Optima
Cover:
Sea ice in the Arctic, where
Anglo American’s exploration
unit is seeking new opportunities.
See article on page 20.
APRIL 2011
Optima
photo by Stocktrek Images
ISBN 00304050
on top of
the world
keeping cool with anglo american’s
arctic exploration unit
Volume 57 Number One april 2011
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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?
Welcome
Contents
Jim Bulten, Paul Gaw and
Justin Pokarier during a routine
safety inspection at Thermal
Coal’s Callide mine, Australia,
June 2010
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.
Cynthia Carroll
Chief executive, Anglo American
Editor-in-chief: Norman Barber
Anglo American plc
20 Carlton House Terrace
London SW1Y 5AN
England
Telephone: +44 (0)20 7968 8888
E-mail: [email protected]
www.angloamerican.com
04 NEWS digest
06 healthcare
14 resource curse
Reports from Anglo
American and around the
industry, including updates
on Minas-Rio and Barro Alto
A look at Anglo American’s
programmes to support
employees with HIV/AIDS
and tuberculosis
New research suggests
that countries rich in
resources may be more
blessed than first thought
20 arctic potential
26 africa’s promise
32 book review
Exploring the harsh, frozen
north to unlock some
of the world’s greatest
mineral deposits
Reflecting on how Africa’s
governments can reduce
poverty and help the
continent fulfil its potential
Greg Mills’ new book
argues that Africa’s future
can be “utterly different
from the failed past”
Optima is produced by Redhouse Lane,
14 Bedford Square, London WC1B 3JA, England
Redhouse Lane production team
Editor: Rob Jones
Art director: Ross Behenna
Designer: Asami Matsufuji
Project manager: Anthony Cockell
Distribution enquiries: Emmanuel Dhladhla
[email protected]
02 | Optima | APRIL 2011
Contributors
virginia van der vliet
dambisa moyo
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
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
36 partnerships
paul collier
nick cottam
Having just signed a Memorandum of
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 lowincome and natural-resource-rich societies.
See page 32
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
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
Other contributors
34 manganese
42 ARCHIVE photo
It may be the world’s
fourth most used metal,
but manganese remains
relatively unknown
Stepping back in time
almost 100 years to one
of Anglo American’s first
ever mining interests
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.
APRIL 2011 | Optima | 03
optima NEWS
Digest
A look at recent news from Anglo American
and the mining industry.
Final push for nickel project
“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
more
info
Turn to page 20 to read
about Anglo American’s
investments in the Arctic.
04 | Optima | april 2011
anglo american
Leo Tomlin
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.
discoveries in chile earn recognition award
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.”
Top 10
Anglo American
in numbers
Countries by adult
(aged 15-49) HIV/AIDS
prevalence rate
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
more
info
Turn to page 6 to read
about Anglo American’s
work towards combating
HIV/AIDS and TB.
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
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
anglo american
1.Swaziland
Pt
70,000 oz
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.
$3 million
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.
april 2011 | Optima | 05
OPTIMA REPORT
healthy
profits
Healthcare 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
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
06 | Optima | april 2011
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
RIGHT
Mamoraka Mmutlane,
then an HIV/AIDS
peer educator,
discusses prevention
methods with staff
at the Waterval
Smelter, part of
Anglo American’s
Platinum business
ANGLO PLATINUM; all other photos anglo american unless stated
april 2011 | Optima | 07
OPTIMA REPORT
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.
01
DECADES OF CHANGE
The 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.
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
Effects of anti-retroviral therapy (aRt) at an individual level –
The anglo american experience
Cost savings (USD per month)
36
93
87
–126
96
Cost of ART
Decline in
absenteeism
08 | Optima | april 2011
Reduction of
healthcare
utilisation
Decrease in
staff turnover
and benefit
payments
Note: The overall impact of HIV/AIDS
is equivalent to 3.4% of payroll
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?
