Optima Volume 58 Number One - Anglo American plc/media/Files/A/... · Printed by The Colourhouse. The paper is produced using a 100% chlorine-free (ECF) bleaching process and contains

COVER:Fishermen working in Corral de los Chanchos Bay on the Pacific. The new desalination plant for Anglo American’s nearby Mantoverde copper mine in Chile’s Atacama desert will secure a sustainable water supply for both the mine and the local community, while protecting the environment. See article on page 30.PHOTO COURTESY OF ANGLO AMERICAN

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Printed by The Colourhouse. The paper is produced using a 100% chlorine-free (ECF) bleaching process and contains material sourced from responsibly managed and sustainable forests, together with recycled fibre, certified in accordance with the Forest Stewardship Council.

INTERVIEW: CYNTHIA CARROLL ON FIVE YEARS AS CHIEF EXECUTIVE FOREVERMARK: DE BEERS’ DIAMOND PROMISEAFRICA: RWANDA’S PRESIDENT PAUL KAGAME ON THE FUTURE EMERGING DEMOCRACIES: BRAZIL, INDIA AND SOUTH AFRICA

OPTIMAJULY 2012

A PRECIOUS RESOURCE

HOW ISSUES AROUND SCARCITY AND COMPETITION ARE LEADING TO A PROFOUND CHANGE IN THE WAY

MINING COMPANIES THINK ABOUT WATER

02 | OPTIMA | JULY 2012

WELCOME

Earlier this year, I marked five years as chief executive of Anglo American. My interview with Martyn Lewis was an opportunity to reflect on the strides we have taken in that time – in many areas, showing ourselves to be pioneers.

Our safety culture has progressed beyond expectations – but it takes only one minute when people relax for something to go wrong. We must stay focused and take responsibility for our own safety, and that of our colleagues.

These days, we are all far more aware of the issues of sustainability. Water availability remains a huge challenge for the mining industry. Our report highlights how vulnerable we are in sourcing water, with many operations in water-stretched areas and rising populations requiring more than ever; therefore, we must invest in developing innovative solutions.

In this issue, we are honoured that Rwanda’s president Paul Kagame is sharing his views on the pressures Africa faces as it prepares for increased urban development – certainly his concerns around rising carbon emissions reflect the issues we face in our own operations.

I am optimistic about Anglo American’s future. It is exciting to welcome De Beers back into the fold, and fascinating to read the history of its prestigious Forevermark brand. Its portfolio complements ours and we will be working hard to capture the synergies between the two businesses.

CONTENTS

CYNTHIA CARROLLCHIEF EXECUTIVE, ANGLO AMERICAN 18 FOREVERMARK

De Beers’ unique luxury diamond brand offers consumers assurance and exceptional quality

30 VALUE OF WATERAnglo American’s strategy for securing water supply and how it is adapting to the effects of climate change

Editor-in-chief: Norman Barber

Anglo American plc 20 Carlton House TerraceLondon SW1Y 5ANEnglandTelephone: +44 (0)20 7968 8888E-mail: [email protected]

Optima is produced by Redhouse Lane, 14 Bedford Square, London WC1B 3JA, England

Redhouse Lane production teamEditor: Rob JonesArt director: Tony BeresfordDesigners: Ross Behenna and Jorge Valle GarciaProject manager: Melissa Dickinson

Distribution enquiries: Bev [email protected]

36 NIOBIUM PROFILE Used in everything from MRI scanners to rocket thrusters, niobium has a host of valuable properties

04 DIGEST The official opening of the Kolomela mine, CSR recognition and other news from Anglo American

06 CYNTHIA CARROLL Anglo American’s chief executive shares her views on partnerships, politics and the industry’s opportunities

38 EMERGING NATIONSHow India, Brazil and South Africa are shaping their own models of democratic development

03 JULY 2012 | OPTIMA |

MARTIN VANDER WEYERMartin Vander Weyer is a columnist for The Spectator, a regular contributor to The Daily Telegraph and The Mail on Sunday, and the author of a number of books and plays. His latest book is Fortune’s Spear (2011), the biography of a 1920s fraudster. A Yorkshireman of Flemish ancestry, Martin spent 15 years as an investment banker in London, Brussels and the Far East before turning to writing. He is a visiting research fellow of York University Management School, and is widely involved in community work in the north of England.SEE PAGE 44

PAUL KAGAMEPaul Kagame was sworn in as President of Rwanda for a second term in September 2010. After 30 years as a refugee in Uganda, Kagame returned to lead the Rwandese Patriotic Front’s four-year struggle to liberate his country. In 1994, the RPF ended the genocide and set Rwanda on its current course towards socio-economic development. Kagame has been recognised for his leadership in peace-building and reconciliation, good governance, promotion of human rights and women’s empowerment, environmental stewardship, advancement of education, and information and communications technology. SEE PAGE 22

CLAIRE ADLERClaire Adler is a contributor to The Financial Times, specialising in the luxury sector, covering jewellery, watches and diamonds. Her articles have also appeared in The Times, The Washington Post, The Economist Intelligent Life, Vanity Fair, The Guardian, The Spectator, Wallpaper, Hong Kong Tatler and others. She has contributed to business books published by Pearson Longman and the Open University. Claire also does consultancy work for a number of luxury brands.SEE PAGE 18

CONTRIBUTORS

46 ENSEÑA CHILEA novel education project in South America that is transforming failing state schools

44 BOOK REVIEW Why Nations Fail, a new thesis on what creates economic disparity between countries

OTHER CONTRIBUTORS MARTIN BEAVER (PAGE 30); CAROLINE WILLIAMS (PAGE 36); ANN BERNSTEIN (PAGE 38); TOM AZZOPARDI (PAGE 46) The opinions expressed by contributors do not necessarily represent the views of Anglo American. Provided that permission has been obtained from the editor-in-chief, and on condition that acknowledgement is made to Optima, publications (print and online) are welcome to reproduce articles in whole or in part and to use illustrative material, except where copyright © is especially reserved.

22 AFRICA’S PROSPECTSFrom energy shortages and carbon emissions to soaring populations and poor education, Africa faces major challenges to its development ambitions. Rwanda’s President Paul Kagame discusses plans already making a difference to the continent’s prosperity and what else the public and private sector must do to drive change.

MARTYN LEWISMartyn Lewis has been a television journalist for more than 32 years, anchoring mainstream national news programmes on ITV and BBC TV. He now chairs business conferences and debates for, among others, the Marketing Society, the Windsor Leadership Trust, the World Bank and the European Commission. He is heavily involved in the voluntary sector, chairing NCVO (the main umbrella organisation for the sector), YouthNet and the Queen’s Award for Voluntary Service. SEE PAGE 6

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DIGEST A look at recent news from Anglo American and the mining industry.

NAUTILUS TO MINE SEABEDNautilus Minerals, the Canadian company in which Anglo American owns an 11 per cent stake, is developing the world’s first sea-floor mine, 1,600 metres below the surface of the Bismarck Sea. The mine, Solwara 1, is a potential source of high-grade copper, gold, zinc and silver. It is located on the boundary between two tectonic plates, where vents known as “black smokers” spew polymetallic sulphides. The sulphides precipitate, accumulate and form rich ore deposits.

UNIVERSAL SAFETY“We aren’t going to reach Zero Harm unless we get the basics right. We need to be more disciplined, more rigorous, hold more people to account, be more

demanding, more responsive, more communicative and more consistent… to make sure that safety plays a part in every decision we make, every conversation we have, and every activity we undertake.”ANGLO AMERICAN CHIEF EXECUTIVE CYNTHIA CARROLL, SPEAKING AT A SAFETY LEADERSHIP SUMMIT FOR 150 OF THE COMPANY’S LEADERS IN JOHANNESBURG, APRIL 2012

Turn to page 6 for an in-depth interview with Cynthia Carroll.

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Nautilus geologists examine a drill core

DIGGING DEEPER AS NEW SOUTH AFRICAN MINE OPENSOne of Anglo American’s top four global expansion projects, Kumba Iron Ore’s Kolomela mine, has been officially opened by South Africa’s mineral resources minister Susan Shabangu.

The opencast mine in South Africa’s Northern Cape Province was brought into commercial production five months ahead of schedule in late 2011 and with an exceptional safety record.

The mine dispatched its first product to the port of Saldanha in December 2011 and shipped its first ore for sale to customers in China. Kolomela – meaning “to dig deeper” – is set to deliver four to five million tonnes of iron ore this year and will ramp up to its full nine million tonnes in 2013.

At full production, Kolomela mine will employ roughly 840 permanent employees and about 150 contractors, with 718 new houses being built for its employees, most of which have already been completed.

Cynthia Carroll with South Africa's mineral resources minister Susan Shabangu at the opening of the Kolomela mine (below)


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The first practical trial of a prototype fuel cell locomotive is under way at Anglo American’s Khomanani platinum mine in Rustenburg, South Africa.

Locomotives powered by fuel cells – essentially gas

batteries that produce electricity when fed with hydrogen gas – are expected to create a more economical and environmentally friendly mining environment, and reduce a mine’s energy dependence. Fuel cells do not

need to be changed or recharged, which means less downtime at the mine.

The first locomotive will be tested for several months to establish whether the technology can be commercialised.

LEADING THE CONVERSATION Anglo American has been recognised for excellence at the Radley Yeldar annual

corporate reporting seminar for 2011 reports in the following categories:

The awards highlight the best examples of clear communication from leading companies, commending those which meet audience expectations, regulatory developments and peer behaviour.

2nd PLACE ANNUAL REPORTS

Among FTSE 100 companies

1st PLACE SUSTAINABILITY

REPORTING Among FTSE Eurotop

100 companies

9th PLACEONLINE ANNUAL

REPORTS Among FTSE 100

companies

CSR RECOGNITIONAnglo American is the only mining company to achieve platinum status in the Business in the Community Corporate Responsibility Index 2012. The Index is the UK’s leading voluntary benchmark for corporate responsibility. Platinum status is awarded to companies that embed responsible behaviour across their business, with incentive structures at board and operational levels. Of the 850 companies signed up to the scheme, 30 achieved platinum status this year.

ANGLO AMERICAN IN NUMBERS

$3.7 BILLIONAnglo American’s total proceeds from divesting non-core assets since 2009.

47,200The number of new jobs created by Anglo American around the world as part of small enterprises.

15The number of major resource discoveries Anglo American has made since 1999.

Joyce Mabe, Anglo American’s Platinum business education co-ordinator, meets members of a Rustenburg glass-beading project as part of the company’s community engagement programme

FUEL CELL TRIAL STARTS AT SOUTH AFRICAN MINE


OPTIMA INTERVIEW

07JULY 2012 | OPTIMA |

SHAPING THE FUTURE

When a business leader states she is never satisfied, despite unequivocal improvements in safety and in operational and financial performance under her watch, you might wonder what more she could do. But for the chief executive of Anglo American, this tireless pursuit of the best is characteristic of her relentless enthusiasm and ambitions for the organisation she has led on a transforming journey over the past five years. Martyn Lewis asks Cynthia Carroll about the road ahead.

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ive years after being appointed chief executive of Anglo American, in March 2007, Cynthia Carroll is, to some extent, still getting started. Sure, she has already driven the company through some almost unimaginable triumphs. After she challenged attitudes to safety within the organisation, numbers of fatal accidents have declined. And her shrewd focus at the operational and strategic end of things

has led to Anglo American being seen, in her words, as “the company on the move in the industry”.

Australia’s Metallurgical Coal business, for instance, was barely breaking even in 2007. Now, it’s outperforming the competition, making over $1 billion in operating profit last year, with improved productivity and a target to triple the production of hard coking coal by 2020.

The three major projects delivered last year – Barro Alto nickel, Los Bronces copper and Kolomela iron ore – are now in the ramping-up phase, and Minas-Rio is expected to start producing its first iron ore in the next couple of years. In Australia, meanwhile, the company is breaking ground with its Grosvenor metallurgical coal project.

Altogether, Anglo American has an approved project pipeline to deliver volume growth of 50 per cent by 2014, with unapproved projects that have the potential to double its output in the longer term.

The world’s number one diamond company is coming back into the fold – “There’s nothing like De Beers in the world,” Carroll says with pride – and there are plans to push businesses further. “Our Platinum business is performing in line with the industry, it has the world’s greatest resources of the metal and the suite of platinum group metals is unrivalled in its range of applications − but we’re not satisfied with the returns and we think we can do a lot more given the optionality and the resources we have.”

Focusing the business on core strategic operations, more than $3.7 billion of assets and businesses have been divested. Meanwhile, acquisitions such as the Pebble copper project in Alaska and a copper resource at Michiquillay in Peru, as well as the Foxleigh metallurgical coal project in Australia, continue to complement Anglo American’s existing portfolio.

“We’ve not stood still with respect to acquisitions,” Carroll reflects, “but we’ve been very, very thoughtful.”

