DELIVERING CHANGE BUILDING RESILIENCE …

1 ANGLO AMERICAN TRANSFORMATION REPORT 2016 TRANSFORMATION REPORT 2016 DELIVERING CHANGE BUILDING RESILIENCE working IN PARTNERSHIP4 Anglo American in South Africa Transformation Report 2016 DELIVERING CHANGE BUILDING RESILIENCE working IN PARTNERSHIPThis Transformation Report reviews the progress being made by Anglo American to contribute to South Africa becoming a more equitable and inclusive society. The report covers the business units that operate in South Africa; namely: Coal South Africa; De Beers Consolidated Mines (De Beers); Kumba Iron Ore (Kumba); and Anglo American Platinum (Platinum). The report also includes, where applicable, Anglo American s Corporate Division (AACD); Anglo American s EMEA Shared Services in South Africa (AAESS); and Anglo American s enterprise development initiative, aggregate figures are used in the report, incorporating data from all or some of the entities listed above, they are represented under Anglo American South Africa Limited (AASA).

2 LIVING OUR VALUESSAFETY We take personal accountability to ensure that we work and live safelyCARE AND RESPECTWe treat each other with respect and dignity in words and actionsINTEGRITYWe walk the talk - our actions are consistent with our wordsACCOUNTABILITYI ndividual accountability drives team and business accountabilityCOLLABORATIONWe align and collaborate across functions to ensure collective high performanceINNOVATIONI nnovation is key to our future and is a central part of our drive for sustainabilityFront cover images1. Naledi Trust Village, Kroonstad, Lovedale Primary School library. The Anglo American 2016 Mining Indaba exhibition stand was donated to Lovedale Primary School and converted into a library and study Welding students at the skills development centre at Kumba s Kolomela mine in Mineralogist Buhle Mkhize at Crown Mines, loads a sample into the XRM instrument for 3D Raesetja (Processor) and Malesela (Processor)

3 Discussing efficiencies at Area 455 Water Filtration at Mogalakwena North American in South Africa Transformation Report 2016 CONTENTSO verview2 OVERVIEW2 Foreword4 Introduction8 Anglo American s contribution to South Africa10 OUR WORKPLACE10 Responsible safety, health and environmental management19 OUR PEOPLE19 Achieving equity in our workplace36 Investing in our skills base42 Improving housing and living conditions48 FEATURE48 Gaining momentum in tackling employee indebtedness54 OUR COMMUNITIES54 Developing mine communities74 OUR PARTNERS74 Diversifying ownership to promote greater economic participation82 Promoting preferential procurement and supplier development91 Enterprise development108 Facilitating beneficiation114 APPENDIX114 GlossaryHISTORICALLY DISADVANTAGED SOUTH AFRICAN (HDSA)

4 REPRESENTATION AT MANAGEMENT LEVELSup to 65%HDSA TRAINING AND DEVELOPMENT billionSPEND WITH BEE-COMPLIANT billionFUNDING PROVIDED FOR 110 BUSINESSESR121 millionINVESTMENT IN HOUSING billionSOCIAL AND LABOUR PLAN EXPENDITURER310 millionOverview12 Anglo American in South Africa Transformation Report 2016 OVERVIEW: FOREWORDCOLLABORATING TO SUPPORT GROWTH AND STABILITY IN THE MINING SECTOR The sector s struggles have motivated greater activity to support its revival. A significant current development is the establishment of a new Mining Precinct in Johannesburg. This is a public private partnership which aims to arrest the current general decline in South Africa s mining industry through developing new, people-centred technology and techniques that support improved performance and modern mining methods.

5 A key objective is to develop the local mining equipment manufacturing sector. The Precinct is working with a variety of parties and partners to provide a collaborative and interactive environment in which openness and innovation are encouraged, with the aim of enhancing mining s economic impact as the country industrialises further and seeks to transform its American actively supports mining s role in promoting local industrialisation, including through our role in downstream-beneficiation sectors, such as the steel industry and fuel cell manufacturing. Our role in mineral beneficiation spans the provision of raw materials for downstream value-addition and the creation of enabling environments for the development of new entrepreneurs and industrialists in downstream and sidestream industries, which provide a wide range of goods and services to the sector.

