AGM report by Richard Solly, Co-ordinator of London Mining Network and member of Colombia Solidarity Campaign
This year’s Anglo American AGM was held upstairs at the Queen Elizabeth II Conference Centre, Westminster, on Thursday 21 April. I attended it with friends from Colombia Solidarity Campaign and Action for Southern Africa.
It began, as always, with lengthy talks by the Chairman, Sir John Parker, and the Chief Executive, Mark Cutifani. You can read their talks on the company’s website. Then there were several contributions from representatives of institutional investors from the Aiming for A coalition, supporting Resolution 21 (see the endnote for the text) on climate resilience. Just as at the recent Rio Tinto AGM the resolution was worthy but limited. The board agreed with it. We’ll see in due course to what extent it improves corporate behaviour.
My friend Diana and I raised concerns about the impacts of the Cerrejon coal mine in Colombia – Diana spoke about water and I spoke about community evictions to make way for mine expansion. The latest of these evictions was in February at a community called Roche and involved the brutal Colombian riot police.
Then our friends Tony and Sunit from Action for Southern Africa spoke about the health needs of mine workers and former mine workers with silicosis in South Africa. There has been a settlement recently involving several thousand silicosis sufferers, but there are tens of thousands more in need of help. The problem was caused by inadequate dust suppression in deep gold mines over a lengthy period. Anglo American was the biggest gold producer in South Africa for many years.
The company’s answers were predictable. They were doing the best they could in difficult circumstances. Things are not perfect, but everything is improving.
It was interesting, when I got home from the AGM, to find an email newsletter from Cerrejon Coal, ‘regretting’ the events surrounding the Roche eviction. The text underneath the regretful headline was not very regretful at all. It was full of self-justification. In any case, it had taken the company eight weeks to regret anything about the eviction. I wonder whether the knowledge that we would mention the matter at the Anglo American AGM had anything to do with it.
I cast my mind back to a conversation I had with Cerrejon’s social responsibility officers when I was last in Colombia in 2014. They told me that these evictions happen because ‘urbanisation is inevitable’. I replied that it was only inevitable because they were making it so. This, and the general attitude of Anglo American and the other multinationals involved at Cerrejon (BHP Billiton and Glencore) remind me of the final words of The Mission, by Robert Bolt.
Vatican career diplomat Father Altamirano has been sent from Rome ostensibly to adjudicate in the question of whether Jesuit missions to the Guarani Indigenous People – missions which were independent of both Spanish and Portuguese authorities, where property was owned by the Guarani, and where there was no slavery – should or should not be handed over to the Portuguese colonists in Brazil, where slavery was legal. In fact, Altamirano has been sent to engineer the eviction of the missions and the delivery of the Guarani into Portuguese slavery because of the diplomatic consequences in Europe if it were not done. So he decides in favour of the Portuguese. The Spanish and Portuguese colonial authorities proceed to take the Jesuit missions with great slaughter, enslaving those Guarani who have not been murdered. Afterwards, Altamirano confronts the Spanish and Portuguese representatives, Cabeza and Hontar.
‘Have you the effrontery to call this slaughter “necessary”?’ Altamirano asked in a low voice.
Cabeza stared back at him. ‘Given our legitimate purpose, duly sanctioned by the Reverend Visitor-General, yes.’
Altamirano made no reply. He walked to the window and looked out on to the cool night sky.
Hontar gave a cough. ‘You had no choice. You must work in the real world. And the real world is thus.’
‘Oh no,’ said Altamirano. ‘Thus have we made it.’
Questions and answers at the AGM
Tendai Chigudu from the Central Finance Board of the Methodist Church proposed Resolution 21 about climate resilience. This resolution was co-filed by a coalition of institutional investors which together hold more than 5% of company’s shares. Tendai congratulated the Board for understanding the importance of climate change and working to reduce the company’s emissions. Could the company assure investors that it will stress test its new portfolio against a range of climate outcomes?
Company Chairman Sir John Parker said he was glad to consult with a group of shareholders on this aspect of sustainability. Regarding the company’s future portfolio, its research already considers factors related to the low carbon economy. It had used this to predict coal prices up to 2035. It will analyse its copper and platinum portfolios similarly.
Bruce Duguid, from Hermes, explained that he represented more than 40 institutional investors, 24 of whom are shareholders in Aiming for A. He said that following reorganisation, the company would remain focused on energy intensive industries in mining and smelting copper and platinum. Energy efficiency has achieved a 7% reduction in energy use since 2011. Energy efficiency would reduce the company’s long-term exposure to climate related risks. Would Anglo American set out targets for energy efficiency in the medium and long term?
