Report on the Anglo American AGM, Queen Elizabeth II Conference Centre, London, 30 April 2019
By Richard Solly (Co-ordinator of London Mining Network and member of Colombia Solidarity Campaign) with assistance from Hal Rhoades, Illary Valenzuela, Isobel Tarr, Laura Chaparro, Paul Robson, Richard Harkinson and Seb Ordonez
Anglo American’s 2019 AGM was another marathon meeting, like last year’s. A number of us from London Mining Network raised issues and so did institutional investors concerned about climate change and about tailings dam safety, and other investors concerned about worker safety and the links between Anglo American subsidiary De Beers and Israeli military operations in Gaza.
Meanwhile, outside, demonstrators drew the attention of passers-by to the company’s impacts. Our friends from Medact concentrated particularly on the health impacts of the company’s activities, especially around the jointly-owned Cerrejon coal mine in Colombia.
The account below is a summary rather than a full account of the meeting. Comments in square brackets are my own observations on the proceedings.
The Chairman’s speech
1. Company Chairman Stuart Chambers started by saying that South America represented one third of Anglo American’s investment even before the current investment in the Quellaveco copper project in Peru. He said that this explained the need to elect Marcelo Bastos as a new member of the board. Marcelo is Brazilian and has experience all over South America. The next non-executive director would reinforce the company’s South African experience.
2. [I wondered why he was emphasising all this, and then discovered that Anil Agarwal, owner of over 19% of Anglo American’s shares through his family trust, Volcan, and Chairman of Indian-based mining company Vedanta (against which, in its time as a London-listed company, many in London Mining Network campaigned doggedly) was voting against Marcelo Bastos because Mr Agarwal wants Anglo American to concentrate on South Africa, where Vedanta also has operations. Vedanta has been associated with multiple allegations of corruption, dangerous pollution, fatal work accidents, killings of protesters, violations of indigenous rights and law-breaking. It truly sets benchmarks for the industry – some of which are currently under consideration by UK judges after a recent decision of the UK Supreme Court.]
3. Stuart Chambers said that Anglo American is radically different from five years ago, and that this is a testament to Mark Cutifani, the management team and all the company’s people around the world. The shareholder return was 18%, way better than elsewhere on the London Stock Exchange. This, he said, is because the company directs its energy towards “doing the right thing”. Last year the management team had consulted widely with the company’s 90,000 employees to “distil its purpose”. This involves thinking very differently about the future of mining, reducing its environmental footprint and bringing lasting benefit to all those affected by it, from those who live around the company’s operations all the way through to its customers. Anglo American will re-engineer mining to improve people’s lives. As a global miner, he said, its products form an essential part of the daily lives of millions of people, so the company must take into account the demands of society over mining impacts. It aims to work safely, cleanly and efficiently, with due regard to all stakeholders.
4. He said that climate change is very important [I think this may count as an understatement]. He was pleased with the dialogue the company was having with investors in Climate Action 100 Plus. Anglo American had completed a questionnaire and quantitative scenario analysis and an analysis of its membership of industry associations. [I am sure that, if only they had known of this ground-breaking work, the striking school children inspired by young Swedish activist Greta Thunberg would have returned to their classes and the Extinction Rebellion activists would have abandoned their protests, comforted by the conviction that all would be well.] The company considers business sustainability in all its dimensions and in an integrated fashion.
5. “We have to keep our people safe,” he continued. This was always number one on the board’s agenda. He was “very disappointed” at the five fatal incidents that had taken place at the company’s managed operations last year. The company’s new Elimination of Fatalities Taskforce “has work to do”. Two more employees had been killed this year in workplace incidents. In addition, one of the company’s Singapore office employees and her children had been killed in the attacks in Sri Lanka at Easter.
6. He then spoke about the company’s FutureSmart Mining TM – technology aimed, he said, at transforming mining and ore processing. [Note that FutureSmart Mining, when written, always seems to be followed by the letters ‘TM’. I assume that this means that the phrase is a registered trade mark rather than that it has any connection with Transcendental Meditation, but both promise multiple benefits.] FutureSmart Mining (TM) would bring benefits in safety, energy and water consumption, the wider environmental footprint, productivity, and getting access to hitherto uneconomic ore bodies. [It is difficult to see how pushing forward the mining frontier into deposits which would, of necessity, create a greater proportion of waste material than higher grade ores, could possibly improve the company’s wider environmental footprint – but this may be exactly what FutureSmart Mining TM will show us. I only hope that those involved in delivering it will wear appropriate SuperHero Lycra (TM) body stockings and colourful capes. It will be such a disappointment if they don’t.]
7. Finally, Mr Chambers noted that the company does not own the minerals in the ground. “We are custodians,” he said, “and we have a duty to our host countries and communities to invest in and extract them in a spirit of partnership.” The company needs to ensure that the economic lives of those resources are optimised. A sustainable business is born of all these considerations and many more, and a licence to operate is born of conducting the business in a sustainable manner.
The Chief Executive’s Speech
8. Chief Executive Office (CEO) Mark Cutifani said that Anglo American’s production volumes were up 6%, with copper playing a very significant role.
9. He said that the safety of the company’s people is the number one priority. There had been a significant improvement in the last fifteen years but the company had not yet reached the point of zero harm. Five people died in 2018, [all in South Africa], and this is “tragic beyond words. We are determined to get to zero.” The company had launched a taskforce to eliminate all fatalities from the workplace. There had been some positive results. The taskforce had made significant and urgent operational interventions. The company had more than halved workplace injuries over the past few years, he said, “but the job is not done until it is done. We have to prove that we can do it every day.” He said that Anglo American leads the industry in treating HIV and AIDs and monitoring community health.
10. The most significant environmental incidents, he said, had been at Minas-Rio in Brazil, where two pipeline breaks had occurred in March 2018. There had been no injuries and no lasting damage to the environment, but the breaks were unacceptable. The company had cleaned up the spills and recommissioned the pipeline in September. The two recent tailings dam facilities incidents in Brazil [the Fundao tailings dam failure in November 2015 and the Brumadinho tailings dam failure in January 2019] had shown what can happen. Anglo American manages to high standards, higher than regulations demand, with internal and external controls, but the company would use the Brumadinho disaster to learn how to do better. The company will publish detailed information on each of its tailings facilities in the next few months as a first step to industry restoring trust with stakeholders.
