Anglo American Annual Report 2012

ACQUISITIONS AND DIVESTMENTSFailure to achieve expected benefits from any acquisition or valuefrom assets or businesses sold.Impact: Failing to deliver expected benefits from acquisitions canresult in adverse financial performance, lower production volumesor problems with product quality. The Group could find itself liablefor past acts or omissions of the acquired business without anyadequate right of redress.Failure to achieve expected values from the sale of assets ordelivery beyond expected receipt of funds may result in higherdebt levels, underperformance of those businesses and possibleloss of key personnel.Root cause: Benefits may not be achieved as a result of changingor incorrect assumptions or materially different market conditionsor deficiencies in the due diligence process.Delays in the sale of assets or reductions in value may arise due tochanging market conditions.Mitigation: Rigorous guidelines are applied to the evaluation andexecution of all acquisitions, including those that require theapproval of the Investment Committee and Group ManagementCommittee and, subject to size, the Board.Commentary: The acquisition of Oppenheimer family sharesin De Beers has enabled benefits to be identified that will bedelivered during the integration process. This acquisitionincreases the profile of this risk. Please refer to pages 83–85for further detail.COMMUNITY RELATIONSDisputes with communities may arise from time to time.Impact: Failure to manage relationships with local communities,government and NGOs may disrupt operations and negativelyaffect Anglo American’s reputation as well as our ability to bringprojects into production.Root cause: We operate in several countries where ownershipof rights in respect of land and resources is uncertain and wheredisputes in relation to ownership or other community mattersmay arise.The Group’s operations can have an impact on local communities,including the need, from time to time, to relocate communities orinfrastructure networks such as railways and utility services.Mitigation: We have developed comprehensive processes toenable our business units to effectively manage relationships withcommunities and we actively seek to engage with all communitiesimpacted by our operations.No change in riskINVESTING ORGANISING Page 18OPERATING Page 22 EMPLOYINGOperating and financial reviewIncreased riskINVESTING Page 14 ORGANISING Page 18OPERATING Page 22 EMPLOYINGINFRASTRUCTUREInability to obtain adequate supporting facilities, servicesand installations (water, power, road, rail and port, etc.).Impact: Failure to obtain supporting facilities may affect thesustainability and growth of the business, leading to loss ofcompetitiveness, market share and reputation.Failure of rail or port facilities may result in delays and increasedcosts as well as lost revenue and reputation with customers.Failure to procure shipping costs at competitive market ratesmay reduce profit margins.Root cause: The potential disruption of ongoing generationand supply of power is a risk faced by Anglo American in anumber of countries in which it operates. Our operations andprojects can be located in countries or regions where power andwater supplies are not certain and may be affected by populationgrowth, the effects of climate change or lack of investment byowners of infrastructure.We rely upon effective rail and port facilities for transporting ourproducts and will be expected to provide shipment of product insome circumstances to customers’ premises. We use third partiesto provide these services.Mitigation: We seek to work closely with suppliers ofinfrastructure to mitigate the risk of failure and have establishedcontingency arrangements. Long term agreements with suppliersare sought where appropriate.No change in riskINVESTING ORGANISING Page 18OPERATING Page 22 EMPLOYINGAnglo American plc Annual Report 2012 53