| Fri 18 Feb 2011, 9:27 | | AGL - Anglo American plc - Anglo American announces EBITDA of $12.0 billion and |
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AGL
ANAAL
AGL - Anglo American plc - Anglo American announces EBITDA of $12.0 billion and
doubles operating profit to $9.8 billion
Anglo American plc
Incorporated in the United Kingdom
(Registration number: 3564138)
Short name: Anglo
Share code: AGL
ISIN number: GB00B1XZS820
18 February 2011
Anglo American announces EBITDA of $12.0 billion and doubles operating profit to
$9.8 billion
Financial results driven by strong operational performance and higher prices
- Group operating profit(1) of $9.8 billion ($9.1 billion from core
operations(2))
- Underlying earnings(3) of $5.0 billion and underlying earnings per share of
$4.13, a 93% increase
- Profit attributable to equity shareholders of $6.5 billion
- Net debt(4) reduced to $7.4 billion at 31 December 2010
Operational excellence and strategic delivery
- $3.0 billion ($2.5 billion from core operations) benefit delivered from asset
optimisation and procurement programmes, exceeding target of $2 billion(5) by
the end of 2011:
- Asset optimisation: $1.8 billion (from core operations), including one-off
benefits
- Procurement: $0.7 billion (from core operations)
-Strong productivity performances:
- Kumba mining productivity up 11%
- Metallurgical Coal export mine productivity up 48% since 2008
- Platinum business transformed - cash operating costs controlled below
inflation, labour productivity increased by 23% since 2008 and production target
exceeded at 2.6 million ounces $3.3 billion of announced proceeds(6) from
divestments of non-core businesses, including:
- $1.3 billion from sale of zinc business
- $0.9 billion from sale of Moly-Cop and AltaSteel
- Tarmac and Lafarge to combine UK businesses to create a leading UK
construction materials company
Near-term volume growth of 50% (7) by 2015 driven by several major projects
- Barro Alto 36 ktpa nickel project - first production in March 2011, on
schedule
- Los Bronces 200 ktpa copper expansion on schedule for first production in Q4
2011
- Kolomela 9 Mtpa iron ore project 81% complete, on schedule for first
production by end Q2 2012
- Minas-Rio 26.5 Mtpa iron ore project - significant progress made, with major
licences awarded and long-term port tariff agreement secured
$70 billion project pipeline with potential to double production (7) over next
decade
- Two major new projects to be approved: Quellaveco (225 ktpa copper) and
Grosvenor (4.3 Mtpa metallurgical coal)
- Expect to approve $16 billion of projects over next 3 years
Safety performance
- Number of fatalities reduced by 68% since early 2007
- Lost time injury rates reduced by 51% since early 2007
- Drive for zero harm stepped up
Dividend
- Final dividend of $0.40 per share, bringing total dividends for the year to
$0.65 per share
HIGHLIGHTS Year ended Year ended
US$ million, unless otherwise stated 31 Dec 2010 31 Dec 2009 Change
Group revenue including associates (8) 32,929 24,637 34%
Operating profit including associates
before special items and
remeasurements - core operations (1)(2) 9,102 4,451 104%
Operating profit including associates
before special items and remeasurements (1) 9,763 4,957 97%
Underlying earnings (3) 4,976 2,569 94%
EBITDA (9) 11,983 6,930 73%
Net cash inflows from operating activities 7,727 4,087 89%
Profit before tax (10) 10,928 4,029 171%
Profit for the financial year
attributable to equity shareholders (10) 6,544 2,425 170%
Earnings per share (US$):
Basic earnings per share (10) 5.43 2.02 169%
Underlying earnings per share (3) 4.13 2.14 93%
(1) Operating profit includes attributable share of associates` operating profit
(before attributable share of associates` interest, tax and non-controlling
interests) and is before special items and remeasurements, unless otherwise
stated, see notes 3 and 4 to the Condensed financial statements. For the
definition of special items and remeasurements see note 5 to the Condensed
financi al statements.
(2) Operations considered core to the Group are Platinum, Diamonds, Copper,
Nickel, Iron Ore and Manganese (Kumba Iron Ore, Iron Ore Brazil and Samancor),
Metallurgical Coal, Thermal Coal, Exploration and Corporate Activities. See page
11 in the Financial review of Group results section for a reconciliation of
operating profit from core operations to Group operating profit.
(3) See note 10 to the Condensed financial statements for basis of calculation
of underlying earnings.
(4) Net debt includes related hedges and net debt in disposals groups. In 2010
net debt has been updated to include related hedges, being derivative
instruments that provide an economic hedge of assets and liabilities included in
net debt. The comparative has been adjusted accordingly. See note 13 to the
Condensed financial statements.
(5) $1bn of sustainable AO benefits from core businesses and $1bn of procurement
benefits from core businesses.
(6) Consideration on a debt and cash free basis, as announced.
(7) 2009 production base line for production growth information.
(8) Includes the Group`s attributable share of associates` revenue of $4,969
million (2009: $3,779 million). See note 3 to the Condensed financial
statements.
(9) Earnings before interest, tax, depreciation and amortisation (EBITDA) is
operating profit before special items, remeasurements, depreciation and
amortisation in subsidiaries and joint ventures and includes attributable share
of EBITDA of associates. See note 6 to the Condensed financial statements.
(10) Stated after special items and remeasurements.
Cynthia Carroll, Chief Executive, said, "Anglo American performed strongly in
2010, both operationally and financially, and we have continued to deliver on
our clear strategic objectives. In addition to benefiting from higher commodity
prices, our focused commodity businesses are driving superior operating
performances, through major productivity improvements, disciplined cost
management and the benefits of our asset optimisation and global supply chain
programmes. We completed a number of sales of non-core businesses during 2010
and into 2011 and our divestment programme is now well advanced. Anglo
American`s EBITDA of $12.0 billion, operating profit of $9.8 billion and
underlying earnings of $5.0 billion, reflects delivery on all fronts.
We have exceeded all expectations by achieving asset optimisation and
procurement benefits of $2.5 billion during 2010 from our core businesses alone,
including one-off benefits, well ahead of our 2011 target of $2 billion for
sustainable projects. The productivity benefits that we have achieved have also
enabled us to leverage the benefits of higher commodity prices. I expect the
value we unlock from asset optimisation in particular to increase further as we
embed these best in class practices and continue to improve our operational
performance.
We have transformed our Platinum business, moving it down the cost curve, with
23% productivity gains and cash operating costs controlled below inflation, and
further safety improvements, while exceeding our refined platinum production
target of 2.5 million ounces. Our Kumba Iron Ore, Metallurgical Coal and Nickel
businesses also delivered productivity gains, while the benefits of the
restructuring of De Beers are clear to see, with the business reaping the
rewards of the much improved environment for diamonds.
Our near term production growth of 50% by 2015 is exceptionally strong, with
four major projects making excellent progress, enabling us to start up a new
mining operation every six to nine months over the next few years. The first
such project, our 36,000 tonnes per year Barro Alto nickel project will begin
production on schedule in March, more than doubling our Nickel business`
production when it reaches full capacity. In the fourth quarter of this year,
the 200,000 tonnes per year expansion of our Los Bronces copper operation will
begin production on schedule and will have highly attractive cash operating
costs. Looking to the end of the second quarter of next year, 2012, the 9
million tonnes per year Kolomela iron ore project in South Africa will begin
production with a very competitive cost position.
We have made substantial progress with our 26.5 million tonnes per year Minas-
Rio iron ore project in Brazil, securing a number of key approvals, including
the mining permit and the second part of the installation licence for the mine,
beneficiation plant and tailings dam. These approvals support a March 2011 start
date for the civil works for the beneficiation plant and tailings dam
construction and it should then take between 27 and 30 months to construct and
commission the mine and plant, complete the project and deliver the first ore on
ship. We have also now secured an extremely competitive cost position for the
project by reaching agreement with our partner at the Acu port on a fixed 25-
year iron ore port tariff that gives us a clear, first quartile FOB cost
position for Minas-Rio. Our optionality for port expansion and the priority
rights we have for our iron ore shipments, make this port facility a key
strategic asset for Anglo American in Brazil.
Anglo American has a truly world class resource base beyond our near and medium
term projects, with the potential to double production over the next decade
through our $70 billion pipeline of more than 60 projects. In the next three
years alone, we expect to approve $16 billion of projects.
We have completed divestments of our non-core businesses with announced proceeds
of $3.3 billion to date, including our zinc portfolio, Moly-Cop and AltaSteel,
five undeveloped coal assets in Australia and a number of Tarmac`s European
businesses. Today we have also announced the creation of a leading UK
construction materials company by combining the highly complementary businesses
of Tarmac and Lafarge in the UK. We have received strong interest in the
remaining businesses and will sell those outstanding in a manner and on a
timetable that maximises value.
We continue to focus on our safety performance across the board and recorded
further improvement during the year, with fatalities and lost time injury rates
both continuing to reduce. Regrettably, however, 14 people lost their lives
while on company business during the year, a clear reminder that we have further
work to do to achieve zero harm. We have, though, made substantial progress -
our Nickel, Thermal Coal, Copper, Iron Ore Brazil and Exploration teams achieved
a fatality-free year in 2010 and we have achieved a 68% reduction in the number
of fatalities in safety since early 2007.
In terms of the outlook, while there remain a number of uncertainties in the
immediate term, not least in the developed economies, our medium to long term
view of demand growth for our commodities remains positive, driven by the
resource intensive nature of economic growth in emerging markets."
Review of 2010
Financial results
Anglo American`s underlying earnings were $5.0 billion, up from $2.6 billion in
2009, with operating profit of $9.8 billion, almost double the level of $5.0
billion in 2009. This increase in operating profit was mainly driven by the
Kumba Iron Ore, Copper and Platinum business units, which benefited from strong
market prices, partially offset by the strengthening South African rand and
Australian dollar currencies. There was an increase in realised prices across
all commodities with platinum and nickel prices increasing by 34% and 48%
respectively from 2009.
Copper delivered an operating profit of $2,817 million, 40% higher than 2009 as
a result of record copper prices and higher molybdenum revenues due to increased
prices and sales.
Nickel reported an operating profit of $96 million, $94 million higher than 2009
as a result of higher nickel prices.
Platinum generated an operating profit of $837 million, a significant increase
due to higher metal prices and successful cost control programmes; this was
partly offset by a stronger rand and lower sales volumes.
Iron Ore and Manganese generated an operating profit of $3,681 million, 147%
higher than 2009. Within this commodity group, Kumba Iron Ore had a strong
performance with operating profit of $3,396 million, 128% higher.
Metallurgical Coal delivered an operating profit of $783 million, a 74% increase
on 2009, primarily due to higher average benchmark coking coal prices and record
increased production of high-margin export products. The business had record
export sales, with metallurgical coal production increasing by 16%. This offset
the impact of the strong Australian dollar and adverse weather conditions, which
had a significant impact on production.
Thermal Coal`s operating profit of $710 million was 2% lower than 2009, as a
result of the stronger rand. This was partially mitigated by a strong recovery
in thermal coal prices.
Diamonds recorded an operating profit of $495 million, 673% higher than 2009,
due to a strong recovery in the demand for rough diamonds in 2010. Sales of
rough diamonds by The Diamond Trading Company (DTC) were up 57% compared with
sales in 2009.
Other Mining and Industrial generated an operating profit of $661 million, 31%
higher than 2009, due to strong performances from the Zinc, Scaw Metals and
Copebras businesses. This was partially offset by lower profits from Tarmac and
Catalao.
Production
Platinum recorded an increase of 5% to 2.57 million ounces of refined platinum,
exceeding their target of 2.5 million ounces. Copper production decreased from
the record high in 2009 due to, expected lower throughput and grades at Los
Bronces, the impact of strikes and lower grades which was partly offset by
improved concentrator throughput at Collahuasi, and the absence of third party
purchases at Mantos Blancos. Nickel achieved a 2% increase in production due to
a 13% increase from Loma de Niquel despite electricity rationing imposed by the
Venezuelan government; nickel production at Codemin was impacted by planned
furnace relining and lower grades. Iron ore production from Kumba Iron Ore`s
Sishen Mine increased by 5% to 41.3 Mt as the jig plant exceeded name plate
production capacity through improved quality of plant feed material and more
efficient shutdown intervals. Metallurgical Coal delivered record production,
with a 16% increase of its high quality metallurgical coal to 14.7 million
tonnes, driven by a strong supply response from the Capcoal and Moranbah North
complexes, despite the negative impact of Cyclone Ului in the first quarter and
record rainfall in the second half of the year in Queensland. Production in
Diamonds increased in response to a strong recovery in demand for rough diamonds
during 2010. Production at Thermal Coal was flat, driven mainly by higher output
at Mafube, and the continuing ramp-up at Zibulo, offsetting the impact of
challenging geological conditions predominantly at the Goedehoop complex.
Capital structure
Net debt, including related hedges, of $7,384 million was $3,896 million lower
than at 31 December 2009, and $3,546 million lower than at 30 June 2010. Cash
inflows from operating activities of $7,727 million and the proceeds from
disposals of $2,795 million, funded capital investment (including related
hedges) of $4,994 million, principally in the Group`s core assets, including
combined investment of $2,299 million in the Los Bronces, Barro Alto, Minas-Rio
and Kolomela (previously Sishen South) projects. The Group also contributed $450
million towards De Beers` $1 billion rights issue in March 2010, paid a $302
million dividend to company shareholders and $617 million dividends to non-
controlling interests.
Special items and remeasurements
The Group recognised a number of one off operating special charges, amounting to
$253 million, including associates. These included impairment and related
charges of $122 million, chiefly attributable to accelerated depreciation at
Loma de Niquel, due to uncertainty over the renewal and restoration of certain
concessions. In addition, restructuring costs of $131 million arose in 2010,
principally in the Other Mining and Industrial segment given the ongoing
divestments programme.
Dividends
Anglo American`s dividend policy will provide a base dividend that will be
maintained or increased through the cycle. A final dividend of 40 US cents per
share has been declared, thereby establishing Anglo American`s new base annual
dividend per share at 65 US cents, subject to shareholder approval at the Annual
General Meeting to be held on 21 April 2011. Taking into account the Group`s
substantial investment programme for future growth, future earnings potential
and the continuing need for a robust balance sheet, any surplus cash will be
returned to shareholders.
Delivering value through operational excellence
Anglo American has continued to deliver significant value from its global scale
and organisational structure, striving for best in class operating efficiencies
across all its operations. Two specific and Group-wide initiatives, namely the
asset optimisation and global procurement programmes, are well advanced and
continue to deliver ahead of expectations, in terms of both timing and quantum
of value. These two programmes were targeted to deliver $2 billion in benefits
by 2011, from Anglo American`s core businesses alone.
In 2010, $2.5 billion of benefits were delivered from the core businesses ($3.0
billion from the total Group) representing the additional operating profit and
capital expenditure savings realised in the year over and above the performance
expected had the programmes not been initiated. These benefits are valued
employing 2010 commodity prices and exchange rates. Of the $2.5 billion, asset
optimisation contributed $1.8 billion of value (including one-off benefits of
$279 million), well in excess of the 2011 target for sustainable benefits of $1
billion. Global procurement contributed $713 million of benefits, of which $466
million related to operating profit benefits and $247 million for capital spend
benefits.
This strong performance is driven by increased volumes realised from the
portfolio of projects and increased cost savings, with benefits from prior
period initiatives being enhanced by higher market prices in 2010, partially
offset by regional currency strengths. The resulting year on year operating
profit benefit for core businesses (at constant 2009 commodity prices and
exchange rates) equates to a $170 million uplift in volumes and cash cost
savings of $159 million.
Significant growth through project delivery
Anglo American has a clear strategy of deploying its capital in those
commodities that deliver long term, through-the-cycle returns for its
shareholders, and which have strong fundamentals and the most attractive risk-
return profiles. Those commodities are copper, diamonds, iron ore, manganese,
metallurgical coal, nickel, platinum and thermal coal.
Anglo American has developed a portfolio of world class operating assets and
development projects focused on these commodities, with the benefits of scale,
expansion potential and cost position. Anglo American`s project management
systems and processes have been further enhanced to ensure closer collaboration
between the Group`s technical and project teams, thereby creating improved
oversight of project execution and future capital allocation.
The Group`s pipeline of projects spans its core commodities and is expected to
deliver organic production growth of 50% by 2015. Beyond the near term, Anglo
American has a world class pipeline of projects across its selected commodities
and is progressing towards approval decisions in relation to the development of
two further high quality growth projects - the 225 ktpa Quellaveco copper
project in Peru and the 4.3 Mtpa Grosvenor metallurgical coal project in
Australia. Submission to the Board for approval is expected for the Quellaveco
project during 2011 and for the Grosvenor project in the second quarter of 2012.
Together with a number of other medium and longer term projects, Anglo American
has the potential to double production over the next decade through its $70
billion pipeline of more than 60 projects.
Anglo American`s four largest near term strategic growth projects are all well
placed on their respective industry cost curves, have long resource lives and
are entering production from early 2011 onwards, in what is expected to be a
period of sustained long term demand growth.
Barro Alto
The Barro Alto nickel project in Brazil was 99% complete at the year end and is
on schedule to deliver first production in March 2011. This project makes use of
a proven technology and will produce an average of 36 ktpa of nickel in full
production (41 ktpa over the first five years), doubling production from Anglo
American`s Nickel business, with a competitive cost position in the lower half
of the cost curve.
Los Bronces
The Los Bronces copper expansion project in Chile is on schedule for first
production in the fourth quarter of 2011. Production at Los Bronces is scheduled
to increase by 278 ktpa to 490 ktpa over the first three years of full
production following project completion and to average 400 ktpa over the first
10 years. At peak production levels, Los Bronces is expected to be the fifth
largest producing copper mine in the world, with highly attractive cash
operating costs, reserves and resources that support a mine life of over 30
years and with further expansion potential. Also within the Los Bronces
district, work continues on the construction of the exploration tunnel to
provide underground drilling access to explore and define the resources at the
very significant and high quality new discovery at Los Sulfatos.
Kolomela
Kumba Iron Ore`s Kolomela project in South Africa is well advanced and overall
project progress reached 81% by 31 December 2010. The project is on schedule to
deliver initial production at the end of the first half of 2012, ramping up to
full capacity in 2013. Kolomela is situated 80 km to the south of Kumba`s world
class Sishen mine and, when full production is achieved in 2013, will produce 9
Mtpa of high quality seaborne iron ore, with further potential for expansion.
Minas-Rio
The Minas-Rio iron ore project in Brazil has made significant progress and is
expected to produce 26.5 Mtpa of iron ore in its first phase. The award of the
second part of the mine, beneficiation plant and tailings dam installation
licence (LI part 2) in December 2010, being the final primary installation
licence, supports the start of the civil works for the beneficiation plant and
tailings dam construction in March 2011, after the rainy season. This licence
followed the award of the mining permit in August 2010. As previously stated, it
should take between 27 and 30 months from commencement of these works to
construct and commission the mine and plant, complete the project and deliver
the first ore on ship; however, there are still a number of other licences and
permits to be obtained during this period.
Anglo American also reached agreement on a fixed 25-year iron ore port tariff
with its port partner, LLX SA, in relation to the LLX Minas-Rio (LLX MR) iron
ore port facility at Acu. The iron ore volumes associated with the first phase
of the project will be subject to a net port tariff of approximately $5.15 per
tonne (in 2013 terms) after taking into account Anglo American`s shareholding in
LLX MR ($7.10 per tonne gross). As part of the agreement to secure the long term
tariff arrangements, Anglo American has agreed to fund a greater share of the
development cost of the first phase of the port. This agreement is expected to
result in additional capital expenditure attributable to Anglo American of
approximately $525 million in relation to the port.
Studies for the expansion of the Minas-Rio project have continued during 2010
and the latest resource statement provides a total resource (measured, indicated
and inferred) of 5.3 billion tonnes, supporting the expansion of the project. In
addition, the port agreement noted above also covers a long-term tariff
arrangement for all Anglo American`s iron ore volumes beyond the first phase of
the Minas-Rio project. The level of the expansion tariff will be dependent upon
the capital cost to expand the port to accommodate those additional volumes and
that capital cost will be determined in due course.
Divestment portfolio update
Anglo American`s programme to divest of its non-core businesses is well
advanced. During 2010, Anglo American announced the sale of a number of
businesses for a total consideration of $3.3 billion on a debt and cash free
basis.
During the first quarter of 2010, Anglo American agreed the sales of Tarmac`s
aggregates businesses in France, Germany, Poland and the Czech Republic and its
Polish, and French and Belgian concrete products businesses, for a combined
consideration of $483 million. These were all completed in 2010. In May 2010,
Anglo American announced the sale of its portfolio of zinc assets to Vedanta
Resources plc (Vedanta) for $1,338 million on an attributable, debt and cash
free basis. Of the total consideration(1), $698 million related to the Skorpion
mine, $308 million related to the Lisheen mine and $332 million related to Anglo
American`s 74% interest in Black Mountain Mining (Proprietary) Limited (which
holds 100% of the Black Mountain mine and the Gamsberg project). The sale of
Skorpion completed on 3 December 2010, the sale of Black Mountain Mining
(Proprietary) Limited completed on 4 February 2011, and the sale of Lisheen mine
in Ireland completed on 15 February 2011.
In July 2010, Anglo American announced that it had entered into an agreement
with a consortium to sell its interests in five undeveloped coal assets in
Australia for a total consideration of approximately $577 million. The
transaction completed in December 2010.
In November 2010, the sale of Moly-Cop and AltaSteel to OneSteel was announced
for a total consideration of $932 million. The transaction completed on 31
December 2010.
The preparatory work to separate the remaining businesses for divestment from
the Group is under way and the divestments will be carried out in a manner and
to a timetable that maximises value for Anglo American`s shareholders. It is
envisaged that there will be a different divestment timetable for each of the
businesses - Copebras, Peace River Coal and Scaw Metals.
Anglo American has conducted a drilling programme at its Catalao ferroniobium
business in Brazil which has delineated additional niobium resources. In
conjunction with the application of improved processing technology, this may
result in the significant extension of Catalao`s life of mine and production
capacity, which would enable Anglo American to take advantage of the attractive
dynamics of, and long term demand outlook for, the niobium market. Anglo
American has therefore decided to retain the business in its portfolio and is
progressing a feasibility study for Catalao.
On 18 February 2011, Anglo American and Lafarge announced their agreement to
combine their cement, aggregates, ready-mixed concrete, asphalt and contracting
businesses in the United Kingdom, Tarmac Limited and Lafarge Cement UK, Lafarge
Aggregates and Concrete UK. The 50:50 joint venture will create a leading UK
construction materials company, with a portfolio of high quality assets drawing
on the complementary geographical distribution of operations and assets, the
skills of two experienced management teams and a portfolio of well-known and
innovative brands.
Outlook
The outlook for demand growth for Anglo American`s commodities remains extremely
positive. Such demand will be driven by the resource intensive nature of robust
economic growth in the emerging markets, led by China and India and many
countries across Asia, Latin America and Africa. While there remain a number of
short term uncertainties, indicators suggest continued recovery in the developed
economies and a continuation of the changing structure of the world`s economy
through urbanisation and the trending convergence of living standards.
(1) The agreed consideration was based on profits and cash flows for the zinc
businesses being for the benefit of the purchaser from 1 January 2010, subject
to completion.
Selected major projects
Completed in 2010
Completion
date
Sector Project Country
Platinum MC Plant Capacity South Africa Q2 2010
Expansion - phase 1
Mainstream inert grind South Africa Q3 2010
projects
Capex
$m (1)
Sector Project Country
Platinum MC Plant Capacity South Africa 95
Expansion - phase 1
Mainstream inert grind South Africa 149
projects
Production volume(2)
Sector Project Country
Platinum MC Plant Capacity South Africa 11 ktpa Waterval Converter
Expansion - phase 1 matte (WCM)
Mainstream inert grind South Africa Improve process recoveries
projects
Approved
First
production
Sector Project Country date
Platinum Thembelani No. 2 Shaft South Africa 2008
Mogalakwena North South Africa 2007
Twickenham South Africa 2015
Unki Mine Zimbabwe 2010
Khuseleka Ore Replacement South Africa 2007
Base metals refinery South Africa 2011
expansion
Dishaba East Upper UG2 South Africa 2007
Diamonds Jwaneng - Cut 8 Botswana 2010
Copper (5) Los Bronces (6) expansion Chile 2011
Collahuasi Phase 1 Chile 2011
Nickel Barro Alto Brazil 2011
Iron Ore and Minas-Rio phase 1 Brazil 2013
Manganese
Kolomela (previously Sishen South Africa 2012
South)
Thermal Coal Zibulo (previously South Africa 2009
Zondagsfontein)
Approved
Full
production
Sector Project Country date
Platinum Thembelani No. 2 Shaft South Africa 2018
Mogalakwena North South Africa 2010
Twickenham South Africa 2019
Unki Mine Zimbabwe 2013
Khuseleka Ore Replacement South Africa 2015
Base metals refinery South Africa 2013
expansion
Dishaba East Upper UG2 South Africa 2012
Diamonds Jwaneng - Cut 8 Botswana 2024
Copper (5) Los Bronces (6) expansion Chile 2012
Collahuasi Phase 1 Chile 2011
Nickel Barro Alto Brazil 2012
Iron Ore and Minas-Rio phase 1 Brazil 2014
Manganese
Kolomela (previously Sishen South Africa 2013
South)
Thermal Coal Zibulo (previously South Africa 2012
Zondagsfontein)
Approved
Capex
Sector Project Country $m (1)
Platinum Thembelani No. 2 Shaft South Africa 316
Mogalakwena North South Africa 822
Twickenham South Africa 911
Unki Mine Zimbabwe 459
Khuseleka Ore Replacement South Africa 187
Base metals refinery South Africa 360
expansion
Dishaba East Upper UG2 South Africa 219
Diamonds Jwaneng - Cut 8 Botswana 3,000 (4)
Copper (5) Los Bronces (6) expansion Chile 2,500
Collahuasi Phase 1 Chile 92
Nickel Barro Alto Brazil 1,900
Iron Ore and Minas-Rio phase 1 Brazil 5,034
Manganese
Kolomela (previously Sishen South Africa 1,062
South)
Thermal Coal Zibulo (previously South Africa 517
Zondagsfontein)
Approved
Sector Project Country Production volume (2)
Platinum Thembelani No. 2 Shaft South Africa Replace 115 kozpa refined
platinum (3)
Mogalakwena North South Africa 350-400 kozpa refined
platinum
Twickenham South Africa 180 kozpa refined platinum
Unki Mine Zimbabwe 70 kozpa refined platinum
Khuseleka Ore Replacement South Africa Replace 101 kozpa refined
platinum
Base metals refinery South Africa 11 ktpa Nickel
expansion
Dishaba East Upper UG2 South Africa 100 kozpa refined platinum
Diamonds Jwaneng - Cut 8 Botswana 100 million carats
Copper (5) Los Bronces (6) expansion Chile 200 ktpa copper (7)
Collahuasi Phase 1 Chile 19 ktpa copper
Nickel Barro Alto Brazil 36 ktpa nickel
Iron Ore
and Minas-Rio phase 1 Brazil 26.5 Mtpa iron ore pellet
Manganese feed (wet basis) (8)
Kolomela (previously
Sishen South) South Africa 9.0 Mtpa iron ore
Thermal
Coal Zibulo (previously South Africa 6.6 Mtpa thermal
Zondagsfontein)
See the following page for footnotes.
