OUR CONTRIBUTION TO SOUTH AFRICA - TRANSFORMATION PERFORMANCE REPORT 2018 - Anglo American South Africa
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TRANSFORMATION PERFORMANCE REPORT 2018 OUR CONTRIBUTION TO SOUTH AFRICA
SCOPE OF THE REPORT
In this Transformation Performance Report 2018, procurement and enterprise development; employment
Anglo American South Africa (AASA) measures its equity; human resource development; housing and living
performance for the last time against the Broad-Based conditions; and beneficiation. Five-year performance data is
Black Socio-Economic Empowerment Charter for the used to show trends and to emphasise that transformation is
South African Mining and Minerals Industry (the Mining something that is built on over time, and not just over a
Charter) of 2010. 12-month period*.
In addition, this report looks ahead to the implementation of The 2010 Mining Charter’s sustainable development and
the targets and guidance of Mining Charter III, and what this growth pillar is not featured in this report as health, safety
means for Anglo American’s transformation journey. and environmental (HSE) management in the South African
mining industry is governed by strict and extensive
The report covers the business units that operate in South legislation and regulation, which go far beyond the demands
Africa; namely: Coal South Africa; De Beers Group Managed set by the 2010 Mining Charter. For information on how
Operations (De Beers); Kumba Iron Ore (Kumba); and AASA has performed in the area of HSE, please go to our
Anglo American Platinum (Platinum Group Metals (PGMs)). website to access the Group Sustainability Report.
The report also includes (where applicable) Anglo
American’s Corporate Division (Corporate Division) and All AASA mining operations adhere to the reporting pillar of
Anglo American’s EMEA Shared Services in South Africa the 2010 Mining Charter and develop Social and Labour
(Shared Services). Plans (SLPs) according to Mineral and Petroleum
Resources Development Act (MPRDA) requirements. SLPs
Key data is included for AASA and its business units to are submitted to the Department of Mineral Resources and
illustrate performance against the 2010 Mining Charter Energy (DMRE) for approval, and mining right holders report
pillars of ownership; mine community development; annually to the DMRE on their compliance.
* There has been a material change in the portfolio size of the
components of our business and, therefore, year-on-year comparisons
are not on a like-for-like basis.
CONTENTS
IFC 1 2
Scope of the report Foreword Our contribution to South Africa
OUR 4 11
PERFORMANCE Ownership Mine community development
18 24 30
Procurement and enterprise Employment equity Human resource development
development
37 42 47
Housing and living conditions Beneficiation In closing
48
Glossary
Transformation Performance Report 2018
FOREWORD
diverse, but inclusive too. Diversity enables our employees
to bring the totality of who they are to the workplace, while
inclusion means that they are able to feel more valued and
welcome. If we break down the barriers that exclude
people, we believe we will be able to unleash great potential
from our employees.
A second strand is our absolute recommitment to safety.
Safety has always been important to Anglo American,
and we can be proud of our achievements. But we want to
take this to an even higher level in our continued drive for
zero harm, and in a way that is totally transformative in how
we work.
Another strand, and one that is perhaps more uniquely
South African, relates to land. This is an issue that we are
taking very seriously. Within Anglo American, we have
looked at excess land that we hold, and how we can we make
this available to benefit communities. But, it is not as simple
as making land available to communities. Without a
The story of Anglo American is inextricably long-term development strategy for that land, it becomes
self-defeating, because people will not necessarily have
linked to the story of South Africa. Over the past the means to develop that land in an economically
102 years, we have contributed significantly to beneficial way.
South Africa’s growth and development. Part of our thinking has been undertaken under a working
group that is exploring possibilities in respect of land
restitution and redistribution, as part of a broader strategy of
We have committed ourselves to building a South Africa that land reform. Here we will work closely with government,
is inclusive and fair, one where all citizens are able to maximise municipalities, other companies and communities.
their potential, regardless of their background. It is this belief
A fourth strand in our thinking relates to communities. Again,
that has been at the heart of our transformation efforts within
we are approaching this from a non-traditional standpoint,
Anglo American: that the success of South Africa – in driving
with our starting point being what a community would look
inclusive growth and social cohesion – is our success too, as like when we are not there. Our Sustainable Mining Plan is
a company that is deeply rooted in this country. fundamental to transforming how our stakeholders
This is why we wholeheartedly support the objectives of the experience Anglo American.
Mining Charter. It is an important document that expresses In conclusion, I think we have been tougher on ourselves
the practical ways in which we need to collectively work than ever before in trying to understand how we take
together, as partners, to transform mining in South Africa. It transformation to the next level and ensuring that what we do
is critical that we continue to attract the requisite level of is truly transformative for South Africa. What really propels
investment to grow and sustain our business, and for that, us is our desire to ensure that we are a company of choice
policy and regulatory certainty is key. We are confident that – as an employer, an investor and as a neighbour.
we will be able to achieve that through continued dialogue
with government – by getting all the key role players to sit Our Purpose, which is to re-imagine mining to improve
around a table, talk through our differences, agree to people’s lives, takes on a special meaning for transformation
disagree on certain issues but develop consensus on the in South Africa. Ultimately, we know that it is people’s lived
mining industry we want. experiences of transformation that matters.
We will continue to build on the progress we’ve made by
Looking specifically at transformation within Anglo
working hard to ensure that we lend a hand in building an
American, we have broadened our view. I will mention four
inclusive and prosperous South Africa.
strands that I believe are critical at this juncture.
First, for Anglo American, transformation has always been
fundamental to how we do business. Our approach has
always been to ‘go beyond compliance’ in all of our efforts to
transform our business.
Within Anglo American, we have a renewed commitment to Andile Sangqu
celebrating diversity, by driving a culture that is not only Executive Head of Anglo American South Africa
Transformation Performance Report 20181
ANGLO AMERICAN’S CONTRIBUTION TO
SOUTH AFRICA
We are proud of our longstanding contribution to the
country, where we have played an instrumental role in
growing the economy. Through our continued presence in
South Africa, we aim to help build a stronger and more
sustainable country. NUMBER OF BUSINESS UNIT
CEOs BASED IN SOUTH AFRICA
2018 2017
4 4
NUMBER OF BUSINESS UNITS
MANAGED FROM SOUTH AFRICA
Investment in PRESENCE IN 2018 2017
South Africa SOUTH AFRICA 4 4
R265.4 bn
Amount of capex invested in
South Africa since 1999
% Operating assets % Revenue from
(2017: R251.6 bn)
in South Africa South Africa
2018 2017 2018 2017
30% 34% 38% 40%
% Operating profit
from South Africa
2018 2017
COMMITMENT TO
SOUTH AFRICA
40% 40%
NUMBER OF AMOUNT PAID IN
EMPLOYEES SALARIES AND WAGES
47,000* R24.9bn
(2017: 52,000)
* Reduction in employee numbers due to sale of assets at Coal South Africa (Seriti: 3,119) and PGMs (Union mine: 5,160).
