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25 July 2014
   
 
 
 
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Good morning ladies and gentlemen – it is a great pleasure to be here with you at Indaba 2013.

Let me start by thanking Minister Shabangu - for her speech and for the welcome she gave to all of us.

Susan Shabangu has always spoken from the heart, as someone committed to the development of her country.

As always, it is both a pleasure and an honour to be sharing the platform with her.

And thank you also to Doctor Marc Faber, for his extremely interesting and thought-provoking keynote address.

Pause

Indaba has always been one of the highlights of my calendar and I am particularly pleased to be here with you this year, having unavoidably missed last year’s event. 

Those with a good memory may recall that my absence last year was due to an unfortunate accident involving a horse.

Pause

Ladies and gentlemen – I want to reassure you.

Pause

I’m now firmly back in the saddle.

Pause

And I may be handing over the reins at Anglo American.

Pause

But I have no intention of riding off into the sunset any time soon.

Pause

A lot has happened since last year’s Indaba.

The past twelve months have been momentous - both for our industry and for South Africa.

Globally, the mining sector has been under severe economic pressure, with depressed commodity prices reflecting uncertainty about short-term demand.

And here in South Africa we have experienced industrial strife and the human tragedy of Marikana.

Pause

We are at a pivotal moment.

And at that moment I want to share with you some thoughts on the path forward.

I speak to you as someone who is passionate.

Passionate about Anglo American.

Passionate about our industry.

And passionate about South Africa.

Pause

And I speak for a company that has this great country running through every strand of its DNA.

Anglo American was born in South Africa and it remains committed heart and soul to South Africa.

It is because I care – and because Anglo American cares – so strongly about the future – that I am here to talk to you today.

I will be saying some things that you may have heard me say before.

But I make no apology for that.

The truth remains the truth.

And we each have a continuing responsibility to tell it like it is.

Pause

Let me talk first about South Africa itself.

This is a country that has achieved miracles.

And those miracles were made possible by the foundations put in place when democracy was born.

The bedrock of a constitution that enshrines the rights of all South Africa’s citizens.

A free and fair electoral system.

An independent judiciary with a duty to uphold the rule of law.

A free press with the power to challenge abuse.

An economy founded on free enterprise.

And an inclusive society - with the courage and grace to heal the scars of the past.

Those foundations remain critical to the future, as South Africa addresses the huge challenges that remain:

The scourge of poverty.

The waste of unemployment.

And the injustice of inequality.

 

Mining has a vital role to play in helping South Africa to tackle those challenges.

We all know that mining is critical to South Africa’s prosperity.

To quote just a few key facts:

In 2011, mining directly contributed 9.2% of South Africa’s GDP and helped to generate a total of 18.7% of GDP.

In terms of jobs, the mining sector directly employed over five hundred thousand people and was indirectly responsible for a further eight hundred and forty thousand jobs.

So, based on the typical dependency ratio, that means that around thirteen and a half million people are dependent on mining generated jobs.  

And the money the mining industry spends overwhelmingly benefits South Africa.

In 2011, out of a total South African mining industry expenditure of four hundred and thirty seven billion Rand, no less than eighty nine per cent was spent in South Africa itself.

Through wages, taxes, purchases and investments – this is an industry that makes a vital contribution.

Since 1999, Anglo American alone has invested over one hundred and eighty eight billion Rand in South Africa.

Mining is at the heart of the South African economy.

It has a critical role to play in supporting the objectives of the National Development Plan – in relation to jobs, education, health, infrastructure and the environment.

And South Africa has a world-leading mineral endowment – with an estimated two point five trillion dollars in mineral resources.

Pause

How can we ensure that the potential of the mining industry is realised – for the benefit of all the mining industry’s stakeholders?

As I have said before, I firmly believe that there are four essential truths that must be recognised if we are to make progress.

Let me take just a few moments to talk about them again.

Pause

The first truth is that there is no future for any society without law and order.

Public order is the bedrock without which civilisation collapses.

Last year in South Africa we saw violence and unrest - across the mining industry and also in other sectors.

Violence and criminality are always unacceptable and they must never be tolerated by society.

We must never go back to those days again.

Pause

The second truth we have all learned through experience is that anarchy in the workplace ultimately benefits no one.

It is in the interests of all stakeholders – employers, employees and trade unions – for there to be orderly and fair processes to regulate union recognition and collective bargaining.

