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

Anglo American: a brief profile 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 Anglo Platinum 75% Base Metals 100% Anglo American plc Anglo Coal 100% AngloGold Ashanti 42% Ferrous & Industries Mondi Paper & Packaging 100% Industrial Minerals 100% De Beers 45%

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 History and Objectives

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 Anglo Zimele – Structure and Status

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) Anglo Zimele – the Model (1)

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 Anglo Zimele – the Model (2)

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 Lessons Learned

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 Anglo Zimele – How it fits in