2 Transformation Performance Report 2018
OUR CONTRIBUTION
A ’S
RI C
F
THA S
SOU ITIE
ITH ENT
RS W NED
T NE -OW Eskom
Amount paid to
PAR TATE for electricity
Y S
KE
2018 2017
R4.5 bn R5.7 bn
Coal delivered to Eskom*
2018 2017
2.83 Mt 26.06 Mt
CONTRIBUTIONS
Contributor to South Contributor to South Contributor on
African fiscus Africa’s foreign earnings the JSE
2018 2018 2018
Amount paid in direct Export revenues Market capitalisation
and indirect taxes generated on the JSE
R18.7 bn R111.1 bn R688 bn
(2017: R20.6 bn) (2017: R103.5 bn) (2017: R575 bn)
2018
R10.4 bn
Amount paid to
Transnet for 2017
R10.1bn
transport
* Reduction due to the Seriti and New Largo sale.
Transformation Performance Report 20183
OWNERSHIP
MINING CHARTER II TARGETS
Companies to target a minimum of 26% ownership by historically disadvantaged
South Africans (HDSAs), including entrepreneurs, communities, and employees
(in the form of employee share ownership plans (ESOPs)).
Anglo American’s Johannesburg campus is a landmark historical building in the inner city.
A CLOSER LOOK AT WHO OWNS R70 billion) of Anglo American’s business in South Africa.
CASE STUDY
ANGLO AMERICAN HDSAs continue to hold between 9% and 13% in the
Our ownership structure is very different today from business we control and represent South Africans from a
20 years ago – South Africans own about 35% of range of geographies and categories.
Anglo American through their pension funds, and
In addition to current ownership, HDSAs acquired
government employees are major beneficiaries through
approximately R15 billion of Anglo American’s business
the Public Investment Corporation’s investment worth
units which do not form part of the current business unit
R50 billion.
configuration in South Africa; for example, AngloGold
Black shareholders currently hold approximately R26 billion Ashanti, Tongaat and Hulamin. Such disposals to HDSAs
of listed shares in Anglo American plc via investments. represented about 12% of Anglo American’s business in
Since 1994, HDSAs have acquired some 30% (more than South Africa.
Significant shareholdings
Number of Voting rights
Company shares (%)
Volcan (Volcan Holdings PLC and Volcan Holdings II PLC) 271,802,858 19.35
Public Investment Corporation 181,834,825 12.94
BlackRock Inc 81,814,750 5.83
Silchester International Investors LLP 70,110,363 4.99
Genesis Assert Managers LLP 55,426,734 3.95
Tarl Investment Holdings (RF) Proprietary Limited (1) 47,275,613 3.37
Coronation Assert Management (Pty) Ltd 42,295,188 3.01
Epoch Two Investment Holdings (RF) Proprietary Limited (1) 42,166,686 3.01
(1)
poch Two Investment Holdings (RF) Proprietary Limited (Epoch 2) and Tarl Investment Holdings (RF )Proprietary Limited (Tarl) are two
E
independent companies that have purchased shares as part of Anglo American’s share buyback programme. Epoch 2 and Tarl have waived their
right to vote all the shares they hold, or will hold, in Anglo American plc.
4 Transformation Performance Report 2018
OWNERSHIP
OUR PERFORMANCE Mvelaphanda Resources, Atlatsa Resources, Ponahalo,
Anglo American Inyosi Coal, and Siyanda Resources.
We have led the black economic empowerment (BEE)
initiative for more than 25 years and have contributed We continue to seek to diversify the level of participation and
significantly to South Africa’s transformation imperative ownership by HDSAs in our mining assets. Most recently,
through the more than 40 BEE transactions, worth more this has been achieved by selling our Coal businesses that
than R70 billion, that we have concluded. supply Eskom to Seriti Resources, as well as Union and Royal
Bafokeng Platinum mine to HDSAs, during 2018.
Since 1994, our BEE efforts have resulted in the creation of
several black-owned and -managed South African Most companies that have acquired our assets have
companies, such as Exxaro Resources, African Rainbow flourished, not only in mining, but in their diversification
Minerals, Royal Bafokeng Platinum, Shanduka, into other parts of the economy.
HDSA ownership (%)
Kumba Coal South
Actual current shareholding (SIOC) Africa PGMs De Beers
Effective shares held by HDSA-controlled entities 9 3 2 26
Entrepreneurs (effective) 6 3 0 7
Employees 0 0 0 13
Community 3 0 2 6
HDSA shareholding via mandated investments 5 8 8 5
Anglo American plc indirect effective interest 4 8 6 5
Direct interests 1 0 2 0
Actual effective shareholding 31 December 2018 14 11 10 31
Portion of business sold to HDSAs
Portion of business acquired by HDSA-controlled entities 29 59 40 26
Entrepreneurs 20 56 21 7
Employees 6 1 2 13
Community 3 2 17 6
HDSA shareholding via mandated investments 5 8 8 5
Anglo American plc indirect effective interest 4 8 6 5
Direct interests 1 0 2 0
Total HDSA interest at 31 December 2018 34 67 48 31
Note: Coal South Africa community percentage is zero, although there are a number of community trusts within BEE consortia.
In addition, the Inyosi Coal Community Trust has an effective 4% interest in Anglo American Inyosi Coal.
Transformation Performance Report 20185
OWNERSHIP CONTINUED
EMPLOYEE SHAREHOLDERS
We pioneered the first employee share ownership scheme in South Africa. Since 2004, all Anglo American employees have
participated in ESOPs or similar structures such as De Beers’ Equal Allocation Trust (EAT) units. In total, 77,520 employees
have benefited from these schemes.
Most of these schemes have now expired, and we are exploring new models to be implemented.
EMPLOYEE SHARE OWNERSHIP PLANS
Historical and current ESOPs as at December 2018
Vested benefit
per person to
Total 2018
Business Scheme Tenure (R million) Employees R’000
De Beers EAT, KET 1 2006- 878 2
±14,850 3 524
and KET 21 2018
PGMs Kotula 2008- 433 40,000 11
2015 Free shares 391
Dividends 42
ESOP Bonus 2018 176 1,952 9
Kumba Envision 1&2 2006- 3,506 7,000 498
Nov 2016 Envision 1
Capital 2,670
Dividends 279
Envision 2
Dividends 557
Karolo 2008- 2018 award ±5,500 20
2023 Free shares 110
Dividends 5
Coal South Africa Siyaphambili 2008- 139 8,218 17
2019 free shares
Weighted average 5,247 77,520 68
1
The De Beers EAT, The De Beers Key Employee Trust 1 (KET 1), De Beers Key Employee Trust 2 (KET 2) and Ponahalo Capital RF (Pty) Ltd are
shareholders of Ponahalo Holdings RF (Pty) Ltd. As at December 2018, EAT held 0% of Ponahalo Holdings (all underlying shares repurchased
by the end of 2018) and KET 1 and KET 2, an aggregate of 50% in Ponahalo Holdings. Ponahalo Capital holds the remaining 50% of
Ponahalo Holdings.