Indeed, the efforts to perfect the right strategy are paying off, she insists. “We’ve been consistent about what our strategy is, and we’re not changing that... Though we always

question and challenge ourselves and reflect on where we are and how we can improve... I do believe we are now in the enviable position of having done our scenario planning in terms of what the future is likely to hold, and what commodities in which geographic regions will deliver strong, cost-advantaged growth and set us apart from the competition.”

Despite these and other successes, Carroll’s ‘to do’ list is, perhaps, no shorter than it was five years ago. She makes it clear that her work in driving the business forward – especially in improving safety – has no end date, no final goal. The targets simply get more ambitious.

“I never see my business as being finished or unfinished,” she laughs, adding in all seriousness, “I’m never satisfied.”

MARTYN LEWIS: What do you regard as your most important achievements over the past five years? CYNTHIA CARROLL: Back in March 2007, I regarded my mission as being fairly clear. The immediate priorities were to do something about our poor safety record, formulate a coherent strategy, and set a vision and objectives for the organisation. This included putting in place initiatives to make sure we had a more efficient organisational structure and building a fact base on the businesses. The aim was to have a more joined-up business that would capture synergies across the Group, with the ability to successfully deliver large complex projects, and also to develop a performance culture. All of this was absolutely critical.

LEWIS: Have you put in place all the strategic moves that you wanted to in order to make the company fit for purpose? Are you satisfied that the Anglo American ship is on a steady course? CARROLL: The Anglo American I inherited had been made up of many different, unrelated businesses – and it had been managed accordingly. These businesses were disconnected, even within the businesses – as were the leaders of the business units. In the case of Platinum in early 2000, each mine was a profit centre.

Over the past five years, we have been on a journey to transform Anglo American into a company that delivers on its commitments by driving for performance and shareholder value. We’ve done that by having a clear vision and strategy, by turning around business unit performance

01 At the Sakatti exploration site in northern Finland, project geophysicist Circé Malo-Lalande and Cynthia Carroll discuss data from Anglo American’s Ground Electromagnetic Superconducting Quantum Interference Device (EMSQUID)

02 Martyn Lewis conducting the interview


and by becoming a cohesive company. Crucially, too, we have established strong relationships with governments, unions and other stakeholders around the world.

So we’re on a very different footing today. We’ve got the right people. Our business unit leaders are team players who are driven, energetic, joined up and supportive of one another. They are focused, they know what they need to do and they are constantly thinking about operational performance and outperforming the competition.

LEWIS: Riding shotgun to all this is the safety mantra. Are you happy with the progress that has been made on the safety front? CARROLL: Safety has always been my number one concern, and it’s at the heart of the transformation of our business. We have put an enormous effort into putting systems in place across the Group to lift safety standards and bring about cultural change, and we continue to work closely with unions and governments on the issue.

Since 2007, the number of people who have died on company business has reduced by well over 50 per cent, and there’s been a similar trend in our serious injury rate. Last year more than 90 per cent of our sites operated without a single fatal injury, and we are experiencing sustained periods of injury-free operation throughout the business. So we are demonstrating that zero harm is achievable.

But I’m hardly satisfied. We’re still having fatalities. And we’ve got many challenges ahead. Look at Minas-Rio – we’ve got around 10,000 people on the ground, spread across hundreds of kilometres, and most of them contractors − so you can’t ever let up.

LEWIS: You say that you have got the right team at the top now, but how do you instil the performance culture right down through the organisation?CARROLL: I come back to the initiatives we started putting in place in 2007, and these included our asset optimisation and supply chain programmes. We publicly said we were going to deliver $2 billion of value by the end of 2011. In the end, we delivered $3.2 billion.

That didn’t happen because a couple of people at the top thought it was a good idea.

It was a combination of restructuring business units and functions within the organisation as a whole, finding the best people to run them, and then creating an environment where people are encouraged to come up with and share 02

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ideas. We’ve created a culture of driving for performance and value day in, day out, and we’re now seeing it cascading through the organisation.

LEWIS: Was there any opposition to that, perhaps from people who’ve been with the organisation a long time?CARROLL: There was a lot of resistance to change at the outset. I removed a whole layer of top management at the very beginning. In fact, there’s only one person left today who was part of the original executive committee. But we made changes throughout the organisation.

And some people put their hands up and said, ‘The way you’re dealing with safety, the demands you’re making and what you’re looking for... I can’t do it, so I’ve got to step aside.’ So there were a lot of people who did just that.

We needed to be more efficient and streamlined, and we wanted to be the best in terms of operational efficiencies, whether at our operations or in our corporate offices. As part of that, over the past few years, we have reduced our workforce worldwide by approximately 50,000 people.

LEWIS: And did the downturn that started in 2008 make it easier for you to do that, because everyone knew the world was in trouble?CARROLL: That was not the trigger for doing it. It was evident to me that we were disjointed as an organisation and that we weren’t capturing synergies. So we decided we were going to be a focused mining company with a number of core commodities. We looked at the historical returns, we looked at how the markets were developing, we looked at our asset base and how we could capitalise on that and grow those commodities – and how all that would fundamentally differentiate Anglo American.

We started that work well before the onset of the recession. But the downturn in September 2008 was certainly a wake-up call, and I guess it gave me that much more firepower to say to everyone: “We have no choice − we’ve got to be outperforming everybody, we’ve got to be at the low end of the cost curve no matter where we are in the cycle.”

Unlike others, however, we protected our capital spend – and we didn’t go to our investors and ask for help. We cut back substantially, but we preserved the major projects that we thought would deliver tremendous value in a few years’ time. In 2011, we delivered three of those projects, all on or ahead of schedule. That was a significant milestone for us − and nobody else in the industry managed to do that last year.

LEWIS: Looking at the industry more broadly, how do you feel it has changed, and what are its biggest challenges? CARROLL: For a start, it’s become a much bigger industry – there are now 12 mining companies in the FTSE 100, with five in the top 20 alone. So the industry is much more in the spotlight of investors, governments, NGOs and other interested parties than it was a few years ago.

LEWIS: Obviously, relations with governments are a key factor in a global business such as yours. Do you think you and other global chief executives increasingly have to be political? CARROLL: I don’t see myself as being particularly political, but do I have to deal with politicians? Absolutely. Am I taking sides with politicians? No, I am not. But I know we have to engage with governments around the world on a continual basis, and with multiple parties and at multiple levels.

I don’t think I would be doing my job properly if I wasn’t prepared, on behalf of our shareholders, to spell out and stand up for what we think is right, and what we don’t think is right.

And that includes putting things into a context so that politicians understand what mining is all about; that it’s a global industry with operations that may be around for several generations, and one that demands huge amounts of capital.

There’s also a need to keep reminding governments that mining is becoming increasingly competitive as more players enter the industry – for example, the Chinese and Indian enterprises who want to get into it because they want to secure the resources for their countries’ future.

And for our part, we have to recognise that the social and political pressures on mining have increased substantially and will continue to do so: we have to demonstrate what we bring to the party, that we are part of the solution. And, with our industry-leading social performance, and our careful environmental stewardship, we are superbly placed to do that.

“We’re on a different footing. We’ve got the right people. Our business unit leaders are team players who are energetic, driven, joined up and supportive of one another. They know what they need to do.”CYNTHIA CARROLL


LEWIS: Would you like to be able to spend less time on political issues?CARROLL: I have no choice. For example, in Peru – a country with a particularly blighted mining history − I’ve already seen the new president, Ollanta Humala, twice. We have taken a different tack in Peru from anyone else. We have paused our Quellaveco copper project launch in order to be part of a dialogue with the local community, an approach I don’t think other mining companies have done.

Because of that approach, we are better known and understood. And we have had the chance to understand those communities that much better and adjust our mine plans in response to their concerns. The result is that we are gaining support; I think the President understands that we’re determined to do the right thing, even though it takes time. It’s a short-term loss for a long-term gain – for the community, the government and us. And by long term, I mean that the result of our presence will not only be beneficial over the life of our planned operations, but that it

will continue to make a positive and lasting impact long after the mine gates shut for the last time.

LEWIS: Are we seeing some softening in demand for commodities right now?CARROLL: In the medium to long term, the fundamentals are strong where demand will increase, whether it’s from China, India, Brazil or elsewhere in the developing world. As for China, there’s no question that it’s slowing down, but it’s certainly not coming to a standstill. Is that going to have a substantial impact on the demand for our commodities? I don’t think so – after all, seven per cent GDP growth off today’s much higher levels means we are shifting more volume than we did just a few years ago when China’s growth rate was over 10 per cent. All the emerging countries are going to be developing more steel capacity and needing increasing amounts of raw materials.

And then there’s the demand from the developed countries – I’m reasonably optimistic about the US in

01 Underground with shift supervisor Portia Lesenyeho at Anglo American’s Dishaba platinum mine

02 With Peru’s then President-Elect Ollanta Humala in Lima, July 2011

03 Showing their support for the joint-venture Pebble copper project: schoolgirls from Newhalen, Alaska, with Cynthia Carroll

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particular... So, on the demand side, things look positive – though it won’t be a straight-line path and there’ll certainly be periods of volatility.

LEWIS: What about the supply side?CARROLL: If you look at the projected demand over the next 20 years or so for commodities such as copper and iron ore, then the industry will need to bring on stream the equivalent of a major new mine every year. When you factor in the industry’s patchy project-delivery record, then there are certainly going to be periods of tightness in the markets.

India, for instance, has huge iron ore deposits of its own, but is now importing iron ore for the first time. To realise its growth targets, India needs to lift its steel production from 70 million tonnes a year right now to between 150 and 200 million tonnes by around 2020 – a phenomenal rate of growth – and to do that they’ll need iron ore. And that puts a question mark on their big iron ore projects: will there be enough accessible domestic iron ore to supply them all?

LEWIS: Will this mean higher prices, and won’t that be good for the mining industry?CARROLL: We’ve seen costs going up steadily year on year and they’ve been getting much, much worse. We’re seeing capital expenditure inflation outstripping the underlying price of many commodities. Raw-material input costs have risen sharply, as have labour costs − so supply constraints and shortages don’t simply translate into higher margins for miners.

If you add to the mix the colossal financial scale of some of the projects being contemplated, increasing demands from governments, along with calls from investors for higher dividends, then all the major miners have the challenge of convincing shareholders that investment in long-life, large-scale, capital-intensive projects will deliver worthwhile returns. We’re already seeing some of our peers reviewing certain of their capital projects.

LEWIS: And most of the world’s best mining assets have been mined already?CARROLL: We’re confronted by depleting resources and a steady decline in the quality of those resources – something that politicians don’t always take into account when they are considering imposing new taxes on the industry.

As miners, we aim for tier one assets that are large scale, expandable, long life, low cost, with high margins,

and preferably in familiar locations. Trying to find such assets today is a big challenge. There hasn’t been a major diamond discovery in almost two decades, for instance. And I speak from the vantage point of Anglo American being a global leader in exploration, with 15 major discoveries since 1999. Nobody has done what we’ve done from an exploration perspective.

The growing demand for metals and minerals also means that mining companies are exploring in new-frontier areas beyond their traditional mining jurisdictions. This inevitably presents a heightened degree of risk and may be accompanied by political instability in some countries where good governance is still developing. And there are all the attendant challenges in terms of access, climate, the lack of infrastructure, logistics, security, and many others.

LEWIS: Does that mean you have to help deliver an infrastructure that assists countries in improving the lives of their people?CARROLL: All of us in the industry are thinking not only about building downstream smelters, developing railways and building ports, but about looking at ways to secure access to energy supplies.

So while Anglo American is not really in the business of developing infrastructure, there are places where we are intervening in order to assure energy supplies for our operations. For example, in South Africa there will be power shortages for the next few years until Eskom gets its next generation of power stations up and running. This is a situation where we, as Eskom’s number one supplier of thermal coal, are doing something practical right now by trying to relieve the demand on the national grid through making discard coal available to independent power producers. In Brazil, too, we’re installing our own power-transmission lines to serve our Minas-Rio iron-ore project.

And, further out, we’re also looking at solar energy and wind power as future energy sources.

LEWIS: What do you see as the biggest challenges, not just for Anglo American but for the mining industry? CARROLL: I think the biggest challenge is around developing resources in a competitive way. Mining companies and governments alike are having issues over where the resources should be developed in the future.

I referred a few moments ago to the depletion of resources and their declining quality − their lower grades.


TIMELINEFIVE YEARS AS CHIEF EXECUTIVE

1 March 2007Cynthia Carroll succeeds Tony Trahar as chief executive of Anglo American.

1 May 2007On winning the $403 million Michiquillay copper project: “We are excited by this opportunity to expand our activities in Peru.”

15 May 2007Agrees first major deal: the purchase of a 49 per cent interest in the Minas-Rio iron ore project in Brazil.

18 June 2007After a number of fatalities, closes platinum mines at Rustenburg and initiates new safety training for all 28,000 miners.

23 October 2007Issues a series of social, environmental and economic commitments on behalf of the Pebble Partnership to address concerns from the local community.

