| Fri 17 Feb 2012, 8:42 | | AGL - Anglo American plc - Anglo American announces record EBITDA of $13.3 |
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AGL
ANAAL
AGL - Anglo American plc - Anglo American announces record EBITDA of $13.3
billion and 23% increase in underlying EPS
Anglo American plc
Incorporated in the United Kingdom
(Registration number: 3564138)
Short name: Anglo
Share code: AGL
ISIN number: GB00B1XZS820
Anglo American announces record EBITDA of $13.3 billion and 23% increase in
underlying EPS
Financial results driven by impressive operational performance and higher
prices
- Record Group operating profit (1) of $11.1 billion
- Record underlying earnings (2) of $6.1 billion and underlying EPS of $5.06,
a 23% increase
- Net debt (3) reduced to $1.4 billion at 31 December 2011
- Final dividend increased by 15% to 46 US cents per share, bringing total
dividends for the year to 74 US cents per share, a 14% increase
Delivery of value through operational efficiency and strategic opportunities
- Kumba Iron Ore record export sales volumes of 37.1 Mt
- Met Coal - record open cut metallurgical coal production; 7% increase
despite Q1 2011 rainfall
- $5.1 billion acquisition of up to 40% interest in De Beers - unique
opportunity to consolidate control of the world`s leading diamond company
- $5.4 billion sale of a minority 24.5% interest in Anglo American Sur copper
assets - highlights value and quality of asset base
- Acquisition of 25.17% minorities in Peace River Coal - 100% ownership of
high quality one billion tonne metallurgical coal resource
Nine growth projects commissioned on or ahead of schedule (4)
- Newly commissioned and approved projects to deliver 35% volume growth by
2014
- Barro Alto 36 ktpa nickel project - first production in March 2011
- Los Bronces 200 ktpa copper expansion - first production in October 2011
- Kolomela 9 Mtpa iron ore project - first shipment in December 2011
- Collahuasi Phase I expansion (copper), Zibulo (thermal coal), Unki and
Mogalakwena North (platinum) projects all completed in 2011
Maintaining momentum into the next phase of growth
- Minas-Rio 26.5 Mtpa iron ore project is progressing well; implementing
measures to mitigate various site challenges in a high inflationary Brazilian
mining environment, to target H2 2013 first ore on ship
- Six growth projects approved in 2011, including Grosvenor 5 Mtpa
metallurgical coal project in Australia approved in December 2011
- Quellaveco 225 ktpa copper project in Peru progressing towards approval
- Exploration discoveries replenishing world class resource base across
copper, nickel, PGMs - Sakatti discovery in Finland a significant grassroots
exploration success
- Expect to approve $16 billion of projects over next three years
Safety performance
- Tragically, 17 employees lost their lives
- Despite downward trend since 2007, disappointing performance in 2011 at
Platinum; particularly with 12 fatal accidents
- Lost time injury frequency rates, excluding Platinum, reduced by 16%
HIGHLIGHTS Year ended Year ended
US$ million, unless otherwise stated 31 Dec 2011 31 Dec 2010 Change
Group revenue including associates (5) 36,548 32,929 11%
Operating profit including associates
before special items and
remeasurements (1) 11,095 9,763 14%
Underlying earnings (2) 6,120 4,976 23%
EBITDA (6) 13,348 11,983 11%
Net cash inflows from operating
activities 9,362 7,727 21%
Profit before tax (7)(8) 10,782 10,928 (1)%
Profit for the financial year
attributable to equity shareholders (7)(8) 6,169 6,544 (6)%
Earnings per share (US$):
Basic earnings per share (7) 5.10 5.43 (6)%
Underlying earnings per share (2) 5.06 4.13 23%
(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 2 and 3 to the Condensed financial statements. For
the definition of special items and remeasurements see note 4 to the Condensed
financial statements.
(2) See note 9 to the Condensed financial statements for basis of calculation
of underlying earnings.
(3) Net debt includes related hedges and net debt in disposal groups. See note
12 to the Condensed financial statements.
(4) The schedule for delivery of first production from projects refers to the
information published in Anglo American`s 2010 Annual Report.
(5) Includes the Group`s attributable share of associates` revenue of $5,968
million (2010: $4,969 million). See note 2 to the Condensed financial
statements.
(6) 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 5 to the Condensed financial
statements.
(7) Stated after special items and remeasurements See note 4 to the Condensed
financial statements.
(8) For the year ended 31 December 2011 special items and remeasurements,
including associates, before tax and non-controlling interests, amounted to a
gain of $152 million (2010: gain of $1,820 million), and after tax and non-
controlling interests, amounted to a gain of $49 million (2010: gain of $1,568
million).
Cynthia Carroll, Chief Executive, said: "Anglo American delivered an
impressive financial and operational performance in 2011, as we continued to
capture the benefits of operational improvements and disciplined cost
management to capitalise on the attractive commodity demand and pricing
environment that prevailed for much of the year. We have reported a record
operating profit of $11.1 billion, a 14% increase, EBITDA of $13.3 billion and
underlying earnings increased by 23% to $6.1 billion, also a record.
Our successful delivery of three major mining projects on or ahead of schedule
during the year is a great achievement, and will contribute significant new
volumes of iron ore, copper and nickel as the new operations continue to ramp
up during 2012. Our decision to sustain capital investment in the development
of these and other growth projects through the cycle, with highly competitive
operating costs and capital intensity ratios, sets us apart as a near term
volume growth leader.
The first shipment of lump iron ore from the 9 Mtpa Kolomela mine in South
Africa in December 2011, five months ahead of schedule, was an important step
towards our goal of increasing production to 70 million tonnes per annum from
our South African iron ore assets this decade. In copper, the expansion at Los
Bronces in Chile, completed in October 2011, will more than double the mine`s
production of 221,000 tpa, on average over the first three years of full
production, with reserves and resources that support a mine life of over 30
years. And in Brazil, we delivered first production at our new Barro Alto
nickel operation in March 2011. Barro Alto will average 41,000 tpa of nickel
over its first five years of full production and increase Anglo American`s
nickel volumes by 180%.
We also made good progress during the year at the greenfield Minas-Rio iron
ore project in Brazil, the fourth of our strategic growth projects. We are
continuing to manage a number of challenges in a high inflationary Brazilian
mining environment. To mitigate these challenges, we are implementing various
measures including acceleration activities within the previously announced 15%
capital expenditure increase, to target first ore on ship in the second half
of 2013.
We are maintaining momentum into our next phase of growth, with the Board
approval of six growth projects across six commodities including our 5 Mtpa
Grosvenor metallurgical coal project in Australia. We expect to approve
further new projects during 2012, including the Quellaveco copper project in
Peru. Looking further out, we are focused on prioritising the most value-
accretive options from our $84 billion pipeline of unapproved projects towards
development and we continue to replenish and increase our world class resource
base through industry-leading exploration successes. Our discovery of copper,
nickel, PGMs and cobalt at Sakatti in northern Finland is a great example of
Anglo American`s deep-rooted greenfield exploration expertise delivering value
as well as the use of innovative drilling technology to reduce our
environmental impacts as we work towards defining the resource.
Beyond our organic growth programme, we continue to deliver shareholder value
commercially. We took the unique opportunity in November to finalise the
agreement to acquire the Oppenheimer family`s shareholding in De Beers, taking
Anglo American`s interest in the world`s leading diamond company to up to 85%.
We will continue to pursue growth where we see the most compelling, long term
opportunities and to deliver value from our high quality asset base. Our sale
of a non-controlling interest in our Anglo American Sur (AA Sur) assets to
Mitsubishi for $5.4 billion, valuing those assets at $22 billion, is a
demonstration of that commitment and of the quality of our assets.
Safety remains my absolute priority and I have not wavered on this commitment
since my appointment as Chief Executive five years ago. I am deeply saddened
that in 2011, 17 employees died while working for Anglo American. We have a
long way to go to achieve our objective of zero harm, despite marked
improvements in our safety record since 2007, with significant reduction in
the number of our people who have lost their lives at work and lost time
injury rates. While we continue to see many examples of safety excellence
across Anglo American, we are committed to reviewing, refocusing and
reprioritising our safety related programmes to address ongoing challenges.
Despite short term uncertainty persisting in the global economy, particularly
in Europe, the longer term outlook for Anglo American`s diversified mix of
commodities remains strong. We expect sustained growth in the emerging
economies, notably in China and India, which will underpin robust demand for
commodities, supplemented by early recovery signs in the US. Continuing
industrialisation and urbanisation and the considerable scope for the
convergence of living standards, combined with long term supply constraints,
present an attractive proposition across our unique portfolio of early, mid
and late development cycle commodities."
Review of 2011
Financial results
Anglo American`s underlying earnings were $6.1 billion, up from $5.0 billion
in 2010, with a record operating profit of $11.1 billion, 14% higher than
2010. This increase in operating profit was mainly driven by the Kumba Iron
Ore, Metallurgical Coal, Thermal Coal and Diamonds business units, which
benefited from strong market prices. There was an increase in realised prices
across all major commodities with export metallurgical coal and South African
export thermal coal prices increasing by 42% and 39% respectively from 2010.
Iron Ore and Manganese generated an operating profit of $4,520 million, 23%
higher than 2010. Within this commodity group, Kumba Iron Ore had a strong
performance with a record operating profit of $4,397 million, 29% higher.
Metallurgical Coal delivered a record operating profit of $1,189 million, a
52% increase on 2010, primarily due to higher realised export selling prices,
which offset the impact of rain on production and sales.
Thermal Coal`s record operating profit of $1,230 million was 73% higher than
2010, as a result of higher export thermal coal prices for both South African
and Colombian coal and a strong rail performance in South Africa in the second
half of 2011.
Copper delivered an operating profit of $2,461 million, 13% lower than 2010,
as a result of lower sales volumes and higher operating costs, partly offset
by high copper prices during the first half of the year.
Nickel reported an operating profit of $57 million, $39 million lower than
2010, largely due to higher project evaluation and exploration expenditure
related to the development of the unapproved Nickel project pipeline.
Platinum generated an operating profit of $890 million, a $53 million
increase, due to higher metal prices, which were offset by higher costs driven
by labour and electricity rate increases.
Diamonds reported a record operating profit of $659 million, 33% higher than
2010, owing to significant price increases in 2011.
Other Mining and Industrial generated an operating profit of $195 million, 71%
lower than 2010, owing to the disposal of a number of businesses during the
year and in 2010. Copebras and Catalao delivered a combined increase in
operating profit of 29% compared to the prior year. This was driven by an
increase in sales volumes and prices at Copebras owing to high demand for
fertilizers.
Production
The Group`s operations were impacted by a number of challenges in 2011, most
notably weather disruptions in Queensland, Chile and southern Africa. Iron ore
production from Kumba Iron Ore`s Sishen Mine decreased by 6% to 38.9 Mt as
production from the mine`s dense media separation plant was hampered by mining
feedstock constraints following wet weather. The Kolomela mine, which started
production ahead of schedule, produced 1.5 Mt in 2011. Metallurgical Coal
export production decreased by 9% compared to the prior year primarily as a
result of heavy rainfall and subsequent flooding in late 2010 and in the first
quarter of 2011, which resulted in force majeure declarations being in effect
until June. However, the business made a strong recovery as a result of
successful mitigation actions taken early in the year to recover lost volumes
in the second half of the year. Thermal Coal RSA export production performance
remained flat year-on-year and a record production performance at Cerrejon led
to a 7% increase in production compared to 2010. Copper production of 599,000
tonnes was 4% lower compared to 2010 due to lower grades, extreme wet weather,
and operating issues at Collahuasi. Production was marginally higher at the
Los Bronces operation as a result of the start-up of the Los Bronces Expansion
Project in October. Nickel production in 2011 increased by 44% to 29,100
tonnes as a result of delivery of the Barro Alto project, which produced 6,200
tonnes, and higher output at both Loma de Niquel and Codemin. Equivalent
refined platinum production from the mines managed by Platinum and its joint
venture partners for 2011 totalled 2.41 million ounces, a decrease of 3%
compared to 2010. Diamond production totalled 31.3 million carats a 5%
decrease compared to 2010, reflecting the impact of maintenance and excessive
rainfall in southern Africa during the first half of the year, and a focus on
waste stripping, as well as scheduled maintenance at the Debswana and De Beers
Consolidated Mines operations in the second half.
Capital structure
Net debt, including related hedges, of $1,374 million was $6,010 million lower
than at 31 December 2010, and $5,420 million lower than at 30 June 2011. Cash
inflows from operating activities of $9,362 million and the proceeds from
disposals of $533 million, funded capital investment (including related
hedges) of $5,764 million, including combined investment of $2,350 million in
the Los Bronces, Barro Alto, Minas-Rio and Kolomela (previously Sishen South)
projects.
Special items and remeasurements
The Group recognised a number of operating special charges and remeasurements,
amounting to $173 million, including associates. These included an impairment
of Tarmac Building Products (Other Mining and Industrial segment) of $70
million and accelerated depreciation of $84 million at Loma de Niquel (Nickel
segment) due to ongoing uncertainty over the renewal of three concessions that
expire in 2012 and over the restoration of 13 concessions that have been
cancelled. In addition, restructuring costs of $19 million principally relate
to retrenchment and consultancy costs within the Platinum and Diamond
segments.
Dividends
Anglo American`s dividend policy will provide a base dividend that will be
maintained or increased through the cycle. The Group has maintained this
policy and recommended a final dividend of 46 US cents per share, giving a
total dividend for the year of 74 US cents per share, subject to shareholder
approval at the Annual General Meeting to be held on 19 April 2012. As
previously stated, after 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.
Three major new mining operations delivered on or ahead of schedule
Anglo American commissioned three major new mining operations on or ahead of
schedule during 2011 - the Kolomela iron ore mine in South Africa, the Los
Bronces copper expansion in Chile and the Barro Alto nickel mine in Brazil.
The Group`s pipeline of projects spans its core commodities and is expected to
deliver organic production growth of 35% by 2014 from those projects that have
been commissioned during 2011 and those that are approved and currently in
development.
During 2011, the Board of Anglo American approved a number of growth projects
across the Group`s portfolio of commodities, including the 5 Mtpa Grosvenor
metallurgical coal project in Queensland, Australia and the Collahuasi Phase 2
expansion in Chile. Beyond the near term, Anglo American has a world class
pipeline of projects across its chosen commodities and is progressing towards
approval decisions in relation to the development of further high quality
growth projects, including the 225 ktpa Quellaveco copper project in Peru.
Submission to the Board for approval is expected for the Quellaveco project
once the necessary water permits have been obtained. Together with a number of
other medium and longer term projects, Anglo American has the potential to
double production through its $98 billion pipeline of more than 85 approved
and unapproved projects.
Anglo American has a clear strategy of deploying its capital in those
commodities with strong fundamentals and the most attractive risk-return
profiles that deliver long term, through-the-cycle returns for its
shareholders. The Group has developed a portfolio of world class operating
assets and development projects with the benefits of scale, expansion
potential and attractive cost position and capital intensity. Anglo American`s
project management systems and processes ensure close collaboration between
the Group`s technical and project teams to execute projects effectively.