2
De Beers: 58% of EAT unit holders accepted a voluntary offer to repurchase one third of their vested units in 2013. The 2013 repurchase was
implemented at the prevailing fair value of the time of R3,068 per unit and a total of R50 million was paid out to EAT participants. The offer was
extended to all vested units held by EAT, KET 1 and KET 2 participants and an additional R15 million was paid to KET1 and KET 2 participants.
The repurchase of EAT units over the period 2016-2018 equated to R769 million, calculated based on the prevailing fair value per unit when the
EAT unit repurchase was implemented (2013 = R3,068 per unit, 2016 = R13,532 per unit, 2017 and 2018 = R8,408 per unit). This total increases
to R863 million should the R50 million for the 2013 voluntary EAT repurchase, as well as the R43 million ex-gratia payment to non-EAT unit holders,
be incorporated. The total repurchase equals R878 million for all EAT and KET unit holders. Vested benefit is based on independent annual valuation
performed by an independent external auditor, BDO.
3
Approximately 7% of EAT participants were active employees, with the bulk (almost 50%) of the EAT participants being pensioners. The balance is
past employees of De Beers South Africa.
4
De Beers: R52,000 per person R878 million/14,854 participants (EAT only): each EAT participant received six EAT units in 2006 for no
consideration. Participants who opted to encash their third of EAT units in 2013 had only four remaining EAT units at the commencement of the
2016-2018 repurchase programmes.
6 Transformation Performance Report 2018
OWNERSHIP
Value of trust Financial flow into
Community trusts transactions trusts since 2006
Coal South Africa
Anglo Inyosi Coal Community Trust (which owns 15% of Inyosi Coal
(Pty) Ltd, which in turn owns 27% of Anglo American Inyosi Coal) R7.5 million R76.4 million
De Beers
Ponahalo Women’s Trust – effective 8.75% of Ponahalo Holdings R3.7 billion* R14.5 million
Ponahalo Disabled Persons – effective 5% of Ponahalo Holdings R8.3 million
Ponahalo Community Trust – effective 8.75% of Ponahalo Holdings R14.5 million
Kumba
SIOC Community Development Trust R458 million R3.0 billion
Platinum
Alchemy (which includes Lefa La Rona Trust; R3.5 billion R373 million
Rustenburg Community Development Trust; (dividends, safety
Dikuno Tsa Sechaba Community Development Trust; net and CSI)
Zenzele Itereleng Non-Profit Company (NPC);
Bohwa Bja Rena Community Development Trust;
Ditholwana Tsa Rena Community Development Trust)
* Since the R 3.7 billion empowerment transactions were fully funded by debt, the equity value of these trusts was R nil at the 2006 transaction date.
HOW WE MEASURE OWNERSHIP
We measure the current actual HDSA shareholding methodology. Where BEE entities acquired control of a
in the businesses that we control, and the portion of mine’s production, 100% of the production is counted as
our business transferred to HDSAs, the latter being being transferred to HDSAs.
the measurement we apply for the purposes of the
We also measure the direct and indirect black share-
2010 Mining Charter.
holding in each business unit, which is calculated with
More specifically, in calculating BEE ownership for the
Anglo American’s effective interest in the business unit.
purposes of the Mining Charter, we measure the portion
of our South African business in terms of production The current actual HDSA shareholding is the direct and
equivalent acquired by HDSAs. Where equity interests or indirect HDSA share ownership in listed shares in PGMs
portions of mines were sold, the equivalent production is and Kumba, plus the effective indirect HDSA shareholding
calculated to provide a consistent measurement via Anglo American plc in each of the business units.
Transformation Performance Report 20187
OWNERSHIP CONTINUED
Coal South Africa
At the end of 2018, Anglo Operations (Pty) Ltd, of which Coal South Africa is a division, had transferred at least 67% of its
attributable production capacity to HDSA-owned and -controlled entities.
Three of the key transactions are included in the table below:
Summary of empowerment transactions
Company Date Transaction Value (R)
New Largo Coal 2018 Sale of New Largo Project to New Largo Coal, owned by Seriti Resources 850 m
and Coalzar, both majority-owned and -controlled by HDSAs, and the
Industrial Development Corporation (IDC)
2018 Sale of Eskom-tied mines (Kriel, New Denmark and New Vaal) to 2.3 bn
Seriti Resources
2010 Sale of 27% interest in Kriel and coal projects to Inyosi Coal, a BEE 7 bn
consortium led by Pamodzi and Lithemba consortia (66%). Thereafter,
they jointly developed Zibulo mine
De Beers
De Beers is empowered through an ongoing relationship with its empowerment partner Ponahalo, which holds a 26%
shareholding in De Beers Consolidated Mines Holdings. The company owns De Beers’ mining operations in South Africa
and is responsible for the sales, sorting and beneficiation of the Group’s diamonds in the country.
De Beers’ Equal Allocation Trust consisted of 14,850 current or ex-De Beers South Africa employees. In 2006, the date
on which the transaction became effective, employees owned 12% of Ponahalo, KET No. 1 held 2% of Ponahalo, and KET
No. 2 held 36% of Ponahalo. The last EAT trust interests were repurchased from beneficiaries during 2018.
Summary of empowerment transactions
Company Date Transaction Value (R bn)
2006 Sale of 26% of DBCM (South African operations of De Beers) 3.7
to Ponahalo
8 Transformation Performance Report 2018OWNERSHIP
Kumba
In 2006, Kumba completed a BEE ownership transaction at a company level, resulting in 26% HDSA ownership.
The ownership consisted of a community trust and the Envision ESOP, each held 3%. Exxaro Resources, created out
of the unbundling of Kumba’s iron ore assets in 2006, held 20%. The Envision ESOP schemes ended in 2006 and 2011
respectively. The original value of the transaction was R3 billion.
Exxaro, Kumba’s primary empowerment partner, replaced its BEE structure in 2017. Post this transaction, Exxaro is 30%
HDSA-owned.
In 2018, Kumba shareholders approved a new employee share ownership plan, called Karolo. Under Karolo, some
5,500 employees are awarded R20,000 worth of free Kumba shares on an annual basis for three years, with a three-year
vesting period. Participants receive dividends over the vesting period. During August 2018, R5 million in dividends was paid
to participants. As at end December 2018, Karolo owned 0.11% of Kumba.