Sir John Parker replied that, having completed the first phase of its ten year strategy in 2015, the company had set out targets to 2020, involving an 8% reduction in energy use and 22% reduction in carbon emissions. Its operations have set annual targets based on viable energy sources. Management has these targets embedded in their financial targets.
A representative of Rathbone Investment Management said he was concerned about the long-term sustainable future of the company. There had been recent success in cutting operational emissions but the COP 21 Paris agreement recognises the need for the world to decarbonise completely this century and the G8 have called for total decarbonisation. Will the company set out more clearly its investment in low carbon research and development so that its assets can continue to be productive into the future?
Sir John Parker replied that the company had published its aggregate investment value in the past and would commit to do so more clearly, but with its portfolio being significantly reshaped at present it would need time to do this and to set meaningful targets in this area.
Adam Matthews, of the Church of England Ethical Investment Advisory Group, said that he welcomed dialogue with the company and the board on climate change. He welcomed also the review of executive remuneration which had been mentioned and the company’s values of trust and doing the right thing. Given that many jobs had been lost, especially in developing countries and emerging economies, the company’s reports need to say how the remuneration committee exercises its judgement.
Sir John Parker said that the board listens to shareholders, as Adam knew from the recent dialogue.
Another shareholder was pleased about the board’s support for Resolution 21 on strategic resilience. At COP 21, governments had aimed to limit the global average temperature rise to 1.5 degrees. There was a need to shift away from a high carbon mix.
Sir John Parker said that platinum group metals are used in a range of environmental technologies, and this would create significant demand for them. Similarly with copper: it is used in air conditioning, refrigeration and renewable energy generation. The core of the new Anglo American will involve environmentally friendly commodities which will help reduce emissions.
Diana Salazar, of Colombia Solidarity Campaign, spoke about the Cerrejón coal mine in the province of La Guajira, in Colombia. Anglo American owns one third of the mine, along with London-listed companies BHP Billiton and Glencore. She said:
“My question relates to the environmental impacts on water of the Cerrejón Mine. I want to clarify that environmental sustainability is not only about decreasing emissions, it is about having functional ecosystems.
“Access to water is very difficult in La Guajira. This is due to the environment and the poor infrastructure in place, but also to the use and management of this scarce resource in the area. The ecosystem’s capacity to absorb and filter water is disrupted by the four pits, each hundreds of metres in depth, for coal extraction. In addition, a high amount of water is needed for the production process, and more importantly to control the dust on the roads. BHP Billiton wrote in December 2014: ‘anticipated drought conditions constrained production volumes at Cerrejón, given the need to manage dust emissions’ (Burton, 2015).
“People from La Guajira also have their view on this situation. In the judgement of the People’s Political and Ethical Tribunal on Mining Aggression in La Guajira, held in 2014, it says: ‘the loss of streams, ponds and wetlands, along with the pollution of the Rancheria River, has forced communities to use bottled water, thereby reinforcing dependency and increasing plastic pollution. All the above constitutes a flagrant violation of the human right to water and hence the right to health and to life itself.’
“The fact that Anglo American played a role in approving the P40 expansion plan means that the company should respond to its potential negative impacts if it goes ahead. What is your position in this respect, taking on board the massive local opposition?
“Will you, before you leave Cerrejón, do all what you can to ensure that the diversion of the Arroyo Bruno does not go ahead?”
Sir John Parker replied that water availability is of great concern to the people in that part of Colombia and that this has been increased because of the drought created by El Nino. The Cerrejón foundation had focused on improving water supply and quality, benefiting over 19,000 people in 126 communities. This is why Cerrejón invests in water efficiency. 93% of the water Cerrejón uses is of low quality, unfit for human or animal consumption or irrigation. The high quality water it uses is for employees and their families. Because of the drought, Cerrejón has worked with the local community to deliver over 30 million litres of water to more than 200 communities involving 27,000 residents, and the quality of water is the same as for Cerrejón workers. Cerrejón has used its own trains to deliver water and has also repaired 68 windmill-driven water pumps that deliver millions of litres of water a day. It is doing its best in drought stressed conditions.
Diana said that this supported what she had said: there had been a change in the local ecosystem and the mine was making this change worse. Communities are now saying that they are dependent on the company’s water supply and this increases their dependence.
Sir John Parker replied that most of water used by the mine is unfit for human or animal consumption.