Future unapproved
First
production
Sector Project Country date
Platinum Tumela No 4 Shaft South Africa 2020
Copper (5) Quellaveco Peru 2015
Collahuasi expansion Phase 2 Chile 2012
Michiquillay Peru 2018
Pebble US TBD
Nickel Jacare phase 1 Brazil TBD
Morro Sem Bone Brazil TBD
Iron Ore and Sishen Expansion Project South Africa 2011
Manganese phase 1B
Sishen Expansion Project 2 South Africa 2015
Sishen Concentrate South Africa 2015
Metallurgical Minas-Rio expansion Brazil TBD
Coal Grosvenor Australia 2013
Drayton South Australia 2015
Moranbah South Australia 2016
Thermal Coal Elders Project South Africa 2016
New Largo South Africa 2013
Cerrejon P500 P1 Colombia 2013
Cerrejon P500 P2 Colombia TBD
Future unapproved
Full production
Sector Project Country date
Platinum Tumela No 4 Shaft South Africa 2026
Copper (5) Quellaveco Peru 2016
Collahuasi expansion Phase 2 Chile 2012
Michiquillay Peru 2019
Pebble US TBD
Nickel Jacare phase 1 Brazil TBD
Morro Sem Bone Brazil TBD
Iron Ore and Sishen Expansion Project South Africa 2012
Manganese phase 1B
Sishen Expansion Project 2 South Africa 2019
Sishen Concentrate South Africa 2016
Metallurgical Minas-Rio expansion Brazil TBD
Coal Grosvenor Australia 2016
Drayton South Australia 2017
Moranbah South Australia 2019
Thermal Coal Elders Project South Africa 2020
New Largo South Africa 2016
Cerrejon P500 P1 Colombia 2015
Cerrejon P500 P2 Colombia TBD
Future unapproved
Sector Project Country Production volume (2)
Platinum Tumela No 4 Shaft South Africa 271 kozpa refined
platinum
Copper (5) Quellaveco Peru 225 ktpa copper
Collahuasi expansion Phase 2 Chile 20 ktpa copper (9)
Michiquillay Peru 155 ktpa copper (10)
Pebble US 175 ktpa copper
Nickel Jacare phase 1 Brazil 34 ktpa nickel
Morro Sem Bone Brazil 32 ktpa nickel
Iron Ore and Sishen Expansion Project South Africa 0.7 Mtpa iron ore
Manganese phase 1B
Sishen Expansion Project 2 South Africa 10.0 Mtpa iron ore
Sishen Concentrate South Africa 2.0 Mtpa iron ore
Metallurgical Minas-Rio expansion Brazil TBD
Coal Grosvenor Australia 4.3 Mtpa
metallurgical
Drayton South Australia 4.2 Mtpa thermal
Moranbah South Australia TBD
Thermal Coal Elders Project South Africa 12.8 Mtpa thermal
New Largo South Africa 15 Mtpa thermal
Cerrejon P500 P1 Colombia 8 Mtpa thermal
Cerrejon P500 P2 Colombia 10-20 Mtpa thermal
(1) Capital expenditure shown on 100% basis in nominal terms and reflects
approved capital expenditure.
(2) Represents 100% of average incremental or replacement production, at full
production, unless otherwise stated.
(3) Thembalani 2 Shaft is currently under review.
(4) Debswana will invest $500 million in capital expenditure. Project
investment, including capital expenditure, is likely to total $3 billion over
the next 15 years. Total carats exposed are over the life of the expansion.
(5) Pebble will produce molybdenum and gold by-products, Michiquillay will
produce molybdenum, gold and silver by-products and other projects will produce
molybdenum and silver by-products.
(6) The February 2010 earthquake in Chile impacted the rate of progress and
ultimate capital cost of the Los Bronces expansion project. Remedial actions
have ensured the project remains on schedule for first production in Q4 2011.
The cost impact remains under review.
(7) Production represents average over first 10 years of the project. Production
over the first three years of the project will average 278 ktpa
(8) Capital expenditure, post acquisition of Anglo American`s shareholding in
Minas-Rio, includes 100% of the mine and pipeline, and an attributable share of
the port, as modified by the agreement with LLX SA and LLX Minas-Rio.
(9) Further phased expansions have the potential to increase production to 1
Mtpa.
(10) Expansion potential to 300 ktpa.
For further information, please contact:
United Kingdom
James Wyatt-Tilby, Media Relations
Tel: +44 (0)20 7968 8759
Caroline Metcalfe, Investor Relations
Tel: +44 (0)20 7968 2192
Leisha Wemyss, Investor Relations
Tel: +44 (0)20 7968 8607
South Africa
Pranill Ramchander, Media Relations
Tel: +27 (0)11 638 2592
Anna Mulholland, Investor Relations
Tel: +27 (0)11 373 6683
Kgapu Mphahlele, Investor Relations
Tel: +27 (0)11 373 6239
Anglo American plc is one of the world`s largest mining companies, is
headquartered in the UK and listed on the London and Johannesburg stock
exchanges. Anglo American`s portfolio of mining businesses spans precious metals
and minerals - in which it is a global leader in both platinum and diamonds;
base metals - copper and nickel; and bulk commodities - iron ore, metallurgical
coal and thermal coal. Anglo American is committed to the highest standards of
safety and responsibility across all its businesses and geographies and to
making a sustainable difference in the development of the communities around its
operations. The company`s mining operations and extensive pipeline of growth
projects are located in southern Africa, South America, Australia, North America
and Asia. www.angloamerican.com
Webcast of presentation:
A live webcast of the results presentation, starting at 9.00am UK time on 18
February, can be accessed through the Anglo American website at
www.angloamerican.com.
Note: Throughout this results announcement, `$` denotes United States dollars
and `cents` refers to United States cents; operating profit includes
attributable share of associates` operating profit and is before special items
and remeasurements, unless otherwise stated; special items and remeasurements
are defined in note 5 to the Condensed financial statements. Underlying
earnings, unless otherwise stated, is calculated as set out in note 10 to the
Condensed financial statements. Earnings before interest, tax, depreciation and
amortisation (EBITDA) is operating profit before special items and
remeasurements, depreciation and amortisation in subsidiaries and joint ventures
and includes attributable share of EBITDA of associates. EBITDA is reconciled to
`Total profit from operations and associates` in note 6 to the Condensed
financial statements and to `Cash flows from operations` in note 6. Tonnes are
metric tons, `Mt` denotes million tonnes and `kt` denotes thousand tonnes,
unless otherwise stated.
Forward-looking statements
This announcement includes forward-looking statements. All statements other than
statements of historical facts included in this announcement, including, without
limitation, those regarding Anglo American`s financial position, business and
acquisition strategy, plans and objectives of management for future operations
(including development plans and objectives relating to Anglo American`s
products, production forecasts and reserve and resource positions), are forward-
looking statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of Anglo American, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding Anglo American`s present
and future business strategies and the environment in which Anglo American will
operate in the future. Important factors that could cause Anglo American`s
actual results, performance or achievements to differ materially from those in
the forward-looking statements include, among others, levels of actual
production during any period, levels of global demand and commodity market
prices, mineral resource exploration and development capabilities, recovery
rates and other operational capabilities, the availability of mining and
processing equipment, the ability to produce and transport products profitably,
the impact of foreign currency exchange rates on market prices and operating
costs, the availability of sufficient credit, the effects of inflation,
political uncertainty and economic conditions in relevant areas of the world,
the actions of competitors, activities by governmental authorities such as
changes in taxation or safety, health, environmental or other types of
regulation in the countries where Anglo American operates, conflicts over land
and resource ownership rights and such other risk factors identified in Anglo
American`s most recent Annual Report. Forward-looking statements should,
therefore, be construed in light of such risk factors and undue reliance should
not be placed on forward-looking statements. These forward-looking statements
speak only as of the date of this announcement. Anglo American expressly
disclaims any obligation or undertaking (except as required by applicable law,
the City Code on Takeovers and Mergers (the "Takeover Code"), the UK Listing
Rules, the Disclosure and Transparency Rules of the Financial Services
Authority, the Listings Requirements of the securities exchange of the JSE
Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and
the Namibian Stock Exchange and any other applicable regulations) to release
publicly any updates or revisions to any forward-looking statement contained
herein to reflect any change in Anglo American`s expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
Nothing in this announcement should be interpreted to mean that future earnings
per share of Anglo American will necessarily match or exceed its historical
published earnings per share.
Certain statistical and other information about Anglo American included in this
announcement is sourced from publicly available third party sources. As such, it
presents the views of those third parties, though these may not necessarily
correspond to the views held by Anglo American.
Financial review of Group results
Group operating profit was $9,763 million, with operating profit from core
operations of $9,102 million, 104% higher than 2009. This increase in operating
profit was driven by the Kumba Iron Ore, Copper and Platinum business units,
which benefited from strong market prices, partially offset by the strengthening
South African rand and Australian dollar currencies. There was an increase in
realised prices across all export commodities, with a 34% increase in platinum,
a 92% increase in export iron ore, a 32% increase in copper, a 25% increase in
export metallurgical coal, a 48% increase in nickel and a 28% increase in export
thermal coal.
Operations considered core to the Group are Platinum, Diamonds, Copper, Nickel,
Iron Ore and Manganese (Kumba Iron Ore, Iron Ore Brazil and Samancor),
Metallurgical Coal, Thermal Coal, Exploration and Corporate Activities. The
table below reconciles operating profit from core operations to total Group
operating profit.
Operating profit Year ended Year ended
$ million 31 Dec 2010 31 Dec 2009
Platinum 837 32
Diamonds 495 64
Copper 2,817 2,010
Nickel 96 2
Iron Ore and Manganese 3,681 1,489
Metallurgical Coal 783 451
Thermal Coal 710 721
Exploration (136) (172)
Corporate Activities and Unallocated costs (181) (146)
Operating profit including associates before
special items and
remeasurements - core operations 9,102 4,451
Other Mining and Industrial 661 506
Operating profit including associates before
special items and
remeasurements 9,763 4,957
Underlying earnings - core operations (1) 4,454 2,166
(1) See note 4 to the Condensed financial statements
Copper operating profit was 40% higher than 2009, with a 32% increase in the
realised price of copper, partially offset by an 8% decrease in sales volumes
owing to lower production and shipping constraints as a result of the failure of
a shiploader in Patache port in December. Nickel recorded a significant increase
in its operating profit driven by improved nickel prices. Platinum operating
profit was driven by higher metal prices and cost control programmes, partly
offset by a stronger rand and lower sales volumes. Kumba Iron Ore`s operating
profit was 128% higher than 2009, driven by a 6% increase in export sales
volumes and a 92% increase in realised prices. Samancor`s strong performance was
driven by higher manganese ore and alloy prices resulting from increases in
world steel production and demand. Despite weather impacts in 2010 and a
stronger Australian dollar, Metallurgical Coal increased its operating profit by
74% from 2009 due to higher average realised coking coal prices and record
production of high-margin export products. Thermal Coal operating profit
decreased by 2% due to the stronger rand, partly offset by a strong recovery in
export thermal coal prices. De Beers Diamond Trading Company (DTC) revenue
increased by 57% compared with 2009 in response to increased demand for rough
diamonds during 2010, primarily driven by increased consumer demand in India and
China.
Other Mining and Industrial`s operating profit increased in the Zinc, Scaw
Metals and Copebras businesses, owing to higher metal and soft commodity prices
and tightly controlled costs. This was partially offset by lower profits from
Tarmac due to difficult trading conditions in the UK and the sale of the
majority of Tarmac`s European businesses during 2010. Lower operating profits at
Catalao were due to lower niobium grades and overall recoveries.
Group underlying earnings were $4,976 million, 94% higher than 2009, which
reflects the operational results above. Net finance costs, before
remeasurements, of $244 million were $29 million lower than 2009. The effective
tax rate, before special items and remeasurements and including attributable
share of associates` tax, reduced in the year from 33.1% to 31.9%.
Group underlying earnings per share were $4.13 compared with $2.14 in 2009, a
93% increase.
Underlying earnings Year ended Year ended
$ million 31 Dec 2010 31 Dec 2009
Profit for the financial year attributable to
equity shareholders of the
Company 6,544 2,425
Operating special items including associates 253 2,574
Operating remeasurements including associates (382) (734)
Net profit on disposals including associates (1,598) (1,632)
Financing special items including associates 13 7
Financing remeasurements including associates (106) 128
Special items and remeasurements tax including
associates 112 (137)
Non-controlling interests on special items and
remeasurements
including associates 140 (62)
Underlying earnings 4,976 2,569
Underlying earnings per share ($) 4.13 2.14
The Group`s results are influenced by a variety of currencies owing to its
geographic diversity. In 2010, there was a negative exchange variance in
underlying earnings of $687 million. The Group results suffered from the
stronger Australian dollar and South African rand. The Australian dollar and the
South African rand strengthened by 16% and 15% respectively in 2010 compared
with 2009. There was a positive impact on underlying earnings from a significant
increase in prices amounting to $3,260 million, reflecting higher prices across
all commodities.
Summary income statement Year ended Year ended
$ million 31 Dec 2010 31 Dec 2009
Operating profit before special items and
remeasurements 8,508 4,377
Operating special items (228) (2,275)
Operating remeasurements 386 638
Operating profit from subsidiaries and joint ventures 8,666 2,740
Net profit on disposals 1,579 1,612
Share of net income from associates (see
reconciliation below) 822 84
Total profit from operations and associates 11,067 4,436
Net finance costs before remeasurements (244) (273)
Financing remeasurements 105 (134)
Profit before tax 10,928 4,029
Income tax expense (2,809) (1,117)
Profit for the financial year 8,119 2,912
Non-controlling interests (1,575) (487)
Profit for the financial year attributable to
equity shareholders 6,544 2,425
Basic earnings per share ($) 5.43 2.02
Group operating profit including associates before
special items and remeasurements(1) 9,763 4,957
Operating profit from associates before special
items and remeasurements 1,255 580
Operating special items and remeasurements (29) (203)
Net profit on disposals 19 20
Net finance costs (before special items and
remeasurements) (88) (28)
Financing special items (13) (7)
Financing remeasurements 1 6
Income tax expense (after special items and
remeasurements) (315) (286)
Non-controlling interests (after special items and
remeasurements) (8) 2
Share of net income from associates 822 84
(1) Operating profit before special items and remeasurements from subsidiaries
and joint ventures was $8,508 million (2009: $4,377 million) and attributable
share from associates was $1,255 million (2009: $580 million). For special items
and remeasurements see note 5 to the Condensed financial statements.
Special items and remeasurements
Year ended 31 Dec 2010
Subsidiaries
and joint
ventures Associates Total
$ million
Operating special items (228) (25) (253)
Operating remeasurements 386 (4) 382
Operating special items and remeasurements 158 (29) 129
Net profit on disposals 1,579 19 1,598
Year ended 31 Dec 2009
Subsidiaries
and joint
ventures Associates Total
$ million
Operating special items (2,275) (299) (2,574)
Operating remeasurements 638 96 734
Operating special items and remeasurements (1,637) (203) (1,840)
Net profit on disposals 1,612 20 1,632
Total operating special items, including associates, amounted to a charge of
$253 million in the year ended 31 December 2010. This included impairment and
related charges of $122 million principally relating to accelerated depreciation
of $97 million and assets written off within the Platinum segment of $20
million, partially offset by an impairment reversal at Dawson Seamgas
(Metallurgical Coal segment) of $22 million.
Accelerated depreciation of $73 million has been recorded at Loma de Niquel due
to uncertainty over the renewal of three concessions that expire in 2012 and
over the restoration of 13 concessions that have been cancelled.
Operating special items also include restructuring costs, principally
retrenchment and consultancy costs, relating to amounts incurred in the Other
Mining and Industrial segment of $71 million and the Platinum segment of $38
million.
Operating remeasurements, including associates, reflect a net gain of $382
million principally in respect of non-hedge derivatives of capital expenditure
in Iron Ore Brazil. The net gain includes net unrealised gains of $148 million,
net realised gains of $255 million and other remeasurement losses of $17
million.
Net profit on disposals of $1,598 million, including associates, was recognised,
chiefly as a result of the Group`s ongoing divestment programme. The Group
completed the disposal of its 100% interest in Moly-Cop and AltaSteel (Other
Mining and Industrial segment), generating a profit on disposal of $555 million,
its undeveloped coal assets in Australia (Metallurgical Coal segment),
generating a profit on disposal of $505 million, and its 100% interest in the
Skorpion zinc mine (Other Mining and Industrial segment), generating a profit on
disposal of $244 million.
The Group completed the disposal of Tarmac`s Polish concrete products business
in March 2010, its French and Belgian concrete products business in May 2010,
and its aggregates business in France, Germany, Poland and the Czech Republic in
September 2010, resulting in combined net cash inflows of $472 million. Tarmac
is included in the Other Mining and Industrial segment.
In addition, net gains were recognised on transactions in Platinum and Thermal
Coal. In April 2010 the Group sold its 37% interest in the Western Bushveld
joint venture (Platinum segment) for consideration of $107 million. In November
2010 the Group realised a gain of $546 million as a result of the Bafokeng-
Rasimone Platinum mine transaction (Platinum segment). In June 2010 the
previously announced black economic empowerment (BEE) transaction to dispose of
a 27% interest in Anglo American Inyosi Coal (Proprietary) Limited (Thermal Coal
segment) was completed. The amount recognised on disposal principally relates to
an IFRS 2 Share-based payment charge of $78 million.
Financing remeasurements, including associates, reflect a net gain of $106
million principally due to preference share investments, and an associated
embedded interest rate derivative. In addition, financing remeasurements also
include net gains on non-hedge derivatives of debt of $17 million.
Special items and remeasurements tax, including associates, amounted to a charge
of $112 million. This relates to a tax remeasurement credit of $122 million and
a tax charge on special items and remeasurements of $234 million.
Net finance costs
Net finance costs, excluding a net remeasurement gain of $105 million (2009:
loss of $134 million), decreased to $244 million (2009: $273 million). This was
primarily the result of a reduction in interest and other finance expense of $92
million driven by lower gross debt across the Group, partially offset by the
full year effect of interest expense on bonds issued during 2009.
Tax
Year ended 31 Dec 2010
Associates`
tax and
$ million Before special non-
(unless otherwise items and controlling Including
stated) remeasurements interests associates
Profit before tax 9,109 322 9,431
Tax (2,699) (313) (3,012)
Profit for the financial year 6,410 9 6,419
Effective tax rate
including associates (%) 31.9%
Year ended 31 Dec 2009
Associates`
tax and
$ million Before special non-
(unless otherwise items and controlling Including
stated) remeasurements interests associates
Profit before tax 4,422 234 4,656
Tax (1,305) (235) (1,540)
Profit for the financial year 3,117 (1) 3,116
Effective tax rate
including associates (%) 33.1%
IAS 1 (Revised) Presentation of Financial Statements requires income from
associates to be presented net of tax on the face of the income statement.
Associates` tax is therefore not included within the Group`s income tax expense.
Associates` tax included within `Share of net income from associates` for the
year ended 31 December 2010 was $315 million (2009: $286 million). Excluding
special items and remeasurements this becomes $313 million (2009: $235 million).
The effective rate of tax before special items and remeasurements including
attributable share of associates` tax for the year ended 31 December 2010 was
31.9%. This was broadly in line with the equivalent effective rate of 33.1% for
the year ended 31 December 2009. In future periods it is expected that the
effective tax rate, including associates` tax, will remain above the United
Kingdom statutory tax rate.
Balance sheet
Equity attributable to equity shareholders of the Company was $34,239 million
compared with $26,121 million at 31 December 2009. This increase is primarily
the result of profit for the year of $6,544 million and the balance sheet impact
of strengthening exchange rates relative to the US dollar (in particular the
rand).
The increase in property plant and equipment of $4,612 million is primarily the
result of additions and foreign exchange gains, partly offset by depreciation,
assets transferred to disposal groups and assets disposed as part of the Group`s
divestment programme.
Investments in associates on the balance sheet increased by $1,588 million,
mainly due to the Group`s $450 million contribution towards De Beers` $1 billion
rights issue in March 2010, improved earnings in both De Beers and Samancor, and
the recognition of an associate following the Bafokeng-Rasimone Platinum mine
transaction.
Assets classified as held for sale, net of associated liabilities, were $188
million at 31 December 2010 and represent Zinc assets.
Cash flow
Net cash inflows from operating activities were $7,727 million compared with
$4,087 million in 2009. EBITDA was $11,983 million, an increase of 73% from
$6,930 million in 2009.
Proceeds from the sale of subsidiaries and joint ventures were $2,795 million
and primarily include proceeds from the sale of Other Mining and Industrial
assets, the sale of undeveloped assets in Metallurgical Coal and proceeds from
the Bafokeng-Rasimone Platinum mine transaction.
Purchases of tangible assets, net of associated derivatives, amounted to $4,994
million, an increase of $236 million. This spend was focused on the four key
near term strategic growth projects (Los Bronces, Barro Alto, Minas-Rio and
Kolomela).
Net cash used in financing activities was $2,400 million, compared to $1,680
million in 2009. During the year, the Group used cash to repay $2,338 million of
short term borrowings, partially offset by the issuance of senior notes during
the year.
Liquidity and funding
Net debt, including related hedges, was $7,384 million, a decrease of $3,896
million from 31 December 2009. Cash and cash equivalents, excluding the impact
of exchange, increased by $2,857 million, reflecting operating cash flows and
disposal proceeds, offset by investments in associates, purchase of property,
plant and equipment and a net repayment of borrowings.
Net debt at 31 December 2010 comprised $13,439 million of debt and the closing
liability position on related derivatives of $405 million, partly offset by
$6,460 million of cash and cash equivalents (including amounts in disposal
groups). The debt ageing profile has remained consistent with the prior year,
with 89% of the total debt being due after more than one year (2009: 90%). Net
debt to total capital(1) at 31 December 2010 was 16.3%, compared with 28.7% at
31 December 2009.
In July 2010, the Group replaced a $2.5 billion facility maturing in March 2012
with a $3.5 billion facility maturing in July 2015.
In September 2010 the Group raised $1.25 billion through the issuance of senior
notes (US bonds). The senior note offering comprised $750 million 2.15% senior
notes due 2013 and $500 million 4.45% senior notes due 2020.
At 31 December 2010 Anglo American had undrawn committed borrowing facilities of
$11.1 billion. In January 2011 the Group repaid $1.1 billion drawn on its $2.25
billion revolving credit facility maturing in June 2011. The Group subsequently
cancelled this facility.
The Group`s forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group will be able to operate
within the level of its current facilities for the foreseeable future.
Group corporate cost allocation
Corporate costs which are considered to be value adding to the business units
are allocated to each business unit and costs reported externally as Group
corporate costs only comprise costs associated with parental or direct
shareholder related activities.
Corporate costs (after costs allocations) of $181 million (2009: $146 million)
were incurred in 2010, an increase of $35 million. The increase was mainly due
to insurance cost increases resulting from increases in new claims, the impact
of the stronger rand and inflation.
Dividends
Anglo American`s dividend policy will provide a base dividend that will be
maintained or increased through the cycle. A final dividend of 40 US cents per
share has been declared, thereby establishing Anglo American`s new base annual
dividend per share at 65 US cents, subject to shareholder approval at the Annual
General Meeting to be held on 21 April 2011. Taking into account the Group`s
substantial investment programme for future growth, future earnings potential
and the continuing need for a robust balance sheet, any surplus cash will be
returned to shareholders.
Analysis of dividends
US cents per share 2010 2009
Interim dividend 25 -
Recommended final dividend 40 -
Total dividends 65 -
(1) Net debt to total capital is calculated as net debt (including related
hedges) divided by total capital. Total capital is net assets excluding net
debt.
Operations review 2010
In the operations review on the following pages, operating profit includes
attributable share of associates` operating profit and is before special items
and remeasurements unless otherwise stated. Capital expenditure relates to cash
expenditure on property, plant and equipment including cash flows on related
derivatives.
COPPER
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2010 31 Dec 2009
Operating profit 2,817 2,010
EBITDA 3,086 2,254
Net operating assets 6,291 4,763
Capital expenditure 1,530 1,123
Share of Group operating profit 29% 41%
Share of Group net operating assets 14% 12%
Copper generated an operating profit of $2,817 million, an increase of 40%,
mainly due to record copper prices, coupled with higher molybdenum revenues
related to both higher prices and sales. This was partly offset by higher unit
costs driven by increased power costs and a strengthening in the peso, lower
sales volumes reflecting lower production and shipping constraints, following
the failure of a ship loader at Patache port in December, and an increase in
project evaluation expenditure in both Chile and Peru.
Markets
Average prices 2010 2009
Average prices (LME cash, c/lb) 342 234
Average realised prices (c/lb) 355 269
Copper prices increased significantly during 2010, particularly during the
second half of the year, as demand picked up in the OECD countries and remained
relatively robust in China, while supply continued to be constrained, visible
inventories fell and the US dollar weakened. The emergence of physically backed
copper Exchange Traded Funds (ETFs) further fuelled the bullish consensus views.
The LME copper cash price ended 2010 at a (nominal) record of 442 c/lb, a 33%
increase over the prior year closing price. The 2010 average price of 342 c/lb
represented a 46% increase compared with the previous year. The average realised
price for the year was 355 c/lb, 32% higher than for 2009. The lower percentage
increase in the realised price versus the average price reflects the lower level
of provisional price adjustments in 2010 compared with 2009.
Operating performance
2010 2009
Attributable copper production (tonnes) 623,300 669,800
Total copper production of 623,300 tonnes was 7% lower than the prior year
which, with the exception of Collahuasi, was in line with expectations.
Los Bronces production of 221,400 tonnes was 7% lower than the record production
level achieved in 2009, principally due to, as forecast, lower throughput as a
result of harder ore and lower grades. The earthquake in February 2010 also had
a small negative impact on production levels due to power outages and the need
to realign a SAG mill. Recoveries were marginally higher than prior year.
