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12.07.2004 Business & Finance

Embedding Social Responsibility Into The Fabric Of Corporate Life

By john owusu"

– The Case Of Anglogold Ashanti: DELIVERED BY DAN OWIREDU, CHIEF OPERATING OFFICER, ANGLOGOLD ASHANTI (WEST AFRICA) The quest to locate the notion of Corporate Social Responsibility in the operations of all major corporate bodies these days has become almost a mantra that many recite for various reasons. This has become even more acute as societies change with rising expectations, and the realisation dawns that some corporate entities, particularly mining companies, have a short shelf life after all. Accordingly media practitioners, Non-Governmental organisation, which have mushroomed in Africa countries these days, politicians, social workers, farmers, teachers, trade unions, shareholders and the government agencies, just to mention only a few, are all itching to know what the practice of CSR entails. Against this background, I have divided my presentation into two broad areas –What Corporate Social Responsibility means and What AngloGold Ashanti has achieved in the bid to promote Corporate Social Responsibility in the communities and countries in which it operates.

In order to appreciate the concept of Corporate Social Responsibility a good definition is critical. Lord Holme and Richard Watts of the United Kingdom in their publication 'Making Good Business Sense' concisely define the concept as “continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large”.

The Chief Executive/President of Levi Strauss also adds another dimension when he notes that, “It' s nothing more than balancing bottom line concerns with social responsibility. The organisation needs to be an ethical creature – an organism capable of both reaping profits and making the world a better place to live”.

A Company's Social Responsibility must therefore involve capacity building for sustainable livelihoods, respect for cultural differences, and the promotion of the welfare and skill development for employees, the enhancement of life in the communities, and a creative relationship with the government and all other stakeholders. In essence, therefore, it is about focusing on the efficient running of the core business in a socially responsible way, complemented by investment in communities and the society in general. That is balancing the needs of the company and its survival with the prime objective of ensuring the best interest of its stakeholders for the benefit of the society.

In order to facilitate the promotion of the CSR concept in African mining, a special conference of African Ministers of Mining and Energy held in Ouagadougou, in December 2000 directed that additional emphasis among others, should be placed on the following key measures to:

· Establish macro-economic plans to create opportunities for increasing national income through mining;

· Take the necessary measures to ensure a better redistribution of the income derived from mining, so that it can contribute more effectively to the alleviation of poverty, and the protection of the environment;

· Establish suitable modalities to incorporate the needs of the community into mining investment or development plans by involving the community in decision making;

· Take measures to address the cyclical volatility of mineral commodities and;

· Ensure maximum added value from African mineral products to facilitate sustainable development; CSR in AngloGold Ashanti West Africa It is pertinent at this stage to indicate that I will largely limit my presentation to the former Ashanti Goldfields operations, and only give examples from other mines in the former AngloGold Company to emphasise the identical corporate values, which made the recent merger of the two companies, such an attractive proposition.

The record of our operations in this country and beyond confirms that even before the Ouagadougou conference, the former AGC, now largely forming AngloGold Ashanti (West Africa), had taken advantage of the improved macro-economic situation engendered by the Mining Law of 1986 for instance, to progressively increase gold production at Obuasi from 250,000 ounces a year to 930,000 by 1994. Further growth was planned and with internally-generated resources as well as external financing, the one mine company was transformed into an African mining multinational with other mines in Ghana, Guinea, Zimbabwe and Tanzania, thus making the production of 1.6 million ounces of gold possible by 2003.

At the same time, we unilaterally decided to make substantial strategic investments in the 1980's in banking (Ecobank), the service industry (Labadi Beach Hotel), Agriculture (Jei River Farms), growth of local industries Carmeuse Lime Factory and African Explosives, Entertainment (Golden Nuggets, Len Clay Stadium and Academy complex), all in the general attempt to kick start the Ghanaian economy at a very difficult time in our national economic history.

This fine history of achievements dovetails very well into AngloGold Ashanti's vision to be the leading gold mining company in the world in many respects apart from impressive production figures. We aim to build an organisation that not only continues to creates value for our shareholders, but also impacts positively on the communities in which we operate. Several of these countries and communities face challenging social and economic pressures, and we recognize that our growth and success in these areas must be realized in a meaningful partnership with these communities. SAFETY & ENVIRONMENT AngloGold Ashanti's commitment to operate its mines at the highest standards of safety to employees and the environment is part of management action on daily basis. We endorse the notion that 'safe mining is good mining'. Hence, we have established environmental management units and safety and loss control units in all our mines. The results of these concerted effort is that; currently, all our mines within the West Africa group and Geita are rated either 4 or 5-star by the internationally recognized NOSA (National Occupational Safety Award of South Africa). Our Lost Time Injury Frequency Rate (LTIFR) - which is a measure of the time lost in production due to injury in hours lost per 200,000 man-hours worked, is now down to 0.37 a 100% improvement from the figures recorded just over two years ago, and on a par with international best practice.