11. Since 2012 Anglo American had halved the number of its assets and improved the performance of assets retained, with a total increase of 10% in physical product. Costs are 26% lower than they were seven years ago. Everyone in Anglo American is producing double what they were producing in 2012, and the company has led the industry in productivity gains.
12. The company has targeted investment in greenfield exploration, so it has high-return, long-life, low-cost operations in prospect. It has the capacity for profitable growth inside its existing portfolio. The Board has approved the development of the Quellaveco copper project in Peru and expects it to generate a strong cash return. Its reserve life is longer than 30 years. Mitsubishi has purchased 40% of the project. The project is on track. The river diversion agreed as part of the company’s community consultation is complete and good progress is being made on concrete pouring for construction.
13. The company’s growth opportunities, he said, include copper in Chile, diamonds in Botswana, Namibia and South Africa and coal in Australia. Anglo American is the most significant mining investor in South Africa by a significant margin. It will continue to work with government and local communities and others to build positive impact.
14. On FutureSmart Mining TM, he said, Anglo American acknowledges that it and the industry as a whole have a long way to go, but change has been remarkable. “Many technologies which we are developing significantly reduce our energy and water use per unit of production,” he said. “Sustainable mining is good business.” The company is aligned to the United Nations Sustainable Development Goals and aims to be a trusted corporate leader. As an example, in South Africa it is a champion regarding community development in Limpopo; it is developing thriving communities to help them develop new commercial activities; and to promote a healthy environment. Anglo American is working to be the company that governments and communities choose to develop their mineral resources, he said.
15. “Imagine a world without mining,” he invited us. “Mining’s contribution to society is enormous. Without mining we could only produce half the amount of food we currently produce. We are well positioned to supply a consumer world, a greener world and an interconnected electrified world.” [I recalled the publication, in 2009, of the report Philippines: Mining or Food? This made clear that the expansion of mining in the Philippines was diminishing food production because of competition for land and severe pollution of soil and water. Anglo American was at the time interested in mining in that country. I recalled also the slump in food production in La Guajira, Colombia, since the construction of the Cerrejón opencast coal mine, of which Anglo American owns one third.]
Questions from shareholders
Worker safety and shareholding by independent directors
16. The first question was from a man who described himself as a ‘returning shareholder’ – he had sold his shares a few years previously when the company seemed to be doing poorly but had recently bought shares again. He said that all independent directors should buy shares in the company and that Ian Ashby had not done so. He was also concerned about the company’s safety performance: five workers had lost their lives in 2018. He said that the company had said that it is group policy to reduce these incidents to zero and that each incident is subject to vigorous investigation. What has management actually done? The number of fatalities is much too high. “You are not improving,” he said. “There are problems in your operations. What are you doing specifically in new operations in South America?”
17. Stuart Chambers replied that the view that non-executive directors should own shares in the company was not a universal view. “Some in the governance community believe that non-executive directors owning shares may be too concerned about short-term benefit,” he said. So the company leaves share buying to the discretion of non-executive directors. Executive directors are expected to buy shares and retain them well after their service to avoid short-termism.
18. Ian Ashby added that he believed he could execute his duties as an independent director without buying shares in the company. “I have made a conscious choice that I won’t invest,” he said. The shareholder retorted that about 90% of independent non-executive directors in FTSE 100 companies do hold shares in their companies. Stuart Chambers said that it was up to independent non-executive directors to do what they think right.
19. Stuart Chambers went on, “Regarding safety and loss of lives, you asked what actions are being taken. You said you were concerned at the lack of progress. Fatalities result from underlying unsafe practices and progress on underlying measures has been significant.”
20. Mark Cutifani added, “In the last ten years we have improved 90% and in the last six years 65%. We still have to get to zero. We have been changing operating processes to change our work. We still have in certain areas procedures not being properly followed and this may be because we are making procedures too complex, so we are trying to simplify things to make things clearer. We had the top 200 leaders of the industry a month ago and this was the number one issue stalked about. We need the right procedures to make it easier for people to work safely.” This was why the company had established the Elimination of Fatalities Taskforce. Resourcing for the work had been increased by a factor of seven or eight times.
Political risk management in South Africa
21. Another shareholder asked about political risk management. He said he had family connections in South Africa. He was concerned that a growing rift between poor and rich was creating political problems. He said there was a trend for people of European descent to emigrate from South Africa. There was increasing concern about the ANC government seeking to expropriate agricultural land. In light of these concerns, what could Anglo American do to maintain good relations with the South African government and avoid expropriation of mineral assets?
22. Stuart Chambers replied that the split between rich and poor and consequent tensions were not restricted to South Africa. He said that land expropriation without compensation does not affect Anglo American as mining and prospecting rights do not depend on ownership of the surface. He said that the company wanted political stability and consistency and that relations with the government are critical. The company makes a lot of effort to maintain relations with the South African government. “The situation at the moment is that law has not changed,” he said. The President, on behalf of the ANC, had issued a political manifesto intent but “they may or may not go ahead with it.”
23. A representative of campaign organisation ShareAction said that it was pleasing to see Anglo American highlighting engagement with stakeholders as the key to its climate change principles. In connection with the Paris Agreement on climate change, the International Labour Organisation (ILO) and others had spoken of the importance of ensuring that workers have a just transition. Over 100 large institutional investors have now spoken in favour of a just transition to reduce inequality and mitigate climate change. A pro-growth, pro-jobs transition from fossil fuels is necessary. Social protection and wage guarantees are necessary. Governments may make regulations which will affect Anglo American’s operations. Would Anglo American publish a policy on just transition by the 2020 company AGM and would it do so in collaboration with trade unions? ShareAction would be happy to work with the company on this.
24. Stuart Chambers said that the company was fully committed to reducing carbon emissions in all that it does. It has very clear targets for 2030. They take it towards significant reduction of carbon. It would be reporting not only on its scope 1 and scope 2 but also its scope 3 emissions (carbon emissions caused by the use of its products). A lot of technology work is going on to identify the technical and economic progress needed to achieve net zero carbon mining. Still, there is disagreement among very experienced people in defining a standard way of understanding this. “We must not hold ourselves to plans that are not properly thought through,” he said. “We need a clear idea of what we are going to do and how we are going to do it.”
25. Mark Cutifani said that the company was “aligned regarding a just transition. We are more than happy to commit to work with employees in turning the conversation into one that we can all be part of. We are committed to working through the just transition process and involving all our workforce.”