Collahuasi attributable production at 221,800 tonnes was 6% lower than the
record level achieved in 2009. In addition to lower grades, production was also
impacted by an illegal contractor strike in May, which had a negative impact of
5,000 tonnes, a 33-day strike in November during wage negotiations with
employees reducing production by a further 5,000 tonnes and a number of smaller
negative impacts on production relating to unscheduled outages in the
concentrator plant. These were partly offset by targeted improvements and
debottlenecking, which significantly improved throughput at the concentrator
plant. In December 2010 a catastrophic failure occurred in the shiploader at
Collahuasi`s Patache port. Collahuasi is currently implementing a contingency
plan to ship copper out of alternative ports in Arica, Iquique and Antofogasta
during the first quarter of 2011 whilst repairs are being carried out. The
incident reduced Anglo American`s share of December sales by approximately 8,800
tonnes of copper but did not impact production.
Mantos Blancos production of 78,600 tonnes was 13% lower, principally due to
there being no purchases of third party solutions (from which the prior year had
benefited), expected lower grades and the impact of a conveyor failure in the
first quarter. At El Soldado, production of 40,400 tonnes was 2% lower. The
impact of mining lower grade ore and recovering low grade stockpiles was mostly
offset by additional copper recovered from processing slag from the Chagres
smelter. Production at both Mantoverde and the Chagres smelter were in line with
2009.
Higher power, labour, contractor, spares and fuel costs, coupled with a stronger
peso and lower production levels, adversely impacted unit operating costs,
although their impact was partly offset by higher by-product revenues, lower
sulphuric acid prices and lower TC/RCs, in addition to benefits generated by
asset optimisation and procurement initiatives.
Projects
The Los Bronces expansion project is on schedule for first production in the
fourth quarter of 2011. Production at Los Bronces is scheduled to increase to
490 ktpa over the first three years of full production following project
completion and to average 400 ktpa over the first 10 years. At peak production
levels, Los Bronces is expected to be the fifth largest producing copper mine in
the world, with highly attractive cash operating costs, and reserves and
resources that support a mine life of over 30 years, with further expansion
potential. Also within the Los Bronces district, work continues on the
exploration tunnel being constructed. The tunnel will provide underground
drilling access to explore and define the resources at the Los Sulfatos
discovery.
At Collahuasi, the expansion project to increase sulphide processing capacity to
150,000 tonnes of ore per day is scheduled to be commissioned in the second half
of 2011. In July 2010, Collahuasi announced the increase of its copper reserves
and resources by 40%, or by more than 2 billion tonnes, to 7.1 billion tonnes at
0.82% copper. A concept study to evaluate the next phases of expansion at
Collahuasi, to ultimately increase production to at least 1 Mt of copper per
annum, is expected to be completed in the first quarter of 2011.
Studies continue at both Mantos Blancos and Mantoverde to evaluate further
extensions to the lives of the operations. During 2010, the life of Mantos
Blancos was extended by five years to 2020, and Mantoverde by two years to 2016.
In Peru, the feasibility study for the Quellaveco project is complete. It is the
intention to submit the project for Board approval during 2011 once the
necessary water permits have been awarded. Some early works activity is under
way in order to maintain the project completion date of late 2014. Also in Peru,
early-stage work continues at the Michiquillay project. The drilling relating to
the geological exploration programme will restart once certain social agreement
issues under discussion with the local communities have been resolved. It is
currently envisaged that the project will move to the pre-feasibility stage once
drilling analysis and ore body modelling have been satisfactorily completed.
Activity at the Pebble project in Alaska continued during 2010, with the focus
on engineering work to advance towards a pre-feasibility study, further
environmental study work towards completion of an environmental baseline
document, and additional geological exploration drilling. The project`s pre-
feasibility study is expected to be completed in 2012.
Outlook
Copper production is expected to increase during 2011, with the start-up of
production from the expansion project at Los Bronces in September 2011, together
with improvements in plant throughput, and at El Soldado due to a significant
grade improvement as the development phase of the open pit mine nears
completion. A further step change in production will be seen in 2012, when the
Los Bronces expansion project reaches full capacity, delivering the targeted
economies of scale, driving unit costs down the industry cost curve and
offsetting upward cost pressures expected to continue in 2011.
The short to medium term outlook for the copper price is robust, underpinned by
healthy demand growth, in particular from China and other industrialising
countries, and insufficient copper supply from existing mines and planned
projects. Such conditions are expected to lead to a period of metal market
deficits and dwindling inventories, exacerbated by the emergence of physically
backed ETFs. Copper is also expected to benefit from continued investor interest
in commodities as a new asset class. While some further price- induced
substitution is expected to occur, this is not expected to be significant enough
to undermine the other positives, certainly over the medium term.
NICKEL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2010 31 Dec 2009
Operating profit 96 2
EBITDA 122 28
Net operating assets 2,334 1,787
Capital expenditure 525 554
Share of Group operating profit 1% 0.04%
Share of Group net operating assets 5% 5%
Nickel generated an operating profit of $96 million, following a year of much
improved nickel prices. Nickel`s operating profit was net of $11 million of
costs relating to development of the unapproved project pipeline, a $10 million
increase compared with 2009.
Markets
Average price (c/lb) 2010 2009
Average market price (LME, cash) 989 667
Average realised price 986 668
The average nickel price was 48% higher than in 2009, underpinned by strong
stainless steel demand. Global nickel consumption increased by 12% to 1.48 Mt in
2010, while supply remained constrained owing to strike action and delays to new
projects experienced by a number of producers.
From a low of $7.73/lb during February, prices rose sharply to a high for the
year of $12.52/lb in April as a result of improved underlying fundamentals and
stainless steel restocking. Prices retreated to $8.14/lb in June, amid concerns
over the impact of the European debt crises, but rebounded during the fourth
quarter, ending the year at $11.32/lb.
LME stocks decreased by 18% from a high of 166,000 tonnes at the beginning of
February to 136,000 tonnes at the end of December, indicative of underlying
physical demand for nickel.
Operating performance
2010 2009
Attributable nickel production (tonnes) 20,200 19,900
Nickel production increased by 2% to 20,200 tonnes in 2010 primarily owing to
improved production levels at Loma de Niquel. Overall unit costs were 7% above
2009.
Loma de Niquel produced 11,700 tonnes of nickel, an increase of 13% compared
with 2009, when production was impacted by the non-renewal of the environmental
permit to dispose of smelter slag during January and by a metal run-out in May
from the operation`s No. 2 electric furnace, which halted production for the
rest of that year. Despite resuming operations at the rebuilt furnace in March
2010, production was severely impacted until August by electricity rationing
imposed by the Venezuelan government, resulting in approximately 2,400 tonnes of
lost output.
Loma`s unit operating costs at $5.83/lb were 12% lower than in 2009. The
principal factors in the reduction were the higher volume of output and the 50%
devaluation of the Venezuelan Bolivar, partly offset by high local inflation.
Due to uncertainty over the renewal of three mining concessions, which have not
been cancelled but which will expire in 2012, and over the renewal of thirteen
concessions that were cancelled in 2008, an accelerated depreciation charge of
$73 million has been recorded against Loma de Niquel mining properties. This has
been recognised as an operating special item. Refer to note 5 in the Condensed
financial statements.
Year on year production at Codemin decreased by 11% or 1,000 tonnes, primarily
due to the planned relining of a furnace in the last quarter of the year.
Production was also negatively affected by lower grade. Unit operating costs
were higher than 2009 principally due to a stronger Brazilian real and the
impact of planned maintenance.
Projects
The Barro Alto project ended the year at 99% complete, remaining on schedule to
deliver first production in the first quarter of 2011. This project makes use of
a proven technology and will produce an average of 36 ktpa of nickel in
ferronickel at full production, averaging 41 ktpa over the first five years,
with a competitive cost position.
The Nickel business` unapproved project pipeline has the potential to increase
production by an additional 66 ktpa, with further upside potential, leveraging
the Group`s considerable nickel laterite technical expertise. Jacare, with
mineral resources of 3.7 Mt contained nickel, was the largest nickel discovery
in the last decade and has the potential to significantly strengthen Anglo
American`s position in the worldwide nickel market.
Outlook
Nickel production is forecast to more than double in 2011 as the Barro Alto
project ramps up. Codemin production is expected to normalise, with no
significant maintenance planned, and production at Loma de Niquel should benefit
from a more stable power supply and a full year with both furnaces.
The long term outlook for nickel is positive, underpinned by stainless steel
demand driven by growth and urbanisation rates in emerging economies. In the
short to mid-term, nickel prices will be heavily influenced by the successful
delivery of new projects, some of which use an unproven processing technology,
as well as the introduction to the market of physically backed ETFs.
PLATINUM
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2010 31 Dec 2009
Operating profit 837 32
EBITDA 1,624 677
Net operating assets 13,478 12,141
Capital expenditure 1,011 1,150
Share of Group operating profit 9% 1%
Share of Group net operating assets 31% 31%
Platinum recorded an operating profit of $837 million, a significant increase,
due to higher metal prices and successful cost control programmes, partly offset
by a stronger rand and lower sales volumes. Lower sales volumes were the result
of a shipment delay caused by the weather in Europe in late December 2010.
Refined metal also became available after the last shipping date of the year,
whereas 2009 sales volumes benefited from higher than usual stock levelsat the
beginning of the year.
Markets
The average dollar price achieved for platinum was $1,611 per ounce for the
year, a 34% increase compared with $1,199 in 2009. The average prices achieved
for palladium and rhodium sales for the year were $507 per ounce (2009: $257)
and $2,424 per ounce (2009: $1,509) respectively. The average price achieved on
nickel sales was $9.70 per pound (2009: $6.54). The overall basket price
achieved for the year of $2,491 per platinum ounce sold compared with $1,715
achieved in 2009.
The PGM markets had a strong year in 2010, with significant recovery in demand
from the autocatalyst and industrial markets, healthy demand from the jewellery
sector and increasing investor interest in the platinum and palladium markets,
primarily via ETFs. Supply increases from the industry were largely delivered
and, as a result, the platinum and palladium markets remained essentially in
balance. The rhodium market saw a reduced surplus due to improved autocatalyst
demand.
Platinum continued its commitment to the development of the PGM markets, working
with industry partners and stakeholders in the maintenance of existing, and the
development of new, industrial applications for the metals, while also
maintaining the health of the jewellery markets.
Autocatalysts
Demand for platinum in autocatalysts had another year of solid recovery in 2010,
as global production and sales of vehicles increased from lows of 59 million and
66 million vehicles in 2009 to reach 73 million and 71 million respectively. In
particular, vehicle sales in the BRIC countries saw strong growth year on year,
with Chinese production of light duty vehicles surpassing that of the
traditionally largest market, the US, at close to 16 million. In Europe, the
diesel proportion of sales rebounded to 50% in 2010 after declining to 47% in
2009, driven mainly by increased fleet sales. US vehicle inventories have
returned to historical averages in 2010 and reached 67 days in December 2010,
compared with an average of 62 days in 2009 and a high of 118 days in February
2008.
Industrial
Demand from the industrial sector continued to recover from 2009 lows, with
capacity utilisation rates in the chemical and petroleum sectors having improved
and all major indices seeing significant recovery. New capacity build in the
glass sector contributed strongly to this recovery.
Jewellery
Despite the increase in the platinum price over the year, the jewellery market
remained resilient and achieved approximately 1.5 million ounces of new metal
demand in 2010. This represents a 40% decline compared with the record demand
seen in 2009, when inventory rebuilding took place.
Investment
2010 started with strong investor inflows into the platinum and palladium ETFs,
particularly into the new ETFs launched in the US. By the end of the year, the
aggregate holdings in the platinum ETFs were a record 1.23 million ounces, with
a record 2.21 million ounces being held across the palladium ETFs. The
investment sector is now firmly established as a key source of demand for PGMs,
making up 10% and 15% of platinum and palladium 2010 demand respectively.
Operating performance
Platinum performed strongly in 2010, achieving its goals of further improving
its safety record, producing more than 2.5 million ounces of refined platinum,
controlling cash operating costs growth below inflation, increasing employee
productivity to more than 7m2 per month per operating employee, strengthening
its balance sheet via a successful R12.5 billion ($1.6 billion) rights issue and
spending capital of $1 billion. The focus on and delivery of targets across all
of these areas resulted in the resumption of dividend payments and contributed
to Platinum`s ultimate operating strategy of delivering `Safe, Profitable
Platinum`.
Safety
Platinum`s Lost Time Injury Frequency Rate of 1.17 for 2010 improved by 14.6%
and was a record for the business. Consistent improvement is being seen in many
parts of the business - many of Platinum`s mines operated for over 3.5 million
shifts without a fatality and the number of injury free operations continues to
increase. Sadly, eight employees lost their lives at Anglo Platinum`s managed
operations during the year.
Production
Refined platinum production increased by 5% to 2.57 million ounces, exceeding
the company`s target of 2.5 million ounces. Equivalent refined platinum
production (equivalent ounces are mined ounces expressed as refined ounces) from
the mines managed by Platinum and its joint venture partners was 2.48 million
ounces, an increase of 0.8% compared with 2009. Sales of refined platinum for
the year were 2.52 million ounces, compared with 2.57 million ounces in 2009.
Costs
Costs continued to be managed tightly, with cash operating costs per equivalent
refined platinum ounce of R11,730 ($1,603), an increase of 4.4%, or flat in real
terms. Cost increases were curbed primarily through a 12% increase in
productivity to 7.06m2 per month per operating employee, exceeding the target of
7m2. This was offset by a decline in grades of 3% to a 4E built-up head grade of
3.23 g/t, an average rise in wages of 8.7% and an increase in electricity
tariffs of 26.4%.
Overall headcount was reduced to 54,022 at the end of the year, from 58,320 at
the end of 2009.
Projects
Capital expenditure amounted to $1,011 million, a 12% decrease, with $511
million spent on projects and $500 million on stay-in-business capital.
The concentrator at the Unki project in Zimbabwe was formally commissioned
during the fourth quarter of 2010. First production of refined metal from the
mine is expected during the first quarter of 2011. At full capacity, Unki will
supply 70 koz of refined platinum, a run rate expected to be reached in 2013.
The Mogalakwena North Project reached steady state during the third quarter of
2010 (annual steady state 2011) and through optimisation projects will
continuously produce 600 ktpm of ore.
Dishaba East Upper project implementation commenced in 2007 and is on schedule
to reach steady-state platinum production of 100,000 platinum ounces per annum
by 2012.
Outlook
2011 is expected to be a strong year for Platinum, building on the momentum
established in improving the safety of all employees, increasing production to
2.6 million ounces of refined and equivalent refined platinum to meet expected
solid demand. Costs will continue to be closely managed in order to keep them
around 2010 levels, delivering further productivity improvements and investing
$1.16 billion of capital to ensure the company`s future production growth
profile.
The platinum market is expected to remain in balance in 2011 due to continued
strength from autocatalyst and industrial demand, resilient jewellery markets
and continued investor interest. An increase in supply levels is also expected.
In such an environment, the platinum price is expected to average at least
$1,800 per ounce. Palladium`s price strength is expected to continue as that
market moves further into deficit due to the strength of autocatalyst and
investor demand and reduction in supplies to the market.
Light vehicle sales in 2011 are expected to increase to 75 million, underpinning
further demand for PGMs for autocatalysts, particularly in China and India.
At expected higher platinum prices, demand for jewellery is expected to plateau
in 2011, but new sources of demand, such as the Indian market, are being pursued
and should start to add to demand in the medium term. Industrial demand for PGMs
should increase further in the year due to strong consumer demand for end
products.
IRON ORE AND MANGANESE
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2010 31 Dec 2009
Operating profit 3,681 1,489
Kumba Iron Ore 3,396 1,487
Iron Ore Brazil (97) (141)
Samancor 382 143
EBITDA 3,856 1,593
Net operating assets 11,701 10,370
Capital expenditure 1,195 1,140
Share of Group operating profit 38% 30%
Share of Group net operating assets 27% 27%
Iron Ore and Manganese generated an operating profit of $3,681 million, 147%
higher than 2009. This was as a result of higher iron ore export prices and
sales volumes, as well as higher manganese ore and alloy volumes and prices.
Markets
World crude steel production continued to increase during 2010 and returned to
above pre-2008 levels at 1.4 billion tonnes. China`s continued robust economic
growth contributed to growth in crude steel production, despite power
restrictions and destocking through the supply chain. Crude steel production in
China increased by 9% to 626 Mt and continued to exceed demand. The European,
Japanese and South Korean markets saw a 24% increase in crude steel output,
bringing totalproduction to 341 Mt, only slightly below levels achieved in 2008.
Despite the continued strength in iron ore demand in China, a surge in Chinese
domestic iron ore supply during 2010 resulted in a decrease of 2% to 603 Mt in
seaborne imports. Global seaborne iron ore demand increased by 5% to 979 Mt,
driven by a 19% increase in demand from the steel industry in the rest of the
world.
Index prices rose strongly during the year, with the 62% Fe Platts index
averaging approximately $147/t (CFR), up from $80/t in 2009.
The manganese ore and alloy market reflected the increase in world crude steel
production and demand, resulting in significantly increased prices for alloy and
ore during the year. Production increased to meet demand, with furnaces reaching
full capacity for the first time since 2008.
Operating performance
Kumba Iron Ore
Kumba generated an operating profit of $3.4 billion, more than double the $1.5
billion for 2009, largely attributable to a 92% weighted average increase of
realised iron ore export prices and a 6% increase in export sales volumes. This
was partly offset by the 15% strengthening of the rand against the US dollar and
the implementation of the South African mining royalty, effective from 1 March
2010.
Total sales volumes increased by 8% to 43.1 Mt. Export sales volumes from Sishen
Mine for the year increased by 1.9 Mt or 6% to 36.1 Mt. Export sales volumes to
China of 19.8 Mt represented 61% of total export volumes for the year, compared
with 75% during 2009. Export sales volumes to Europe, Japan and South Korea
increased by 54% to 13.9 Mt. Total domestic sales volumes for the year increased
by 21% to 7.0 Mt due to higher demand from ArcelorMittal
South Africa.
Volumes railed on the Sishen-Saldanha export channel increased by 5% to 36.5 Mt.
This performance was adversely impacted by industrial action at Transnet and
significant derailments during the second and third quarters of 2010, before
returning to a more solid performance in the fourth quarter.
Total tonnes mined at Sishen Mine increased by 19% to 153.2 Mt, of which waste
material mined comprised 67% or 102.0 Mt, an increase of 24%. Total production
at Sishen Mine increased by 5% to 41.3 Mt. The jig plant achieved 13.3 Mt of
production for the year, 0.3 Mt above the name plate capacity of the plant
through improved quality of plant feed material and more efficient shutdown
intervals. Production from the Dense Media Separation (DMS) plant decreased by
3% to 28.1 Mt due to the failure of single-line equipment and the availability
of feedstock from the pit.
Sishen Mine`s unit cash cost of R113.69 ($15.83) per tonne increased by 15%
compared with R98.83 ($11.78) per tonne in 2009. This expected increase was
driven by a 24% increase in waste mining volume and above inflation increases in
the key input costs of labour, diesel and electricity.
Iron Ore Brazil
Iron Ore Brazil generated an operating loss of $97 million, reflecting the pre-
operational stage of the Minas- Rio project, partially offset by operating
profit at Amapa following a substantial production improvement, a focus on cost
containment and the price environment, partially offset by an adverse change in
product mix and plant availability issues experienced in the early part of the
year. Amapa produced 4.0 million tonnes of iron ore, a 52% increase. The
production and cost profile at Amapa remains in line with the study conducted at
the end of 2009 and production is forecast to increase further in 2011 and 2012.
Samancor
Samancor generated an operating profit of $382 million, a 167% increase, due to
higher sales volumes and prices following the improvement in global steel
demand.
Projects
The development of the 9 Mtpa Kolomela Mine is well advanced and overall project
progress reached 81% as at 31 December 2010. The project remains on budget and
on schedule to deliver initial production at the end of the first half of 2012,
ramping up to full capacity in 2013. To date, 22.6 Mt of waste material has been
moved, 18.6 Mt of it during 2010. $679(1) million of capital expenditure has
been incurred to date, with $307(1) million incurred during 2010.
Significant progress has been made at the Minas-Rio project in Brazil, expected
to produce 26.5 Mtpa in its first phase. The award of the second part of the
mine, beneficiation plant and tailings dam installation licence (LI part 2) in
December 2010, being the final primary installation licence, supports the start
of the civil works for the beneficiation plant and tailings dam construction in
March 2011, after the rainy season. This licence followed the award of the
mining permit in August 2010. As previously stated, it should take between 27
and 30 months from commencement of these works to construct and commission the
mine and plant, complete the project and deliver the first ore on ship; however,
there are still a number of other licences and permits to be obtained during
this period.
Anglo American also reached agreement on a fixed 25-year iron ore port tariff
with its port partner, LLX SA, in relation to the LLX Minas-Rio (LLX MR) iron
ore port facility at Acu. The iron ore volumes associated with the first phase
of the project will be subject to a net port tariff of approximately $5.15 per
tonne (in 2013 terms) after taking into account Anglo American`s shareholding in
LLX MR ($7.10 per tonne gross). As part of the agreement to secure the long term
tariff arrangements, Anglo American has agreed to fund a greater share of the
development cost of the first phase of the port. This agreement is expected to
result in additional capital expenditure attributable to Anglo American of
approximately $525 million in relation to the port.
Project development at the plant has been focused on progressing earthworks in
preparation for the commencement of civil works. The pipeline element of the
project is well progressed, with pipe laying, welding and burying beginning in
June, and ended the year ahead of schedule, including the completion of two
underground river crossings (one of which is the longest of its type in Brazil).
The civil works for the filtration plant are under way and, at the port,
offshore works have continued with the commencement of the construction of the
iron ore pier and breakwater, following completion of the 2.9 km main trestle.
Studies for the expansion of the Minas-Rio project have continued during 2010
and the latest resource statement provides a total resource volume (measured,
indicated and inferred) of 5.3 billion tonnes, supporting the expansion of the
project. In addition, the port agreement noted above also covers a long term
tariff arrangement for all of Anglo American`s iron ore volumes beyond the first
phase of the Minas-Rio project. The level of the expansion tariff will be
dependent upon the capital cost to expand the port to accommodate those
additional volumes and that capital cost will be determined in due course.
(1) Excludes capitalised costs for pre-strip waste removal.
Outlook
Analyst forecasts indicate that global crude steel production is expected to
grow by 5-10% in 2011. The rate of growth in crude steel production in China is
anticipated to decrease as the Chinese government seeks further improvements in
overall energy efficiency for the next five-year plan. However, with anticipated
shortfalls in seaborne iron ore supply, in particular from India, the overall
global seaborne iron ore market is expected to remain structurally tight.
Kumba`s export sales volumes are anticipated to be in line with volumes achieved
during 2010. Domestic sales volumes remain dependent on the off-take
requirements from ArcelorMittal. Waste mining at all the operational sites is
anticipated to increase, which will put upward pressure on unit cash costs of
production. Annual production volumes during 2011 are expected to remain at
levels achieved during 2010 as the jig plant has reached its name plate
capacity.
Kumba`s operating profit remains highly sensitive to the rand/US dollar exchange
rate.
The market for manganese ore and alloys is dependent upon the carbon steel
industry. Increased demand and prices will be underpinned by strengthening steel
production trends and the level of Chinese exports.
Kumba Iron Ore update
Kumba`s Sishen Iron Ore Company (SIOC) notified ArcelorMittal South Africa
Limited (ArcelorMittal) on 5 February 2010, that it was no longer entitled to
receive 6.25 Mtpa of iron ore contract mined by SIOC at cost plus 3% from Sishen
Mine, as a result of the fact that ArcelorMittal had failed to convert its old
order mining right. This contract mining agreement, concluded in 2001, was
premised on ArcelorMittal owning an undivided 21.4% interest in the mineral
rights of Sishen Mine. As a result of ArcelorMittal`s failure to convert its old
order mining right, the contract mining agreement automatically lapsed and
became inoperative in its entirety as of 1 May 2009.
As a result, a dispute arose between SIOC and ArcelorMittal, which SIOC has
referred to arbitration. Following mediation by the Department of Trade and
Industry, SIOC and ArcelorMittal reached an interim pricing arrangement in
respect of the supply of iron ore to ArcelorMittal from the Sishen Mine. This
arrangement will endure until 31 July 2011. Both parties have exchanged their
respective pleadings, and the arbitration panel has been appointed.
After ArcelorMittal failed to convert its old order mining right, SIOC applied
for the residual 21.4% mining right previously held by ArcelorMittal and its
application was accepted by the Department of Mineral Resources (DMR) on 4 May
2009. A competing application for a prospecting right over the same area was
also accepted by the DMR. SIOC objected to this acceptance. Notwithstanding this
objection, a prospecting right over the 21.4% interest was granted by the DMR to
Imperial Crown Trading 289 (Proprietary) Limited (ICT). SIOC initiated a review
application in the North Gauteng High Court on 21 May 2010 in relation to the
decision of the DMR to grant a prospecting right to ICT.
SIOC initiated an application on 14 December 2010 to interdict ICT from applying
for a mining right in respect of the Sishen Mine and the DMR from accepting an
application from ICT, nor granting such 21.4% mining right to ICT pending the
final determination of the review application. This application is currently
pending.
The DMR informed SIOC on 12 January 2011 that ICT had applied for a 21.4% mining
right over Sishen Mine on 9 December 2010 and that the DMR had accepted this
application on 23 December 2010. The DMR`s acceptance of the application means
that the mining right application will now be evaluated according to the
detailed process stipulated in the Mineral Resources & Petroleum Development Act
2004 before a decision is made as to whether or not to grant the mining right.
SIOC does not believe that it was lawful for the DMR to have accepted ICT`s
application, pending the High Court Review initiated in May 2010, and has
formally objected to, and appealed against, the DMR`s acceptance of ICT`s mining
right application. SIOC has also requested that its interdict application be
determined on an expedited basis, in order to prevent the DMR from considering
ICT`s mining right application until the finalisation of the review proceedings.
In addition, SIOC is in the process of preparing a challenge against the DMR`s
decision of 25 January 2011 to reject SIOC`s May 2009 application to be granted
the residual 21.4% mining right. Finally, on 26 January 2011, SIOC lodged a new
application for the residual 21.4% mining right.
On 4 February 2011 SIOC made an application to join ArcelorMittal as a
respondent in the review proceedings.
SIOC will continue to take the necessary steps to protect its shareholders`
interests in this regard.
METALLURGICAL COAL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2010 31 Dec 2009
Operating profit 783 451
EBITDA 1,116 706
Net operating assets 3,918 3,407
Capital expenditure 217 96
Share of Group operating profit 8% 9%
Share of Group net operating assets 9% 9%
Metallurgical Coal generated an operating profit of $783 million, a 74%
increase, primarily due to higher average benchmark coking coal prices and
record production of high-margin export products. The business delivered record
export sales growth of 30% for metallurgical coal, with production increases of
16% compared with the prior year, 12% higher than the previous record in 2008.
