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In Zimbabwe, Anglo-American Mining Says It's Held
Hostage, Defends Investing
Byline: Matthew Russell Lee of
Inner City Press at the UN: News Analysis
UNITED NATIONS,
July 12 -- A mining company under
fire for its investments in Zimbabwe, Anglo-American, has defending
itself
against concerns
raised at the UN by saying it's held hostage by Robert
Mugabe's "use it or lose it" laws.
If
Anglo-American does not continue investing
in Zimbabwe, it argues, Mugabe could seize the Unki mine and profit
from it. So it is more moral, Anglo-American's Mark Moody-Stuart
argues, to
proceed with the platinum mine than for example to sell it to another
operator
which might not have the same claimed social responsibility concerns.
By this
logic, it seems, all business would continue in apartheid South Africa,
Pol
Pot's Cambodia, even Nazi Germany.
In
fairness, Sir Mark Moody-Stuart's six-paragraph response to Inner City
Press'
questions raised to UN Deputy Secretary General Asha Rose Migiro, UK
Ambassador
to the UN John Sawers and to the UN Global Compact, on whose board of
directors
Moody-Stuart serves, describes steps Anglo-American has taken to try
for
example to deny foreign exchange to Mugabe's Zimbabwe. It also notes
the 650
people employed at the Unki mine, and implies that a post-Mugabe
Zimbabwe might
be glad that Anglo-American did not discontinue the platinum mine. The
latter
two arguments, again, would apply to apartheid, the Nazis and Khmer
Rouge.
The denial
of foreign exchange is particular interesting in light of an expose
this week,
also by Inner City Press, that the UN in Myanmar has allowed the Than
Shwe
government to profit for
exchanges of dollars into "Foreign Exchange Certificates"
at the Myanmar Foreign Trade Bank, click here
for that.
Welcome to Zimbabwe sign, "use it or lose it"
rationale not shown
Anglo-American
Mining, either because of its
chairman's position with the Global Compact or otherwise, has with its
six
paragraph answer been more forthright than the UN or UN Development
Program,
which is also involved in mining in Zimbabwe.
The Global
Compact, a UN mechanism for dealing with corporations, seems to be in
between
the model of UNDP's stone-walling and Anglo-American's belated but
well-crafted
rationalizations.
Once Inner
City Press asked Deputy Secretary General Migiro to explain how a
business
executive with a prominent position with the UN Global Compact could
run a
company investing in Robert Mugabe's Zimbabwe, which Ms. Migiro had
just
denounced, Migiro said the Compact should pay attention, that is has
rules and
standards. Inner City Press e-mailed the Director and Spokesman of the
Compact
asking "on deadline" for their response, and if possible for a response
from Sir Mark Moody-Stuart. Some six hours later, the spokesman said
the
response would have to wait for the next day. Inner City Press held its
story for
24 hours reporting on the
But
the Compact, even 24 hours later, did not provide any response. Inner City
Press
ran an interim story based on the comments of Ms. Migiro, and those
of UK
Ambassador John Sawers, that companies could not accurately predict the
future
of today's Zimbabwe (and therefore should not be investing there). The
Compact
bristled, for example that Moody-Stuart is not the CEO but the
"non-executive chairman" of Anglo-American Mining -- a distinction
not made in Moody-Stuart's own letter -- and that using the time stamp
of the
receipt and not sending of the Compact's interim response made the
Compact look
two hours slower than it was. Both are noted here, though it would seem
that a
UN office like the Global Compact should be able to provide at least a
one
sentence response when the UN Deputy Secretary General is asked and
comments
about the Compact and investment in Zimbabwe.
In light
of the heated comments of the Ambassadors to the UN of the UK, France
and U.S.
about Robert Mugabe and investment in Zimbabwe last week, Sir Mark
Moody-Stuart's rationalization, below, is certain not to convince all
or even
most of its critics. But the response is appreciated, as it may move
the debate
forward. We will continue reporting on these issues, watch this site.
The
response
Dear Mr. Lee
Matthias Stausberg of the Global
Compact Office has sent me a transcript of questions you asked in a
press
conference with the Deputy Secretary General and has also forwarded to
me the
questions you subsequently sent to the Global Compact Office. I
understand that
you are questioning the basis for Anglo American's investment in
building a
platinum mine in Zimbabwe and asking what posture a company should
adopt in
dealing with a government which many people regard as illegitimate.