Summary of empowerment transactions
Company Date Transaction Value (R bn)
2006 Exxaro holds 20% of Sishen Iron Ore Company (SIOC) – the result 5.4
of an empowerment transaction that involved the unbundling of
Kumba’s iron ore assets and the relisting of Kumba Resources
as Exxaro
SIOCCDT 2006 SIOC Community Development Trust holds approximately 3% of 0.5
SIOC
Envision 2006 The Envision ESOP schemes held 6% of SIOC. These schemes 3.5
ended in 2011 and 2016
PGMs
PGMs has transferred 40% of its business (measured on attributable production, value of the business transferred and direct
shareholding) to HDSAs through the sale of assets and joint venture transactions, as well as through the participation of
community trusts and ESOPs.
Summary of empowerment transactions
Company Date Transaction Value (R bn)
2018 Sale of 33% in the Bafokeng Rasimone Platinum joint venture to 2.2
Royal Bafokeng Platinum
2018 Sale of Union mine and 50.1% in MASA Chrome to Siyanda Resources 0.4
Baphalane Ba 2016 Sale of 26% interest in the Amandelbult chrome plant to Baphalane 0.4
Mantserre Siyanda Chrome Company, (Baphalane Ba Mantserre community
and Siyanda Resources, through its subsidiary SIMA)
Alchemy 2011 PGMs shares sold, at a discount, to communities situated around 3.5
their mines
Kotula Trust 2008 Establishment of an ESOP that owns 1.5% of PGMs (which has now 2.5
vested). More than 90% of the scheme beneficiaries were HDSAs
2008 PGMs swaps its 37% interest in the Western Bushveld Joint 1.3
Venture for a 26.6% interest in Wesizwe Platinum
Transformation Performance Report 20189OWNERSHIP CONTINUED
PGMs continued
Summary of empowerment transactions
Company Date Transaction Value (R bn)
2008 Sale of 22% in Northam and 50% in Booysendal project to 6.1
Mvelaphanda Resources
2006 Development of a chrome recovery plant at Union mine with 0.3
Siyanda Chrome Investments, an HDSA company
Bakgatla Ba Kgafela 2006 Bakgatla Ba Kgafela community exchanged a royalty over certain 0.5
community properties, 15% interest in Union, 26% in the Magazynskraal
project and 55% in the Rooderand project
2004 Sale to Anooraq Resources (now Atlatsa Resources) of 51% of 8.9*
Lebowa Platinum Mine and additional interests in Ga-Phasha,
Boikgantsho and Kwanda
2002 PGMs contributed mining rights to form a joint venture with 0.2
Mvelaphanda Resources and Bapo-Ba-Mogale
2002/ PGMs and the Royal Bafokeng Nation contributed properties to 3.1
2010 form a joint venture in 2002. RBP listed on the JSE in 2010 after
acquiring the controlling interest in the Bafokeng Rasimone
Platinum Mine Joint Venture from PGMs
2001 PGMs contributed mining rights to form the Modikwa mine joint 2.4
venture with African Rainbow Minerals
2000 Anglo American and Remgro sold their holdings, of 17.5% and 5%, 0.4
respectively, in Northam to Mvelaphanda Resources
* Incorrectly reported as R4.9 billion in the 2017 Transformation Performance Report.
LOOKING AHEAD TO MINING CHARTER III
For existing rights, 26% BEE ownership met historically is recognised under Mining Charter III, but new targets are to
be met for new rights upon renewal. For new rights, BEE ownership is set at 30%, split between BEE entrepreneurs,
employees and communities.
OWNERSHIP
10 Transformation Performance Report 2018MINE COMMUNITY DEVELOPMENT
MINING CHARTER II TARGETS
In order to achieve a social licence to operate, companies are to target meaningful
contributions towards community development, particularly in communities close to
mines and in labour-sending areas. Programmes must be based on a clear
assessment of development needs and in line with local authorities, integrated
development plans.
Villager, Desia Langa, grows vegetables with water provided by the Mapela Water Project.
PROVIDING A PRECIOUS RESOURCE the municipality, PGMs and the Mapela Traditional
CASE STUDY
TO A COMMUNITY IN NEED Authority provides oversight of the project.
Lack of access to water, drought and water scarcity have The project has been modelled around a pilot at Scheming
plagued the community of Mapela, situated close to village, commissioned in June 2016. The pilot has been
PGMs’ Mogalakwena mine in Limpopo, for decades. In highly successful, benefiting 2,000 people and
2011, the mine made an effort to help the community demonstrating livelihood-restoration spin-offs. For example,
secure access to this life-giving resource and began members of the community have started their own
trucking tanks of water to the 42 villages of Mapela. This vegetable gardens and are able to sustain their families.
was a risky and expensive solution, but the Mogalakwena Some are even selling their products to the local market –
local municipality simply did not have the capacity to unlocking economic opportunities for the villagers.
provide water to the 20,000 households in need.
When the project is completed later in 2019, 70,000
In 2017, the municipality signed a memorandum of people will benefit at a cost of 55 cents per person a
understanding (MOU) with Hall Core Water Mapela for day (as opposed to R2 a day for the trucking solution).
the company to take responsibility for the provision of The project also has a strong BEE shareholding –
water, and the Mapela Water Project was born. Hall Core HDSAs will hold 30% of Hall Core Water Mapela, to grow
to 40% over 10 years. All assets and infrastructure will
Water Mapela is building water infrastructure for Mapela’s
eventually be owned by the community.
42 villages, which will supply water to more than 70,000
residents. Mogalakwena mine will pay for the water At the end of December 2018, 30 villages were completed,
supplied to the communities for 10 years, or until such giving 45,000 people access to clean, potable water. The
time as the municipality provides them with piped water. project has created 88 permanent jobs, with two
A steering committee made up of representatives from employees from each of the villages.
Transformation Performance Report 201811MINE COMMUNITY DEVELOPMENT CONTINUED
OUR PERFORMANCE We work closely with the DMRE and provincial and local
authorities to seek their guidance, advice and support on
To be productive, safe, responsible and sustainable, our how best to integrate our efforts into their development
mines must operate alongside thriving communities. planning for the region.