This offset the impact of the strong Australian dollar, which had the effect of
increasing unit costs by 17% in US dollar terms. Adverse weather and flooding
had a significant impact on production, initially with Cyclone Ului in the first
quarter and subsequently record spring and summer rainfall from the third
quarter onwards in the regions where the business operates.
Markets
Anglo American weighted average achieved FOB prices
($/tonne) 2010 2009
Export metallurgical coal 176 141
Export thermal coal 87 74
Domestic thermal coal 30 27
Attributable sales volumes (`000 tonnes) 2010 2009
Export metallurgical coal 14,948 11,542
Export thermal coal 6,384 6,239
Domestic thermal coal 8,342 8,604
2010 saw a significant increase in demand for metallurgical coal from the global
steel industry with a return to levels last seen in 2008 in the traditional
Asian markets and sustained growth in China and India. Demand increased in the
first quarter as steelmakers started to restock, which resulted in a temporary
oversupply of steel mid-year as steel producers drew down stock again. In the
third quarter, this trend reversed and the industry has subsequently seen a
strengthening in coal demand and prices. European demand continues to recover,
albeit at a slower pace than in Asia. Unseasonal record rainfall in Australia
has limited supply from Queensland mines since September, a trend which has
continued throughout the fourth quarter and will continue to impede production
into early 2011. Industry stock levels reached record low levels and this is
expected to result in a further increase in metallurgical coal prices in 2011.
The market for metallurgical coal has traditionally priced coal through annual
price negotiations, providing for fixed pricing for a 12 month period. Since the
second quarter of 2010, a move to quarterly pricing has occurred. In parallel
with this shift, multiple coking coal indices have been developed with the aim
of creating a liquid spot market with transparent pricing, though no reliable
index has yet been determined. Metallurgical Coal is well placed to continue to
supply its customers under the new pricing mechanisms as they evolve.
Operating performance
Attributable production (`000 tonnes) 2010 2009
Export metallurgical coal 14,702 12,623
Thermal coal 14,461 14,052
Metallurgical Coal delivered record production and sales of metallurgical coal.
The business increased the sales of its high quality metallurgical coal by 30%
to 14.9 million tonnes, driven by a strong supply response from the Capcoal and
Moranbah North complexes. The production increases were achieved despite the
negative impact of Cyclone Ului in the first quarter and record rainfall in the
second half of the year in Queensland. The rainfall experienced in 2010 was more
than double the historic average for the areas in which the business operates.
Successful stock management, dewatering capacity, relocation of assets and the
quick mobilisation of additional production capacity were key to ensuring that
the open cut production recovered as quickly as possible. Combined with improved
coal logistics chain management, this enabled the business to deliver record
sales volumes in response to stronger demand.
Productivity improvements at the underground operations were a major focus
during the year, particularly in response to the rain disruption at the open cut
operations. Unit costs were negatively affected by the adverse weather
conditions, mitigated by the benefits from the increased production volumes,
with export cost per tonne in local currency 1% lower than the previous year. A
comprehensive rain loss mitigation initiative aimed at reducing the impact of
rain at the open cut operations has been initiated.
Port and track expansions for the Dalrymple Bay Coal chain were completed in
2010 to address immediate seaborne market growth. The business has flexible
arrangements in place to assist in logistics planning and weather mitigation. To
meet the continuing industry growth, rail and port throughput will be addressed
through the 25 Mtpa Abbot Point expansion and the 30 Mtpa Wiggins Island
project, scheduled for 2012 and 2014 respectively, and a number of conceptual
projects currently under way.
Projects
Metallurgical Coal took further steps to focus its business on high-margin
export products by progressing the Grosvenor and Drayton South feasibility
studies and by divesting non-core assets including the sale of five undeveloped
exploration assets and the Dawson Seamgas assets. The proposed divestment of the
Callide mine was announced. The Callide mine primarily supplies domestic power
stations in Queensland and produced 8.5 million tonnes of thermal coal in 2010
and has expansion potential from its resource base of more than one billion
tonnes.
At the Greenfield projects of Grosvenor, Moranbah South, Dartbrook and Drayton
South, studies continue in order to meet expectations of growing demand for both
metallurgical and export thermal coal. Approval of the 4.3 Mtpa Grosvenor
metallurgical coal project is targeted for the second quarter of 2012.
Outlook
A continued focus on longwall productivity and other asset optimisation
programmes to improve operational effectiveness are expected to further increase
sales of high margin export products in 2011.
The positive industry trends seen in 2010 are expected to continue as the
European market recovers and new steel plants come on stream in India and Asia.
The demand outlook for both metallurgical and export thermal coal is stimulating
expansion of supply from new and existing mines to meet demand over the medium
term. Prices are forecast to remain strong as Australia, which provides two-
thirds of the world seaborne metallurgical coal market, has experienced severe
weather-related supply constraints in the first quarter of 2011, while Europe
and China experience another cold winter.
THERMAL COAL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2010 31 Dec 2009
Operating profit 710 721
South Africa 426 442
Colombia 309 305
Projects and corporate (25) (26)
EBITDA 872 875
Net operating assets 2,111 1,707
Capital expenditure 274 400
Share of Group operating profit 7% 15%
Share of Group net operating assets 5% 4%
Thermal Coal delivered an operating profit of $710 million, a 2% decrease
compared with 2009, predominantly as a result of the stronger rand partly offset
by a strong recovery in thermal coal prices. Export sales volumes, including
capitalised export sales volumes from Zibulo, increased by 3% compared with
2009.
Markets
Anglo American weighted average achieved FOB prices
($/tonne) 2010 2009
RSA export thermal coal 82.49 64.46
RSA domestic thermal coal 19.64 18.48
Colombian export thermal coal 72.69 73.47
Attributable sales volumes (`000 tonnes) 2010 2009
RSA export thermal coal 16,347 15,857
RSA domestic thermal coal 5,178 6,251
Colombian export thermal coal 10,461 10,103
2010 was a robust year for the global seaborne thermal coal market. Despite a
challenging environment for thermal coal imports into Europe, surging energy
demand growth in Asia, provided predominantly by coal fired power generation,
helped drive global demand and support prices.
Thermal coal markets in Europe and the US saw softer demand as weakened power
markets and cheaper gas reduced coal consumption. At the beginning of the year,
Colombian producers were compelled to price competitively to move thermal coal
into their traditional US and European markets. This resulted in delivered
thermal coal prices in the European market regularly trading at a discount to
the South Africa FOB export price, which excludes the cost of freight. As demand
in the Asia Pacific market progressively improved, South African thermal coal
sales into this market increased and Colombian producers began exporting
significant volumes to this region for the first time.
China and India imported significantly more thermal coal during 2010, compared
with 2009, increasing by some 40% and 15% respectively, which boosted demand for
South African coal. The Richards Bay Coal Terminal in South Africa exported 63
million tonnes during 2010, a 2 million tonne increase over 2009, with some 65%
exported to Asian markets and around 30% going to the European and Mediterranean
region.
Operating performance
Attributable production (`000 tonnes) 2010 2009
RSA thermal coal 21,612 22,186
RSA Eskom coal 36,403 36,225
Colombian export thermal coal 10,060 10,190
South Africa
Operating profit from South African sourced coal was 4% lower than 2009 at $426
million. This was mainly due to the stronger South African rand which was partly
offset by a 28% increase in average export thermal coal prices. Export sales
volumes, including capitalised export sales volumes from Zibulo, increased by 3%
compared with 2009. As in previous years, Thermal Coal utilised the full rail
capacity entitlement that was made available, and rail remains the key
constraint.
Annual production stayed steady at 58.5 Mt, driven mainly by higher output at
Mafube, which has ramped up to full production, with the Zibulo operation also
ramping up to its commercial production levels. New Denmark improved production
with the new longwall equipment being commissioned during the first quarter of
2010. This was, however, partly offset by lower production from the remaining
underground operations which were adversely impacted by geological conditions
and pit room constraints. Isibonelo`s production was also affected by pit room
constraints, coupled with reduced demand from Sasol.
Colombia
Severe wet weather conditions in the second half of 2010 had a significant
impact on production, logistics and sales at the majority of coal mining
operations in Colombia, where the total annual rainfall for the region was
almost double the previous average recorded figure.
Operating profit from Cerrejon of $309 million was marginally higher than that
achieved in 2009, despite the extreme wet weather conditions and the strong
Colombian peso. Overall saleable production was in line with 2009 performance,
primarily as a result of a very good start to the year when dry conditions
prevailed at the mine. Improvements in coal recovery rates continued to
contribute positively to all aspects of the operation. Cerrejon`s in-pit mining
initiatives have enabled the mine to cope with the unprecedented rainfall. The
4% increase in total tonnage sold was partly due to the utilisation of the
stockpile which had been built up over the previous dry periods.
Projects
In South Africa, the $517 million Zibulo project is approaching completion, the
opencast operation is at full production and the underground operation has four
of eight production sections deployed. The washing plant, which is a 50:50 joint
venture with BHP Billiton Energy Coal South Africa, is fully commissioned and is
operating at 80% of planned monthly production. Completion of the man and
materials shaft is expected to be in the second quarter of 2011. The mining
rights of Zibulo colliery and the environmental management plan were approved
during 2010.
The feasibility study for the New Largo project started in 2010 and is expected
to be completed in the first quarter of 2012. Significant progress has been made
to complete a provisional coal supply agreement with Eskom by end of March 2011.
At Cerrejon, a two phase growth strategy has been adopted and is currently being
implemented. The first phase, referred to as P500 Phase 1, requires an increase
in the port and logistics chain capacity, whilst maintaining the current
operational footprint, in order to reach a target of 40 Mtpa. The second phase,
referred to as P500 Phase 2, will require a river diversion and pit expansions
to access the additional reserve required to reach a potential 50-60 Mtpa. The
feasibility study for Phase 1 was reviewed by the shareholder review teams
towards the end of 2010. A process is under way to address the findings of the
review process. The aim is to have the Phase 1 ready for approval by the
shareholder boards towards the end of the second quarter of
2011.
Outlook
Extreme wet weather, predominantly in Australia, Indonesia and Colombia, have
significantly affected short term thermal coal availability and 2011 export
prices are expected to trade in a range considerably above that prevailing
during 2010.
DIAMONDS
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2010 31 Dec 2009
Share of associate`s operating profit 495 64
EBITDA 666 215
Group`s associate investment in De Beers (1) 1,936 1,353
Share of Group operating profit 5% 1%
(1) Excludes shareholder loans of $358 million and preference shares of nil
(2009: $367 million and $88 million respectively).
Anglo American`s share of operating profit from De Beers increased significantly
to $495 million. DTC sales of rough diamonds totalled $5.08 billion, a 57%
increase (2009: $3.23 billion), due to improved consumer demand and better
prices during 2010.
Markets
The first half of 2010 saw a strong recovery in demand for rough diamonds from
DTC Sightholders against the low levels seen in early 2009. This recovery trend
continued through the second half of the year following improved demand from
retail markets, particularly in the Eastern markets of India and China. By the
end of 2010, DTC rough diamond prices had returned to pre-recession levels.
Since launching two years ago, De Beers` proprietary diamond brand, Forevermark,
has continued to establish itself in China, Hong Kong and Japan. Forevermark
jewellery is now available in 348 stores globally, a 40% increase on the
beginning of 2009. Expansion, particularly across China, is progressing rapidly
with five new cities added in 2010 and further locations planned for 2011.
Operating performance
Revenue from sales of rough diamonds by the DTC, including those through joint
ventures, increased by 57% compared with 2009, in response to increased consumer
demand. Approximately 33.0 million carats were recovered from wholly-owned and
joint venture operations in 2010, compared with around 24.6 million carats in
2009, an increase of 34%.
The business has remained focused on prudent cash management and has continued
to tackle costs aggressively. While costs necessarily rose due to increased
production levels, exacerbated by a weaker US dollar, De Beers was able to
maintain savings from the restructuring of the cost base in 2009, contributing
to improved margins. In Botswana, Debswana commenced a comprehensive operations
and cost review that identified many efficiency improvement opportunities which
will be delivered over the next three years.
De Beers has an uncompromising focus on the safety of its employees and the
security of its product. Regrettably, Debswana experienced a fatality late in
the year, and De Beers` 2010 LTIFR was 0.24 versus 0.21 for 2009. This
deteriorating trend is being addressed through the continued rollout of the
Safety Risk Management Programme (SRMP).
In 2010, a review of the impact of the illicit diamond trade on De Beers
demonstrated that there were a number of criminal syndicates behind the
systematic theft of product from the operations. This resulted in the
development of a new Global Security Strategy, which called for an
organisational restructuring, with security specialists being recruited to both
the centre and operations. A baseline of security control effectiveness for each
operation was also established, forming the basis for improvement targets. Going
forward, De Beers` will be driving a Loss Prevention programme as a key pillar
to improve product security.
Projects
Debswana commenced the Cut-8 expansion project at Jwaneng mine during 2010. Cut-
8 represents the largest ever investment in Botswana and is expected to extend
the life of mine to at least 2025.
De Beers continued to take an active leadership role in protecting consumers`
confidence in diamonds. As it has done since its inception, De Beers continued
to support the Kimberley Process, offering guidance to DTC Sightholders on the
identification of potentially illegal and unethical exports from Zimbabwe`s
Marange region. De Beers continued to support increased producer country
participation in the diamond pipeline, a key element of further empowerment. The
2010 De Beers` Shining Light Awards, focused on promoting young, undiscovered
designers in southern Africa, was the largest to date, comprising 30 pieces of
diamond jewellery from Botswana, Namibia and South Africa.
Outlook
The near term market outlook has been improved by the strengthening demand for
rough diamonds throughout 2010 and the robust retail performance during the year
end gifting season, which extended from the traditional Thanksgiving and
Christmas period, to cover Diwali and the Chinese New Year, reflecting
increasing growth in Eastern markets. It is likely that some of the price and
volume increases were driven by retailer restocking and the business therefore
expects 2011 to produce positive growth, albeit at a slower rate than 2010.
While starting from a low level, growth is expected to continue to be strong in
the emerging markets of China, India and other Far East markets. Production of
approximately 38 million carats is expected in 2011, reflecting increasing
demand from Sightholders and growing consumer demand.
OTHER MINING AND INDUSTRIAL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2010 31 Dec 2009
Operating profit 661 506
Tarmac 48 101
Zinc 321 175
Scaw Metals 170 131
Copebras 81 (40)
Catalao 67 106
Coal Americas (3) (8)
Other (23) 41
EBITDA 912 878
Net operating assets 3,807 5,029
Capital expenditure 224 268
Share of Group operating profit 7% 10%
Share of Group net operating assets 9% 13%
Tarmac
Tarmac generated an operating profit of $48 million, a 52% decrease, reflecting
difficult trading conditions in the UK and the sale of the majority of Tarmac`s
European businesses during 2010. On a like-for-like basis, operating profit
decreased by 17%. There was strong downward price pressure during the year and
Tarmac continued to deliver cost savings to mitigate the impacts of these
difficult trading conditions.
In the UK Quarry Materials businesses, volumes remained at similar levels to
2009, but unusual weather patterns resulted in a greater degree of seasonal
variation over the year. Tarmac`s work to maximise operational efficiency
continues and a newly revised management structure continues the good progress
made in recent years.
Weak demand in the housing and commercial sectors put considerable pressure on
the Tarmac Building Products business, which continued its cost reduction and
business rationalisation initiatives.
The 2011 outlook remains relatively weak for the construction sector as a whole,
but underlying fundamental demand remains and will turn to orders when economic
conditions are more conducive to construction activity.
Zinc
2010 2009
349,700(1)
Attributable zinc production (tonnes) 350,400
Attributable lead production (tonnes) 71,200 68,300
Average market price - zinc (c/lb) 98 75
Average market price - lead (c/lb) 97 78
(1) Allowing for Skorpion`s full year production, total attributable zinc
production was 362,900 tonnes, a 4% increase over the previous period.
Zinc generated an 83% increase in operating profit to $321 million, mainly as a
result of higher metal prices, improved efficiencies and tightly controlled
costs.
Production at Skorpion increased by 1% to 151,700 tonnes on a full year basis,
although only 138,500 tonnes is reported due to the disposal of the operation on
3 December 2010. While electricity constraints, mill motor failures and cell
repairs affected production, the combined impact was more than offset by a
number of asset optimisation initiatives.
At Lisheen, ore processed increased by 4% and zinc metal production increased by
2% to 175,100 tonnes. Lead metal production increased by 7% to 20,600
tonnes.
At Black Mountain, good progress was made with the improvements to the
underground infrastructure, which resulted in an increase of 13% in total ore
hoisted. Tonnes milled increased by 7%, with improved feed grades on all metals
other than silver. This resulted in strong metal in concentrate production
increases of 28% for zinc to 36,100 tonnes, 3% for lead to 50,600 tonnes, 14%
for copper to 2,500 tonnes and 4% for silver to 56,600 kg.
Anglo American announced the sale of its zinc portfolio to Vedanta on 10 May
2010 for total consideration(1) of $1,338 million. The sale of Skorpion was
completed on 3 December 2010 resulting in a net cash inflow of $570 million.
Scaw Metals
Scaw Metals increased its operating profit by 30% to $170 million.
Moly-Cop and AltaSteel performed well, assisted by strong demand for grinding
media and increased vertical integration with the Canadian rolling mills.
Production of steel products at 794,200 tonnes exceeded the prior year,
notwithstanding the earthquake in Chile in February 2010 impacting production in
Talcahuano. In November, Anglo American announced the sale of Moly-Cop and
AltaSteel to OneSteel. The transaction was completed on 31 December 2010
resulting in a net cash inflow of $993 million.
In the South African managed businesses, certain key steel markets remained
under pressure, resulting in a lower operating profit. The reduction is
attributed to selling price pressure, rising input costs and the effect of a
strong rand. Despite this, the integrated nature of the business allowed the
rolling mills to maintain reasonable levels of output to supply the downstream
businesses. Grinding media demand remained strong, albeit with some pricing
pressure. Production of steel products at Scaw South Africa was 710,000 tonnes,
a 2% increase over the prior year.
Copebras
Copebras recorded an operating profit of $81 million, a $121 million improvement
over 2009, as a result of improved market conditions and operational improvement
initiatives. Strong prices for soft commodities during the second half of 2010
served as a sound foundation for increased demand for fertilisers in Brazil.
Sales volumes of 998,100 tonnes of fertilisers were virtually in line with those
achieved in 2009, but higher operating margins were achieved, with record sales
for certain products.
Catalao
Catalao generated an operating profit of $67 million for the year, 37% lower
than 2009 as a result of lower niobium grades and overall recoveries, partially
offset by improved realised prices. Sales in 2010 reached 4,100 tonnes.
Following a landslide in the pit in late 2009, operations at Catalao started to
improve by mid- year when access was re-established in richer parts of the pit.
The subsequent discovery of water in certain parts of the pit in the third
quarter required a revision of the mining plan. Normal levels of production were
reached towards the end of the year.
Coal Americas
Peace River Coal (PRC) in Canada had a much improved operating performance in
2010, delivering a 44% increase in run of mine coal and a 35% increase in clean
metallurgical coal production. This was due to improved mining and plant
operations and improved coal recovery, coupled with the successful
implementation of Phase 1 of the Trend Mine Plant Upgrade project in May 2010,
which improved and stabilised plant performance. Phases 2 and 3 of the Trend
Mine Plant Upgrade Project are progressing on schedule and will be commissioned
in the first quarter of 2011, delivering a further 30% capacity improvement in
Trend plant throughput.
(1) The agreed consideration was based on profits and cash flows for the zinc
businesses being for the benefit of the purchaser from 1 January 2010, subject
to completion.
The business was impacted by temporary port constraints during December 2010,
which led to the delay of two cargoes into the first week of 2011, with the
result that metallurgical coal sales volume for 2010 ended 18% lower than coal
production. As a result of the impact on revenue of these delayed cargoes, PRC
reported an operating loss of $3 million for the year. However, given the
current market strength and the strong trading conditions anticipated for 2011,
coupled with increasing production from PRC, a substantial uplift in
profitability is forecast for 2011.
The Environmental Assessment Application for the Roman Mountain Brownfield
project was submitted in 2010. This project will consist of an integrated plant
and mining operation of up to 5 Mtpa capacity with the Trend mine.
The business continues to develop strong relationships with the community and
the key First Nations in the area, which was reflected in the successful launch
of mining fundamentals and a truck driver training programme in 2010. The
programme is delivering promising results and has had a positive impact on the
workforce in the area.
CONDENSED FINANCIAL STATEMENTS
for the year ended 31 December 2010
Consolidated income statement
for the year ended 31 December 2010
2010
Before Special
special items and
items and remeasure-
remeasure- ments
US$ million Note ments (note 5) Total
Group revenue 3 27,960 - 27,960
Total operating costs (19,452) 158 (19,294)
Operating profit from
subsidiaries and
joint ventures 3 8,508 158 8,666
Net profit on disposals 5 - 1,579 1,579
Share of net income from
associates 3 845 (23) 822
Total profit from operations
and associates 9,353 1,714 11,067
Investment income 568 - 568
Interest expense (801) - (801)
Other financing gains/(losses) (11) 105 94
Net finance costs 8 (244) 105 (139)
Profit before tax 9,109 1,819 10,928
Income tax expense 9a (2,699) (110) (2,809)
Profit for the financial year 6,410 1,709 8,119
Attributable to:
Non-controlling interests 1,434 141 1,575
Equity shareholders of the Company 4,976 1,568 6,544
Earnings per share (US$)
Basic 10 4.13 1.30 5.43
Diluted 10 3.96 1.22 5.18
2009
Before Special
special items and
items and remeasure-
remeasure- ments
US$ million Total
ments (note 5)
Group revenue 20,858 - 20,858
Total operating costs (16,481) (1,637) (18,118)
Operating profit from subsidiaries and
joint ventures 4,377 (1,637) 2,740
Net profit on disposals - 1,612 1,612
Share of net income from associates 318 (234) 84
Total profit from operations and
associates 4,695 (259) 4,436
Investment income 514 - 514
Interest expense (780) - (780)
Other financing gains/(losses) (7) (134) (141)
Net finance costs (273) (134) (407)
Profit before tax 4,422 (393) 4,029
Income tax expense (1,305) 188 (1,117)
Profit for the financial year 3,117 (205) 2,912
Attributable to:
Non-controlling interests 548 (61) 487
Equity shareholders of the Company 2,569 (144) 2,425
Earnings per share (US$)
Basic 2.14 (0.12) 2.02
Diluted 2.10 (0.12) 1.98
Consolidated statement of comprehensive income
for the year ended 31 December 2010
US$ million Note 2010 2009
Profit for the financial year 8,119 2,912
Net gain on revaluation of available for sale
investments 316 741
Net (loss)/gain on cash flow hedges (14) 122
Net exchange gain on translation of foreign
operations (including associates) 2,431 3,973
Actuarial net gain/(loss) on post employment
benefit schemes 131 (217)
Share of associates` net expense recognised
directly in equity (50) (7)
Tax on net income recognised directly in equity 9c (149) (228)
Net income recognised directly in equity 2,665 4,384
Transferred to income statement: sale of available
for sale investments - (1,554)
Transferred to income statement: cash flow hedges 4 162
Transferred to initial carrying amount of hedged
items: cash flow hedges 20 30
Transferred to income statement: exchange
differences on disposal of foreign operations (40) (2)
Share of associates` net expense transferred from
equity (8) -
Tax on items transferred from equity 9c 1 77
Total transferred from equity (23) (1,287)
Total comprehensive income for the financial year 10,761 6,009
Attributable to:
Non-controlling interests 1,885 783
Equity shareholders of the Company 8,876 5,226
Consolidated balance sheet
as at 31 December 2010
US$ million Note 2010 2009
Intangible assets 2,316 2,776
Property, plant and equipment 39,810 35,198
Environmental rehabilitation trusts 379 342
Investments in associates 4,900 3,312
Financial asset investments 3,220 2,726
Trade and other receivables 321 206
Deferred tax assets 389 288
Other financial assets (derivatives) 465 238
Other non-current assets 178 191
Total non-current assets 51,978 45,277
Inventories 3,604 3,212
Trade and other receivables 3,731 3,351
Current tax assets 235 214
Other financial assets (derivatives) 377 365
Cash and cash equivalents 13b 6,401 3,269
Total current assets 14,348 10,411
Assets classified as held for sale 15 330 620
Total assets 66,656 56,308
Trade and other payables (4,950) (4,395)
Short term borrowings 11,13b (1,535) (1,499)
Provisions for liabilities and charges (446) (209)
Current tax liabilities (871) (566)
Other financial liabilities (derivatives) (80) (76)
Total current liabilities (7,882) (6,745)
Medium and long term borrowings 11,13b (11,904) (12,816)
Retirement benefit obligations (591) (706)
Deferred tax liabilities (5,641) (5,192)
Other financial liabilities (derivatives) (755) (583)
Provisions for liabilities and charges (1,666) (1,583)
Other non-current liabilities (104) (423)
Total non-current liabilities (20,661) (21,303)
Liabilities directly associated with assets
classified as held for sale 15 (142) (191)
Total liabilities (28,685) (28,239)
Net assets 37,971 28,069
Equity
Called-up share capital 738 738
Share premium account 2,713 2,713
Other reserves 3,642 1,379
Retained earnings 27,146 21,291
Equity attributable to equity shareholders of the Company 34,239 26,121
Non-controlling interests 3,732 1,948
Total equity 37,971 28,069
The financial statements of Anglo American plc, registered number 3564138, were
approved by the Board of directors on 18 February 2011 and signed on its behalf
by:
Cynthia Carroll Rene Medori
Chief executive Finance director
Consolidated cash flow statement
for the year ended 31 December 2010
US$ million Note 2010 2009 (1)
Cash flows from operations 13a 9,924 4,904
Dividends from associates 255 616
Dividends from financial asset investments 30 23
Income tax paid (2,482) (1,456)
Net cash inflows from operating activities 7,727 4,087
Cash flows from investing activities
Purchase of property, plant and equipment 3 (5,280) (4,607)
Cash flows from derivatives related to capital
expenditure 3 286 (151)
Investment in associates(2) (519) (31)
Purchase of financial asset investments (134) (269)
Net repayment/(advance) of loans granted 18 (134)
Interest received and other investment income 235 244
Disposal of subsidiaries, net of cash and cash
equivalents disposed 14 2,539 69
Sale of interests in joint ventures 14 256 -
Sale of interests in associates 3 662
Proceeds from sale of financial asset investments 7 2,041
Repayment of capitalised loans by associates 33 -
Proceeds from disposal of property, plant and
equipment 64 46
Other investing activities 22 (18)
Net cash used in investing activities (2,470) (2,148)
Cash flows from financing activities
Interest paid (837) (741)
Cash flows from derivatives related to financing
activities 217 (85)
Dividends paid to Company shareholders (302) -
Dividends paid to non-controlling interests (617) (472)
Repayment of short term borrowings (2,338) (6,624)
Net receipt of medium and long term borrowings 1,194 6,253
Movements in non-controlling interests 356 21
Sale of shares under employee share schemes 42 29
Purchase of shares by subsidiaries for employee
share schemes (3) (106) (75)
Other financing activities (9) 14
Net cash used in financing activities (2,400) (1,680)
Net increase in cash and cash equivalents 2,857 259
Cash and cash equivalents at start of year 13c 3,319 2,744
Cash movements in the year 2,857 259
Effects of changes in foreign exchange rates 284 316
Cash and cash equivalents at end of year 13c 6,460 3,319
(1) Comparatives have been reclassified following the adoption of IFRS 3
(Revised) Business Combinations to reflect consequential changes to IAS 7
Statement of Cash Flows.
