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CommDev Workshop 19 June 2006

Local Business Development - Anglo American’s experience in South Africa. Edward Bickham Executive Vice President External Affairs. CommDev Workshop 19 June 2006. Anglo American: a brief profile. Anglo American plc. Anglo Platinum 75%. Base Metals 100%. Anglo Coal 100%.

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CommDev Workshop 19 June 2006

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  1. Local Business Development - Anglo American’s experience in South Africa Edward Bickham Executive Vice President External Affairs CommDev Workshop 19 June 2006

  2. Anglo American: a brief profile Anglo American plc Anglo Platinum 75% Base Metals 100% Anglo Coal 100% Ferrous & Industries Mondi Paper & Packaging 100% Industrial Minerals 100% AngloGold Ashanti 42% De Beers 45% • Founded in 1917 in South Africa • Moved primary listing to London in 1999 • One-third of assets in Southern Africa; two-thirds in developing or transition economies • FTSE UK top 20 company; FTSE Global 103

  3. History and Objectives History • 1989: founded as Small Business Initiative • 2000: renamed ‘Anglo Zimele’ • 2003: Khula Mining Fund Objectives • Create access to mainstream business opportunities for Historically Disadvantaged South Africans • Create sustainable, commercially viable, enterprises driven by people with passion and entrepreneurial spirit • Contribute to the sustainable development of mining communities

  4. Anglo Zimele – Structure and Status Structure • Business Development • Junior Mining Fund • Facilitation of BEE procurement Status • Invested in 30 companies – end 2005 • Supports over 2,000 direct jobs • Turnover in 2005 $88.1 million (2004 $41 million) • Assisted Anglo American to increase its 2005 Black Economic Empowerment spend to $1.4 billion • Evaluation carried out in 2005 showed a survival rate of 72% over 8 years

  5. Anglo Zimele – the Model (1) Business Development • Minority (20%-30%) equity stake • Loan finance on ‘commercial’ terms • Shareholder and loan agreements • Entrepreneur(s) must also make commitment (time and financial) • Board representation • Skills transfer and mentoring • Business planning and corporate governance support • Performance requirements on corporate responsibility issues • Clear exit strategy (3 year time horizon)

  6. Anglo Zimele – the Model (2) Procurement • Identifies procurement opportunities with Anglo divisional supply chain personnel • Helps to source BEE suppliers based on commercial principles • Quality • Price • Service and delivery • Cost savings • Hands-on support/coaching for access to tenders • Encourages diversification to supply other businesses

  7. Lessons Learned • Focus on commercial principles • Talent, motivation and commitment of entrepreneurs is key • Closeness to core business gives better feel for credit risk • Aim to diversify as quickly as practicable from sole dependence upon Anglo supply chain • Mentoring and support a crucial and flexible element

  8. Anglo Zimele – How it fits in • Contributes to realisation of requirements of South African Mining Charter • Increasing involvement in facilitation of BEE deals with pre-existing ‘non-empowered’ suppliers • Not involved in micro-finance or sustainable livelihoods initiatives • Community enterprises handled by division • Seeking to export model to South America, China and Eastern Europe

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