Anglo American Plc · LSE:AAL
Anglo American — Africa Mining Network (February 2015)
28 slides from Anglo American's conference presentation, February 2015
Slide 1: Leveraging Local Procurement to Drive Shared Value
LEVERAGING LOCAL PROCUREMENT TO DRIVE SHARED VALUE A PRESENTATION TO THE AFRICA MINING NETWORK February 2015
Slide 2: Introduction and Context
Introduction and Context The Anglo American Diversified Miner strategy and the idea of Shared Value Local Procurement and supplier development as tools to build shared value Our case studies – Brazil and South Africa Our learnings
Slide 3: Who We Are
WHO WE ARE Anglo American is a global and diversified mining business that provides the raw materials essential for economic development and modern life. 3
Slide 4: What We Produce
WHAT WE PRODUCE Key Corporate & representatives offices Platinum Diamonds Copper Nickel Iron ore and Manganese Metallurgical Coal Thermal Other Mining & Industrial 4
Slide 5: Context
CONTEXT The world needs mining… 5
Slide 6: Context: but there are challenges to address
CONTEXT … but there are challenges to address • The World’s resources are limited and are getting harder to access – the next generation of mines are increasingly located in deserts, up mountains and in jungles • There is growing competition for land and water – it is estimated we will need 70% more
Slide 7: What this means to responsible mining companies
CONTEXT What this means to responsible Mining Companies The implications of this to Companies who wish to contribute meaningfully into the future are: • Our business models need to adapt to provide broader social benefits • There will be an increasing expectation on mining companies to contribute to
Slide 8: Introduction and Context
Introduction and Context The Anglo American Diversified Miner strategy and the idea of Shared Value Local Procurement and supplier development as tools to build shared value Our case studies – Brazil and South Africa Our learnings
Slide 9: Anglo American Strategy: The Diversified Miner
ANGLO AMERICAN STRATEGY:THE DIVERSIFIED MINER • Anglo American is a global and diversified mining business that provides the raw materials that are essential for economic development and modern life. • As a responsible miner we are the custodians of these precious resources. We need to work together
Slide 10: Our Shared Value Approach
OUR SHARED VALUE APPROACH A response to address poverty, unemployment and inequality At Anglo American, we believe that through the creation of meaningful entrepreneurial and employment opportunities through our Supply Chain, we will help more people to build sustainable livelihoods. Our approach of
Slide 11: Introduction and Context
Introduction and Context The Anglo American Diversified Miner strategy and the idea of Shared Value Local Procurement and supplier development as tools to build shared value Our case studies – Brazil and South Africa Our learnings
Slide 12: What Local Procurement Means to Us
WHAT LOCAL PROCUREMENT MEANS TO US • Local procurement initiatives are principal value drivers for the business and for communities around our operations. • Local procurement aims to create opportunities for local suppliers to provide high quality goods and services to support our mining activities.
Slide 13: Why We Focus on SMMEs
WHY WE FOCUS ON SMME’S 65% of all European businesses in the USA are SMME’s 40% of the GDP of 53% of Asian countries businesses in the come from USA are SMME’s SMME’s 96% of Nigerian businesses are SMMEs Over 82% of the 1 Million businesses registered in South Africa are SMMEs We believe that any me
Slide 14: Our Business Case for Local Procurement
OUR BUSINESS CASE FOR LOCAL PROCUREMENT While there is an unprecedented social benefit by increasing local procurement, effective programmes also need to be driven by a strong business case. In our business, we have identified some of these critical factors: Create Supply Chain efficiencies and redu
Slide 15: What We Deliver Through Supplier Development
WHAT WE DELIVER THROUGH SUPPLIER DEVELOPMENT Local procurement is only effective when complimented by the right supporting programmes. Successful initiatives needs to deliver a combination of targeted benefits to the right suppliers, we structure our programmes to include: Supplier access to finance
Slide 16: Our Local Procurement Toolkit
OUR LOCAL PROCUREMENT TOOLKIT To support consistent application of our local procurement programmes, we have developed a 188 Page toolkit which contains • Policy & Definitions • Case studies & examples • Best practice guidance for strategies • Exercises and scenarios to build internal capability to
Slide 17: Our 10 Step Local Procurement Process
OUR 10 STEP LOCAL PROCUREMENT PROCESS © The Anglo American Local Procurement approach (1) Establish a Business Case (2) Determine Demand Opportunities for LP (3) Assess Local Supply Capacity Tactics include: 1. Unbundling contracts (4) Develop a Local Procurement Strategy 2. Ring-fenced opportunitie
Slide 18: Our case studies – Brazil and South Africa
Introduction and Context The Anglo American Diversified Miner strategy and the idea of Shared Value Local Procurement and supplier development as tools to build shared value Our case studies – Brazil and South Africa Our learnings
Slide 19: Case Study 1: South Africa (Platinum)
CASE STUDY 1: SOUTH AFRICA (PLATINUM) A response to address poverty, unemployment and inequality at the Modikwa JV As a pilot at our Modikwa JV, our team agreed to focus on 3 high potential entrepreneurs, provide them with the right resources, high value opportunities and support to build their busi
Slide 20: Our Direct Investment in a Small Supplier
OUR DIRECT INVESTMENT IN A SMALL SUPPLIER Modikwa JV Supplier Development Programme (Engineering workshop) Pre - Anglo American investment Construction of new facility 20 A World class facility today
Slide 21: Case Study 1: South Africa (Platinum)
CASE STUDY 1: SOUTH AFRICA (PLATINUM) Modikwa JV Supplier Development Programme Monthly Spend with the 3 targeted Modikwa JV suppliers R 12 272 000 R 2,694,000 increase in purchases between January – June 2014 R 2,338,000 R 1 783 000 R 1,783,000 R 2,071,000 + R 1,553,000 R 14 050 000 in direct inves
Slide 22: What Else We Do in South Africa
WHAT ELSE WE DO IN SOUTH AFRICA • We support supplier development programmes across our 4 Business Units • Via Zimele – we provide enterprise funding at preferential rates, then follow this up with post- investment mentoring • We provide lucrative early payment plans (7 and 15 day terms) supported b
Slide 23: A Bit More About Zimele Funds
A BIT MORE ABOUT ZIMELE FUNDS 23
Slide 24: Case Study 2: Brazil (Iron Ore)
CASE STUDY 2: BRAZIL (IRON ORE) PROMOVA Supplier Development Programme PROMOVA is a supplier development programme established in 2012 between Anglo American and the communities that were potentially affected by the expansion of the Minas Rio project. The main objective of PROMOVA was focused on the
Slide 25: Case Study 2: Brazil (Iron Ore) – Results and Impact
CASE STUDY 2: BRAZIL (IRON ORE) Results and impact by 2014 45 targeted SMME suppliers US$ 64 Million Savings in interest rates for 45 community based suppliers between December 2012 and March 2014 + US$ 73.5 Million Purchases from local communities Since 2013 = 6.62% increase in local GDP Courses fo
Slide 26: Our learnings
Introduction and Context The Anglo American Diversified Miner strategy and the idea of Shared Value Local Procurement and supplier development as tools to build shared value Our case studies – Brazil and South Africa Our learnings
Slide 27: Some of Our Learnings
SOME OF OUR LEARNINGS Principles for an effective local procurement and supplier development approach Through our local procurement journey, we have found a balance which makes our approach work, some of the key principles learnt include: • Selection of the right entrepreneurs are critical • Underst
Slide 28: Thank You
THANK YOU
Anglo American — Africa Mining Network (February 2015) on 6ix