Anglo Zimele - Anglo American South Africa

Transforming South Africa’s mininglandscape3The Anglo Khula Mining Fund handles theexploration and mining related investments andis a joint initiative between Anglo Americanand Khula Enterprise Finance Limited, agovernment-owned entity that promotes SMEdevelopment. The fund assists emerging, blackownedmining companies with equity and loanfinance, as well as technical support during thehigh risk exploration and pre-feasibility phasesof projects, bringing them to a commerciallybankable position.would have shut down due to the delayedtransfer of funds by a creditor bank. This wouldhave been a huge loss for the local community,living in an isolated area with higher thanaverage unemployment rate and no realalternative for income generation.Without the fund, many black-owned juniormining companies would not be afforded theopportunity to operate in the mining sector. Thefund provides similar support services to thoseoffered by the Supply Chain Fund, and relies onthe technical, engineering and mining expertiseof Anglo American’s divisions.An example of such an investment is VaalkrantzColliery based in Vryheid, KwaZulu-Natal andmanaged by a black-owned enterprise – LeeuwMining and Exploration. Without the financialand technical support of the Fund, the operationBlack Wattle Dump, a reclamation operationmanaged by Zingaro Coal reclaims coal from theBlack Wattle Colliery in Witbank, MpumalangaInternational recognition andmilestonesThe Anglo Zimele model, which has beenadopted by the International Finance Corporation(IFC), a member of the World Bank Group,Mondi, De Beers, Barloworld and others,represents a unique approach to provide SMEswith integrated access to markets, financialsupport, skills transfer and capacity building.The IFC has purported the model as theprescribed approach for companies, around theworld, which seek to integrate local SMEs intotheir supply chains.In 2007, Anglo Zimele secured a double win atthe BigNews Enterprise Development Awards.The unit was praised as the Best InternalCorporate Enterprise Development Programmeand received the accolade for Most OutstandingOverall Enterprise Development Programme.The name Zimele is derived from the Africanlanguages Zulu and Xhosa meaning ‘to beindependent’.

4Building the right foundationsVukani Musa Construction specialises in building and civil works in the rapidlyexpanding Kathu region of the Northern Cape.Vukani MusaConstructionpartners Willem Smitand Joseph KenteIts founder, Joseph Kente, is a man determinedto succeed. Despite having to cut his schoolingshort because of financial hardship, hecontinued studying while training as a carpenterat Kumba Iron Ore’s Sishen Mine. He passedmatric and his trade test and then went on toqualify as a building inspector in 2001.He soon realised that there were few blackownedcompanies that could deliver high-qualitybuilding services and approached the KumbaSmall Business Hub for assistance.Recognising his talent and determination,the Hub facilitated the granting of a loan ofR680,000 from the Small Business Start-upFund. Joseph founded Vukani Musa Constructionin April 2008, and has already employed 18people. He holds a 50% stake in the company,while his partner, Willem Smit, who has over20 years experience in the building trade, ownsthe remaining shares.Vukani Musa has already commenced a numberof projects, including the upgrading of variousbuildings at Sishen, as well as the constructionof a pre-primary facility at a local school.Joseph is living a long-nurtured dream.

5There’s a doctor in the houseSupporting ourcommunityAn excellent example of the depth and diversity of the businesses supported by theAnglo Platinum Small Business Hub initiative is the medical practice owned by Dr LornaMaphuthuma in Burgersfort in the Limpopo Province.Lorna was faced with the opportunity of alifetime when the owner of a thriving medicalpractice where she acted as a locum, asked herif she wanted to take over the business.Lorna received a loan from the SmallBusiness Start-up Fund, which enabled herto buy the practice. Lorna intends to developthe facility, which already incorporates aresident physiotherapist, an optometristand a radiographer into a ‘one-stop shop’.The practice serves both private and generalpatients, and is a preferred service provider tothe Anglo Platinum Health Scheme for which itoperates an after-hour treatment service.Lorna is full of praise for the support shereceives from the Hub, particularly thequarterly audit of her books that allows herto concentrate on patients, secure in theknowledge that her financial affairs are ingood hands.The proud owner of a medical practice inBurgersfort in the Limpopo Province,Dr Lorna Maphuthuma