26. Stuart Chambers added that the company would update ShareAction on the progress it was making, “but to commit to a policy by an AGM date may be rash,” he said. “We will certainly update on where we are on that journey.”
Membership of industry associations
27. A representative of Influence Map asked the Chairman to confirm that the results of the company’s Industry Association Membership Review was on the company’s website, as he had been unable to find it. Stuart Chambers said that it was indeed on the company’s website but had only been posted in the previous day or two. The Influence Map representative asked whether the company would leave any trade group if it had failed to reform its lobbying practices by the end of the stated time-frame.
28. Stuart Chambers said that Anglo American had contracted the work out to a third party. It had reviewed the positions of 71 industry associations of which Anglo American was a member. Five were identified where there was some misalignment (though it was not material) between Anglo American’s goals and those of the industry associations in question. “We have a view that where there is misalignment the best thing you can do for a reasonable length of time is to engage and try to change view of the association,” he said. “If progress is not made, maybe you need to pull out, but we have not reached that position with any of the industry associations yet and we do not plan to exit any of the five associations.”
29. The Influence Map representative asked at what point the company would conclude that it had been bashing its head against a brick wall for too long. Stuart Chambers replied that it depended on the issue, and in the five cases the areas of disagreement were smaller than the areas of agreement, so Anglo American could not put a date on pulling out – it would take a few years rather than a few months to change things, but probably less than ten years.
30. Mark Cutifani added that in the case of taking responsibility for supply chains, Anglo American was the last mining company involved in those processes because other companies abandoned the industry association for lack of progress, whereas Anglo American had managed to change the association from within. “We think with those five associations for the next few years there is potential for making progress,” he said.
31. The Influence Map representative said that Influence Map would welcome it if Anglo American were more transparent about how it was changing the conversation in industry associations and who it was engaging with within them. Stuart Chambers suggested that they write to the company after they had read the company’s report. The Influence Map representative asked if the letter could be an open letter and whether it would receive an open response, and Stuart Chambers agreed to this.
The Los Bronces copper project in Chile
32. Sebastian Ordonez, of LMN member group War on Want, asked about the company’s Los Bronces copper operation in Chile. He said: “You recently announced that you would scrap your $3 billion dollar investment in Los Bronces if studies indicated the plan could harm nearby glaciers or if there is major opposition from local communities in Chile. You also say that all of your data proves that you can mine the copper without doing any damage to the glaciers and without affecting the groundwater.
33. “However, as you know, a combination of rising temperatures and mining activity has already sped up melting of the ice that’s been there for thousands of years, with some glaciers having visibly disappeared. Communities and experts argue that some of the glaciers close to Los Bronces are already melting at a faster pace than others further away.
34. “With regard to your projects specifically, there are serious community concerns over various parts of your operation which they argue are having an impact on the glaciers that could be catastrophic for the ecosystems, lands, communities and cities downstream in the medium and long term.
35. “There are concerns that airborne dust particles are being deposited on mountain tops, speeding up the melting process.
36. “There are concerns about the operations in the high mountains, where the burning of fossil fuels, the camps’ heating systems, the machinery, the installations generate enormous amounts of heat – which is also deposited on the mountaintops, also speeding up the melting process.
37. “There are concerns about mining permafrost which critically influences behaviour of water both on and underneath the earth’s surface.
38. “And there are serious concerns that the underground mining tunnels being built could bring the tunnels dangerously close to the surface as all the material is excavated.
39. “We know that glaciers are already being heavily impacted by climate change, and that millions of people depend on these glaciers for their water. Glaciers are also critical for the adaptation process for the current ecological and climate crisis we are facing. Glaciers act as an adaptation mechanism for hydrological systems by storing water that then melts and is released into the tributaries that source the water for Santiago, Chile’s capital, where half the Chilean population lives.
40. “You say in your sustainability strategy that you want to reduce carbon by 30% in your operations, and that you aspire to reduce freshwater use by 50% in water-scarce regions, so my question is:
41. “To what extent have you evaluated the impact of high mountain excavation on different types of ice, and on all of the other functions that the glaciers provide to the ecosystems, communities, livelihoods and populations that are dependent on them downstream? Can you really guarantee that the Los Bronces expansion will not do any damage to the glaciers or affect the groundwater?”
42. Stuart Chambers replied that the impact of climate change on glaciers is a concern for any human being. If they are creating too much carbon dioxide in China this will affect glaciers in Chile. “We need to continue on this journey,” he said. “How can mining in Chile coexist with glaciers? This is a very pressing issue. We continue to support professional research into how glaciers behave, how they affect the ecosystem. If there is a direct impact or effect by our decision to expand or operate Los Bronces we will have to review and revise and seek mitigating actions. We need to keep pushing first class scientific research. On the basis of the information we have today we have not been able to establish any direct link between the mining operations we have and the receding of the glaciers.” If it became clear that there was a link, the company would have to rethink its plan.
43. Sebastian Ordonez asked if they would scrap the plan. Stuart Chambers said that he was not saying that the company would scrap the plan but that it would need to amend the plan so that mining would not affect glaciers. If that were not possible “we would have to scrap the plan,” he said.
Cerrejón Coal and river diversion in La Guajira, Colombia
44. Laura Chaparro, of LMN member group Colombia Solidarity Campaign, asked about river diversion and related issues around the Cerrejón coal mine, one-third owned by Anglo American:
45. “In the last Anglo-American AGM, there was a question about why Anglo American has failed to include information about the issues around Cerrejón in the Annual and Sustainability Reports. The response indicated that the company would raise issues if they are high level in the report, but Mark Cutifani said that you could consider that only as long as it does not take away the primary responsibility for this from Cerrejón management. He said you would take this matter on and give us a response this year.
46. “Nonetheless, information about those issues was not included in the 2018 Annual Report. On the contrary, the report reaffirms that Anglo American does not have management control of independently managed operations such as Cerrejón. In this context, and knowing that Anglo American is proud about their values such as accountability, integrity and collaboration, I just want to ask you: Should not Anglo American report to their stakeholders about how Cerrejón’s operations have caused a lot of displacements and internal division of ethnic communities, about why the measures taken have not helped people to rebuild their communities, and about why the communities have had to come up with legal actions to protect their territories and fundamental rights? Are these not high-level issues?