Building thriving communities with better health,
education and improved employment opportunities is Community spend is calculated at 1% of net profit after tax.
one of the three pillars of our overall sustainability
approach and key to transformation in South Africa. Challenges and actions
The areas in which we operate have serious infrastructure
Working in collaboration with host communities is at the heart
limitations. Issues around accessibility to decent healthcare
of our approach to mine community development. The
facilities, quality education, adequate water supply and road
performance of our business and our social licence to
capacity remain a huge challenge in many of our
operate depend on our ability to understand and manage the
issues that matter most to communities. Our aim is to support communities. Our business units engage with local
job creation, public-service delivery and improve education municipalities to come up with lasting solutions to improve
so that local economies can thrive after mine closure. infrastructure. One of the solutions we are working on is
improving municipal capacity to strengthen the ability of
Anglo American’s approach to social performance is local authorities to deliver services to communities, known
informed by our values and Code of Conduct and governed as the Municipal Capability Development Programme. The
by the Social Way. The Social Way requires all Anglo approach taken in 2018 has been to work in partnership
American-managed sites to ensure that policies and systems with the Department of Cooperative Governance and
are in place to engage with mine communities, to prevent Traditional Affairs (COGTA) at a national level, COGTA and
and mitigate adverse social impacts, and to optimise Human Settlements (COGTAHA) at a provincial level, and
development opportunities. The Social Way is supported by engage six selected municipalities to co-develop specific
our Socio-Economic Assessment Toolbox (SEAT), which projects per municipality to achieve the objectives.
provides guidance on how to manage social impacts and
deliver socio-economic development. Operations complete As a major mining company in South Africa, expectations
a SEAT assessment every three years. During 2018, we around our contribution to society are high. The current
revised our Social Way, SEAT and related policies, taking into socio-economic landscape is characterised by alarmingly
consideration changes in our business and the external high levels of unemployment, low skills levels, poverty and
environment, our sustainability approach, evolving disillusionment. This is compounded by the remote
stakeholder expectations and international best practice.
location of many of our operations, where there is limited
Updated polices and guidance will be published in 2019.
formal and alternative economic activity. Consequently,
Our approach is also informed by regulatory requirements our mines represent significant centres of socio-economic
such as the Mining Charter and Social and Labour Plans activity and an important source of welfare for rapidly
(SLPs). Five-year SLPs are developed in consultation with growing populations.
municipalities and regular interaction with communities.
To deliver projects effectively, we need to collaborate with
They are aligned to municipal integrated development plans
our stakeholders. Our business units have several
and local economic development strategies.
engagement initiatives in place to make sure that
Our mine community development objectives are aligned stakeholders are informed and able to contribute to their
with national, provincial and local priorities, and draw from own development agendas. Platforms include engagement
South Africa’s National Development Plan (NDP) and the forums, fieldworkers, inter-faith programmes, and
United Nations’ Sustainable Development Goals (SDGs). communications tools such as community newspapers.
12 Transformation Performance Report 2018MINE COMMUNITY DEVELOPMENT
Mine community development expenditure (R million)
Investment
Business unit 2018 2017 2016 2015 2014 over five years
Coal South Africa 81.1 62.8 53.7 127.5 143.8 468,9
De Beers 31.6 32.6 32.6 42.9 39.4 179,1
PGMs 457 295 337 546 236 1 871
Kumba 123.5 98.7 58.9 174.6 202.3 658
AASA 693.2 489.1 482.2 891 621.5 3,177
Mine community development expenditure per focus area (R million)
Focus area Coal De Beers Kumba PGMs Total %
Health and social welfare 3.6 1.5 19.4 7.8 32.3 4.8
Education and skills development 22.3 15.2 36.8 55.6 129.9 18.2
Infrastructure 18.1 0* 32.0 118.7 168.8 27
Enterprise development 0 7.1 25.9 88.8 121.8 18.3
Institutional capacity development 3.7 0 9.0 0 12.7 1.3
Community trusts 3.9 0 0 82.0 85.9 12.4
Other 29.5 7.8 0.4 104.1 141.8 17.9
Total 81.1 31.6 123.5 457.0 693.2 100
* De Beers’ infrastructure spend is included in education and skills development spend
Ms Angie Motshekga, South African Minister of Basic Education, and Norman Mbazima, Deputy Chairman of AASA, at the launch of AASA’s Education Programme, with master of ceremonies, Redi Tlhabi.
Transformation Performance Report 201813MINE COMMUNITY DEVELOPMENT CONTINUED
development to mentoring and building the capabilities of
Coal South Africa
governing bodies.
Mine community development expenditure increased to
Since 2015, De Beers has contributed R5 million a year
R81.1 million during 2018 (2017: R62.8 million) owing to
to build a library at Sol Plaatje University. It contributed
increased traction in implementing SLP projects as a result
R3 million towards additional teachers at three schools in
of better collaboration with the eMalahleni municipality.
Musina, with the goal of reducing the number of learners per
A total of 16 new SLP projects were approved during 2018.
class. De Beers also invested R2.7 million in the rural schools
The largest portion of expenditure was spent on programme, focused on infrastructure.
infrastructure-related projects – 48.2% or R29 million of the Through the De Beers Fund, De Beers partnered with the
total spend. Projects included a combination of education, Free State Department of Education and the Kagiso
water and sanitation, and enterprise-related infrastructure. Shanduka Trust to invest R27 million to build a school in the
Partnering with eMalahleni municipality, Coal South Africa community of Maokeng in Kroonstad, a labour-sending area.
upgraded Schoongezicht’s pump station. In partnership with The school will benefit 850 learners and includes a Grade R
Govan Mbeki municipality, the Lebohang sewer network in and primary section, media centre, nutrition centre, covered
Leandra is in the process of being upgraded. In Mhluzi, an walkways and security fencing.
industrial park and two junior traffic-training centres are
being built and a block of classrooms (with three classrooms,
Kumba
a book-storage facility, a water fountain and ablution
facilities) was constructed at Mphephethe primary school. In 2018, Kumba spent R123.5 million on community
development (2017: R106.7 million). Education and skills
During the year, Greenside and Khwezela collieries development were an important focus during the year,
contributed to a major provincial infrastructure development with expenditure increasing to R36.8 million. Sishen and
that will improve access to healthcare for the people of Kolomela mine provided bursaries to local communities and
eMalahleni. The project involves relocating the remotely built additional classrooms and ablution blocks at local
situated Impungwe District Hospital to a central site currently schools. Kumba also contributed R10 million towards the
occupied by the Witbank Specialised Hospital in Ackerville. completion of the Sol Plaatje University library.
Education and training projects included providing As part of the AASA Education Programme, Kumba has
scholarships to 48 local students from disadvantaged identified 26 schools and is currently identifying a minimum
backgrounds and a maths and science incubator programme in of 25 early childhood development sites as beneficiaries of
Embalenhle. The incubator programme has yielded excellent the Programme.
results – achieving a 100% pass rate for grade 12 learners.
Kumba continued to collaborate with the Department of
In addition to contributing to thriving communities through Health to increase access to good-quality primary and
infrastructure, education, health and welfare, livelihoods, and mental health-care. A safe haven co-funded by the
water and sanitation, Coal South Africa focuses on Department of Social Development was constructed in
environment, sports, arts and culture, disaster and Tsantsabane during the year.
emergency relief, and social projects selected by employees.
