Economic contributions

Overview

We assess our financial performance not just on our profits, but also by the economic contributions we make.

Our results

Our total economic contribution is measured by our gross sales revenue, which was US$25,440 million in 2006.  This represents a 23 per cent increase from 2005, and it breaks down as follows:

• Payments to suppliers -  43 per cent
• Taxes and royalties -  16 per cent
• Payments to employees - 10 per cent
• Dividends and interest  - 10 per cent
• The remainder was reinvested

Looking at the total economic contribution is appropriate at the company level.  However, care must be taken when aggregating total revenues across different industries in a national economy as some outputs are inevitably counted more than once.  For example, iron ore is used to produce steel, and steel is used to make cars. For this reason, it is more accurate to measure the economic contribution of a business in terms of "value added".

Value added represents the value that a firm has added to the materials and services it has bought in.  The total amount of value added by our Group was US$14.4 billion in 2006. This was 57 per cent of the total turnover, and represents a 14 per cent increase on 2005.

Our value added is the sum of payments to employees, taxes and royalties, interest payments, dividends, retained profits and depreciation.  Although excluded from the calculation of value added, payments to suppliers constitute a strong additional benefit to the economy, generating employment and creating wealth in other sectors.

In addition, many social and economic benefits arise from our community investment in socio-economic programmes, such as local education and health programmes. There are also a number of indirect contributions to the economy results from our business.  These include our workers spending their wages, governments distributing their tax revenues, shareholders spending their profits, export revenues generated from international sales of our products and investment in local infrastructure such as roads, power or telecommunications for our operations.