47. “In the same way, as the annual report mentioned Anglo American as a leading global mining company, I am wondering if being a leader does not mean, even with ‘just’ the 33.3% of shareholding, that you can ensure that Cerrejón Coal enter a truly respectful dialogue with the affected communities and make commitments to attend to their needs, particularly given that so many of those needs were created by the Cerrejón operation in the first place?
48. “Recently, the Constitutional Court and the Tribunal of La Guajira have protected the rights of the ethnic communities to a healthy environment and participation through the Prior Consultation. I am sure you know about this. However, the specific question for you is:
49. “Although the Bruno Creek diversion was agreed by the government in 1998, Anglo American knows about the serious lack of drinking water in La Guajira that has resulted in the judgement SU 698 and the declaration by the Constitutional Court of an ‘Estado de Cosas Inconstitucional’ in La Guajira. This requires specific measures to protect water resources, among other things; in these circumstances does Anglo American continue to agree with the diversion when experts are warning about the devastating consequences of doing it?”
50. Stuart Chambers said that the company had considered including information on Cerrejón in its sustainability report but had concluded it would be unhelpful to include in its sustainability strategy and plans non-managed joint ventures where Anglo American does not have operational control, which is the case for Cerrejón. Cerrejón’s management team are responsible for running the Cerrejón mine and are best placed to answer questions, though Anglo American does answer questions. “We have to develop strategy and plans for things which we can execute,” he continued. Cerrejón’s three shareholders, Anglo American, BHP and Glencore, had all clearly stated that Cerrejón is run by independent management. “Of course, influence is possible,” he said, “and we will always seek to influence the way they do what they do. On the subject of the Bruno Creek, we welcome the position as it currently stands. A group is sitting in judgement about whether the Bruno Creek diversion should be put back. The Cerrejón mine is operating on a land envelope and the Bruno Creek runs through land being mined by Cerrejón, and part of the original agreement was that, to protect water, Cerrejón would divert the river so that Cerrejón could operate the mine without a risk to the river. A 3.5 kilometre section was moved 700 metres to the north, and Cerrejón does not draw any water from this creek, and none of the communities use water from the river in the 3.5 kilometre section on mine land. Cerrejón’s objective was to try to preserve and protect the water. If this is not the view of this interest group and they judge we will have to put it back to its original state, then of course we will do so. We think this will be bad for the communities and will lead to fewer jobs. We think moving the river back will be negative, but we will respect the decision made.”
51. Mark Cutifani added that “water flow increases by 30% as you move past the diversion, but we will respect the decision.”
Resettlements around the Cerrejón coal mine in Colombia
52. Isobel Tarr, of LMN member group Coal Action Network, said: “This year I visited La Guajira in Colombia and I have two questions about Cerrejón.
53. “Resettlement: My first question concerns the resettlement rights of communities displaced by the Cerrejón coal mine in La Guajira. When will the company comply with the resettlement obligations that it has been ordered to with respect to Tamaquitos II, Tabaco and Roche, and return to the dialogue table with these communities? In January this year the company walked away from the dialogue table with the community of Roche, as it has with others.
54. “Stuart Chambers opened this meeting by saying that trust in the host countries and communities provides Anglo American’s license to operate. If this is the case then the company has no license to operate in La Guajira.
55. “I was earlier this year in La Guajira, meeting with community leaders from the aforementioned communities. When Cerrejón walked away from dialogue with Roche, this not only undermined trust in the process and suspended the dialogue but the company representative publicly denounced the communities and the NGOs in ways which, in a climate of intimidation and paramilitary violence, has made social leaders in Colombia feel in unnecessary danger.
56. “Knowing about the different issues with the communities’ participation in the Prior Consultation, how will Anglo American influence Cerrejón to return to dialogue and create real trust with the communities and to establish fair compensation for the communities?
57. “Communities you won’t recognise: Last month I met people who are still living in the areas Cerrejón claim to have resettled people from within Cerrejón. You claim these people are not there and therefore there is no one within the highest impact area, and that therefore the work can continue as normal. But people are living there, they do exist, and they have a right to remain living in their territory without their crops dying, with access to clean water.
58. “Furthermore, I have visited communities which you claim are not experiencing impacts of mining, namely Manantialito, Nuevo Espinal, El Rocio, La Gran Parada and Cerrito, to name a few. I have seen water run black with coal dust off the leaves of crops which are not growing. I have met children with unexplained rashes and respiratory disorders. The extraction operation is moving ever closer to some of these communities and the company must acknowledge and take responsibility for the impacts. When will Anglo American use its influence to compel Cerrejón to acknowledge its responsibility to these communities and what will it do about it?
59. “Community leaders are risking their lives to draw these matters to your attention; in the past 12 months we have seen an escalation in death threats, including one issued by paramilitaries to members of Fuerza de Mujeres Wayuu in October, physical intimidation tactics including paramilitaries arriving at communities and asking after social leaders, following them, and the assassination of Jose Victor Ceballos Epinayu, a social leader belonging to Nacion Wayuu, this February. In the last 24 hours members of Fuerza de Mujeres Wayuu received another death threat from the Aguilas Negras paramilitary group. Every day’s delay in addressing these issues puts them in further danger.”
60. Stuart Chambers replied that Isobel had made a lot of points and that he was not in a position to address all of them in detail. “If they are indeed as you suggest then we will influence Cerrejón management. We insist the Cerrejón goes about its business legally and ethically and abides by tutelas and other legal actions open to communities to protect their interests.” He said that it was possible that there were areas where this was not happening on the ground. Mark Cutifani would comment. He went on, “If you are suggesting that Cerrejón management is involved…”
61. Isobel cut in, “No, that is not what I am suggesting, but this is an outcome of what is done. In summary, I am asking about resettlement and about communities whose rights have been denied.”
62. Stuart Chambers said, “We cannot engage directly with communities but we can oversee Cerrejón’s engagement, working with the other two shareholders.”
63. Mark Cutifani thanked Isobel for making the observations. “Let us speak afterwards about specifics,” he said, “and we can communicate with Cerrejón. Regarding the resettlement process, compared to where were were years ago the processes have been improved significantly. We have promoted IFC [International Finance Corporation, the private finance arm of the World Bank] standards and have given them support and advice and have made good progress in four out of the five communities and are continuing to make progress. If there are issues within that that we can refer back to the Cerrejón team we are happy to do that. On the second part, many people do not understand that a lot of water in the local region is not fit for human consumption and most of the water we draw is not fit for human consumption. The only water we return to the river is water that passes certain standards. If you can pinpoint where the water is being taken from then we can see whether unfit water is being discharged from the mine. We can help follow up on anything else you have got.”