Barro Alto - delivered on schedule in March 2011
The Barro Alto nickel project in Brazil, a greenfield nickel project approved
for development in December 2006, delivered its first metal in March 2011.
Barro Alto is ramping up towards full production capacity, which it is
expected to reach at the beginning of 2013. This project makes use of proven
technology and will produce an average of 36 ktpa of nickel in full production
(41 ktpa over the first five years), more than doubling production from Anglo
American`s Nickel business, with a competitive cost position in the lower half
of the cost curve.
Los Bronces - delivered on schedule in October 2011
The Los Bronces copper expansion project in Chile delivered its first
production on schedule in October 2011. Production at Los Bronces is expected
to more than double (increase by 278 ktpa on average) over the first three
years of full production following project completion and to average 200 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.
Kolomela - delivered ahead of schedule in December 2011
Kumba`s Kolomela project in South Africa shipped its first lump iron ore from
the port of Saldanha to China in December 2011, five months ahead of schedule.
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 - progressing well
The Minas-Rio iron ore project in Brazil is expected to produce 26.5 Mtpa of
iron ore in its first phase and has made good progress during the year. Minas-
Rio has secured a number of major licences and permits during the year; the
offshore and onshore works at the port are on schedule; more than 90% of land
access has been secured along the 525 km pipeline route and more than 200 km
of pipe has been installed; and the civil works at the beneficiation plant are
well under way. As with other complex greenfield mining projects, a number of
unexpected issues, such as the discovery of caves at the beneficiation plant
site which require specialised assessment, continue to cause delays to the
work scheduling, in addition to outstanding land access and an evolving
permitting environment. Minas-Rio is implementing various measures to manage
these challenges in a high inflationary Brazilian mining environment,
including acceleration activities within the previously announced 15% capital
increase, to target first ore on ship in the second half of 2013.
Pre-feasibility studies for the second phase of the Minas-Rio iron ore project
commenced during 2011 and, although still under way, the studies, together
with the current resource statement (total resource volume (Measured,
Indicated and Inferred)) of 5.8 billion tonnes, support the expansion of the
project.
Grosvenor - on track
The greenfield Grosvenor project is situated immediately to the south of Anglo
American`s Moranbah North metallurgical coal mine in the Bowen Basin of
Queensland, Australia. The mine is expected to produce 5 Mtpa of metallurgical
coal from its underground longwall operation over a projected life of 26 years
and to benefit from operating costs in the lower half of the cost curve.
Grosvenor forms a major part of the Group`s strategy of tripling production of
metallurgical coal from its Australian assets by 2020, equivalent to a 12%
compound annual growth rate, using a standard longwall and coal handling and
preparation plant (CHPP) design model. In its first phase of development,
Grosvenor will consist of a single new underground longwall mine, targeting
the same well understood Goonyella Middle coal seam as Moranbah North, and
will process its coal through the existing Moranbah North CHPP and train
loading facilities. A pre-feasibility study for expansion by adding a second
longwall at Grosvenor is under way.
Exploration discoveries replenishing world class resource base
Anglo American`s exploration and discovery expertise was widely acclaimed
during 2011, winning two major exploration awards. The Exploration team
received the Prospectors and Developers Association of Canada`s award for the
Los Sulfatos copper discovery in Chile and the Fennoscandian Exploration and
Mining award for the Sakatti discovery in Finland. The Exploration team was
also recognised by the Metals Economics Group as the most successful Major
Company explorer in terms of copper and nickel found during the period 1999 to
2010. The Group`s exploration success, with 15 major discoveries since 1999,
differentiates Anglo American by enabling significant replenishment of its
resource base at a highly competitive cost.
Anglo American`s most recent major discovery, known as the Sakatti project in
northern Finland, is a significant copper-nickel-platinum group metals
grassroots discovery. Sakatti is located within a known mining region, 150 km
north of the Arctic Circle, with excellent infrastructure including major
highways and power generation facilities. Anglo American`s tenure to the
Sakatti deposit and surrounding area is part of a contiguous extensive tenure
package covering 830 kmSquared. The current exploration drilling programme is
focused on delineating the boundaries of the mineralised body and, as such,
precludes infill drilling at a density required for the definition and
estimation of a Joint Ore Reserves Committee compliant Mineral Resource.
Anglo American sees Finland as highly prospective and its immediate plans are
to continue to expand its exploration work at the Sakatti deposit, as well as
looking at other priority targets within Lapland and the broader Fennoscandia
region.
Opportunities seized to deliver additional value
De Beers
In addition to pursuing its extensive organic growth programme, Anglo American
constantly evaluates other opportunities to deliver value to shareholders. In
November 2011, Anglo American agreed to acquire the Oppenheimer family`s 40%
interest in De Beers for $5.1 billion, pending regulatory and government
approvals, increasing Anglo American`s current 45% shareholding to up to 85%.
Cash proceeds will be paid on completion of the transaction.
This transaction is a unique opportunity for Anglo American to consolidate
control of the world`s leading diamond company - De Beers, marking the Group`s
commitment to an industry with highly attractive long term supply and demand
fundamentals. Underpinned by the security of supply offered by a new 10 year
sales agreement with the Government of the Republic of Botswana, this forms a
compelling proposition.
The benefits brought by Anglo American`s scale, technical, operational and
exploration expertise and financial resources, combined with the
unquestionable leadership of De Beers` business and iconic brand will enable
De Beers to enhance its position across the diamond pipeline and capture the
potential presented by a rapidly evolving diamond market.
Anglo American Sur
In November 2011, entirely in accordance with its rights, Anglo American
announced the completion of the sale of a 24.5% stake in Anglo American Sur
(AA Sur), comprising a number of the Group`s copper assets in Chile, to
Mitsubishi Corporation LLC (Mitsubishi) for $5.39 billion in cash. This
transaction highlighted the inherent value of AA Sur as a world class, tier
one copper business with extensive reserves and resources and significant
further growth options from its exploration discoveries, valuing AA Sur at $22
billion on a 100% basis.
There is continuing litigation between Anglo American and Codelco in respect
of the option agreement between them relating to AA Sur (described fully in
Note 15 to the Condensed financial statements). Anglo American will continue
to defend its rights vigorously, while remaining open to working with Codelco
to reach a settlement that recognises the strength of Anglo American`s legal
position and protects the interests of Anglo American`s shareholders.
Peace River Coal
In October 2011, Anglo American announced that it had acquired 100% ownership
of Peace River Coal Limited Partnership (PRC), which comprises the Trend
metallurgical coal mine and various exploration leases in British Columbia,
Canada, through the acquisition of the 25.17% interest in PRC that it did not
already own for a cash consideration of $166 million. PRC is a large and high
quality coking coal resource of approximately one billion tonnes, on an
attributable basis, supported by well developed power, rail and port
infrastructure. Anglo American sees significant resource upside and plans to
invest in further exploration studies to ascertain its full long term
potential. In the near term, a feasibility study to increase production from 1
Mtpa to 3.5 Mtpa by 2015 is progressing.
Update on non-core businesses
Subject to regulatory approvals, Anglo American`s programme to divest of its
businesses not considered core to its operations has been largely completed.
Scaw South Africa, the remaining business of the Scaw Metals group, is the
last such business to be sold and that sales process is under way.
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, 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. This transaction is progressing through the
regulatory clearance processes.
Outlook
Despite short term uncertainty persisting in the global economy, particularly
in Europe, the longer term outlook for Anglo American`s diversified mix of
commodities remains strong. Sustained growth in the emerging economies should
underpin robust demand for commodities, albeit with a degree of short term
volatility, while the signs of economic recovery and stimulus in the US should
provide a further fillip.
Rapid `catch-up` in living standards, notably in China and India, combined
with a medium term need for infrastructure replacement in the developed
countries, present an attractive proposition for the early cycle commodities.
Over time the considerable scope for an expanding middle class in many
emerging economies should boost consumption, which positions Anglo American
well due to its breadth of unique mid to late cycle exposure from copper and
nickel to platinum and diamonds.
Prices for Anglo American`s commodities are expected to be robust as
widespread supply constraints and the challenges producers face in bringing
new supply into production will lead to increasing capital intensity and tight
market fundamentals. Costs are likely to continue to be affected by strong
producer currencies and increasing prices for key inputs.
Selected major projects
Completed / In Commissioning 2011
Completion
Sector Project Country date
Iron Ore and Kolomela South Africa Q4 2011
Manganese
Thermal Coal Zibulo South Africa Q4 2011
Copper Los Bronces expansion Chile Q4 2011
Collahuasi Phase 1 Chile Q4 2011
Nickel Barro Alto Brazil Q1 2011
Platinum Unki Mine Zimbabwe Q4 2011
Mogalakwena North South Africa H2 2011
Base metals refinery South Africa Q3 2011
expansion
Dishaba East Upper UG2 South Africa H2 2011
Capex
Sector Project Country $m (1)
Iron Ore and Kolomela South Africa 1,062
Manganese
Thermal Coal Zibulo South Africa 517
Copper Los Bronces expansion Chile 2,800
Collahuasi Phase 1 Chile 148
Nickel Barro Alto Brazil 1,900
Platinum Unki Mine Zimbabwe 459
Mogalakwena North South Africa 822
Base metals refinery South Africa 360
expansion
Dishaba East Upper UG2 South Africa 219
Sector Project Country Production volume (2)
Iron Ore and Kolomela South Africa 9.0 Mtpa iron ore
Manganese
Thermal Coal Zibulo South Africa 6.6 Mtpa thermal
Copper Los Bronces expansion Chile 200 ktpa copper(3)
Collahuasi Phase 1 Chile 19 ktpa copper
Nickel Barro Alto Brazil 36 ktpa nickel(4)
Platinum Unki Mine Zimbabwe 70 kozpa refined platinum
Mogalakwena North South Africa 350-400 kozpa refined
platinum
Base metals refinery South Africa 11 ktpa Nickel
expansion
Dishaba East Upper UG2 South Africa 100 kozpa refined platinum
Approved
First
production
Sector Project Country date
Iron Ore and Minas-Rio phase 1 Brazil 2013
Manganese
Groote Eylandt Expansion Australia 2013
Project (GEEP 2)(6)
Metallurgical Grosvenor Phase 1 Australia 2013
Coal
Thermal Coal Cerrejon P500 Phase 1 Colombia 2013
Copper Collahuasi expansion Phase 2 Chile 2013
Platinum Twickenham South Africa 2015
Khuseleka Ore Replacement South Africa 2007
Bathopele Phase 4 South Africa 2009
Bathopele Phase 5 South Africa 2013
Diamonds Jwaneng - Cut 8 Botswana 2017
Other Mining Boa Vista Fresh Rock Brazil 2013
and
Industrial
Full
production
Sector Project Country date
Iron Ore and Minas-Rio phase 1 Brazil 2014
Manganese
Groote Eylandt Expansion Australia 2013
Project (GEEP 2)(6)
Metallurgical Grosvenor Phase 1 Australia 2016
Coal
Thermal Coal Cerrejon P500 Phase 1 Colombia 2015
Copper Collahuasi expansion Phase 2 Chile 2014
Platinum Twickenham South Africa 2019
Khuseleka Ore Replacement South Africa 2015
Bathopele Phase 4 South Africa 2012
Bathopele Phase 5 South Africa 2018
Diamonds Jwaneng - Cut 8 Botswana 2021(8)
Other Mining Boa Vista Fresh Rock Brazil 2014
and
Industrial
Capex
Sector Project Country $m (1)
Iron Ore and Minas-Rio phase 1 Brazil 5,034
Manganese
Groote Eylandt Expansion Australia 280
Project (GEEP 2)(6)
Metallurgical Grosvenor Phase 1 Australia 1,700
Coal
Thermal Coal Cerrejon P500 Phase 1 Colombia 1,311
Copper Collahuasi expansion Phase 2 Chile 212
Platinum Twickenham South Africa 1,248
Khuseleka Ore Replacement South Africa 187
Bathopele Phase 4 South Africa 67
Bathopele Phase 5 South Africa 230
Diamonds Jwaneng - Cut 8 Botswana 3,000(9)
Other Mining Boa Vista Fresh Rock Brazil 173(10)
and
Industrial
Sector Project Country Production volume
(2)
Iron Ore and Minas-Rio phase 1 Brazil 26.5 Mtpa iron ore
pellet feed
Manganese (wet basis)(5)
Groote Eylandt Expansion Australia 0.6 Mtpa manganese ore
Project (GEEP 2)(6)
Metallurgical Grosvenor Phase 1 Australia 5.0 Mtpa metallurgical
Coal
Thermal Coal Cerrejon P500 Phase 1 Colombia 8.0 Mtpa thermal
Copper Collahuasi expansion Phase 2 Chile 20 ktpa copper(7)
Platinum Twickenham South Africa 180 kozpa refined
platinum
Khuseleka Ore Replacement South Africa Replace 101 kozpa
refined platinum
Bathopele Phase 4 South Africa 65 kozpa refined
platinum
Bathopele Phase 5 South Africa 139 kozpa
Diamonds Jwaneng - Cut 8 Botswana 100 million carats
Other Mining Boa Vista Fresh Rock Brazil 2.7 ktpa additional
and niobium in product
Industrial
See the following page for footnotes.
Future unapproved
First
production
Sector Project Country date
Sishen Expansion Project South Africa 2013
Iron Ore and phase 1B
Manganese
Sishen B Grade South Africa 2016
Sishen Concentrates South Africa 2017
Kolomela Expansion South Africa 2017
Minas-Rio expansion Brazil TBD
Grosvenor Phase 2 Australia 2015
Metallurgical Coal
Drayton South Australia 2015
Moranbah South Australia 2016
Elders Multi-product Project South Africa 2017
Thermal Coal
New Largo South Africa 2015
Cerrejon P500 P2 Colombia TBD
Quellaveco Peru 2016
Copper
Michiquillay Peru 2019
Collahuasi expansion Phase 3 Chile TBD
Pebble US TBD
Nickel Jacare Brazil TBD
Platinum Tumela Conglomerate South Africa 2020
Diamonds Gahcho Kue Canada TBD
Venetia UG(13) South Africa TBD
Full
production
Sector Project Country date
Sishen Expansion Project South Africa 2014
Iron Ore and phase 1B
Manganese
Sishen B Grade South Africa 2017
Sishen Concentrates South Africa 2019
Kolomela Expansion South Africa 2019
Minas-Rio expansion Brazil TBD
Grosvenor Phase 2 Australia 2017
Metallurgical Coal
Drayton South Australia 2015
Moranbah South Australia 2019
Elders Multi-product Project South Africa 2019
Thermal Coal
New Largo South Africa 2017
Cerrejon P500 P2 Colombia TBD
Quellaveco Peru 2017
Copper
Michiquillay Peru 2020
Collahuasi expansion Phase 3 Chile TBD
Pebble US TBD
Nickel Jacare Brazil TBD
Platinum Tumela Conglomerate South Africa 2026
Diamonds Gahcho Kue Canada TBD
Venetia UG(13) South Africa TBD
Sector Project Country Production
volume (2)
Sishen Expansion Project South Africa 0.75 Mtpa
iron ore
Iron Ore and phase 1B
Manganese
Sishen B Grade South Africa 6.0 Mtpa
iron ore
Sishen Concentrates South Africa 1.1 Mtpa
iron ore
Kolomela Expansion South Africa 6.0 Mtpa
iron ore
Minas-Rio expansion Brazil TBD
Grosvenor Phase 2 Australia 6.0 Mtpa
metallurgical
Metallurgical Coal
Drayton South Australia 4.0 Mtpa
thermal
Moranbah South Australia 12.0 Mtpa
metallurgical
Elders Multi-product Project South Africa 3.0 Mtpa
thermal
Thermal Coal
New Largo South Africa 13.0 Mtpa
thermal
Cerrejon P500 P2 Colombia 10-20 Mtpa thermal
Quellaveco Peru 225 ktpa copper
Copper
Michiquillay Peru 187 ktpa copper(11)
Collahuasi expansion Phase 3 Chile 469 ktpa
Pebble US 175 ktpa(12)
Nickel Jacare Brazil TBD
Platinum Tumela Conglomerate South Africa 271 kozpa
refined platinum
Diamonds Gahcho Kue Canada TBD
Venetia UG(13) South Africa TBD
(1) Capital expenditure shown on 100% basis in nominal terms.
