Resource Development Council

Cynthia Carroll -
Speech to the Resource Development Council
October 23, 2007

Note: This is a copy of her speech, as provided

Thank you very much John Shively and the Resource Development Council for hosting us this morning, for this opportunity to speak with you, and most importantly to all of you for your interest in Anglo American and the Pebble Project.

It’s a real pleasure to be in Alaska. I have great memories of my time working here in the 1980s as a young exploration geologist for Amoco. It’s wonderful to be back.

As you know, Anglo American took a 50% stake in the Pebble project at the end of July, forming the Pebble Partnership with Northern Dynasty, with a commitment to invest in Alaska up to 1.425 billion dollars. I am very excited about this project and was eager to take an early opportunity to meet the many people involved, visit the site and engage with the Project’s stakeholders.

Northern Dynasty has done an outstanding job, not just in the discovery of what promises to be a world-class asset for Alaska, but also in bringing the project to this stage. I look forward to the new Pebble Partnership building on this foundation and moving ahead now with Anglo on board.

Yesterday I met Governor Palin and I found it very valuable to hear her perspectives on this wonderful state, its potential and how the Partnership can help work together with Alaskans to play our part. Then I was particularly pleased to visit Iliamna and to see the area. I’ve really valued the opportunity to talk to the people who are working there and understand their experiences. I look forward to talking to more of you this morning.

Before turning to Pebble and how the new Partnership hopes to take the project forward, I want to focus on Anglo American, where we come from and what we stand for. Anglo American is relative newcomer to Alaska, but we are not a newcomer to building and operating large, complex projects – and ultimately mines. Whenever we take on a project, we do so in a manner that fully integrates our experiences and values as a company and as individuals.

I am an American citizen and took over as Chief Executive of the company in March this year. Anglo American itself – despite the name – was actually founded in 1917 in South Africa. In fact we celebrated our 90th birthday last month. The company was very much a family concern, set up by Sir Ernest Oppenheimer and carried forward by his descendants. The initial start-up capital was drawn equally from Britain and the United States: that’s how we got our name.

Since 1999 we have been headquartered in London. We have recently been through a major process of change from being a broad-based conglomerate to a focused mining company with major businesses in platinum, coal, iron ore and the base metals - in particular copper, zinc and nickel. We also hold a 45% stake in the world’s leading diamond producer De Beers. We operate in some 35 countries around the world, and provide employment to over 150,000 workers. We are one of the largest producers of copper in the world. We produce 640,000 tons per year from multiple mines in Chile and have two significant copper development projects in Peru at different stages of evaluation. In copper alone, our total workforce is 16,000 people.

I want to talk to you for a moment about what modern mining means for me, for my vision for Anglo American and for the direction of our projects, including Pebble.

My vision is for Anglo American to become the leading global mining company of choice. Not only for our investors, but also the partner of choice for communities, for businesses and governments; the supplier of choice for our customers; the employer of choice for our workforce.

For me, modern mining isn’t just about delivering returns for shareholders, remote from the project site. It means working in partnership to meet local needs – whether these are in infrastructure, health care, education or business development, for example. It involves working with and for the villages around our operations, and the broader communities in our areas of influence. The result must be real economic opportunities and sustained benefits exercising a positive influence well beyond the lifetime of our operations.

For Pebble, that means our responsibilities are to all Alaskans, and to Alaskans in the region around the project.

Modern mining means going beyond compliance, and I’ll return to this theme later with regard to Pebble. What “beyond compliance” signifies in practice depends on local circumstances. In many parts of the world, as you know, HIV/AIDS is a terribly important health issue. In this area, Anglo is the leading company in the world. We have a progressive approach to tackling not just the symptoms but the causes of the problem. In South Africa, for example, we have developed the largest workplace voluntary testing and treatment programme in the world. We are providing almost 5,000 people with anti-retroviral medicine because that is the right thing for our workforce, the community and the company. And I think it’s fair to say that the leadership position we established in this area has had real benefits beyond our workplace. The government – and other companies – are themselves coming to see the benefits of providing treatment. I stress that we are able to do this in South Africa and are leaders in this only because we have productive and profitable operations there.

Throughout the world, modern mining for Anglo means going beyond compliance in investing in enterprise development. We run a South African enterprise development business, named Anglo Zimele – a Zulu word meaning “to be independent”. This business uses a combination of equity participation, loans, opportunities to compete for contracts and business mentoring. Using these tools, it helps entrepreneurs establish viable and sustainable businesses, leveraging the mine supply chain.