Investors and tailings dams
64. Stephen Barrie, of the Church of England Pensions Board, asked about the lobbying practices of industry associations of which Anglo American is a member, especially where they threaten to undermine the company’s position on climate change and particularly where it threatens to undermine Anglo American’s support for the Paris agreement. On the topic of climate change more broadly, the Church of England Pensions Board welcomed the company’s engagement with Transition Pathway. It welcomed the company’s support through the International Council on Mining and Metals (ICMM) for a review of tailings dam standards. One hundred investors with 12 trillion dollars under management had written to all mining companies asking for information about and an evaluation of their tailings dams. Would Anglo American respond?
65. Stuart Chambers replied, “Yes. When you have read through our industry association survey document please let us know of concerns. Industry associations are slow, but we will see what we can do.”
Climate change and the Climate Action 100 investors’ alliance
66. A representative of Hermes Investment said that he was also speaking for the Climate Action 100 investors’ alliance. The alliance wished to praise Anglo American on its continuing commitment to minimising its negative impacts and make the transition to a low carbon economy. It welcomed work on trade association management. It urged the company to accelerate its progress in move towards low carbon world. Could Anglo American take three steps forward to achieve accelerated progress? These steps were transparency, ambition and incentives.
67. A representative of the Central Finance Board of the Methodist Church, also part of the Climate Action100 alliance, asked that by the end of the year Anglo American publish a detailed inventory of its scope 1, 2 and 3 emissions, including coal. If Anglo American thinks coal contributes to achieving its ambition, the company should set out why it thinks so. It should publish its pathway to reducing emissions for every commodity.
68. Stuart Chambers replied that the company already discloses scope 1, 2 and 3 emissions in its regular reporting. It would continue to work with the Transition Pathway initiative and develop a robust methodology to measure, track and reduce its scope 3 emissions. Linked to that, its ambition is to commit to a date for achieving a zero net carbon position. It expected to reduce emissions significantly but a challenge for the company, especially on scope 3, is that to identify and report is one thing but there are lot of other things to address. “To deliver on a zero position on scopes 1, 2 and 3 we need a zero carbon electricity supply and zero carbon transport and tackle fugitive emissions and start defining offsetting options where technology and the economy do not seem to offer a zero carbon possibility. Regarding the Paris Agreement, that is mismatched with national commitments. This causes confusion in dialogues with nation states. We are not in a position to give an end date to that and cannot commit to do that by the next AGM, but we will commit to push it forward vigorously and will give an update at the next AGM, but I cannot promise it will include that we will achieve X by Y.”
69. On remuneration, Stuart Chambers said that about 10% of the company’s long-term incentive plan concerns sustainability commitments and measures and about the same proportion of the annual bonus involves the same matters. The company is led by its remuneration committee and is embarking on discussions with shareholders on what its policy should be in the next three years, and he would be surprised if this did not feature in that policy.
70. The Hermes representative asked whether the company would provide an update on the matter before the next AGM. Stuart Chambers said that it would, but could not commit to hard and fast positions. It would continue to be part of the transition initiative.
71. Mark Cutifani added, “The one issue worth adding is we are really thinking hard about what we can do internally with new technology to see how we can reduce our footprint and not rely on buying credits. We could buy credits but would prefer to address the underlying problem. It is better to fix the issues but we will make this open and transparent in our dialogues.”
Tailings dam stability and the company’s iron ore operations in Minas Rio, Brazil
72. Richard Harkinson, of London Mining Network, said: “Anglo American has declared itself to be industry leaders on improving tailings waste management, and storage, most of which is designed to be perpetual.
73. “You have noted that ‘catastrophic tailings dam breaches in the mining industry have led to greater public scrutiny’.
74. “You have said that in a general way you are committed to greater transparency on your liabilities and responsibilities for mining wastes management. I have looked carefully through your reporting including your sustainability data, and cannot find a useful list of your tailings dams (operating and divested) with relevant disaggregated data on volumes/weight of wastes contained, areas covered, locations, heights of dam containing walls, and any information on independent stability assessments with relevant data – dates, engineers of record, etc, against what standards/protocols and factors of safety. We have heard from the CEO again in response to the Church of England that Anglo is working towards transparency. We know that the Church of England have sent letters of inquiry to all major mining companies. We consider that the Church of England’s questions don’t go far enough.
75. “We want to share with you the critical observation that the collapse of a mine tailings dam can have a catastrophic effect due to the force with which mining waste escapes from a burst dam. It is unclear whether the effects of the collapse of the two tailings dams in Brazil are fully remediable. It should be remembered that there is a very strong trend for tailings dam to get larger and the effects of future dam failures will get exponentially larger.
76. “You state that you are working through ICMM to find a way forward. Tailings dams are an area of poorly quantified risk for the mining industry and this should be a concern for all investors. The two dams that collapsed had been previously classified as stable. There would appear to be a lack of an adequate independent system of due diligence and risk analysis for tailings dams, or whether mining companies have programmes for risk elimination in currently used dams and decommissioning of abandoned dams.
77. “Is your company committed, through industry bodies, to the creation of a global independent system for ensuring full and transparent risk analysis of tailings dams?
78. “Is your company committed to ensuring, through industry bodies, that companies have adequate ring-fenced funds for risk elimination, dam decommissioning and disaster remediation?”
79. “How is and will be your Minas Rio tailings dam affected by the new legislation in Minas Gerais on tailings dam stability and safety, which stipulates more stringent conditions for tailings dams and doesn’t allow there to be people living downstream in the zone where people could not be rescued in time. There are people living in such a zone below the Minas Rio tailings dam, who say that they as yet do not know the position is.
80. “Will Anglo commit to undertake only voluntary and consensual relocation of affected people in order to comply with legal provisions and will Anglo commit to being transparent in your dealings with affected people?
81. “What other concerns are involved in your seeking permitting for the raising of the existing dam?”
