Operating safely
sustainably and responsibly

Operating safely, sustainably and responsibly is embedded in everything we do.

Realising a step change in our performance

operating – safely, sustainably and responsibly

Our Thermal Coal business is advocating a sustainable alternative to traditional building products by using the gypsum waste produced by its Emalahleni Water Reclamation Plant. In 2010, it completed a 66-unit employee housing project making use of gypsum as the primary building material.

The plant was established to eliminate the challenges posed by rising underground mine water and desalinates 25 million litres of polluted water from five mines every day. This is turned into safe drinking water that is fed into the critically water-stressed area’s municipal reservoirs, meeting 20% of the local authority’s daily requirements.

The unit operates at a 99.5% recovery rate and the ultimate goal is for it to be a zero waste facility. This will be achieved through the complete use of its solid by-product – around 200 tonnes of raw gypsum a day, eliminating an environmental liability as well as the costs associated with the storage and removal of waste.

Two research and development projects have investigated various uses for the by-product, with one being its utilisation in the building of affordable homes.

Thermal Coal tested the technology as part of a housing project involving the construction of 66 three-bedroom units in the Kwa Mthunzi Vilakazi Village, west of Emalahleni. The houses were built by local contractors and create long term home ownership opportunities for employees moving away from mine villages into sustainable areas.

Gypsum has been used as a raw material for the production of bricks using a process identical to the standard cement brick-making method. Fifty per cent of the sand used for traditional bricks has been replaced with raw gypsum and the same procedure was applied for the plastering of the units. Initial tests reveal that these bricks perform just as well as their cement counterparts and meet or exceed strength, shrinkage, water penetration and durability requirements.

The project supports the South African Mining Charter’s drive to promote home ownership among employees, and the project may be expanded to 300 residential stands in the Kwa Mthunzi Village.

Our performance

Anglo American is committed to operating safely, sustainably and responsibly and we believe that real sustainable progress is best achieved by engaging in productive partnerships.

Sustainable development (SD) touches on every aspect of our business and is both a critical enabler in terms of our licence to operate and a key value driver. Our approach is based on a belief that exceptional operational value can be realised by embedding sustainable development in everything that we do – from our systems, risk processes and procedures, to the way in which we consult and work with our stakeholders.

Strong governance and risk management processes ensure that we deliver on our commitments. A dedicated global Safety and Sustainable Development (S&SD) risk and assurance team provides the Executive Committee and S&SD Committee of the Board with expert opinion on the adequacy of risk-control measures to ensure that current and emerging risks are effectively controlled. This independent perspective, coupled with subject matter expertise (internal and external) enables us to identify critical safety, health and environmental improvement opportunities, thereby focusing and accelerating improvement efforts.

To help identify those SD activities and associated levers that will increase the competitive strength of our mines, both in the short and longer term, we have identified and integrated key S&SD value drivers into our operations and project review process. We are also developing a framework to assess the financial value of SD initiatives and the extent to which these can increase the value of greenfield projects. This will support decision-making at the planning stages of projects, thereby enhancing future performance and maximising value.

Safety

Mining is a hazardous industry and our most urgent priority is to prevent any fatal injury occurring. The safety of our employees, therefore, will remain our top priority until we achieve and maintain zero harm.

Performance

We deeply regret that 14(1) employees and contractors lost their lives while working at Anglo American in 2010. We take the view that any loss of life is unacceptable and we believe that all injuries are preventable. We therefore continue to be unrelenting in our efforts to keep our people safe. However, we are encouraged by the significant progress in our safety performance over recent years. Since 2006, the total number of workplace deaths has declined by 68%, and 30% year on year.

Our total number of lost-time injuries, the lost-time injury frequency rate (LTIFR) and the severity of injuries also continue to decline. At year end 2010, the Group LTIFR of 0.57 represented a 51% decrease since 2006 and bettered our target of 0.64 for the year. These figures represent significant improvements across most business units, particularly in the Platinum business, which has shown remarkable progress given the high risk nature of deep-level hard-rock mining. Excluding Platinum, our LTIFR stood at 0.22. Notably, too, Anglo American’s total recordable case frequency rate of 1.44 (2009: 1.81) has also reduced steadily over the years.

Managing risk

The Group safety strategy, launched towards the end of 2008, remains our core framework and roadmap for safety management throughout the Group. It is based upon 10 key elements which we believe are the fundamentals of effective risk management – the key to improving safety performance.