Infrastructure projects are still an important feature owing
About R3 million was spent on environmental projects during
to the deteriorating state of local infrastructure and the
the year, including partnering with the eMalahleni
inability of municipalities to develop new or maintain existing
municipality to provide waste-management equipment and
infrastructure. Kumba spent R32 million on water and waste
transforming what used to be an informal dumping ground
projects during the year (2017: R17 million). A borehole project
into an outdoor fitness park in Phola.
in Maremane, a rural area with inadequate water and sanitation
conditions, stood out as a particular success. Three new
De Beers boreholes were drilled and tested, a new pump station was built,
De Beers invested R31.6 million within local communities in and a new borehole connected to the main feed-water supply
line. The improved water supply has already had a positive
2018 (2017: R32.6 million). This included projects
impact on the health of 293 households and 1,770 people.
implemented through the De Beers Fund. Voorspoed mine
implemented 94% of its SLP projects, but due to the delay in SLP expenditure increased to R55.1 million from R25.3 million
the approval of the 2018-2022 SLPs, 2018 mine community in 2017 as some 2017 projects were carried over to 2018.
development projects were not implemented at Venetia mine. There were 18 approved SLP projects, all of which are
being implemented.
De Beers believes in the power of education to transform
lives and is implementing AASA’s Education Programme at Kumba embarked on a more proactive stakeholder
Venetia mine. The five-year programme entails a ‘whole- engagement approach during the year – through existing
school’ development approach to education. Working in forums and engagement platforms. This allowed the
partnership with the Department of Education, interventions company to foster partnerships with its community
range from investment in school infrastructure and teacher stakeholders and to help resolve potential social issues.
14 Transformation Performance Report 2018MINE COMMUNITY DEVELOPMENT
In terms of health projects, PGMs handed over the Naledi
A SHARED-VALUE STRATEGY FOR clinic to the Limpopo Department of Health and donated two
THE NORTHERN CAPE ambulances to be stationed at Mecklenburg Hospital close
to Twickenham.
A study commissioned in 2017 through the
To date, 33 of 74 SLP commitments have been completed
Northern Cape Mine Leadership Forum
and 41 projects are at different stages of implementation.
highlighted the limitations of companies acting in
isolation, recognising the potential for
collaboration to enable organisations to work at
scale. The study proposed ways to create shared REGIONAL COLLABORATIVE
value for companies and mine communities.
DEVELOPMENT PROGRAMME
In 2018, Kumba started working with Assmang,
South32, Kudumane Manganese Resources and In 2016, PGMs piloted a new approach to socio-
the Minerals Council South Africa to develop a economic development that seeks to ensure greater
shared-value strategy for the Northern Cape. A pilot impact not only in its immediate communities but
project is currently being identified, and in 2019 more also more widely in the regions that host its
projects will be conceived, with input from community operations. The approach, known as Collaborative
representatives, faith-based groups, businesses and Regional Development, is now being explored
entrepreneurs, government, academics and NGOs. across Anglo American, and emphasises cross-
The shared-value vision will emphasise the views and sectoral partnership between government, business,
aspirations of the youth and support national, regional research and NGOs to bring about lasting benefits.
and local planning processes. The work seeks to mitigate the “honeypot effect” of
mining, where development takes place in a limited
area around mines, which then, because of improved
services, leads to an influx of people into the area,
thereby placing a further burden on service delivery.
The approach seeks to catalyse and facilitate broader,
more wide-scale development in its host regions.
Collaborative Regional Development is based on
collaboration with partners voluntarily committing time,
resources and funds to the partnership and sharing
decision-making on development initiatives for the region.
The approach is currently under way in Limpopo and
also Peru, and is being explored in other host regions.
CEOs, general and operations managers, and task team members from
participating mines, together with representatives from Minerals Council
South Africa, contributed their shared vision for the Northern Cape through a
creative exercise of ‘what it looks like when it’s fixed’.
Anglo American Chairman’s Fund
The mission of the Anglo American Chairman’s Fund is to
PGMs remain the leading corporate donor in South Africa, through
understanding the country’s most pressing developmental
PGMs spent R457 million on mine community development challenges; applying the resources at its disposal to
during 2018 (2017: R295.4 million), which included SLP maximum effect; supporting and adding value to practical
commitments and community trusts aimed at assisting interventions in communities; and creating new
communities to implement livelihood-restoration initiatives. opportunities and addressing urgent social needs.
R118 million of this was spent on infrastructure development
– on water, roads and electrification projects. Water The fund is guided by the following set of principles:
infrastructure in Mapela now provides clean water to over • Care, respect and dignity
45,000 people. A total of 900 houses in Twickenham • Partner of choice
communities have been electrified and solar street lights
have been erected in six villages, benefiting more than • Backing champions
18,000 people. • C
loser integration with overall Anglo American community
engagement
In excess of 10,000 people (learners, teachers and parents)
• S
trategic-partner links with government, national donors,
participated in PGMs’ education programmes, and the
civil society and other partners
company built flushing-sanitation facilities in 10 schools in
Mogalakwena and Amandelbult, which previously used • Evidence-based engagement for developing communities
pit latrines. • Support for public- and civil-sector service-delivery systems.
Transformation Performance Report 201815MINE COMMUNITY DEVELOPMENT CONTINUED
The fund supports projects in all nine of South Africa’s Programme is carried out by a management service provider
provinces, but with a focus outside of the operational areas and an external evaluator at an estimated cost of R50 million
of our business units. In 2018, the fund performed well, over the five years.
with a total expenditure of R50.2 million on corporate social
investment (2017: R57.7 million) – despite a decrease in the The Programme aims to ensure that school leadership,
approval of grants in the order of R7.5 million. A total of management and governance practices are effective,
124 grants were approved in 2018 (2017: 163). ensuring well-functioning schools, and that teachers are
motivated, competent and effective, which will lead to
The fund is in a limited funding position and, as a result, the
trustees recommended supporting existing partners. teaching and learning time being optimised. The aim is for
However, this limits the ability to support new and children leaving primary school to have grade-appropriate
innovative projects, so it was decided to consider one-off literacy and numeracy skills and to leave secondary school
projects to support. with quality matric passes. The focus of the ECD intervention
will be on ECD practitioner development to enable children
Contribution to the Anglo American Chairman’s attending supported ECD sites to attain age-appropriate
Fund and De Beers Fund (R million) developmental outcomes and be ready for Grade R.
Anglo
Operations AASA has committed to supporting a total of 100 schools
Kumba PGMs De Beers* Limited** AASA
and 100 ECD sites in three provinces and local to the
8 7.5 23 37 75.5 participating operations.
* De Beers contributed to the De Beers Fund, which is independent of
A situational analysis and infrastructure audit was conducted
the Anglo American Chairman’s Fund
for 90 schools. Empowerment and transformation retreats
** Includes Coal South Africa
were held for 23 schools, with the remainder scheduled for
2019. The retreats are attended by school staff, including
ANGLO AMERICAN SOUTH AFRICA’S
principals, representatives from school governing bodies
EDUCATION PROGRAMME
and student leadership councils, and are intended to
AASA’s Education Programme, an initiative of our Sustainable facilitate the delivery of a clear plan of action to improve the
Mining Plan, focuses on early-childhood learning and a ‘whole functioning of schools. Attendees hold each other
school’ systemic approach to facilitate a significant positive accountable for achieving goals.
impact on the educational outcomes for children in selected
early childhood development (ECD) sites, primary and An ECD situational analysis around the selected
secondary schools local to Anglo American operations primary schools is scheduled to be completed in 2019,
Launched in 2018, the Programme is aligned to the policy and and this will support the design of appropriate early
strategy of the Department of Basic Education (DBE). An childhood learning interventions.