82. Stuart Chambers replied that for assessment of its tailings dams Anglo American uses its own standards, which he said are world leading. He said that the company also submits its findings to independent assessment. He said that the company’s own expert on tailings dams was at the AGM. He said that Richard was asking for more disclosure on what Anglo American does and more involvement by the company on moving this forward for industry as a whole. Anglo American is committed to both of these, he said, and would disclose more. One issue, he said, is striking a balance between how much the company discloses and how much time people have to spend on disclosure rather than doing other work. Regarding ring-fenced funds, he could not make commitments for other companies, but Anglo American’s audit committee had discussed the matter that morning. Money needed to be set aside for tailings dams and for the whole remediation of mines, and this is the company’s most significant balance sheet issue. “We believe we have set aside enough,” he said.
83. Mark Cutifani added that in 2014 Anglo American had identified tailings as “an area where we needed to ensure we had risk issues covered, and we shared these with ICMM, and they used them to develop new standards for the industry. Today our standards go beyond those standards and we have made those available to everyone, and we will provide full detail on all our standards and all our tailings dams as requested by the Churches and others. We will provide the information you have asked for.” ICMM was still working through the issues and Anglo American would participate, and this would be shared globally and be open to discussion and debate. “We will publish sufficient information to address all your questions,” he said.
84. Richard Harkinson said that with regard to tailings dam stability, the CEO had said that Anglo American had its own standards and had taken them to the ICMM. What the ICMM had said [in a report published in 2016] was that a body should be established which would be responsible for independent safety audits, and this has not been taken forward.”
85. Mark Cutifani replied, “It has by us. We understand the transparency issue and we will make information known. We do have local experts involved and have an annual independent review of dams.” The company would make this available in the next month or so in response to the request from the Church investors and others.
86. Richard Harkinson asked how the company determined adequate factors of stability. Mark Cutifani said that this would be made clear in the publication. Regarding Minas Rio, he said that the tailings dam is not an upstream dam, which is the type that failed at Samarco and Brumadinho. It is a downstream dam built of independently sourced material and engineered. It is also a water-containing structure. “We try to harvest water from rainfall and use it in the water balance so we minimise the water extraction from the area round our operations. We think it will more than fulfil the requirements of the state of Minas Gerais.”
87. Richard Harkinson pointed out that he was not saying that the Minas Rio dam was an upstream dam. Stuart Chambers said that “it potentially reassures other shareholders that Minas Rio will not go the way of Samarco and Brumadinho.” Mark Cutifani added that the company was in consultation with communities up to ten kilometres from the dam. It had agreed resettlement with a community four kilometres from the dam, which is the closest affected community, and is in discussion with a community as far as twelve kilometres from the dam, [beyond the ten kilometre limit set by law].
88. Richard Harkinson replied that people cannot be reassured just because it is a downstream dam. “You have to be transparent and consult with people,” he said. Stuart Chambers said that after “these two horrible tragic events we will not hide behind some legal requirement but will talk openly with neighbouring communities beyond ten kilometres.”
89. Richard Harkinson observed that the impacts of the other disasters had not kept within ten kilometres but that he would wait for fuller disclosure.
The Quellaveco copper project in Peru
90. Illary Valenzuela Oblitas, of London Mining Network, said: “My question regards the social and ecological impacts of the Quellaveco project.
91. “Anglo American has been responsible for the rupture of pipelines, the depletion and contamination of water systems and the displacement of communities in various parts of Latin America.
92. “Despite the agreements reached in the Mesa de Diálogo in 2011 in Moquegua, concerns persist over the mine’s plans to divert the Asana river and the impact of its vast water consumption in a region already stressed by contaminated and depleted watersheds from previous mining activities.
93. “Additionally, there are serious doubts surrounding the impartiality of the government’s role in oversight with regards to this project given that Fabiola Martha Muñoz, formerly Anglo American Peru’s head of community relations, is the current Minister of Agriculture, that the current President Martín Vizcarra adamantly supported the project even prior to the Mesa de Diálogo during his mandate as Governor of Moquegua, and that the head of operations at Quellaveco, Tom McCully, worked for Newmont during the period of intense and violent conflict over the Yanacocha mine in Northern Peru.
94. “My question is: what guarantees can you offer the communities of Moquegua that their water and livelihoods will not be sacrificed again for the profit of a mining company?”
95. Stuart Chambers said that Tom McCully would have learnt first hand that if you do not get your community engagement right there can be an unhappy ending. Anglo American had owned the mining right at Quellaveco for 25 years. We have been at it a long time. “I was there a year ago and the community engagement aspects seem to have been pretty thorough,” he said. “The reason we diverted the Asana was to protect and preserve the river once the mine is operating. Once it is operating it will take no water from the Asana River. It is a very significant project and there will be disruption to the community. Regarding political oversight, we are not a company that does what we do because of the strength or weakness of political oversight. Regardless of it, we want to do the right thing. Martín Vizcarra because of his links to Moquegua has to overachieve and cannot be seen to favour something from his past, and he has become a challenge for us” he said, then asked Mark Cutifani, “Can we commit to take our responsibilities seriously?”
96. Mark Cutifani replied, “Yes, very seriously. I recently met the President and community leaders and discussed 27 commitments and where we are tracking on all commitments. The Asana diversion has begun, and was very significant in the recent floods, and the governor commended us for our support for local communities. The diversion provides higher quality water all year round and we continue to work on all the commitments. Tommy [McCully] came to Newmont late in the process and has helped us see where there were gaps early in the process, and his feedback was we must engage early with local communities. We must get all programmes completed to communities; satisfaction. The President has been very tough on us. As Governor he refused to have his company involved with us in any way.”
97. Stuart Chambers added, “I have been chairman for 18 months and in that period every single person on this podium has spent a day and a half visiting and getting stuck into this project and that includes Marcelo Bastos. We are keen to make this a success.”
The Minas Rio iron ore mine in Minas Gerais state, Brazil
98. Paul Robson, of London Mining Network, said that he had visited the Rio Doce valley and studied the impact of the 2015 Fundao tailings dam collapse. He continued: “On page 46 of the AA Sustainability Report for this year it says: ‘Our Minas Rio iron ore operation in Brazil has continued to incur significant water stress despite increased rainfall in 2017-18.’ This is an intriguing observation because the dictionary definition of ‘incur’ is ‘to become subject to something unpleasant as a result of one’s own actions’. The statement in the Sustainability Report appears to be an admission that water stress is due to the Minas Rio project itself. This is what objectors to the original project and to its expansion pointed out. This is what Patricia Generoso said at this meeting two years ago. This water stress is affecting other water users in the basin of the Rio St. António and the recovery of the Rio Doce, and the main contributor to water stress is the Minas Rio Project. This project has led to significant water stress effects on other water users, has it not?