During 2010, a mandatory safety, health and environmental risk-management process and procedure was implemented throughout the Group to ensure that everyone, permanent employee and contractor alike, follows a consistent and rigorous approach.

A suite of Major Risk Standards and Guidelines was also developed in recognition that we needed to take a more proactive approach to the management of those risks that may have low probability but which could potentially result in major loss of life. Implementation of these standards will commence in 2011.

These build upon the Anglo Fatal Risk Standards (AFRS), designed to address high level hazards that are common throughout most of the Group. By year end, we had achieved an average AFRS compliance of 86% against a target of 100%. While we believe that the most critical hazards have been addressed sufficiently, further work is required to reach full compliance; action plans have been developed to address any gaps.

Enhancing risk-management capability

The award-winning Anglo American Safety, Health and Environment Risk Management Programme, which we have now made available across the mining industry, continues to be one of the key ways in which we equip our people with the essential knowledge and skills they need to ensure we apply a common, robust approach to managing risk. More than 5,000 Anglo American executives, managers and front-line employees and other stakeholders have now been trained in the programme, which has been revised to include our new safety, health and environment risk management process. This is now being rolled out to target supervisors and front-line employees.

Learning from incidents

A crucial step in preventing injuries is to understand their immediate and fundamental causes. A standardised suite of training programmes and an associated set of ‘learning from incidents’ (LFI) procedures has been developed to ensure that we investigate incidents thoroughly and enhance our learning as a result. This includes guidance on conducting thorough, consistent incident investigations in order to establish their root causes and to identify and put in place preventative measures and additional controls to improve the management of current and potential risks.

Safety assurance

A total of 47 audits were conducted by the Group Safety and Sustainable Development Risk and Assurance team in 2010. Focusing on our key risk areas, including falls of ground, contractor management, noise and dust, and isolation of energy, this risk based assurance programme is a key element in reviewing the quality and effectiveness of the controls we have in place for managing these risks.

Audit reports identifying elements of best practice and areas for improvement have been shared with site and business unit leadership teams and action plans subsequently developed to help focus and accelerate improvement efforts.

  • (1) A further two fatal incidents are under investigaton.
Lost time injury frequency rate and fatal injury frequency rate

Water

Around 72% of our operations are located in water-stressed catchments where we expect increasing competition for water resources. Resultant risks include supply shortages, cost escalations and growing legislative complexities.

A strategy for water stewardship

At the heart of the new Anglo American water strategy and policy, approved in 2010, is our aim to demonstrate leadership within our water catchments. We believe that this will unlock value in our current operations, safeguard future projects and bring benefit to both the environment and the communities surrounding our operations. The strategy is a three-stage journey phased over 10 years, moving from a strong initial focus on internal performance improvement, to leadership beyond operational borders. The strategy is guided by four focus areas: water efficiency, water security, water risk and liability and stakeholder engagement.

Performance

During 2010, Group operations consumed 115 million m3 of water for primary activities. This 6.5% like-for-like decrease on 2009 consumption levels is due to a 11% saving in water used for primary activities at the Platinum business, and revised calculation methods at the Los Bronces copper project in Chile. Despite acquisitions and expansions, and taking into account disposals, a relatively stable level of demand has been maintained since 2006. We used a further 10.6 million m3 of water for secondary activities such as employee villages, sports grounds and facilities linked to company owned infrastructure. These areas of activity will be the target of greater reduction efforts as we strive to decrease our total water footprint in the future.

A focus on water efficiency

Operations employ a combination of technology, behaviour and process-change initiatives in order to save water. A new water efficiency target setting tool (WETT) was piloted in 2010 and will set new site level targets and ultimately a Group water reduction target.

Apart from using less water, many of our operations are also experimenting in the use of different qualities or sources of water.

For example, Platinum is targeting zero potable water consumption for mining and process applications (excluding domestic water demand). It has already replaced 5,000 Ml, or 22% of drinking water, since 2008, by embracing the principles of water conservation and demand management, with a strong focus on the use of treated sewage water for use in mining and processes, with secondary water from local municipal systems. This reduces our demand for water that can be used for human consumption.

Our Group as a whole recycles a high proportion of water. In 2010, this amounted to roughly double our total water consumption.