24 December 2007On Queensland’s Foxleigh coal mine: “A valuable strategic and complementary addition to our portfolio.”

17 January 2008On taking outright control of Minas-Rio and Amapá: “These two projects… will significantly increase our participation in the sea-borne iron ore market.”

29 April 2008Addresses the Tripartite Safety Summit in Johannesburg, advising delegates to focus on “solving the problem instead of allocating blame”.

Continued on page 14

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Then there are all the challenges of going into unfamiliar geographies and jurisdictions, and having to consider infrastructure needs.

Many countries are not easy places to operate and do business in and some have little or no experience of mining, so they don’t have the supporting infrastructure or suitably qualified people. There are also challenges around regulation; we find that countries often don’t even have the systems in place for mining companies to have access to the permits they need.

Then there will always be issues around access to water. More than 80 per cent of our own operations and projects are in water-stressed areas. Already, nearly 70 per cent of our total operational water requirements are met by recycling or re-using water – and that’s very high for the industry. In South Africa we’re using technology to treat mine water for drinking water, and we’re building a desalination plant in Chile that will benefit not only our Chilean copper mines, but also the surrounding communities.

Over and above all of this, all parties concerned have rising expectations of what mining companies should be doing, and that includes the end-user, who is increasingly taking the view that mining products should be ethically sourced.

TIMELINEFIVE YEARS AS CHIEF EXECUTIVE

Continued from page 13

June 2009Tells President Jacob Zuma that plans to nationalise South Africa’s mines are “not going in the right direction”.

22 June 2009Rejects Xstrata’s $70 billion approach for a merger with Anglo American, calling it “totally unacceptable”.

19 August 2009Ranked 4th most powerful woman in the world by Forbes magazine.

11 May 2010Addresses investors at the Bank of America Merrill Lynch Global Metals & Mining Conference.

7 April 2011Warns Prime Minister Julia Gillard that Australia’s proposed carbon tax would threaten Australian coal mining’s competitiveness.

30 June 2011Delivers the keynote speech at the Melbourne Mining Club in London, focusing on the dangers of relying on conventional wisdom.

20 September 2011Recognised by the Diamond Empowerment Fund and China Charity Federation for helping to empower people in Africa.

24 January 2012Addresses sightholders at the annual Chairman’s Cocktail Reception, emphasising De Beers’ market-leading position.

“We’ve certainly got more challenges than we had five or even three years ago – and not everybody is coming to the table and doing what they need to do. This may be because sections of the industry don’t fully appreciate the challenges ahead.”CYNTHIA CARROLL

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LEWIS: There’s been a lot of noise around resource nationalism...CARROLL: It’s an issue that we are facing continually. Countries are becoming far more aware, and protective, of the value of their mineral inheritance. Developing nations and developed economies alike are seeking to increase their share of the mining cake through a range of means, from establishing joint ventures with mining companies, to windfall taxes and increased royalties, and even in some cases threatening to push matters to the point of nationalisation of mining assets.

Our own aims are to build lasting relationships with governments at all levels, and, as a company that operates primarily in the developing world and emerging markets, to optimise our own developmental impact as a major investor. Through our supply chain alone, we spend nearly $14 billion annually, mainly in Africa and South America, which is more than the entire UK Official Development Assistance budget. This drives jobs, opportunity and uplift. But we must seek ways to do even more, so that we can continue to develop real partnerships and our businesses operate within an enabling environment. And that’s all about governments doing the right thing and setting up the right conditions to allow investors such as ourselves to operate on a sustainable, long-term basis. We therefore need sensible and stable fiscal regimes that don’t keep moving the goalposts, so that governments don’t unduly burden mining companies who already have substantial investments in their countries, and scare away potential mining investment, through ratcheting up taxes, royalties or dividends.

People often ask me, for instance, about the challenges of doing business in South Africa. Well, we’ve had constructive talks with the government there on how carbon abatement can be paid for, just as an example.

Contrast that with Australia... Mining is the country’s biggest export earner; so the mining industry wants a balanced approach. But the new Minerals Resource Rent Tax will have a significant negative impact on the returns on investment for anyone in coal or iron ore. Then there’s the new carbon tax... The Australian government hasn’t brought the mining industry along with it. The carbon tax didn’t evolve in a constructive, mutually beneficial way.

And it’s a tax that’s going to affect billions of dollars of investment and many thousands of jobs across the Australian mining industry.

LEWIS: So it’s vital to build relationships across the stakeholder spectrum?CARROLL: Yes. We believe stakeholder engagement is key to developing resources and unlocking value. If we don’t get this part of our business right, we will not be successful. We have to recognise that mining companies cannot go it alone, even if they wanted to. We have to forge partnerships across a very broad range of constituencies – governments at all levels, communities close to mining operations, labour and trade unions, NGOs, suppliers and customers.

Partnerships are about sharing the benefits. In our Platinum business this past year, we are creating a trust through our Project Alchemy, whereby we will feed back substantial long-term financial benefits to Platinum’s host communities and key labour-sending areas. We did a similar thing in Kumba Iron Ore, where a unique broad-based employee share-ownership scheme is making a tremendous difference to the prosperity of lower-earning employees and their families.

We are constantly thinking about ways to reach out to and ensure we’re building a sustainable economic community − one that has a sense of ownership of the resources that are in the ground.

LEWIS: And creating benefits that go beyond the mining industry?CARROLL: Exactly. In South Africa, our Platinum business is in partnership with fuel cell company Altergy and the Department of Science and Technology. Through a $14 million investment, we are seeking to manufacture and market fuel cell systems locally and in other sub-Saharan countries. This will help foster a new low-carbon economy and create employment opportunities in the service and maintenance and manufacturing industries. In Australia, we are a cornerstone investor in MBD Energy, which is developing a hybrid CO2 capture and algal synthesiser process. This has the potential to both reduce our carbon emissions and provide large-scale commercial and sustainable solutions to the production of bio-oil and of nutritious meal for use in livestock.

Modern mining is so much more than going into an area, extracting the resources and moving on. That would not be a formula for success. The mines we are building may be around for decades; the decisions we make today may well affect people for generations to come. So we always have to look to the long term, and that could be up to 100 years.

01 At La Moneda Presidential Palace in Santiago with Chile’s President Sebastián Piñera (centre) and Anglo American’s CEO of Copper John MacKenzie

02 Cynthia Carroll and Zimele chief investment manager Lia Vangelatos (centre) meet an entrepreneur at the Zimele Procurement and Enterprise Development Trade Fair in Johannesburg, June 2011

03 South Africa’s Mineral Resources Minister Susan Shabangu and Cynthia Carroll at Anglo American’s Khomanani platinum mine, where they unveiled a platinum-based fuel-cell-powered mine locomotive prototype, May 2012


OPTIMA INTERVIEW

The challenge is that politicians often think only in terms of the next election cycle – three to five years at best.

LEWIS: Have recent macro-economic developments like Europe’s sovereign-debt crisis and China’s self-imposed slowdown made you less optimistic?CARROLL: Well, we’ve already seen a lot of volatility, and there’s going be more to come. Yet only very recently I was talking to one of the top economists in China, and he believes that, although the fundamentals there are going to be softer and that, going forward, the country’s growth rate will be lower by design, seven or eight per cent growth is likely. That, on an ever-growing base, is still a significant increase in demand for raw materials. I continue to be pretty optimistic.

Adjusted for inflation, China’s GDP per capita at purchasing power parity rates is presently around the level that the US was last at in about 1935 and the UK about 1930. Its inland infrastructure-development and urbanisation has many years to run. Ten of the country’s 29 provinces are growing at double-digit rates – which is expected to continue through the rest of the decade. China still has very many years of build-out as its inner provinces play catch-up with the more developed coastal areas.

Having said that, I think we’ve certainly got more challenges than we had five or even three years ago – and not everybody is coming to the table and doing what they need to do. That may be because certain sections of the industry don’t fully appreciate the challenges ahead – I’m referring to reputation, heightened expectations, and doing the right thing. And I think these challenges are of such magnitude and complexity that we won’t easily overcome them.

LEWIS: You made a clarion call in mid-2011 that everyone should be clear and bold in their campaigning for the future of the industry. Do you think there are still some people that are falling short on that?CARROLL: I absolutely do. Take nationalisation in South Africa… I had a meeting with President Zuma in June 2009 and I said to him that the nationalisation debate was not going in the right direction and that we all had to watch this. I think, at that time, there was a sense that the issue had gone away and we could all move on. But it hasn’t gone away.

At Anglo American, we fully recognised that we couldn’t win the debate by ourselves. We needed to get others on

board, so we reached out to government and we also engaged with the country’s Chamber of Mines and helped them formulate a paper that clearly laid out the implications of mining nationalisation, and how as an industry we needed to take things forward.

Yet, in all of this, our BEE (black economic empowerment) partners had been almost completely silent on the issue. So, when I met them, I told them: “You’re all telling me you’re worried – well, get up and speak out.”

In answer to your question, I would say there are some who have really done a very good job. That goes for South Africa’s Chamber of Mines.

In Australia, too, the industry really came together on the issue of the Minerals Resource Rent Tax, basically agreeing that the government needed to substantially modify its approach toward one that supported continued investment in the industry. That’s why I – and other mining industry leaders, too − went to the prime minister, and also to the treasurer, and questioned them on their unilateral approach toward introducing the tax.

LEWIS: What do you think sets Anglo American apart?CARROLL: A key differentiator is the diversity of our portfolio of commodities and the breadth of our project pipeline, built up of tier one resources, which cut across each part of the commodity cycle. So we have choices as no other company has.

We are also intensely focused, starting with safety, followed by value creation, while we have a long track record of going beyond mining. Beyond our international reputation for being at the forefront of mining technology and engineering, we are a global corporate leader in several other fields: in healthcare, in community engagement, and in small and medium enterprise development.

Anglo American has been a true pioneer and is a world leader in caring for the health of our people and the development of the communities in which we operate. In 2011, more than 110,000 of our people were tested for HIV in South Africa alone. And over 90 per cent of our employees in southern Africa participated in voluntary HIV counselling and testing. More than 60 per cent of HIV-positive employees in southern Africa participated in disease-management programmes and upwards of 4,500 employees received free anti-retroviral drugs.

In June last year, we were one of the first companies to pledge $3 million over three years to the UK Government-

01 Relations with host communities are critical to the success of mining operations worldwide. Here, Cynthia Carroll meets local people based in and around Iliamna, Alaska, where the Pebble project is located, to hear community issues

02 At Anglo American, women now make up nearly a quarter of management ranks. During a Kumba Iron Ore board visit to the Sishen mine, Cynthia Carroll meets up with Kumba’s communications manager Tanya Aucamp

03 In October 2011, Anglo American Chairman Sir John Parker and Cynthia Carroll had the honour of each having a coal-haul locomotive named after them. Left to right: Rail company Asciano CEO John Mullen, Cynthia Carroll, Metallurgical Coal CEO Seamus French, Sir John Parker, Director of Pacific National Coal David Irwin, and Asciano Chairman Malcolm Broomhead


led Global Alliance for Vaccines and Immunisations, a public-private partnership that is increasing access to immunisation in the world’s poorest countries.

In January this year, I joined other world business leaders at the World Economic Forum, in Davos, to launch the Business Leadership Council for a Generation Born HIV-Free. This is a private-sector-led initiative that aims to end the transmission of HIV from mothers to children by the end of 2015.

On the community-engagement front, Anglo American was the only UK mining group to secure platinum status in the 2012 Corporate Responsibility Index, the UK’s leading voluntary benchmark of corporate responsibility. The fact that we have attained platinum status for the third consecutive year speaks volumes about our proactive and collaborative approach to listening to our host communities and understanding their needs, and to working alongside our various stakeholder groups to create social, economic and environmental initiatives that have the most positive impact.

Looking at job creation, our Zimele enterprise development programme was the first mining initiative to be recognised by the United Nations’ Business Call to Action. We have committed to a job-creation target in South Africa of 25,000 by 2015, and we have invested $78 million in more than 1,000 new small businesses that have already generated more than 19,500 jobs, largely outside of direct mining.

In total, around the world, we have created more than 47,000 new jobs as part of small enterprises. These are real jobs making a real and positive difference to people’s livelihoods in our local communities.

LEWIS: You talked about partnerships involving honesty and, “at times, bravery, too”. Just how brave do you have to be in the mining industry?CARROLL: I sent one of my daughters an email this morning about bravery and about having the courage of your convictions and standing up for what you believe in... I think you can easily be persuaded by people internally and externally. There are all manner of reasons why people are putting pressure on you to do one thing or another and, in my position, I just have to do what I think is right. It’s all about the team, it’s all about the organisation; it’s not about one person. That’s what I stand for – setting the pace and the tone, and making sure we’re making the right decisions... and there are times when I have to make those.

LEWIS: The buck stops with you.CARROLL: Absolutely. And I take responsibility for that.

LEWIS: Do you ever feel weighed down by the responsibility or are you excited by it?CARROLL: I’m excited by it. When I’m no longer excited, I’ll do something else.

