12 interested parties. We need to be deliberate in our relationships as no one owes us a living!!! I characterize our industry as a “Materials Solutions Industry”, building off a conversation where a good friend, Jeremy Oppenheim used the term to play back to me a conversation where I was describing the essence of how we saw our roles as miners. That is who we are, and it also describes how we make our contribution to society. In any conversation about who you are and what you do – be clear on both. For me, clarity comes with Purpose. A reason for being. To use one example that has been well documented, at Anglo American we took 18 months to align 7 words, “To Reimagine Mining to Improve People’s Lives”. And while those 7 words were important, it was as much about how we got there as it was about what the words meant. Helping people understand mining’s role in society was as important as defining how we would go about our work. So, as an industry we need to have a clear view of the business we are in, and for whom we need to deliver outcomes that are valued in their specific context. So, for us to deliver on a Value Proposition that is grounded in the concept of being the world’s Materials Solutions Industry, we need to work across 3 domains: First, we need to do our job. Our ability to deliver the materials at a cost that remains economic and socially affordable to society requires us to reset our core business structures, our corporate strategies and our operating business models. • As mines develop, we are generally captive to at least 5 primary structural cost drivers. ➢ Exploration costs per unit of payable product – doubling in metals over 20 years. ➢ Increasing mine depths at a rate of around 40m per year. ➢ Lowering mined grades at 1.5% per year for the last 100 years. ➢ In mine development costs per stope or bulk mined tons extracted. ➢ Input costs rising above average inflation rates reflecting energy and labor intensities in more remote regions, compared to major population centers. • And what does all that mean – in most mining businesses, we need to improve 7% to 15% each year, just to stand still on unit costs. This point connects to my earlier Anglo American observation, where our 40% real cost reductions were more like 60%, when one considers increasing depths and our other structural cost drivers that were in play over that same 9 years of record performance improvement. • As we constrain mine development and approvals, we hasten our descent into
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