99. “I asked a question at the last AGM about the mineral pipeline, the two breaks in the pipeline and its causes. This year’s annual report says that authority has been given to restart the pipeline and it is now in operation again and the production of the project is being increased towards target levels. The Annual Reports say nothing about the causes of the breakages of the mineral pipeline. What were the root causes of the pipeline breakages a year ago?”
100. Mark Cutifani replied that as the company goes through the commissioning period it uses more water as it is learning how to balance the circuit. He said that the water recycle rate at Minas Rio is 60% on one operation and 20% on another. Anglo American was harvesting rainfall from local areas and using the tailings dam as a recycling point for local water. The company was also looking at the technologies being used at Quellaveco in Peru, and new technologies, in order to reduce evaporation and water consumption. “Lots of work is being done to reduce water consumption,” he said.
101. Regarding the pipeline, he said that “the key issue we found was there was a batch of four kilometres of pipe that came from China in 2010 where the quality of the weld was not top-line standard. Those pipes were installed close to the pump station. Small micro-cracks were subjected to alternating high pressure and the cracks opened and developed over three years and then there was the failure of those cracks in both cases, both from the same batch of pipes. We have removed most of those pipes and x-rayed pipes for micro-cracks and have removed four kilometres of pipes in those areas and committed to a new programme of checks on a monthly, three monthly and annual basis.” The company was monitoring areas with high noise and vibration for micro-cracks. This has “changed the operating parameters of the pump station and how to maintain the pipeline.”
102. Paul Robson noted that there is likely to be water stress for the next 30 years and that the mine is operating in competition with other users. Mark Cutifani replied, “We have improved our water use and are working for 50% savings. We have made significant progress.”
De Beers, blood diamonds and the Israeli military
103. A representative of Shareholders Against Blood Diamonds asked about the Israeli military and human rights violations and why Anglo American subsidiary De Beers trades with diamond-cutting companies in Israel which generate revenue which enables the armed forces to commit war crimes and crimes against humanity. He suggested that there was the possibility the De Beers and Anglo American may be legally liable for the revenue from the diamond industry supporting these crimes against Palestinian people.
104. Stuart Chambers said that the search for shareholder value was not worth a human life. If value cannot be created without killing people then the company would have to reduce its financial performance. Mark Cutifani had spoken about the company’s elimination of fatalities taskforce. This did not undermine the force of questions about dealing with Israel and supporting indirectly the activities described.
105. Bruce Cleaver, CEO of De Beers, spoke about the beneficiation of diamonds. This, he said, was mostly done in Namibia, Botswana and South Africa. Less than 5% of free mark diamonds were beneficiated in Israel. “We expect all our sight holders and all clients to comply with our ethical values,” he said. Stuart Chambers added that the company does not participate in what the money made by sight holders is subsequently used to do. Anglo American could not accept or refuse a customer simply on the grounds of their nationality. The company respects the judgement of the international political community on particular countries, he said, and would comply with international measures such as trade embargoes should they be imposed. It could not sit in political judgement of something such as this until the international community had judged it.
106. Shareholders Against Blood Diamonds responded that the company seemed to be saying that respect for human life only applied to its own people and not to people being killed on the ground in Gaza. Given that De Beers was involved with the Israeli diamond industry, and that this was funding the Israeli military, how could the company market its diamonds as conflict free?
107. Stuart Chambers replied that the diamonds are mined in areas which are conflict free. “If someone buys diamonds and beneficiates them in Botswana or Namibia and then sells them to the USA, and that person is an Israeli, it is difficult for us to say we would not sell to them, and we may be subject to serious legal consequences.” [This seemed to be missing the point about diamond-cutting being done in Israel and helping to fund the military through taxation and direct company donations by the diamond-cutting companies, which was what was being alleged.] He said that the company would investigate what is going on, “because we do not want to contribute to human rights violations.”
108. Another question was asked about the whereabouts of the Steinmetz Diamond which had been mined by De Beers and then displayed in the Tower of London for a while, but had been withdrawn because of allegations about the Steinmetz family directly supporting an Israeli army brigade responsible killings of civilians in Gaza, particularly the Samouni family, whose wounded children had been denied access to medical treatment and had died. The De Beers chief said that the diamond had ceased to be De Beers’ diamond once it was sold, and the company had no idea where it is.
109. The company was asked to condemn the actions taken by the Israeli military in Gaza, in particular the bombing of civilians. Stuart Chambers said that of course the company condemned human rights violations but that it was very difficult to account for what happens to what the company sells after it has sold it, several stages down the road. Shareholders Against Blood Diamonds agreed to provide more detail so that the question could be put again at next year’s AGM, and Stuart Chambers said that this would be fine.
110. Another shareholder asked about the major shareholding in Anglo American by the South African Public Investment Corporation, which had taken a stance in favour of Palestinian rights. What would be the effect of SAPIC disinvesting?
111. Stuart Chambers said that if SAPIC did this over a period of time (and they would not do it quickly, he said) the share value would go down and then others would take advantage of that and buy shares and the share value would therefore be restored. “I don’t think SAPIC would do that,” he said, “and it is not up to us to influence it. If the citizens of South Africa force PIC to pull out it is not for us to interfere. But shareholders need not be concerned.” [But the question was clearly not asked because of concern for the share value – it was asked because of concern for human rights.]
112. Another shareholder asked the Chairman to discount everything that the speakers from Shareholders Against Blood Diamonds had said. She said that they were anti-semitic, that Israel investigated all allegations of human rights violations by its soldiers, and that the people of Gaza were bombing Israeli schools. Would the company discount everything that had been said?
113. Stuart Chambers said that he would not discount what the other shareholders had said any more than he would discount what this shareholder had just said. “We will not discount anyone’s position without a serious attempt to get to the bottom of the situation,” he said. “But we will not condemn people on the basis of someone’s nationality.”