It is the right of employees to decide who they want to represent them and to be able to make a free and informed choice.

And collective agreements freely negotiated should be observed – not torn up.

The rule of law is as important in the workplace as it is in every other aspect of society.

The third truth I want to talk about is that none of us can defy economic reality.

Modern businesses operate in global markets.  The laws of supply and demand determine what they can afford. 

Businesses that cannot generate adequate returns ultimately collapse and die.

Companies that want a future have to remain economically competitive.

 

At times that requires tough choices.

And tough choices can be unpopular.

The easy course for the short term is often the wrong course for the long term.

And the fundamental responsibility of management is to make the decisions that are right for the long term. 

A sustainable business can meet the needs of its stakeholders.

An unsustainable business will ultimately serve no one.

Pause

The need to be competitive is not confined to companies – it is also relevant to countries.

Which takes me on to my fourth and final truth.

In the modern world, no country is an economic island.

Like any other nation, South Africa will only succeed if it fosters an environment that is conducive to business and attractive to international investors.

Creating that environment starts with the need for stable labour relations and the maintenance of law and order.

But these are not the only requirements.

Regulatory stability is also key to competitiveness.

And nowhere is this truer than in the mining sector.

Mining is an industry with long term horizons.

When making investments, mining companies have to think decades ahead.

They need certainty as to the rules under which they will operate.

They will not invest if there is a fear of onerous and unpredictable regulatory change.

And nor will they invest if there is a threat that existing regulatory requirements will be enforced in an arbitrary and unequal manner.  

Pause

Law and order.

Industrial Stability.

Economic viability.

Regulatory stability.

They are all essential if we are to make progress.

But we know that they represent just the beginning.

We all have a continuing responsibility to contribute to South Africa’s social development and transformation.

But the power we have collectively is far greater than the impact any of us can make individually.

In my very first Indaba speech in 2008, I talked about the need for partnership.

It is a message that remains true today.

We will only make the right progress if we work together, as partners for social development.

Within the mining industry, the role played by the Chamber of Mines is critical.

And mining companies need to work in partnership with their employees and trade unions, to move on from conflict and to build positive relationships for the future.

Partnership between business and government is also critical, particularly in ensuring that development objectives and initiatives are aligned.

Pause

Partnership is essential.

But it isn’t easy.

Partnership is about dialogue – not monologue.

It requires listening as well as talking.

And above all it requires understanding and acceptance.

Companies need to understand that in a vibrant democracy there will always be a lively political debate, in which not all the views expressed will be to the liking of business.

In return, governments and political parties need to accept that business has an important role to play and a legitimate voice that deserves to be heard.

Business is a partner, not a pariah.

Pause

Partners will not always agree with each other.

But we are all grown-ups.

We need to respect each other and to resolve our differences in a way that reflects our shared objectives.

Pause

A defining context for the relationship between Anglo American and its partners in the months ahead will clearly be the consultation process in relation to our Platinum restructuring proposals.

A conference platform is not the place to conduct that consultation.

But I would like to cover just a few points, to make the position clear in relation to a topic that has understandably attracted so much coverage.

The critical starting point is that Boards of Anglo American and Anglo American Platinum are totally committed to ensuring a sustainable platinum business for the future – for the benefit of all stakeholders.

This is a business in which we plan to invest one hundred billion Rand over the next decade.

But to do that we must make the changes necessary to make the business sustainable.

We need to recognise and tackle the enormous economic challenges the platinum sector faces.

This is an industry in crisis.

We have seen several years in which levels of demand for platinum have fallen significantly short of the industry’s expectations – in part because of depressed world economies and the consequential downturn in the automotive sector.

And the near term future shows no sign of respite.

At the same time, costs have continued to rise relentlessly – labour costs, energy costs and other input costs.

As a result, margins have been squeezed dramatically and the sector has not been earning adequate returns.

This is an unsustainable position.

In the case of Anglo American Platinum, we have to restructure the business to make it viable for the future and - in doing so – to protect over forty five thousand jobs.

Pause

But the question of how to restructure is rightly one that requires consultation with all our stakeholders.

As you know, we have made our proposals public – as we are required to do as a listed company.

The proposals include what I believe to be the most comprehensive and imaginative Social Plan created by any company in any sector in South Africa.

We are targeting to create at least as many jobs as the fourteen thousand that may be affected by the restructuring.

