

Chief executive Cynthia Carroll and International Alert secretary-general Dan Smith (pictured) signed a Memorandum of Understanding in January 2011, marking the start of a three-year collaboration to promote and implement conflict-sensitive business practice.

“We take our responsibilities seriously – to prevent conflict and promote human rights – and have developed systematic processes to achieve this,” Carroll said. “However, we always have more to learn and we are delighted to be able to draw on the expertise of such an experienced NGO as International Alert.”

One of the world’s leading conflict prevention and resolution organisations, International Alert this year marks 25 years of working with governments, international institutions and the private sector in many of the world’s trouble spots to agree and implement policies and practices for sustainable peace.

“Our work across Africa and South America has shown us how difficult it can be to undertake mining activity without a negative impact on local communities,” said Smith. “We are encouraged by Anglo American’s commitment to learning more by working with us.”

on alert for a new partnership

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disruptive to a local economy if active steps are not taken to ensure that local communities are able to benefit from the economic opportunities. The challenge at Barro Alto has been to combine a massive investment in infrastructure with the right support for people in the form of education, training and, where appropriate, access to finance to support new business.

“Because of its scope, the Barro Alto project has led to a broadening of the relationship,” says Bishop.

A key focus, he says, has been the partnership’s support for youth enterprise, with considerable emphasis placed on technical training and entrepreneurship, along with help for small start-up businesses and access to micro-credit loans. Thanks to CARE’s support programmes, some 250 entrepreneurs have so far been trained in both rural and urban areas, while hundreds of schoolchildren have been given additional help with reading skills and supported to take part in cultural activities.

With communities like those around Barro Alto on board, there is now a big communication job to do, concludes Elliott. “What we are trying to show is that good practice is not damaging to the business, but beneficial. In other words, people need to understand that different issues in different parts of the world can suddenly turn into roadblocks for major projects if they are not handled properly. By the same token, they can open doors and drive progress – and that’s increasingly down to the right partnerships.”

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Starbucks. In each case, CARE assesses the public commitments of the business concerned – for example, Anglo American’s involvement in the Extractive Industry’s Transparency Initiative (EITI) – and, adds Bishop, “we have turned companies down who don’t meet the criteria”.

By the same token, he continues, CARE will learn from a business partner wherever it can. South Africa, for example, is a key market where Anglo American has the biggest free HIV workplace testing and treatment programme in the world and “there’s a lot we can learn from this as an NGO”.

support for sChools and new businessesFor its part, Anglo American didn’t exactly approach the CARE partnership from a standing start. Faced with some extremely challenging community issues in a variety of different arenas, the company developed its Socio-Economic Assessment Toolbox (SEAT), which was launched at the end of 2003 following pilot projects in South Africa, Brazil and Australia. What SEAT does is look at the company’s operations in the context of the host community, assessing key impacts before drawing up a plan designed to benefit all parties. The process, which is repeated every three years, has inevitably provided a strong basis for moving the CARE partnership forward.

While SEAT comes up with the impacts and an outline plan, there may then be an opportunity for CARE to provide further insight into what is feasible on the ground. This has been the case in Brazil’s rural Goiás state, where the new Barro Alto nickel operation is one of Anglo American’s four near-term strategic growth projects. Anglo American would be the first to admit that a project the size of Barro Alto – with mineral resources of 123 million tonnes at a grade of 1.5 per cent nickel – can be

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01 Mark Aken (background), Anglo American’s manager – sustainable development standards, and FFI staff inspect a snake found while reviewing Nickel’s Jacaré exploration site in Brazil. FFI staff have since trained Anglo American employees on how to catch and safely remove snakes from the site

02 Anglo American’s senior environmental specialist – biodiversity, Shelley Currin (left), Thermal Coal environmental co-ordinator Godfrey Magamola Thema (second right) and environmental officer Galaletsang Mosetlho (far right) during a visit to Thermal Coal’s New Denmark colliery with FFI’s director of business & diversity programme Pippa Howard (not in picture) and programme manager Helen Nyul

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case study community support at barro alto

Inevitably, with an operation the size of Barro Alto, there are challenges for both the company and for the local community as its population and economy grow rapidly. Meeting those challenges and working with host communities to build lasting economic prosperity has been a priority for the Barro Alto team.