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BUSINESS PROFILE

In 2008, the company responsible for producing one of the most memorable advertising campaigns of all time – persuading most of the western world throughout the second half of the 20th century that a diamond is forever – created a new diamond brand, Forevermark.

In the aftermath of heated debate about the questionable journey of certain diamonds, and mounting concern over the provenance of goods in industries spanning food to metals, De Beers recognised the time was ripe for a diamond brand that spoke more intimately with its consumers and secured their hard-earned trust. At its heart, Forevermark was a turning point in the criteria De Beers laid out for both the aesthetics and the ethics of diamonds.

“For most people, buying a diamond, especially their first one, is no easy task,” says Stephen Lussier, CEO of Forevermark and a De Beers executive director. “Many people have limited knowledge of diamonds and the experience can be stressful. Forevermark makes it simpler – it is a promise you will always

A DIAMOND PROMISE

De Beers created Forevermark, a brand of inscribed diamonds, shining the light on its proprietary technologies and increased transparency, four years ago. Claire Adler looks at the brand’s

growing appeal and its plans for global leadership.

be proud to wear your diamond next to your skin. This promise comes with all the experience of De Beers, the world’s foremost diamond experts, behind it.”

The core of Forevermark’s offering is a unique inscription on each diamond that represents a promise of something much greater – a commitment to rarity, beauty, the communities from which it was mined, responsible sourcing, environmental considerations and the leveraging of De Beers’ closely guarded, patented testing and inscription technologies.

DELIVERING ON A PROMISE The impetus for the Forevermark brand crystallised at a time of dramatic change for the company. Shifts in the market, including ever-more stringent anti-trust legislation and the emergence of new diamond producers, had resulted in the progressive shrinking of De Beers’ share of the global rough diamond market from a one-time high of some 80 per cent to nearer 35 per cent by the turn of the century. The company thus re-evaluated its future by commissioning extensive research into what diamond buyers were looking for. The results would shape the future De Beers marketing strategy and engender a shift from marketing diamonds in general to communicating with its own end consumers directly.

“Our goal is for Forevermark to become the world’s leading diamond brand”

STEPHEN LUSSIER


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“In the West, we foresaw demand for a lot more assurance, confidence and comfort, particularly for a product coming from the developing world. We knew consumers needed more than the word of the jeweller,” says Lussier. “Looking East, we saw consumers more interested in branded jewellery, so we knew we had to provide the mystique and magic inherent to powerful brands. A unique inscription on every Forevermark diamond, achieved with our proprietary technology, would give consumers faith in the promise we were making.”

Launched in Asia in 2008, Forevermark diamonds have been worn by Hollywood A-listers such as Nicole Kidman, Gwyneth Paltrow and Uma Thurman at red-carpet events. Forevermark diamonds and jewellery are now present in 10 countries, in addition to the UK, where the diamonds are exclusively on sale at celebrity jeweller Stephen Webster’s glamorous Mayfair boutique, in his bridal collection.

Last year proved a bumper year for Forevermark with rapid expansion into new markets India and America, as well as Singapore, the Caribbean, Mexico, Malaysia and South Africa; the launch of the first Forevermark iPad app; and a doubling to 700 of the total number of locations where Forevermark is available. The brand is set to notch up 1,000 locations by the end of 2012. The average selling price is around $3,000, although the entry point is around $700. At the other end of the spectrum, the sky is the limit.

“Our goal is for Forevermark to become the world’s leading diamond brand,” says Lussier unequivocally.

Unsurprisingly, the provenance of diamonds is one of the pivotal elements of the Forevermark concept. Only a small number of mines in the world have been approved as Forevermark sources.

At Debswana’s* Jwaneng mine in Botswana, Balisi Bonyongo is the general manager in overall control. He is responsible for ensuring all the standards Forevermark has established to produce diamonds safely and in an environmentally friendly way are met. Having grown up in a

remote Botswanan village, he carved out his future in his country’s biggest success story, the diamond industry.

“One treats this job with a lot of respect because there is a sense of duty here,” says Bonyongo. “This company took me after I did my ‘O’ levels. I’m actually part of the diamond dream. I don’t play games when I speak about this stuff.”

INVESTMENTS AND PARTNERSHIPSIn Botswana, revenue from Debswana has allowed successive governments to invest heavily in public health and education, including mobile clinics and training for specialist doctors. Four years ago, De Beers announced the opening of DTC (The Diamond Trading Company − the rough-diamond distribution arm of De Beers) Botswana, the largest and most sophisticated diamond-sorting facility in the world. In 2011, De Beers announced that agreement had been reached on a new 10-year contract for the sorting, valuing and sales of Debswana’s diamond production. As part of the milestone agreement, De Beers will transfer its London-based rough-diamond sales activity to Botswana by the end of 2013, underpinning the long-term future of the partnership and transforming Botswana into one of the world’s leading diamond trading and manufacturing hubs.

Forevermark mines assume full responsibility for employee health and safety, and are committed to making a positive contribution to their local communities, from providing employee benefits and career opportunities, to

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“One treats this job with a lot of respect because there is a sense of duty here. I’m part of the diamond dream.”BALISI BONYONGO (RIGHT)

BUSINESS PROFILE

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*Debswana is the 50/50 diamond-mining joint venture between the government of Botswana and De Beers


offering HIV education and medication, and implementing initiatives to empower women. They also have long-term plans in place to restore the land they occupy. The Jwaneng mine has set aside areas of land in its vicinity dedicated to conservation and nature reserves.

AN ELITE SPARKLEForevermark partners, including the jewellers and retailers who sell jewellery incorporating Forevermark diamonds, and approved cutting and polishing houses, known as diamantaires, are subject to strict standards that are regularly monitored by independent auditors to maintain the integrity of the Forevermark diamond pipeline. For example, Venus Jewel, a Forevermark diamantaire based in Surat, India, supports educational charities which help disadvantaged young women.

Rigorous selection means fewer than one per cent of the world’s diamonds are eligible to become Forevermark diamonds. Once identified, they are segregated and managed separately with the help of sophisticated IT tracking systems. Then, only a small coterie of the world’s top craftspeople are permitted to cut and polish them at approved Forevermark cutting and polishing houses.

Botswana-based Pini Sharon, one of the few master craftspeople in the world who polish Forevermark diamonds, explained: “The angles of a Forevermark diamond are more correct than a normal stone so the diamond is much more beautiful, much more alive.”

Sharon uses the classic ‘four Cs’ of cut, clarity, carat and colour to evaluate diamond quality, applying additional criteria to assess and assure beauty and optimum sparkle.

The Forevermark inscription, consisting of the Forevermark icon and a unique identification number, made on the table facet or flat part of the diamond, uses highly confidential patented Forevermark technology and is invisible to the naked eye. It is 1/5,000th of the width of a human hair and can only be seen using a special Forevermark microscope, found in authorised Forevermark jewellers. Unlike diamond inscriptions found on the diamond’s girdle, the Forevermark inscription can be viewed when the diamond is set in jewellery, offering extra reassurance to its owner.

Perhaps there is a paradox in an inscription from a luxury brand which is invisible to the naked eye, especially given

part of the Forevermark promise is an enhanced ability to trace the diamond’s journey from the mine to its owner. Then again, the inscription’s invisibility possibly lends the brand even greater kudos than unashamedly brandishing another luxury label might. There is something inherently reassuring and personal about the owner alone being aware of the rarity, quality and uniqueness of their jewel. Either way, evidently knowledge of these discreet Forevermark inscriptions has succeeded in giving buyers that extra degree of reassurance. A second inscription centre was opened last year to meet demand, which has soared by more than 90 per cent over the past two years.

A SECRET LUXURY SERVICEAt the Forevermark Diamond Institutes in Antwerp, Belgium, and now in Maidenhead in the UK, where inscriptions are made, security is so tight that De Beers staff have been known to refer to the places as having the aura of a James Bond film location about them.

“The secrecy surrounding Forevermark locations is based on our deep understanding of diamonds, especially when the technology for detecting synthetic treatments that change or imitate a diamond’s natural state is becoming more sophisticated,” says Lussier.

What began as a radical change in marketing strategy has gathered significant traction and a keen celebrity following.

Last summer, an online campaign centred around the concept that all promises should be as unbreakable as those made by Forevermark. Model Yasmin Le Bon parted with a handsome donation and spent a day volunteering at Barnardo’s, the charity for young people, whose work

includes supporting young carers. Responding to the invitation “Our inscription is our promise. What’s yours?” thousands of people shared their pledges on a website, from spending more time with loved ones to giving up smoking.

Milton Pedraza, chief executive of luxury market research firm the Luxury Institute, sums up why Forevermark has a bright future.

“As luxury consumers mature beyond the ‘look at me’ phase, the idea of a brand label

that is hidden and only known to the owner of the luxury item is very timely,”

he reflects. “Luxury buyers are increasingly seeking pieces with

meaning, purpose, and compelling stories.”

PREVIOUS PAGE Actress Nicole Kidman wears a Forevermark diamond sautoir, designed by L’Wren Scott and totalling nearly 1,400 carats, at the 2008 Academy Awards

01 In the Botswanan capital of Gaborone, DTC Botswana operates the world’s largest and most sophisticated diamond-sorting facility

02 Forevermark launched in Mumbai and Delhi with a showcase of the world’s largest pair of identical 35-carat, D-colour, flawless round brilliant-cut diamonds – the Steinmetz Forevermark Yin Yang

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OPTIMA REPORT



Faced with the threat of climate change, in addition to the perennial challenges of famine, disease and rising

populations, Africa’s prospects remain uncertain. However, steps are being taken to unlock the value of

the continent’s resources and capabilities. Paul Kagame, President of Rwanda, believes that, by working with the

right partners and taking ownership of the issues, Africa can steer itself on a new journey.

STABILISING THE “ARC OF

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here is little doubt that the world faces enormous challenges in meeting the

impact of climate change. And many of the most negative consequences directly

affect Africa.During 2011, the world’s population

reached seven billion. By 2050, it is expected to increase to over nine billion,

and Africa’s population will have more than doubled from its current figure of little over one billion.

At the same time, we face enormous pressures of urbanisation. By 2025, Africa will be an urban continent, with the vast majority of people under the age of 25, their horizons and aspirations informed by the global, not the rural, village. This group could be a tremendous developmental opportunity and advantage as long as we are able to ensure a demographic dividend, by bringing down population growth rates at the time these young people hit the job market.

And there is clear evidence of the link between our environment and the economy. For instance, a study by the Stockholm Environment Institute of the economic impact of climate change in Rwanda reveals that extreme weather patterns associated with climate change could result in annual economic losses of just under one per cent of our country’s GDP by the year 2030. Our own inability to track the contributions of the environment to national growth – because they are not properly factored into our GDP calculations – is another impediment to progress.

Famine, state failure, disease and migration often go hand in hand. Throw in climate change, and we face a future more uncertain than at any time in our recent environmental history. Many scientists, for example, believe that the North Pole will have melted by 2040, raising our oceans, swamping coastal areas, and creating water shortages in those regions that are already water-stressed. Many of these are some of the poorest areas of Africa and Asia. The United States National Intelligence Council estimates that, between 2008 and 2025, the number of people facing water or food shortages will increase from 600 million to 1.4 billion in what it describes as an “arc of instability”.

TAKING JOINT RESPONSIBILITYAfrica is not responsible for the bulk of carbon emissions, but we will be among those regions most severely affected if the worst-case scenarios come to light. Agreement on the environment has until now been held up by who is willing to accept the blame for the current situation, who is willing to make the most cuts, how great those cuts should be so as not to endanger global economic growth, and who should pay for all this.

While we must play our role in this important global dialogue, acting in a manner that protects the environment can help Africa to help itself – in at least three respects.

“Africa is not responsible for the bulk of carbon emissions, but we will be among those most severely affected if the worst-case scenarios come to light.”PAUL KAGAME

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First, despite its richness in hydrocarbons, gas and uranium, Africa is desperately short of energy. Satellite images of Africa illustrate how the continent, especially the portion south of the Sahara, is shrouded in darkness. We have more than 10 per cent of the world’s reserves of oil, but we have to import refined petrol, diesel and paraffin at great cost and over huge distances.

The entire electrical generation capacity of the 49 countries of sub-Saharan Africa is about that of Spain. Two-thirds of this amount is, however, produced by one country: South Africa. Less than a quarter of the population of sub-Saharan Africa has access to electricity, versus about half in South Asia and more than 80 per cent in Latin America. At current rates, fewer than 40 per cent of African countries will reach universal access to electricity by 2050. This creates a significant development hurdle. Every extra megawatt of power provided can add as much as $3,000 per capita to gross domestic product. Indeed, most high-growth economies are characterised by strong energy sector growth, stable prices and ongoing reforms.

While thermal power sources might offer short-term solutions to this constraint, these are expensive and

non-renewable. Instead, the combinations of solar, biomass and hydro offer a sustainable solution. We need to work harder, for example, to make the hydro-electric potential of the Inga Falls on the Congo river in the Democratic Republic of Congo a reality. This could supply as much as 45,000 megawatts of renewable power, making it the largest hydro-electric project in the world. Africa needs to unite hands and efforts to make sure these schemes go from ideas to plans, from plans to projects, and from projects to power.