02
“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.
april 2011 | Optima | 09
ELAINE BANISTER
OPTIMA REPORT
01
PREVENTION AND TESTING
A 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 HIVpositive, 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
10 | Optima | april 2011
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-UP
Closing 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
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
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
Timeline
Brian Brink’s
career
1972
Is awarded an Anglo American Group
vocational scholarship to support
his studies at the University of the
Witwatersrand Medical School
1975
Qualifies as a medical doctor – MB BCh
(Witwatersrand)
1981
Joins 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
1993
Relocates 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 present
Acts 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 present
Is 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 present
Serves 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
“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
april 2011 | Optima | 11
OPTIMA REPORT
in numbers
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
4,000
Number 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
12 | Optima | april 2011
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
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 EXCELLENCE
Anglo 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
anglo platinum
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.”
01
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
01 The Swissray
Expert 4000
digital X-ray
machine at RPM
Bleskop Hospital,
Johannesburg,
has greatly enhanced
checking and
monitoring for
TB and silicosis
GETTING INDUSTRY ON BOARD
Brink 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”.
april 2011 | Optima | 13
optima report
A Blessing
14 | Optima | april 2011
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.
illustrations by the heads of state
april 2011 | Optima | 15
optima report
T
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 out
Sachs 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
16 | Optima | april 2011
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 curse
Critics 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.
“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.”
Figure 1: 1990-2000
Figure 2: 2000-2007
15
20
AVerage ANNUAL GDP growth 2000-2007
AVerage ANNUAL GDP growth 1990-2000
Average percentage GDP growth per annum versus exports of natural resources
10
5
0
-5
-10
-15
0 102030405060708090
Exports of natural resources (% of GDP, 1995)
Individual countries
15
10
5
0
-5
-10
0 102030405060708090100
Exports of natural resources (% of GDP, 2007)
Correlation between GDP growth and
resource intensity of exports
World Bank, World Development Indicators, 2009
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).
april 2011 | Optima | 17
optima report
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
“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.”
18 | Optima | april 2011
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
Figure 3: Real CRB commodity price index in
US inflation-adjusted terms
180
160
140
CRB COMMODITY PRICE
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.
120
100
80
60
40
20
0
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.
Supercycle
This 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
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
YEAR
Commodity Research Bureau (CRB) index of 22 commodity prices, deflated using US consumer prices
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.
Authors
gavin keeton
jasi kassami
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.
april 2011 | Optima | 19
business profile
01
02
all photos anglo american
03
The final
Anglo 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.
20 | Optima | april 2011
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.”
04
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
Frontier
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 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
april 2011 | Optima | 21
business profile
01
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 industrywide reputation as successful explorers.”
Challenging conditions
Anglo 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,
02
22 | Optima | april 2011
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
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.”
P A C I F I C
O C E A N
Safety awareness
Where is the Arctic?
JAPAN
PHILIPPINES
Sea of Japan
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
MEXICO
the Scandinavian
peninsula.
When Anglo American’s exploration teams first
ventured into the Arctic some 40 years ago, safety
South
China
procedures in
the mining industry were very
ALASKA
Sea
RUSSIA
rudimentary in comparison with today’s standards.
CANADA
Today, safety is seen as a top priority, with safety
ARCTIC
procedures being absolutely crucial – especially in
CIRCLE
Approximately
such remote regions as the Arctic. Many contractors
66O 33’ North Latitude
MONGOLIA
support
Anglo MYANMAR
American staff on exploration ventures,
ARCTIC OCEAN
Temperature: The coldest
so considerable effort is expended to communicate
U. S. A.
temperature recorded in
the company’s
safety culture. Only by ensuring
C H I N A BHUTAN
the northern hemisphere
Anglo American has the right people, the right
NORTHO POLE
90 N
in a populated place was
equipment and
NEPALthe right training can the company
Baffin
Bay
in Oymyakon, in Russia’s
fulfil its “Safe Discovery”
goal.
INDIA
KYRGYZSTAN
Sakha Republic, at -71.2˚C.
The exploration team of geophysicists, geologists,
GREENLAND
KAZAKHSTAN
The Arctic’s average winter
drillers
and technicians in the Arctic is in training
TAJIKISTAN
UZBEKISTAN
temperature is a little warmer
Aral
Sea AFGHANISTAN
almost
constantly,
covering everything from coping
PAKISTAN
at -30˚C. In July, the warmest
TURKMENISTAN
with freezing temperatures, extensive survival
ICELAND
month, it doesn’t get much
techniques and first aid, to off-road driving and the
above 10˚C.
