Strategy
AngloGold Ashanti’s business strategy is reviewed regularly to determine progress in its implementation against the backdrop of a dynamic operating and regulatory environment. These evaluations allow for tactical adjustments necessary to achieve the ultimate goal of becoming “the leading mining company”.
AngloGold Ashanti has defined its strategic focus in five parts:
- Recognise that “People are the business” – organisational development is a strategic value driver for the group;
- Maximise margins – manage both revenue and costs to ensure delivery and protection of returns throughout the economic cycle;
- Manage the business as an asset portfolio – use capital deployment optimisation approaches to support delivery of return targets;
- Grow the business – have a definite strategy for both organic growth and growth by acquisition and be opportunistic in seeking value accretive targets; and
- Embrace sustainability principles – understand and focus on creating value for both business and social partners to manage risk and opportunity.
The key components of each of the strategy points are as follows:
People are the business
AngloGold Ashanti recognises that “People are the business” and through its:
- Mission, defines a clear view of the organisation;
- Vision, reflects a clear and consistent view of the organisation’s future;
- Values, recognises that the process used to achieve results is as important as the results themselves;
- Business Process Framework, defines the policy, standards and operating framework necessary to establish a flexible and responsive work model within which people have the opportunity to be creative and realise their potential; and
- Organisational model, ensures that the right person, does the right work, in the right way and at the right time.
Maximise margins
AngloGold Ashanti seeks to ensure sustainable value and maximise returns by:
- Managing revenues to ensure that full value is realised from its products by:
- managing product sales to realise premiums for the delivery of a superior quality product and by exploring other value adding initiatives;
- delivering products of a consistent quality, on time; and
- offering exposure to spot prices.
- Managing costs to protect margins and returns on capital employed by:
- applying resource development strategies to maintain operating margins over the life cycle of the assets;
- protecting critical margins where appropriate;
- maintaining costs below the industry’s mean in order to minimise risks to cash flow and returns in a volatile price environment; and
- optimising capital deployment by investing only in assets and growth opportunities which offer superior returns.
Manage the business
Meeting commitments is a critical objective and includes:
- ensuring safe work practices and a healthy workforce;
- generating returns on capital of more than 15% through the cycle;
- meeting production and cost targets;
- managing costs to maximise margins and return on capital employed over the life cycle of all operations and projects;
- maximising revenues; and
- implementing Project ONE to standardise all operating procedures and achieve key five-year goals. The five-year goals agreed in 2008 were:
- a 70% reduction in accident rates;
- a 30% improvement in overall productivity (in terms of ounces of gold produced per employee);
- a 60% reduction in reportable environmental incidents;
- a 20% increase in gold production;
- a 25% reduction in real IFRS total cash costs per ounce; and
- to deliver an average return on capital of above 15%.
Given the progress achieved to date, the board reviewed and amended the following key five-year goals in late 2010 for the period 2011-2015 as follows:
- Safety – an all injury frequency rate of less than 9 per million hours worked by 2015;
- Productivity – 20% improvement in oz/TEC by 2015;
- Environment – 30% reduction in reportable incidents by 2015;
- Production (attributable ounces produced) – between 5.4Moz and 5.6Moz, an improvement of 20% on base;
- Total cash cost per ounce – a 20% improvement in real unit costs by 2015 (adjusted for mining inflation); and
- Return on shareholders’ equity (%) – 15% through the cycle to 2015.
Manage the business as an asset portfolio
AngloGold Ashanti regularly reviews and ranks each asset and project as part of its annual business planning process. This ranking is both absolute and relative to its peer group, with the aim of:
- ensuring that individual assets and projects meet or exceed specified risk-adjusted rates of return;
- identifying the strengths and weaknesses of the portfolio, with particular focus on portfolio risk;
- implementing strategies to identify optimal orebody capability;
- applying methods and design to ensure optimal operating performance;
- ensuring the application of detailed planning and scheduling, together with the use of best-practice operating methods associated with each asset;
- optimising returns from existing assets and growth opportunities; and
- selling those assets that no longer meet the company’s criteria at attractive valuations.
Grow the business
AngloGold Ashanti seeks to further enhance shareholder value through:
- Exploration – leveraging its asset portfolio and landholdings through greenfield and brownfield exploration and development while targeting new opportunities;
- Brownfield development – the development portfolio comprises board approved projects including: the Tropicana gold project in Australia; the Córrego do Sítio and Lamego projects in Brazil; the Mine Life Extension project at Cripple Creek & Victor in the United States; the Ventersdorp Contact Reef project at the Mponeng mine in South Africa; and others undergoing feasibility studies in Argentina, Brazil, Colombia, the Democratic Republic of the Congo, Mali, Namibia, South Africa and the United States;
- New projects – by promoting organic growth and leveraging current positions;
- Mergers and acquisitions – by selectively pursuing value accretive merger and acquisition opportunities; and
- Logical incrementalism – by maximising the value of other commodities within an existing and developing asset portfolio.
Embrace sustainability principles
AngloGold Ashanti seeks to embrace sustainability principles to create business and social partnerships based on mutual value creation. This approach includes:
- Safety and health – ensuring that commitment to the welfare of people remains the company’s most important value;
- Environment – by managing the impact on the environment, meeting commitments made to host communities and ensuring AngloGold Ashanti is the preferred development partner for mining projects;
- Community relations – establishing relationships and developing strategies that support the creation of unique value for various community partners;
- Institutional relations – working through the respective government and other local institutions, while respecting the values and traditions of each jurisdiction; and
- Political relationships – managing relationships in a manner consistent with the company’s values.