Without energy, we will not be able to break through our current development ceiling, for all the will in the world. The absence of electrical power is akin to development enslavement of our continent and its people.

CURBING AN OIL ADDICTIONToday, Rwanda is working to harvest methane gas from Lake Kivu, an energy source that is both clean and local. The world needs to curb its addiction to oil, and we can lead the way in Africa, drawing from our abundant natural resources.

We can also achieve more in the context of regional and international cooperation. An example of such cooperation on the African continent is the Lake Victoria Basin

CASE STUDY: RESTORING BIODIVERSITY TO THE WETLANDS

Rwanda received the Green Global award for the restoration of the Rugezi-Burera-Ruhondo wetlands, home to numerous species of birds, in the northern part of the country. Local communities in the area took on the entire restoration project after realising the direct positive impact it would have on their lives.

The local communities agreed to be resettled; cattle were moved; trees were planted. In the end, the damage to the wetlands was reversed, and their biodiversity recovered.

PAGE 22On the stump: President Paul Kagame campaigning for his re-election. Rwanda is due to hold its presidential election in August this year

01 Tutuka is one of South Africa’s major coal-fired power stations. Around 90 per cent of electricity generated in Africa’s biggest economy is derived from coal

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Commission (LVBC), a coordination body for environmental and natural resources management in the region, promoting the management of the lake and its catchment area and the conservation of aquatic resources, while developing fishing, industry, agriculture and tourism.

In Rwanda, we are promoting environmental and climate-compatible development as well as resource-conscious economic development as an integral part of our national vision.

Within this context, we have created an environmental management authority, tasked with coordinating, supervising and regulating environmental management for sustainable development. Its responsibilities include ensuring that an environmental and social impact assessment is carried out for every project before implementation. This allowed us to

“We have a vision of Rwanda for 2050: a developed country where agriculture and industry have a minimal negative impact on the environment.”PAUL KAGAME

revise our Vision 2020 targets and our Economic Development and Poverty Reduction Strategy to incorporate climate change and environment indicators.

We have just completed our National Climate Change and Low Carbon Development Strategy, a strategic framework that includes a vision of Rwanda for 2050 as a developed country where agriculture and industry have a minimal negative impact on the environment.

Furthermore, district-level development plans include environmental and resource-protection actions. Performance contracts signed by district mayors every year include preventing soil erosion and protecting marshlands, as well as access to clean water and electricity. They have to incorporate energy-efficient measures such as the use of biomass and the promotion of biogas for domestic application; ecological sanitation, forest cover and others.

More than 10 per cent of our land has been dedicated to conservation and 23.4 per cent has been put aside for forests and parks. Interventions such as stopping the use of non-biodegradable plastic material, reforestation, radical terracing to fight soil erosion, and protection of water bodies are beginning to have a positive impact on our environment.

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01 This image of the world’s city lights reflects Africa’s lack of modern energy services, which continues to hinder its development

02 The new Bujagali hydropower facility, located where the White Nile emerges from Lake Victoria, is part of Uganda’s broader development strategy to improve the country’s investment climate in order to promote growth and reduce poverty

03 A female doctor tests suspected counterfeit drugs in a Nigerian laboratory. Empowering Africa’s women is vital if they are to be liberated from the rural grind

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To make these plans and systems work better, we plan to embed more modern and relevant techniques, and continue to hold our public officials accountable to our promises.

For this reason, we integrate the protection of our environment and natural capital into every aspect of our economic development plans and strategies. This is why our Ministry of Finance and Economic Planning, in collaboration with the Rwanda Environment Management Agency, has supported the integration of environmental sustainability and climate change into the budgets of other economic sectors for the last two fiscal periods.

A PROSPERING CONTINENTThe second point about African self-interest in acting expeditiously on the environment is the need to protect one of our great comparative advantages – tourism. Rwanda’s natural forests are the habitat of one of our greatest tourist assets, the mountain gorilla, viewed by 20,000 visitors annually.

Africa’s share of world tourism flows is only around five per cent, 49 million of 940 million globally, earning the continent about $30 billion of a global total of $500 billion.

We know that for every 10 tourists, one job is created and that tourism is the world’s fastest-growing economic sector. We must therefore do more to leverage our natural advantages in this regard.

Simply providing a decent product, whether hotels or beaches or wildlife is a necessary, but insufficient, step in order to tap into this market. Protecting our environment has to occur alongside investing in improvements in air transport safety, reliability and frequency. Together, this will assist us in gaining a larger slice of tourism revenue.

Third, the provision of energy will enable us to realise our Millennium Development Goals more quickly, especially in the liberation of women from the rural grind. In developing countries, the involvement of women is particularly critical given that they produce up to 80 per cent of food and

“The world needs to curb its addiction to oil, and we can lead the way in Africa, drawing from our abundant natural resources.”PAUL KAGAME

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01 Rwanda’s natural forests are the habitat of the mountain gorilla, viewed by 20,000 visitors annually. However, Africa needs to do more to leverage its natural advantages and increase its share of world tourism from its current lowly five per cent

02 For more than five years, Rwandan conservation bodies, NGOs and individuals have been working hand in hand with The Great Ape Trust and other international partners to restore Rwanda’s Gishwati Forest to its former glory. The forest is expected to achieve National Park status in the near future

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provide 90 per cent of water and fuel wood. We also need to educate our children and raise their awareness of the prudent use of water, energy and land. Our Technical and Vocational Training Institutions are increasingly focusing on areas such as renewable energy, agro-forestry and irrigation in their curricula. This will result in higher productivity and a more resilient environment for future generations.

The late Kenyan environmentalist and Nobel Laureate Wangari Maathai led the way in protecting our region’s forests; it would be both testimony to her legacy and fulfilment of our responsibility if we could do more to safeguard this critical resource and, at the same time, improve the living conditions of families and the future of our communities.

Crucially, it is the private sector that will drive Africa’s development and pursuit of prosperity. They, too, need to understand that investing in protecting the environment need not be a burden; rather, it can be a lucrative business with high returns. Experience has shown that investing in such green businesses as renewable energy, waste management and ecotourism is hugely profitable. We are already working to improve the conditions for doing

business in order to attract domestic as well as foreign direct investment. This creates jobs and builds capacity. Private enterprise also contributes to infrastructure development, and provides innovative technologies that can help us achieve more goals even faster, including the sustainable harvesting of water, modern farming for food security, and harnessing energy resources.

Thus, at the core of our efforts to protect the environment must also be an attitude that seeks to work with the private sector, bring them into our development process and make them true partners in sustainable environmental management.

To prove that maintaining our natural capital and preserving the health of our ecosystems is viable and possible, we need access to accurate data. That is why we are working with the Common Market for Eastern and Southern Africa (COMESA) and the Massachusetts Institute of Technology (MIT) to set up the Kalisimbi Climate Observatory Centre in Rwanda. This is just one of the strong alliances we hope will ensure that the present and future use of our natural capital does not lessen our quality of life – or that of generations to come.

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03 Kenyan environmentalist and human rights campaigner Dr Wangari Maathai, who, in 2004, was the first African woman to win the Nobel Peace Prize, being honoured for her contribution to sustainable development, peace and democracy. She is pictured here (centre) with members of the Green Belt Movement, which she founded in 1977 to encourage poor women to plant 30 million trees

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EVERY DROP MATTERS

With water often a scarce supply, but absolutely essential for operations, Anglo American is investing in research and development to ensure it becomes more water-resilient.

Martin Beaver reports.


WATER STRATEGY


Independent scientists from R2 Resources Jude Simon (left) and Elizabeth Smith conduct environmental studies in the Bristol Bay region of Alaska, close to the Pebble copper project

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There’s no fixed rule, but a healthy human being takes about eight weeks to die without food. Without water, you could be dead

in three days. Without wishing to push the analogy too far, the same applies to the body corporate. Without capital, companies fade away. Without water, they can die. And mining companies are particularly vulnerable.

One, because they use a lot of water – in both production and processing. Last year, Anglo American consumed more than 115 million cubic metres of water in its primary activities alone – the equivalent of one Olympic-size swimming pool for every two employees. And if the company delivers all of its proposed projects, that figure could double by 2018.

Two: minerals are often found in parts of the world where water is already scarce. More than 80 per cent of Anglo American’s operations and projects are in water-stressed areas, many of which are in remote locations near communities that already lack basic water services.

Three: the nature of mining tends to degrade the quality of the water it touches. Poor quality water is bad for the mine as it can corrode equipment; and it is bad for the environment and

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local communities who suffer the resulting pollution.

Four: the lifecycle of a mine is enormously long. The period from initial exploration to closure can range from 40 to 150 years. To put that in context, 40 years ago the internet did not exist. Look back 150 years, and neither did Germany.

FUTURE RISK AND DEMANDThe investment decisions that companies like Anglo American make today are well within timescales that could be significantly affected by weather variability associated with climate change. Assessing how climate change might affect a business is neither simple nor precise. But for a mining company, trying is vital. Global population is predicted to grow by around 30 per cent in less than 40 years, from seven billion today to more than nine billion by 2050 – and

01

“Therefore, today, when you buy it, it is normally priced at a low level that everyone can afford. This is unlikely to be the case in 20 years’ time.”

So, companies need to regard water as “a strategically important, non-renewable resource”. While 70 per cent of the surface of the earth is water, less than five per cent of it is suitable for human or animal consumption, and only 0.6 per cent is easily accessible. Furthermore, “once you have destroyed the quality of water, it is very difficult to reinstate it”, Mann adds.

“At the moment, there is an artificial reality about how water is valued. Establishing the future value of water is something we are already looking at.”

Remember, 20 years ago, carbon pricing was scarcely on corporate radars. But not any more.

potentially 10.5 billion – according to the United Nations. These additional people will need water directly as well as water to grow their food. While mankind’s ability to feed itself has steadily increased, our ability to make more water has not.

“We expect variable supply, escalating cost and increasing regulation of water,” says Richard Garner, who is responsible for the company’s water strategy. “In order to have a resilient business, we have to ensure that we can secure water for our own needs without compromising water resources for other users. This is an essential element of any licence to operate.”

Despite the fact that water falls free from the sky, it now represents a material business risk for companies like Anglo American.

“Everyone needs it,” explains Jeremy Mann, head of geosciences, process & SD technology development.

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PARTNERING WITH COMMUNITIESThe strategy also means partnering with stakeholders, such as at eMalahleni. This is one of the most economically dynamic – and fastest-growing – urban areas of South Africa. It is a municipality of over 500,000 people in a water-stressed catchment, and has faced considerable difficulties in meeting increasing demand for drinking water as supply tightens.

But while too little water on the surface is a problem for communities, too much water underground is no less of a problem for mining companies.

Anglo American has spent almost $100 million – and a decade of research and development – on a water-reclamation plant to treat underground water. The research involved the Group’s Thermal Coal business establishing partnerships with the local authority and the major mining houses in the Highveld coalfields, particularly BHP Billiton.

The eMalahleni plant was commissioned in 2007, and currently supplies around 12 per cent of the town’s water. All of Anglo American’s mining operations nearby are also now self-sufficient. The plant will remain in operation well beyond the end of active mining to sustainably manage mine water and make drinking water available to the local community into the future.

In July 2011, Anglo American approved further investment in the plant to increase treatment capacity from 30 Ml to 50 Ml a day – with a peak capacity of 60 Ml a day.

ADAPTING TO CHANGEAnglo American’s approach to sustainable development is to always do what it can to combat

INFRASTRUCTURE INVESTMENT Anglo American’s Group water strategy involves spending money building infrastructure. While some parts of the world experience shifts in weather patterns, the weather in northern Chile is either stable or permanently extreme – depending on how you look at it.

The Mantoverde copper mine is in Chile’s Atacama region. Some parts of the region may not have had any rain at all since at least the 16th century. Yet Anglo American’s operations use 120 litres of water a second. This is currently supplied by a well field shared by local communities. Over-exploitation means that output from these wells has been rapidly

01 Coordinator of water resources at Anglo American’s Minas-Rio iron-ore project Leonardo Mitre Alvim De Castro inspects the water levels of a river in Brazil’s Minas Gerais province

02 After a severe wet season in Australia in 2010-2011, a rain immunisation project – which included the construction of flood defence and water storage facilities (pictured) – sought to decrease the environmental risks and consequential production time loss at Anglo American’s Metallurgical Coal sites

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declining and, unless something was done to provide more water, mining operations and local users would have been significantly affected from as early as next year.

So Anglo American is spending almost $100 million on building a desalination plant that will take water from the Pacific Ocean, treat it and pipe it 42 kilometres away, up into the Andes. Effectively, Anglo American is making its own water.

The plant is due to start operating in March 2013. Output will fully cover Mantoverde’s needs for the foreseeable future – and, at the same time, free up the water that it currently takes from the well field for local people and agriculture.