(2) Includes $450 million cash paid, in the year ended 31 December 2010, to
subscribe to the Group`s share of De Beers` rights issue. Refer to note 17.
(3) Includes purchase of Kumba Iron Ore Limited and Anglo Platinum Limited
shares for their respective employee share schemes.
Consolidated statement of changes in equity
for the year ended 31 December 2010
Share- Cumulative
Total based translation
share Retained payment adjustment
capital (1) earnings reserve reserve
US$ million
Balance at 1 January 2009 3,451 18,827 288 (4,077)
Total comprehensive income - 2,257 - 3,526
Dividends paid to
non-controlling interests - - - -
Issue of shares to
non-controlling interests - - - -
Changes in ownership
interest in subsidiaries - - - -
Equity settled
share-based payment schemes - 64 127 -
Issue of convertible bond - - - -
Other - 143 (14) -
Balance at 1 January 2010 3,451 21,291 401 (551)
Total comprehensive income - 6,595 - 2,004
Dividends paid - (302) - -
Dividends paid to
non-controlling interests - - - -
Issue of shares to
non-controlling interests - 90 - -
Consolidation by De Beers
of non-controlling interest - (128) - -
Changes in ownership
interest in subsidiaries - (471) - 21
Equity settled
share-based payment schemes - 64 86 -
Other - 7 (11) -
Balance at 31 December 2010 3,451 27,146 476 1,474
Total
equity
attributable
Fair to equity
value share-
and other holders Non-
reserves of the controlling Total
(note 12) Company interests equity
US$ million
Balance at 1 January 2009 1,732 20,221 1,535 21,756
Total comprehensive
income (557) 5,226 783 6,009
Dividends paid to
non-controlling interests - - (472) (472)
Issue of shares to
non-controlling interests - - 107 107
Changes in ownership
interest in subsidiaries - - (50) (50)
Equity settled
share-based payment schemes - 191 37 228
Issue of convertible bond 355 355 - 355
Other (1) 128 8 136
Balance at 1 January 2010 1,529 26,121 1,948 28,069
Total comprehensive income 277 8,876 1,885 10,761
Dividends paid - (302) - (302)
Dividends paid to
non-controlling interests - - (617) (617)
Issue of shares to
non-controlling interests - 90 572 662
Consolidation by De
Beers of non-controlling
interest - (128) - (128)
Changes in ownership
interest in subsidiaries (107) (557) (112) (669)
Equity settled
share-based payment schemes - 150 13 163
Other (7) (11) 43 32
Balance at 31 December 2010 1,692 34,239 3,732 37,971
(1) Total share capital comprises called-up share capital of $738 million (2009:
$738 million) and the share premium account of $2,713 million (2009: $2,713
million).
Dividends
2010 2009
Proposed ordinary dividend per share (US cents) 40 -
Proposed ordinary dividend (US$ million) 483 -
Ordinary dividends paid during the year per share (US cents) 25 -
Ordinary dividends paid during the year (US$ million) 302 -
Notes to the Condensed financial statements
1. General information
Investors should consider non-GAAP financial measures in addition to, and not as
a substitute for or as superior to, measures of financial performance reported
in accordance with International Financial Reporting Standards (IFRS). The IFRS
results reflect all items that affect reported performance and therefore it is
important to consider the IFRS measures alongside the non-GAAP measures.
Reconciliations of key non-GAAP data to directly comparable IFRS financial
measures are presented in notes 3, 6 and 10 to these consolidated financial
statements (the Condensed financial statements).
The financial information for the year ended 31 December 2010 does not
constitute statutory accounts as defined in sections 435 (1) and (2) of the
Companies Act 2006. Statutory accounts for the year ended 31 December 2009 have
been delivered to the Registrar of Companies and those for 2010 will be
delivered following the Company`s annual general meeting convened for 21 April
2011. The auditor has reported on these accounts; their reports were
unqualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis of matter and did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
2. Basis of preparation
Condensed financial statements and accounting policies
Whilst the preliminary announcement (the Condensed financial statements) has
been prepared in accordance with IFRS and International Financial Reporting
Interpretation Committee (IFRIC) interpretations adopted for use by the European
Union, with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS and with the requirements of the United Kingdom Listing
Authority (UKLA) Listing Rules, these Condensed financial statements do not
contain sufficient information to comply with IFRS. The Group will publish full
financial statements that comply with IFRS in March 2011.
The Condensed financial statements have been prepared under the historical cost
convention as modified by the revaluation of pension assets and liabilities and
certain financial instruments.
The accounting policies applied are consistent with those adopted and disclosed
in the Group`s financial statements for the year ended 31 December 2009, with
the exception of the adoption of IFRS 3 (Revised) Business Combinations and
consequential amendments to IAS 27 (Revised) Consolidated and Separate Financial
Statements, IAS 28 (Revised) Investments in Associates and IAS 31 (Revised)
Interests in Joint Ventures which applied prospectively from 1 January 2010.
The adoption of the revised IFRS 3 continues to apply the acquisition method to
business combinations but with some significant amendments to the measurement of
goodwill and non-controlling interests and the treatment of transaction costs.
There have been no material acquisitions in the year ended 31 December 2010 or
the year ended 31 December 2009.
The revisions to IAS 27 consequent upon the issuance of IFRS 3 (Revised) result
in transactions with non-controlling interests now being accounted for as
transactions with equity owners of the Group. For purchases from non-
controlling interests, the difference between any consideration paid and the
relevant share acquired of the carrying value of net assets of the subsidiary is
recorded in equity (previously goodwill). Gains or losses on disposals to non-
controlling interests are now also recorded in equity (previously recorded
through the income statement).
The revisions to IAS 27, IAS 28 and IAS 31 consequent upon the issuance of IFRS
3 (Revised), require that when the Group ceases to have control or significant
influence, any retained interest in the entity is remeasured to its fair value,
with the change in carrying amount recognised in the income statement.
Previously, the carrying amount of our retained interest represented the
attributable historic carrying value. The fair value is the initial carrying
amount for the purpose of subsequent accounting for the retained interest as an
associate, joint venture or financial asset.
The adoption of the revised standards has resulted in references to minority
interests being amended to non- controlling interests.
A number of other amendments to accounting standards and new interpretations
issued by the International Accounting Standards Board were applicable from 1
January 2010. They have not had a material impact on the accounting policies,
methods of computation or presentation applied by the Group.
3. Segmental information
The Group`s segments are aligned to the structure of business units based around
core commodities. Each business unit has a management team that is accountable
to the Chief executive. The Kumba Iron Ore, Iron Ore Brazil and Samancor
business units have been aggregated as the Iron Ore and Manganese segment on the
basis of the ultimate product produced (ferrous metals).
In addition assets identified for divestment are managed as a separate business
unit, Other Mining and Industrial, and accordingly presented as a separate
segment. Catalao, the Group`s ferroniobium business based in Brazil, was managed
within this business unit throughout 2010. However, subsequent to the year end,
and following the successful delineation of substantial additional niobium
resources, the Group decided to retain this business. As Catalao continues to be
managed within the Other Mining and Industrial business unit, it is presented
within Other Mining and Industrial in the segmental analysis.
The Group`s Executive Committee evaluates the financial performance of the Group
and its segments principally with reference to operating profit before special
items and remeasurements which includes the Group`s attributable share of
associates` operating profit before special items and remeasurements.
Segments predominantly derive revenue as follows - Platinum: platinum group
metals; Diamonds: rough and polished diamonds and diamond jewellery; Copper and
Nickel: base metals; Iron Ore and Manganese: iron ore, manganese ore and alloys;
Metallurgical Coal: metallurgical coal; Thermal Coal: thermal coal; and Other
Mining and Industrial: heavy building materials, zinc and steel products.
The Exploration segment includes the cost of the Group`s exploration activities
across all segments, excluding Diamonds.
The segment results are stated after elimination of inter-segment transactions
and include an allocation of corporate costs.
Analysis by segment
Revenue and operating profit by segment
Operating
Revenue (1) profit/(loss)(2)
US$ million 2010 2009 2010 2009
Platinum 6,602 4,535 837 32
Diamonds 2,644 1,728 495 64
Copper 4,877 3,967 2,817 2,010
Nickel 426 348 96 2
Iron Ore and Manganese 6,612 3,419 3,681 1,489
Metallurgical Coal 3,377 2,239 783 451
Thermal Coal 2,866 2,490 710 721
Other Mining and Industrial 5,520 5,908 661 506
Exploration - - (136) (172)
Corporate Activities and
Unallocated Costs 5 3 (181) (146)
Segment measure 32,929 24,637 9,763 4,957
Reconciliation:
Less: Associates (4,969) (3,779) (1,255) (580)
Operating special items and
remeasurements - - 158 (1,637)
Statutory measure 27,960 20,858 8,666 2,740
(1) Segment revenue includes the Group`s attributable share of associates`
revenue. This is reconciled to Group revenue from subsidiaries and joint
ventures as presented in the Consolidated income statement.
(2) Segment operating profit is revenue less operating costs before special
items and remeasurements, and includes the Group`s attributable share of
associates` operating profit. This is reconciled to operating profit from
subsidiaries and joint ventures after special items and remeasurements as
presented in the Consolidated income statement.
Associates` revenue and operating profit Associates`
operating
Associates` revenue profit/(loss) (1)
US$ million 2010 2009 2010 2009
Platinum 237 47 (59) (26)
Diamonds 2,644 1,728 495 64
Iron Ore and Manganese 983 603 382 143
Metallurgical Coal 258 164 122 48
Thermal Coal 761 742 308 303
Other Mining and Industrial 86 495 7 48
4,969 3,779 1,255 580
Reconciliation:
Associates` net finance costs (before
special items and remeasurements) (88) (28)
Associates` income tax expense (before
special items and remeasurements) (313) (235)
Associates` non-controlling interests
(before special items and remeasurements) (9) 1
Share of net income from associates (before
special items and remeasurements) 845 318
Associates` special items and remeasurements (22) (184)
Associates` special items and
remeasurements tax (2) (51)
Associates` non-controlling interests on
special items and remeasurements 1 1
Share of net income from associates 822 84
(1) Associates` operating profit is the Group`s attributable share of
associates` revenue less operating costs before special items and
remeasurements.
Non-cash items
Significant non-cash items included within operating profit are as follows:
Depreciation Other non-cash
and amortisation (1) expenses (2)
US$ million 2010 2009 2010 2009
Platinum 750 636 57 92
Copper 269 244 97 71
26 23 9
Nickel 26
Iron Ore and Manganese 142 81 90 4
Metallurgical Coal 322 249 75 26
Thermal Coal 113 107 40 13
Other Mining and Industrial 251 360 16 34
Exploration - - 4 4
Corporate Activities and Unallocated
Costs 46 22 61 64
1,919 (3) 1,725 463 317
(1) The Group`s attributable share of depreciation and amortisation in
associates is $301 million (2009: $248 million) and is split by segment as
follows: Platinum $37 million (2009: $9 million), Diamonds $171 million (2009:
$151 million), Iron Ore and Manganese $33 million (2009: $23 million),
Metallurgical Coal $11 million (2009: $6 million), Thermal Coal $49 million
(2009: $47 million) and Other Mining and Industrial nil (2009: $12 million).
(2) Other non-cash expenses include equity settled share-based payment charges
and amounts included in operating costs in respect of provisions, excluding
amounts recorded within special items. Comparatives have been reclassified to
align with current year presentation.
(3) In addition $97 million (2009: nil) of accelerated depreciation has been
recorded within operating special items (refer to note 5).
Capital expenditure and net debt
Capital expenditure (1) Net debt (2)
US$ million 2010 2009 2010 2009
Platinum 1,011 1,150 (65) 196
Copper 1,530 1,123 (243) (187)
Nickel 525 554 561 380
Iron Ore and Manganese 1,195 1,140 89 874
Metallurgical Coal 217 96 (615) (9)
Thermal Coal 274 400 (50) 23
Other Mining and
Industrial 224 268 365 341
Exploration - - (2) -
Corporate Activities and
Unallocated Costs 18 27 7,403 9,710
4,994 4,758 7,443 11,328
Reconciliation:
Remove: Cash flows from
derivatives relating to
capital expenditure 286 (151)
Purchase of property,
plant and equipment 5,280 4,607
Interest capitalised 247 246
Non-cash movements(3) 305 379
Property, plant and
equipment additions (4) 5,832 5,232
Amounts related to
disposal groups (46) - (59) (48)
5,786 5,232 7,384 11,280
(1) Capital expenditure is segmented on a cash basis and is reconciled to
balance sheet additions. Cash capital expenditure includes cash flows on related
derivatives.
(2) Segment net debt includes related hedges and excludes net debt in disposal
groups. Comparatives have been adjusted to include related hedges (refer to note
13c).
For a reconciliation of net debt to the balance sheet refer to note 13b.
(3) Includes movements on capital expenditure accruals, movements relating to
deferred stripping and the impact of realised cash flow hedges.
(4) Capital expenditure on an accruals basis is split by segment as follows:
Platinum $1,043 million (2009: $1,445 million), Copper $1,820 million (2009:
$1,186 million), Nickel $602 million (2009: $570 million), Iron Ore and
Manganese $1,536 million (2009: $1,138 million), Metallurgical Coal $297 million
(2009: $163 million), Thermal Coal $297 million (2009: $409 million), Other
Mining and Industrial $216 million (2009: $303 million), Exploration $1 million
(2009: nil) and Corporate Activities and Unallocated Costs $20 million (2009:
$18 million).
Segment assets and liabilities
The following balance sheet segment measures are provided for information:
Segment assets (1)
US$ million 2010 2009
Platinum 14,701 13,082
Copper 7,300 5,643
Nickel 2,443 1,888
Iron Ore and Manganese 12,333 10,758
Metallurgical Coal 4,711 4,176
Thermal Coal 2,897 2,343
Other Mining and Industrial 4,596 6,231
Exploration 3 4
Corporate Activities and Unallocated
Costs 402 311
Other assets and liabilities 49,386 44,436
Investments in associates (3) 4,900 3,312
Financial asset investments 3,220 2,726
Deferred tax assets/(liabilities) 389 288
Cash and cash equivalents 6,401 3,269
Other financial assets/(liabilities) -
derivatives 842 603
Other non-operating assets/(liabilities) 1,518 1,674
Other provisions - -
Borrowings - -
Net assets 66,656 56,308
Segment liabilities (2)
US$ million 2010 2009
Platinum (1,223) (941)
Copper (1,009) (880)
Nickel (109) (101)
Iron Ore and Manganese (632) (388)
Metallurgical Coal (793) (769)
Thermal Coal (786) (636)
Other Mining and Industrial (789) (1,202)
Exploration (12) (2)
Corporate Activities and Unallocated
Costs (377) (409)
Other assets and liabilities (5,730) (5,328)
Investments in associates (3) - -
Financial asset investments - -
Deferred tax assets/(liabilities) (5,641) (5,192)
Cash and cash equivalents - -
Other financial assets/(liabilities) -
derivatives (835) (659)
Other non-operating assets/(liabilities) (2,233) (2,128)
Other provisions (807) (617)
Borrowings (13,439) (14,315)
Net assets (28,685) (28,239)
Net segment assets
US$ million 2010 2009
Platinum 13,478 12,141
Copper 6,291 4,763
Nickel 2,334 1,787
Iron Ore and Manganese 11,701 10,370
Metallurgical Coal 3,918 3,407
Thermal Coal 2,111 1,707
Other Mining and Industrial 3,807 5,029
Exploration (9) 2
Corporate Activities and Unallocated
Costs 25 (98)
Other assets and liabilities 43,656 39,108
Investments in associates (3) 4,900 3,312
Financial asset investments 3,220 2,726
Deferred tax assets/(liabilities) (5,252) (4,904)
Cash and cash equivalents 6,401 3,269
Other financial assets/(liabilities) -
derivatives 7 (56)
Other non-operating assets/(liabilities) (715) (454)
Other provisions (807) (617)
Borrowings (13,439) (14,315)
Net assets 37,971 28,069
(1) Segment assets at 31 December 2010 are operating assets and consist of
intangible assets of $2,316 million (2009: $2,776 million), property, plant and
equipment of $39,810 million (2009: $35,198 million), biological assets of $2
million (2009: $4 million), environmental rehabilitation trusts of $379 million
(2009: $342 million), retirement benefit assets of $112 million (2009: $54
million), inventories of $3,604 million (2009: $3,212 million) and operating
receivables of $3,163 million (2009: $2,850 million).
(2) Segment liabilities at 31 December 2010 are operating liabilities and
consist of non-interest bearing current liabilities of $3,834 million (2009:
$3,447 million), environmental restoration and decommissioning provisions of
$1,305 million (2009: $1,175 million) and retirement benefit obligations of $591
million (2009: $706 million).
(3) Investments in associates is split by segment as follows: Platinum $1,112
million (2009: $447 million), Diamonds $1,936 million (2009: $1,353 million),
Iron Ore and Manganese $880 million (2009: $658 million), Metallurgical Coal
$223 million (2009: $146 million), Thermal Coal $749 million (2009: $689
million) and Other Mining and Industrial nil (2009: $19 million).
Revenue by product
The Group`s analysis of segment revenue by product (including attributable share
of revenue from associates) is as follows:
US$ million 2010 2009
Platinum 4,053 3,101
Palladium 697 361
Rhodium 782 527
Diamonds 2,644 1,728
Copper 4,782 3,783
Nickel 824 625
Iron ore 5,234 2,330
Manganese ore and alloys 983 603
Metallurgical coal 2,711 1,693
Thermal coal 3,707 3,197
Heavy building materials 2,376 2,870
Zinc 584 445
Steel products 1,568 1,371
Other 1,984 2,003
Geographical analysis
Revenue by destination and non-current segment assets by location
The Group`s geographical analysis of segment revenue (including attributable
share of revenue from associates) allocated based on the country in which the
customer is located, and non-current segment assets, allocated based on the
country in which the assets are located, is as follows:
Non-current
Revenue segment assets (1)
US$ million 2010 2009 2010 2009
South Africa 3,307 2,567 17,389 15,157
Other Africa 502 139 373 599
Brazil 1,135 662 11,159 10,105
Chile 1,940 1,229 5,628 4,280
Other South America 207 190 589 574
North America 1,805 1,297 540 698
Australia 474 427 4,022 3,584
China 5,075 3,469 5 4
India 2,021 1,222 - -
Japan 4,198 2,697 - -
Other Asia 2,818 1,874 42 46
United Kingdom (Anglo American plc`s
country of domicile) 3,980 3,850 2,331 2,686
Other Europe 5,467 5,014 48 241
32,929 24,637 42,126 37,974
(1) Non-current segment assets are non-current operating assets and consist of
intangible assets and property, plant and equipment.
Revenue and operating profit by origin
Segment revenue and operating profit before special items and remeasurements by
origin (including attributable share of revenue and operating profit from
associates) has been provided for information:
Operating profit/
(loss) before special
items and
Revenue remeasurements
US$ million 2010 2009 2010 2009
South Africa 15,711 10,293 5,001 2,023
Other Africa 2,329 1,539 501 78
South America 7,492 6,040 3,416 2,310
North America 679 510 14 (20)
Australia and Asia 4,141 3,279 911 620
Europe 2,577 2,976 (80) (54)
32,929 24,637 9,763 4,957
Segment assets and liabilities by location
The Group`s geographical analysis of segment assets and liabilities, allocated
based on where assets and liabilities are located, has been provided for
information:
Segment assets (1)
US$ million 2010 2009
South Africa 21,294 18,309
Other Africa 377 664
South America 18,982 16,528
North America 611 805
Australia and Asia 4,849 4,310
Europe 3,273 3,820
49,386 44,436
Segment liabilities
US$ million 2010 2009
South Africa (2,815) (2,148)
Other Africa (26) (66)
South America (1,384) (1,262)
North America (38) (132)
Australia and Asia (851) (813)
Europe (616) (907)
(5,730) (5,328)
Net segment assets
US$ million 2010 2009
South Africa 18,479 16,161
Other Africa 351 598
South America 17,598 15,266
North America 573 673
Australia and Asia 3,998 3,497
Europe 2,657 2,913
43,656 39,108
(1) Investments in associates of $4,900 million (2009: $3,312 million) are not
included in segment assets. The geographical distribution of these investments,
based on the location of the underlying assets, is as follows: South Africa
$2,334 million (2009: $1,934 million), Other Africa $1,220 million (2009: $914
million), South America $729 million (2009: $675 million), North America $376
million (2009: $320 million), Australia and Asia $698 million (2009: $426
million) and Europe $(457) million (2009: $(957) million).
4. Operating profit and underlying earnings by segment
The following table analyses operating profit (including attributable share of
associates` operating profit) for the financial year by segment and reconciles
it to Underlying earnings by segment. Underlying earnings is an alternative
earnings measure, which the directors consider to be a useful additional measure
of the Group`s performance. Underlying earnings is profit for the financial year
attributable to equity shareholders of the Company before special items and
remeasurements and is therefore presented after non-controlling interests. A
reconciliation from `Profit for the financial year attributable to equity
shareholders of the Company` to `Underlying earnings for the financial year` is
provided in note 10.
Operating Operating
profit/(loss) before profit/(loss) after Operating
special items and special items and special items and
US$ million remeasurements (1) remeasurements remeasurements (2)
Platinum 837 765 72
Diamonds 495 466 29
Copper 2,817 2,832 (15)
Nickel 96 45 51
Iron Ore and
Manganese 3,681 4,037 (356)
Metallurgical Coal 783 806 (23)
Thermal
Coal 710 708 2
Exploration (136) (136) -
Corporate
Activities and
Unallocated Costs (181) (192) 11
Core operations 9,102 9,331 (229)
Other
Mining and Industrial 661 561 100
9,763 9,892 (129)
Net interest, tax
and non- 2010
controlling Underlying
US$ million interests earnings
Platinum (412) 425
Diamonds (193) 302
Copper (1,096) 1,721
Nickel (21) 75
Iron Ore and Manganese (2,258) 1,423
Metallurgical Coal (198) 585
Thermal Coal (198) 512
Exploration 8 (128)
Corporate Activities and
Unallocated Costs (280) (461)
Core operations (4,648) 4,454
Other Mining and Industrial (139) 522
(4,787) 4,976
Operating Operating
profit/(loss) before profit/(loss) after Operating
special items and special items and special items and
US$ million remeasurements (1) remeasurements remeasurements (2)
Platinum 32 (72) 104
Diamonds 64 (139) 203
Copper 2,010 2,114 (104)
Nickel 2 (86) 88
Iron Ore and Manganese 1,489 350 1,139
Metallurgical Coal 451 423 28
Thermal
Coal 721 715 6
Exploration (172) (172) -
Corporate
Activities and
Unallocated Costs (146) (377) 231
Core operations 4,451 2,756 1,695
Other
Mining and
Industrial 506 361 145
4,957 3,117 1,840
2009
Net interest, tax
and non-
controlling Underlying
US$ million interests earnings
Platinum 12 44
Diamonds (154) (90)
Copper (809) 1,201
Nickel (15) (13)
Iron Ore and Manganese (918) 571
Metallurgical Coal (129) 322
Thermal Coal (204) 517
Exploration 5 (167)
Corporate Activities and
Unallocated Costs (73) (219)
Core operations (2,285) 2,166
Other Mining and Industrial (103) 403
(2,388) 2,569
(1) Operating profit includes attributable share of associates` operating profit
which is reconciled to `Share of net income from associates` in note 3.
(2) Special items and remeasurements are set out in note 5. Operating special
items (including associates) in the year ended 31 December 2010 amounted to a
charge of $253 million (2009: $2,574 million) and operating remeasurements
(including associates) in the year ended 31 December 2010 amounted to a credit
of $382 million (2009: $734 million).
5. Special items and remeasurements
`Special items` are those items of financial performance that the Group believes
should be separately disclosed on the face of the income statement to assist in
the understanding of the underlying financial performance achieved by the Group.
Such items are material by nature or amount to the year`s results and require
separate disclosure in accordance with IAS 1 (Revised) Presentation of Financial
Statements paragraph 97. Special items that relate to the operating performance
of the Group are classified as operating special items and include impairment
charges and reversals and other exceptional items, including restructuring
costs. Non-operating special items include profits and losses on disposals of
investments and businesses as well as transactions relating to business
combinations.
`Remeasurements` comprise other items which the Group believes should be
reported separately to aid an understanding of the underlying financial
performance of the Group. This category includes:
- unrealised gains and losses on `non-hedge` derivative instruments open at year
end (in respect of future transactions) and the reversal of the historical
marked to market value of such instruments settled in the year. The full
realised gains or losses are recorded in underlying earnings in the same year as
the underlying transaction for which such instruments provide an economic, but
not formally designated, hedge (if the underlying transaction is recorded in the
balance sheet, e.g. capital expenditure, the realised amount remains in
remeasurements on settlement of the derivative). Such amounts are classified in
the income statement as operating when the underlying exposure is in respect of
the operating performance of the Group and otherwise as financing. foreign
exchange gains and losses arising on the retranslation of US dollar denominated
De Beers preference shares held by a rand functional currency subsidiary of the
Group. This is classified as financing. foreign exchange impact arising in US
dollar functional currency entities where tax calculations are generated based
on local currency financial information (and hence deferred tax is susceptible
to currency fluctuations). Such amounts are included within income tax expense.