IRAN use of helicopters. Its people are even taught
safe
Sea
how
to cope with the surprisingly acute problem of
Baltic
North
Sea
IRELAND
Sea
IRAQ
Arctic mosquitoes in the short summer months.
U. K.
ck
Bla
ATLANTIC OCEAN
TURKEY
SYRIA
Canada-based senior project geologist Rob
SAUDI ARABIA
LEBANON
JORDAN
ISRAEL
Mackie explains: “Everyone has a safety induction
Transportation issues
SPAIN
at the start of each project and then attends weekly
Sea
EGYPT
ranean
editer
MOROCCO
Transport in these harsh climates is another
high-risk
factor TUNISIA M
safety meetings to openly discuss any issues. Last
Canary Islands
SUDAN
LIBYA
WESTERN SAHARA
ALGERIA
season, due to the level of risk, we brought a polar
for Anglo American – and not just where
people are
CHAD
MAURITANIA
MALI
bear expert to a remote community to provide
NIGER
concerned. Ensuring vital fuel supplies reach projects in the
training on managing that threat, because the area
northern tip of Canada is a particular challenge, and petrol
we were working in is a known habitat for them.”
drums have to travel thousands of miles via truck, boat, plane,
Despite the many dangers and challenges of
and by helicopter slinging (transporting cargo in nets
his Arctic office, Mackie can recall only one hairy
moment, when four of his colleagues had to spend
underneath the aircraft). But that alone isn’t the main
an unplanned night out in the field, tens of kilometres
difficulty; the drums must be picked up and set down at least
from base camp. “The weather turned bad on them
nine times en route to their far-flung destinations, and finding
very quickly and the helicopter couldn’t get in to
skilled people and appropriate equipment to handle them at
pick them up. Luckily, they had plenty of emergency
each pit stop is crucial – but far from easy.
training and safety kits – which we all have to carry
To ensure the fuel arrives intact and without incident, the
– with enough rations and equipment to see them
through the night.”
company’s suppliers use the highest quality fuel drums and
Sea of
Okhotsk
FINLAND
SWEDEN
NORW
AY
Hudson
Bay
Gulf of
Alaska
SOUTH East China
Sea
NORTH
KOREA
KOREA
Yellow
Sea
Caspian Sea
Red Sea
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,
03
april 2011 | Optima | 23
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.
inside view
Stephanie Klatt
01
›› Project geologist at Anglo American’s Sakatti exploration project in Finland
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-oftill 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
24 | Optima | april 2011
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.”
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 industry average is one discovery
of a potential mine for every thousand
exploration targets. Anglo American’s
success rate is much better.”
JIM COPPARD
regional head of exploration, arctic
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
02
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 innovation
Necessity 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.”
Author
jessica
mccahon
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.
april 2011 | Optima | 25
optima report
From
Promise
to Reality
26 | Optima | april 2011
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.
april 2011 | Optima | 27
Last Refuge/Robert Harding World Imagery/Corbis
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.
optima report
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,
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
02
national geographic/getty images
28 | Optima | april 2011
de beers
01
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 inertia
Across 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,
03
ed kashi/corbis
failings. In essence, aid severs the connection between the
national security and infrastructure – African governments
individual and government and undermines the veracity
are able to abdicate their responsibilities in food production.
of the contract between them.
Furthermore, the pervasive and insidious culture of aid
More importantly, the international community
dependency makes it near impossible for Africans to hold
has become conditioned to approach food security as a
their governments accountable for failing to provide the
recurring emergency concern rather than as the structural
basic requirements to enable food production or to penalise
problem it is.
them for bad behaviour, such as corruption.
Of course, in emergencies, such as the floods in
As is well known, in more developed countries, a
Mozambique or droughts in Ethiopia, there is a moral
(sovereignty) contract exists between governments and
imperative for the international community to act. But
citizens. In return for paying taxes, the governments provide
until African governments
a suite of public goods to their
“Governance issues – corruption, come to regard aid as
citizens. If the incumbent fails to
temporary support, as
deliver on a promise, then they are
political instability – remain
opposed to a right in
voted out of office. Put another way,
the key logjam in unlocking
perpetuity, they will continue
driven by the desire to stay in office,
Africa’s potential.”
to fail to implement the
the government is incentivised to
dambisa moyo
necessary measures for
deliver the public goods.
self-sufficiency, including food production.