“We estimate we will have to halve water consumption in current operations... and ensure that 80 per cent of water used is recycled or recovered.”JEREMY MANN


WATER STRATEGY

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works, improved flood-protection, and upgrades to the underground drainage network, storage and water-treatment capacity.

Overall, it provides a water-management infrastructure that can quickly move water out of the mining areas and into storage during severe wet periods – and back again for use in mining operations during droughts.

the causes of climate change. But it also means adapting to their possible impacts.

“Shifts in the availability of water are one of the main ways in which climate change will manifest itself,” says Garner. Coastal areas could suffer a rise in sea levels. Dry areas could become drier – or wetter. Or both.

The challenge already faced by the Metallurgical Coal operations in

A DECADE OF CHANGEANGLO AMERICAN IS IMPLEMENTING A 10-YEAR WATER STRATEGY, WHICH IS DIRECTLY LINKED TO THE GROUP’S OVERALL AIM OF “OPERATING SAFELY, SUSTAINABLY AND RESPONSIBLY”.

Some of Anglo American’s operations are in parts of the world that have plenty of water. But almost three-quarters of the company’s current – and planned – operations are in places such as Australia, Chile, Peru and southern Africa, where access to water is already a significant socio-economic concern. The Group’s 10-year water strategy is focused on:

n improving the company’s water use efficiency and water security

n minimising risk by integrating water into long-term business planning and understanding the water implications of climate change

n partnering with other stakeholders.

Some of this can be done now. But some of it is years from fulfilment. For example, Anglo American is undertaking research with such bodies as the UK Met Office in modelling the potential regional impacts of changes in precipitation. Some of this work is genuinely cutting-edge as it involves trying to model both when and to what extent changes might occur.

But the strategy also means Anglo American must get its own house in order. One way to make yourself more water-resilient is to use less water. But that isn’t as simple as it sounds. It requires you to know how much water you are using and where it is essential to operations. It means you need to be able to set targets, and have projects in place to deliver them. Projects require budgets, skills and time. And it all requires accurate measurement.

Using its Water Efficiency Target Tool (WETT), Anglo American has established a baseline of robust water-use data, enabling it to set targets for reductions at each site. WETT was piloted at seven sites and 2012 will be the first year of full implementation across the Group. Hopes are high. The pilot at Platinum achieved a 21 per cent improvement in water efficiency.

Australia is a high variability in rainfall that oscillates between severe drought and extreme flood conditions. In the 2010-2011 wet season, for example, Queensland was hit by more than a metre of rain. This seriously affected coal production – flooding pits and closing access roads. Anglo American initiated a rain immunisation project that includes extensive pump and piping

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CHANGES TO PROCEDURESAdaptation projects are good. Partnering with stakeholders and building infrastructure are good too. But, ultimately, the business needs to change its processes if it is to create a sustainable business in terms of water use.

“By 2030, we want our mines to be water-neutral,” says Mann. “But in order to achieve that, we estimate

finish – from the perspective of water. No opportunity or assumption is being left unconsidered.

“For example, when we are exploring for new mining opportunities, part of our assessment of the resource is the amount of water that would be needed to extract and process the minerals.

“We are looking at options for dry-processing what we mine, rather than using water. And we are also looking at technologies that could minimise water issues beyond mine closure, such as water contamination.”

This is all much more complicated than it sounds and there is no silver bullet. For instance, while dry-processing would reduce water consumption, Mann explains, “it might also increase our energy consumption and therefore our carbon footprint, contrary to other technology commitments. So we have a parallel project looking at how we can simultaneously achieve a carbon-neutral mine.”

Is it possible that all of this work will come to nothing? “No,” Mann concludes. “Although, there are already Anglo American projects that are stalled because of local community concerns about water. I have no doubt that if we put the right technologies in place to address such concerns, now and in the future, then we will be able to operate without any issues.”

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01 One objective of the Los Bronces copper expansion project is to recycle all the water at its Las Tórtolas tailings facility for use in its grinding plant

02 Seamgas maintenance supervisor Andrew McLennan near Metallurgical Coal’s Moranbah North vacuum plant water recirculation tank

03 Inspecting reverse-osmosis tubes at the eMalahleni plant in South Africa, which currently purifies up to 30 million litres of mine water daily

that we will have to halve water consumption in current operations. From this reduced quantity, they will need to ensure that 80 per cent of the water they do use will be recycled or recovered. The remaining 20 per cent that could be lost through seepage or evaporation has to be as clean when it leaves the mine as it was when it came in. So we are looking at our entire operation – from start to

Martin Beaver is a freelance writer with a special interest in sustainable development issues, which he has covered for companies such as Shell, Centrica, Lloyd’s Register and National Express.

AUTHORMARTIN BEAVER

For further information on Anglo American’s water strategy and performance, visit http://bit.ly/AAWater

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RESOURCES PROFILE

N ever heard of niobium? Well, you’ve almost certainly made use of it today. Maybe you wear

glasses with lightweight but powerful lenses; niobium oxide in the glass makes this possible. If you drive a modern car, it is the niobium in the chassis that makes the steel strong yet light and resilient. Add that to countless uses in electronics, construction, jewellery and even space exploration, and niobium may well be the best-kept secret ingredient in the world.

Niobium was discovered in 1801 by Charles Hatchett, a chemist at the British Museum in London. He analysed a mineral sample in the museum’s collection that had come from New England and found an element he didn’t recognise. He named it columbium, after Columbia, a folk name for America at the time.

Scientists spent much of the next 50 years arguing over whether or not columbium was chemically identical to tantalum, an element often found in the same ore. Eventually, in the 1860s, the two were proven to be different and columbium was renamed niobium, after Niobe, the daughter of Tantalus in Greek mythology.

HOT, NOT HEAVY No one found a use for niobium until the early 1900s, when it was briefly a filament in early lightbulbs. In its pure metal form, niobium has one of the highest melting points of all metals, at 2,469˚C, which made it a good candidate for the job, although it was soon superseded by tungsten, which has a melting point over 3,000˚C.

Niobium hit its stride in the 1920s, when it was found to increase the strength of steel, while also making it lighter, corrosion-resistant and easier to weld and shape.

Over 90 per cent of niobium mined today is used in these high-strength, low-alloy steels. Nearly all of it comes

from two mines in Brazil, both of which extract the mineral pyrochlore, containing Nb2O5, niobium oxide. One mine is near the city of Araxá in the Minas Gerais region, run by CBMM (Companhia Brasileira de Metalurgia e Mineração); the other is near Catalão and is operated by Mineração Catalão, wholly owned by Anglo American.

Together, these two mines account for 91 per cent of the world’s niobium supply (around 85 per cent coming from the Araxá mine and six per cent from Mineração Catalão), with another nine per cent coming from Iamgold Corporation’s Niobec mine in Quebec, Canada.

Although niobium is the 33rd most common element in the Earth’s crust, it is often scattered erratically in rocks of volcanic origin, so is relatively difficult

to find. As a result, most of the rest of niobium produced comes as a by-product of mining for other metals, such as tin in parts of Nigeria.

ROCKETS AND MAGNETSIn its pure metal form, niobium is incredibly versatile and has many unique properties. It is soft, pliable, corrosion-resistant, able to withstand extreme highs and lows of temperature, and capable of both conducting and storing electricity.

As such, it has been put to a dizzying array of uses outside the steel industry, from nose studs to the rocket thruster nozzles used in the Apollo missions to the moon in the 1960s and early 1970s.

At temperatures below -264˚C, niobium acts as a superconductor, which means that it loses all electrical resistance and can transmit a current without losing energy. When superconducting wires are wound into coils they can conduct very strong electrical currents, generating a large magnetic field. Niobium-containing superconducting magnets are used to propel trains powered by magnetic levitation (maglev trains), power magnetic resonance imaging (MRI) scanners in hospitals and provide the

THE SECRET INGREDIENTWhat strengthens steel, makes vehicles lighter, thereby reducing carbon emissions, and can even help keep a human heart beating? Caroline Williams reports on niobium, the element that can do it all.

ANGLO AMERICAN’S NIOBIUM OPERATION

OPERATION: Mineração Catalão

LOCATION: Catalão and Ovidor, Brazil

ANGLO AMERICAN OWNERSHIP:

100%

OPERATION TYPE: Open-pit mine

ANNUAL PRODUCTION 3,800 tonnes

Caroline Williams is a freelance science writer and broadcaster. As an ex-features editor at New Scientist, she continues to contribute regularly to the magazine. She has also produced and contributed to radio programmes for the BBC’s Natural History Unit for broadcast on BBC Radio 4, the World Service and 5 Live.

AUTHORCAROLINE WILLIAMS


huge amounts of energy needed in particle detectors, such as the Large Hadron Collider at CERN in Geneva.

Niobium is increasingly used in electrical circuits as a capacitor, acting like a storage tank for electrons to allow a circuit to cope with surges in demand. The ideal capacitor for modern microcircuits, such as those in mobile phones, is tantalum − but niobium is becoming a popular choice as it is more common in the Earth’s crust, so less prone to shortages and price hikes.

For all these exotic properties, however, niobium is completely inert inside the human body and therefore it is a key ingredient in pacemakers and hypo-allergenic body piercings and jewellery. And when added to glass it gives the glass a higher refractive index, bending light at a greater angle, which means that powerful lenses – in spectacles and cameras for example – can be thinner and lighter.

AN ELEMENT IN DEMANDOf all these uses, two are likely to substantially increase demand for niobium in the coming years, according to Sérgio Castanho, managing director of Anglo American’s Niobium business.

“We expect steel demand to increase steadily until 2020,” he says, “stimulated by China and India, coupled with increasing niobium usage intensity in the developed world.”

Despite the recent economic slowdown in Europe, growth is expected there, too. A recent EU report estimated that, by 2030, demand for niobium will be nearly five times the level of 2006*. Globally, demand for ferroniobium (FeNb) is expected to grow by six to seven per cent per year, to around 80,000 tonnes of FeNb a year by 2017, Castanho adds.

Niobium’s use in other electronics is expected to increase. With rising demand for mobile phones and

computers, it could become the element of choice in micro-capacitors.

Anglo American is increasing its niobium operations to keep up with this rising demand. One key development is the Boa Vista Fresh Rock project, in which the existing plant in Ouvidor will be adapted to process fresh rock instead of oxidised ore, resulting in a near-doubling of output. By the time phase 2 is completed, Anglo American’s global niobium market share will have risen from six to 16 per cent.

“This will lead to an increase in production capacity to approximately 6,500 tonnes of niobium per year from the current 3,800 tonnes,” says Anglo American’s Niobium and Phosphates’ Mauro Meinberg.

Whether most people know it or not, niobium is fast becoming central to modern life and, with mining set to be ramped up to cope, its ubiquity is only going to increase. Niobium is on its way to becoming one secret ingredient that we can’t live without.

01 Superconducting magnets containing niobium help propel magnetic levitation (maglev) trains. Featured is the Maglev train, which connects Shanghai’s Pudong International Airport with the city’s subway system

02 Discovered more than 200 years ago by a chemist at London’s British Museum, niobium is overwhelmingly sourced from Brazil

03 Inert inside the human body, niobium is used in magnetic resonance imaging (MRI) devices

04 A cable-winding machine in Illinois weaves superconducting niobium-titanium wire into multiple-strand cable for the world’s most advanced superconducting quadrupole accelerator magnets

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If we have realised one thing from the global financial crisis, it’s the growing prominence and importance of the emerging markets of the South. Until now, more attention has focused on the size of the economies and their rate of growth than on the ideas and policies being tested in these developing countries.

The phrase “the Washington Consensus” became identified with a set of economic policy prescriptions that dominated the discourse about economic development in many of the world’s most important multilateral institutions and across the globe. As a set of ideas, the Washington Consensus has been tarnished by the financial crisis. A number of leaders and intellectuals across the developing world now suggest that policies at the core of the Washington Consensus have been totally discredited. As ever, it’s important to distinguish rhetoric from reality, and to note that numerous developing nations are continuing to follow many of the essential policy prescripts of the Washington Consensus.

The rise of China has presented the developing world with a set of competing ideas. That country’s remarkable economic growth over the past few decades coupled with

EMERGING DEMOCRATIC NATIONSON THE RISE

the hundreds of millions of people who have moved out of extreme poverty has led to increasing interest in what has been called “the Beijing Consensus”. The concept is associated as much with China’s authoritarian politics as its economics and, like the Washington Consensus, there are many misconceptions and considerable debate as to exactly what the Chinese model is.

Nonetheless, its attraction in numerous parts of the world is growing, especially in the context of anaemic growth in leading western nations. From the point of view of people who support democracy, there is a clear need to turn the spotlight away from China and other authoritarian societies. We need alternative models of development rooted in the actual experiences of the developing world. A better understanding of how countries like India, Brazil and South Africa are pursuing the goals of development and inclusion in democratic contexts would be an important way to counter the appeal of the Beijing Consensus. Is there an alternative model of democratic, market-driven development emerging from these countries and other developing-country democracies? If such a model exists, what are its key elements?