(2) Represents 100% of average incremental or replacement production, at full
production, unless otherwise stated.
(3) Production represents average over first 10 years of the project.
Production over the first three years of the project will average 278 ktpa.
(4) Average production of 36 ktpa over the full production years; a new mine
plan will extend the life of Barro Alto with lower production in the
additional years.
(5) 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.
Capital expenditure is under review to contain the capital increase to
approximately 15% of this guidance.
(6) Subject to conditions precedent being fulfilled.
(7) Further phased expansions have the potential to increase production to 1
Mtpa.
(8) Waste stripping at Cut-8, an extension to Jwaneng Mine, began in 2010.
Carat recovery will commence in 2017, with Cut-8 reaching full production when
Cut-7 ore is exhausted in 2021.
(9) Debswana is investing $500 million in capital expenditure. Project
investment, including capital expenditure, is likely to total $3 billion over
the next 15 years. Total carats exposed are over the life of the extension.
(10) Capital estimate subject to review.
(11) Expansion potential to 300 ktpa.
(12) Pebble will produce molybdenum and gold by-products and other projects
will produce molybdenum and silver by-products.
(13) A feasibility study is scheduled for consideration by the De Beers
Consolidated Mines (DBCM) board in 2012.
For further information, please contact:
Media
UK
James Wyatt-Tilby
Tel: +44 (0)20 7968 8759
Emily Blyth
Tel: +44 (0)20 7968 8481
South Africa
Pranill Ramchander
Tel: +27 (0)11 638 2592
Investors
UK
Leng Lau
Tel: +44 (0)20 7968 8540
Caroline Crampton (nee Metcalfe)
Tel: +44 (0)20 7968 2192
Leisha Wemyss
Tel: +44 (0)20 7968 8607
Anglo American is one of the world`s largest mining companies, is
headquartered in the UK and listed on the London and Johannesburg stock
exchanges. Anglo American`s portfolio of mining businesses spans bulk
commodities - iron ore and manganese, metallurgical coal and thermal coal;
base metals - copper and nickel; and precious metals and minerals - in which
it is a global leader in both platinum and diamonds. Anglo American is
committed to the highest standards of safety and responsibility across all its
businesses and geographies and to making a sustainable difference in the
development of the communities around its operations. The company`s mining
operations, extensive pipeline of growth projects and exploration activities
span southern Africa, South America, Australia, North America, Asia and
Europe. www.angloamerican.com
Webcast of presentation:
A live webcast of the results presentation, starting at 9.00am UK time on 17
February, can be accessed through the Anglo American website at
www.angloamerican.com.
Note: Throughout this results announcement, `$` 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 4 to the Condensed financial statements. Underlying
earnings, unless otherwise stated, is calculated as set out in note 9 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` and to `Cash flows
from operations` in note 5 to the Condensed financial statements. 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
Operating profit Year ended Year ended
$ million 31 Dec 2011 31 Dec 2010
Iron Ore and Manganese 4,520 3,681
Metallurgical Coal 1,189 780
Thermal Coal 1,230 710
Copper 2,461 2,817
Nickel 57 96
Platinum 890 837
Diamonds 659 495
Other Mining and Industrial 195 664
Exploration (121) (136)
Corporate Activities and Unallocated Costs 15 (181)
Operating profit including associates before
special items and
remeasurements 11,095 9,763
Group operating profit was a record at $11,095 million, 14% higher than 2010.
This improvement in operating profit was primarily driven by increases in the
realised prices of commodities. These included a 42% rise in export
metallurgical coal realised prices, a 39% increase in South African export
thermal coal realised prices, and a 26% increase in iron ore realised prices.
However, increased commodity prices impacted results mainly in the first half
of the year as global macro-economic uncertainties led to a decrease in
commodity prices in the second half.
During the year, three projects (Barro Alto, Los Bronces Expansion and
Kolomela) were delivered. While this contributed to an increase in production,
operating profit was negatively impacted by production disruptions across the
Group`s operations due to various causes, including inclement weather, safety
stoppages and grade declines. These disruptions, industry-wide mining cost
pressures and economic uncertainties leading to a fall in commodity prices
during the fourth quarter have also affected operating profit and resulted in
lower production volumes and in higher unit costs of production across the
Group. The impact of this negative global trend was mitigated by the
continuing positive performance of our embedded Asset Optimisation and
Procurement programmes.
The Group`s results are impacted by currency fluctuations in the countries
where the operations are based. The weakening of the US dollar against the
Australian dollar, Chilean peso and Brazilian real resulted in a $149 million
negative exchange variance in operating profit compared to 2010. CPI inflation
had a further negative $585 million impact on operating profit compared to
2010.
Group underlying earnings were $6,120 million, a 23% increase on 2010, which
reflects the operational results above. Net finance costs, before
remeasurements, excluding associates, were $20 million (compared to $244
million for 2010). The effective rate of tax, before special items and
remeasurements and including attributable share of associates` tax, reduced in
the year from 31.9% to 28.3%.
Group underlying earnings per share were $5.06 compared with $4.13 in 2010.
Reconciliation of profit for the period to
Underlying earnings Year ended Year ended
$ million 31 Dec 2011 31 Dec 2010
Profit for the financial year attributable to
equity shareholders of the
Company 6,169 6,544
Operating special items 173 253
Operating remeasurements 74 (382)
Net profit on disposals (203) (1,598)
Financing special items 9 13
Financing remeasurements (205) (106)
Special items and remeasurements tax 118 112
Non-controlling interests on special items and
remeasurements (15) 140
Underlying earnings(1) 6,120 4,976
Underlying earnings per share ($) 5.06 4.13
(1) See note 3 to the Condensed financial statements
Summary income statement Year ended Year ended
$ million 31 Dec 2011 31 Dec 2010
Operating profit from subsidiaries and joint
ventures before special
items and remeasurements 9,668 8,508
Operating special items (164) (228)
Operating remeasurements (65) 386
Operating profit from subsidiaries and joint ventures 9,439 8,666
Net profit on disposals 183 1,579
Share of net income from associates (see
reconciliation below) 977 822
Total profit from operations and associates 10,599 11,067
Net finance costs before remeasurements (20) (244)
Financing remeasurements 203 105
Profit before tax 10,782 10,928
Income tax expense (2,860) (2,809)
Profit for the financial year 7,922 8,119
Non-controlling interests (1,753) (1,575)
Profit for the financial period attributable to
equity shareholders of the Company 6,169 6,544
Basic earnings per share ($) 5.10 5.43
Group operating profit including associates before
special items and remeasurements(1) 11,095 9,763
Operating profit from associates before special
items and remeasurements 1,427 1,255
Operating special items and remeasurements (18) (29)
Net profit on disposals 20 19
Net finance costs (before special items and
remeasurements) (48) (88)
Financing special items and remeasurements (7) (12)
Income tax expense (after special items and
remeasurements) (384) (315)
Non-controlling interests (after special items and
remeasurements) (13) (8)
Share of net income from associates 977 822
(1) Operating profit before special items and remeasurements from subsidiaries
and joint ventures was $9,668 million (2010: $8,508 million) and attributable
share from associates was $1,427 million (2010: $1,255 million). For special
items and remeasurements see note 4 to the Condensed financial statements.
Special items and remeasurements
Year ended 31 Dec 2011
Subsidiaries
and joint
ventures Associates Total
$ million
Operating special items (164) (9) (173)
Operating remeasurements (65) (9) (74)
Operating special items and remeasurements (229) (18) (247)
Net profit on disposals 183 20 203
Financing special items - (9) (9)
Financing remeasurements 203 2 205
Special items and remeasurements tax (119) 1 (118)
Non-controlling interests on special
items and remeasurements 12 3 15
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
Financing special items - (13) (13)
Financing remeasurements 105 1 106
Special items and remeasurements tax (110) (2) (112)
Non-controlling interests on special
items and remeasurements (141) 1 (140)
Operating special items and remeasurements, including associates, amounted to
a loss of $247 million. This includes impairment and related charges,
restructuring costs and operating remeasurements.
Impairment and related charges were $154 million (2010: $122 million). This
principally comprises an impairment of Tarmac Building Products of $70 million
(Other Mining and Industrial segment) and accelerated depreciation of $84
million (2010: $97 million), mainly arising at Loma de Niquel (Nickel
segment). The accelerated depreciation charge at Loma de Niquel has arisen due
to ongoing uncertainty over the renewal of three concessions that expire in
2012 and over the restoration of 13 concessions that have been cancelled.
Restructuring costs in 2011 principally relate to retrenchment and consultancy
costs within the Platinum and Diamond segments (2010: Other Mining and
Industrial, Platinum and Diamond segments).
Operating remeasurements reflect a net loss of $74 million (2010: gain of $382
million) principally in respect of non-hedge derivatives of capital
expenditure in Iron Ore Brazil. Derivatives which have been realised in the
year had a cumulative net operating remeasurement gain since their inception
of $383 million (2010: gains of $255 million).
Net profit on disposals, including associates, amounted to a gain of $203
million (2010: $1,598 million). In February 2011 the Group completed the
disposal of its 100% interest in the Lisheen operation and its 74% interest in
Black Mountain Mining (Proprietary) Limited, which holds 100% of the Black
Mountain mine and the Gamsberg project, resulting in a net cash inflow of $499
million, generating a profit on disposal of $397 million. Lisheen and Black
Mountain were included in the Other Mining and Industrial segment.
Also included in net profit on disposals is a charge of $141 million on
Platinum broad based community economic empowerment transactions completed.
This principally relates to an IFRS 2 Share-based Payment charge of $131
million resulting from a community economic empowerment transaction involving
certain of Platinum`s host communities, which was completed in December 2011.
The Group sold Tarmac`s businesses in China, Turkey and Romania in July,
October and November 2011 respectively. Tarmac is included in the Other Mining
and Industrial segment.
Financing remeasurements reflect a net gain of $205 million (2010: gain of
$106 million), including associates, and relate to an embedded interest rate
derivative, non-hedge derivatives of debt and other financing remeasurements.
Special items and remeasurements tax amounted to a charge of $118 million
(2010: charge of $112 million). This relates to a credit for one-off tax items
of $137 million (2010: nil), a tax remeasurement charge of $230 million (2010:
credit of $122 million) and a tax charge on special items and remeasurements
of $25 million (2010: charge of $234 million).
The current year credit relating to one-off tax items of $137 million
principally relates to the recognition of deferred tax assets in Iron Ore
Brazil which were originally written off as part of the impairment charges
related to the Amapa iron ore system in 2009, and a capital gains tax refund
related to a prior year disposal.
Net finance costs
Net finance costs, before remeasurements, excluding associates, were $20
million (compared to $244 million for 2010). This reduction compared to 2010
was driven by increased interest income due to higher average levels of cash
and an increase in interest capitalised.
Tax
Year ended 31 Dec 2011
Associates`
tax and
$ million Before special non-
(unless otherwise items and controlling Including
stated) remeasurements interests associates
Profit before tax 10,626 401 11,027
Tax (2,741) (385) (3,126)
Profit for the financial year 7,885 16 7,901
Effective tax rate
including associates (%) 28.3%
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%
IAS 1 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 2011 is $384 million (2010: $315 million). Excluding special items
and remeasurements this becomes $385 million (2010: $313 million).
The effective rate of tax before special items and remeasurements including
attributable share of associates` tax for the year ended 31 December 2011 was
28.3%. The decrease compared to the equivalent effective rate of 31.9% for the
year ended 31 December 2010 is due to a number of non-recurring factors that
include the recognition of previously unrecognised tax losses and the
reassessment of certain withholding tax provisions across the Group. 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 $39,092 million
at 31 December 2011, up on the $34,239 million at 31 December 2010. This was
mainly due to the increase in the Group operating profit, and the proceeds on
the disposal of 24.5% of Anglo American Sur SA. Investments in associates were
$340 million higher than at 31 December 2010, principally as a result of a
significant improvement in earnings at De Beers. Property, plant and equipment
increased by $739 million compared to 31 December 2010, due to ongoing
investment in growth projects. There were no assets classified as held for
sale at 31 December 2011 (compared to assets, net of associated liabilities,
of $188 million at 31 December 2010) due to the sale of the remaining Zinc
assets during the year.
Cash flow
Net cash inflows from operating activities were $9,362 million compared with
$7,727 million in 2010. EBITDA was $13,348 million, an increase of 11% from
$11,983 million in the prior year, reflecting strong prices across the Group`s
core commodities.
Net cash used in investing activities was $4,853 million compared with $2,470
million in 2010. Purchases of property, plant and equipment, net of related
derivative cash flows, amounted to $5,764 million, an increase of $770
million, reflecting major spend on the Group`s strategic growth projects.
Proceeds from disposals, principally the Group`s remaining Zinc portfolio (net
of cash and cash equivalents disposed) were $533 million (2010: $2,795
million).
Net cash inflow from financing activities was $1,474 million compared with net
cash used of $2,400 million in 2010. During the year the Group paid dividends
of $818 million to company shareholders, and $1,404 million in dividends to
non-controlling interests.
Liquidity and funding
Net debt, including related hedges, was $1,374 million, a decrease of $6,010
million from $7,384 million at 31 December 2010. The decrease in net debt
reflects strong operating cash flows and proceeds on the disposal of 24.5% of
Anglo American Sur SA.
Net debt at 31 December 2011 comprised $12,873 million of debt, partially
offset by $11,732 million of cash and cash equivalents, and the current
position of derivative liabilities related to net debt of $233 million. Net
debt to total capital (1) at 31 December 2011 was 3.1%, compared with 16.3% at
31 December 2010.
At 31 December 2011, the Group had undrawn committed bank facilities of $8.4
billion.