We are beginning to receive similar recognition in the area of environmental management. Our Freda-Rebecca mine was selected a few years ago for the Zimbabwe Mines Environmental Conservation's “Most Improved Mine” award, for its efforts in re-vegetation of waste dumps, nature conservancy and environmental awareness programmes. Today, two of our mines, Geita and Bibiani are rated ISO 14001 on Environmental Management. A few years ago, the former Ashanti closed an old roaster technology processing plant at Obuasi built in 1947 and modernized with an Arsenic Recovery Plant at a cost of $7million in the 1990's, and replaced it with what is now the largest Bi-Oxidation plant in the world, which uses the most environmentally friendly gold-processing technology in the industry today. VALUE ADDITION Even before the merger of Ashanti and AngloGold this year, AngloGold had played a major role in championing the cause of achieving much greater value on its own as well as through the World Gold Council by pursuing a more aggressive production and marketing of gold jewellery. To this end Dr Sam Jonah and Bobby Godsell, the two respective Chief Executives at the time, jointly commissioned in February 2002 in Cape Town, the Africa Gold Museum which has on display, 'redeemed' West African jewellery and other adornments then held in an European collection. Currently as President and Chief Executive respectively, and jointly charged with the strategic development of AngloGold Ashanti under their joint leadership, the focus of the company in jewellery marketing, is being further sharpened. Already the Executive Director for Marketing and his staff in Johannesburg have paid working visits to relevant Ghanaian institutions in pursuit of the cherished goal of beneficiation based partly on the dying Ghanaian expertise in gold smithing. ADDITIONAL MEASURES IN ENVIRONMENTAL CONTROL We are showing our social commitment in other ways as well. Last year, we planted more than 100,000 tree seedlings on waste and tailing dam areas at our Ghana mines, and re-vegetated 100 hectares in the process. In Zimbabwe, our Freda-Rebecca mine produced over 30,000 seedlings in the mine nursery, and has been active in maintaining a nature conservancy, which has become an educational environmental centre for the local schools. HIV/AIDS AND MALARIA CONTROL Halting the spread of HIV/AIDS within our workforce and the communities in which we operate has become a top priority. There are active education programmes at all our mines, and free condoms are given out monthly. A cursory review of the “Report to Society” of 2003 by the erstwhile AngloGold will amply reveal the pioneering work on education and treatment of HIV/AIDS and malaria control which are now the hallmark of our global operations in all endemic areas.

For example our Geita mine in Tanzania has partnered with AMREF (African Medical Research Foundation), an NGO to provide health and counseling services to those in the Geita Township. Operating on a 3-year budget of US$300,000, the Geita Mine Community Health Project aims to develop and implement a sustainable programme of health promotion, disease prevention, and improved treatment with a particular focus on HIV, other STI (sexually transmitted Infection), TB, and malaria. The project is achieving this through awareness workshops, and training and support of representatives of local community groups. It provides free and anonymous HIV testing and counseling, and targets the female recreational workers and their clients to promote safer sexual behaviour. The impact of the project so far has been impressive.

Increasingly large numbers of people are attending counseling sessions, getting tested for HIV, and getting trained as peer counselors to assist victims in their respective communities. Our Freda-Rebecca mine in Zimbabwe has also made progress working with the Zimbabwe AIDS Prevention Support Network (ZAPSO), leasing an office building for ZAPSO at Freda's cost, and training over 70 peer educators to raise awareness in their local communities.

Obuasi's example is even more significant among the West African mines. Indeed Obuasi was arguably the first mine in the sub-region to take the initiative at evolving an effective response to contain the epidemic. Obuasi undertook mass meetings involving workers and was the first to introduce condoms in pay slips as a means to attract individual attention to its anti HIV education program. This initiative attracted the attention of the world service of BBC and the Amsterdam foundation, who both saw in the move an example worthy of emulation of other corporate bodies in the developing world. Consequently every employee is so much aware of all the causes of HIV/AIDS that the infection rate has been significantly reduced. On malaria control, Obuasi decided to highlight its consent through the declaration of Malarial Awareness Day and other initiatives that it undertook. This should have been further enhance by the larger AngloGold Ashanti and its to be implemented very soon. MICRO-FINANCE & ENTREPRENEURSHIP We have initiated micro-finance schemes at Siguiri and Geita, and contributed approximately US$160,000 to them. At Siguiri, we are working with the Canadian NGO, Adventist Relief Agency (ADRA) to administer and disburse these funds. Typical recipients have been women's groups, agricultural groups, and cattle-raising groups. Our main objective has been to increase the living standard of the Sous-Prefecture of Kitinia by a minimum of 75%, and we are evolving even more effective ways to monitor the full impact of our initiatives in those communities. By our estimate, these funds have reached almost 5,000 people, with almost 100% repayment rates. The fund has even been able to receive interest on loans paid back, and this is being ploughed back for further disbursement.