The global financial crisis exposed deep flaws in established theories of economic development. Now, leading thinkers are looking to India, Brazil and South Africa for a better model, as Ann Bernstein reports.

Ann Bernstein is executive director of the Centre for Development and Enterprise South Africa. Her book, The Case for Business in Developing Economies (Penguin 2010), was awarded the Antony Fisher Memorial Award for 2012 by the Atlas Research Foundation, Washington DC.

AUTHORANN BERNSTEIN


OPTIMA REPORT

INCLUDE: A NEW VOICE IN THE DEVELOPMENT DEBATE

South Africa’s leading social and economic policy think tank, the Centre for Development and Enterprise, has been instrumental in establishing an international think tank consortium called INCLUDE. The consortium consists of leading think tanks from three developing countries: India, Brazil and South Africa. The two other principal members of the consortium are the Centre for Policy Research, the leader in Indian public policy research; and the Instituto Fernando Henrique Cardoso, founded by the former Brazilian president.

The consortium has three objectives: learn about each country’s development strategies; use that knowledge to strengthen the consortium’s influence in national policy reform processes; and facilitate a greater voice in global debates about development from democratic emerging countries.

This new global consortium seeks to provide an independent perspective on growth and development, casting greater light on how these three countries are seeking to achieve sustained and inclusive growth in dynamic, democratic contexts.

The comparative insights arising from research, workshops and engagement with business experts and government leaders on best practice in the three countries will prove relevant not only to reformers in the countries concerned but also in the wider developing world, from which it is hoped like-minded partners will emerge in the future.

The first workshop of the international consortium was held in Johannesburg in 2011. Important insights emerged from the experience of the three countries with respect to markets, states and enterprise.

STATES AND MARKETSCentral to the challenge of maximising redistribution through participation in employment and enterprise is the task of managing the relationship between state and market to promote inclusive growth. This topic encourages considerable rhetoric and ideological positioning. It is important to dig deeper and think harder about the realities behind the bombast. We need to debunk false dichotomies between the market and the state.

All three countries encompassed by this initiative have very large state sectors. Strong traditions of statism stem from nationalist, military authoritarian and leftist ideological sources. Even those influences that have been consigned to the past have left their mark on the present. There is an inbuilt bias towards state-led redistribution and political clout for the public sector.

In India, the state sector remains dominant, at over 50 per cent of GDP. In Brazil, under military rule in the 1960s to 1980s, state-owned enterprises multiplied, and although significant areas of the economy have been privatised, large sectors are still in state hands. In democratic South Africa, modest attempts at privatisation had ground to a halt by

2004, and many important economic sectors (electricity, rail, road, air transport and ports) remain state-dominated.

However, the size of the state matters less than the quality of its interventions. Effective market economies require smart states. Governments that ensure excellent infrastructure can greatly boost market dynamism; governments that ensure quality education for all their citizens reap massive returns. This requires state officials who are competent, able to manage large systems and complex projects, and able to regulate sophisticated companies. It also needs politicians and state officials who want markets to work and can accurately gauge the complex relationship between effective state performance and market-friendly intervention.

In too many instances, the three countries are experiencing considerable incompetence and inefficiencies in their state sectors at the same time as a political desire for a more activist state hampers rather than facilitates the development of markets. In Brazil, the viability of the social security system is threatened by the disproportionate pension benefits of civil servants. In South Africa, public sector pay rises regularly outstrip productivity. In India, delivery of subsidies and transfers to the very poor are compromised by corruption and bureaucracy.

PRIVATE COPINGWhat we are seeing in all three countries is a common desire for mainly market-driven development, coupled with a historically large state, and a preference for the state to play a major role in strategies for growth as well as in strategies for the inclusion of more people in the modern economy and society. There is a tendency to downplay or even deny the contradictions and conflicting priorities involved in these differing perspectives on growth.

As a result, people are taking their own paths to inclusiveness. Some of the interesting new developments do not always include the state. Thus “private coping”, such as the growth of private schooling for poorer people in India (where it is massive) and South Africa (15 per cent and growing), is one example of how market dynamics are responding to demand and disillusion with the poor

01 South Africans queue at local elections in 2011, when the ruling African National Congress faced its strongest opposition since the end of apartheid. Campaigns were dominated by issues such as housing, water and employment

“The size of the state matters less than the quality of its interventions. Effective market economies require smart states. Governments that ensure excellent infrastructure... and quality education reap massive returns.”ANN BERNSTEIN


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quality of state offerings. Growth has changed citizens’ expectations of the state in Brazil and presented them with alternatives. With the expansion of the middle class, an increasing part of the population buys market-based education and health services while looking to the state to regulate private providers.

A second area is the impact of employment. Contrary to the many well-meaning and often state-driven or foreign-funded ideas of how to help the poor, it is clear that employment is the best way out of poverty and into a world of skills and new opportunities, albeit initially at a very low level. The 90 million people moved out of poverty in India over the past 20 years provide a striking illustration that faster economic growth and more market opportunities offer the most sustainable and empowering route out of poverty.

“The relationship between democracy and development will be a major topic in the century ahead. In a democracy, development is seen as a wider concept than economic policy alone.”ANN BERNSTEIN

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01 Students at a private school in Bangalore, India. Private schooling for poorer people is a major part of the country’s growth strategy

02 Highway construction in Brazil’s commercial capital, São Paulo. Compared to China, all three countries lag in respect of infrastructure, the quality of schooling and productivity growth

BUSINESS AND GOVERNMENTThe role of the business sector in economic reform differs greatly in each of the three countries, in part as a result of their particular histories. However, in all three, companies have had to move away from the special deals that characterise undemocratic situations and highly state-oriented systems, to participation in public debates about general rules for governing economic activity and corporate opportunity. There are therefore increasing areas of common interest and comparability across the three countries concerning how companies participate in the democratic public square.

For example, all three societies need to assess whether the liberalisation of their economies is leading to state capture by powerful business interests and, if so, how this can be countered. Corruption is a growing challenge in all three cases.

Democracies which have both a free press and vigorous civil society organisations are at an advantage in this arena. Laws can encourage transparency, watchdogs can be established and the media can report on corruption, thus encouraging remedial action by the state or allowing voters

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to know what is happening. However, enforcing vigorous and intense competition among companies (and political parties) is probably one of the most powerful tools for preventing business from capturing the state. Public education about the value of competitive processes would also make a difference.

ECONOMIC GROWTH CHANGES ATTITUDESThe impact of higher levels of economic growth on a society can be profound.

In all three countries, social mobility is a reality. Brazil’s last president rose from the disadvantaged north-east and his vice-president came from a similarly deprived background. South Africa’s president and many cabinet members come from poor families. The Indian prime minister is the exception, emerging from that country’s impressively well-educated elite, but the heads of many regional states come from the poorest groups in India, including former “untouchables”.

Success breeds success. Many South African companies have expanded successfully into Africa, and some have become global players. In the process, they act as

ambassadors for the country, even the continent, spearheading a new era of African growth and potential.

The growth of Indian multinationals has changed how other countries and companies view not just those Indian companies but the country itself. India is now seen as a much more attractive place in which to do business. Within India, leading-edge companies have become national icons – an unexpected and remarkable phenomenon, considering India’s history of state dominance. The corporate leader as national hero is a different and refreshing approach to traditional development theory.

All three countries have introduced sensible macro-economic management, but frequently the vital micro reforms that should complement this macro consensus and give it momentum and meaning have not been followed through. They all face enormous threats to their competitiveness. Compared to China, for example, they lag in respect of infrastructure, the quality of schooling and productivity growth.

The establishment of a think tank consortium across three countries and continents is a bold initiative and the aim of learning from three countries as vitally important as India, Brazil and South Africa is an ambitious endeavour. The intention is to learn more about each other’s countries and look for comparative insights about democracy and inclusive growth.

The relationship between democracy and development will be a major topic in the century ahead. In a democracy, development is seen as a wider concept than economic policy alone. A country’s future is determined by the vision its leaders offer their citizens. Felipe Kast, presidential delegate for Chilean reconstruction within the Ministry of Housing and Urbanism, talked recently of changing “the inequality of dreams”. This is a profound insight. If poorer people and formerly excluded groups feel they are now part of the modernisation story, their attitudes change; they have bigger dreams for themselves and their children and in so doing drive their society to greater heights. The skill of leadership is to make sure that people are encouraged to think big and that new opportunities in education, employment and urbanisation are available and working to best effect for as many people as possible.

Despite their differences, India, Brazil and South Africa face the common challenges of pursuing modernisation and eradicating poverty without sacrificing democratic freedoms. In the current global context their progress in meeting this challenge and the way it is communicated outside their own borders has enormous importance for the future.


BOOK REVIEW

T he City of Nogales is cut in half by a fence,” begins this weighty thesis on what it is that makes

some countries rich while even their closest neighbours stay poor or get poorer. Nogales sits astride the Arizona-Mexico border: on the US side, average household incomes are $30,000 a year, teenagers go to school, life expectancy is high, law and order prevails; on the Mexican side, incomes are closer to $10,000, few people complete their education, and crime, corruption and infant mortality are rife.

These differences arise with no variation of geography, climate or endemic disease – and, we might assume, little difference in the cultural and ethnic origins of the adjacent

populations. Likewise in the Korean peninsula, a people united by an ancient, distinctive culture is divided by an armed stand-off along the 38th Parallel – and the southerners enjoy European levels of prosperity while the northerners literally starve, their life expectancy a decade shorter than that of their cousins over the border. A satellite photograph by night shows the southern Republic lit like a fairground, but the northern Democratic People’s Republic in pitch dark for lack of electricity.

The explanation for these contrasts offered by Professors Daron Acemoglu, an economist at MIT, and James A Robinson, a Latin American specialist at Harvard, is illustrated by the irony of the North Korean state’s full title. This failed nation is brutally undemocratic: its people have no control over their own destiny, and nor does it meet any definition of a “republic” of empowered citizens. It is the fiefdom of a mad dynasty, the Kims, and their corrupt entourage. In the authors’

particular vocabulary – which provides the intellectual key to the book – North Korea is an “extractive” regime, while South Korea is “inclusive”.

CREATIVE DESTRUCTIONTo be inclusive is to be pluralist in the distribution of power, egalitarian in access to resources and rewards, and responsive to the will of the people. To be extractive is to be despotic without being benign: to rule in the interest of an elite; to tax and restrict enterprise, or replace it with central planning, state ownership and corrupt monopolies in such a way as to prevent wealth-sharing and crush innovation; and to limit education lest it promote free thinking. By shackling learning and discouraging creativity, states with these characteristics render themselves less susceptible to “creative destruction”, a Schumpeterian phrase used in Why Nations Fail to denote industrial or technological revolution and the accompanying social change.

WHY NATIONS FAIL: THE ORIGINS OF POWER, PROSPERITY AND POVERTY BY DARON ACEMOGLU AND JAMES A ROBINSONPROFILE BOOKS, LONDON 2012. 529 PAGES.Review by Martin Vander Weyer

DEMOCRACY KEY TO PROGRESSION


And yet, the authors argue, it is through periodic bouts of creative destruction that inclusive states have multiplied their wealth and consolidated their global leadership. Britain’s development as a role model in this respect dates from as long ago as the signing of the Magna Carta in 1215 — a “first hesitant step towards pluralism” that King John himself immediately asked the Pope to annul, but which first signalled the possibility of restraining the extractive might of monarchy. Almost half a millennium would pass before the Glorious Revolution of 1688 gave impetus towards a proper balance of power between king and parliament, with a very limited franchise but under the unchallenged rule of law. With the parallel development of an orderly and accessible financial system (the Bank of England was founded in 1694), conditions then ripened for the great industrial developments of the next century and a half – and, with them, a further shift of power from an extractive aristocracy to an urban, progressive middle class.

Thus the authors observe – on the brightly lit side of the divide – a virtuous circle of improving quality of life, of which democratic freedom is an essential element. But on the dark side, from North Korea to sub-Saharan Africa and parts of Latin America, they see a vicious circle in which ruling elites are often extractive in the most basic sense, violating their own countries without regard for human rights or property.

IT’S THE POLITICS, STUPIDWhy Nations Fail has been hailed by historian Niall Ferguson as a “compelling” contribution to the continuing debate about how the world works, and can be admired especially for its breadth and richness of detail, which extends from ancient Rome and

the Mayan city states to the BRIC nations of the 21st century. The product of 15 years of collaborative research by the two professors, it is a hugely ambitious work of scholarship, but also highly readable – suffering only from an occasional unevenness of style, between the analytical and the anecdotal, which is surely a side effect of shared authorship.

But the message from Acemoglu and Robinson can be summed up – as Robinson’s Harvard colleague

Dani Rodrik has helpfully pointed out – in four words: “It’s the politics, stupid!” In the absence of an inclusive polity, other forms of human progress can only ever be limited in scope and potential – or, to put it the other way round, wherever sustainable long-term improvement in quality of life is to be observed (Brazil is offered as a current example) it is sure to be underpinned by democratic institution-building. Resource wealth, demographic change and other contingent factors matter too, but in the end the course a nation takes at every “critical juncture” (another key phrase) is determined by its institutional make-up. Political reform is therefore the most fundamental tool for addressing poverty and inequality wherever they arise.