A three-year programme has been put in place to support the town of Barro Alto and the surrounding area. The programme involves working with CARE Brazil and a number of other NGOs on a range of projects – everything from capacity building and support for local entrepreneurs to lessons on sexually transmitted diseases and female empowerment and helping local farmers increase milk and honey yields.

In fact, milk is the main product of this rural community, and in recent months there has been significant progress in improving both the quality and the quantity of the final product. Using technical consultants employed through CARE, the programme has addressed factors such as hygiene, milking rotas and overall farm management to achieve lasting improvements. “It has also been a question of meeting with farmers to discuss how they do things and what will work for them in terms of changes,” says Juliana Rehfeld, Anglo American’s head of sustainable development for the Nickel business unit.

The Barro Alto programme, which is more than two years old, is intentionally diverse in order to focus on the region’s various priorities. Anglo American has invested heavily in social and community

infrastructure, including schools, water and sanitation, and by building a technical training institute and providing a new hospital. This has been complemented by the company’s work with CARE to deliver refresher training for teachers, micro-credit loans, capacity building for the local municipality and support to hundreds of local entrepreneurs and schoolchildren.

Other NGOs are playing their part. Fauna & Flora International has completed a detailed survey of the area’s biodiversity, but there have also been important contributions from Agenda Publica – which is helping to focus on the United Nations Millennium Development Goals – and Repro Latina, which has been supporting efforts to increase awareness around HIV and other sexually transmitted diseases.

03 Liomar Silva Rocha Vidar, a community relations manager for Anglo American, learns first-hand about the Projecto via Lactea milk-farm scheme in Brazil

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42 | Optima | april 2011

West Springs mine under development in 1918. anglo american was founded by Sir ernest oppenheimer in 1917, initially to participate in the development of South africa’s Witwatersrand, the world’s biggest goldfield. The first interests to be acquired were all on the Witwatersrand’s east rand goldfield east of Johannesburg and included the brakpan, Daggafontein, Springs and West Springs gold mines.

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32325 AA_Nelson Silva_UK_267x210 Optima Mag

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EDUCATION.

THIS IS BECAUSE WE BELIEVE THAT

BETTER EDUCATION NOT ONLY

BENEFITS US, BUT CAN ALSO IMPROVE

THE LIVES AND ECONOMIES OF THE

COMMUNITIES WHERE WE WORK.

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NELSON SILVALos Bronces, Chile

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printed by the colourhouse. the paper is produced using a 100% chlorine-free (ecF) bleaching process and contains material sourced from responsibly managed and

sustainable forests, together with recycled fibre, certified in accordance with the Forest Stewardship council.

32325 AA_Nelson Silva_UK_267x210 Optima Mag

Client: Anglo American

Description: Press – Nelson Silva – UK

Artwork Size: 297x210mm Trim +3mm Bleed

Publication: Optima Mag

Traffic: Matt Hopkins

Artworker: Proof: DATE:DL 1 09.03.11

Page 1FONTS: DIN

Colour correction

V1Operator

File Formatclient/campaign

000/000

TA G @ O G I LV Y

j o b #000000

VERY IMPORTANT FOR REPRO: Please check A/W files for correct trapping. This is your responsibility.

LAST YEAR, OF THE 82.5 MILLION

DOLLARS WE SPENT ON SOCIAL

PROJECTS AROUND THE GLOBE,

NEARLY ONE-FIFTH WENT INTO

EDUCATION.

THIS IS BECAUSE WE BELIEVE THAT

BETTER EDUCATION NOT ONLY

BENEFITS US, BUT CAN ALSO IMPROVE

THE LIVES AND ECONOMIES OF THE

COMMUNITIES WHERE WE WORK.

A SMART MINING COMPANY KNOWS

ITS FUTURE IS ONLY AS BRIGHT AS

THE LOCAL TALENT IT CAN TAP INTO.

FIND OUT MORE, AT

GETTHEFULLSTORY.COM

NELSON SILVALos Bronces, Chile

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Cover:Sea ice in the Arctic, where Anglo American’s exploration unit is seeking new opportunities. See article on page 20.photo by Stocktrek ImAgeS

ISBN 00304050

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printed by the colourhouse. the paper is produced using a 100% chlorine-free (ecF) bleaching process and contains material sourced from responsibly managed and sustainable forests, together with recycled fibre, certified in accordance with the Forest Stewardship council.

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