The Group`s forecasts and projections, taking account of reasonably possible
changes in trading performance, indicate the Group`s ability to operate within
the level of its current facilities for the foreseeable future.
Corporate Activities and Unallocated Costs
Following a reassessment of our estimate of the likely outcome of existing
insurance claims and a low number of new claims received, liabilities in the
insurance captive have reduced in the current year. This reduction, combined
with an increase in insurance premium income, has more than offset the
unallocated corporate costs in 2011, resulting in the operating profit
recorded within Corporate Activities and Unallocated Costs.
Dividends
Anglo American`s dividend policy will provide a base dividend that will be
maintained or increased through the cycle. The Group has maintained this
policy and recommended a final dividend of 46 US cents per share, giving a
total dividend for the year of 74 US cents per share, subject to shareholder
approval at the Annual General Meeting to be held on 19 April 2012. As
previously stated, after 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 2011 2010
Interim dividend 28 25
Recommended final dividend 46 40
Total dividends 74 65
Related party transactions
Related party transactions are disclosed in note 16 to the Condensed financial
statements.
(1) Net debt to total capital is calculated as net debt divided by total
capital. Total capital is net assets excluding net debt.
Operations review 2011
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.
IRON ORE AND MANGANESE
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2011 31 Dec 2010
Operating profit 4,520 3,681
Kumba Iron Ore 4,397 3,396
Iron Ore Brazil (42) (97)
Samancor 165 382
EBITDA 4,733 3,856
Net operating assets 13,069 11,701
Capital expenditure 1,732 1,195
Share of Group operating profit 41% 38%
Share of Group net operating assets 30% 27%
Operating profit before special items and remeasurements increased by 23% from
$3,681 million to $4,520 million, principally owing to stronger export prices,
a year-on-year weighted average price increase of 26% in export iron ore for
Kumba and an increase of 3% in export sales volumes.
Markets
Global steel demand growth continued to be driven by ongoing urbanisation and
industrialisation in China. China is now the biggest steel producing country
accounting for approximately 45% of the global steel market. In early 2011,
steel production in China reached record levels. However, the tightening in
monetary policy to manage the inflationary pressures experienced in China
since October 2010 led to credit liquidity constraints and a slower GDP growth
rate in the second half of the year. This coupled with margin compression as a
result of higher raw material input costs and lower steel prices, led to a
reduction in steel production rates and downstream steel de-stocking by end-
users.
Steel demand and pricing in Europe has been subdued since April 2011,
following concerns around the European sovereign debt crisis. Japanese steel
production and prices were initially impacted by the earthquake and tsunami
during the first quarter but recovered during the third quarter. However, as
macro- economic uncertainty increased, this also weighed heavily on steel
prices and demand in Japan towards the end of the year. As a result, European
and Japanese steel producers started to implement production slowdowns in an
attempt to stabilise steel markets. Consequently, iron ore offtake in these
regions has slowed and China was the target of diverted contractual tonnages
from a number of suppliers.
The combination of higher seaborne ore supplies and lower crude steel
production during the second half of 2011 resulted in a sharp fall in index
prices in the fourth quarter. Steel producers resumed sourcing of iron ore
during November 2011, following a period of de-stocking, particularly in
China. Index and spot iron ore pricing has now reached a support level
provided by high cost Chinese domestic iron ore production.
Underpinned by global steel production, prices for manganese ores have been
under considerable pressure, particularly in the second half of 2011, on the
back of a general oversupply in the market and a build-up of port inventories
in China. Alloy conversion capacity continued to grow through the year,
placing additional pressure on margins for all alloys, with some higher cost
producers eventually idling capacity in order to cut losses.
Operating performance
Kumba Iron Ore
The total material mined at Sishen mine increased by 8% from 153.2 Mt in 2010
to 165.0 Mt, of which waste mined was 119.0 Mt, an increase of 17% from 2010.
This planned increase in mining activity was negatively affected by wet pit
conditions resulting from excessive rainfall during the first half of 2011. As
a consequence, the availability of run-of-mine material supplied to the dense
media separation (DMS) plant reduced, causing total production at Sishen mine
to decrease by 6% from 41.3 Mt in 2010 to 38.9 Mt. The jig plant achieved a
run rate in excess of design capacity, producing 13.5 Mt for the year (2010:
13.3 Mt) as a result of an improved yield brought about by moderating the
quality of the ore produced by the plant. Kolomela was brought into production
ahead of schedule. Waste material stripped in the year amounted to 30.3 Mt
(2010: 18.6 Mt) as two open pits were developed at a cost of $131 million
(2010: $108 million), all of which was capitalised. The plant was successfully
commissioned during 2011, delivering 1.5 Mt of production in the year.
Kumba`s total sales volumes increased by 0.4 Mt to 43.5 Mt in 2011 (2010: 43.1
Mt). Total export sales volumes increased by 1.0 Mt to a record 37.1 Mt.
Export sales volumes to China increased to 68% of total export volumes for the
year, compared with 61% in 2010. The company`s traditional markets accounted
for about 22% of export sales, while Kumba sold a small portion of its total
exports into the Middle East and North Africa, and South America.
Approximately 73% of exports were sold to long term and annual contractual
customers and 27% at prices derived from index.
Iron Ore Brazil
Iron Ore Brazil generated an operating loss of $42 million, largely reflecting
the pre-operational state of the Minas-Rio project.
The Amapa operation contributed an operating profit of $120 million for the
year, compared with an operating profit of $16 million in 2010, reflecting a
strong production performance and continued cost containment during a period
of elevated prices. Production in 2011 totalled 4.8 Mt, a 20% increase over
the previous year.
Samancor
Operating profit declined by 57% to $165 million (2010: $382 million), driven
mainly by lower prices and stronger average local currencies in South Africa
and Australia.
Production was lower at the South African mines owing to safety related
downtime, issues concerning sinter plants and higher stripping ratios. In
addition, production was lower at GEMCO in Australia as a result of
concentrator downtime and unusually heavy rainfall in early and late 2011.
Anglo American`s share of ore production at 2.8 Mt was 6% lower than the prior
year, while alloy production of 300,500 tonnes was only marginally lower.
Manganese ore sales prices softened by 19% in 2011, due to an oversupplied
market and a build-up of port inventories in China.
Projects
Excellent progress was made at Kolomela mine, which was delivered five months
ahead of schedule and within budget. Kolomela is ramping up well and is on
track to produce between 4 Mtpa and 5 Mtpa in 2012, before producing at full
design capacity of 9 Mtpa in 2013.
Kumba`s stated South African growth target of producing 70 Mtpa by 2019 is
intact:
- 9 Mtpa will come from Kolomela in 2013;
- 15 Mtpa to be delivered from other projects in the Northern Cape Province;
and
- 5 Mtpa potential from projects in the Limpopo Province.
The Minas-Rio iron ore project in Brazil is expected to produce 26.5 Mtpa of
iron ore in its first phase and has made good progress during the year. Minas-
Rio has secured a number of major licences and permits during the year; the
offshore and onshore works at the port are on schedule; more than 90% of land
access has been secured along the 525 km pipeline route and more than 200 km
of pipe has been installed; and the civil works at the beneficiation plant are
well under way. As with other complex greenfield mining projects, a number of
unexpected issues, such as the discovery of caves at the beneficiation plant
site which require specialised assessment, continue to cause delays to the
work scheduling, in addition to outstanding land access and an evolving
permitting environment. Minas-Rio is implementing various measures to manage
these challenges in a high inflationary Brazilian mining environment,
including acceleration activities within the previously announced 15% capital
increase, to target first ore on ship in the second half of 2013.
Pre-feasibility studies for the second phase of the Minas-Rio iron ore project
commenced during 2011 and, although still under way, the studies, together
with the current resource statement (total resource volume (Measured,
Indicated and Inferred)) of 5.8 billion tonnes, support the expansion of the
project.
The second expansion of the GEMCO operation in the Northern Territory of
Australia (GEEP2 project) was approved in May 2011. This follows the
successful completion of the GEMCO Expansion Phase 1 (GEEP1) project in
January 2010.
The first phase expansion confirmed GEMCO`s status as the world`s largest and
lowest cost producer of manganese ore. This second expansion, which is
expected to be completed in late 2013 will further enhance GEMCO`s competitive
advantages and create additional options for growth. The $280 million GEEP2
project (Anglo American`s 40% share: $112 million) will increase GEMCO`s
beneficiated product capacity from 4.2 Mtpa to 4.8 Mtpa through the
introduction of a dense media circuit by-pass facility. The expansion will
also address infrastructure constraints by increasing road and port capacity
to 5.9 Mtpa, creating 1.1 Mtpa of latent capacity for future expansions.
Outlook
Continuing macroeconomic uncertainty has undermined the short term outlook for
the global seaborne iron ore market. Monetary tightening to control inflation
in emerging economies such as China has restrained economic growth. In
addition, an uncertain policy response to tackle the European sovereign debt
crisis has also weakened economic activity. Despite the short term macro-
economic uncertainty, medium to long term prospects for iron ore demand remain
robust as China`s living standards continue to `catch up` with those in the
developed economies. Nevertheless, as China shifts from an investment
intensive to consumption driven economy, the rate of growth for steel
materials is expected to moderate to a more sustainable level.
While demand is a key driver for pricing, supply constraints also play a
crucial role. In the short term, iron ore supply is anticipated to remain
tight amid seasonal weather impacts in Brazil and Western Australia, and the
government`s moves in India to control exports of iron ore. The ongoing
challenges faced by producers to deliver new supply is expected to lead to
increased capital intensity and will, therefore, underpin the long term
pricing outlook. Anglo American`s ability to supply iron ore to the market
will be enhanced by the ramping up of Kolomela during 2012 and the delivery of
the Minas-Rio project in the second half of 2013.
Kumba Iron Ore update
Sishen Supply Agreement arbitration
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 rights. 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. During 2011, three arbitrators were appointed and May
2012 was set as the date for the arbitration to begin. On 9 December 2011,
SIOC and ArcelorMittal agreed to postpone the arbitration until the final
resolution of the mining right dispute (see below).
SIOC and ArcelorMittal reached an interim pricing arrangement in respect of
the supply of iron ore to ArcelorMittal from the Sishen mine. This interim
arrangement endured until 31 July 2011. SIOC and ArcelorMittal agreed to an
addendum to the interim supply agreement which extended the terms and
conditions of the current interim agreement. The new interim pricing
agreement, which is on the same terms and conditions as the first interim
pricing agreement, commenced on 1 August 2011 and will endure to 31 July 2012.
21.4% undivided share of the Sishen mine mineral rights
After ArcelorMittal failed to convert its old order rights, 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 (Pty) 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.
The High Court Review, in which SIOC challenged the award of the 21.4%
prospecting right over Sishen mine by the DMR to ICT, was presided over by
Judge Raymond Zondo in the North Gauteng High Court in Pretoria, South Africa,
from 15 to 18 August 2011.
On 21 December 2011 judgment was delivered in the High Court regarding the
status of the mining rights at Sishen mine. The High Court held that, upon the
conversion of SIOC`s old order mining right relating to the Sishen mine
properties in 2008, SIOC became the exclusive holder of a converted mining
right for iron ore and quartzite in respect of the Sishen mine properties. The
High Court held further that as a consequence, any decision taken by the DMR
after such conversion in 2008 to accept or grant any further rights to iron
ore at the Sishen mine properties was void. Finally, the High Court reviewed
and set aside the decision of the Minister of Mineral Resources or her
delegate to grant a prospecting right to ICT relating to iron ore as to a
21.4% share in respect of the Sishen mine properties. On 3 February 2012, both
the DMR and ICT submitted applications for leave to appeal against the High
Court judgment.
The High Court order does not affect the interim supply agreement between
ArcelorMittal and SIOC, which will endure until 31 July 2012 as indicated
above.
SIOC will continue to take the necessary steps to protect its shareholders`
interests in this regard.
Samancor
A general state of oversupply in the global manganese ore market and high port
stocks in China have pushed prices to lower levels of approximately $4.80/mtu
CIF China. Demand is expected to slow even further owing to stock utilisation,
and short term macro-economic uncertainty.
Alloy prices have also been affected by ongoing macro-economic uncertainty and
steel producers minimising stock in the pipeline. This trend is expected to
continue in 2012. Prices of manganese ore and alloy are expected to decline
further from current levels with a recovery anticipated towards the latter
part of 2012.
METALLURGICAL COAL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2011 31 Dec 2010
Operating profit 1,189 780
EBITDA 1,577 1,134
Net operating assets 4,692 4,332
Capital expenditure 695 235
Share of Group operating profit 11% 8%
Share of Group net operating assets 11% 10%
(1) In 2011 Peace River Coal has been reclassified from Other Mining and
Industrial to Metallurgical Coal, to align with internal management reporting.
Comparatives have been reclassified to align with current year presentation.
Metallurgical Coal`s operating profit increased by 52% to a record $1,189
million. Higher realised export selling prices and a strong production
recovery in the second half of the year more than offset the impact of rain on
production and a strong Australian dollar. Production at the Queensland
operations was affected by heavy rainfall and subsequent flooding in late 2010
and in the first quarter of 2011, which resulted in force majeure declarations
being in effect until June 2011. Export metallurgical coal production
decreased by 9% compared to the prior year, primarily as a result of the
impact of these adverse weather conditions, although the business made a
strong recovery in the second half of the year, particularly at the open cut
operations. Unit costs increased as a result of lower production, the
additional costs associated with flood recovery initiatives and the strong
Australian dollar.
Markets
Anglo American weighted average achieved FOB prices
2011 2010
($/tonne)
Export metallurgical coal 251 177
Export thermal coal 101 87
Domestic thermal coal 34 33
Attributable sales volumes (`000 tonnes) 2011 2010
Export metallurgical coal 13,983 15,729
Export thermal coal 6,274 6,384
Domestic thermal coal 7,455 8,342
Despite short term macro-economic uncertainties and monetary tightening
measures in China impacting steel production in the second half of the year,
metallurgical coal supply shortages due to wet weather and industrial
disruptions resulted in a strong metallurgical coal market for most of 2011.
Record quarterly prices were settled across all metallurgical coal categories
in the April to June 2011 quarter, resulting in overall 2011 average prices
being well above historical levels.
Anglo American led the metallurgical coal quarterly price settlements in three
consecutive quarters during 2011, providing a well-supported market reference
for premium hard coking coals and PCI coals. The majority of Anglo American`s
metallurgical coal sales were placed against term contracts with quarterly
negotiated price settlements.
Operating performance
Attributable production (`000 tonnes) 2011 2010
Export metallurgical coal 14,190 15,570
Thermal coal 13,426 14,461
Production declined following Queensland`s record rainfall, with floods
affecting both the open cut and underground operations. As a consequence,
sales of high quality metallurgical coal decreased by 11% to 14.0 Mt for the
year. However, successful mitigation actions taken early in the year to
recover lost volumes and ongoing asset optimisation improvements led to record
run-of-mine production at the open cut operations. For the second half of the
year, all metallurgical coal open cut operations set new production records,
demonstrating the strong effort to recover from the flooding events. A
mitigation programme aimed at reducing the impact of rain at the open cut
operations has been completed, which will significantly reduce the impact of
such events in the future.