MOU was signed between AASA and the DBE in March 2018.
Engagement with stakeholders at a provincial and local level
The Education Programme is funded by the four South is a priority of the programme. A partnership with the SIOC
African business units: between R100 million and R120 million Community Development Trust provides additional funding
by each business unit over the five years (2018 – 2022). and enables the support of an additional 10 schools and
The management and monitoring and evaluation of the associated ECD sites in the Thabazimbi area.
AASA Education Programme – expenditure in 2018
No. of No. of No. of Total
schools educators in learners in expenditure
Business unit selected selected schools selected schools (Rm)
PGMs 25 399 13,684 1.3
Coal South Africa 24 750 21,863 3.0
De Beers 25 564 17,236 1.8
Kumba 26 573 14,776 1.6
Corporate Division n/a n/a n/a 4.3
Total 100 2,286 67,559 12.0
16 Transformation Performance Report 2018MINE COMMUNITY DEVELOPMENT
AMBASSADORS FOR GOOD
In 2018, we launched an employee volunteering • time management
programme in the UK and South Africa called • university preparation
Ambassadors for Good. The programme invites
• bursary applications
employees to form teams within the workplace and
partner with organisations in our host communities. • financial literacy
• sex education
They can then bid for small grants from the Anglo American
Foundation. Ambassadors for Good generated strong • computer literacy.
employee interest and more than 90 projects were
The project takes in 20-25 students annually from
selected and funded by an oversight committee, which
Princess High School, in Roodepoort, Johannesburg.
ensured that potential projects support and progress our
sustainability goals. Learnings and workshops are also shared via a social
media platform so that more learners benefit from the
One of the successful South African projects was an
programme. This project aligned with several of our
application to support FLaME (Future Leaders and
sustainability goals, including women and girl
Mentorship Engine), an existing programme that
empowers matric learners from disadvantaged schools empowerment and education.
with life skills and education on topics their schools are To date, from the 32 students mentored that have
not able to cover such as: completed the FLaME programme, 100% of them have
• depression and anxiety passed matric. In 2019, another 24 students will go
• drug and alcohol abuse through the programme.
Students from Princess High School currently participating in FLaME. These young people are learning how to cope better with issues faced in life.
LOOKING AHEAD TO MINING CHARTER III
The new Charter anticipates that companies will achieve 100% of their SLP commitments in each year. We
are working with the DMRE to enable it to monitor our SLPs and manage approvals for amendments.
MINE COMMUNITY
DEVELOPMENT
Transformation Performance Report 201817PROCUREMENT AND
ENTERPRISE DEVELOPMENT
MINING CHARTER II TARGETS
Companies to target higher levels of procurement expenditure with BEE-owned entities.
Prioritising markets for BEE suppliers helps to transform South Africa’s economy.
Maxwell Mlangeni, owner of Today’s Destiny, with some of his fleet of vehicles used to haul coal from several of Coal South Africa’s sites.
UNBUNDLING MAJOR CONTRACTS A volumes. Successfully completing the job gave Maxwell
CASE STUDY
SPRINGBOARD TO SUCCESS FOR SMMEs the confidence to resign as a croupier and spend his
Small, medium and micro enterprises (SMMEs) wanting payout on the first truck in his now considerable fleet.
to break into the mining industry have been given the Within two months, he was hauling coal to and from
opportunity through Coal South Africa’s move to ‘unbundle’ several sites and, by June 2017, had been awarded his first
major contracts held by well-established players. large contract. This gave him the borrowing collateral to
Maxwell Mlangeni, owner of a coal-haulage company extend his fleet to 23 vehicles, of which 14 are already fully
called Today’s Destiny, is one such example. paid for. The entire fleet meets Coal South Africa’s vehicle
safety standards, while driver behaviour is monitored
Maxwell has always had a passion for maths and passed his continually from a centralised control room. Maxwell
matric with distinction, going on to be a croupier working at understands the mutual value of complying with stringent
a casino. Croupiers must have the ability to think on their vehicle standards – a safe fleet is more reliable and
feet, have exceptional reasoning and decision-making skills, economical to maintain.
and be service-orientated – qualities that have stood
Maxwell in good stead as he moved into the haulage Today’s Destiny now employs more than 60 people, a
business, navigating the logistical complexities of hauling workforce made up of drivers, supervisors, maintenance
large quantities of coal around the country. staff and safety personnel – all of whom take pride in
working for a company with a reputation built on reliability
His first major break in the industry came from Coal South and professionalism.
Africa’s Khwezela mine, where he was initially tasked with
transferring material from a mineral-resource deposit In 2018, Coal South Africa increased its expenditure with
when an existing contractor could not meet the required Today’s Destiny by more than 300%.
18 Transformation Performance Report 2018PROCUREMENT AND ENTERPRISE DEVELOPMENT
OUR PERFORMANCE participation of SMMEs. Following research by the Small
Business Institute, we now know that South Africa’s formal,
Anglo American South Africa’s inclusive procurement employing-SMME segment of the economy is much smaller
strategy aims to make a valuable contribution to than originally thought. There are only 250,000 formal,
South Africa’s transformation, economic growth and employing-SMMEs in the country, which collectively employ
empowerment of local businesses. This approach is in 3.8 million people, or just over 28% of total jobs. Given this
line with our sustainability imperative to improve context, and especially because our operations are mainly
peoples’ livelihoods in our mine communities.
located in rural areas, it is clear that driving socio-economic
One of the key drivers of economic development and development is essential to supporting jobs and creating
employment in South Africa is the capability, capacity and thriving communities.
BUILDING AN INCLUSIVE SUPPLY CHAIN THAT CREATES SHARED AND
SUSTAINABLE PROSPERITY
Permaculture training at Mogalakwena’s Groenfontein Training Centre.
OUR GOALS • Finding ways to remove barriers for host communities
• Creating and maintaining mutually beneficial socio- and local businesses to be included in our supply chain,
always keeping governance and compliance
economic relationships with local businesses.
requirements in mind.
• Providing full, fair and accessible procurement • Being a trusted corporate leader by government and
opportunities for host communities and local suppliers industry so that we are invited to help shape and
to supply goods and services to our operations across develop local and national policies in our sector.
the mining value chain.
• Looking for ways to help our host communities and
• Increasing our focus on including black-, women- and suppliers find sustainable growth opportunities beyond
youth-owned entities within our supply chain. our supply chain, so that they can continue to thrive long
after our operations cease.
