Reinventing mining: Anglo American CEO on the high stakes of change
The mining industry is at a critical point as stakeholder pressures multiply. In response, an unlikely coalition of players — from companies and academia to civil society and governments — is helping shape the "mining company of the future."
Their initiative, known as the Development Partner Framework (DPF) (PDF), is co-led by Anglo American and the Kellogg Innovation Network, and is designed to ensure benefits for communities, companies and the environment. It has prompted the industry to do some serious soul-searching, including listening to some of its harshest critics.
This interview with one of the architects of the initiative — Mark Cutifani, chief executive of Anglo American, non-executive director of Anglo American Platinum and chairman of De Beers — explores how this new approach could transform the industry and drive shared economic, environmental and social value.
IFC SUSTAIN: How did the Development Partner Framework get started?
Mark Cutifani: In 2009, during a presentation to Kellogg on safety for AngloGold Ashanti, I heard Nike, GE and others talking about their sustainability experiences.
That was really useful. Too often in the mining industry, we just talk to mining people.
Then, in 2012, at a Kellogg event in Belo Horizonte, Brazil, covering innovation, improved productivity and cost cutting, we talked about innovation in sustainable mining practices. That’s what started this conversation.
IFC SUSTAIN: What are your trying to solve with the framework?
Cutifani: On our side, we need access to land. Developing a healthy relationship with local communities is a more sensible and cost-effective way of operating than fighting each other. If you have a local community fighting you, you might add 20 percent to your costs — when you could have pursued a 1 percent solution.
The game has changed. Yet we are 1,020 years behind other industries. I see great work being done, but we are missing opportunities that could make a difference for us, for our shareholders and for the communities where we operate.
To be sustainable for the long term, we have to do things differently. And we should reflect on what we did when we were growing successfully and had more community support — if you go back 100-200 years, we were literally building essential infrastructure across continents.
IFC SUSTAIN: Working across government, civil society and corporations, how do you make shared purpose a reality?
Cutifani: As industry leaders, we must be accountable and facilitate conversations with key stakeholders. So we are providing a framework that companies can use to develop business models that engage employees, communities, local, regional and federal governments, as well as NGOs — with each having a view on how we’re running our businesses.
I would hope that 90 percent of the time we could agree. And when we cannot, at least we can have respectful discussions and get objective feedback. If we want broad based community support, we must have constructive conversations.
IFC SUSTAIN: How are you mobilizing fellow mining companies?
Cutifani: This industry is a quick adopter of things that work. But it really does not have a major brand leading the way on sustainability, like Unilever for consumer goods.
So we decided to get out there and shine a light on what we think is the right way forward for the industry. This also allows us to deepen relationships, increase productivity and harness innovative approaches. And in five to 10 years, this could position us as the industry leader.
IFC SUSTAIN: What are the challenges you still face?
Cutifani: In Botswana, the president recently said publicly that Anglo American was its preferred development partner. Yet in South Africa, a five-month platinum industry strike showed us we need to engage very differently with employees.
We have learned a lot from the field as we developed the DPF. For example, in Cerrejón, Colombia, we have been through relocations, and the vast majority of the community has signed up. Of course, the conversation with the last few families is really difficult. How do you tell someone they must move from their home?
It is a tough industry from that perspective. But as long as we are open, honest, supportive and constructive, most of the time we will be in the right place in that conversation.
IFC SUSTAIN: Do shareholders support the DPF?
Cutifani: We have good support for cleaning up bad practices and capital discipline. And our ethical investors are happy to see last year’s 30 percent reduction in safety incidents and 40 percent reduction in environmental incidents.
But 80 percent of shareholders are probably wondering what to make of this approach. So it is critical to demonstrate that this is about more than ticking sustainability boxes. Getting this right is mission critical.
And when you explain that getting it wrong means a five-month strike or delays in obtaining licenses, the penny drops. It is a bit like safety — at some point, it will just be the way we do business.
IFC SUSTAIN: You recently sought the Vatican’s advice on relations with communities affected by mining. How do such unusual partnerships help you navigate big challenges?
Cutifani: This is a dialogue. All you can do is engage and judge whether that engagement helps you do things in a different way, then decide whether to continue the dialogue.
And if community leaders feel they can influence industry behavior, they will engage. That is the success they are looking for.
IFC SUSTAIN: What are your key performance indicators?
Cutifani: We track the number of protests and projects held up because we did not secure a license or reach an agreement with the community. Those measures demonstrate whether we have good relationships with communities and governments.
Some companies just build walls to keep everyone out. We do not. We build relationships with the local community — they are our front line.
IFC SUSTAIN: On a personal note, what drives your perspective?
Cutifani: When I first entered the industry, the guy who mentored me was killed on a shift. So safety has always been front and center for me. And I come from a working class family. Living around mines, seeing the good, the bad and the ugly, I knew there was a better way.
I have also worked on the shop floor, so I have a sense of what is fair in the workplace. It does not stop me from making the hard calls — you have to make the hard calls and be transparent and honest. In the end, that works best for everyone.
This article first appeared at SUSTAIN, a magazine produced by the International Finance Corporation, a member of the World Bank Group.