At the underground operations, productivity improvement was a major focus
during the year, with the implementation of a structured internal programme to
raise the longwall operations` productivity to benchmark levels. The programme
also involved partnership agreements with equipment suppliers to establish
best-in-class practices. New weekly production records have since been set at
both longwall underground operations. Scheduled longwall moves in the second
half of the year reduced production below prior year levels, however, a
partial drift failure at Moranbah delayed the restart of the longwall
following its move.
Optimisation of the entire coal supply chain through streamlined logistics
management and new product offerings to customers through blending, continue
to deliver significant benefits and value to our customers.
Projects
In December 2011, the development of the $1.7 billion, 5 Mtpa Grosvenor Phase
1 metallurgical coal project was approved. This represents the first phase of
our investment programme in Australia to grow our high margin, hard coking
coal production. Grosvenor`s first development coal will be produced in 2013,
with full commercial production expected in 2016. Advanced stage project
studies continue at the greenfield projects of Moranbah South, Dartbrook and
Drayton South in Australia, and also at Roman in Canada, to achieve our
objective of tripling hard coking coal production by 2020 to meet expected
growth in demand for both metallurgical and thermal coal.
Negotiations continue on the proposed divestment of the Callide mine as part
of Metallurgical Coal`s strategy to exit the low margin domestic thermal coal
business. Callide primarily supplies domestic power stations in Queensland,
producing 8.0 Mt of thermal coal in 2011, with expansion potential from its
resource base of more than 800 million tonnes.
Outlook
Metallurgical Coal will be a 100% exporter, with a focus on high margin hard
coking coal growth, following the planned divestment of Callide. Sustained
productivity increases at both the underground and open cut operations,
together with the industry leading expansion plans already announced, will
position Anglo American as a leading producer of premium products in a highly
attractive market.
In the short term, continuing global economic uncertainty is expected to
challenge the recovery of the steel market during 2012. Measures to control
inflation in emerging economies such as China and India have restrained
economic growth. In addition, an uncertain policy response to tackle the
European sovereign debt crisis has also weakened economic activity. Despite
the short term macro-economic uncertainty, the medium to long term prospects
for metallurgical coal demand remain robust as China and India continue to
grow strongly.
In the absence of weather-related disruptions, Australian supply is expected
to continue to recover to pre- flooding levels. However, persistent industrial
disruptions may impact the full recovery of supply in Australia.
THERMAL COAL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2011 31 Dec 2010
Operating profit 1,230 710
South Africa 775 426
Colombia 482 309
Projects and corporate (27) (25)
EBITDA 1,410 872
Net operating assets 1,886 2,111
Capital expenditure 190 274
Share of Group operating profit 11% 7%
Share of Group net operating assets 4% 5%
Thermal Coal generated an operating profit of $1,230 million, representing a
73% increase on 2010, driven by stronger average export thermal coal prices.
This was in part offset by industry-wide cost pressures, primarily in labour,
fuel and power.
Markets
Anglo American weighted average achieved FOB prices
($/tonne) 2011 2010
RSA export thermal coal 114.27 82.49
RSA domestic thermal coal 21.36 18.42
Colombian export thermal coal 101.01 72.69
Attributable sales volumes (`000 tonnes) 2011 2010
RSA export thermal coal 16,532 16,347
RSA domestic thermal coal 40,136 41,323
Colombian export thermal coal 10,685 10,461
The Asia-Pacific region commenced the year with severe weather interruptions
in Australia and Indonesia, disrupting coal exports and driving Newcastle
thermal coal FOB prices to a post-2008 high of $136/t(1) during January and
averaged $121/t(1) for the year (2010: $99/t(1)). The earthquake and tsunami
which struck Japan in March damaged the country`s Pacific coast coal-fired
power plants and transmission infrastructure. Although this event immediately
reduced Japan`s thermal coal requirements, India and China imported
significantly more thermal coal during 2011, some 25% and 15% respectively
above 2010 volumes, which increased overall demand in the Asia-Pacific region
by approximately 8%. During the final quarter of 2011 the market weakened, as
the earlier upsurge in the international thermal coal prices and increased
exports from Indonesia softened demand, Australian FOB prices subsequently
stabilised in December at $110/t(1).
The Atlantic-Mediterranean region was impacted by the political upheaval and
ensuing geo-political tensions that affected several North African and Middle
Eastern countries during 2011, which led to an increase in global energy
prices and improved thermal coal`s competitiveness compared with gas-powered
electricity generation. This was a contributing factor to an estimated 8%
increase in thermal coal imports into the Atlantic-Mediterranean region during
2011 and added support to South African FOB export prices, which averaged
$116/t(2) for the year (2010: $92/t(2)). A warm start to the northern
hemisphere winter, continued economic uncertainty within Europe and increased
exports from the US, Colombia and South Africa adversely affected market
sentiment during the fourth quarter. This placed further pressure on seaborne
thermal coal prices, which for South African exports settled at $104/t(2) FOB
during December.
(1) GlobalCOAL`s NEWC index price.
(2) Argus/McCloskey API4 index price.
Operating performance
Attributable production (`000 tonnes) 2011 2010
RSA thermal coal 21,388 21,612
RSA Eskom coal 35,296 36,403
Colombian export thermal coal 10,752 10,060
South Africa
Operating profit from South African operations increased by 82% to $775
million, driven by higher export thermal coal prices, although partly offset
by the impact of the stronger rand particularly in the first half of the year.
Costs were impacted by industry-wide increases in labour, power and fuel, as
well as additional stock management costs following train derailments during
the first quarter. These were compounded by a 20-day extended maintenance
stoppage during May and June 2011 on the railway line to Richards Bay Coal
Terminal (RBCT). Export sales volumes were also similarly affected in the
first half. However, export sales recovered during the second half of the year
as optimised load out efficiencies on the operations complemented improved
Transnet Freight Rail performance.
Production for the year decreased by 2% to 57 Mt. Although Zibulo moved from
project to operational phase during the fourth quarter of 2011, as a result of
some sections opening ahead of schedule. These gains were offset, however, by
heavy rainfall in the first quarter that hampered the opencast operations as
well as geological issues at certain underground operations. In addition
production was impacted by industrial action in the third quarter.
Colombia
At Cerrejon, operating profit of $482 million was 56% higher, primarily due to
higher thermal coal prices and production offsetting the impact of above
inflation cost increases and a strong local currency. Record production was
achieved despite the continuation of the rain-related stoppages associated
with the La Nina weather phenomenon. Although rain-related stoppages were
approximately double the forecast, there was an improvement from 2010. This
improvement, in combination with mining efficiencies and scheduling, enabled
Cerrejon to exceed its theoretical production capacity of 32 Mtpa for the
first time, resulting in a 7% increase in production year-on-year.
Projects
The 6.6 Mtpa Zibulo mine in South Africa reached commercial operating levels
in the fourth quarter of 2011, ahead of schedule.
Also in South Africa, the New Largo Coal Project, currently at feasibility
stage, has two main elements: a new opencast mine and a conveyor which will
run from an existing coal plant to an Eskom power station. The operation plans
to mine domestic thermal coal and Thermal Coal is currently negotiating a coal
supply agreement with Eskom for delivery into its Kusile power station.
Initial coal from the mine is expected in 2015.
In Colombia, Phase 1 of the Cerrejon P500 expansion project, to increase
production by 8 Mtpa, was approved by Cerrejon`s three shareholders in the
third quarter of 2011. First coal is targeted during the fourth quarter of
2013, with the project expected to achieve full production at the end of 2015.
As at the end of 2011, the project was on schedule and on budget.
Outlook
The international seaborne thermal coal market is expected to remain in
balance during 2012, as increased supply from the main exporting countries of
Australia, Indonesia and Colombia is consumed by the developing Asia-Pacific
economies, aided by Japan`s recovery from the recent natural disasters. Growth
in thermal coal consumption is expected to continue in both China and India
reflecting rising energy demand as their economies grow strongly. In Europe,
demand for thermal coal is expected to be consistent with 2011, with minimal
demand growth in line with forecast weak GDP growth in the region. The
Atlantic market is expected to continue to see the impact of strong US thermal
coal exports in reaction to the increasing supply of US domestic gas and low
US gas prices.
COPPER
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2011 31 Dec 2010
Operating profit 2,461 2,817
EBITDA 2,750 3,086
Net operating assets 7,643 6,291
Capital expenditure 1,570 1,530
Share of Group operating profit 22% 29%
Share of Group net operating assets 17% 14%
Copper generated an operating profit of $2,461 million, 13% lower than in
2010. The higher average copper price for the year was more than offset by
lower sales volumes and higher operating costs. Higher power and fuel-related
costs affected all operations, particularly the Los Bronces operation due to a
period of exposure to the elevated marginal cost of power on the central
Chilean grid. At Collahuasi, the decision to incur additional logistics costs
in order to maximise sales while the Patache port shiploader was being
repaired also had an adverse effect on unit costs.
Markets
Average prices 2011 2010
Average prices (LME cash, c/lb) 400 342
Average realised prices (c/lb) 378 355
Copper prices increased strongly during the first half of the year, and
reached a record (nominal) high of 460c/lb as demand increased and supply
remained constrained. However, as concerns grew over the outlook for the world
economy, the price moved off this peak and was more volatile in the second
half of the year as Europe`s sovereign debt crisis continued to affect
sentiment.
After dropping sharply in September, the copper price recovered during
subsequent months to end the year at 343c/lb, representing a decrease of 25%
from its February high.
For the full year, the realised price averaged 378c/lb, a 6% increase compared
with 2010. This included a negative provisional price adjustment for 2011 of
$278 million, versus a net positive adjustment in the prior year of $195
million.
Operating performance
2011 2010
Attributable copper production (tonnes) 599,000 623,300
Total attributable copper production of 599,000 tonnes was 4% lower than in
2010. This was mainly due to lower production from Collahuasi, Mantos Blancos
and Mantoverde.
Attributable production at Collahuasi was 10% lower at 199,500 tonnes. The
decrease was due to expected lower grades, abnormally high rainfall and heavy
snow affecting throughput, and an illegal strike during November. Output at
Mantos Blancos and Mantoverde was 8% and 4% lower at 72,100 tonnes and 58,700
tonnes respectively, due to lower grades.
Production at Los Bronces was marginally higher at 221,800 tonnes; the
operation benefiting from 19,000 tonnes achieved from the start-up of the
expansion project and higher throughput, as a result of asset optimisation
initiatives. This increase in production was offset by anticipated lower
grades, a temporary failure in a return solutions pipeline impacting copper
cathode production, and safety stoppages following a fatal accident in
September. Production at El Soldado also increased by 16%, to 46,900 tonnes,
owing to higher ore grades following a period of mine development.
The impact on Collahuasi`s sales volumes arising from the December 2010
shiploader failure at the Patache port, was successfully overcome in the first
half of the year through the implementation of a contingency plan that
included shipping copper concentrate through the ports at Arica, Iquique and
Antofagasta. The shiploader was repaired and fully operational by July 2011.
Projects
The delivery of first copper production from the Los Bronces expansion was
achieved on schedule in the fourth quarter of 2011. The ramp-up period is
expected to take 12 months before full production is reached, during which
time processing plant throughput will increase from 61,000 tonnes to 148,000
tonnes of ore per day. The expansion will increase the mine`s output by an
average of 200,000 tonnes of copper per annum over the first 10 years.
At Collahuasi, an expansion project to increase concentrator plant capacity to
150,000 tonnes of ore per day, to yield an additional 19,000 tonnes of copper
a year over the estimated life of mine, was commissioned in the fourth quarter
of 2011. A further project to raise throughput to 160,000 tonnes of ore per
day, resulting in an annual average copper production increment of 20,000
tonnes of copper over the mine`s estimated life, is under way and is expected
to be commissioned in 2013. A pre-feasibility study is also in progress to
evaluate options for the next phases of major expansion at Collahuasi, with
potential to increase production to up to 1 Mt of copper a year.
In Peru, Anglo American is focused on obtaining the necessary permits for the
Quellaveco project to progress to Board approval. Early-stage work is
continuing at the Michiquillay project and drilling relating to the geological
exploration programme has recommenced after completion of discussions with the
local communities. It is envisaged that the Michiquillay project will move to
the pre-feasibility stage following the completion of drilling analysis and
orebody modelling.
Activity at the Pebble project in Alaska continues with the focus on
completing the pre-feasibility study by late 2012 and targeting production
early in the next decade. An environmental baseline document highlighting key
scientific and socio-economic data was delivered to government agencies in
late 2011.
Outlook
The ramp-up of the Los Bronces expansion to full capacity over the next 12
months will lead to significantly higher production levels. However, this will
be partly offset by the lower ore grades expected at Collahuasi in 2012.
Industry-wide input cost pressures are expected to continue over the short
term, particularly in relation to power and fuel related costs. However, these
will be partially mitigated by the increased production from the expanded Los
Bronces operation. Our global supply chain network and strong supplier
relationships will continue to play a vital role in identifying opportunities
to reduce costs and improve the quality and security of the key services and
materials that support our operations.
Persistent market concerns arising from uncertainties over the near term
outlook for the global economy will continue to lead to relatively pronounced
short term volatility in commodity prices, including copper. Robust demand
from the emerging economies, the lack of new supply and increasing capital
intensity for new supply, however, means that the medium to long term
fundamentals for copper remain strong.
As announced in September 2011, we are participating in a sale process to
dispose of our effective 16.8% interest in Palabora Mining Company. A review
of this investment in the second half of 2011 concluded that the asset was no
longer of sufficient scale to suit the Group`s investment strategy.
NICKEL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2011 31 Dec 2010
Operating profit 57 96
EBITDA 84 122
Net operating assets 2,535 2,334
Capital expenditure 398 525
Share of Group operating profit 1% 1%
Share of Group net operating assets 6% 5%
Nickel generated an operating profit of $57 million which was net of $31
million project evaluation operating costs. Loma de Niquel and Codemin`s
financial performance was similar to that of the previous year.
Markets
Average price (c/lb) 2011 2010
Average market price (LME, cash) 1,035 989
Average realised price 1,015 986
The average market nickel price was 5% higher than in 2010. During the first
half of the year the nickel price was supported by demand growth from the
stainless steel industry and a supply gap owing to mine disruptions and delays
to a number of projects. The price peaked in February above 1,310c/lb.
However, prices softened considerably in the second half, reflecting ongoing
concern around uncertainty over the near-term outlook for the global economy,
softer summer demand in the northern hemisphere, higher supply from new
projects (including Barro Alto) and nickel pig iron (NPI) production. As a
consequence, the nickel price fell to a low of less than 770c/lb in November,
before closing the year at 829c/lb.
The market was broadly in balance in 2011; global nickel consumption increased
by around 7%, while supply increased by around 12%.