Through this initiative, thousands of jobs and dozens of companies have been created. The large majority of these have stood the test of time and are prospering in a big way. Indeed, the survival rate of these small businesses is phenomenal. Right now as we speak, Anglo Zimele is supporting 46 thriving companies, giving direct employment to over 4,000 people. We have recently expanded and adapted this model successfully to Chile and want to bring it here to Alaska.

As an aspiring producer in Alaska, we see real potential in drawing on this model, perhaps with organizations like the Alaska Federation of Natives. I am told that the AFN has worked to scale international development models to foster economic development in rural Alaska, an approach with similarities to models we have developed successfully.

Around all our operations, modern mining means going beyond compliance in addressing the environmental challenges associated with any major industrial activity. For example we have pioneered wetlands conservation and recovery around one of our major coal operations. We are delivering a major river restoration project around our Dartbrook mine in Australia, addressing damage caused not by mining but by years of agricultural degradation. In Australia, we are planting endangered tree species and stabilizing stream beds to promote new healthier fish habitats.

Water is a key resource for mining. But we look at water issues from all angles. For example, working in a public-private partnership at Emalaheni in South Africa, in response to local needs we are pumping underground mine water from our collieries; we are desalinating it, cleaning it, bringing the quality right up to drinking standards to supply the Local Authority’s reservoirs. Water is a scarce resource there. When fully operational, this project will meet some 20% of the area’s daily water requirements. From mine water to drinking water!

For our coal division in Austrialia, “beyond compliance” means working with the indigenous community. We run innovative and highly successful indigenous business training programmes there, and linked efforts to combat racism. Only last month, this initiative won the Government of the State of Queensland’s multicultural award.

So Anglo American doesn’t just stand for investment in mining. We believe in supporting a whole range of activities that help deliver sustainable communities in the long term. Education and skills; language training; new business development, attracting new suppliers; promoting water conservation and clean water; protecting the aquatic habitat; delivering energy efficiency: these are all core areas for Anglo American as a modern mining company.

I’ve gone into some detail about these examples and I’m grateful to you for listening to me. They are a long way from Anchorage and a long way from the Pebble Project. But I wanted to illustrate with concrete facts what Anglo American stands for. Because I believe that actions speak louder than words. And, though the examples are different, they have a common theme: they respond to local needs, local concerns, and our broad commitment to go well beyond what is strictly required of us at our operations. We want to bring this type of commitment to our project here in Alaska.

This brings me to the Pebble Project. There have been quite a lot of words said about this project already. I hope you will forgive me for adding a few more now! But as I do so, I would ask this of you: that you judge the Pebble Partnership on its actions. Not on words, either of proponents or opponents, but on its actions. I cannot tell you today what our proposal for a mine will look like, as exploration drilling is still under way. Nor can I give you details of the new Pebble management team because we are in a transition, and the new team will only be in place towards the beginning of next year. But I can tell you about our approach.

I know that Pebble has attracted its fair share of controversy – perhaps more than its fair share. As a new arrival, I do not pretend to understand all the concerns. But as an American who has worked in Alaska, spent months climbing mountains, camping, backpacking as a geologist, I can perhaps begin to understand the sensitivities around a project of this nature, located as it is near salmon streams in the Lake Iliamna area.

My core message to all those with concerns about the project is that I appreciate at first hand the beauty and value of all Alaska’s natural resources – your wildlife, your wilderness, your fish.

I firmly believe that the Pebble project can be developed by our Partnership into a mine that goes well beyond industry standards and is genuinely world class in all we do. We will go about this in a rigorously safe manner, and set new industry benchmarks for the benefit of all Alaskans, helping sustainable development in the region and beyond for many years to come. As you might imagine, I would not have committed to such a substantial investment in Alaska if I did not believe this.

And I want to emphasise that we are talking about a really major investment: we expect the capital cost of the project to come to between 3 and 5 billion dollars. This is a huge investment. It stands to bring proportionately massive economic benefits that will be felt all Alaskans – not least in terms of thousands of jobs, directly and indirectly, across multiple generations. Because we want to be in this for the long term; we want to grow and develop with you for fifty, perhaps over a hundred years.

But, particularly since this is such a long-term investment in Alaska, I want to go a step further in making clear our commitment to the environment. We do not want to and will not be associated with the development of a mine that damages Alaska’s fisheries and wildlife, or the livelihoods of Alaskan communities. If the mine cannot be planned in a way that provides proper protections it should not be built.

Today I want to expand on this commitment. I want to set out - and these are of course issues that NDM Chairman Bob Dickinson, and NDM President and CEO Ron Thiessen here and I have discussed and are fully agreed on - I want to set out how the Partnership intends to proceed on Pebble.