Does the thesis stand up in all cases? Perhaps not quite. The analysis of what is bad and retrogressive about extractive governance can hardly be challenged, but there is more to discuss on the inclusive side of the global report sheet. None of the “Asian Tiger” economies, for example, were fully

inclusive at the height of their economic rise: South Korea was a repressive quasi-democracy with a high degree of central planning, as was Taiwan; Singapore’s success was based on rigid social authoritarianism, while colonial Hong Kong combined laissez-faire economics with no democracy at all.

All of them arguably enjoyed the advantages of the Asian work ethic and entrepreneurial spirit – but Acemoglu and Robinson dismiss this example of “cultural hypothesis” as a red herring. Likewise, they say, the Mexicans of Nogales are not poorer than their American neighbours because they are lazier – the common cultural hypothesis in relation to that part of the world – but because they have been traduced by centuries of extractive rule.

Finally, the authors turn their attention to the biggest counter-example of all, the rise to capitalist riches of still-communist China – a success so far achieved despite the highly extractive political institution that is the ruling Chinese Communist Party, and a success that is not obviously leading towards inclusive political reform. Acemoglu and Robinson believe, however, that change must come one day because the inherent tensions are such that Deng Xiaoping’s “bird in a cage” model – the bird being the economy, the Party the cage – simply cannot be sustained. “Authoritarian growth is neither desirable nor viable in the long run, and thus should not receive the endorsement of the international community” as a template for other poor parts of the world.

Until we find out what happens next, that issue hangs in the air. But if Why Nations Fail is not beyond challenge as a framework for human history, it is also a manifesto for open, democratic government. In that sense we should all hope its authors win the argument.

“The course a nation takes at every ‘critical juncture’ is determined by its institutional make-up. Politcal reform is the most fundamental tool for addressing poverty and inequality.”MARTIN VANDER WEYER


OPTIMA REPORT

LESSONS IN EDUCATION E

ducation is a red-hot issue in Chile. After a year of massive protests by disgruntled students and months-long sit-ins by pupils, the country is debating the best way to create the schools and universities it needs to forge ahead.

Like many developing countries, it is facing the difficult transition from one whose wealth is based on natural resources to an advanced economy that develops through the ingenuity and abilities of its inhabitants.

The main obstacle in achieving this evolution is its education system that, according to experts, is failing too many young people.

A programme in which high-flying graduates teach some of Chile’s

most vulnerable students is achieving remarkable results in the classroom.

Enseña Chile is having a significant impact on both teachers and pupils,

reports Tom Azzopardi.01

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LESSONS IN EDUCATION

disruptive pupils in under-resourced schools, too often give up on their charges as unable or unwilling to learn. But time and again, Enseña Chile’s dedicated recruits have proved them wrong.

“Kids are addicted to learning if they have the opportunity to do so. They really take off,” Recart says.

DEVELOPING AMBITIONSComing from outside the system and determined to make a difference within a short space of time, the newcomers can radically change how students see themselves.

Many of the pupils come from troubled communities, plagued by drugs and petty crime. But their tough lives equip them with skills that children at Chile’s best schools lack. Once focused, their possibilities are endless.

01 Enseña Chile tutor Juan Lorca at the Colegio Centro Educational Eduardo de la Barra in Peñalolén, Santiago

02 Enseña Chile co-founder and chief executive Tomás Recart teaching at Liceo Luis Matte Larrain in Puente Alto, Santiago

Classroom performance may be among the best in Latin America, but the national average cloaks a wide gap between the privately schooled rich and the majority who are too often failed by municipal education.

And while public spending on education has risen sevenfold in real terms over the past 20 years, scores in literacy and mathematics have shown no comparable increase.

Faced with a student population determined to engender change, the current government has promised to make improvements, with more funding for students, higher teaching standards and more widespread coverage of pre-school education.

But while politicians tinker at the top, a new social programme aimed at improving education in public schools is making significant headway.

NEW PERSPECTIVES ON TEACHINGLike the 20-year-old Teach for America on which it is based, Enseña Chile (“Teach Chile” or “Chile Teaches” in Spanish) selects and trains university graduates to work as teachers in state schools in vulnerable communities across the country.

Although teaching graduates can apply, 90 per cent of applicants are graduates in other areas, including law, medicine, business administration and engineering.

Rather than recruit future teachers, the programme’s aim is to find high-calibre professionals before they go on to have successful careers in their chosen fields.

After a rigorous selection process – fewer than one in 10 may finally make the grade – they undertake a month’s intense training before spending two years working full-time in schools in the same conditions as the teachers.

“Half of the people who join us have never thought about working in teaching before,” says Tomás Recart, Enseña Chile’s co-founder and chief executive. “We select people who are already trained; we just polish them up.”

Fellow teachers are often initially suspicious of what their new colleagues can achieve. But what the professionals lack in teaching experience, they make up for in leadership, drive and a determination to achieve results.

“We don’t want them just to be effective; we want them to be transformational,” Recart explains.

The failings of Chile’s public schools, he adds, partly reflect a lack of ambition. Teachers, tired of teaching rowdy,

“We don’t want teachers just to be effective; we want them to be transformational.”TOMÁS RECART

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OPTIMA REPORT

Javiera Horta, an Enseña Chile recruit in her second year of teaching at a technical school in the southern city of Pitrufquén, says her biggest challenge was her pupils’ indifference. Hailing mostly from local farming communities, they could only see their future as working the soil, as their families have for generations, and saw little point in education. With her help, they are developing ambitions and challenging themselves.

“Before, they didn’t care if they got a bad mark; now it affects them and they try harder,” she says.

Although the programme remains small in scale, providing just one or two teachers per participating school, it is already having a measurable impact on school results. An external evaluation by the Washington DC-based Inter-American Development Bank showed that, after just six months, pupils taught by Enseña Chile recruits were achieving higher scores in maths and Spanish than those taught by their regular teachers.

A TIME OF TRANSFORMATIONDespite these promising indicators, Recart is under no illusion that Enseña Chile is the solution to Chile’s education problems. For a start, the complete dedication demanded of the recruits is extremely gruelling and ultimately unsustainable. Few choose to continue beyond the requisite two years and some drop out before the end.

However, the pupils’ success raises their interest in education and transforms the way participants think about education and their own future. Of the 49 individuals who have completed the programme so far, just two have gone to work in business. Many have switched careers, either retraining as teachers or moving to some other education-related area, in academia, an NGO or the public sector. Others have gone back to their original careers but with new insights gained from their time in the classroom.

Recart recalls a doctorate student in biology who, after two years in a public school, switched from studying oncology to using neuroscience to better understand how children learn. Another, an industrial engineering graduate, is now applying to study for a master’s degree in education policy and management.

As more and more promising professionals undergo Enseña Chile’s trial of fire, Chile will eventually develop a critical mass of

leading figures in business, the media, the public sector and politics with a keen awareness of the problems in the country’s education system and the abilities to solve them.

“We can’t solve education. But we can be a bridge between the talent and our biggest problem,” says Recart.

RECRUITING TALENTThe biggest constraint is not resources or applicants but attracting talent. “The figure could be 300 or 50; it all depends on the quality of the applicants,” Recart maintains.

The main challenge is how the programme is viewed. Too many graduates see starting their career in the classroom as a sacrifice or a form of charity, when it is, Recart says, “the best graduate school in the country”. Communication and leadership skills honed in the classroom are just what

business and government are looking for.In the US and UK, employers

have caught on. Last year, Teach for America was ranked the seventh best place

to launch a career alongside the US State Department, KPMG

and Ernst & Young. It is now the biggest recruiter of graduates from

Harvard University.Recart’s expectation is that Chilean businesses

will soon reach the same conclusions as their American peers and Enseña Chile will have few problems placing 2,000 high-flyers in schools around the country. By then, it is hoped that solving Chile’s deficiencies in education will simply be a matter of time.

Tom Azzopardi is a freelance journalist based in Santiago, Chile. He writes about business, energy, mining and tourism. He has contributed to a wide range of publications, including AmericaEconomia, BBC Travel, BNA, Breakbulk, bUSinessCHILE, Fodor’s, Mining MX, Northern Miner and Platts.

AUTHORTOM AZZOPARDI

01 and 02 Enseña Chile tutors Felipe Merino and Graciela Pérez. Participants in the scheme include law and medicine graduates who work full-time in schools alongside teachers

03 Javiera Horta, pictured at Pitrufquén, a school in the region of Araucanía, says pupils’ indifference is the biggest challenge

01

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A CLASS ACTHOW SIX TEACHING NOVICES CREATED A GROUND-BREAKING PROGRAMME TO TRANSFORM CHILE’S SCHOOLS

None of Enseña Chile’s six young founders started out planning to work in education – “We all just fell into it,” explains Tomás Recart – or rather they each separately realised that education lay at the heart of the problems they were facing.

Recart’s colleague, Susana Claro, began her career at Un Techo para Chile (“A Roof for Chile”), another pioneering charity that employs volunteers to build basic homes for the inhabitants of Chile’s remaining shanty towns.

“But I realised I would be building social housing for the rest of my life if we didn’t tackle education,” she recalls.

Not only did education lie at the crux of many of society’s ills, but its problems, though manifold, could be overcome.

Working at the city hall of Puente Alto, an impoverished suburb in southern Santiago, Recart took over management of one of the country’s worst public schools and within three years lifted it to halfway up the results table.

A software system designed by the friends to help head teachers track student attendance and results helped reduce truancy by two per cent in just a couple of years.

“That sounds small, but it meant 600 kids were off the streets and back in the classroom… and we were people who

did not know anything about education,” Recart observes.

The seeds of Enseña Chile were really sown when Recart met Wendy Kopp, CEO and founder of Teach for America, while studying at Harvard’s Kennedy School of Government in 2006.

Recart says he was initially unconvinced: “I knew Teach for America, but it did not rock my world. I wondered what lasting impact there would be from putting graduates in front of a classroom of children.”

SOLVING PROBLEMSBut the point of Teach for America did not end in the classroom, Kopp replied. Its real aim was to connect education with people who could fix it.

“Don’t try to solve all the problems,” she told Recart. “Bring in people who will solve the problem for you.”

Recart was convinced and, within a year, Chile was one of seven countries selected for an initiative to replicate the Teach for America programme around the world.

Initially, the reaction in Chile was sceptical. Education experts doubted Chilean graduates could be tempted to go back to school. But within weeks of the inaugural call being put out in August 2008, the programme had more than 400 applicants. And by the

following March, the pioneering 26 teachers were beginning lessons.

Anglo American came on board as one of the programme’s strategic partners at a crucial moment in late 2008. This was the time when financial markets were in crisis, and the global economy was about to go over the cliff, and Enseña Chile was just weeks away from sending its first cohort of teachers into the classroom.

Today, the company not only supports the programme financially but also shares its managerial experience, with executives sitting on both the programme’s strategic development and communications committees. Since that first year, Enseña Chile has grown rapidly. Last year, the programme attracted 1,250 applicants, with 97 finally making it into the classroom.

Spread around 54 schools in three regions of Chile, Recart estimates that around 20,000 pupils are now benefiting from the Enseña Chile initiative. And next year, Recart wants to double the number of teachers.

03

To read more about the initiative, visit www.ensenachile.cl (Spanish-language website) or www.facebook.com/ensenachile

MORE INFO

http://www.ensenachile.cl

ARCHIVE SHOT


During their tour of South Africa in 1947, the British Royal Family visited the headquarters of De Beers in Kimberley. (Left to right) Anglo American and De Beers chairman Sir Ernest Oppenheimer, Queen Elizabeth (later known as the Queen Mother), Princess Elizabeth (the future Queen Elizabeth II) and Harry Oppenheimer (who would succeed his father, Sir Ernest, as chairman of Anglo American and De Beers) study a display of some of De Beers’ most valuable rough diamonds. The Princess received a six-carat diamond encased in a casket carved from Kimberley’s famous diamondiferous “blue ground”.

ANGLO AMERICAN: ESTABLISHED 1917

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COVER:Fishermen working in Corral de los Chanchos Bay on the Pacific. The new desalination plant for Anglo American’s nearby Mantoverde copper mine in Chile’s Atacama desert will secure a sustainable water supply for both the mine and the local community, while protecting the environment. See article on page 30.PHOTO COURTESY OF ANGLO AMERICAN

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INTERVIEW: CYNTHIA CARROLL ON FIVE YEARS AS CHIEF EXECUTIVE FOREVERMARK: DE BEERS’ DIAMOND PROMISEAFRICA: RWANDA’S PRESIDENT PAUL KAGAME ON THE FUTURE EMERGING DEMOCRACIES: BRAZIL, INDIA AND SOUTH AFRICA

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