2010
Subsidiaries and
US$ million joint ventures Associates (2) Total
Impairment and related charges (107) (15) (122)
Restructuring costs (121) (10) (131)
Other - - -
Operating special items (228) (25) (253)
Operating remeasurements 386 (4) 382
Operating special items and
remeasurements 158 (29) 129
Disposal of Moly-Cop and
AltaSteel 555 - 555
Gain on Bafokeng-Rasimone
Platinum mine transaction 546 - 546
Disposal of undeveloped coal
assets 505 - 505
Disposal of Skorpion zinc mine 244 - 244
Disposals of interests within
Platinum segment 107 - 107
Anglo American Inyosi Coal BEE
transaction (86) - (86)
Disposals of interests in Tarmac
businesses (294) - (294)
Disposal of interest in AngloGold
Ashanti - - -
Other 2 19 21
Net profit on disposals (3) 1,579 19 1,598
Financing special items - (13) (13)
Financing remeasurements 105 1 106
Total special items and
remeasurements before tax and
non-controlling interests 1,842 (22) 1,820
Special items and remeasurements
tax (110) (2) (112)
Non-controlling interests on special
items and remeasurements (141) 1 (140)
Net total special items and
remeasurements attributable to
equity shareholders of the Company 1,591 (23) 1,568
2009 (1)
Subsidiaries and
US$ million joint ventures Associates (2) Total
Impairment and related charges (1,909) (272) (2,181)
Restructuring costs (376) (27) (403)
Other 10 - 10
Operating special items (2,275) (299) (2,574)
Operating remeasurements 638 96 734
Operating special items and
remeasurements (1,637) (203) (1,840)
Disposal of Moly-Cop and
AltaSteel - - -
Gain on Bafokeng-Rasimone
Platinum mine transaction - - -
Disposal of undeveloped coal assets - - -
Disposal of Skorpion zinc mine - - -
Disposals of interests within
Platinum segment 316 - 316
Anglo American Inyosi Coal BEE
transaction - - -
Disposals of interests in
Tarmac
businesses - - -
Disposal of interest in
AngloGold
Ashanti 1,139 - 1,139
Other 157 20 177
Net profit on disposals (3) 1,612 20 1,632
Financing special items - (7) (7)
Financing remeasurements (134) 6 (128)
Total special items and
remeasurements before tax and
non-controlling interests (159) (184) (343)
Special items and
remeasurements tax 188 (51) 137
Non-controlling interests on special
items and remeasurements 61 1 62
Net total special items and
remeasurements attributable to
equity shareholders of the Company 90 (234) (144)
(1) Presentation of special items and remeasurements has been simplified.
Comparatives have been reclassified to align with current year presentation.
(2) Relates to the Diamonds segment.
(3) $1,246 million (2009: $316 million) relates to disposals of subsidiaries and
consolidated businesses and $440 million (2009: nil) relates to fair value gains
on retained investments (see note 14).
Subsidiaries` and joint ventures` special items and remeasurements
Operating special items
Impairment and related charges of $107 million in the year ended 31 December
2010 principally relate to accelerated depreciation of $97 million and assets
written off within the Platinum segment of $20 million, partially offset by an
impairment reversal at Dawson Seamgas (Metallurgical Coal segment) of $22
million.
In the year ended 31 December 2010 accelerated depreciation of $73 million has
been recorded at Loma de Niquel due to uncertainty over the renewal of three
concessions that expire in 2012 and over the restoration of 13 concessions that
have been cancelled.
Impairment and related charges in the year ended 31 December 2009 of $1,909
million mainly relate to the Amapa iron ore system (Amapa) ($1,667 million) and
Loma de Niquel ($114 million). The impairment in relation to Amapa was a result
of the operational difficulties and delays in increasing production. The
impairment brought the carrying value of Amapa in line with fair value (less
costs to sell) determined on a discounted cash flow basis.
Restructuring costs principally relate to retrenchment and consultancy costs and
relate to amounts incurred in the Other Mining and Industrial segment of $71
million (2009: $78 million) and the Platinum segment of $38 million (2009: $37
million). In the year ended 31 December 2009 restructuring costs of $47 million
were recorded within the Corporate Activities and Unallocated Costs segment and
a total of $21 million in the Metallurgical and Thermal Coal segments. In
addition costs associated with `One Anglo` initiatives of $148 million and bid
defence costs of $45 million were recorded.
Operating remeasurements
Operating remeasurements reflect a net gain of $386 million (2009: $638 million)
principally in respect of non-hedge derivatives of capital expenditure in Iron
Ore Brazil (2009: Iron Ore Brazil and Los Bronces). The net gain includes net
unrealised gains of $148 million (2009: $757 million), net realised gains of
$255 million (2009: losses of $105 million) and other remeasurement losses of
$17 million (2009: $14 million).
Profits and losses on disposals
In December 2010 the Group completed the disposal of its 100% interest in Moly-
Cop and AltaSteel (Other Mining and Industrial segment) resulting in a net cash
inflow of $993 million, generating a profit on disposal of $555 million.
In November 2010 the Group realised a gain of $546 million as a result of the
Bafokeng-Rasimone Platinum mine transaction (Platinum segment). Refer to note 14
for more information on this transaction.
In December 2010 the Group disposed of undeveloped coal assets in Australia
(Metallurgical Coal segment) resulting in a net cash inflow of $522 million,
generating a profit on disposal of $505 million.
In December 2010 the Group completed the disposal of its 100% interest in the
Skorpion zinc mine (Other Mining and Industrial segment) resulting in a net cash
inflow of $570 million, generating a profit on disposal of $244 million.
In April 2010 the Group sold its 37% interest in the Western Bushveld joint
venture (Platinum segment) for consideration of $107 million. This investment
had a nominal carrying value.
In June 2010 the previously announced black economic empowerment (BEE)
transaction to dispose of a 27% interest in Anglo American Inyosi Coal
(Proprietary) Limited (Thermal Coal segment) was completed. The amount
recognised on disposal principally relates to an IFRS 2 Share-based Payment
charge of $78 million.
The Group completed the disposal of Tarmac`s Polish concrete products business
in March 2010, its French and Belgian concrete products business in May 2010,
and its aggregates business in France, Germany, Poland and the Czech Republic in
September 2010, resulting in combined net cash inflows of $472 million. Tarmac
is included in the Other Mining and Industrial segment.
Financing remeasurements
Financing remeasurements reflect a net gain of $105 million (2009: loss of $134
million) principally due to preference share investments, and an associated
embedded interest rate derivative. In addition, financing remeasurements also
include net gains on non-hedge derivatives of debt of $17 million (2009: loss of
$13 million).
Special items and remeasurements tax
Special items and remeasurements tax amounted to a charge of $110 million (2009:
credit of $188 million). This relates to a tax remeasurement credit of $122
million (2009: $469 million) and a tax charge on special items and
remeasurements of $232 million (2009: $174 million). In the year ended 31
December 2009 a tax special item charge of $107 million was recorded relating to
the write off of a deferred tax asset related to Amapa.
6. EBITDA by segment
Earnings before interest, tax, depreciation and amortisation (EBITDA) is
operating profit before special items and remeasurements, depreciation and
amortisation in subsidiaries and joint ventures and includes attributable share
of EBITDA of associates.
US$ million 2010 2009
Platinum 1,624 677
Diamonds 666 215
Copper 3,086 2,254
Nickel 122 28
Iron Ore and Manganese 3,856 1,593
Metallurgical Coal 1,116 706
Thermal Coal 872 875
Other Mining and Industrial 912 878
Exploration (136) (172)
Corporate Activities and Unallocated Costs (135) (124)
EBITDA 11,983 6,930
EBITDA is reconciled to operating profit, including attributable share of
associates, before special items and remeasurements and to `Total profit from
operations and associates` as follows:
US$ million 2010 2009
Total profit from operations and associates 11,067 4,436
Operating special items and remeasurements (including
associates) (129) 1,840
Net profit on disposals (including associates) (1,598) (1,632)
Associates` financing special items and remeasurements 12 1
Share of associates` interest, tax and non-controlling
interests 411 312
Operating profit, including associates, before special
items and remeasurements 9,763 4,957
Depreciation and amortisation: subsidiaries and joint
ventures 1,919 1,725
Depreciation and amortisation: associates 301 248
EBITDA 11,983 6,930
EBITDA is reconciled to `Cash flows from operations` as
follows:
US$ million 2010 2009
EBITDA 11,983 6,930
Share of operating profit of associates before special
items and remeasurements (1,255) (580)
Cash element of operating special items (94) (294)
Share of associates` depreciation and amortisation (301) (248)
Share-based payment charges 219 204
Provisions (37) (46)
(Increase)/decrease in inventories (309) 23
Increase in operating receivables (587) (360)
Increase/(decrease) in operating payables 516 (573)
Deferred stripping (196) (150)
Other adjustments (15) (2)
Cash flows from operations 9,924 4,904
7. Exploration expenditure
Exploration expenditure is stated before special items.
US$ million 2010 2009
By commodity
Platinum group metals 11 17
Copper 19 43
Nickel 27 22
Iron ore 14 8
Metallurgical coal 3 10
Thermal coal 21 25
Zinc 3 10
Central exploration activities 38 37
136 172
8. Net finance costs
Finance costs and exchange gains/(losses) are presented net of effective hedges
for respective interest bearing and foreign currency borrowings.
The weighted average capitalisation rate applied to qualifying capital
expenditure was 4.8% (2009: 6.5%).
US$ million 2010 2009
Investment income
Interest and other financial income 342 334
Expected return on defined benefit arrangements 205 157
Dividend income from financial asset investments 30 23
577 514
Less: interest capitalised (9) -
Total investment income 568 514
Interest expense
Interest and other finance expense (632) (724)
Interest payable on convertible bond (68) (44)
Unwinding of discount on convertible bond (65) (39)
Interest cost on defined benefit arrangements (219) (174)
Unwinding of discount relating to provisions and other
non-current liabilities (73) (45)
(1,057) (1,026)
Less: interest capitalised 256 246
Total interest expense (801) (780)
Other financing gains/(losses)
Net foreign exchange gains/(losses) 17 (24)
Net fair value (losses)/gains on fair value hedges (7) 29
Other net fair value losses (21) (12)
Total other financing losses (11) (7)
Net finance costs before remeasurements (244) (273)
Remeasurements
Net gain/(loss) on embedded and non-hedge derivatives 72 (100)
Foreign exchange loss on De Beers preference shares (9) (21)
Other remeasurements 42 (13)
Total remeasurements 105 (134)
Net finance costs after remeasurements (139) (407)
9. Income tax expense
a) Analysis of charge for the year
US$ million 2010 2009
United Kingdom corporation tax 24 50
South Africa tax 1,199 567
Other overseas tax 1,333 700
Prior year adjustments (7) (45)
Current tax (excluding special items and remeasurements tax) 2,549 1,272
Deferred tax (excluding special items and remeasurements tax) 150 33
Tax (excluding special items and remeasurements tax) 2,699 1,305
Special items and remeasurements tax 110 (188)
Income tax expense 2,809 1,117
b) Factors affecting tax charge for the year
The effective tax rate for the year of 25.7% (2009: 27.7%) is lower (2009:
lower) than the applicable statutory rate of corporation tax in the United
Kingdom of 28%. The reconciling items are:
US$ million 2010 2009
Profit on ordinary activities before tax 10,928 4,029
Less: Share of net income from associates (822) (84)
Group profit on ordinary activities before tax 10,106 3,945
Tax on profit on ordinary activities calculated at United
Kingdom corporation tax rate of 28% 2,830 1,105
Tax effects of:
Special items and remeasurements tax (406) (144)
Items not taxable/deductible for tax purposes
Exploration expenditure 13 22
Non-taxable/deductible net foreign exchange (gain)/loss (3) 6
Non-deductible/taxable net interest expense/(income) 2 (2)
Other non-deductible expenses 125 65
Other non-taxable income (40) (39)
Temporary difference adjustments
Change in tax rates 4 -
Movements in tax losses (50) 5
Enhanced tax depreciation (41) -
Other temporary differences (73) (45)
Other adjustments
Secondary tax on companies and dividend withholding taxes 657 356
Effect of differences between local and United Kingdom rates (218) (139)
Prior year adjustments to current tax (7) (45)
Other adjustments 16 (28)
Income tax expense 2,809 1,117
IAS 1 (Revised) requires income from associates to be presented net of tax on
the face of the income statement. Associates` tax is therefore not included
within the Group`s income tax expense. Associates` tax included within `Share
of net income from associates` for the year ended 31 December 2010 is $315
million (2009: $286 million). Excluding special items and remeasurements this
becomes $313 million (2009: $235 million).
The effective rate of tax before special items and remeasurements including
attributable share of associates` tax for the year ended 31 December 2010 was
31.9%. This was broadly in line with the equivalent effective rate of 33.1% for
the year ended 31 December 2009. In future periods it is expected that the
effective tax rate, including associates` tax, will remain above the United
Kingdom statutory tax rate.
c) Tax amounts included in total comprehensive income
An analysis of tax by individual item presented in the Consolidated statement of
comprehensive income is presented below:
US$ million 2010 2009
Tax on net income recognised directly in equity
Revaluation of available for sale investments (46) (105)
Cash flow hedges (2) (22)
Exchange gains on translation of foreign operations (82) (154)
Actuarial net (gain)/loss on post employment benefit schemes (19) 53
(149) (228)
Tax on items transferred from equity
Transferred to income statement: sale of available for sale
investments - 135
Transferred to income statement: cash flow hedges (1) (51)
Transferred to initial carrying amount of hedged items: cash
flow hedges 2 (7)
1 77
10. Earnings per share
US$ 2010 2009
Profit for the financial year attributable to equity
shareholders of the Company
Basic earnings per share 5.43 2.02
Diluted earnings per share 5.18 1.98
Headline earnings for the financial year (1)
Basic earnings per share 4.27 2.46
Diluted earnings per share 4.09 2.40
Underlying earnings for the financial year (1)
Basic earnings per share 4.13 2.14
Diluted earnings per share 3.96 2.10
(1) Basic and diluted earnings per share are shown based on Headline earnings, a
Johannesburg stock exchange (JSE Limited) defined performance measure, and
Underlying earnings, which the directors consider to be a useful additional
measure of the Group`s performance. Both earnings measures are further explained
below.
The calculation of the basic and diluted earnings per share is
based on the
following data:
US$ million (unless otherwise stated) 2010 2009
Earnings
Basic earnings, being profit for the financial year
attributable to equity shareholders of the Company 6,544 2,425
Effect of dilutive potential ordinary shares
Interest payable on convertible bond (net of tax) 49 32
Unwinding of discount on convertible bond (net of tax) 47 28
Diluted earnings 6,640 2,485
Number of shares (million)
Basic number of ordinary shares outstanding (1) 1,206 1,202
Effect of dilutive potential ordinary shares(2)
Share options and awards 14 11
Convertible bond 61 40
Diluted number of ordinary shares outstanding (1) 1,281 1,253
(1) Basic and diluted number of ordinary shares outstanding represent the
weighted average for the year. The average number of ordinary shares in issue
excludes the shares held by employee benefit trusts and Anglo American plc
shares held by Group companies.
(2) Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
potentially dilutive ordinary shares.
In the year ended 31 December 2010 there were no share options which were anti-
dilutive. In the year ended 31 December 2009 there were 231,351 share options
which were potentially dilutive but were not included in the calculation of
diluted earnings per share because they were anti-dilutive.
In April 2009 the Group issued $1.7 billion of senior convertible notes. The
senior convertible notes were issued with a coupon of 4%, a conversion price of
GBP18.6370 and unless redeemed, converted or cancelled, will mature in 2014. The
Group will have the option to call the senior convertible notes after three
years from the issuance date subject to certain conditions. The impact of this
potential conversion has been included in diluted earnings and diluted number of
ordinary shares outstanding.
Underlying earnings is presented after non-controlling interests and excludes
special items and remeasurements (see note 5). Underlying earnings is distinct
from `Headline earnings`, which is a JSE Limited defined performance measure.
The calculation of basic and diluted earnings per share, based on Headline and
Underlying earnings, uses the following earnings data:
US$ million 2010 2009
Profit for the financial year attributable to equity
shareholders of the Company 6,544 2,425
Operating special items 14 2,180
Operating special items - tax - (67)
Operating special items - non-controlling interests (3) (102)
Net profit on disposals (1,684) (1,632)
Net profit on disposals - tax 123 76
Net profit on disposals - non-controlling interests 138 66
13 7
Financing special items
Headline earnings for the financial year 5,145 2,953
Operating special items(1) 239 394
Operating remeasurements (382) (734)
Net loss on disposals(2) 86 -
Financing remeasurements (106) 128
Special items and remeasurements tax (11) (146)
Non-controlling interests on special items and
remeasurements 5 (26)
Underlying earnings for the financial year 4,976 2,569
(1) Year ended 31 December 2010: includes restructuring costs, accelerated
depreciation and related charges (2009: includes restructuring costs).
(2) Year ended 31 December 2010: includes amounts related to the Anglo American
Inyosi Coal BEE transaction.
11. Financial liabilities analysis
An analysis of borrowings, as presented on the Consolidated balance sheet, is
set out below:
Due within Due after 2010
US$ million one year one year Total
Secured
Bank loans and overdrafts 57 404 461
Obligations under finance leases 5 5 10
Unsecured 62 409 471
Bank loans and overdrafts 1,276 1,536 2,812
Bonds issued under EMTN programme 62 4,346 4,408
US bonds - 3,249 3,249
Convertible bond(1) - 1,434 1,434
Commercial paper - - -
Other loans 135 930 1,065
1,473 11,495 12,968
Total 1,535 11,904 13,439
Due within Due after 2009
US$ million one year one year Total
Secured
Bank loans and overdrafts 416 413 829
Obligations under finance leases 8 11 19
Unsecured 424 424 848
Bank loans and overdrafts 351 3,982 4,333
Bonds issued under EMTN programme 572 4,410 4,982
US bonds - 1,935 1,935
Convertible bond(1) - 1,369 1,369
Commercial paper 67 - 67
Other loans 85 696 781
1,075 12,392 13,467
Total 1,499 12,816 14,315
(1) Represents the fair value of the debt component of the convertible bond at
the date of issue of $1,330 million (net of fees) adjusted for cumulative
unwinding of discount of $104 million (2009: $39 million). The fair value of the
equity conversion feature was $355 million and is presented in equity (refer to
note 12).
The Group had the following undrawn committed borrowing facilities at 31
December:
US$ million 2010 2009
Expiry date
Within one year (1) 3,781 2,247
Greater than one year, less than two years 12 3,090
Greater than two years, less than five years 7,269 4,093
Greater than five years 58 90
11,120 9,520
(1) Includes undrawn rand facilities equivalent to $1.7 billion (2009: $1.5
billion) in respect of a series of facilities with 364 day maturities which roll
automatically on a daily basis, unless notice is served.
In the year ended 31 December 2010 the Group raised $150 million through the
issuance of a $100 million floating rate note, due April 2012 and a $50 million
floating rate note, due September 2012, under the Euro Medium Term Note (EMTN)
programme and ZAR1 billion ($151 million) through the issuance of a fixed rate
note, due in May 2015, under the South African Domestic Medium Term Note
programme.
In July 2010 the Group replaced a $2.5 billion facility maturing in March 2012
with a $3.5 billion facility maturing in July 2015.
In September 2010 the Group raised $1.25 billion through the issuance of senior
notes (US bonds). The senior note offering comprised $750 million 2.15% senior
notes due 2013 and $500 million 4.45% senior notes due 2020.
In February 2011 the Group cancelled its $2.25 billion revolving credit facility
maturing in June 2011. At 31 December 2010 $1.1 billion (2009: nil) was drawn
under the facility which was subsequently repaid.
12. Consolidated equity analysis
Fair value and other reserves comprise:
Convertible Available for Cash flow
US$ million debt reserve sale reserve hedge reserve
Balance at 1 January 2009 - 1,088 (194)
Total comprehensive income - (783) 226
Issue of convertible bond 355 - -
Other - - (1)
Balance at 1 January 2010 355 305 31
Total comprehensive income - 270 7
Changes in ownership interest
in subsidiaries - (107) -
Other - - -
Balance at 31 December 2010 355 468 38
Total fair value
US$ million Other reserves (1) and other reserves
Balance at 1 January 2009 838 1,732
Total comprehensive income - (557)
Issue of convertible bond - 355
Other - (1)
Balance at 1 January 2010 838 1,529
Total comprehensive income - 277
Changes in ownership interest in subsidiaries - (107)
Other (7) (7)
Balance at 31 December 2010 831 1,692
(1) Other reserves comprise a legal reserve of $682 million (2009: $689
million), a revaluation reserve of $34 million (2009: $34 million) and a capital
redemption reserve of $115 million (2009: $115 million).
13. Consolidated cash flow analysis
a) Reconciliation of profit before tax to cash flows from operations
US$ million 2010 2009
Profit before tax 10,928 4,029
Depreciation and amortisation 1,919 1,725
Share-based payment charges 219 204
Net profit on disposals (1,579) (1,612)
Operating and financing remeasurements (491) (504)
Non-cash element of operating special items 134 1,981
Net finance costs before remeasurements 244 273
Share of net income from associates (822) (84)
Provisions (37) (46)
(Increase)/decrease in inventories (309) 23
Increase in operating receivables (587) (360)
Increase/(decrease) in operating payables 516 (573)
Deferred stripping (196) (150)
Other adjustments (15) (2)
Cash flows from operations 9,924 4,904
b) Reconciliation to the balance sheet
Cash and
cash equivalents (1) Short term borrowings
US$ million 2010 2009 2010 2009
Balance sheet 6,401 3,269 (1,535) (1,499)
Balance sheet - trade and other
receivables(2) - - - -
Balance sheet - disposal groups (3) 59 64 - -
Bank overdrafts - (1) - 1
Bank overdrafts - disposal groups (3) - (13) - -
Net debt classifications 6,460 3,319 (1,535) (1,498)
Medium and Current financial
long term borrowings asset investments
US$ million 2010 2009 2010 2009
Balance sheet (11,904) (12,816) - -
Balance sheet - trade and other
receivables(2) - - - 3
Balance sheet - disposal groups (3) - (3) - -
Bank overdrafts - - - -
Bank overdrafts - disposal groups (3) - - - -
Net debt classifications (11,904) (12,819) - 3
(1) `Short term borrowings` on the balance sheet include overdrafts which are
included within cash and cash equivalents in determining net debt.
(2) Current financial asset investments of $3 million at 31 December 2009 have
been reclassified on the balance sheet to other receivables.
(3) Disposal group balances are shown within `Assets classified as held for
sale` and `Liabilities directly associated with assets classified as held for
sale` on the balance sheet.
c) Movement in net debt
Current
Cash and Debt due Debt due financial
cash within after asset
US$ million equivalents (1) one year one year investments
Balance at 1 January 2009 2,744 (6,749) (7,211) 173
Cash flow(3) 259 6,624 (6,253) (200)
Unwinding of discount on
convertible bond - - (39) -
Equity component of
convertible bond(3) - - 355 -
Reclassifications - (917) 917 -
Movement in fair value - - 63 -
Other non-cash movements - (15) (26) 3
Currency movements 316 (441) (625) 27
Balance at 1 January 2010 3,319 (1,498) (12,819) 3
Cash flow 2,857 2,338 (1,194) (7)
Unwinding of discount on
convertible bond - - (65) -
Disposal of businesses - 1 2 -
Reclassifications - (2,359) 2,359 -
Movement in fair value - (6) (180) -
Other non-cash movements - - (11) 3
Currency movements 284 (11) 4 1
Balance at 31
December 2010 6,460 (1,535) (11,904) -
Net debt Net debt
excluding including
US$ million hedges Hedges (2) hedges
Balance at 1 January 2009 (11,043) (297) (11,340)
Cash flow(3) 430 85 515
Unwinding of discount on convertible
bond (39) - (39)
Equity component of convertible bond(3) 355 - 355
Reclassifications - - -
Movement in fair value 63 (73) (10)
Other non-cash movements (38) - (38)
Currency movements (723) - (723)
Balance at 1 January 2010 (10,995) (285) (11,280)
Cash flow 3,994 (217) 3,777
Unwinding of discount on convertible bond (65) - (65)
Disposal of businesses 3 - 3
Reclassifications - - -
Movement in fair value (186) 95 (91)
Other non-cash movements (8) - (8)
Currency movements 278 2 280
Balance at 31 December 2010 (6,979) (405) (7,384)
(1) The Group operates in certain countries (principally South Africa and
Venezuela) where the existence of exchange controls may restrict the use of
certain cash balances. These restrictions are not expected to have a material
effect on the Group`s ability to meet its ongoing obligations.
(2) Derivative instruments that provide an economic hedge of assets and
liabilities in net debt are included above to reflect the true net debt position
of the Group at the year end. These consist of net current derivative assets of
$2 million (2009: $41 million) and net non-current derivative liabilities of
$407 million (2009: $326 million) which are classified within `Other financial
assets (derivatives)` and `Other financial liabilities (derivatives)` on the
balance sheet.
(3) The issue of the convertible bond had a net impact on debt due after one
year at the date of issue of $1,330 million due to the conversion feature of
$355 million which is presented separately in equity.
14. Disposals
Moly-Cop Tarmac
and Bafokeng European
US$ million AltaSteel Skorpion transaction businesses
Net assets disposed
Property, plant and equipment 229 342 348 490
Other non-current assets 145 1 208(1) 303
Current assets 350 176 70 256
Current liabilities (83) (30) (16) (106)
Non-current liabilities (126) (47) (123) (116)
Net assets 515 442 487 827
Non-controlling interests (3) - - (11)
Group`s share of net
assets immediately prior
to disposal 512 442 487 816
Fair value adjustment to
retained investments - - 440 -
Less: Retained investments - - (826) -
Net assets disposed 512 442 101 816
Cumulative translation
differences recycled
from reserves (23) (7) - (10)
Net gain/(loss) on disposals 555 244 106 (294)
Net sale proceeds 1,044 679 207 512
Net cash and cash
equivalents disposed (68) (120) (14) (58)
Non-cash/deferred
consideration - - - -
Accrued transaction
costs and similar items 17 11 - 18
Net cash inflow from
disposals (2) 993 570 193 472
2010 2009
US$ million Other Total Total
Net assets disposed
Property, plant and equipment 34 1,443 425
Other non-current assets 1 658 2
Current assets - 852 48
Current liabilities (5) (240) (34)
Non-current liabilities - (412) (65)
Net assets 30 2,301 376
Non-controlling interests - (14) (3)
Group`s share of net assets immediately prior
to disposal 30 2,287 373
Fair value adjustment to retained investments - 440 -
Less: Retained investments - (826) (235)
Net assets disposed 30 1,901 138
Cumulative translation differences recycled from
reserves - (40) -
Net gain/(loss) on disposals 635 1,246 316
Net sale proceeds 665 3,107 454
Net cash and cash equivalents disposed (20) (280) (10)
Non-cash/deferred consideration (83) (83) (486)
Accrued transaction costs and similar items 5 51 47
Net cash inflow from disposals (2) 567 2,795 5
(1) Includes $202 million of Platinum`s associate investment in Royal Bafokeng
Platinum Limited.