6 We enjoy a strong partnership with government, and are committed to BUILDING on this relationship to ensure we play our part in DELIVERING on the goals of the National Development Plan. Business, government and labour have continued to engage on key initiatives aimed at addressing some of the underlying social challenges facing the sector and its communities. These include the Framework Agreement for a Sustainable Mining Industry; Mining Phakisa; and the Leaders Declaration on the Mining Industry Commitment to Save Jobs and Ameliorate the Impact of Job Losses. LEGISLATIVE AND REGULATORY UNCERTAINTYL egislative and regulatory uncertainty is an ongoing concern and constrains efforts to revive the sector. Government recognises that the mining industry and its stakeholders need continuity and certainty to be able to effect transformation, and to continue to sustain and grow investment in the 2004 and 2010 Mining Charters were products of a multi-stakeholder negotiation process.

7 As a result this accelerated transformation objectives, which industry then implemented. The charter that was published on the 15 June 2017 has deviated from this spirit and approach. We believe that a lasting solution can only emanate from a similar collaborative process as was followed with the first two RESILIENCE IN A CHALLENGING OPERATING CONTEXTA lthough it appears that the low point in the current mining cycle is behind us, the industry expects ongoing volatility. Anglo American has responded decisively by improving cash-flow generation and materially strengthening the balance sheet. With our operating model working well, and portfolio and organisational restructuring nearly complete, we are steadily BUILDING our RESILIENCE . We remain mindful that further progress depends on keeping our many partners on board as we strive for operational excellence, and on honouring our commitments to be a partner for American is a significant contributor to the country s social and economic transformation.

8 Our contribution addresses key national priorities such as small business development, job creation and supporting domestic investment in the economy by developing and supporting entrepreneurs. The challenging business climate and growing expectations of communities around our operations, have emphasised the need for innovation in order to deliver greater returns to society in general from lower expenditure. Engaging with our stakeholders in a meaningful way becomes ever more critical under these conditions. Andile SangquExecutive head of Anglo American South AfricaFOREWORDThe mining industry in South Africa has an important role to play in driving socio-economic transformation and redressing historical and social inequality. Against a background of continued commodity-price volatility, with increased stakeholder expectations across a range of fronts, the mining sector recognises the need to work in partnership with stakeholders to ensure that it continues to make a positive, sustainable contribution to American in South Africa Transformation Report 20163 OVERVIEW: FOREWORDDIVERSIFYING OUR EFFORTS TO ADDRESS SOCIETAL CHALLENGESIn my Foreword to last year s Transformation Report, I committed us to extending our efforts in seeking ever more collaborative and innovative solutions to the challenges posed by transformation.

9 Such endeavours can vary greatly in scale. I would like to highlight a simple but powerful initiative introduced in 2016: a community radio series called Makarapa City. The programme deals with the social issues facing many people in mine communities, such as indebtedness and lack of amenities, while highlighting the ways in which Anglo American is contributing through education, health, enterprise development and mine-community development. The stories tapped into the realities of communities everyday lives in an authentic and realistic way, and the positive feedback on the first series resulted in a second season aired later in the year. We hope that Makarapa City can be a catalyst for real and sustainable engagement and BUILDING trusting relationships with our mining a broader canvas, we are spearheading a regional approach to socio-economic development in Limpopo province, where we have both platinum group metals (PGMs) and diamond assets.

10 The magnitude of the challenges in the province requires action on a scale greater than any one mine can realistically begin to tackle. We are therefore playing a leading role in stimulating collaboration and partnership across various sectors, in order to bring about lasting, positive transformational CHANGE in the region. LOOKING AHEADAt the heart of transformation lies a common vision for a better, more equitable and participative society. We believe Anglo American and the broader mining sector have an important part to play in helping to move South Africa to where it needs to American is now in a stronger and more stable position. We believe 2017 and the years ahead will see promising developments for the company, and for the South African mining industry generally.