China continued to be a key consumer of nickel in 2011, contributing more than
40% of global stainless steel production in the year. Nickel consumption
growth in China is expected to outpace other markets in 2012, although the
North American market may surprise on the upside, while demand in Europe and
the rest of Asia is expected to decrease.
Although NPI was a feature of the Chinese market in early 2011, prices fell
significantly enough by the end of the year to have a real impact on NPI run
rates, encouraging stainless steel producers in China to switch back to
refined metal and ferronickel.
Operating performance
2011 2010
Attributable nickel production (tonnes) 29,100 20,200
Nickel production in 2011 increased by 44% to 29,100 tonnes as a result of
delivery of the Barro Alto project and higher output at Loma de Niquel and
Codemin. Barro Alto was commissioned in March 2011 and produced 6,200 tonnes.
Loma de Niquel produced 13,400 tonnes, an increase of 15% over the prior year,
mainly due to an additional two months of production from the electric furnace
2, which was restarted in March 2010. The loss of production in 2010 from
general power rationing did not recur in 2011; power rationing, however,
continues to pose a threat and stand-by on-site generators have been installed
to mitigate production risks.
Due to ongoing uncertainty over the renewal of three concessions that expire
in 2012 and over the renewal of 13 concessions that have been cancelled, an
accelerated depreciation charge of $84 million (2010: $73 million) has been
recorded in relation to Loma de Niquel assets. This has been recognised as an
operating special item. Refer to note 4 to the Condensed financial statements.
A range of scenarios is being considered in respect of the conditions for
renewal of Loma de Niquel`s three remaining concessions, due in November 2012,
and for access to the cancelled concessions.
Codemin`s production of 9,500 tonnes was 12% higher than in 2010, when the
operation was impacted by the planned relining of a furnace. The impact of
lower grades in 2011 was more than offset by process improvements that
increased throughput capacity.
Projects
The Barro Alto project delivered first metal on schedule in March 2011 and is
expected to reach full capacity rates at the beginning of 2013.
Our Nickel business`s promising unapproved projects in Brazil, Jacare and
Morro Sem Bone, have the potential to increase production by more than 66
ktpa, with further upside potential, which would leverage the Group`s
considerable nickel laterite technical expertise. Jacare, with Mineral
Resources of 3.9 Mt (of which 2.6 Mt are Inferred Resources) of contained
nickel, will enter the pre-feasibility study phase in 2012 and has the
potential to significantly strengthen Anglo American`s position in the
worldwide nickel market.
Outlook
Nickel production from the Nickel business unit is expected to be
significantly higher in 2012 as a result of the ramp-up of Barro Alto.
The nickel market is expected to be in surplus in 2012, with increasing supply
coming on line from new projects. However, there is a possibility that the
surplus could be mitigated by supply falling short of expectations, mainly
from projects using new technologies, such as high pressure acid leaching. The
nickel price in 2012 is expected to be heavily influenced by the delivery of
these new projects and the development of the European economic situation.
High cost NPI supply will continue to support a price ceiling or floor.
The long term outlook for nickel is positive, underpinned by stainless steel
demand driven by economic growth and urbanisation in emerging economies.
PLATINUM
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2011 31 Dec 2010
Operating profit 890 837
EBITDA 1,672 1,624
Net operating assets 11,191 13,478
Capital expenditure 970 1,011
Share of Group operating profit 8% 9%
Share of Group net operating assets 25% 31%
Platinum recorded an operating profit of $890 million, a 6% increase, mainly
due to an 8% rise in the average realised basket price. This was offset by
above inflation labour and power costs.
Sales volumes of refined platinum were 3% higher than 2010 at 2.6 million
ounces.
Markets
The average dollar realised price for platinum was $1,707 per ounce in 2011, a
6% increase compared with $1,611 per ounce in the prior year. The average
realised prices for palladium and rhodium sales were $735 per ounce (2010:
$507) and $2,015 per ounce (2010: $2,424), respectively. The average realised
price on nickel sales was $10.50 per pound (2010: $9.70). The overall average
realised dollar basket price was 8.3% higher at $2,698 per platinum ounce
sold.
The global platinum market displayed resilience in 2011 with muted growth in
autocatalyst and jewellery demand, a strong increase in industrial demand and
significantly lower investment demand. Gross platinum demand remained
unchanged in 2011 while a small increase in recycling and a 5% increase in
mined supply resulted in the platinum market in 2011 remaining in balance.
The palladium market in 2011, however, saw a 19% supply surplus in the year,
as significant declines in jewellery and investment demand were only partly
offset by the solid increases in demand for palladium in autocatalysis and
industrial applications. The rhodium market saw its fourth consecutive surplus
as recycle volumes remained high.
Platinum continued to work with industry partners and stakeholders to develop
the platinum markets to maintain existing, and develop new industrial
applications and through Platinum Guild International, maintain the health of
jewellery markets.
Autocatalysts
Demand for light vehicles increased by 1% in 2011 to 75 million units. Vehicle
production was constrained by the earthquake and tsunami in Japan and by
flooding in Thailand. Vehicle production in Europe increased by 3%, buoyed by
Germany and export markets. Gross autocatalyst demand for platinum increased
by 2% to 3.15 million ounces and for palladium by 5% to 5.8 million ounces.
Autocatalyst demand for rhodium was slightly lower year-on-year at 705,000
ounces.
Industrial
Gross industrial demand for platinum reached a new record high of 1.96 million
ounces, largely due to growth in the glass and petroleum industry. Wider
application of process catalysts in the chemical industry saw platinum demand
increase proportionately higher than the corresponding increase in chemical
demand.
High fuel cell unit growth driven by competitive stationary applications
continued in 2011. Palladium process catalyst use for plastic bottle feedstock
increased as new capacity increased. Rhodium content in rhodium/ platinum
catalysts for glass manufacturing increased owing to low rhodium price levels.
Jewellery
Platinum jewellery demand increased 2% in 2011, despite higher average prices
during the year. Platinum and gold price volatility increased in the last
quarter of 2011 and the platinum price fell to below that of gold. Increased
platinum demand resulted from consumer preference over gold and in China the
increased platinum demand improved retail profits, leading to an increase in
the number of new retail stores, increasing platinum stockholding and sales.
Investment
Ongoing macro-economic uncertainty continues to dampen investment sentiment
and in the last quarter of 2011, platinum and gold suffered the consequences
of the risk averse trades by global investment and hedge funds. Although there
was little change in physical demand for platinum, the increased platinum
trading liquidity greatly exaggerated the consequent fall in the platinum
price. Since then reduced investor participation, particularly by gold
investors who previously held both metals, continues to keep the platinum
price at depressed levels, with the rand basket price currently below the
incentive price of the majority of production. Trade in non-visible or over-
the-counter metal continues to have a material impact on short term prices and
higher levels of price volatility is expected in 2012, with a bias to higher
prices if investment sentiment improves.
Operating performance
Safety
Twelve employees lost their lives during the year, a very disappointing
performance. We extend our sincere condolences to their families, friends and
colleagues. Platinum had 81 Section 54 Department of Mineral Resources safety
stoppages in 2011 compared to 36 in 2010. Platinum is continuing to work with
government and labour departments towards zero harm.
Production
Equivalent refined platinum production (equivalent ounces are mined ounces
expressed as refined ounces) from the mines managed by Platinum and its joint
venture partners for 2011 totalled 2.41 million ounces, a decrease of 3%
compared to 2010.
Wholly owned mines (including Union and Western Limb Tailings Retreatment)
produced 1,601,600 equivalent refined platinum ounces, in line with the prior
year. A strong performance from Mogalakwena and Unki was offset by lower
volumes from the Rustenburg, Tumela and Dishaba mines. Unki was delivered
successfully, on schedule and within budget, in January 2011 and contributed
51,600 additional equivalent refined platinum ounces. In addition,
Mogalakwena, a low cost, open-pit mine continued to perform strongly.
Mogalakwena mine increased production by 18% due to a 12% improvement in 4E
built-up head grade, a 4% increase in tonnes milled and a 16% improvement in
recoveries at North concentrator during the second half of 2011.
Refined platinum production of 2.53 million ounces for 2011, was 2% lower than
the prior year.
Projects
Capital expenditure for 2011 was $970 million, of which $451 million was spent
on projects, $443 million on stay-in-business capital and $76 million on waste
stripping at Mogalakwena.
Project capital expenditure for 2011 related mainly to the Twickenham project
($95 million), Mortimer furnace upgrade ($58 million), Thembelani 2 shaft
replacement project ($57 million), Unki ($40 million), the Base Metals
Refinery 33,000 tonnes nickel expansion project ($34 million), and the
Khuseleka ore replacement project ($25 million).
The Unki Platinum Mine Project was handed over to operations in January 2011
and has reached steady state production of 120,000 tonnes milled per month
during the fourth quarter of 2011, a year ahead of schedule. The Base Metal
Refinery 33,000 tonnes nickel expansion project has produced its first metal
in line with expectations and reached steady state production during the
fourth quarter of 2011 as planned.
Outlook
Growth in platinum demand is expected to be driven by increased global vehicle
production, ongoing tightening of emissions legislation and strengthening
jewellery demand. Primary supply challenges are expected to escalate during
2012, with increased risk of supply disruptions from power shortages,
industrial actions and safety stoppages in South Africa. The ongoing
constraint on capital investment posed by low prices continues to limit South
African output growth and 2012 may exhibit the compounding effects of similar
capital constraints in recent years.
Consequently, Platinum expects the platinum market to remain in balance in
2012. We believe the expected growth in platinum demand and the ongoing
challenges faced by platinum miners will be key drivers of the recovery in the
platinum price in 2012. Platinum plans to refine and sell between 2.5 and 2.6
million ounces of platinum in 2012, subject to market conditions. In 2011,
Platinum had forecast growth to 2.7 million ounces of platinum in 2012,
however, given the current circumstances, the forecast has been reduced.
Although the 2012 sales volume target is unchanged from that achieved in 2011,
Platinum believe this is an appropriate level to meet forecast demand.
Platinum maintains a relentless focus on mitigating industry-wide cost
pressures, primarily through an increase in production volume from our
underground mines, increase in utilisation of smelting and refining capacity
through the introduction of some secondary material, reduction of redundant
labour through mechanisms that avoid retrenchment, adjustment of overhead and
shared services labour to the needs of the business, freezing of all
recruitment in non-production jobs and the continued focus on asset
optimisation and supply chain management, benefiting from Anglo American`s
global initiatives.
Platinum`s project ranking and prioritisation to focus on less capital
intensive projects in the near term, is expected to reduce capital expenditure
for 2012 from $1.16 billion to up to $1.10 billion, excluding capitalised
interest.
DIAMONDS
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2011 31 Dec 2010
Share of associate`s operating profit 659 495
EBITDA 794 666
Group`s associate investment in De Beers (1) 2,230 1,936
Share of Group operating profit 6% 5%
(1) Excludes outstanding loans owed by De Beers, including accrued interest of
$301 million (2010: $355 million).
Anglo American`s share of operating profit from De Beers totalled $659
million, an increase of 33%, reflecting De Beers` deliberate and targeted
approach to maximise margins and capture the full benefit of significant price
growth in 2011.
On 4 November, Anglo American announced its intention to acquire the
Oppenheimer family`s entire 40% interest in De Beers for $5.1 billion cash.
Under the terms of the existing shareholders` agreement between Anglo
American, CHL Holdings Ltd (representing the Oppenheimer family) (CHL) and the
Government of Botswana (GRB), the GRB has a pre-emption right in respect of a
pro rata portion of the CHL`s interest in De Beers, enabling it to participate
in the transaction and to increase its interest in De Beers, on a pro rata
basis, to up to 25%. In the event that the GRB exercises its pre-emption
rights in full, under the proposed transaction, Anglo American would acquire
an incremental 30% interest in De Beers, taking its total interest to 75%, and
the consideration payable by Anglo American to CHL would be proportionately
reduced.
Markets
In 2011, the Diamond Trading Company (DTC) achieved its second highest ever
level of sales ($6.5 billion), a 27% increase over the prior year (2010: $5.1
billion). The first half of the year saw exceptional consumer demand growth
which, when coupled with lower than historical levels of global diamond
production, resulted in very strong polished and rough diamond price growth.
While reflecting the robust market fundamentals, rough diamond prices in this
period included an element of speculative buying in the trading centres.
During the second half of the year, both retail and cutting centre sentiment
was impacted by the challenging macro-economic environment, restricted
liquidity in the cutting centres and a slowdown in the rate of growth of
consumer demand at retail. As a result, De Beers experienced lower levels of
demand for its rough diamonds and prices receded slightly from the highs seen
in the middle of the year. However, in total, 2011 was a very strong year on
the demand side, with record levels of consumer demand growth estimated at
between 11% and 13% over the full year, and DTC price growth of 29% from 1
January 2011 to 31 December 2011.
De Beers Diamond Jewellers reported good growth in sales across all regions,
with Greater China particularly strong. The China opportunity is a priority
for De Beers, with further 2012 expansion plans following the opening of
stores in Beijing, Tianjin, Dalian and a second Hong Kong store in 2011.
Forevermark continued its expansion both in its existing markets of China,
Hong Kong and Japan, and in the second half of the year launched in India and
the US. Forevermark is now available in 658 retail stores across nine markets,
an increase of 89% compared with 2010.
Operating performance
De Beers reported an LTIFR of 0.15 (2010: 0.24) but, regrettably, there were
seven loss of life incidents in the year. Comprehensive safety reviews are
being carried out at all De Beers operations.
De Beers` production was 5% lower than the prior year at 31.3 million carats
(2010: 33.0 million carats). During the first half of the year, in spite of a
number of challenges, including heavy rainfall in southern Africa, maintenance
backlogs, poor contractor performance, skills shortages, and protracted labour
negotiations, De Beers produced 15.5 million carats, in line with the first
half of 2010 (15.4 million carats). During the second half of the year, De
Beers produced another 15.8 million carats despite a shift in its operational
focus, in light of prevailing rough diamond market trends in the fourth
quarter. De Beers utilised this period to address maintenance and waste
stripping backlogs in order to better position the mines to increase their
rate of production as demand from Sightholders increases. This is likely to
continue for several months into 2012.
In 2011, De Beers Exploration spent $40 million (2010: $43 million) on work
programmes focused on 11,347 km2 of ground-holdings in Angola, Canada, India,
Botswana and South Africa, supported by laboratory and technical services
centralised in South Africa.
A new $2 billion multicurrency international credit facility was concluded in
October, comprising an $800 million term loan and a $1.2 billion revolving
credit facility with tenors of March 2015 and October 2016 respectively.
Projects and restructuring
Debswana`s Jwaneng Mine Cut-8 extension project is progressing satisfactorily,
largely on schedule and on budget. More than 40 million tons of waste has been
stripped to date, and infrastructure construction is over 90% complete, with
the remaining work forecast to be completed during 2012.