I also spoke about the Cerrejón mine. I said:
“I congratulate the company for deciding to pull out of coal, and consequently for selling its share in the Cerrejón Coal mine in Colombia, a venture in which it should never have become involved in the first place, given its history of human rights abuse and environmental destruction.
“My question concerns the continuing evictions and relocations of farming families to make way for the mine.
“These families are overwhelmingly of Indigenous or African descent and enjoy communal rights under the 1991 Constitution of Colombia. In the case of the community of Old Roche, whose last family was evicted on 24th February this year, their rights as Afro-colombians were formally recognised by the District Tribunal in Riohacha and the Colombian Supreme Court in 2012. These include the right to prior consultation over economic projects affecting their land.
“In most cases, those rights have been ignored. Communities continue to be evicted despite the fact that they have never been consulted over the most basic issue, namely, whether they do or do not consent to the mine.
“The recent eviction happened because a number of families who had been relocated by Cerrejón Coal were so dissatisfied with conditions in New Roche that they moved back to the old village site, despite the proximity of the mine. People complain that they are unable to make a living in the new communities, that there is inadequate land and that there are problems with the houses, with sewerage and water availability. Those families who want to continue farming and herding are particularly aggrieved.
“Families from Roche complain that Cerrejón Coal creates an atmosphere of anxiety, fear and desperation to induce them to move. They consistently tell us that the company has failed to keep all the agreements it has made with them.
“The family evicted from Old Roche on 24th February, the Ustate family, tell us that the company insisted that they accept a piece of land in the company’s possession encumbered with easements including one allowing the passage of soldiers across the land, a terrifying prospect given the armed conflict in Colombia and the record of the Colombian military.
“The eviction was carried out with the help of the notoriously violent Colombian Riot Police, ESMAD, and in the presence of unidentified armed men who threatened community leader Yoe Arregoces. There were injuries to over a dozen people, including a young man with learning difficulties and a pregnant woman who had a miscarriage as a result. The community has called for an investigation by the national Attorney General’s Office.
“The early days of Anglo American’s involvement in this project were marked by the brutal eviction of the village of Tabaco, and in these last days before the company’s withdrawal, there has been another brutal eviction.
“Will Anglo American support the formation of an independent commission of inquiry into the many allegations that Cerrejón Coal has failed to keep agreements it has made, either verbally or in writing, with communities?
“Is Anglo American going to walk away from this project leaving families without sufficient land and means of livelihood, their communities divided and dispersed, in substandard housing crowded at the edges of local towns, separated from the sacred sites in which they have buried their dead for generations, mourning the passing of a communal life marked by dignity and independence; or will Anglo American act in a manner consistent with human decency and ensure, before its departure, that ALL the concerns of the displaced families, and of those currently facing displacement, have been resolved to the satisfaction of those families?”
Sir John Parker replied that Anglo American had not yet sold its stake in Cerrejón, and continued to own 33% of it. He thanked me for the dialogue I had had with them over the years, saying it had been a constructive conversation. But he said that I had not mentioned that the mine provides for 65% of the GDP of the region, five hundred million dollars in taxes, and that this is an important economic activity. He said that Anglo American recognises that resettlement is a difficult process for everyone, especially if the company has to ask for eviction. On 24th February this year, 24 families from Roche were already in their new houses. He said that a judge had managed the situation with the Ustate family, and that the family had not kept its agreement with Cerrejón. Cerrejón fulfilled its side of the agreement, and that was confirmed by an independent NGO, Indepaz. He said that the public security forces had undergone human rights training. However, due to the complaints of NGOs, Cerrejón Coal had asked for an investigation into the events on 24th February involving the Ustate Family. The company’s communication with the family is good.
I pointed out that Indepaz was tired of the company using its report as positive evidence when it was not. Indepaz had made clear that the company had failed in a number of areas. Sir John Parker said that we should leave this to a judge, and that if I had information I should give it to the judge.
Tony Dykes, of Action for Southern Africa (ACTSA), raised the issue of decent compensation and health care for all ex-miners and current miners in Southern Africa with silicosis. (It is estimated tens of thousands have this incurable and debilitating disease. It is impossible to give any precise accurate figure of the number with silicosis, as the mining companies, despite a duty to do so, have not done comprehensive, systematic testing. ACTSA believes 90,000 to be a reasonable estimate of those who have silicosis.) Sir John Parker, in his opening remarks, had referred to the settlement of two of the legal cases in early March as a landmark settlement. Chief Executive Mark Cutifani also made reference to the settlement.