Consider now what happens when foreign aid replaces
To be sure, there are some countries across Africa that
the need for government to depend on taxpayers’ receipts.
are setting themselves apart from the pack by
African governments spend more time courting and catering
implementing the suite of growth-enhancing policies
to their donors than their constituents. In this case, even if
outlined above.
the incumbent does not deliver on the promise to provide
In 2009, weeks after the World Bank named Rwanda
public goods, as long as aid donors are happy to continue
the “world’s top reformer”, the country attracted
providing aid, there is often no way for the impoverished
hundreds of millions of dollars in foreign capital for
population to hold the government accountable for its
03 The AmenamKpono 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
april 2011 | Optima | 29
optima report
Bloomberg via Getty Images
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
01
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 fasttrack development
model has proved
appealing to many
African leaders
02
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 potential
With 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
30 | Optima | april 2011
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
Angus Maddison
A 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.
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.
april 2011 | Optima | 31
book review
leading africa
to prosperity
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.
Why Africa is Poor:
and what Africans
can do about it
By Greg Mills
Penguin, London 2010
Review by Paul Collier
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
“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
32 | Optima | april 2011
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.
transforming the future
So 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
KHALIL SENOSI/AP/PRESS ASSOCIATION IMAGES
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
01
chosen not to invest in the core
apparatus of prosperity, an effective tax
system and an impartial legal system.
elitist influence
Without 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
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
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.
april 2011 | Optima | 33
RESOURCE PROFILE
a mineral
to remember
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.
I
t 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.
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 steelmaking
Around 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
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
Anglo American’s manganese operations
Operation
Anglo American
ownership
Location
Operation type
annual
Production
Samancor Manganese
Samancor ManganeseThe Groote Eylandt Mining CompanyThe Tasmanian Electro
Metallurgical Company
– South African Mines
– South African alloy
Joint venture, part of Samancor Manganese
Joint venture, facilities part of Samancor Manganese
36.4% 40%40% (BHP Billiton: 60%)
40% (BHP Billiton: 60%)
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
Open cut and undergroundMetalloys processing Open-cut mineProcessing plant
plant
138 mtu
34 | Optima | april 2011
404 kt
190 mtu
270 kt
CHARLES D. WINTERS/SCIENCE PHOTO LIBRARY
01
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 usage
Manganese 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 market
Anglo 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.”
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
Author
john
rolinson
A graduate biologist,
John Rolinson’s writing
background spans
corporate and agency
communications. His
sector experience
includes mining,
construction, oil and
pharmaceuticals.
april 2011 | Optima | 35
optima report
Partnerships between the
private sector and nongovernmental 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
36 | Optima | april 2011
care/nicole tobin
L
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
CARE 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
april 2011 | Optima | 37
optima report
Influencing wider industry
What 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.
01
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
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.”
02
JON samuel, ANGLO AMERICAN’S International
social and community development manager
38 | Optima | april 2011
Helen Nyul/FFI
“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.”
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 community
According 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
03
on alert for a new partnership
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.”
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
april 2011 | Optima | 39
optima report
01 Mark Aken
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
Support FOR schools and new businesses
For 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 SocioEconomic 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
pippa howard/FFI
02
40 | Optima | april 2011
01
Helen Nyul/FFI
(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
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”.
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.”
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
03
april 2011 | Optima | 41
Archive shot
Anglo American:
established 1917
anglo american
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.
42 | Optima | april 2011
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
NELSON SILVA
Los Bronces, Chile
GETTHEFULLSTORY.COM
THE
UNIVERSITY
OF MINING
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Optima
Cover:
Sea ice in the Arctic, where
Anglo American’s exploration
unit is seeking new opportunities.
See article on page 20.
APRIL 2011
Optima
photo by Stocktrek Images
ISBN 00304050
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keeping cool with anglo american’s
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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?