to key projects
to maximise our
long term returns.
In this, my first year as chairman of Anglo American, I am pleased to report on a very creditable overall performance during an extremely volatile year in our markets. Your company is in very good shape to meet the challenges ahead: we have a formidable portfolio of top quality assets and projects, we are a more fit for purpose and lean organisation, our business is adequately funded, our Board has been refreshed and we are enthusiastically executing our clear strategy for delivering value.
In my first few months, I have travelled extensively around the Group. I have been impressed not only by Anglo American's asset quality but also by the professionalism of its people. We have a top class team, with an unparalleled record of innovation and leadership in exploration, in engineering, and in mining operations.
In 2009, we increasingly reaped the benefit from initiatives we put in place to create greater shareholder value. An important element is our asset optimisation programme, which aims to unlock value from existing assets and achieve operational excellence through ongoing cost and productivity improvements.
Another significant initiative is a streamlined supply chain in order to capitalise on the scale of the Group and to deliver cost savings by forming strategic global partnerships with key suppliers.
Furthermore, a far-reaching and bold restructuring of the Group has enabled it to become a more effective organisation. The new operating model is designed to make Anglo American nimble, lean and fit to execute our business strategy.
All these actions in combination have led to a new sense of purpose for our Group. We are now very clear on our strategic priorities. We are focused on those commodities we consider will give Anglo American the best mix for the future, we know where we are headed, and we are well positioned for the next commodity upcycle and beyond.
No company can ever be ranked as truly great if it has an unsatisfactory safety record. As your new chairman, I would like to state categorically that safety will have my unremitting attention as it has always been my number one agenda item. My philosophy is that the people who come to work for you each day have the right to return home safe to their families each night.
It is encouraging to report that Anglo American is making further inroads in improving its safety performance. In 2009, there was another significant decline in the number of people who lost their lives on company business, accompanied by a similar downward trend in lost-time injuries. Over the past three years, under Cynthia Carroll's leadership, the number of fatalities has been reduced by nearly 60% - a most encouraging development - but we remain intent on a zero-injuries objective.
Operating our businesses in a socially and environmentally responsible way, and earning and deserving trust, are fundamental to our licence to operate and to delivering long term value to our investors.
Our commitment to excellence in this field is not a function of the economic cycle. Indeed, in difficult economic times the responsibility on us to demonstrate that we are a consistent, supportive partner for sustainable development is all the greater.
We continued to integrate sustainable development into our business processes in 2009. We launched two major policies: the Anglo Environment Way, and the Anglo Social Way, which establish demanding environmental and social management standards. We assessed our social performance against the standards in the Social Way at the end of 2009, identifying many examples of best practice but also some gaps which we aim to close in 2010.
We also launched a new version of our Good Citizenship Business Principles - our corporate code of conduct. Alongside a greater focus on environmental issues, this emphasises an increased commitment to our already extensive programmes on HIV/AIDS treatment as well as to diversity and family life.
It also strengthens our stance against corruption: in 2009 we developed a comprehensive Business Integrity Policy, accompanied by detailed anti-corruption Performance Standards. This will be rolled out through the business in 2010.
Climate change took centre stage at the end of 2009. Although the Copenhagen Accord fell short of expectations, we remain committed - as both a major consumer of energy and a major coal producer - to minimise our own carbon emissions, play a proactive role in the ongoing international debate, and work to develop our technological response. An example of this is our investment in methane capture in Australia, where we have helped develop two mine gas power stations, which together will reduce carbon dioxide emissions by around 2.3 Mtpa.
More broadly, Anglo American continues to support leading international initiatives to promote responsible corporate activity. We remain committed to the United Nations Global Compact and the Extractives Industry Transparency Initiative, and have been pleased to see the latter steadily gain traction. We continue to support the Investment Climate Facility for Africa, to which we have contributed $1.5 million to date. We are also actively engaged in discussions around the review of the OECD Guidelines for Multinational Enterprises, and continue to play an active role in support of the Voluntary Principles on Security and Human Rights.
The world economy has recovered after the severe recession of late 2008 and early 2009. Unprecedented policy stimulus and, more recently, a turn in the inventory cycle have contributed to the upturn. In the major advanced economies there are some significant headwinds that will probably restrain growth in 2010 and 2011. Financial systems are fragile, households and companies are rebuilding balance sheets, and policymakers are under pressure to withdraw extreme stimulus measures. Prospects are much brighter in the major emerging economies. China and India are growing strongly as increases in infrastructure spending have offset the weakness of export markets. While policymakers will probably seek to curb overheating risks, longer term economic fundamentals remain sound. Economic growth in the emerging economies will continue to outpace that in the advanced economies over the next decade.
I believe it is the Board's job to set the drumbeat for the business by owning the strategy, empowering management to execute it, and hold them accountable for delivery. Thus, the Board needs to be fit for purpose, with the right range of skill sets to be capable of tackling any issue that comes through the boardroom door.
It is against that background that I welcome Sir Philip Hampton, with his wealth of financial, strategic and boardroom experience; Jack Thompson, a lifelong successful mining executive; and Ray O'Rourke, who has spent a lifetime of achievement in large scale complex construction projects.
I would also like to take this opportunity to thank Sir Rob Margetts, Chris Fay and Fred Phaswana for the valuable contributions they have made over the years to the success of Anglo American. I also wish to pay tribute to Karel Van Miert, who passed away in June last year. He is greatly missed.
My final words go to my predecessor, Sir Mark Moody-Stuart. He achieved so much in his nearly seven years as chairman to embed sustainability and good corporate governance, both in our own business and in the global arena.
On behalf of the Board, I wish all of those stepping down a long and active retirement. I also wish to thank all our employees and pay tribute to their dedication and their loyalty to Anglo American.
The resumption of the dividend at the earliest possible time remains a key priority for the Board. Assuming that the commodity price environment and outlook continue to improve and the business performance remains robust, the Board would expect to be able to announce the resumption of a dividend in respect of the current financial year.
Career in brief:
Joins the ship design team at Harland & Wolff as a naval architect and engineer
Joins the board of British Shipbuilders Corporation
Returns to Harland & Wolff as chairman and chief executive, leading a transfer from the public to the private sector
Joins British Coal Corporation as a non-executive director
Joins Babcock International as CEO (becoming chairman the following year)
Becomes a non-executive director of British Gas, which leads to him becoming chairman of the Lattice Group when it demerges from BG Group
Appointed chairman of National Grid Transco when the Lattice Group and National Grid merge.
Becomes chairman of RMC Group, Aggregates and Cement. He is also knighted for services to the defence and shipbuilding industries
Appointed Chair of the Court of the Bank of England
Appointed chairman of P&O, leading the sale to Dubai's DP World
Joins Anglo American as chairman