Operational water management

Over the past two years, all of our operations have developed site-level Water Action Plans (WAPs), through which the requirements of The Anglo American Environment Way (AEW) and its accompanying Water Performance Standard are implemented. The AEW sets out the minimum requirements for water management throughout the Group and applies to all stages of the mining cycle. It reinforces the water hierarchy of control (avoid, minimise, re-use and recycle), legal compliance and the fundamental importance of continuous stakeholder engagement.

WAPs are being augmented by elements of the new water strategy that are most applicable to individual operations, not least being the importance of proactive participation by each operation in its own water basin.

Water consumption

Around 72% of our operations around the world are located in water-stressed catchments

c.72%

Climate change and energy

Our goal is to realise the maximum economically sustainable energy and carbon savings in our business and in the use of our products. To achieve this, we developed a new climate change strategy and policy, which will be implemented in three phases over the next 10 years. The strategy focuses on minimising our exposure to, and the cost of compliance with, emerging carbon policies; maximising opportunities in our product markets; and building adaptation measures against impacts of regional climate change.

Energy consumption

During 2010, we consumed 100.7 million gigajoules (GJ) of energy (2009: 102.1 million GJ(1); 99.9 excluding businesses since divested). This 0.8 million GJ like-for-like energy consumption rise stems from small increases at most business units, excluding the coal businesses as well as the Other Mining and Industrial group of businesses, whose contribution decreased due to divestments in the second half of 2010.

GHG emissions

During 2010, our Group emitted 20 million tonnes (Mt) of carbon dioxide equivalents (CO2e), in comparison with 19 Mt in 2009 (18.5 excluding businesses since divested). This rise is due to an increase in process emissions in the Copper, Nickel, and Thermal Coal businesses, as well as higher methane emissions at Metallurgical Coal mines.

Becoming more efficient

Our primary response to climate change continues to focus on using energy more efficiently, particularly in implementing innovative technology solutions around the optimisation of machinery used in the mining industry. During 2010, 10 sites piloted our new approach to energy and carbon-performance management, which lays particular emphasis on identification of efficiency opportunities along with requirements for measurement, monitoring, reporting, target-setting and verification. The new approach will be implemented throughout the business by the end of 2011.

Tackling coal mine methane gas

Methane is found in high concentrations at many of our metallurgical coal mines in Australia. While methane is a highly potent greenhouse gas (GHG), such high concentrations make large scale methane- capture and -use initiatives, such as at the (non-Anglo American owned) Moranbah North and Capcoal power stations, viable. Each year, these power stations prevent around two million tonnes of CO2e emissions from entering the atmosphere.

In South Africa, Thermal Coal’s New Denmark mine has commissioned two mobile flare units to reduce its methane emissions from ventilation boreholes. The use of methane-drainage flaring is expected to reduce the mine’s greenhouse gas emissions by 15%. Owing to the inconsistent quantity and quality of the vented methane, it is not feasible for the mine to capture and use it as a source of energy at this stage. We are also researching other ways to capture and use the dilute methane that is released from underground mine ventilation shafts. The research into catalysed ventilation air methane capture is being undertaken together with Johnson Matthey.

Using alternative sources of energy

Collectively, in 2010 our Copper, Nickel and Iron Ore Brazil businesses consumed 34.5 million GJ of energy largely derived from renewable sources and 74,000 tonnes of biofuels.

Our South African and Australian operations, which run on electricity grids that are heavily coal-dependent, have greater difficulty in finding renewable sources of energy. Our biggest alternative energy projects are the methane-fired power stations at the Moranbah North and Capcoal mines, which generate a combined 77MW of electricity. In South Africa, we have begun to install solar water heaters in our mine housing, and are investigating additional low carbon energy options.

Carbon neutral mining of the future

The Anglo American Mine 2030 project was initiated to develop and deploy technologies that will enable us to manage cost effective, zero harm and resource-efficient mines in the future. We have, as part of this process, incorporated potential energy and carbon technologies into a timeline that will help us to run efficient, carbon-neutral mines in 20 years time. These range from near term solutions for spontaneous combustion to eventually being able to capture and store carbon in an effective and financially viable way.

