AngloGold Ashanti and communities

Podcast

Kathryn McPhail

Kathryn McPhail

Principal, International Council on Mining and Metals (ICMM)

“No one party working alone can deliver sustainable development. It is critical for key stakeholder groups to work in partnership: companies, governments, civil society, and international donor agencies.”

Listen to podcast
Partnering for mutual benefit

Our context

AngloGold Ashanti’s vision is to become the leading mining company which, in the context of sustainability, implies that we will adopt an approach which is inclusive and engaging of a broad range of stakeholders, including host communities and governments.

Many of the communities which host our operations are vulnerable. Transparency in our interactions with both communities and governments, as well as an approach of partnership is therefore essential if they are to derive sustainable economic benefit from our operations.

AngloGold Ashanti is in the process of developing a global sustainability strategy, one of the objectives of which is to promote a more consistent approach to local socio-economic development, community and government relations, and which will be integrated with our organisational change model, Project ONE.

Our Community and Environmental Framework remains in place to inform community and environment strategies developed across projects and operations. Successful execution of the sustainability strategy will further strengthen the implementation of this framework, ensure the delivery of sustainable outcomes for our business and social partners and contribute to the reduction of reportable community and environmental incidents, which is a key business objective.

This section gives a consolidated picture of economic value added and distributed by the company in 2010 including payments made to governments and funds invested in host communities. It sets out our current approach to engaging with communities and governments for mutual economic benefit.

Economic value added and distributed

AngloGold Ashanti’s economic value-added statement is presented below. It outlines the financial contributions made in respect of, among others, dividends to shareholders, salaries and wages to employees, social investments in communities and taxes paid to governments.

Our annual financial statements and our website, www.anglogoldashanti.com, give more detailed information relating to operating costs, employee salaries and benefits accruing to shareholders. In this report and in our supplementary web-based information we provide disclosure relating to the two remaining aspects of the value-added statement – payments to government and community and social investments including infrastructural investment.

Economic value added statement for the year ended 31 December

  % $m
2010
% $m
2009
Economic value generated
     
Gold sales and by-product income 975,463 963,862
Interest received 143 154
Royalties received 8
Profit from sale of assets 149
Income from investments 2106 294
Total economic value generated 1005,620 1004,059
Economic value distributed
      
Operating costs (1) 412,289 281,136
Employee salaries, wages and other benefits 241,365 281,117
Payments to providers of capital 4233 4184
– Finance costs and unwinding of obligations 3 166 3 139
– Dividends 1 67 1 45
Payments to governments       
– Current taxation 3147 4164
Community investment (2) 16 11
Total economic value distributed 724,050 642,612
Economic value retained
281,570 361,447
  1. (1)Operating costs for 2009 have been restated to include the effects of the realised gains and losses on non-hedge derivatives and exclude profit (loss) from associates and joint ventures. Operating costs in 2010 are higher due to increased royalty expenditure of $142m (2009: $84m), rehabilitation costs of $109m (2009: $22m), mandatory convertible bonds transaction costs of $56m (2009: nil). The 2010 and 2009 years exclude hedge buy-back costs.
  2. (2)Community investment excludes equity accounted joint ventures.

Payments to government

AngloGold Ashanti is a member of the Extractive Industries Transparency Initiative (EITI). The EITI process supports fiscal transparency and governance, both of which are important in promoting sustainable economic development.

Of the countries in which AngloGold Ashanti operates, only Ghana has achieved full compliance with EITI membership provisions. Tanzania, Mali, and the Democratic Republic of the Congo (DRC) are candidate members. We have, however, taken the approach of disclosing payments made to governments in all countries in which we operate, whether or not the government concerned is a member of the EITI.

Payments made to governments in 2010 are shown in the following table. Further detail, including a breakdown of the type of payments made to each government is included in our web-based supplementary information.

Payments to government by country in $000 (2008 – 2010)

  2010 2009 2008
Argentina*  62,581 36,592 31,449
Australia  28,095 54,382 65,645
Brazil  122,499 78,353 82,862
Colombia  14,561 9,617 8,053
DRC  10,494 2,177 2,174
Ghana*  61,558 55,409 42,079
Guinea*  96,344 63,567 37,621
Mali*  170,320 153,296 118,145
Namibia  14,014 6,833 9,236
South Africa  199,455 117,707 91,106
Tanzania  44,994 59,743 38,466
USA  19,406 6,576 7,713
Total  844,321 644,252 534,549

*Includes dividends paid to governments as shareholders of operations.

Community investment programmes

We continue to invest substantially in host communities and labour-sending areas and our community investment programme is a significant part of this effort. We define community investment as the investment of resources, including funds and in-kind contributions, in the community where the beneficiaries are external to the company. This support seeks to complement the work of government, non-governmental organisations (NGOs) and community-based organisations (CBOs). It includes those contributions which the company is obliged to undertake, such as those agreed with governments as part of stability agreements or mining conventions, and where legislation dictates that community contributions are made. Each AngloGold Ashanti site defines the areas of emphasis in their community investment programmes in line with their stakeholder engagement plan, but most include priorities relating to education and social infrastructure.