The underground feasibility study to extend the life of Venetia Mine in South
Africa is underway, and scheduled for consideration by the De Beers
Consolidated Mines (DBCM) board in 2012.
De Beers Canada completed an Optimisation Study at Snap Lake Mine in mid-2011,
securing a mining solution to economically access this promising long life but
challenging orebody, and thereby achieve its forecast 20-year life of mine.
Per the NI 43-101 Technical Report issued by Mountain Province Diamonds Inc.
in 2010, Gahcho Kue (GK) is identified as commencing in 2013 with production
from 2015. The GK Environmental Impact Statement has been submitted and the
review process is currently underway and ultimately the final project schedule
will be dependent on progress with obtaining environmental permits and
regulatory approvals.
In September, DBCM completed the sale of Finsch Mine, as a going concern, to a
Petra Diamonds-led consortium for a consideration of R1.425 billion ($210
million), plus assumption of rehabilitation liabilities. In May, DBCM
announced that it had entered into an agreement to sell Namaqualand Mines to
Trans Hex in a transaction valued at R225 million ($33.5 million), subject to
the fulfilment of a number of conditions precedent.
In September, a new 10 year contract for the sorting, valuing and sales of
Debswana`s diamond production was announced by De Beers and its joint venture
partner, the GRB. As part of the agreement, De Beers will transfer its London-
based rough diamond aggregation and sales activity to Botswana by the end of
2013. From its new base in Botswana, the DTC will aggregate production from De
Beers` mines and its joint venture operations worldwide, and sell to local and
international Sightholders.
In November, De Beers and the Government of the Republic of Namibia (GRN)
finalised an agreement to increase the GRN`s effective shareholding in De
Beers Marine Namibia from 15% to 50% through the establishment of a new 50:50
joint venture holding company. This will not change current marketing
arrangements and all diamond production from Namdeb will continue to be
sorted, valued and marketed exclusively by the DTC together with Namibia DTC.
In December, the DTC announced the provisional qualification of 72 Sightholder
applicants for the upcoming Supplier of Choice sales contract period, which
begins on 31 March 2012 and runs to 30 March 2015.
Outlook
In spite of uncertainty, and barring a global economic shock, continued growth
in global diamond jewellery sales is expected, albeit at lower levels than the
growth experienced in 2011. This will be driven by the overall strength of the
luxury goods market, improving sentiment in the US (the largest diamond
jewellery market), continuing growth in China, and the positive impact of the
2011 polished price growth on retail jewellery prices.
On the production front, De Beers will continue to prioritise waste stripping
and maintenance backlogs, and we therefore do not expect a material increase
in carat production in 2012. This focus, which began in the second half of
2011 and will continue during the first quarter of 2012, will position De
Beers to ramp-up profitable carat production as Sightholder demand dictates.
In the medium to longer term, the industry fundamentals remain positive with
consumer demand, fuelled by the emerging markets of China and India, outpacing
what will likely be level carat production.
OTHER MINING AND INDUSTRIAL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2011 31 Dec 2010
Operating profit 195 664
Copebras 136 81
Catalao 54 67
Tarmac (35) 48
Scaw Metals 40 170
Zinc 20 321
Other (20) (23)
EBITDA 393 894
Net operating assets 3,201 3,393
Capital expenditure 152 206
Share of Group operating profit 2% 7%
Share of Group net operating assets 7% 8%
(1) Catalao and Copebras, reported in the Other Mining and Industrial segment,
are now considered core to the Group. Tarmac and Scaw, which were identified
for divestment as part of the restructuring programme announced in October
2009, remain non-core to the Group. Until February 2011, this reporting
segment also included the zinc operations. In 2011 Peace River Coal has been
reclassified from Other Mining and Industrial to Metallurgical Coal, to align
with internal management reporting. Comparatives have been reclassified to
align with current year presentation.
Other Mining and Industrial - Copebras and Catalao
Markets
Copebras
Phosphate sales increased by 24% in 2011, as a result of strong domestic
demand early in the year due to the `mini crop` (a smaller secondary crop,
mainly corn, grown in the first half of the year), demand for fertilizers by
sugar cane farmers and farmers purchasing fertilizer ahead of the summer crop
as a result of competitive fertilizer prices relative to grain prices.
The balance between supply and demand for phosphates tightened further through
the year owing to reduced supplies from China and Saudi Arabia; this
contributed to the average phosphates price for the year increasing to $700/t
(2010: $510/t). From October, however, grain prices started declining from
their peak on the back of continuing global economic uncertainty, taking
fertilizer prices with them, which led to lower demand for both. For the year
as a whole, fertilizer sales totalled 955.7 kt, 4.2% below 2010. Dicalcium
Phosphates (DCP) sales were 124.5 kt, in line with 2010, while phosphoric acid
sales were 4.8% higher at 100.2 kt.
Catalao
Niobium demand and prices have remained generally stable, notwithstanding
volatility across world markets and uncertainty about the global economy,
particularly the sovereign debt situation in Europe and the lacklustre pace of
economic recovery in the US.
As an alloying agent, niobium brings unique properties to steels, such as
increased formability, corrosion resistance, weldability and strength under
tough working environments including extreme high or low temperatures. Such
steels are known as High Strength Low Alloy (HSLA) steels. Around 90% of total
world niobium consumption is used as an alloying element, in the form of ferro-
niobium in high strength steels, such steels being used in the manufacture of
automobiles, ships, high pressure pipelines, as well as in the petroleum and
construction industries. The product is exported to the main steel plants in
Europe, the US and Asia.
In 2011, world crude steel production rose by 6.8% to reach a record 1,527 Mt.
Total demand for niobium rose in tandem to more than 70 kt of Nb content in
FeNb form for 2011, which eclipsed the previous record figure of 65.8 kt
achieved in 2008.
Operating performance
Copebras
Copebras generated an operating profit of $136 million, representing a 68%
increase on the previous year. This performance reflected higher international
and local market prices, coupled with operational gains from asset
optimisation initiatives in particular. The strong performance was partially
offset by increased input costs, particularly from sulphur and ammonia,
combined with the strengthening of the Brazilian currency.
Catalao
Catalao`s operating profit declined by 19% to $54 million. The company`s
financial performance was negatively affected by lower production and sales
volumes, higher costs related to Catalao`s reintegration into the Anglo
American Group, local inflationary pressures, and the impact of the Brazilian
currency`s appreciation against the dollar.
Production for the year of 3,900 tonnes represented a 3% decline (2010: 4,000
tonnes) following a significant change of production profile as the mine
advanced further into the transition ore between weathered material and
unoxidised ore, resulting in lower Nb recoveries. Set against this,
improvements in the concentration and metallurgy processes at the Boa Vista
plant led to higher recoveries. This, combined with higher average grades, and
the inclusion of the Copebras tailing from Mine 2, with its higher contained
Nb grade, allowed Catalao to offset the impact of the transition ore.
Projects
Copebras
A debottlenecking project, designed to increase capacity of Granulated Mono-
Ammonium Phosphate (MAP) by 60 kt and of DCP by 25 kt by 2015, is under
review. The project is estimated to increase annual EBITDA by more than $35
million, through increased capacity and cost savings.
Given the phosphate market`s sound fundamentals, the original Goias 2
expansion project undertaken in 2008 and designed to increase phosphate
production by more than 100%, may be re-assessed from a different product-mix
perspective
Catalao
The Boa Vista Fresh Rock (BVFR) Project was approved in October. The existing
plant will be adapted to process new rock instead of oxidised ore, leading to
an increase in production capacity to approximately 6.5 kt of Nb per year from
the current 3.8 kt.
Outlook
Copebras
Prices for agricultural commodities in Brazil remain at healthy levels,
resulting in good margins for farmers. Although international fertilizer
prices softened towards the end of the year owing to the global economic
uncertainty, they remain relatively high.
Nonetheless, the uncertain global economic outlook affected demand in the
Brazilian market late in the year, as farmers decided to postpone purchasing
fertilizer. Prospects are, however, positive and the current higher
inventories of imported fertilizers may preclude further imports early in
2012, improving the overall dynamics for domestic fertilizers later in the
year.
Catalao
Despite the record levels of sales and prices in 2011, growth rates for
niobium are likely to remain capped worldwide in the near term. The European
sovereign debt crisis is likely to have a significant negative bearing on
sales to Europe.
In the short term, additional niobium sales are likely to be diverted on a
spot basis to China and, to lesser extent, to the US. Prices are expected to
come under pressure from a stronger Brazilian real and the uncertain economic
outlook in Europe and North America.
Other Mining and Industrial - Tarmac and Scaw
Tarmac
Tarmac reported an operating loss of $35 million, compared to a profit of $48
million in 2010. On a directly comparable basis, however, taking into
consideration the impact of European businesses that were sold in 2010,
Tarmac`s operating profit showed a reduction of $55 million. Tarmac`s directly
comparable EBITDA performance was 32% lower.
Quarry materials
Asphalt volumes benefited from carry-over of demand resulting from the severe
weather at the end of 2010, as well as some continuing government
infrastructure investment, particularly in respect of Local Authority road
maintenance. In comparison to 2010, concrete volumes decreased reflecting a
reduction in demand from major projects such as the Olympic Village and
Gatwick Airport, and reduced housing and other building expenditure. Cement
production levels improved over 2010 as a result of the ongoing efficiency
programme. Management efforts continue to be focused on mitigating the
significant impact of rising input costs, in particular hydrocarbons, through
initiatives such as increasing the use of recycled asphalt materials to
recapture bitumen.
The outlook for the year ahead remains uncertain and dependent to a large
extent upon the UK government`s response to weak domestic growth and wider
economic uncertainty across the Euro zone. Against this background, volume
declines are anticipated across major product categories in 2012, reflecting
announced reductions in public sector spending, exacerbated by declining
private sector spending. The proposed UK JV with Lafarge is proceeding through
the required regulatory processes.
Building products
Performance was severely impacted by the closure of the Precast business, one-
off non-recurring separation costs and the continuing decline in housing,
retail and commercial markets, which affected all products. Volumes suffered
as a consequence of both the general market decline and a competitive pricing
environment, where customers and competitors remain more focused on price and
less on other value drivers.
Cost-reduction initiatives remain a high priority. Several key projects are
also under way to enhance quality and improve customer service.
The underlying market outlook continues to remain challenging in the short
term.
Scaw Metals
Scaw Metals generated an operating profit of $40 million, a 76% decrease
compared with 2010, largely as a result of the sale of Moly-Cop and AltaSteel
that was concluded in December 2010. On a directly comparable basis, however,
taking into consideration the impact of the sale of Moly-Cop and AltaSteel in
2010, Scaw Metals` operating profit showed a reduction of $23 million. Scaw
Metals` directly comparable EBITDA performance was 24% lower.
A strong performance was recorded by Grinding Media in spite of margin
pressure owing to the strong rand. At Wire Rod Products, performance improved
on the back of strong demand for offshore and mining products and improved
business efficiencies. At Rolled Products, performance was affected by weak
demand from the construction sector and selling prices not fully recovering
rising input costs, resulting in reduced margins. At Cast Products, a number
of foundries suffered from a lack of demand for larger castings in the year,
as well as a strong rand, significantly impacting the business` results. The
situation improved towards the end of the year as the demand for railway,
power generation and general engineering components saw the securing of
important orders for the forthcoming year. A strong focus by management on
cost-saving initiatives in all operations and sales to downstream businesses
has mitigated the effects of weak margins. In addition, the closure of loss-
making operations and a focus on pursuing new markets with higher margins has
enabled Scaw Metals to lessen the impact of weak economic conditions. Total
production of steel products at Scaw South Africa was 677.4 kt, a decrease of
5% over the prior year.
CONDENSED FINANCIAL STATEMENTS
for the year ended 31 December 2011
Consolidated income statement
for the year ended 31 December 2011
2011
Before Special
special items and
items and remeasure-
remeasure- ments
Note ments (note 4)
Total
US$ million
Group revenue 2 30,580 - 30,580
Total operating costs (20,912) (229) (21,141)
Operating profit from
subsidiaries and
joint ventures 2 9,668 (229) 9,439
Net profit on disposals 4 - 183 183
Share of net income from
associates 2 978 (1) 977
Total profit from operations
and associates 10,646 (47) 10,599
Investment income 668 - 668
Interest expense (695) - (695)
Other financing gains/(losses) 7 203 210
Net finance income/(costs) 7 (20) 203 183
Profit before tax 10,626 156 10,782
Income tax expense 8a (2,741) (119) (2,860)
Profit for the financial year 7,885 37 7,922
Attributable to:
Non-controlling interests 1,765 (12) 1,753
Equity shareholders of the
Company 6,120 49 6,169
Earnings per share (US$)
Basic 9 5.06 0.04 5.10
Diluted 9 4.85 0.04 4.89
2010
Before Special
special items and
items and remeasure-
remeasure- ments
US$ million ments (note 4) Total
Group revenue 27,960 - 27,960
Total operating costs (19,452) 158 (19,294)
Operating profit from subsidiaries and
joint ventures 8,508 158 8,666
Net profit on disposals - 1,579 1,579
Share of net income from associates 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 income/(costs) (244) 105 (139)
Profit before tax 9,109 1,819 10,928
Income tax expense (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$)
Basic 4.13 1.30 5.43
Diluted 3.96 1.22 5.18
Consolidated statement of comprehensive income
for the year ended 31 December 2011
US$ million Note 2011 2010
Profit for the financial year 7,922 8,119
Net gain on revaluation of available for sale
investments 115 316
Net loss on cash flow hedges (94) (14)
Net exchange difference on translation of foreign
operations (including associates) (4,060) 2,431
Actuarial net (loss)/gain on post employment
benefit schemes (214) 131
Share of associates` expense recognised directly
in equity, net of tax (32) (50)
Tax on items recognised directly in equity 8c 24 (149)
Net (expense)/income recognised directly in equity (4,261) 2,665
Transferred to income statement: sale of available
for sale investments (10) -
Transferred to income statement: cash flow hedges 5 4
Transferred to initial carrying amount of hedged
items: cash flow hedges 54 20
Transferred to income statement: net exchange
difference on disposal of foreign operations 45 (40)
Share of associates` expense transferred from
equity, net of tax - (8)
Tax on items transferred from equity 8c (14) 1
Total transferred from equity 80 (23)
Total comprehensive income for the financial year 3,741 10,761
Attributable to:
Non-controlling interests 1,142 1,885
Equity shareholders of the Company 2,599 8,876
Consolidated balance sheet
as at 31 December 2011
US$ million Note 2011 2010
Intangible assets 2,322 2,316
Property, plant and equipment 40,549 39,810
Environmental rehabilitation trusts 360 379
Investments in associates 5,240 4,900
Financial asset investments 2,896 3,220
Trade and other receivables 437 321
Deferred tax assets 530 389
Other financial assets (derivatives) 668 465
Other non-current assets 138 178
Total non-current assets 53,140 51,978
Inventories 3,517 3,604
Trade and other receivables 3,674 3,731
Current tax assets 207 235
Other financial assets (derivatives) 172 377
Cash and cash equivalents 12b 11,732 6,401
Total current assets 19,302 14,348
Assets classified as held for sale 14 - 330
Total assets 72,442 66,656
Trade and other payables (5,098) (4,950)
Short term borrowings 10, 12b (1,018) (1,535)
Provisions for liabilities and charges (372) (446)
Current tax liabilities (1,528) (871)
Other financial liabilities (derivatives) (162) (80)
Total current liabilities (8,178) (7,882)
Medium and long term borrowings 10, 12b (11,855) (11,904)
Retirement benefit obligations (639) (591)
Deferred tax liabilities (5,730) (5,641)
Other financial liabilities (derivatives) (950) (755)
Provisions for liabilities and charges (1,830) (1,666)
Other non-current liabilities (71) (104)
Total non-current liabilities (21,075) (20,661)
Liabilities directly associated with assets
classified as held for sale 14 - (142)
Total liabilities (29,253) (28,685)
Net assets 43,189 37,971
Equity
Called-up share capital 738 738
Share premium account 2,714 2,713
Other reserves 283 3,642
Retained earnings 35,357 27,146
Equity attributable to equity shareholders
of the Company 39,092 34,239
Non-controlling interests 4,097 3,732
Total equity 43,189 37,971
The financial statements of Anglo American plc, registered number 3564138,
were approved by the Board of directors on 16 February 2012 and signed on its
behalf by:
Cynthia Carroll Rene Medori
Chief Executive Finance Director
Consolidated cash flow statement
for the year ended 31 December 2011
US$ million Note 2011 2010
Cash flows from operations 12a 11,498 9,924
Dividends from associates 344 255
Dividends from financial asset investments 59 30
Income tax paid (2,539) (2,482)
Net cash inflows from operating activities 9,362 7,727
Cash flows from investing activities
Purchase of property, plant and equipment 2 (6,203) (5,280)
Cash flows from derivatives related to capital
expenditure 2 439 286
Investment in associates (47) (519)
Purchase of financial asset investments (16) (134)
Net repayment of loans granted 22 18
Interest received and other investment income 350 235
Disposal of subsidiaries, net of cash and cash
equivalents disposed 13 514 2,539
Sale of interests in joint ventures 13 19 256
Repayment of capitalised loans by associates 4 33
Proceeds from disposal of property, plant and
equipment 77 64
Other investing activities (12) 32
Net cash used in investing activities (4,853) (2,470)
Cash flows from financing activities
Interest paid (807) (837)
Cash flows from derivatives related to financing
activities 226 217
Dividends paid to Company shareholders (818) (302)
Dividends paid to non-controlling interests (1,404) (617)
Repayment of short term borrowings (1,261) (2,338)
Net receipt of medium and long term borrowings 964 1,194
Movements in non-controlling interests 4,964 356
Sale of shares under employee share schemes 20 42
Purchase of shares by subsidiaries for employee
share schemes (1) (367) (106)
Other financing activities (43) (9)
Net cash inflows from/(used in) financing
activities 1,474 (2,400)
Net increase in cash and cash equivalents 5,983 2,857
Cash and cash equivalents at start of year 12c 6,460 3,319
Cash movements in the year 5,983 2,857
Effects of changes in foreign exchange rates (711) 284
Cash and cash equivalents at end of year 12c 11,732 6,460
(1) Includes purchase of Kumba Iron Ore Limited and Anglo American Platinum
Limited shares for their respective employee share schemes.