Geita is working with two NGOs, Poverty Africa, and Equal Opportunities for all Funds, on a similar basis, and so far, has provided loans to almost 100 small businesses in the Geita area. In Ghana, AngloGold Ashanti has employed and financed the services of Empretech, a small/medium scale business-training consultancy, to train the youth in our surrounding communities, with the objective of training the youth in alternative livelihoods to prepare them once mining has ceased in their areas SPORTS We have been active sponsors of sports at the community and national level. Geita, Freda Rebecca, Obuasi and Bibiani have their own district or national football league teams, and particularly in the national soccer league in Ghana, we have AshantiGold in the Premier Division from where they represented Ghana on the continental level a few years ago. Additionally the Len Clay Stadium in Obuasi does not only host Premier League matches, but also puts out its Soccer Academy and its facilities for community and national uses.

Bibiani also has Goldstars, which is currently campaigning in the First Division and narrowly missed playing in the premier league this year. In Zimbabwe and Guinea, the company sponsored teams play in the respective provincial leagues. Social Amenities Apart from the potable water, electricity, schools, health clinics and other amenities we provide, and maintain in the communities and even beyond, the Iduapriem Mine, for instance, has just introduced a 10% top-up of all teachers working in schools and kindergartens in the vicinity of its operations. The idea is not only to motivate the teachers to put in up their best, but also to attract new ones to the otherwise deprived rural environment. The Company has also commissioned two Centres for Early Childhood Development at Old Town in Bibiani and Adieyie in Tarkwa and a Junior Secondary School at Adubirem in Obuasi, Bibiani and Iduapriem communities early this year and hopes to evolve even more creative ways to promote corporate social responsibility. In Geita the pipeline from Lake Victoria to the mine provides free water to all the villages along the 22-kilometre route.

In Guinea where the law on royalties' payment gives us a voice in the disbursement and use of any payment we make, in conjunction with the local government and of course with the blessings of the central government, infrastructures such as roads, and schools have been constructed in the Siguiri District over the past years. This in no small way has boosted the local economy. We also rehabilitate the main road from the Siguiri Town to Koron, where the mine is located on regular basis.

Education is one area that has received our priority attention over the years. In Guinea, a training centre, supported by local and expatriate trainers, has been set up on the mine to train and augment the skills of our employees. The unique aspect of this centre is that apart from the usual technical, engineering and business subjects taught there, we have also set up a centre for the training of English and French languages for our employees not only from Guinea but our other mines in West Africa. We have also supported the construction and maintenance of several schools and colleges in the Siguiri District – Siguiri Town, Saorou, BALATO, Setiguiya, Niandahoura and many others. In Obuasi, our community apprenticeship programme, where graduates from the universities and technical schools are given opportunity to do practical attachment for periods ranging between three months to one year, I am happy to announce to you that it has been extended to our mines in other countries and as at now 11 Guinean citizens are in Obuasi undertaking two year apprentice course in engineering.

In Bibiani, our community farms produce pawpaw, passion fruit, as successful initiatives in addition to various business-training programmes we have organized for the youth in the community.

For us in AngloGold Ashanti, the principles of the Global Compact of the United Nations, to which the erstwhile Ashanti was a signatory, reflect our own corporate values. In addition, the membership of our Corporate President on the Advisory Committee of the Compact, gives us an added fillip in our determination to be the gold stock of choice in the world.

The results from all of these initiatives are very encouraging. Indeed, we feel we are succeeding in the branding of our company as a social partner and empowering our employees and communities with the real tools for economic self-sufficiency. Here in Ghana we are supporting the Chamber of Mines in the drive to encourage the more equitable distribution of the considerable earnings from royalty payments to the communities in which we operate. This is one area in which a lot of friction has unduly been created in the past. Indeed Obuasi alone paid over $7 million last year in royalties and Ë750 million in property rates last year. We have established prudent environmental management and Loss Control measures in the area of water and air quality control as well as revegetation and afforestation.

Our joint collaborative efforts with our social partners, local and central government authorities as well as all the regulatory bodies, have already contributed immensely to the success of our initiatives. We see ourselves strengthening our relationships in all these areas as we proceed in our mission towards our corporate vision.

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