The gender pay gap at Anglo American
114. Another representative of ShareAction asked about Anglo American’s gender pay gap. “This is an issue that carries significant reputational risk,” she said. “It is good to see that the company looking to have 33% women on its board, but will the company put in time-bound targets to reduce the 50% pay gap? Anglo American is significantly out of line with Glencore and Rio Tinto regarding the gender gap on bonuses. Will the company commit to reviewing its bonus policy to show that it wants to attract women at senior level? ShareAction would be happy to share experience on this.”
115. Stuart Chambers agreed that this is a significant issue. “We have a much more decent percentage of women in total across the world,” he said, “but as you move up to senior levels the percentage of women decreases. This is a big concern. It is a strategic issue for us as we maintain that diversity makes organisation more effective. Our diversity and inclusion strategy is alive and well but we have an awful lot of work to do. This is a UK reporting requirement and this is a report on UK employees of Anglo American, which is about 290 people, so you are dealing with the HQ of the company and it is not very representative of the organisation as a whole. We are keen to address that in HQ but also at mine level around the world. There is a lot to do. This is not about pay equality but about the skew of the percentage of women and men as you go up the hierarchy. We would be happy to have ShareAction insights on this.”
116. The ShareAction representative said that she understood that the company could not ‘magic up’ qualified women but that the bonus policy does seem to be out of line with the company’s competitors.
Anglo American in Ecuador
117. Hal Rhoades, of LMN member group The Gaia Foundation, said: “This question relates to Anglo American’s recently established joint venture with Canadian miner Luminex Resources in Ecuador. We understand that this copper-gold project, located in Ecuador’s Western Cordillera, is still in the exploration phase at two sites – the concessions known as Pegasus A and B. Could you tell us more about the areas under exploration? In particular, any communities present in the region and how you plan to / have already engaged them, and about the local ecosystems under exploration?
118. “In asking these questions we note:
-That Ecuadorean constitution guarantees both indigenous and non-indigenous citizens the right to free, prior and informed consultation and, in the case of indigenous people, the right to grant or withhold their free, prior and informed consent for projects planned for their lands. (Articles 57 and 398).
-The growing global concern about the impacts of expanding metal mining, especially for copper and other metals used in renewable energy technologies, in forest ecosystems that play a critical role in regulating the climate.”
119. Stuart Chambers said that the project is in the exploration stage, not close to the stage of mining. Mark Cutifani added that it there had been no drilling yet, just some sampling. “We do stakeholder mapping as part of the early phase process,” he said, “and as we complete that work we will let people know where we are. We will not share commercially sensitive information, but certainly the community mapping we will share, and we will make sure that all our standards are followed to the letter. But this is very early days.”
120. Hal asked if the company would be open to a dialogue, and Stuart Chambers assured him that it would.
The influence of Anil Agwarwal of Vedanta
121. Finally, I asked about the rumours that Anil Agarwal, currently owner of over 19% of the company’s shares and associated with mining company Vedanta, which has a very poor reputation on indigenous rights, worker safety and respect for the law, was planning to increase his shareholding. What was Anglo American planning to do to prevent him increasing his influence?
122. Stuart Chambers replied that Mr Agarwal could only control the company if he gained 29% of shares, at which point he would have to make a bid for the company and other shareholders would have to decide what they wished to do. If I took a different view from Mr Agarwal on what he thought best for Anglo American, I was free to express it. He gave no detail on what the board would do to prevent a takeover by Anil Agarwal or companies which he controls. He spoke instead of having a “continuous dialogue” with Mr Agarwal as “a significant shareholder”.
Nobody could justly accuse the company of not allowing critical questions to be aired at this AGM. But at the end of the meeting, Stuart Chambers said that in future he may need to restrict the amount of time spent on questions and answers in order to shorten the meeting.
Would that make a difference? Does the airing of criticisms at a company AGM make a difference? Many of the people with whom we work in mining-affected communities think it does – which is why we continue to do it. They say that when we raise issues at mining company AGMs, things on the ground sometimes improve, at least for a while; and in any case, bringing communities’ concerns to AGMs means that company management and shareholders cannot say they have not been told. And when company boards make commitments at AGMs, and we write them down and publish them, communities have markers they can use to hold the companies to account.
On the other hand, the larger London-listed mining multinationals that hold their AGMs in London – BHP, Rio Tinto and Anglo American – are extraordinarily skilful in self-presentation, sometimes with considerably more form than content, and to that extent their AGMs are carefully crafted theatre pieces.
Anglo American particularly specialises in the appointment of affable and courteous Chairmen (and they have all been men since Anglo American moved to London at the turn of the century). Stuart Chambers fits the mould splendidly. He is a nice-looking man who smiles a lot and is always apologetic if he really does have to cut someone off. Early on in the proceedings, and with the force of revelation, I suddenly realised who he reminds me of: Michael Aspel.
British readers under the age of 30 (if there are any), and readers overseas, may well not know who Michael Aspel is. On the other hand, readers under 30 will probably instinctively google him and in a trice know more about him than I do, so perhaps the following explanation will do for readers OVER 30 who have been even less connected to contemporary culture than I have been. Michael Aspel was a television news reader and presenter, whose last major job was on the Antiques Roadshow from 2000 to 2008. But I remember him particularly from a Morecambe and Wise Christmas Show (I am afraid you really will have to google that one if you don’t know what it is) in which he performed, along with other serious television celebrities, as a US marine singing a song from the Rodgers and Hammerstein (google them) musical South Pacific (and that). The song began with them all facing away from the audience, and one by one they turned round, revealing their serious celebrity status. Well, if it’s the case that the Anglo American AGM is, among other things, a show, I think it might be a lot more enjoyable if the board did a song-and-dance routine along the same lines. I suppose it does depend on how limber they all are, and whether they can sing.
You may find this suggestion offensive. What has a song-and-dance routine got to do with children suffering from respiratory diseases because of coal dust contamination, or former mine workers dying of silicosis, or farming communities being forced off their land and deprived of their livelihoods by opencast mining, or pristine ecosystems being disrupted and polluted, or water in arid areas being redirected from agriculture to mining, or community leaders and environmentalists being threatened with death by persons who clearly believe they will benefit from multinational mining projects? Would it not emphasize the point that the privileged people in the company AGM are far removed from the suffering and destruction which mining so often causes at community level? Indeed it would – and that’s why I thought of it; and that’s why we need to keep ensuring that the voices of the communities directly affected by multinational mining projects are heard inside the AGMs of those companies, as one small way of keeping up the pressure for accountability and change.