Tony said that the recent settlement was welcome but that this is about people. Their health will never improve. The settlement involves only a minority of the miners and ex-miners across South Africa who have silicosis. Welcome as the settlement is, will Anglo American commit to work with representatives of the mining industry so that all with silicosis receive decent levels of compensation and health care for the remainder of their lives? Anglo American was the largest gold producer and impacted many, many workers. Tony said that he hoped that next year there would be an industry-wide settlement.
Sir John Parker said that progress had not been easy. He said that Mark Cutifani had led on this as a result of dialogue at the company’s AGMs.
Mark Cutifani thanked Tony for ACTSA’s constructive engagement and support for finding a solution. He said there were thirty companies working together in one form or another to finding a solution. Three or four had taken a lead. Anglo American would remain committed and continue to seek a solution for all affected. In South Africa they did not discriminate about where workers and former workers come from. Anglo American is working closely with the South African government and the commissioner has been very constructive. Working with legal representatives can be complicated. Anglo American acknowledges that it is appropriate and necessary to find solutions for everyone. ACTSA’s involvement had been helpful. Mr Cutifani said that the company made an absolute commitment not to rest until everyone had been looked after in one way or another. The company would work with the government, trade unions and the groups represented by Tony.
Tony Dykes thanked Mark Cutifani and said that he knew he was personally committed on this issue. Tony noted that in his opening remarks the Chairman had paid tribute to Peter Bailey of the South African National Union of Mineworkers. Tony said that Peter conveyed his apologies to the meeting for his absence, as he had hoped to be present. But he had also hoped not to have to be present. Tony had met with him just after the recent settlement. Tony said that ACTSA wanted to work with all stakeholders to achieve a decent settlement that allows all affected to live the rest of their lives well.
Sunit Bagree from ACTSA asked, with respect to the recent settlement involving 4365 claimants suffering from silicosis, when medical checks would commence and when they would be completed.
Sir John Parker replied that they would have to go through medical evaluation and that a trust has been formed to achieve this. The company would endeavour to get the best estimate it could, but this was a question of medical capacity.
Sunit said that some of the miners had already died and some were very old, so this was a matter of the greatest urgency. He asked that the company let him know when it would provide a time frame.
Sir John Parker said that they would provide the best estimate they could and would do all it could with fellow gold mining company AngloGold Ashanti to push this forward.
Mark Cutifani said that cases had been registered and most people had had tests. The rest should not take too long but he would follow this up and get back to Sunit as soon as possible.
Councillor Toby Simon, of the Local Authority Pension Fund Forum, welcomed the support the board had shown for the strategic resilience resolution (Resolution 21). This gave investors greater confidence in the company’s ability to adapt to a low carbon economy. He was interested in Key Performance Indicators (KPIs) as linked to executive remuneration. He wanted a commitment that the transition to a low carbon economy be reflected in the review of the company’s remuneration policy and in the factors that affect the company’s policies on incentives.
Sir John Parker said that the company’s remuneration committee would be consulting shareholders on the remuneration policy. There was currently no specific element for emissions as such, but as Anglo American moved to stabilise its portfolio it would be in a better position to measure this. It does have a driver of energy efficiency and all its businesses have energy savings targets which have an impact on cash and therefore on executive bonuses and on its carbon footprint. In the bonus schemes safety is measured and if targets are not met there is a deductible, rigidly enforced. This demonstrates the breadth of measurement in the existing policy and the company ‘refuses light from no quarter’ and will take on ideas from shareholders as it moves forward.
Phil Clarke, a private shareholder, said that, unlike many previous speakers, he was ‘not linked to any pressure group’, but was ‘a happy shareholder’. He had bought shares in January, when the price was at its lowest. The price had trebled since. He was very grateful to the board for this.
Sir John Parker said that the share price had risen 164% since the beginning of January.
Phil Clarke said that volatility in the company was sharply more than other miners except Glencore. Was the board doing enough to communicate with markets to reduce this volatility? He said that page 141 of the annual report, concerning capital expenditure, noted that $2 billion had been spent on expansion. Was this wise given the need to make divestments? Page 50 of the report, on De Beers, noted that there had been production of 29 million carats of diamonds and sales only 20 million carats. This should have forced the inventory up by nine million carats but he could not see that reflected in the balance sheet.
Sir John Parker said that the expansion was the completion of projects initiated many years ago.
Mark Cutifani added that the expansion had been at Minas Rio (in Brazil) and Gahcho Kue (in Canada). The capital programme had been outlined in 2013 and the company had saved on these projects. It had not committed to a major new project since 2013. The only project it did commit to was with its subsidiary De Beers at Gahcho Kue and that represented an existing commitment. The major production source for additional diamonds was in a joint venture with the government of Botswana in Botswana. Anglo American had been bringing some of those diamonds though into the market. There is still some stock there but, depending on market, this should be sold during the year.
