By definition AngloGold Ashantis new frontiers exploration strategy means that the group recognises the inevitability of searching for gold in areas that are largely unexplored, and where the element of risk in doing business is heightened frequently owing to the vicissitudes of politics in these emerging economies.
case study in Report to Society 2004: Generating new ounces - doing business in new places).
AngloGold Ashantis strategy has in recent years taken it to countries such as Alaska, China, Colombia, Mongolia, the Philippines, and, in Africa, among others, to the Democratic Republic of Congo (DRC) Africas third largest country which is host to a wide range of minerals including copper, cobalt, diamonds and gold.
The DRC has a history of political instability, with violent undertones in recent years. Despite the signing of the Pretoria Accord in 2003, which was to signal an official end to hostilities between factions in that country, conflict persists in eastern DRC, where the companys exploration activities are based and where so-called rebel parties are particularly active.
Through its subsidiary AngloGold Ashanti Kilo a joint venture between AngloGold Ashanti (86.22%) and the State Mining Agency, Offices des Mines dor de Kilo Moto (OKIMO) (13.78%) AngloGold Ashanti holds properties in the Ituri region in the north-east of the DRC, a concession (Concession 40) area of approximately 10,000 km2. The concession covers the Kilo belt, one of nine gold-bearing greenstone belts in the region. The Mongbwalu area, where AngloGold Ashanti is focusing its exploration programme, is believed to have yielded some 1.3 Moz of gold to date.
Although the gold concession was granted in 1996 to the then Ashanti Goldfields, civil conflict hampered efforts to commence mining exploration activities. In November 2003, and with a peace agreement in place, the company deployed two Congolese professional exploration employees to Mongbwalu in anticipation of re-opening the exploration camp. In December 2004, as a result of discussions held with DRC government officials and other interested parties, an exploration team was deployed at Mongbwalu and drilling started in January 2005 (by then under the auspices of AngloGold Ashanti following the business combination between the two companies).
In June 2005 Human Rights Watch (HRW), a United States-based non-governmental organisation (NGO), published a report in which it alleged that the company had made payments to and fostered an inappropriate relationship with a rebel group operating in the area, the Front National Integrationniste (FNI), in order to maintain access to the goldfields.
For a period in 2004 the company had paid a total of $1,100 in landing taxes at the Mongbwalu airstrip, believing the money was going to the transitional government of the DRC. When United Nations officials suggested that these payments could contravene UN Resolution 1493 regarding conflict in the DRC, the company immediately stopped these payments.
In addition, in January 2005 the FNI demanded financial assistance from AngloGold Ashanti to send an FNI delegation for talks in Kinshasa. The company officials involved initially steadfastly refused to yield to this act of extortion, but were later forced to take a different view of the situation in the interests of their personal safety, and handed to the militia $8,000 sourced from petty cash, local business people and their own resources. The amount demanded by the militia was $15,000.
In the wake of the companys own internal investigations and the allegations of improper conduct, AngloGold Ashanti sent a high level team to the DRC to investigate the feasibility of retaining a presence in the region without compromising the companys values and integrity. Following meetings with key stakeholders local, regional and national government representatives, OKIMO, the UN peacekeeping force MONUC and representatives of the Catholic Church AngloGold Ashanti concluded that it was able to conduct its business with integrity in the area and would review its activities regularly.
Should circumstances deteriorate so as to put the safety of employees at risk or compromise the companys values, it will withdraw immediately. Such a situation arose in October 2005 when a resurgence of rebel activity, following the deployment of government troops in the area, prompted the company to withdraw all professional staff, other than security staff, from the camp as a precautionary measure. The exploration team returned and resumed exploration activities after three weeks once the government troops had restored, and indeed improved, stability to the area.
To further ensure operational integrity and compliance with the companys values in its operations in the DRC, AngloGold Ashanti has put in place a number of procedural requirements.These include the disclosure to the government of the DRC of all payments made to the state and its agencies, and all other payments for goods and services received being subject to internal and external audit controls. AngloGold Ashanti management in the DRC is involved in the EITI (Extractive Industries Transparency Initiative) process and the company is committed to the success of the programme
(see box below).