6Lucky Sebigi helps run BoiteriloJewellers, a Kathu-based business,which makes jewellery and a varietyof decorative ware and cutlery

7Delivering successGiving back tothe communityReditsego Transport provides a collection and delivery service for Anglo Coal CentralLaboratory in Witbank.Owner Sybo Ditsego was due to retire whenhe received the entrepreneurial opportunityof a lifetime. The laboratory had previouslyemployed contractors to collect geological andcoal samples from the division’s collieries.However, this service proved to be unreliableand it was suggested that Sybo take over therole himself. With a loan from the Hub, Sybohas purchased two vehicles, office and personalprotective equipment.Sybo, who currently employs a driver and twogeneral workers, is eager to grow his businessso that he can give something back to hiscommunity by employing more people.Xoli Ndebele, GuguHadebe, Solomon Sihlanguand Sybo Ditsego with anewly acquired vehiclepurchased with assistancefrom the Small BusinessStart-up Fund

8Who is eligible for funding?Black-owned small and medium enterprises andsmall-scale black-owned mining companies instart-up and expansion phase. For the SmallBusiness Start-up Fund, entrepreneurs mustbe located within a 50km radius of an AngloAmerican operation.What are the general funding criteria?l Commercial viability – the business must besustainable in the long term and meet returnrequirements.l Transfer of skills – there must be potentialfor BEE entrepreneurial development.l Owner’s equity contribution – minimumof 10%.l For the Supply Chain Fund, there must bean existing or potential link into the Anglosupply chain.l The owners of the investee companies mustbe involved in the day-to-day managementand operation of the business.What are the financial funding criteria?l Maximum funding per deal:• Supply Chain Fund – R5 million• Anglo Khula Mining Fund – R20 million• Small Business Start-up Fund – R1 millionl For the Supply Chain Fund and the AngloKhula Mining Fund, Anglo Zimele acquiresminority equity participation (10-49%).l Working capital requirements will be fundedthrough shareholder loans at prime plus1% (flat 10% for Small Business Start-upFund) with commercial repayment terms andconditions.

9In addition:l An exit strategy for Anglo Zimele must beclearly defined at the outset.l For established business proposals, a newcompany is the preferred route.l The business must be registered as a(Pty) Ltd company and as such must havean appointed auditor.l Proper accounting records must be maintainedby either an internal resource or outsourcedto an independent third party. This resourcemust be approved by Anglo Zimele.Anglo Zimele reserves the right to declineinvestment proposals even though they maymeet the specified criteria.How to apply for funding:Step OneThe first step is to prepare a business plan,which should cover areas such as:l Description of business and opportunityl Industry and market analysisl Technology, operations, and logisticsl Management and human resourcesl Financial analysis and business systemsl Legal aspectsl Action plan with time linel Contingency plans.You need to establish a conservative basis witha clear link between contracts and revenuegeneration. All overheads and expendituresshould be scrutinised on a zero budgeting basis.Step TwoIf your business plan is successfully approvedby the Anglo Zimele board, Anglo Zimeleacquires a minority equity stake in yourbusiness and is represented on your newcompany’s board of directors. Only loan fundingapplies to the Small Business Start-up Fund.Step ThreeFollowing the expression of interest to pursuethis deal, you sign confidentiality and terms ofengagement agreements with Anglo Zimele.Shareholders and loan agreements will becompiled by Anglo Zimele, which will have asannexures Anglo’s good corporate citizenshipprinciples and Anglo Zimele’s financial reportingand safety, health and environmental (SHE)requirements. A due diligence exercise is alsoundertaken.February 2009

www.angloamerican.co.ukAnglo American South Africa44 Main StreetJohannesburg2001Telephone +27 11 638 9111Anglo ZimeleP.O. Box 61587Marshalltown 2107South AfricaTelephone +27 11 638 4172Fax +27 11 638 5321Website www.anglozimele.co.zaE-mail zimele@angloamerican.co.za