(2) No cash has been received in the year ended 31 December 2010 in respect of
deferred consideration for disposals in 2009 (2009: $64 million in respect of
disposals in 2008). In the year ended 31 December 2010 this resulted in a total
net cash inflow of $2,795 million (2009: $69 million), of which $2,539 million
(2009: $69 million) related to disposals of subsidiaries and $256 million (2009:
nil) to the sale of interests in joint ventures.
Disposals in the year ended 31 December 2010
Disposals of subsidiaries and joint ventures during the year ended 31 December
2010 mainly related to disposals in the Other Mining and Industrial, Platinum
and Metallurgical Coal segments.
Moly-Cop and AltaSteel
On 31 December 2010 the Group completed the sale of Moly-Cop and AltaSteel to
OneSteel Limited resulting in a net cash inflow of $993 million.
Skorpion
The Group announced the sale of its zinc portfolio to Vedanta Resources plc
(Vedanta) on 10 May 2010, for total consideration of $1,338 million on an
attributable, debt and cash free basis. Due to the regulatory approval and
competition clearance processes, separate completion dates were expected for
each of the three businesses within the zinc portfolio, namely Skorpion mine,
Lisheen mine and Black Mountain Mining (Proprietary) Limited. On 3 December 2010
the Group completed the sale of the Skorpion zinc mine in Namibia to Vedanta
resulting in a net cash inflow of $570 million.
Bafokeng-Rasimone Platinum mine (BRPM)
On 7 December 2009 Anglo Platinum Limited exchanged its direct interest of 17%
in BRPM for a 25.4% interest in Royal Bafokeng Platinum Limited (RB Plat) which
was to be listed within 24 months, subject to favourable market conditions. In
November 2010 the BRPM restructuring transaction was completed, which involved a
change in the participation interests of the joint venture from that of joint
control and management by Anglo Platinum Limited to RB Plat holding a majority
interest and operating the joint venture. Until listing on 8 November 2010 Anglo
Platinum Limited retained an effective 50% economic interest in BRPM and
continued to exert joint control. As a result of the primary listing of RB Plat
and the subsequent disposal by Anglo Platinum Limited of a portion of its
shareholding in RB Plat, Anglo Platinum Limited retained an interest of 12.6% in
RB Plat, which is accounted for as a financial asset investment. Anglo Platinum
Limited retains a 33% interest in BRPM, which has been equity accounted from 8
November 2010.
The total gain on the Bafokeng transaction was $546 million, which comprises the
profit on disposal of $106 million and the fair value adjustments to the
retained investments in RB Plat and BRPM of $440 million.
Tarmac European businesses
The Group completed the disposal of Tarmac`s Polish concrete products business
in March 2010, its French and Belgian concrete products business in May 2010,
and its aggregates business in France, Germany, Poland and the Czech Republic in
September 2010, resulting in combined net cash inflows of $472 million.
Other disposals
In December 2010 the Group disposed of undeveloped coal assets in Australia
(Metallurgical Coal segment) resulting in a net cash inflow of $522 million. In
April 2010 Platinum sold its 37% interest in the Western Bushveld joint venture
for consideration of $107 million. This investment had a nominal carrying value.
Disposals in the year ended 31 December 2009
Disposals of subsidiaries and joint ventures in the year ended 31 December 2009
mainly related to disposals in the Platinum segment. In June 2009 Platinum
disposed of a 50% interest in the Booysendal joint venture and a 51% interest in
Bokoni Platinum Mines Limited (and certain other joint venture projects).
15. Disposal groups and non-current assets held for sale
Tarmac disposal groups, which were previously classified as held for sale at 31
December 2009, were disposed of in 2010.
The following assets and liabilities relating to disposal groups were classified
as held for sale. The Group expects to complete the sale of these businesses
within 12 months of the year end.
2010 2009
Zinc disposal Tarmac disposal
US$ million groups (1) groups
Intangible assets 4 13
Property, plant and equipment 117 422
Deferred tax assets - 5
Other non-current assets 49 2
Total non-current assets 170 442
Inventories 26 42
Trade and other receivables 75 72
Cash and cash equivalents 59 64
Total current assets 160 178
Total assets 330 620
Trade and other payables (40) (66)
Short term borrowings - (13)
Provisions for liabilities and charges - (4)
Total current liabilities (40) (83)
Medium and long term borrowings - (3)
Deferred tax liabilities (23) (46)
Provisions for liabilities and charges (72) (55)
Other non-current liabilities (7) (4)
Total non-current liabilities (102) (108)
Total liabilities (142) (191)
Net assets 188 429
(1) Relates to the Group`s portfolio of zinc assets (Other Mining and Industrial
segment) for which disposal transactions had not completed at 31 December 2010
(the Lisheen mine and a 74% interest in Black Mountain Mining (Proprietary)
Limited, which holds 100% of the Black Mountain mine and the Gamsberg proj ect).
The Skorpion mine was disposed of in December 2010 (refer to note 14).
16. Contingent liabilities and contingent assets
Contingent liabilities
The Group is subject to various claims which arise in the ordinary course of
business. Additionally, and as set out in the 2007 demerger agreement, Anglo
American and Mondi have agreed to indemnify each other, subject to certain
limitations, against certain liabilities. Having taken appropriate legal advice,
the Group believes that the likelihood of a material liability arising is
remote.
At 31 December 2010, the Group and its subsidiaries had provided aggregate
amounts of $813 million (2009: $704 million) of loan and performance guarantees
to banks and other third parties primarily in respect of environmental
restoration and decommissioning obligations.
No contingent liabilities were secured on the assets of the Group at 31 December
2010 or 31 December 2009.
Contingent assets
There were no significant contingent assets in the Group at 31 December 2010 or
31 December 2009.
Other
Kumba Iron Ore Limited (Kumba)
Kumba`s Sishen Iron Ore Company (SIOC) notified ArcelorMittal South Africa
Limited (ArcelorMittal) on 5 February 2010, that it was no longer entitled to
receive 6.25 Mtpa of iron ore contract mined by SIOC at cost plus 3% from Sishen
Mine, as a result of the fact that ArcelorMittal had failed to convert its old
order mining right. This contract mining agreement, concluded in 2001, was
premised on ArcelorMittal owning an undivided 21.4% interest in the mineral
rights of Sishen Mine. As a result of ArcelorMittal`s failure to convert its old
order mining right, the contract mining agreement automatically lapsed and
became inoperative in its entirety as of 1 May 2009.
As a result, a dispute arose between SIOC and ArcelorMittal, which SIOC has
referred to arbitration. Following mediation by the Department of Trade and
Industry, SIOC and ArcelorMittal reached an interim pricing arrangement in
respect of the supply of iron ore to ArcelorMittal from the Sishen Mine. This
arrangement will endure until 31 July 2011. Both parties have exchanged their
respective pleadings, and the arbitration panel has been appointed
After ArcelorMittal failed to convert its old order mining right, SIOC applied
for the residual 21.4% mining right previously held by ArcelorMittal and its
application was accepted by the Department of Mineral Resources (DMR) on 4 May
2009. A competing application for a prospecting right over the same area was
also accepted by the DMR. SIOC objected to this acceptance. Notwithstanding this
objection, a prospecting right over the 21.4% interest was granted by the DMR to
Imperial Crown Trading 289 (Proprietary) Limited (ICT). SIOC initiated a review
application in the North Gauteng High Court on 21 May 2010 in relation to the
decision of the DMR to grant a prospecting right to ICT.
SIOC initiated an application on 14 December 2010 to interdict ICT from applying
for a mining right in respect of the Sishen Mine and the DMR from accepting an
application from ICT, nor granting such 21.4% mining right to ICT pending the
final determination of the review application. This application is currently
pending.
The DMR informed SIOC on 12 January 2011 that ICT had applied for a 21.4% mining
right over Sishen Mine on 9 December 2010, and that the DMR had accepted this
application on 23 December 2010. The DMR`s acceptance of the application means
that the mining right application will now be evaluated according to the
detailed process stipulated in the Mineral Resources & Petroleum Development Act
2004 before a decision is made as to whether or not to grant the mining right.
SIOC does not believe that it was lawful for the DMR to have accepted ICT`s
application, pending the High Court Review initiated in May 2010, and has
formally objected to, and appealed against, the DMR`s acceptance of ICT`s mining
right application. SIOC has also requested that its interdict application be
determined on an expedited basis, in order to prevent the DMR from considering
ICT`s mining right application until the finalisation of the review proceedings.
In addition, SIOC is in the process of preparing a challenge against the DMR`s
decision of 25 January 2011 to reject SIOC`s May 2009 application to be granted
the residual 21.4% mining right. Finally, on 26 January 2011, SIOC lodged a new
application for the residual 21.4% mining right.
On 4 February 2011 SIOC made an application to join ArcelorMittal as a
respondent in the review proceedings.
SIOC will continue to take the necessary steps to protect its shareholders`
interests in this regard.
Anglo American South Africa Limited (AASA)
AASA, a wholly owned subsidiary of the Company, is a defendant in 25 separate
lawsuits, each one on behalf of a former mineworker (or his dependents or
survivors) who allegedly contracted silicosis working for gold mining companies
in which AASA was a shareholder and to which AASA provided various technical and
administrative services. The aggregate amount of the 25 claims is less than $5
million, although if these claims are determined adversely to AASA, there are a
substantial number of additional former mineworkers who may seek to bring
similar claims. The first trials of these claims are not expected before late
2012.
17. Related party transactions
The Group has a related party relationship with its subsidiaries, joint ventures
and associates.
The Company and its subsidiaries, in the ordinary course of business, enter into
various sales, purchase and service transactions with joint ventures and
associates and others in which the Group has a material interest. These
transactions are under terms that are no less favourable to the Group than those
arranged with third parties. These transactions are not considered to be
significant.
Dividends received from associates during the year totalled $255 million (2009:
$616 million), as disclosed in the Consolidated cash flow statement.
At 31 December 2010 the Group had provided loans to joint ventures of $319
million (2009: $262 million). These loans are included in financial asset
investments. Amounts payable to joint ventures at 31 December 2010 were $59
million (2009: nil).
At 31 December 2010 the directors of the Company and their immediate relatives
controlled 2% (2009: 3%) of the voting shares of the Company.
Related party transactions with De Beers
During the year, the Group has entered into various transactions with DB
Investments SA and De Beers SA (together De Beers). These transactions are
considered to be related party transactions for the purposes of the UKLA Listing
Rules as a result of the interest in De Beers held by Central Holdings Limited
and certain of its subsidiaries (together CHL) in which Mr N. F. Oppenheimer, a
director of the Company, has a relevant interest for the purpose of the rules.
In February 2010, the shareholders of De Beers agreed, as part of refinancing of
the De Beers group (the Refinancing), that additional equity was required by De
Beers. As a result, such shareholders (including CHL) subscribed, in proportion
to their shareholding, for $1 billion of additional equity in De Beers. The
Group`s share of this equity was $450 million and CHL`s share was $400 million.
Pursuant to the Refinancing, and to satisfy the requirements of the lenders to
De Beers, the shareholders agreed to certain restrictions until specified
financial tests (Normalisation) were met. De Beers has confirmed that
Normalisation occurred during November 2010 and accordingly such restrictions
(other than certain subordination obligations) have fallen away. As part of the
agreed equity subscription, a temporary re-ranking of distribution rights, to be
implemented following Normalisation, was agreed. In pursuance of that agreement,
in November 2010 a $20 million repayment of shareholder loans was made by De
Beers (including to the Group and CHL), pro rata to their individual equity
subscriptions and in priority to existing preferences under the terms of
outstanding preference shares. However, during the period, De Beers also
redeemed the remaining $88 million 10% non-cumulative redeemable preference
shares held by the Group in De Beers, and settled all accrued dividends and
interest, in an aggregate amount of $18 million, relating to such shares.
At 31 December 2010 the amount of outstanding loans owed by De Beers to the
Group and included in Financial asset investments amounted to $358 million
(2009: $367 million). These loans are subordinated in favour of third party
lenders and include:
- dividend reinvestment loans of $133 million (2009: $142 million) advanced
during 2008 and 2009. These loans are interest free for two years from the date
of advance and subsequently interest bearing in line with market rates at the
date of the initial reinvestment; and
- a further shareholder loan of $225 million advanced in 2009. This loan is
interest free for two years after which it reverts to a rate of interest equal
to LIBOR plus 700 basis points until April 2016 and then, provided all interest
payments are up to date, reduces to LIBOR plus 300 basis points.
18. Events occurring after end of year
As set out in note 14, the Group announced the sale of its zinc portfolio to
Vedanta on 10 May 2010, for a total consideration of $1,338 million. Due to the
regulatory approval and competition clearance processes, separate completion
dates were expected for each of the three businesses within the zinc portfolio.
Following regulatory approval from the relevant authorities, the completion of
the sale of Black Mountain Mining (Proprietary) Limited and the Lisheen mine
took place in February 2011 for a combined net cash inflow of approximately $500
million.
On 18 February 2011, the Group and Lafarge SA (Lafarge) announced an agreement
to combine their cement, aggregates, ready-mixed concrete asphalt and
contracting businesses in the United Kingdom, Tarmac Limited (Tarmac UK) and
Lafarge Cement UK, Lafarge Aggregates and Concrete UK (Lafarge UK). The combined
sales of these two businesses in 2010 amounted to GBP1,830 million ($2,815
million), with combined EBITDA of GBP210 million ($323 million). Tarmac UK is
included in the Group`s Other Mining and Industrial segment. The joint venture,
in which each of Anglo American and Lafarge will have a 50% shareholding, will
operate with its own Board of Directors led by an independent Chairman and
executive management teams drawn from both businesses. Completion of the
transaction is conditional upon regulatory approval. Both Lafarge UK and Tarmac
UK operations will continue to operate independently until obtaining such
approvals.
With the exception of the above and the proposed final dividend for 2010 there
have been no material reportable events since 31 December 2010.
Production statistics
The figures below include the entire output of consolidated entities and the
Group`s attributable share of joint ventures, joint arrangements and associates
where applicable, except for Collahuasi in the Copper segment and De Beers which
are quoted on a 100% basis.
2010 2009
Platinum segment (1)
Platinum troy ounces 2,569,900 2,451,600
Palladium troy ounces 1,448,500 1,360,500
Rhodium troy ounces 328,900 349,900
troy ounces 4,347,300 4,162,000
Nickel(2) tonnes 18,500 19,500
Copper(2) tonnes 10,900 11,200
Gold troy ounces 81,300 90,900
Equivalent refined platinum troy ounces 2,484,000 2,464,300
Diamonds segment (De Beers)
(diamonds recovered - carats)
100% basis (Anglo American 45%)
Debswana 22,218,000 17,734,000
Namdeb 1,472,000 929,000
De Beers Consolidated Mines 7,556,000 4,797,000
De Beers Canada 1,751,000 1,140,000
Total diamonds production for De Beers 32,997,000 24,600,000
Anglo American`s share of
diamonds production for De Beers 14,848,700 11,070,000
Copper segment
Collahuasi
100% basis (Anglo American 44%)
Ore mined tonnes 84,060,000 71,197,800
Ore processed Oxide tonnes 7,226,800 7,293,800
Sulphide tonnes 49,119,900 45,348,300
Ore grade processed Oxide % Cu 0.5 0.6
Sulphide % Cu 1.1 1.1
Production Copper concentrate dry metric
tonnes 1,789,300 1,837,900
Copper cathode tonnes 38,800 43,100
Copper in concentrate tonnes 465,200 492,700
Total copper production
for Collahuasi tonnes 504,000 535,800
Anglo American`s share of
copper
production for Collahuasi tonnes 221,800 235,800
Anglo American Sur
Los Bronces mine
Ore mined tonnes 20,021,600 21,115,900
Marginal ore mined tonnes 43,266,400 19,368,700
Las Tortolas
concentrator Ore processed tonnes 18,909,400 20,512,300
Ore grade processed % Cu 1.0 1.1
Average recovery % 88.0 86.3
Production Copper concentrate dry metric
tonnes 598,300 676,100
Copper cathode tonnes 42,600 45,500
Copper in sulphate tonnes 4,100 2,900
Copper in concentrate tonnes 174,700 190,000
Total tonnes 221,400 238,400
El Soldado mine
Ore mined Open pit - ore mined tonnes 4,890,400 7,348,500
Open pit - marginal
ore mined tonnes 101,900 505,600
Underground (sulphide) tonnes 1,390,200 1,501,000
Total tonnes 6,382,500 9,355,100
Ore processed Oxide tonnes 1,532,200 1,689,700
Sulphide tonnes 7,176,100 7,481,500
Ore grade processed Oxide % Cu 0.7 0.7
Sulphide % Cu 0.6 0.7
Production Copper concentrate dry metric
tonnes 174,000 158,700
Copper cathode tonnes 4,700 4,200
Copper in concentrate tonnes 35,700 37,200
Total tonnes 40,400 41,400
(1) See the published results of Anglo Platinum Limited for further analysis of
production information.
(2) Also disclosed within total attributable nickel and copper production.
2010 2009
Copper segment (continued)
Anglo American Sur (continued)
Chagres Smelter
Copper concentrate
smelted tonnes 142,100 140,900
Production Copper blister/anode tonnes 137,900 137,700
Copper blister/anode
(third party) tonnes - 2,500
Acid tonnes 466,700 457,600
Total copper production
for Anglo American
Sur (1) tonnes 261,800 282,300
Anglo American Norte
Mantos Blancos mine
Ore processed Oxide tonnes 4,380,900 4,361,300
Sulphide tonnes 3,924,700 4,248,100
Marginal ore mined tonnes 5,628,900 3,360,000
Ore grade processed Oxide % Cu (soluble) 0.6 0.7
Sulphide % Cu (insoluble) 1.1 1.1
Marginal ore % Cu (soluble) 0.2 0.3
Production Copper concentrate dry metric
tonnes 119,300 125,100
Copper cathode
(third party) tonnes - 8,600
Copper cathode tonnes 39,100 37,600
Copper in concentrate tonnes 39,500 44,000
Total tonnes 78,600 90,200
Mantoverde mine
Ore processed Oxide tonnes 9,223,200 9,676,300
Marginal ore tonnes 5,237,000 4,058,000
Ore grade processed Oxide % Cu (soluble) 0.7 0.7
Marginal ore % Cu (soluble) 0.3 0.3
Production Copper cathode tonnes 61,100 61,500
Total copper production for Anglo
American Norte(1) tonnes 139,700 151,700
Total Copper segment copper production(1) tonnes 623,300 669,800
Platinum copper production tonnes 10,900 11,200
Black Mountain copper production tonnes 2,500 2,200
Total attributable copper production(1) tonnes 636,700 683,200
Nickel segment
Codemin
Ore mined tonnes 493,900 547,700
Ore processed tonnes 488,300 512,000
Ore grade processed % Ni 1.9 2.1
Production tonnes 8,500 9,500
Loma de Niquel
Ore mined tonnes 714,200 822,700
Ore processed tonnes 798,000 641,800
Ore grade processed % Ni 1.6 1.6
Production tonnes 11,700 10,400
Total Nickel segment nickel production tonnes 20,200 19,900
Platinum nickel production tonnes 18,500 19,500
Total attributable nickel production tonnes 38,700 39,400
Iron Ore and Manganese segment
Kumba Iron Ore
Lump tonnes 25,922,300 25,300,000
Fines tonnes 17,462,600 16,643,000
Amapa(2)
Sinter feed tonnes 2,136,900 576,100
Pellet feed tonnes 1,892,500 2,077,100
Total iron ore production tonnes 47,414,300 44,596,200
Samancor(3)
Manganese ore tonnes 2,952,800 1,570,000
Manganese alloys(4) tonnes 312,000 129,000
(1) Includes total concentrate, cathode and copper in sulphate production and
blister/anode produced from third party purchased material.
(2) At 31 December 2009 Amapa was not in commercial production and therefore to
this date all revenue and related costs were capitalised. Commercial production
commenced on 1 January 2010.
(3) Saleable production.
(4) Production includes Medium Carbon Ferro Manganese.
2010 2009
Coal (tonnes)
Metallurgical Coal segment
Australia
Metallurgical 14,701,800 12,622,600
Thermal 14,460,500 14,051,800
Total Metallurgical Coal segment coal production 29,162,300 26,674,400
Thermal Coal segment
South Africa
Metallurgical 436,500 747,100
Thermal 21,612,000 22,185,900
Eskom 36,403,400 36,225,100
58,451,900 59,158,100
Colombia
10,060,100 10,189,600
Thermal
Total Thermal Coal segment coal production(1) 68,512,000 69,347,700
Other Mining and Industrial segment
South America
Thermal 441,400 750,700
Canada
Metallurgical 868,000 645,300
Thermal - 73,000
868,000 718,300
Total Other Mining and Industrial segment coal
production 1,309,400 1,469,000
Total coal production(1) 98,983,700 97,491,100
Coal (tonnes)
Metallurgical Coal segment
Australia
Callide 8,515,600 8,766,400
Drayton 4,206,000 3,630,200
Capcoal 5,460,300 4,598,900
Jellinbah 1,792,500 1,745,800
Moranbah North 3,937,800 2,581,000
Dawson 3,584,400 3,756,200
Foxleigh 1,665,700 1,595,900
Total Metallurgical Coal segment coal production 29,162,300 26,674,400
Thermal Coal segment
South Africa
Greenside 3,425,000 3,294,600
Goedehoop 6,026,200 6,905,000
Isibonelo 4,569,100 5,061,900
Kriel 9,526,100 11,161,700
Kleinkopje 4,423,600 4,414,000
Landau 4,085,800 4,231,500
New Denmark 5,051,600 3,728,900
New Vaal 17,235,300 17,553,700
Nooitgedacht - 475,000
Mafube 2,447,700 2,212,800
Zibulo(1) 1,661,500 119,000
58,451,900 59,158,100
Colombia
10,060,100 10,189,600
Carbones del Cerrejon
Total Thermal Coal segment coal production(1) 68,512,000 69,347,700
Other Mining and Industrial segment
South America
Carbones del Guasare(2) 441,400 750,700
Canada
Peace River Coal 868,000 718,300
Total Other Mining and Industrial segment coal
production 1,309,400 1,469,000
Total coal production(1) 98,983,700 97,491,100
(1) Zibulo (previously Zondagsfontein) is currently not in commercial production
and therefore all revenue and related costs associated with 1,662 kt (2009: 119
kt) of production have been capitalised. The 1,662 kt includes Eskom coal of 765
kt (2009: 33 kt) and export thermal coal production of 897 kt (2009: 86 kt).
(2) At 31 December 2010 Carbones del Guasare had ceased to be an associate of
the Company.
2010
Coal (tonnes) (continued)
Total coal production by
commodity (tonnes)
Metallurgical
South Africa 436,500
Australia 14,701,800
Canada 868,000
Total metallurgical coal
production 16,006,300
Thermal
South Africa - Thermal 21,612,000
South Africa - Eskom 36,403,400
Australia 14,460,500
South America 10,501,500
Canada -
Total thermal coal
production(1) 82,977,400
Total coal production(1) 98,983,700
Other Mining and
Industrial segment (2)
Tarmac
Aggregates tonnes 58,875,600
Lime products tonnes 1,255,900
Concrete m3 3,305,800
Zinc and Lead
Skorpion(3)
Ore mined tonnes 1,412,600
Ore processed tonnes 1,358,000
Ore grade processed Zinc % Zn 11.2
Production Zinc tonnes 138,500
Lisheen
Ore mined tonnes 1,531,700
Ore processed tonnes 1,587,600
Ore grade processed Zinc % Zn 12.2
Lead % Pb 1.9
Production Zinc in concentrate tonnes 175,100
Lead in concentrate tonnes 20,600
Black Mountain
Ore mined tonnes 1,415,500
Ore processed tonnes 1,378,600
Ore grade processed Zinc % Zn 3.3
Lead % Pb 4.2
Copper % Cu 0.3
Production Zinc in concentrate tonnes 36,100
Lead in concentrate tonnes 50,600
Copper in concentrate tonnes 2,500
Total attributable zinc
production tonnes 349,700
Total attributable lead
production tonnes 71,200
Scaw Metals
South Africa Steel
Products tonnes 710,000
International Steel
Products(4) tonnes 794,200
Copebras
Phosphates tonnes 1,002,000
Niobium
Catalao
Ore mined tonnes 1,209,400
Ore processed tonnes 909,300
Ore grade processed Kg Nb/tonne 6.6
Production tonnes 4,000
2009
Coal (tonnes) (continued)
Total coal production by
commodity (tonnes)
Metallurgical
South Africa 747,100
Australia 12,622,600
Canada 645,300
Total metallurgical coal
production 14,015,000
Thermal
South Africa - Thermal 22,185,900
South Africa - Eskom 36,225,100
Australia 14,051,800
South America 10,940,300
Canada 73,000
Total thermal coal
production(1) 83,476,100
Total coal production(1) 97,491,100
Other Mining and
Industrial segment (2)
Tarmac
Aggregates tonnes 72,767,300
Lime products tonnes 1,214,400
Concrete m3 3,521,200
Zinc and Lead
Skorpion(3)
Ore mined tonnes 1,495,900
Ore processed tonnes 1,426,800
Ore grade processed Zinc % Zn 11.5
Production Zinc tonnes 150,400
Lisheen
Ore mined tonnes 1,534,500
Ore processed tonnes 1,526,200
Ore grade processed Zinc % Zn 12.4
Lead % Pb 1.8
Production Zinc in concentrate tonnes 171,800
Lead in concentrate tonnes 19,200
Black Mountain
Ore mined tonnes 1,249,700
Ore processed tonnes 1,293,200
Ore grade processed Zinc % Zn 2.8
Lead % Pb 4.0
Copper % Cu 0.3
Production Zinc in concentrate tonnes 28,200
Lead in concentrate tonnes 49,100
Copper in concentrate tonnes 2,200
Total attributable zinc
production tonnes 350,400
Total attributable lead
production tonnes 68,300
Scaw Metals
South Africa Steel
Products tonnes 693,000
International Steel
Products(4) tonnes 718,000
Copebras
Phosphates tonnes 829,000
Niobium
Catalao
Ore mined tonnes 906,700
Ore processed tonnes 873,500
Ore grade processed Kg Nb/tonne 9.3
Production tonnes 5,100
(1) Zibulo (previously Zondagsfontein) is currently not in commercial production
and therefore all revenue and related costs associated with 1,662 kt (2009: 119
kt) of production have been capitalised. The 1,662 kt includes Eskom coal of 765
kt (2009: 33 kt) and export thermal coal production of 897 kt (2009: 86 kt).
