Transcript No Slide Title

Mining in Africa:
A great opportunity for investment
P. Lazarus Zim
Chief Executive
Anglo American Corporation of South Africa Limited
8 February 2005
1
South Africa’s political
transformation…
•
•
•
•
•
A stable democracy under a sound constitution.
3 peaceful & free & fair elections.
One nation, one flag, one anthem.
Free press & independent judiciary.
An established culture of dialogue and debate to
resolve issues.
• Political transformation has laid the foundation for
economic transformation
• Transformation that has already occurred is often
overlooked…
2
… accompanied by an already
remarkable economic transformation
Higher & less volatile GDP growth
6.0
5.0
4.0
% change
3.0
2.0
1.0
0.0
Forecast
(Reuters Consensus)
-1.0
1984-93 = 1% pa
-2.0
1994-2003 = 2.9% pa
2004-07 = 3.8% pa
-3.0
84
3
86
88
90
92
94
96
98
00
02
04
06
… accompanied by an already
remarkable economic transformation
Reflected in rising private fixed
investment ...
12.0
... as well as improved capital flows
5
Private fixed investment
4
11.5
3
11.0
2
% of GDP
% of GDP
10.5
10.0
9.5
1
0
-1
-2
9.0
-3
-4
8.5
1984-93 = -1.2% pa
1994-2003 = 2.2% pa
-5
8.0
84
84 86
4
88 90 92 94 96 98 00
02
04
Q3
86
88
90
92
94
96
98
00
02
04
JanSep
… accompanied by an already
remarkable economic transformation
Improving fiscal balances
Disciplined fiscal performance
30.0
50
29.0
45
40
35
Expenditure
27.0
26.0
25.0
24.0
0
23.0
-1
22.0
-2
21.0
-3
20.0
Revenue
-4
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
84 86 88 90 92 94 96 98 00 02 04 06
96/97
-8
Deficit
95/96
-7
94/95
Budget deficit
0.0
2.0
4.0
6.0
8.0
93/94
-5
-6
5
28.0
92/93
% of GDP
30
% of GDP
Government debt
55
… accompanied by an already
remarkable economic transformation
...provides scope for lower interest
rates
and significantly lower inflation
20
1984-93 = 14.3% 1994-03 = 7.8%
30
18
16
25
Prime overdraft rate
14
20
CPI (CPIX from 1998)
10
%
%
12
15
8
10
6
4
Target
5
2
Forecast
(Reuters Consensus)
0
84 86 88 90 92 94 96 98 00 02 04 06
(Nov)
6
CPI/CPIX (from 1998)
0
84
86 88
90
92
94
96 98
00
02
04
… accompanied by an already
remarkable economic transformation
International liquidity position
Recognised by improved
Sovereign credit ratings
15
US$ bn
10
S&P
Fitch
5
1994
Baa3
BB
BB
0
1995
Baa3
BB+
BB
-5
2000
Baa3
BBB-
BB+ BBB-
-10
2001
Baa2
BBB-
BBB-
-15
2002
Baa2
BBB-
BBB-
-20
2003
Baa2
BBB
BBB
2004
Baa2
BBB
BBB
2005
Baa1
BBB
BBB
-25
-30
93
7
Moody's
95
97
99
01
03
Although recent Rand strength largely
offset higher commodity prices…
Gold price - Rand & US Dollars
450
Platinum price - Rand & US Dollars
3500
900
7000
Rand/oz
800
400
3000
6000
5000
600
300
USD/oz
250
00
01
02
03
04
05
4000
USD/oz
500
1500
99
8
2000
400
3000
00
01
02
03
04
05
Rand/oz
2500
700
USD/oz
350
Rand/oz
USD/oz
Rand/oz
…growth in mining investment has
outstripped that of other sectors
South Africa: Gross Fixed Capital Formation
(constant 2000 prices)
220
Mining & quarrying
Q1 94 = 100
200
180
160
140
Total excl mining
120
100
94
9
95
96
97
98
99
00
01
02
03
04
Total Anglo American
investment in SA
Rm
Dec
1999
Rm
Dec
2000
CAPEX
4,529
6,425 10,703
Replacement
Expansionary
4,529
-
3,047 2,849
3,378 7,854
Acq of subs
Acq of ass
Acq of JVs
6,934
800
-
Total
10
12,263
1,624
357
2,548
Rm
Dec
2001
5,218
205
16
10,954 16,142
Rm
Dec
2002
Rm
Dec
2003
Rm
Jun
2004
Rm
TOTAL
13,390 14,030
6,020
55,097
4,631
8,759
6,463
7,567
2,704
3,316
24,223
30,874
9,874
3,988
-
9,034
542
-
4,462
9
-
37,146
5,901
2,564
27,252 23,606 10,491
100,708
NB: Money of the day - figures would be higher if adjusted to today’s money
Anglo American’s investment
programme
Approved $6bn global project portfolio…
MEREBANK
$150m
Kleinkopje
$56m
Buxton
$173m
Skorpion
$454m
SIGUIRI
$52m
RICHARDS BAY
$235m
FINSCH
$130m
COPEBRAS
$22m
RUZOMBEROK
$233m
Collahuasi
$288m
ACP Project
$250m
Dartbrook
$55m
2004
Anglo Platinum
Diamonds
PMR Expan.