Sir John Parker observed that if you want a volatile share, you should buy shares in a mining company. He asked – rhetorically – what had happened on share price across the industry since the last Anglo American AGM. He answered himself by saying that Rio Tinto shares had only fallen18%, Anglo American 25%, BHP Billiton 31% and Glencore 44%.
A ‘retail investor’ called Gary asked what were the company’s management strategies for dealing with labour unrest in its platinum assets. What had it learnt from Rustenberg and Marikana? Had its relations with the ANC government in South Africa changed significantly over and what was the company’s plan in the event of the nationalisation of its assets? Is the company a partner of diamond company Alrosa or would it always be competitive? What sort of technology had the company embraced to make the mining process more efficient?
Sir John Parker said that the board had received a detailed paper on the Marikana inquiry so that it could learn lessons.
Mark Cutifani added that the company had to create direct relations with its employees. He said the company was always respectful of unions and the union role and elected representatives of unions but that it needed better and more personal relations with each worker. It did a lot of work helping families through the recent strike so it could change the nature of it relations with them. It was aware that a number of employees had loans from unscrupulous people and were having up to 70% of their pay taken by loan institutions. It worked with the government against the loan sharks and helped people do their own financial planning. Anglo American had been acknowledged throughout South Africa for these programmes. It was about the company working with employees as true partners. The board takes those relations very seriously. The company had done significant work but had a long way to go. Another round of negotiations was scheduled for later this year but it would take years to build the right sort of relationship; nonetheless, it had been far more constructive in the last couple of years than before.
Mark Cutifani said that Anglo American had no relations with Alrosa as they are a competitor. The companies share data and marketing ideas, no more. They know what is selling based on period of the year and market. Anglo American has different diamond pipes with different kinds of diamonds that it can use according to demand.
Mark Cutifani said that environmental technology in mining is changing very rapidly and in the coming years there will be many new technologies. Anglo American is at the forefront of these developments. It is introducing automatic drilling and aiming at improving the quality of blasting. It is involved in open forums on sustainability. The day will come when rock is mined by cutting, not blasting. One day mines will process minerals without using water, and Anglo American is active in the early stages of developing those processes. There is an opportunity to have low capital major expansions. Anglo American has ‘the most aggressive approach across the industry’. [It always disturbs me whenever anyone uses the word ‘aggressive’ as if it were good. ‘Aggression’ is always and everywhere bad, in my view. If people mean ‘active’ or ‘energetic’ they should say so, not subvert the very notion of goodness itself by turning the meaning of words on their heads.]
Mark Cutifani said that the mining nationalisation debate had gone into the background in South Africa. It would be unconstitutional, and the key institutions of South Africa are still holding up very well. South Africans should be proud of these institutions, so nationalisation is not a critical risk. A lot of work is needed on the Mining Charter, as it has a lot of unhelpful elements in it, but the company is listened to, the government does have a history of engagement, and Anglo American will be consulted with and the process will end up with something practical and workable. He said that the constitution would require full compensation with nationalisation, and this is not where the government is. South Africa relies on a constructive and supportive relationship between the government and the mining industry.
Sir John Parker then moved to close the meeting and open the poll. Slides flashed up behind him showing the enormously high percentages of shareholders and proxies who had already voted in favour of all the resolutions. Except that in one slide – which flashed before our eyes so quickly that only the hawk-eyed might spot it – showed that over 40% of shareholders had voted against the remuneration package for Chief Executive Mark Cutifani. This was noted by our ‘happy shareholder’ Phil Clarke, who jumped to his feet to point it out. But the moment passed, and the meeting ended, and we left the dark, airless room and escaped into the light again.
Endnote: Resolution 21
That in order to address our interest in the longer term success of the Company, given the recognised risks and opportunities associated with climate change, we as shareholders of he Company direct that routine annual reporting from 2017 includes further information about:
a) ongoing operational emissions management;
b) asset portfolio resilience to the International Energy Agency’s (IEA’s) scenarios;
c) low-carbon energy research and development (R&D) and investment strategies;
d) relevant strategic key performance indicators (KPIs) and executive incentives;
e) and public policy positions relating to climate change.
This additional ongoing annual reporting could build on the disclosures already made to CDP (formerly the Carbon Disclosure Project) and/or those already made within the Company’s Annual Report and Sustainable Development Report.