Reducing product emissions

Although one of our core commodities, platinum, along with its sister platinum group metals (PGMs), helps to reduce GHGs through the use of these metals in environmental technologies, downstream coal-related emissions are responsible for the greatest proportion of our Scope 3 carbon footprint(2). Viable carbon sequestration technologies are not currently available, which is why we participate in a number of cutting-edge clean coal and carbon sequestration research initiatives. These include the US based FutureGen Industrial Alliance, the Otway CO2 storage project in Australia and the South African Centre for Carbon Capture and Storage. More directly, we hold a 20% interest in MBD Energy, which has commenced applied research into an algal synthesiser process that involves entrapment of CO2 from power station flue gases (see case study on page 29).

Adaptation

In 2008, Anglo American commissioned Imperial College, London, to conduct a high level three year climate change impact-assessment study for selected operations. This has since been followed by a report issued in 2010 on the expected impacts of climate change on the Olifants River catchment (shared between the Gauteng, Mpumalanga, and the Limpopo Provinces in South Africa). A similar study on the area immediately surrounding the Sishen iron ore mine in South Africa’s Northern Cape is currently under way. In addition, the UK Met Office has completed a climate model study for our Minas-Rio project in Brazil on future water availability and potential sea level changes.

The new climate change strategy requires that all operations and projects complete climate change vulnerability assessments, after which all high risk sites will undergo detailed climate change impact-assessments.

  • (1) This figure differs from the 105 million GJ reported in 2009 because of amendments in calculation methodologies.
  • (2) Scope 3 carbon emissions are indirect emissions which are a consequence of our business activities, but occur from sources not owned or controlled by us – such as the combustion of coal.
Energy consumption
Greenhouse gas emissions

Electricity generated by the methane fired power stations at the Moranbah north and capcoal mines

77MW

Number of sites piloting our new approach to energy and carbon-performance management

10

Climate Change Case Study – Continuing the Research

MBD Energy, in which we have a 20% shareholding, offers technology with the potential to provide large-scale commercial and sustainable solutions to three of the world’s most critical issues. These include the availability, security and affordability of bio-oil; the production of nutritious meal for use in livestock and aquaculture; and, of particular importance to us, carbon sequestration.

MBD’s hybrid CO2-capture and algal synthesiser process involves the injection of captured flue gases into a wastewater growth medium housed in plastic membranes. This allows for the rapid growth of an oil-rich algal biomass that may be harvested continuously to produce nutritious animal feed and oil suited to the production of a variety of bio-resins, plastics and transport fuels, including large quantities of bio-diesel.

The technology is modular and economically scaleable, and has applications across numerous industries, including the generation of electrical power.

MBD is based at James Cook University (JCU) in Queensland, Australia, and is one of the largest dedicated algae research and development establishments of its kind anywhere in the world. It has an exclusive relationship with JCU, a world leader in algae research and development.

The company has received funding from the Australian Federal Government and Queensland State Government, and has signed formal agreements to deploy its technology with three major CO2 emitters – the Tarong, Loy Yang and Eraring power stations – which, combined, account for 23% of Australia’s installed coal-fired power generating capacity.

Social and community

Overview

In 2010, we made good progress towards our objective of being a partner of choice for host governments and communities. We recognise that this objective requires the company’s operations to adhere to the highest social performance standards in our industry. Anglo American’s definition of social performance is broad and includes, inter alia: respecting and promoting human rights; supporting sustainable community development; proactive stakeholder engagement; and minimising or eliminating negative social impacts from our operations.

Our approach is driven by Anglo American’s corporate values, our Business Principles and the Anglo American Social Way, the company’s social performance standards. These standards have led to the development of a series of inter-linked initiatives, all of which are aimed at achieving the partner of choice objective:

  • Training and educating community relations managers and other executives whose decisions have a significant impact on our social performance
  • Producing guidance materials, such as our acclaimed Socio-Economic Assessment Toolbox, for social practitioners and other managers to enable them to understand and operationalise social performance objectives
  • A series of specific social performance initiatives, including enterprise development programmes, social investment, HIV/AIDS counselling, testing and treatment and employee housing
  • Ensuring that our core businesses, and in particular procurement and recruitment, are managed in a way that both manages potential risks and identifies opportunities, especially with respect to community development
  • Engaging with key stakeholders on a proactive basis, including communities, governments, academics and NGOs, to ensure that Anglo American is aware of emerging issues, trends and best practice and able to respond appropriately
  • A clear performance monitoring framework, including appraisal of mine performance against the Anglo American Social Way requirements, recording the outputs of social investments in a consistent manner and recording and reporting on stakeholders and complaints and grievances

Performance monitoring

During 2010 all Anglo American operations implemented Social and Community Improvement Plans to address any non-compliances against the Social Way standards, which were launched in 2009. These plans resulted in a significant increase in compliance: 2% significant gaps to close (down from 10% in 2009); 13% minor gaps to close (21% in 2009); 39% fully compliant (42% in 2009); 33% good practice (17% in 2009; and 14% best practice (up from 10% in 2009). During 2011 the objective is to eliminate remaining non-compliances.

