The mining industry is experiencing a period of unprecedented and protracted change, and many in the mining industry are facing considerable challenges as many commodities are facing revenue headwinds owing to volatile macroeconomic conditions.

"All leaders in the industry need to consider how to position the industry for the sustainable growth that is genuinely in the earth. The mineral resources are present and needed, and it behooves the industry to work out a way with the market to mine them sustainably," diversified mining company Anglo American CE Duncan Wanblad told delegates at the recent Joburg Indaba mining conference.

"We need to figure out a way to balance investors' needs for low-risk, high-return investments in an industry that has long-life assets that are perhaps inconsistent with some investors' timeframes."

The mining industry is also working to manage and control costs, in an environment in which capital is expensive. The responses required by this dynamic are becoming more challenging.

"Notwithstanding this, I think we have an incredible set of opportunities and a chance to reshape a bright future for the mining industry, and one in which South Africa will play a central role.

"This will require urgency, diligence in terms of execution, and the ability to manage all the change at a fair pace. The opportunity for high returns and growth exist in this industry," he emphasised.

The changes Anglo American is undergoing will create a different investment platform for the business and will create sustainable growth and returns.

"Our business is on a journey of reinvention and this is a great company that has continuously evolved over its 107 years of life," Wanblad said.

"Another of our constants is our deep roots in South Africa and our belief in the role mining has to play in improving people's lives.

"Whether it is living standards, decarbonisation or the need for food security, the evolution of Anglo American focuses on these things through our strategy of operational excellence, portfolio simplification and growth."

These priorities will transform Anglo American and ensure it is set up for this next phase of mining and able to provide sustainably attractive returns and growth for its investors and the broader community and society at large.

"Operational excellence is at the heart of this strategy, and remains in sharp focus for us. If we can't be operationally excellent, productive and continually on top of costs, then we cannot generate attractive margins, and it is very difficult to make returns to investors that they need to then invest in the development and growth of the opportunities that are present," he said.

Anglo American is transforming its portfolio and executing on its divestment programme, with a clear aim of largely completing this by the end of next year.

"This simplification has to recognise another evolution of how markets are thinking about and valuing companies. Our current configuration is too complex for the market to properly value and it is no longer acceptable for our shareholders to carry the resulting discount that emanates from that complexity," he explained.

He stated that Anglo American had assets of outstanding quality, but that the market significantly undervalued those assets.

"We have to find a way to liberate that value for our shareholder and unlock the value in each of the component parts of this business."

Wanblad said the simplified portfolio that the group was moving towards remained attractive, as it was focused on world-class assets, including copper and premium iron-ore assets. The group's Woodsmith fertiliser asset also offered a compelling option.

"By focusing on these three product verticals, we are creating a much more resilient and structurally profitable business, and we are also creating a strong platform for future growth and offering transparent exposure of the value of the businesses to the markets," he said.

A simpler business will deliver a step-change in operational performance at cost production and will drive significant and sustainable incremental value creation, not just for the benefit of shareholders, but also for the benefit of all stakeholders, particularly the communities closest to, and impacted the most by, mining.

"This is not only true in a simplified Anglo American, but it also true for Anglo American Platinum (Amplats) and Kumba Iron Ore, which will be, in the new iterations of their lives, pure-play businesses with leading market positions.

"This is what happened to the gold industry about 30 years ago. The rationale that underpinned this single-nature value attribution to types of businesses like De Beers and Amplats is similar to our thinking today," said Wanblad.

The group is confident that the creation of these single-entity businesses, diamonds and platinum on their own, will attract different types of capital that will allow them to develop strategies that set them up for success.

"It is not the first time that Anglo American has helped to create successful, independent mining companies in South Africa. The success of companies like Exxaro, Thungela [Resources] and Seriti [Resources] are testament to the benefits of having focused, fit-for-purpose strategies from the foundations that Anglo American put in place during our long history.

"We are energised about creating these entities in mining that continue to proliferate the value of mining in the world and from the heart of South Africa."

GROWTH
Further, growth should be looked at in terms of growing value and the volume growth of many of the materials that the world needs.

"This is underpinned by our ability to responsibly develop and operate some of the world's most modern mines producing critical raw materials that are essential across all of the world."

Anglo American's portfolio had a well-sequenced set of growth options, he noted.

"In copper, we are aiming to achieve more than one-million tons of production by the early 2030s. That is an incredible set of opportunities to have that are well advanced in the permitting process and are sought after by the industry because of our ability to deliver them," he noted.

Similarly, the group's iron-ore portfolio was strategically well-positioned to supply high-quality materials for steelmaking, during and post the transition to clean steelmaking. Kumba was one of the key components of this, he said.

"High-quality iron-ore for steelmaking is one of the most sought-after products in the industry currently and we have a number of valuable expansion options in our Brazilian business, which produces direct reduced iron.

"Demonstrating our confidence in this business, and in South Africa, we have just approved $7.6-billion of new investment into Kumba. They are implementing ultrahigh-density media separation. This will be a deeply margin-enhancing project with real prospects to expand and extend the life of that mine," he noted.

Anglo American's roadmap consists of three building blocks. The first is to strengthen value creation by ensuring all the businesses operate safely and deliver their production and cost-performance targets.

The second is improving the way the market values each of these assets through its portfolio simplication.

The third building block was to provide this platform for growth in mining that the world needed, he said.

In South Africa, the group had offtake agreements for renewable energy that was being built. These were real and positive direct investments in the country, he highlighted.

"Despite all the challenges we and the mining industry have faced in recent years, we have a compelling investment case and real growth opportunities lie ahead.

"South Africa is home to some of the most prospective mineral jurisdictions in the world. But, to realise this potential, we have to first recognise that the mining industry is changing and that future growth will likely come from different models."

Miners will need to consider new strategic partnerships to advance large and capital-intensive projects, Wanblad said.

"South Africa still represents a strong base for development in the region in South Africa and into Africa, which is minerals-rich and needed for the materials it supplies to the world."