$99m
W.L. TAILINGS
$186m
CERREJÓN
$17m
EL SOLDADO
$80m
CUIABÁ
$121m
BLACK MTN
$110m
TAU TONA
$52m
CODEMIN 2
$67m
GRASSTREE
$106m
2005
2006
Coal
DAWSON
$306m
CHAGRES
$21m
TICOR 1
$137m
Base Metals
GROOTEGELUK
$55m
RPM PH 1
$210m
TWICKENHAM
$343m
INYANDA
$30m
2007
Industrial Minerals
MOAB
KHOTSONG
$690m
RPM PH 2
$444m
UNKI
$84m
KROONDAL
$138m
MPONENG
$191m
BRPM
$317m
AngloGold Ashanti
TICOR 2
$54m
ISIBONELO
$65m
Paper & Packaging
2008
Ferrous Metals
Selected major authorised projects with capex estimates. Unapproved projects unshaded. 100% of subsidiaries and AA plc’s share of JV’s and associates. Full production dates.
11
Anglo American’s investment
programme
Approved $6bn global project portfolio…
…of which $4bn is in Southern Africa
MEREBANK
$150m
Kleinkopje
$56m
Buxton
$173m
Skorpion
$454m
SIGUIRI
$52m
RICHARDS BAY
$235m
FINSCH
$130m
COPEBRAS
$22m
RUZOMBEROK
$233m
Collahuasi
$288m
ACP Project
$250m
Dartbrook
$55m
2004
Anglo Platinum
Diamonds
PMR Expan.
$99m
CODEMIN 2
$67m
AngloGold Ashanti
Base Metals
RPM PH 2
$444m
UNKI
$84m
CHAGRES
$21m
2006
Coal
MOAB
KHOTSONG
$690m
TAU TONA
$52m
GRASSTREE
$106m
2005
EL SOLDADO
$80m
CUIABÁ
$121m
KROONDAL
$138m
TICOR 1
$137m
W.L. TAILINGS
$186m
CERREJÓN
$17m
BLACK MTN
$110m
BRPM
$317m
TICOR 2
$54m
ISIBONELO
$65m
MPONENG
$191m
GROOTEGELUK
$55m
DAWSON
$306m
RPM PH 1
$210m
TWICKENHAM
$343m
INYANDA
$30m
2007
Industrial Minerals
Paper & Packaging
2008
Ferrous Metals
Selected major authorised projects with capex estimates. Unapproved projects unshaded. 100% of subsidiaries and AA plc’s share of JV’s and associates. Full production dates.
12
South Africa: A good story
• South Africa post-1994 is a much better place for
doing business.
• Because of South Africa’s size, this has positive
implications for the Continent.
• SA business – often lead by the mining sector - is
seeking to expand across the Continent.
• This is occurring against the backdrop of a highly
favourable global environment for mining
producers.
• As well as a renewed global focus on Africa.
13
SA’s improved performance impacts positively on
the Region & increasingly the Continent
Due to its size South Africa impacts on the Continent
2002 figures
Gross National Income
Population
% of
SubSaharan
Africa
(millions)
USD bn
Per
capita
South Africa
$113
36%
$2 520
45
Rest of Southern Africa*
$ 44
14%
$ 401
108
Southern Africa
$157
50%
$1 023
153
Sub-Saharan Africa
$311
100%
$ 450
689
* Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Swaziland,
Tanzania, Zambia, Zimbabwe.
14
Source: World Bank, World Development Indicators, 2004.
SA’s improved performance impacts positively on
the Region & increasingly the Continent
GDP growth - 1990-2002
8
7
% per annum
6
5
4
3
2
1
15
Mozambique
Mauritius
Botswana
Namibia
Lesotho
Tanzania
Swaziland
Malawi
S Africa*
Angola
S-Saharan Africa
Zambia
Zimbabwe
0
Per capita incomes
now growing in most
countries in Southern
Africa & increasingly
the rest of the
Continent
Source: World Bank, World Development Indicators, 2004.
