2010
AMBATOVY SUSTAINABILITY REPORT
31
C2.1 Management Approach to
Economic Sustainability
Our vision is to contribute significantly to Madagascar’s
development. Since Madgascar is a low-income country,
our economic impacts could be particularly important in
stimulating growth and alleviating poverty.
Our activities have the potential to improve the living
standards of those working with our organization. We are also
aware of the potential for negative impacts in the broader
community and have developed strategies to mitigate them.
Ambatovy’s initiatives for contributing to sustainable economic
development include:
3
Local business development to facilitate local
procurement
3
Major improvements to infrastructure
3
Strong commitment to local hiring and training
3
Strong commitment to local procurement
3
Transparent management of funds and payments to
government
We use a wide range of strategies and actions to fulfill these
commitments. For example, we offer fair and attractive wages
and invest heavily in the development of local human capital
through training and professional advancement. Furthermore,
we are committed to adhering to the financial and tax laws
of Madagascar in a transparent manner and have been a
firm supporter of Madagascar’s participation in the Extractive
Industries Transparency Initiative (EITI). As well, we are
actively developing the local supply chain as a part of our
commitment to direct economic contributions to Madagascar.
This will raise output in the local manufacturing and services
sectors, contributing to the country’s GDP growth.
Economic Targets
Targets for Economic Performance in 2010
Invest in local capacity to participate in our supply chain.
Demonstrate transparency in tax payments and
compliance with Malagasy government and other
financial regulations.
Provide competitive remuneration and benefits to national
employees.
Results and Next Steps
q
The Ambatovy Local Business Initiative (ALBI) was created
in 2010 to promote our “buy locally, hire locally” policy. In
2011, ALBI will become fully integrated with our Supply
Chain Management Department to facilitate local supply
chain logistics.
q
In 2010, we were active participants in the EITI in
Madagascar. We will continue to support the country’s EITI
candidacy in 2011.
q
We are on schedule for this target.
q
Major challenges encountered
q
Challenges en route to resolution
q
Good progress made toward goal
C2.2 Economic Performance
All figures quoted in the following tables are in US dollars
and for the year 2010, unless otherwise stated. These figures
represent costs paid by the Operations Group only, unless
otherwise stated.
Direct Economic Value Generated
Revenue generation will commence after construction
is complete. We will report on this and other factors that
contribute to direct economic value generated in future
reports.
Operating Costs
Over the last four years, Ambatovy’s costs have been
primarily for construction and preparing for the operations
phase. The significant construction costs have been managed
separately from operations costs and what is listed below
is related only to the latter. We have chosen to report only
on operations costs as this will provide comparability for
future reports. As the construction phase comes to an end
and operations begin, many one-time costs will taper off
significantly. The current investment forecast is approximately
$5.5 billion.
9
Table 4 (following page) accounts for operations-related costs
incurred in 2010, including salaries and benefits, taxes and
compensation payments to Project-Affected Persons (PAPs).
Royalties will not commence until the operations phase. In
2010, payments to local suppliers were in the hundreds of
millions of dollars and our commitment to buy locally will
continue as we transition from construction to operations.
Disaggregated operational payments to local suppliers were
not available for this report, but we will endeavour to report on
this key commitment in the future.
C2. Economic Performance
9
As of June 2011 the Project partners released updated financial and scheduling information, which brought the investment costs to US$5.5 billion, excluding finance charges,
working capital and foreign exchange.