Other goods and services provided by the company to community organisations are monitored by a community-based committee and are not directed at any militia or politically-based institutions. In this regard, a stakeholders forum and community development committee has been established to ensure regular contact is maintained with the community and that community development priorities and issues can be brought to the attention of management timeously. A stakeholder engagement plan is also being put in place to formalise this community consultation which is expected to be in place by the end of the first quarter of 2006. The projects community development programme is currently operating on a budget of approximately $100,000 a year, and is being increased to $150,000 in 2006.
Policies and procedures are also in place to ensure that only authorised company personnel are permitted to make use of company assets, such as vehicles. Furthermore, all contact with third parties is logged and the company has no direct contact with militia or political groupings, other than through local government, MONUC (the United Nations Organisation Mission in the DRC) or the FARDC (the Armed Forces of the Democratic Republic of the Congo). Arrangements are in place to report any incidents to MONUC and there is regular contact with MONUCs human rights officials based in Bunia.
The security providers to the operation are a signatory to the Voluntary Principles on Security and Human Rights and AngloGold Ashanti too is in the process of becoming a signatory to the Principles
Furthermore, in employing site-based personnel, background checks have been conducted to ensure that no person with credible allegations of human rights abuses is employed.
In general, AngloGold Ashanti believes that, provided the principles and procedures set out here are adhered to, the companys activities are more likely than not to make a positive contribution to the DRCs social, political and economic recovery.
AngloGold Ashantis current exploration programme in a limited area around Mongbwalu has yielded positive results historical grade and tonnage estimates of 1.2 Moz at 9.9g/t have been confirmed through drilling at Adidi. Exploration in the immediate Mongbwalu area is expected to continue through 2006 and 2007, with the objective of defining a 5 Moz mineable resource and completing a feasibility study in 2008 which, if approved, would lead to mine construction commencing in 2009. A total of $30 million is expected to be spent on exploration through to 2008.
The remainder of the 3,000 m2 Kilo greenstone belt on Concession 40 has estimated historical gold production of 4 Moz. Airborne geophysics will be carried out over the Kilo greenstone belt early in 2006 to guide target generation studies over this ground in 2006 and 2007, with on the ground, field evaluation of the identified targets during 2008.
Engaging with NGOs
AngloGold Ashanti is engaged in a range of initiatives and interacts with NGOs to deal with the issues faced in the DRC and other countries where human rights issues may arise. Although these initiatives and interactions remain work in progress they reflect the efforts of resources and other companies to ensure that their commercial activities largely benefit people in mining communities and countries while minimising negative impact. These include:
The Extractive Industries Transparency Initiative (EITI)
The EITI (www.eitransparency.org) supports improved governance in resource-rich countries through the full publication and verification of company payments and government revenues from oil, gas and mining.
Communities and Small Scale Mining Initiative (CASM)
Communities and Small-Scale Mining (CASM) is chaired by the UK governments Department for International Development and is housed at the World Bank in Washington DC. It was launched in March 2001 in response to international recognition of the need for an integrated approach to address the challenges facing ASM communities and for improved co-ordination between institutions funding and executing assistance. It was established with the purchase of reducing poverty by supporting integrated sustainable development of communities affected by or involved in artisanal and small-scale mining in developing countries.
The International Council on Mining and Metals (ICMM)
AngloGold Ashanti is an active member of this organisation. Members believe that the mining, minerals and metals industry acting collectively can best ensure continued access to land, capital and markets as well as build trust and respect by demonstrating the ability to contribute successfully to sustainable development.
ICMM members seek to offer strategic industry leadership towards achieving continuous improvements in sustainable development performance in the mining, minerals and metals industry.
The Council for Responsible Jewellery Practices (CRJP)
AngloGold Ashanti has recently joined the Council for Responsible Jewellery Practices which was founded in May 2005 with members from a cross-section of the diamond and gold jewellery supply chain, from mines to retail outlets. Council Members are committed to promoting responsible business practices in a transparent and accountable manner throughout the industry. Their commitment aims to maintain consumer confidence in diamond and gold jewellery products and the trust of all interested stakeholders in the industry.