First, we will embark on comprehensive stakeholder engagement. Mine permitting in Alaska involves proper public consultation and transparency around projects. We fully support this and will engage enthusiastically in the permitting process. But we will go beyond compliance. We understand that we will only get this right if we reach a situation where proponents and critics stop talking past each other and if we really understand the concerns and motivations of all the stakeholders in the Pebble Project.

So we will immediately launch what will become a sustained, multi-year, programme of intensive and inclusive stakeholder engagement and I invite you all to participate in this. The Partnership has said that it will listen before it acts. This means listening to and engaging with all stakeholders. To do so properly is not a quick and easy fix; it takes careful construction, patient explanation, a lot of outside help and support and above all a lot of listening. Beyond listening, we understand that this will mean not just being advocates for our own cause, but being genuinely open to thinking about how we might do things differently and incorporating the ideas we hear into our project design and community investment.

For example, I heard yesterday from Native leaders that there are challenges around education: how to provide broader access for young people to opportunities in further education; and how to create vibrant communities that attract young people to return and build their lives in their home region. I want us to understand this better so that we can structure our community investment to support this kind of aspiration.

I described a range of responses Anglo American has made to local concerns around our mines. They are all different. But as I have said, there is always a common factor: we have made sure that we have a comprehensive understanding of local concerns and interests, and work to address those in close partnership with our stakeholders – which in the case of Pebble means – among many others – you in this room.

And we will respond to what we hear. “We must listen before we act.”

Second, we will bring in independent expert scrutiny. I know that Alaska’s permitting processes are detailed and rigorous and know that the technical aspects of the eventual mine plan will be subject to a comprehensive review by the state and federal governments. This rigour and predictability should be a source of pride to you and comfort to would-be investors. The rules may be tough but the process will be fair. But we understand that for some stakeholders this may not be enough. So we will go beyond compliance and establish an independent panel of experts, knowledgeable in Alaska and beyond, to scrutinise our work. Their particular focus will be the crucial issue of water and water quality; their role to scrutinise and advise the project. Again, we will be discussing this proposal with you and other stakeholders and will establish it in a way that meets your needs and concerns and ensures it is genuinely independent. “Pebble must apply the world’s best and most advanced science.”

Thirdly, we will focus on protecting and enhancing the fishery. As I have said, I am acutely aware of the importance – to your native culture and subsistence, to your commercial interests as well as to sporting and tourist interests - of your  world class fisheries and the salmon runs in particular.

The Partnership will have to demonstrate, in the permitting process, that the project fully meets water quality standards to protect the fisheries. If we don’t, we won’t get permits. In these circumstances this would be the right outcome and there will be no mine, period. But on fish too, we will go beyond compliance. Pebble is a longterm project and we see ourselves here for the long term. We want to do great things together in Alaska. We want to establish partnerships and not just to protect but actually to enhance the fisheries. So we will establish the Bristol Bay Sustainable Fisheries Fund to do just that. In partnership with Native people, local communities and other stakeholders it will support communityled initiatives that enhance the socio-economic impact of the fishery.

I am not going into detail today since we are clearly not a fisheries company, although the Partnership is listening to input from a lot of fisheries and community development experts.

We want to work with others in designing the fund to be effective and fit for purpose.

The Partnership will launch this fund in January, with an associated governing board and steering committee. Funded by the Pebble Partnership, but operating independently from the company, it will potentially support a broad range of activities: commercial opportunities; subsistence livelihoods; the sports and tourist sector; the long term research vital for the future of the fishery.

“Pebble must help build sustainable communities and co-exist with healthy fish and wildlife and other natural resources”.

Fourthly, Pebble will be an Alaskan project. “Pebble must be for all Alaskans”, and that means leading by example. The Pebble Partnership will set up office in Alaska, here in Anchorage. It will seek to recruit first and foremost Alaskans to manage, run and work for the company. Northern Dynasty has run an excellent local hire policy delivering real benefits and jobs for Alaskans in many areas. I applaud them for that. The vast majority of Pebble workers at all levels are Alaskans. The new Partnership will build on and expand that base to make a project from which all Alaskans can benefit.

These four commitments will I hope demonstrate the value that the Partnership places on working with you to develop this project in a safe and responsible way. It is a transition time for Pebble: there are details as I have said that are deliberately not yet finalised. So we don’t yet have all the answers. This gives us a fantastic opportunity to hear and respond to your thoughts, your opinions and your needs.

Thank you very much for listening to me as I have set out this new approach.