A breakdown of community investment per operation is presented under the community investment section of our supplementary information, www.anglogoldashanti.com.

Community investment by region in $000 (2008 – 2010)

  2010 2009 2008
South Africa  3,242 2,962 3,177
Continental Africa  8,047 5,525 3,770
Americas  5,480 2,804 1,997
Australasia  456 133 117
Sub-total  17,225 11,424 9,061
Less equity accounted investments included above  (1,145) (543) (620)
Total  16,080 10,881 8,441

Indirect economic benefits resulting from our operations

Our contribution to society and the communities in which we operate often extends beyond the direct payments made to communities and government.

Healthy and co-operative relationships between the company and stakeholders, including appropriate responses to community complaints and grievances regarding our impacts, often contribute towards developmental benefits. Investment in infrastructure and local procurement can contribute to local economic development.

We operate in various and complex environments, namely in developing countries where in many cases we play a pivotal role in providing a source of income to individuals and families or account for a significant percentage of gross domestic product. In such environments we contribute to social infrastructure development, for example power supply, water provision and sanitation and road construction and maintenance. Even in more developed economies, the role of the company is still crucial in many respects in preserving local values and culture, and enhancing the socio-economic status and quality of life of host communities.

In order to make these investments sustainable, we adopt an approach of partnership with local governments, communities and other relevant stakeholders; co-designing strategies that will ensure that communities continue to thrive beyond the lifespan of our operations. In this regard, we strive to identify communities before we start to mine, and engage with them appropriately throughout the life of mine and during closure.

Our approach to community engagement

AngloGold Ashanti defines communities as the groups of people who are directly or indirectly affected by an operation, both positively and negatively. They include host communities – communities in which the operation is located, labour-sending communities, communities along the operation’s transport routes where this applies, and, in some cases, other groups, including former local residents and their families who have moved away but still have strong familial, business or other ties to the area.

Engagement efforts generally focus on two aspects – building relationships with stakeholders and working towards the development of strong economic partnerships. We do this by, among others, implementing mechanisms for handling grievances and complaints, continually assessing the impact of our presence and activities and implementing and assessing steps to minimise and mitigate those impacts.

Results of engagement strategies have been mixed, with some sites continuing to enjoy harmonious relationships and engagements with their stakeholders, whilst others have experienced challenges and friction. At the Siguiri mine in Guinea, for example, we continued to experience community protest actions during the year despite increasing our focus on engagement, including through the holding of an inclusive stakeholder engagement forum.

Management standards on engagement and community complaints and grievances, which are expected to be approved in 2011, will assist the sites in employing the correct strategies of engagement. Even while the standards are being finalised and approved, work continues to tackle these challenges.

Case study

Puerto San Julian Development Agency Foundation in Argentina

Puerto San Julian Development Agency Foundation in Argentina

In the late 1990’s, economic conditions in the Santa Cruz province in Argentina were difficult. The area was traditionally dedicated to the breeding of sheep, soil management was poor and a decline in international wool prices added to economic hardship. The aftermath of the Hudson volcano eruption in southern Chile in 1991 made growth and development almost impossible. The population therefore depended almost exclusively on state-sector employment.

Read case study

Community incidents in 2010

One of the company’s six business goals is the reduction of reportable incidents on community and environment. Our long-term objective is the complete elimination of these incidents. In 2010, community incidents were included in the incident classification and reporting standard. During 2011, work will continue to understand these impacts and reduce their numbers.

Seven reportable community incidents were recorded in 2010, four of which occurred at the Siguiri mine in Guinea, one at the Geita mine in Tanzania, one at the Sadiola mine in Mali and one at the Obuasi mine in Ghana. Two of the incidents were classified as major incidents according to the incident reporting system in place. Of these two major incidents, one occurred at the Geita mine when approximately 150 local community members protested against delays in compensation payments. Issues relating to these payments have been resolved and the payments have been effected. The other occurred at the Sadiola mine in Mali, when local residents protested against the failure of the mine to respond to various grievances. Responses to the grievances raised were given following a mediation meeting attended by local community representatives and chaired by a local government representative.

Community relations objectives in 2010

In our 2009 report, we set out objectives relating to community relations in 2010. Our performance against these objectives is set out below.

Implement management standards and associated guidance material that govern the company’s relationships with communities and the environment.

Standards were developed in consultation with the relevant practitioners at AngloGold Ashanti sites. Internal and external experts were invited to review and add input into these standards. Each standard complies with the current International Finance Corporation (IFC) Performance Standards and ICMM principles and good practice guidelines.

The management standards that have been developed and are pending sign-off are: Engagement, Socio-Economic Contribution, Community Complaints and Grievances, Artisanal and Small-scale Mining (ASM); Cultural Heritage and Sacred Sites; Indigenous Peoples; and Land Access and Resettlement. The standards set out corporate expectations for performance in these areas and will replace the existing Stakeholder Engagement Action Plan (SEAP) and Integrated Development Action Plan (IDAP) guidelines which are currently in use at our operations. Following approval, operations are expected to comply with standards within a period of three years.