And that is on top of a target to redeploy nine thousand of the employees who may be affected.

And our Plan is not just words.

We are totally serious in our intent to create jobs.

What’s more – we know how to do it – as we have proved through Anglo American Zimele.

And we are totally committed to equipping our employees with the skills they need for the future.

We will provide high quality training, as soon as it is needed, to enable employees to benefit from the redeployment and new job opportunities we will create.

Through initiatives focused on housing, infrastructure and the creation of small businesses, we will bring benefit both to Rustenburg and to our labour sending areas.

These will be real and sustainable jobs.

Pause

Restructuring is always painful and difficult.

And none of us has a monopoly on wisdom and good ideas.

We value the opportunity to engage with our partners.

Over the next sixty days we will work collaboratively with the Department of Mineral Resources and the trade unions to explore the way forward.

And after that the formal Section 189 consultation will resume for the following sixty days.

In addition, we will continue to be active participants in the MIGDETT discussions about the challenges facing the platinum sector as a whole.

These are all important processes, which we are approaching with good faith and with serious intent.

We are determined both to create a truly sustainable Anglo American Platinum business for the future and to do so in a way that is beneficial to all our stakeholders.

Pause

The way in which we are approaching the restructuring of Anglo American Platinum reflects a broader philosophy about the role of the mining sector in society.

At the inaugural Mining Lekgotla last June, I talked about ten commitments that I believe mining companies should make to support the development of South Africa.

Those ten commitments – which I called a Pledge for South Africa – are even more relevant today, as they link so closely to the objectives articulated in the National Development Plan.

Let me briefly outline them again.

First, a commitment to re-double our efforts to achieve zero harm in the mining industry.

We cannot rest until we have a mining industry in which everyone goes home safe to their family at the end of the working day.

Second, a commitment to promote health in the workplace and in the broader community.

The mining industry can be a key partner in the South African Government’s efforts to ensure good healthcare for all South Africans.

Third, a clear commitment to making mining a positive force in the environment.

From water purification to clean coal to fuel cells – mining can help South Africa to be a world leader in the development and application of environmental technology.

Fourth, a renewed commitment to employment equity in our industry.

It is time for the mining sector to deliver what it has promised and to move beyond compliance to true transformation.

Fifth, a commitment to support education and skills development in the broader community.

The mining industry has a crucial role to play in supporting the development of the skills society needs.

Sixth, a commitment to use the power of mining to create jobs.

This commitment stretches beyond mining itself.

Beneficiation has an important role to play, provided it is based on a sound business case and concentrates on sectors in which South Africa can have a competitive advantage.

And mining companies also have a critical role to play in job creation outside the sectors related to mining and minerals.

Seventh, a commitment to complete the transformation of the ownership of our industry.

We all need to live up to the ownership commitments we have made – with honesty and transparency.

And Anglo American Platinum is going beyond compliance. Through Project Lefa La Rona – a three point five billion Rand commitment, benefiting over one million people - we are further extending the benefits of ownership not just to our host communities, but also to our key labour-sending areas.

Eighth, a commitment to improve housing for our employees.

Mining companies must continue to work with determination to achieve good housing conditions for all their employees.

And as an industry we need to work with all our stakeholders to discuss openly how the migrant labour system can be changed to create more sustainable lives and communities.  

Ninth, a commitment to use local procurement to support South African businesses. 

Local procurement makes good business sense, both for the mining industry and for our host communities.

A one per cent increase in local procurement would be equivalent in amount to a doubling in community social investment.

Tenth, and finally, a commitment to be transparent and to hold each other to account.

Driving progress is not just the role of government. 

It is time for mining companies to hold each other to account. 

We have a responsibility to hold the mirror up to each other – to drive each other to make the standards of the best, the standards of the entire mining industry.

Pause

Ladies and gentlemen – as you know, this is the last occasion on which I will be speaking to you at Indaba as the Chief Executive of Anglo American.

I will soon be handing the baton to my good friend Mark Cutifani – someone who I know shares the values and the beliefs I have talked about today.

I am enormously proud of everything that the Anglo American team has achieved during my six years as Chief Executive. 

Mark – this is a great company – and you will have my very best wishes as you lead it forward.

For my own part - wherever the future takes me – I will always remain a passionate ambassador:

For Anglo American.

For the mining industry.

And for South Africa itself.

Thank you very much.

Edited by: Creamer Media Reporter
 
 
 
 
 
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