8 February 2013
Visits to Guinea in his role as head of AngloGold Ashanti brought home to Mark Cutifani the fact that something dramatic had to shift within the mining industry if it was to survive.
There is something “just not right” about the fact that 1% of the population live with the consequences of mining, while the rest of us benefit, Cutifani told delegates in a keynote address ahead of a session on sustainable development at the Invest in Africa Mining Indaba in Cape Town on Thursday.
“The things we do [as the mining industry] are so important to global society, but the communities where we do business get the rough end of the stick.”
Starting point ‘the communities themselves’
The Anglo American CEO-designate said a “180-degree shift” was necessary to address this disconnect. The starting point should be the communities themselves: “It is critical to understand how to really engage with communities. We must listen to what communities want to be, not tell them who to be.”
The son of an Italian father and a mother of Irish descent, Cutifani grew up in an industrial seaside town south of Sydney in Australia where, he said, he experienced the effects of mining on the community first hand, including the dust and pollution thrown up by trucks on single-lane dirt roads and the coal mines’ cooling towers.
As an engineering student, Cutifani worked in a local colliery, going on to work at a number of Australian companies before moving overseas. He will be the first executive to head up Anglo American that has hands-on experience as a miner. He takes over the top job in April.
He said mining companies had a responsibility to be agents of change: “We can change the lives of communities forever. We can go from being an extractive industry to a development industry.”
Cutifani reminded his audience of the crucial role mining plays in the lives of countries, economies – and in our daily lives.
Mining contributes 11.5% of global gross domestic product (GDP), with the value of services consumed a further 10%. And, if one considered the value of products and services facilitated by mining, the industry supported and drove around 45% of the world’s GDP. Mining, Cutifani argued, is “integral to everything we do … it is the most important industrial activity on the planet”.
The key issue for Cutifani is to take responsibility for the impact mining has on local communities – a responsibility that should not be left solely with government.
‘Difficult conversations’ between all parties
Cutifani said he had recently joined other mining industry heavyweights to visit the Vatican in an attempt to learn how to best engage with communities. (Many of the NGOs working in Africa are funded by the Catholic Church.)
The meeting proved fruitful and Cutifani seems to have returned to Africa with a determination to deliver a new vision for the industry.
Describing 2013 as the year when a new future for the mining industry would be defined, Cutifani said it was through consultation and “difficult conversations” between all parties – industry, government and communities – that would bring about change.
“We have to make changes to transform the countries we work in.”
Co-operation with governments was also key, he said. Appropriate macroeconomic policies, transparent regulation and security of tenure should be givens to support development and growth.
“I am a believer in South Africa. I am an optimist on South Africa – I never miss an opportunity to promote the country,” Cutifani confessed.
‘Why I believe in South Africa and Africa’
He said he had good reason to be so positive about South Africa in particular, and Africa in general:
- Africa is home to 40% of the world’s natural resources, which must be nurtured to realize their long-term potential.
- Africa, with its fast growing population, has the “best age demographic” for growth. Its estimated 1-billion people is forecast to double by 2025, granting it the world’s youngest working population.
- Seven of the world’s fastest growing economies are Africa. Sierra Leone’s growth rate is at 45%, driven largely by the development of infrastructure to support its iron-ore industry. The government, Cutifani said, had leveraged its success in one industry to grow others.
- Africa’s labour costs are currently very low. There will be a “transitional process” as technological innovations and strong leadership improve productivity, supporting the increase in wages.
Cutifani said South Africa had consistently defied the critics. The economy has grown at a compounding growth rate of 3.2% – which was only 0.2% less than that of Australia’s, whose resource-based economy often drew praise.
It is time that South Africa was recognised for its achievements as a “teenage democracy” instead of being crucified for its challenges. For example, Cutifani said, in the past 19 years, South Africa had “built more low-cost housing than any other country than any other place on the planet”.
South Africa could meet its challenges once government and the private sector stopped talking past each other. “Consultation is necessary and, of course, we can all do much better,” he said.
There were many capital advantages for the industry, but it was important to take advantage of circumstances to improve the life of all: “The job of those who have stewardship of capital is to support society.”
The impact mining has on communities should be positive. “We have changed more in the past five years than in the past 50 years. The next five years will be critical,” he said.