Significant improvement on
pre-1994 performance
South Africa's boom/bust cycle of the
'80s
GNP per capita - 1980-91
8.0
But some successes
8
7
Declining per capita
incomes
6.0
% per annum
6
5
% change
4
3
2
4.0
2.0
0.0
1.4% pa
1
-2.0
0
Mauritius
Botswana
Mozambique*
Swaziland
Malawi
Zimbabwe
Lesotho
Tanzania
Mozambique
80 81 82 83 84 85 86 87 88 89 90 91 92 93
Namibia
-3
South Africa*
Angola
-2
Zambia
-4.0
-1
* 1985-94
16
Source: SA Reserve Bank & World Bank, World Development Indicators, 2004.
SA business as a regional investor
1993
- 18 of SA top 100 listed companies
invested in rest of Africa
17
2004
- 40 of SA top 100 listed companies
invested in rest of Africa
- 232 investments in 27 countries
employing 72 000 people
Source: Who Owns Whom, Africa Inc, Nov 2004
• Favourable global environment for mining
producers.
• Accompanied by renewed global focus on
Africa.
• As the major source of many of the
globe’s unexploited mineral reserves,
Africa in particular stands to benefit from
the improved environment for mining.
18
Favourable global environment now
reinforces improved business climate
Copper
40
30
Nickel
20
China's Share of World
First-use Metals
Consumption
(%)
Zinc
1994
2004
2010
10
0
Aluminium
Fe Ore
Note: Fe ore is sea-borne.
Ni includes Ni content of
stainless imports.
Source: MSU, WBMS, INSG,
Macquarie (Fe Ore, Steel and
Al).
Steel
19
Source: Anglo American, MSU & Macquarie
Favourable global environment now
reinforces improved business climate
3.5
LME Inventories* and Base Metals Price Index
Jan 1997 to Dec 2004
120
3.0
* Cu includes Comex.
Nickel
110
Al
2.5
Stocks, Mt
Lead
Price Index
1990=100100
2.0
90
1.5
Zn
1.0
80
0.5
70
Cu
0.0
Jan 97
20
60
Jan 98
Jan 99
Jan 00
Jan 01
Jan 02
Jan 03
Jan 04
Source: Anglo American, MSU
2005: Africa in the global spotlight
• 2005 WEF (Davos) – unprecedented focus on
Africa.
• Strong African presence & participation:
Presidents Mbeki, Obasanjo, Mkapa.
• PM Tony Blair has placed Africa high on the
agenda of his G8 & EU presidencies.
• Awaiting Report of the Africa Commission.
• Growing consensus that Africa should be
assisted in the same structured way as Europe
post World War 2.
• Important proposals from the United States,
Britain and France of the funding mechanism.
• It is vital to synthesise these into one Africa Plan
by the G8 Summit in July.
21
Africa in the global spotlight:
What we need to do
• Peace & security are vital.
– Will make the full exploitation of Africa’s
mineral wealth possible.
– We applaud the AU, Ecowas & President
Mbeki’s current peace making efforts.
– The current focus of time and resources on
peace making is necessary.
– Good for economic development, good for
Africa, good for business.
22
Africa in the global spotlight:
What we need to do
• Continue to promote investor friendly policies.
• Ensure regulatory and policy certainty.
• For example: in SA the rules are clear
– New Mining legislation
– Mining Charter.
• The key challenge and focal area is that of
implementation.
• It is vital to see mineral right conversion early.
• Continue the fight against HIV-Aids.
23
Africa in the global spotlight:
What we need to do
• Promote strong partnerships between government
and business.
• Public Private Partnership (PPP) – much more that a
buzzword.
• PPP is a necessity – especially in mining.
• Mining projects are high risk, capital intensive,
infrastructure and power (energy) hungry.
• Need the collective and collaborative effort of
government and business.
• Past year: Good experience in relations with DME.
• Recent Transnet-Kumba MOU on expansion of
export capacity and tariff structure is a good
example of PPP.
24
Africa’s business challenges are
manageable
• Anglo American sees transformation as a strategic
imperative.
• This is driven at CEO level through the
Transformation Committee with strong operational
interface.
• We will continue to focus on:
– Employment Equity
– Ownership
– Procurement
– Enterprise development
25
Anglo American’s BEE track record –
Procurement & Enterprise dev.
TOTAL
Rm
Procurement
Development (SMEI’s)
Large Transactions
TOTAL
NOMINAL
REAL
(since inception)
(2003 money)
9,532
11,142
706
783
13,193
17,382
Future:
 Continued 20% - 30% per annum procurement growth

26
Major BEE focus in Anglo Platinum, De Beers, Kumba, Mondi, Anglo Coal
Summary & conclusions
• Africa is at a critical historical crossroads.
• The developed world is indicating its
willingness to assist.
• Global economic circumstances provide a
supportive backdrop.
• Vital that we, as Africa, seize the moment.
• Confident that mining will play a leading role
in driving Africa forwards.
27