Conduct a Community and Environmental Review Programme (CERP) biennially at selected sites, including community aspects.

The 2010/11 programme of community and environmental audits comprised a gap analysis to measure the extent to which sites have met the requirements of the environmental management standards. Work to include community aspects will begin after the standards have been approved by the company’s executive committee which is anticipated in the first half of 2011.

Standards are in the late stages of internal and external reviews. In the interim, site visits have been undertaken to engage sites by raising awareness, soliciting further input and providing feedback on the steps that they would need to take to comply with the proposed standards.

Incorporate community aspects into each operation’s ISO14001 management system by 2012.

The ISO 14001 management system is in place at all perations and some have gone a long way in incorporating community aspects. Further work is being done to support sites to meet the 2014 target date, which is three years after approval of the standard.

Case study

Formulating a common approach to stakeholder engagement in the Americas

Formulating a common approach to stakeholder engagement in the Americas

AngloGold Ashanti’s operations span a wide range of operating conditions and as a result, the means of engaging with communities and other stakeholders differ from site to site. Nevertheless, the company must understand where such engagement is functioning well and where additional effort is required. The development of a common approach and methodology would also allow key challenges and opportunities to be more effectively highlighted across the business and for insights to be shared more effectively.

Read case study

Engagement with government

The government relations function aims to support the company by addressing its key strategic issues in a collaborative way with host governments. Its work is underpinned by an appreciation that government is the custodian of each country’s natural resources. It has full authority to regulate and legislate the licensing of exploration and exploitation of natural resources. Various ministries within each government have a role to play in regulating the industry in areas such as environment, safety, water, finance and taxes.

Government structures being represented at national, regional and local level within each country presents challenges and opportunities for our operations in developing mutually-beneficial relationships in host countries. For example, community investment needs to be aligned with regional development strategies as defined by host governments. Recognising this key role of government, we aim to include regional and national government representatives in partnerships and engagement processes on local development programmes.

In 2010, we committed to rolling out a pilot engagement strategy model which would introduce more consistency into this area of work. Three specific tools were developed: to guide conversations with government, to maintain a register of all government stakeholders and to capture online feedback from all meetings with governments globally. The latter will be analysed and fed back into the business to serve as an ‘early warning system’ for emerging issues, as well as assisting each operation in managing its business unit. This pilot programme will remain work in progress in South Africa during 2011 and, following its successful completion, we hope to extend the programme to two other jurisdictions.

Case study

Partnering for sustainable development in Colombia

Partnering for sustainable development in Colombia

The International Council on Mining and Metals (ICMM) launched ‘Mining: Partnerships for Development’ in February 2010 – a global initiative to enhance mining’s contribution to development and poverty reduction through multi-stakeholder partnerships. AngloGold Ashanti has been an active supporter of the programme since its inception, supporting workshops in Ghana and in Tanzania and most recently participating in a workshop in Bogota, Colombia in April 2010.

Read case study

Local skills development

Significant direct and indirect economic benefits are generated in host communities through investment in local skills development ranging from hiring, training and developing employees from local communities.

Local skills development is not only undertaken as a consequence of the impetus of local authorities and communities to employ people from their own countries, but is also in line with AngloGold Ashanti’s value of leaving the communities better off for us having been there.

As such, a company policy for global transformation and localisation of labour was approved in November 2010 and will be incorporated into formal policies, leadership practices and the System for People (SP) from 2011 with frequent reviews by regions and committees assigned to the transformation model.

The policy aims to promote the company’s values, and in particular respect for the diversity of our various societies. It also takes into account our global footprint and the legislative framework of the countries in which we are present, so as to:

Legislation concerning transformation and localisation of labour is in place in some regions in which we operate:

AngloGold Ashanti recognises the critical role of employees in implementing its business strategy. In line with our values we are committed to recognising diversity and to treating people with dignity and respect. We acknowledge that significant benefits can arise if transformation and localisation are integral to how we do business, everywhere we operate.

Accountability for transformation ultimately rests with line management, with the corporate office transformation team supporting the regions in developing their strategies in line with the legislative and business requirements and standards as outlined in the policy framework.

Implementation of the policy will be reviewed regularly. Governance structures have been put in place, including a board Transformation and Human Resources Development Committee and a Transformation Steering Committee, which meet quarterly to review progress. Transformation structures will also be established at a regional level, similar to those that already exist at the group’s South African operations.

The focus for 2011 will be on ensuring that all operations have systems and structures to ensure compliance with all transformation-related legislation, while at the same time beginning to socialise the transformation policy and strategy as part of the SP implementation process.

Payments to government
Ghana

Two bridges were built over a large river for use by the community just north of Obuasi. Previously there were no bridges over the river

^ Top of the page