In 2010, we launched a comprehensive suite of performance indicators to capture the results of our social investment programmes. Fourteen categories of social investment were identified by reviewing the range of social investment projects supported across the Group. The categories include health, education, community development, environment, disaster response and matching employee fundraising. For these categories, 32 output key performance indicators (KPIs) have been developed which capture the benefits of projects. Sample indicators include permanent jobs created, partner staff trained, and numbers of beneficiaries of our health, education, community development and other projects.

During the year all business units and company sponsored foundations collated detailed input and output data and the first results will be presented in our 2010 Report to Society. In future, output data will be collected as part of project approval processes. Such data will allow us to undertake detailed assessments of the value for money of different types of social investment projects, as well as review the effectiveness of different delivery methods, partners or even operations.

In 2010, we launched a Group-wide stakeholder complaints and grievance procedure. The new approach ensures that all our operations will be able to record, categorise, notify and manage stakeholder complaints to a consistently high standard. The system has been designed to address a key element of the recommendations of Professor John Ruggie, the United Nations Secretary General’s Special Representative on Business and Human Rights.

The process for assessing and reporting compliance against the Anglo American Social Way, together with the social investment output KPIs and the new stakeholder complaints and grievance procedure, amount to a significant investment in our ability to monitor, manage and report on our social performance in a rigorous and consistent manner.

Social programmes

Good progress has also been made on a number of our core social programmes. The number of jobs created and sustained through our enterprise development programmes rose to 17,200 at the end of 2010, up from 12,982 in 2009.

Progress was also made towards our objective of being able to offer free anti-retroviral treatment to the dependants of employees with AIDS. In particular, a detailed survey was undertaken to identify the specific home locations of migrant labourers in our South African business. We also initiated a partnership with the Eastern Cape provincial department of health to devise models to strengthen weak rural health systems. Ensuring good access to primary care is an essential element of any HIV/AIDS programme.

Social investment expenditures increased to $111 million (up from $82.5 million in 2009). This was partly driven by our $10 million donation to the relief effort in Chile after the devastating earthquake of February 2010. Our response to the earthquake included a focused practical effort to assist those affected. This included the provision of heavy earthmoving equipment during the rescue and clear-up phase, and the construction of six fully equipped replacement schools within six weeks of the disaster. Because of our efforts, which were greatly appreciated by both affected communities and the government, more than 4,500 students were able to continue their education with no significant interruption.

External recognition

In 2010 we were delighted to become the first mining company to be awarded the CommunityMark, which is given in recognition of excellence in community development activities. The accolade is awarded by Business in the Community, the UK’s leading organisation for responsible business. We also achieved Platinum status in Business in the Community’s annual Corporate Responsibility Index, the UK’s leading benchmark of responsible business performance. Platinum is the highest level in the index and 2010 was the first time Anglo American achieved this level.

In 2010, we also became the first mining company to have a commitment accepted under the Business Call to Action (BCtA) in support of the Millennium Development Goals. The BCtA is run by the United Nations Development Programme and has the support of several national governments. Commitments are only accepted if they are innovative, scaleable and replicable. Anglo American’s commitment was to expand our enterprise development services worldwide, with a new target of creating 15,000 additional jobs through our small business creation programmes by 2015.

2010 global social investment expenditure
2010 social investment expennditure by region

We are not only providing badly needed housing, we are also delivering wider services to the community and creating local jobs. John Quinn
Project manager in charge of building houses from gypsum

$25m

litres of polluted water desalinated every day at eMalahleni Water Reclamation plant

66

Sixty-six three bedroom houses constructed using gypsum waste

$10m

Donation to earthquake relief effort in Chile

$111m

Social investment expenditure

17,200

Number of jobs created and sustained through our enterprise development programme

68%

decline in workplace deaths since 2006

5,152

the number of people trained in our safety risk management programme