• Focus on supplier development by unlocking the
• Setting measurable objectives that comply with legal
potential of our host communities and local suppliers
requirements and monitoring our progress in delivering
(including SMMEs) by partnering them with our existing
on our Inclusive Procurement Policy.
suppliers to enable them to build their capability and
• Communicating openly and regularly with our
capacity to work effectively so as to ensure their
employees and our stakeholders to encourage their
businesses grow and additional jobs are created.
support and their own adoption of inclusive
• Committing to choosing local workers, businesses procurement opportunities.
and products and services, involving black-, women- • Collaborating with our host communities and
and youth-owned entities from host communities, stakeholders to become a trusted partner to expand
wherever possible. and diversify our supplier base around our operations.
Transformation Performance Report 201819PROCUREMENT AND
ENTERPRISE DEVELOPMENT CONTINUED
OUR APPROACH TO INCLUSIVE PROCUREMENT
INCLUSIVE CATEGORY SUPPLIER DEVELOPMENT
SUPPLIER DEVELOPMENT Developing a more diverse, inclusive
Framework guiding business units, and sustainable supply base
categories and suppliers
A strategic and
structured approach
to inclusive
procurement
ENABLERS
Fit-for-purpose governance, processes, CHANGE AND COMMUNICATION
tools, systems and people to enable the Working with stakeholders to get
strategy and its implementation everyone aligned and involved
Our BEE expenditure increased significantly as a result of the transformation of our supplier base – both existing and
new suppliers – which rose to a total of R37.8 billion (2017: R29.5 billion). This includes the increased spend on HDSA
suppliers, especially women- and youth-owned suppliers. A total of R10.6 billion was expended in our mine communities
(2017: R9.3 billion).
BEE and host community procurement expenditure in 2018
Actual
host-
community Total
% % % Aggregate Actual BEE procurement discretionary
Capital Services Consumables BEE spend spend spend spend
Targets 40 70 50 % Rands (billion) Rands (billion) Rands (billion)
Coal South Africa 84 89 90 85 7.3 0.9 8.3
De Beers 81 75 82 77 3.8 0.6 4.9
Kumba 69 80 84 81 11.8 3.6 14.6
PGMs 73 79 70 74 14.9 5.5 19.3
AASA 77 81 81 79 37.8 10.6 47.2
AASA's performance against the Mining Charter procurement targets
(%)
Charter targets: 100
40% Capital goods 90
50% Consumables 80 83 83 82
81 81 80 79
70 77 76 75
74 72 72
70% Services 69
60
50 58
40
30
20
10
0
2018 2017 2016 2015 2014
20 Transformation Performance Report 2018PROCUREMENT AND ENTERPRISE DEVELOPMENT
CHALLENGES AND ACTIONS
De Beers
Our inclusive procurement team has committed to meeting
with mine-community suppliers, as well as on-site teams, as To maintain its social licence to operate and co-exist with its
regularly as possible. Coal South Africa’s Inclusive host and labour-sending communities, De Beers is building a
Procurement Indaba and Kumba’s SMME Days held at more diverse and inclusive supplier base and focusing on
Kolomela and Sishen are examples of such events. There developing small businesses to increase their capacity,
was also a Group-wide road show during which knowledge capability and market opportunities.
was shared with employees to ensure a consistent approach The company’s spend with BEE entities amounted to
and improved knowledge across the business. R3.8 billion during 2018, 77% of its discretionary spend.
Coal South Africa Identifying opportunities for local businesses and supplier
development remains a high priority for De Beers. During the
Coal South Africa continues to focus on the transformation year, the number of local SMMEs on its supplier development
and diversification of its supply chain to drive inclusivity, with programme increased to 33. These new local suppliers were
an emphasis on procuring from BEE-compliant entities, awarded contracts of a minimum of three years.
especially black- and black-women-owned companies, and
SMMEs. The business unit is achieving meaningful An employee-transport empowerment transaction was
transformation through: also concluded. The transaction resulted in the creation of
two new transport companies, each 40%-owned by local
• E
ngaging with suppliers (including non-BEE suppliers)
people, with eventual growth to 51% ownership within five
to transform
years. The contract value is in excess of R600 million and
• U
nbundling large contracts to create opportunities for key contractors to the mine also make use of the same
local suppliers transport companies.
• P
artnering with original-equipment manufacturers to
De Beers has noted the readiness of local SMMEs to start
enable access to on-time supply near the operations
doing business with the company, but also the lack of basic
• P
artnering with Zimele* to deliver a new supplier business skills, which represents a particular challenge for
development programme De Beers. To remedy this, the company is expanding
• I mproving transparency of our procurement processes partnerships with the Small Enterprise Development
and opportunities to mine communities. Agency, the National Youth Development Agency and key
contractors in order to increase procurement opportunities.
Coal South Africa’s inclusive procurement team links
black-owned companies to our supply chain, while Zimele The company has also noted a shortage of technical skills
provides advice and support for emerging businesses. In this and experience amongst SMMEs, so technical skills training
way, entrepreneurs are empowered with the funds and the is now incorporated into its supplier development
mentorship programmes to grow and sustain their business, programme. De Beers is establishing partnerships with key
while we sustain our operational efficiency. suppliers and development partners to help local SMMEs
access finance for start-up and expansion purposes.
During 2018, Coal South Africa’s six mines spent R7.3 billion Collaboration with key suppliers such as Aucor Auctioneers
with BEE-compliant companies, representing 85% of saw the establishment of Aucor Limpopo (51% owned by
discretionary expenditure. The business unit had 932 active locals and 49% by Aucor Auctioneers.
BEE vendors in 2018 as a direct result of diversifying its
supply chain and engaging with suppliers to transform to a De Beers is committed to developing and supporting
minimum of 25% plus one vote black ownership, to align black-women- and youth owned-companies, an area in which
with regulatory requirements. There was a general it has already seen some success. For example, entrepreneur
improvement in other categories too – spend with Nkateka Sithole is the director of Chibadura Trading after
SMMEs reached R1.3 billion, R3.5 billion with black-owned recognising the shortage of black-female players in the
companies and R840 million with more than 30% vehicle-batteries and tyres market. She enrolled in De Beers’
black-women-owned companies. Zimele incubation programme and has subsequently signed
a contract with Bridgestone and Global Wheels to supply
The business unit continued to monitor the growth of tyres, rims and batteries to Venetia mine. Also part of the
its incubated suppliers and experienced a consistent incubation programme are Ike Freeman and Patience
year-on-year increase in expenditure – R42.4 million was Ngqaba who own Ikefree Projects (a 100% black-youth-
spent with nine suppliers who were part of previous owned business), established in 2014 to offer services such
supplier development programmes. The company also as building, plumbing, carpentry, painting and tiling. Ikefree
spent R43 million with 15 Zimele-funded entities. Projects employs 25 young people from the local community.
* See page 23
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