(2) Production for Coal Americas is included in Coal production section.
(3) The Group sold its interest in Skorpion in December 2010.
(4) Relates to production from Moly-Cop and AltaSteel. The Group sold its
interests in Moly-Cop and AltaSteel in December 2010.
Quarterly production statistics
31 December 30 September 30 June 31 March
2010 2010 2010 2010
Platinum segment
Platinum (troy ounces) 872,400 697,000 553,800 446,700
Palladium (troy ounces) 502,600 404,500 294,400 247,000
Rhodium (troy ounces) 111,400 88,600 67,300 61,600
Nickel (tonnes) 5,000 4,300 4,800 4,400
Equivalent refined
platinum (troy ounces) 640,100 648,300 600,900 594,700
Diamonds segment
(De Beers)
(diamonds recovered
- carats)
100% basis (Anglo
American 45%)
Diamonds 8,532,000 9,033,000 8,420,000 7,012,000
Copper segment
(tonnes)(1) 154,400 153,400 154,700 160,800
Nickel segment
(tonnes)(2) 4,400 5,700 5,300 4,800
Iron Ore and
Manganese
segment (tonnes)
Iron ore(3) 11,807,700 11,819,200 11,458,700 12,328,700
Manganese ore(4) 731,600 848,800 688,400 684,000
Manganese
alloys(4)(5) 76,800 79,600 87,200 68,400
Metallurgical Coal
segment (tonnes)
Metallurgical 3,651,300 3,971,000 3,797,900 3,281,600
Thermal 3,727,500 3,413,000 3,970,200 3,349,800
Thermal Coal
segment (tonnes) (6)
Metallurgical 103,000 111,700 110,400 111,400
Thermal 8,200,700 8,240,300 7,813,000 7,418,100
Eskom 9,484,800 10,431,300 8,275,300 8,212,000
Other Mining and
Industrial
segment (tonnes)(7)
Metallurgical coal 240,200 226,400 206,700 194,700
Thermal coal 48,600 129,900 89,900 173,000
Zinc 77,300 93,700 91,000 87,700
Lead 18,200 22,200 15,400 15,400
South Africa Steel
Products 151,000 180,000 197,000 182,000
International Steel
Products 200,400 215,000 188,800 190,000
Coal production by
commodity (tonnes)(6)
Metallurgical 3,994,500 4,309,100 4,115,000 3,587,700
Thermal 11,976,800 11,783,200 11,873,100 10,940,900
Eskom 9,484,800 10,431,300 8,275,300 8,212,000
Quarter ended % Change (Quarter ended)
31 December 31 December
2010 v 2010 v
31 December 30 September 31 December
2009 2010 2009
Platinum segment
Platinum (troy ounces) 766,000 25% 14%
Palladium (troy ounces) 426,300 24% 18%
Rhodium (troy ounces) 93,900 26% 19%
Nickel (tonnes) 5,300 16% (6)%
Equivalent refined platinum
(troy ounces) 603,900 (1)% 6%
Diamonds segment (De Beers)
(diamonds recovered - carats)
100% basis (Anglo American 45%)
Diamonds 10,124,000 (6)% (16)%
Copper segment (tonnes)(1) 185,900 1% (17)%
Nickel segment (tonnes)(2) 4,900 (23)% (10)%
Iron Ore and Manganese
segment (tonnes)
Iron ore(3) 12,407,200 - (5)%
Manganese ore(4) 615,000 (14)% 19%
Manganese alloys(4)(5) 52,000 (4)% 48%
Metallurgical Coal segment
(tonnes)
Metallurgical 3,805,500 (8)% (4)%
Thermal 3,487,400 9% 7%
Thermal Coal segment
(tonnes) (6)
Metallurgical 130,500 (8)% (21)%
Thermal 7,785,400 - 5%
Eskom 8,448,400 (9)% 12%
Other Mining and Industrial
segment (tonnes)(7)
Metallurgical coal 149,900 6% 60%
Thermal coal 310,200 (63)% (84)%
Zinc 86,500 (18)% (11)%
Lead 18,900 (18)% (4)%
South Africa Steel Products 167,000 (16)% (10)%
International Steel Products 177,000 (7)% 13%
Coal production by commodity
(tonnes)(6)
Metallurgical 4,085,900 (7)% (2)%
Thermal 11,583,000 2% 3%
Eskom 8,448,400 (9)% 12%
(1) Excludes Platinum and Black Mountain mine copper production.
(2) Excludes Platinum nickel production.
(3) At 31 December 2009 Amapa was not in commercial production and therefore to
this date all revenue and related costs were capitalised. Commercial production
commenced on 1 January 2010.
(4) Saleable production.
(5) Production includes Medium Carbon Ferro Manganese.
(6) Zibulo (previously Zondagsfontein) is currently not in commercial production
and therefore all revenue and related costs associated with 1,662 kt (2009: 119
kt) of production have been capitalised. The 1,662 kt includes Eskom coal of 765
kt (2009: 33 kt) and export thermal coal production of 897 kt (2009: 86 kt).
(7) Excludes Tarmac, Copebras and Catalao.
Exchange rates and commodity prices
US$ exchange rates 2010 2009
Average prices for the year
Rand 7.32 8.41
Sterling 0.65 0.64
Euro 0.75 0.72
Australian dollar 1.09 1.26
Chilean peso 510 559
Brazilian real 1.76 2.00
Year end spot prices
Rand 6.60 7.38
Sterling 0.64 0.62
Euro 0.75 0.70
Australian dollar 0.98 1.11
Chilean peso 468 507
Brazilian real 1.66 1.74
Commodity prices 2010 2009
Average market prices for the year
Platinum(1) US$/oz 1,610 1,211
Palladium(1) US$/oz 527 266
Rhodium(1) US$/oz 2,453 1,592
Copper(2) US cents/lb 342 234
Nickel(2) US cents/lb 989 667
Zinc(2) US cents/lb 98 75
Lead(2) US cents/lb 97 78
Iron ore (FOB Australia)(3) US$/tonne 136 68
Thermal coal (FOB South Africa)(4) US$/tonne 92 64
Thermal coal (FOB Australia)(4) US$/tonne 99 72
Hard coking coal (FOB Australia)(5) US$/tonne 191 172
Year end spot prices
Platinum(1) US$/oz 1,755 1,475
Palladium(1) US$/oz 797 402
Rhodium(1) US$/oz 2,425 2,500
Copper(2) US cents/lb 442 333
Nickel(2) US cents/lb 1,132 838
Zinc(2) US cents/lb 110 117
Lead(2) US cents/lb 117 109
Iron ore (FOB Australia)(3) US$/tonne 163 109
Thermal coal (FOB South Africa)(4) US$/tonne 129 81
Thermal coal (FOB Australia)(4) US$/tonne 126 88
Hard coking coal (FOB Australia)(6) US$/tonne 209 129
(1) Source: Johnson Matthey.
(2) Source: LME daily prices.
(3) Source: Platts.
(4) Source: McCloskey.
(5) Source: 2010 represents the quarterly benchmark, with quarter one 2010 being
the final quarter of the annual settlement for JFY 2009-2010. 2009 represents
average annual benchmark, with quarter one 2009 being the final quarter of the
annual settlement for JFY 2008-2009.
(6) Source: 2010 represents the quarter four benchmark and 2009 represents
closing annual benchmark.
Summary by business operation
Revenue (1) EBITDA (2)
US$ million 2010 2009 2010 2009
Platinum 6,602 4,535 1,624 677
Diamonds 2,644 1,728 666 215
Copper 4,877 3,967 3,086 2,254
Anglo American Sur 2,075 1,723 1,263 994
Anglo American Norte 1,073 833 661 408
Collahuasi 1,729 1,411 1,276 952
Projects and corporate - - (114) (100)
Nickel 426 348 122 28
Codemin 195 157 83 49
Loma de Niquel 231 191 82 11
Projects and corporate - - (43) (32)
Iron Ore and Manganese 6,612 3,419 3,856 1,593
Kumba Iron Ore 5,310 2,816 3,514 1,562
Iron Ore Brazil 319 - (73) (135)
Samancor 983 603 415 166
Metallurgical Coal 3,377 2,239 1,116 706
Australia 3,377 2,239 1,147 729
Projects and corporate - - (31) (23)
Thermal Coal 2,866 2,490 872 875
South Africa 2,105 1,748 539 550
Colombia 761 742 358 352
Projects and corporate - - (25) (27)
Other Mining and Industrial 5,520 5,908 912 878
Tarmac(4) 2,376 2,870 188 313
Skorpion(5) 311 236 154 100
Lisheen(5) 265 208 114 74
Black Mountain(5) 197 148 73 59
Scaw Metals(6) 1,579 1,384 213 172
Copebras 461 320 104 (9)
Catalao 152 184 71 111
Coal Americas 179 165 18 6
Tongaat Hulett/Hulamin(7) - 393 - 73
Projects and corporate - - (23) (21)
Exploration - - (136) (172)
Corporate Activities and
Unallocated Costs 5 3 (135) (124)
32,929 24,637 11,983 6,930
Operating profit Underlying
/(loss) (3) earnings
US$ million 2010 2009 2010 2009
Platinum 837 32 425 44
Diamonds 495 64 302 (90)
Copper 2,817 2,010 1,721 1,201
Anglo American Sur 1,125 862 685 444
Anglo American Norte 624 369 419 197
Collahuasi 1,186 880 738 663
Projects and corporate (118) (101) (121) (103)
Nickel 96 2 75 (13)
Codemin 76 41 48 24
Loma de Niquel 65 (7) 55 17
Projects and corporate (45) (32) (28) (54)
Iron Ore and Manganese 3,681 1,489 1,423 571
Kumba Iron Ore 3,396 1,487 1,210 490
Iron Ore Brazil (97) (141) (77) (119)
Samancor 382 143 290 200
Metallurgical Coal 783 451 585 322
Australia 814 474 616 345
Projects and corporate (31) (23) (31) (23)
Thermal Coal 710 721 512 517
South Africa 426 442 314 328
Colombia 309 305 223 215
Projects and corporate (25) (26) (25) (26)
Other Mining and Industrial 661 506 522 403
Tarmac(4) 48 101 67 81
Skorpion(5) 134 43 133 40
Lisheen(5) 114 73 99 67
Black Mountain(5) 73 59 47 60
Scaw Metals(6) 170 131 119 70
Copebras 81 (40) 48 7
Catalao 67 106 38 77
Coal Americas (3) (8) 1 (12)
Tongaat Hulett/Hulamin(7) - 62 - 31
Projects and corporate (23) (21) (30) (18)
Exploration (136) (172) (128) (167)
Corporate Activities and
Unallocated Costs (181) (146) (461) (219)
9,763 4,957 4,976 2,569
(1) Revenue includes the Group`s attributable share of revenue of joint ventures
and associates. Revenue for copper and zinc operations is shown after deduction
of treatment and refining charges (TC/RCs).
(2) Earnings before interest, tax, depreciation and amortisation (EBITDA) is
operating profit before special items, remeasurements, depreciation and
amortisation in subsidiaries and joint ventures and includes attributable share
of EBITDA of associates.
(3) Operating profit includes operating profit before special items and
remeasurements from subsidiaries and joint ventures and attributable share of
operating profit (before interest, tax, non-controlling interests, special items
and remeasurements) of associates.
(4) In the year ended 31 December 2010 Tarmac sold its Polish and French and
Belgian concrete products businesses and the majority of its European Aggregates
businesses. See Disposals note 14.
(5) Skorpion, Lisheen and Black Mountain comprise the Group`s portfolio of
operating zinc assets. The Group completed the disposal of its interest in
Skorpion mine in December 2010. Lisheen and Black Mountain were classified as
held for sale at 31 December 2010. See Disposals note 14 and Disposal groups and
non-current assets held for sale note 15.
(6) Scaw Metals includes Moly-Cop and AltaSteel which were disposed of in
December 2010. See Disposals note 14.
(7) The Group`s investments in Tongaat Hulett and Hulamin were disposed of in
August 2009 and July 2009, respectively.
Key financial data
US$ million (unless otherwise
stated) 2010 2009 2008 2007
Group revenue including associates 32,929 24,637 32,964 30,559
Less: Share of associates` revenue (4,969) (3,779) (6,653) (5,089)
Group revenue 27,960 20,858 26,311 25,470
Operating profit including
associates before special items
and remeasurements 9,763 4,957 10,085 9,590
Special items and remeasurements
(excluding financing and
tax special items and
remeasurements) 1,727 (208) (330) (227)
Net finance costs (including
financing special items and
remeasurements), tax and
non-controlling interests of
associates (423) (313) (783) (434)
Total profit from operations and
associates 11,067 4,436 8,972 8,929
Net finance costs (including
financing special items and
remeasurements) (139) (407) (401) (108)
Profit before tax 10,928 4,029 8,571 8,821
Income tax expense (including
special items and remeasurements) (2,809) (1,117) (2,451) (2,693)
Profit for the financial year -
continuing operations 8,119 2,912 6,120 6,128
Profit for the financial year -
discontinued operations - - - 2,044
Profit for the financial year -
total Group 8,119 2,912 6,120 8,172
Non-controlling interests (1,575) (487) (905) (868)
Profit attributable to equity
shareholders of the Company 6,544 2,425 5,215 7,304
Underlying earnings(2) -
continuing operations 4,976 2,569 5,237 5,477
Underlying earnings(2) -
discontinued operations - - - 284
Underlying earnings(2) - total
Group 4,976 2,569 5,237 5,761
Earnings per share (US$) -
continuing operations 5.43 2.02 4.34 4.04
Earnings per share (US$) -
discontinued operations - - - 1.54
Earnings per share (US$) - total
Group 5.43 2.02 4.34 5.58
Underlying earnings per share
(US$) - continuing operations 4.13 2.14 4.36 4.18
Underlying earnings per share
(US$) - discontinued operations - - - 0.22
Underlying earnings per share
(US$) - total Group 4.13 2.14 4.36 4.40
Ordinary dividend per share (US cents)65.0 - 44.0 124.0
Special dividend per share (US cents) - - - -
Weighted average basic number of
shares outstanding (million) 1,206 1,202 1,202 1,309
EBITDA(3) - continuing operations 11,983 6,930 11,847 11,171
EBITDA(3) - discontinued operations - - - 961
EBITDA(3) - total Group 11,983 6,930 11,847 12,132
EBITDA interest cover(4) - total
Group 42.0 27.4 28.3 42.0
Operating margin (before special
items and remeasurements) -
total Group 29.6% 20.1% 30.6% 28.4%
Ordinary dividend cover (based on
underlying earnings per
share) - total Group 6.4 - 9.9 3.5
US$ million (unless otherwise stated) 2006 (1) 2005 (1) 2004 (1)
Group revenue including associates 29,404 24,872 22,610
Less: Share of associates` revenue (4,413) (4,740) (5,429)
Group revenue 24,991 20,132 17,181
Operating profit including associates
before special items
and remeasurements 8,888 5,549 3,832
Special items and remeasurements (excluding
financing and
tax special items and remeasurements) 24 16 556
Net finance costs (including financing
special items and
remeasurements), tax and non-controlling
interests of associates (398) (315) (391)
Total profit from operations and associates 8,514 5,250 3,997
Net finance costs (including financing
special items and
remeasurements) (71) (220) (385)
Profit before tax 8,443 5,030 3,612
Income tax expense (including special items
and remeasurements) (2,518) (1,208) (765)
Profit for the financial year - continuing
operations 5,925 3,822 2,847
Profit for the financial year -
discontinued operations 997 111 1,094
Profit for the financial year - total Group 6,922 3,933 3,941
Non-controlling interests (736) (412) (440)
Profit attributable to equity shareholders
of the Company 6,186 3,521 3,501
Underlying earnings(2) - continuing
operations 5,019 3,335 2,178
Underlying earnings(2) - discontinued
operations 452 401 506
Underlying earnings(2) - total Group 5,471 3,736 2,684
Earnings per share (US$) - continuing
operations 3.51 2.35 1.84
Earnings per share (US$) - discontinued
operations 0.70 0.08 0.60
Earnings per share (US$) - total Group 4.21 2.43 2.44
Underlying earnings per share (US$) -
continuing
operations 3.42 2.30 1.52
Underlying earnings per share (US$) -
discontinued operations 0.31 0.28 0.35
Underlying earnings per share (US$) - total
Group 3.73 2.58 1.87
Ordinary dividend per share (US cents) 108.0 90.0 70.0
Special dividend per share (US cents) 67.0 33.0 -
Weighted average basic number of shares
outstanding (million) 1,468 1,447 1,434
EBITDA(3) - continuing operations 10,431 7,172 5,359
EBITDA(3) - discontinued operations 1,766 1,787 1,672
EBITDA(3) - total Group 12,197 8,959 7,031
EBITDA interest cover(4) - total Group 45.5 20.0 18.5
Operating margin (before special items and
remeasurements) - total Group 25.4% 18.5% 14.7%
Ordinary dividend cover (based on
underlying earnings per
share) - total Group 3.5 2.9 2.7
See following page for footnotes.
US$ million (unless otherwise
stated) 2010 2009 2008 2007 (1)
Balance sheet
Intangible assets and property,
plant and equipment 42,126 37,974 32,551 25,090
Other non-current assets and
investments (5) 9,852 7,303 7,607 9,271
Working capital 2,385 2,168 861 1,966
Other net current liabilities(5) (785) (272) (840) (911)
Other non-current liabilities
and obligations (5) (8,757) (8,487) (7,567) (6,387)
Cash and cash equivalents and
borrowings (6) (7,038) (11,046) (11,051) (5,170)
Net assets classified as held
for sale 188 429 195 471
Net assets 37,971 28,069 21,756 24,330
Non-controlling interests (3,732) (1,948) (1,535) (1,869)
Equity attributable to equity
shareholders of the Company 34,239 26,121 20,221 22,461
Total capital(7) 45,355 39,349 33,096 29,181
Cash flows from operations -
continuing operations 9,924 4,904 9,579 9,375
Cash flows from operations -
discontinued operations - - - 470
Cash flows from operations -
total Group 9,924 4,904 9,579 9,845
Dividends received from
associates and financial asset
investments - continuing
operations 285 639 659 311
Dividends received from
associates and financial asset
investments - discontinued
operations - - - 52
Dividends received from
associates and financial asset
investments - total Group 285 639 659 363
Return on capital employed(8) -
total Group 24.8% 14.4% 36.9% 38.0%
EBITDA/average total capital(7)
- total Group 28.3% 19.1% 38.0% 40.8%
Net debt to total capital
(gearing) (9) 16.3% 28.7% 34.3% 16.6%
US$ million (unless otherwise stated) 2006 (1) 2005 (1) 2004
Balance sheet
Intangible assets and property, plant and
equipment 25,632 33,368 35,816
Other non-current assets and investments (5) 8,258 5,585 5,547
Working capital 3,096 3,538 3,543
Other net current liabilities(5) (1,430) (1,429) (611)
Other non-current liabilities and
obligations (5) (5,826) (8,491) (8,339)
Cash and cash equivalents and borrowings (6) (3,244) (4,993) (8,243)
Net assets classified as held for sale 641 - -
Net assets 27,127 27,578 27,713
Non-controlling interests (2,856) (3,957) (4,588)
Equity attributable to equity shareholders
of the Company 24,271 23,621 23,125
Total capital(7) 30,258 32,558 35,806
Cash flows from operations - continuing
operations 9,012 5,963 3,857
Cash flows from operations - discontinued
operations 1,045 1,302 1,434
Cash flows from operations - total Group 10,057 7,265 5,291
Dividends received from associates and
financial asset
investments - continuing operations 251 468 380
Dividends received from associates and
financial asset
investments - discontinued operations 37 2 16
Dividends received from associates and
financial asset
investments - total Group 288 470 396
Return on capital employed(8) - total Group 32.6% 18.8% 16.9%
EBITDA/average total capital(7) - total Group 38.8% 26.2% 21.3%
Net debt to total capital (gearing) (9) 10.3% 15.3% 22.6%
(1) Comparatives for 2006, 2005 and 2004 were adjusted in the 2007 Annual Report
to reclassify amounts relating to discontinued operations where applicable.
(2) Underlying earnings is net profit attributable to equity shareholders,
adjusted for the effect of special items and remeasurements and any related tax
and non- controlling interests.
(3) EBITDA is operating profit before special items, remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and includes
attributable share of EBITDA of associates.
(4) EBITDA interest cover is EBITDA divided by net finance costs, excluding
other net financial income, exchange gains and losses on monetary assets and
liabilities, unwinding of discount relating to provisions and other non-current
liabilities, financing special items and remeasurements, but including
attributable share of associates` net interest expense.
(5) Comparatives for 2008, 2007, 2006 and 2005 were adjusted in the 2009 Annual
Report in accordance with IAS 1 Presentation of Financial Statements -
Improvements to reclassify non-hedge derivatives whose expected settlement date
was more than one year from the period end from current to non-current.
(6) This differs from the Group`s measure of net debt as it excludes the net
debt of disposal groups (2010: $59 million; 2009: $48 million; 2008: $8 million;
2007: $(69) million; 2006: $(80) million; 2005: nil; 2004: nil) and
excludes related hedges (2010: liabilities of $405 million; 2009: liabilities
of $285 million; 2008: liabilities of $297 million; 2007: assets of $388
million; 2006: assets of $193 million; 2005: nil; 2004: nil). For more detail
see note 13 Consolidated cash flow analysis.
(7) Total capital is net assets excluding net debt.
(8) Return on capital employed is calculated as total operating profit before
impairments for the year divided by the average of total capital less other
investments and adjusted for impairments.
(9) Net debt to total capital is calculated as net debt (including related
hedges) divided by total capital. Comparatives are presented on a consistent
basis.
Reconciliation of subsidiaries` and associate`s reported earnings to the
underlying earnings included in the Condensed financial statements
For the year ended 31 December 2010
Note only key reported lines are reconciled.
Anglo Platinum Limited
US$ million 2010 2009
IFRS headline earnings (US$ equivalent of published) 674 84
Exploration 11 17
Operating and financing remeasurements (net of tax) (21) 27
Restructuring costs included in headline earnings (net of tax) 28 27
Other adjustments (1) 2
691 157
Non-controlling interests (140) (31)
Elimination of intercompany interest 29 47
Depreciation on assets fair valued on acquisition (net of tax) (102) (83)
Corporate cost allocation (53) (46)
Contribution to Anglo American plc underlying earnings 425 44
De Beers Societe Anonyme
US$ million 2010 2009
De Beers underlying earnings (100%) 598 (220)
Difference in IAS 19 accounting policy 53 5
De Beers underlying earnings - Anglo American plc basis (100%) 651 (215)
Anglo American plc`s 45% ordinary share interest 293 (97)
Income from preference shares 9 9
Other adjustments - (2)
Contribution to Anglo American plc underlying earnings 302 (90)
Kumba Iron Ore Limited
US$ million 2010 2009
IFRS headline earnings (US$ equivalent of published) 1,964 845
Exploration 9 3
Other adjustments 1 (2)
1,974 846
Non-controlling interests (710) (314)
Elimination of intercompany interest 2 (10)
Depreciation on assets fair valued on acquisition (net of tax) (9) (7)
Corporate cost allocation (47) (39)
Other adjustments - 14
Contribution to Anglo American plc underlying earnings 1,210 490
ANGLO AMERICAN plc
(Incorporated in England and Wales - Registered number 3564138)
(the Company)
Notice of Final Dividend
(Dividend No. 21)
The directors have recommended that a dividend on the Company`s ordinary share
capital in respect of the year ended 31 December 2010 will, subject to approval
by shareholders at the Annual General Meeting to be held on Thursday 21 April
2011, be paid as follows:
Amount (United States currency) 40 cents per ordinary share (note 1)
Amount (South African currency) R2.8906 per ordinary share
Last day to effect removal of shares
between the UK and SA registers Thursday 17 February 2011
Last day to trade on the JSE Limited
(JSE) to qualify for dividend Friday 25 March 2011
Ex-dividend on the JSE from the
commencement of trading on Monday 28 March 2011 (note 2)
Ex-dividend on the London Stock Exchange
from the commencement of trading on Wednesday 30 March 2011
Record date (applicable to both the
United Kingdom principal register and
South African branch register) Friday 1 April 2011
Last day for receipt of US$:GBP/ currency
elections by the UK Registrars (note 1) Tuesday 5 April 2011
Last day for receipt of Dividend
Reinvestment Plan (DRIP) mandate forms by the UK
Registrars (notes 3, 4 and 5) Tuesday 5 April 2011
Last day for receipt of DRIP mandate
forms by Central Securities Depository
Participants
(CDSPs) (notes 3, 4 and 5) Thursday 7 April 2011
Last day for receipt of DRIP mandate
forms by South African Transfer
Secretaries
(notes 3, 4 and 5) Monday 11 April 2011
Currency conversion US$:GBP/ rates
announced on Wednesday 13 April 2011
Removal of shares between the UK and SA
registers permissible from Wednesday 13 April 2011
Dividend warrants posted SA Tuesday 26 April 2011
Dividend warrants posted UK Wednesday 27 April 2011
Payment date of dividend Thursday 28 April 2011
Notes
1. Shareholders on the United Kingdom register of members with an address in the
United Kingdom will be paid in pounds sterling and those with an address in a
country in the European Union which has adopted the euro, will be paid in euros.
Such shareholders may, however, elect to be paid their dividends in US dollars.
Shareholders with an address elsewhere will be paid in US dollars except those
registered on the South African branch register who will be paid in South
African rand.
2. Dematerialisation and rematerialisation of registered share certificates in
South Africa will not be effected by CSDPs during the period from the JSE ex-
dividend date to the record date (both days inclusive).
3. Those shareholders who already participate in the DRIP need not complete a
DRIP mandate form for each dividend as such forms provide an ongoing authority
to participate in the DRIP until cancelled in writing. Shareholders who wish to
participate in the DRIP should obtain a mandate form from the UK Registrars, the
South African Transfer Secretaries or, in the case of those who hold their
shares through the STRATE system, their CSDP.
4. In terms of the DRIP, and subject to the purchase of shares in the open
market, share certificates/CREST notifications are expected to be mailed and
CSDP investor accounts credited/updated on Thursday 5 May 2011. CREST accounts
will be credited on Friday 6 May 2011.
5. Copies of the terms and conditions of the DRIP are available from the UK
Registrars or the South African Transfer Secretaries.
Registered office
20 Carlton House Terrace
London
SW1Y 5AN
England
UK Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
England
South African Transfer Secretaries
Link Market Services South Africa (Pty) Limited
11 Diagonal Street
Johannesburg 2001
South Africa
(PO Box 4844, Johannesburg 2000)
Sponsor: UBS South Africa (Pty) Ltd
Date: 18/02/2011 09:27:01 Produced by the JSE SENS Department.
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