On the first issue, I suspect
that you have seen reports originating with ‘The Times’ (of London)
suggesting
that Anglo was about to embark on a $400 million new investment in
Zimbabwe and
supported by a (unsurprising) chorus of disapproval from those who had
been
told this as fact. In fact in your own question you referred to the
"recent announcement" announcement of an investment. The reality is
that the investment is not new - we have been quite transparently
building this
mine for the last five years, based on many years of previous
exploration in
long held permits. The Unki mine is probably still two years from going
into
production. Indeed 'The Times' has reported on it twice before and we
have
referred over the years to our operations in Zimbabwe in our "Report to
Society" which constitutes our "Communication on Progress" to
the Global Compact Office.
Bearing in mind the difficult
operating conditions in Zimbabwe we have proceeded relatively slowly. We have developed our project in such a way as
to avoid ‘propping-up’ the Government since we have gone out of our way
to fund
the in-country costs of the project from substantial sums that have
already
been trapped under Zimbabwean jurisdiction. We have also funded the
purchase of
capital equipment offshore so that foreign exchange has not been
introduced by
us into the country and we have thus not reduced those constraints on
the
government that flow from lack of foreign exchange. Moreover, since the
mine is
not yet in production we are not paying substantive taxes. Were we, on
the
other hand, to suspend the project then the Government could be
expected to
invoke their 'use it or lose it' legislation and potentially on-sell
the asset
to operators who are unlikely to observe the same sorts of social and
environmental standards as Anglo American. At the same time, the
Government
could thus raise substantial sums in cash through this sale process. I
should
note that the Government has often complained of the slow progress of
the mine
development and made plain the actions that they could take if
development was
not progressed.
It is certainly not clear to me
or the board of Anglo American that it would be a net gain for human
rights if
we were to abandon the 650 people who currently work at Unki, their
dependents
and the surrounding communities in relation to measures like food and
diesel
distribution, improving access to water and support for health and
education
services. At the same time, as explained, a withdrawal is in fact
likely in the
present circumstances to be of direct financial benefit to the
government.
Turning to your more general
question about what a company should do if it finds itself in a country
where
there is what is argued to be an illegitimate government. I find this
difficult
to answer on a theoretical basis since a lot will depend upon the
nature of the
business and the hope of redemption that exists for the country.
Economic
sanctions, for example, rarely bring about change by themselves. I
think the
key test that a company as to apply to its operations is whether it can
do
business whilst continuing to observe international norms and its own
business
principles. An alternative question might be whether it can – despite
wider
circumstances – do good in its immediate sphere of influence and, if it
does,
is its presence causing damage on other fronts through, for example,
enabling
the very survival of a Government which is guilty of serious abuses?
Extractive businesses are, of
course, peculiarly vulnerable to these sorts of controversies. They
have to go
where the resources are and some of these countries are lacking any
alternative
catalyst for development. Moreover, for these resource to be brought to
account
and to generate wealth for a range of stakeholders (including
investors,
employees, communities, suppliers etc) requires significant up-front
investment.
This makes extractive investors comparatively immobile and choices are
difficult if, for example, in the middle of the development a political
crisis
breaks out and things go wrong for five years of a potential mine life
of 50
years. Is it more moral for a company with a commitment to human rights
and
decent standards to flee such country in order to avoid challenges to
its
reputation and to sell its assets or to allow them to fall into the
hands of
the regime? These things are not simple
and any company operating in such circumstances must review its
position on a
regular basis. At the same time it is important that a company be open
and
transparent in reporting on all its activities, allowing its
shareholders and
other stakeholders to draw their own conclusions and, if need be,
express
disagreement or disapproval.
I trust that this clarifies Anglo
American’s position. I believe our approach is fully consistent with
our
commitments to the principles of the Global Compact.
Best wishes,
Mark Moody-Stuart
Anglo American plc
Registered in England and Wales
under the Companies Act 1985 | Registered Number 3564138
One final
note, for now, on Moody-Stuart's letter -- it amplifies an argument
advanced by Anglo-American's
EVP for external relations to GlobalCompactCritics.net's
story (to which we credit the photo above) about Inner City Press'
questions. Next time Moody-Stuart is at the UN he should take
questions, without benefit of an External Relations staffer, on these
questions. Watch this site.
And this --
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