Consolidated statement of changes in equity
for the year ended 31 December 2011
Share- Cumulative
Total based translation
share Retained payment adjustment
capital (1) earnings reserve reserve
US$ million
Balance at 1 January 2010 3,451 21,291 401 (551)
Total comprehensive income - 6,595 - 2,004
Dividends payable to
Company shareholders - (302) - -
Dividends payable to
non-controlling interests - - - -
Changes in ownership
interest in subsidiaries - (471) - 21
Issue of shares to
non-controlling interests - 90 - -
Consolidation by De Beers
of non-controlling interest - (128) - -
Equity settled
share-based payment schemes - 64 86 -
Other - 7 (11) -
Balance at 1 January 2011 3,451 27,146 476 1,474
Total comprehensive income - 5,928 - (3,404)
Dividends payable to
Company shareholders - (834) - -
Dividends payable to
non-controlling interests - - - -
Changes in ownership
interest in subsidiaries - 3,027 - -
Issue of shares to
non-controlling interests - - - -
Equity settled
share-based payment schemes - (19) (18) -
IFRS 2 charges on black economic
empowerment transactions - 102 - -
Other 1 7 (5) -
Balance at 31 December 2011 3,452 35,357 453 (1,930)
Total
equity
attributable
Fair to equity
value share-
and other holders Non-
reserves of the controlling Total
(note 11) Company interests equity
US$ million
Balance at 1 January
2010 1,529 26,121 1,948 28,069
Total comprehensive
income 277 8,876 1,885 10,761
Dividends payable to
Company shareholders - (302) - (302)
Dividends payable to
non-controlling
interests - - (617) (617)
Changes in ownership
interest in
subsidiaries (107) (557) (112) (669)
Issue of shares to
non-controlling
interests - 90 572 662
Consolidation by De
Beers of
non-controlling
interest - (128) - (128)
Equity settled
share-based payment schemes - 150 13 163
Other (7) (11) 43 32
Balance at 1 January
2011 1,692 34,239 3,732 37,971
Total comprehensive
income 75 2,599 1,142 3,741
Dividends payable to
Company shareholders - (834) - (834)
Dividends payable to
non-controlling interests - - (1,401) (1,401)
Changes in ownership
interest in subsidiaries - 3,027 788 3,815
Issue of shares to
non-controlling interests - - 16 16
Equity settled
share-based payment schemes - (37) (167) (204)
IFRS 2 charges on black
economic
empowerment transactions - 102 29 131
Other (7) (4) (42) (46)
Balance at 31 December
2011 1,760 39,092 4,097 43,189
(1) Total share capital comprises called-up share capital of $738 million
(2010: $738 million) and the share premium account of $2,714 million (2010:
$2,713 million).
Dividends
2011 2010
Proposed ordinary dividend per share (US cents) 46 40
Proposed ordinary dividend (US$ million) 557 483
Ordinary dividends payable during the year per share (US cents) 68 25
Ordinary dividends payable during the year (US$ million) 834 302
Notes to the Condensed financial statements
1. Basis of preparation
The financial information for the year ended 31 December 2011 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 2010
have been delivered to the Registrar of Companies and those for 2011 will be
delivered following the Company`s annual general meeting convened for 19 April
2012. The auditors have 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.
Whilst the preliminary announcement (the Condensed financial statements) has
been prepared in accordance with International Financial Reporting Standards
(IFRS) and IFRS Interpretations 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 2012.
Accounting policies
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
2010, with the exception of certain amendments to accounting standards or new
interpretations issued by the International Accounting Standards Board, which
were applicable from 1 January 2011. These have not had a material impact on
the Group.
Non-GAAP measures
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 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 2, 5 and
9 to the Condensed financial statements.
2. 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).
Following a strategic review during the year, Peace River Coal is now managed
as part of the Metallurgical Coal business unit, and accordingly is presented
as part of the Metallurgical Coal segment. It was previously reported within
the Other Mining and Industrial reporting segment. Comparatives have been
reclassified to align with current year presentation.
Catalao and Copebras, reported in the Other Mining and Industrial segment, are
now considered core to the Group.
Tarmac and Scaw, which were identified for divestment as part of the
restructuring programme announced in October 2009, are not considered to be
individually significant to the Group and are therefore also presented in the
Other Mining and Industrial reporting segment. Until February 2011, this
reporting segment also included the zinc operations.
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 - Iron Ore and Manganese:
iron ore, manganese ore and alloys; Metallurgical Coal: metallurgical coal;
Thermal Coal: thermal coal; Copper and Nickel: base metals; Platinum: platinum
group metals; Diamonds: rough and polished diamonds and diamond jewellery; and
Other Mining and Industrial: phosphates, niobium, heavy building materials,
steel products and, until February 2011, zinc.
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
Revenue (1)
US$ million 2011 2010
Iron Ore and Manganese 8,124 6,612
Metallurgical Coal 4,347 3,522
Thermal Coal 3,722 2,866
Copper 5,144 4,877
Nickel 488 426
Platinum 7,359 6,602
Diamonds 3,320 2,644
Other Mining and Industrial 4,039 5,375
Exploration - -
Corporate Activities and Unallocated
Costs 5 5
Segment measure 36,548 32,929
Reconciliation:
Less: associates (5,968) (4,969)
Operating special items and
remeasurements - -
Statutory measure 30,580 27,960
Operating profit/(loss) (2)
US$ million 2011 2010
Iron Ore and Manganese 4,520 3,681
Metallurgical Coal 1,189 780
Thermal Coal 1,230 710
Copper 2,461 2,817
Nickel 57 96
Platinum 890 837
Diamonds 659 495
Other Mining and Industrial 195 664
Exploration (121) (136)
Corporate Activities and Unallocated
Costs 15 (181)
Segment measure 11,095 9,763
Reconciliation:
Less: associates (1,427) (1,255)
Operating special items and
remeasurements (229) 158
Statutory measure 9,439 8,666
(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 before special items and remeasurements. 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` revenue
US$ million 2011 2010
Iron Ore and Manganese 926 983
Metallurgical Coal 372 258
Thermal Coal 1,080 761
Platinum 269 237
Diamonds 3,320 2,644
Other Mining and Industrial 1 86
5,968 4,969
Reconciliation:
Associates` net finance costs
Associates` income tax expense
Associates` non-controlling interests
Share of net income from associates (before
special items and remeasurements)
Associates` special items and remeasurements
Associates` special items and remeasurements tax
Associates` non-controlling interests on special
items and remeasurements
Share of net income from associates
Associates` operating profit/(loss) (1)
US$ million 2011 2010
Iron Ore and Manganese 165 382
Metallurgical Coal 207 122
Thermal Coal 482 308
Platinum (86) (59)
Diamonds 659 495
Other Mining and Industrial - 7
1,427 1,255
Reconciliation:
Associates` net finance costs (48) (88)
Associates` income tax expense (385) (313)
Associates` non-controlling interests (16) (9)
Share of net income from associates (before
special items and remeasurements) 978 845
Associates` special items and remeasurements (5) (22)
Associates` special items and remeasurements tax 1 (2)
Associates` non-controlling interests on special
items and remeasurements 3 1
Share of net income from associates 977 822
(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 before special
items and remeasurements are as follows:
Depreciation and amortisation (1)
US$ million 2011 2010
Iron Ore and Manganese 180 142
Metallurgical Coal 375 343
Thermal Coal 128 113
Copper 289 269
Nickel 27 26
Platinum 729 750
Other Mining and Industrial 198 230
Exploration - -
Corporate Activities and Unallocated Costs 41 46
(3) (3)
1,967 1,919
Other non-cash expenses (2)
US$ million 2011 2010
Iron Ore and Manganese 127 90
Metallurgical Coal 104 76
Thermal Coal 30 40
Copper 124 97
10 23
Nickel
Platinum 76 57
Other Mining and Industrial 51 15
Exploration 3 4
Corporate Activities and Unallocated Costs 54 61
579 463
(1) In addition the Group`s attributable share of depreciation and
amortisation in associates is $286 million (2010: $301 million). This is split
by segment as follows: Iron Ore and Manganese $33 million (2010: $33 million),
Metallurgical Coal $13 million (2010: $11 million), Thermal Coal $52 million
(2010: $49 million), Platinum $53 million (2010: $37 million) and Diamonds
$135 million (2010: $171 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.
(3) In addition $84 million (2010: $97 million) of accelerated depreciation
has been recorded within operating special items (see note 4) and $39 million
(2010: nil) of pre-commercial production depreciation has been capitalised.
Capital expenditure and net debt
Capital expenditure (1)
US$ million 2011 2010
Iron Ore and Manganese 1,732 1,195
Metallurgical Coal 695 235
Thermal Coal 190 274
Copper 1,570 1,530
Nickel 398 525
Platinum 970 1,011
Other Mining and Industrial 152 206
Exploration 1 -
Corporate Activities and Unallocated Costs 56 18
5,764 4,994
Reconciliation:
Remove: cash flows from derivatives relating
to capital expenditure 439 286
Purchase of property, plant and equipment 6,203 5,280
Interest capitalised 321 247
Non-cash movements (3) 27 305
Net debt in disposal groups
6,551 5,832
Property, plant and equipment additions in
disposal groups(4) (2) (46)
Property, plant and equipment additions (5) 6,549 5,786
Net debt (2)
US$ million 2011 2010
Iron Ore and Manganese 1,211 89
Metallurgical Coal (211) (635)
Thermal Coal 81 (50)
Copper (781) (243)
Nickel 603 561
Platinum 20 (65)
Other Mining and Industrial 338 385
Exploration (6) (2)
Corporate Activities and Unallocated Costs 119 7,403
1,374 7,443
Reconciliation:
Remove: cash flows from derivatives relating
to capital expenditure
Purchase of property, plant and equipment
Interest capitalised
Non-cash movements (3)
Net debt in disposal groups - (59)
1,374 7,384
Property, plant and equipment additions in disposal groups(4)
Property, plant and equipment additions (5)
(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. For a reconciliation of net debt to the balance sheet see note 12b.
(3) Includes movements on capital expenditure accruals, movements relating to
deferred stripping and the impact of realised cash flow hedges.
(4) Relates to additions in businesses held in disposal groups, prior to their
sale.
(5) Capital expenditure on an accruals basis is split by segment as follows:
Iron Ore and Manganese $2,125 million (2010: $1,536 million), Metallurgical
Coal $681 million (2010: $314 million), Thermal Coal $231 million (2010: $297
million), Copper $1,877 million (2010: $1,820 million), Nickel $405 million
(2010: $602 million), Platinum $1,014 million (2010: $1,043 million), Other
Mining and Industrial $159 million (2010: $153 million), Exploration $1
million (2010: $1 million) and Corporate Activities and Unallocated Costs $56
million (2010: $20 million).
Segment assets and liabilities
The following balance sheet segment measures are provided for information:
Segment assets (1)
US$ million 2011 2010
Iron Ore and Manganese 13,646 12,333
Metallurgical Coal 5,660 5,159
Thermal Coal 2,650 2,897
Copper 8,767 7,300
Nickel 2,655 2,443
Platinum 12,288 14,701
Other Mining and Industrial 3,923 4,148
Exploration 2 3
Corporate Activities and Unallocated
Costs 375 402
49,966 49,386
Other assets and liabilities
Investments in associates(3) 5,240 4,900
Financial asset investments 2,896 3,220
Deferred tax assets/(liabilities) 530 389
Other financial assets/(liabilities) -
derivatives 840 842
Cash and cash equivalents 11,732 6,401
Other non-operating assets/(liabilities) 1,238 1,518
Borrowings - -
Other provisions for liabilities and charges - -
Net assets 72,442 66,656
Segment liabilities (2)
US$ million 2011 2010
Iron Ore and Manganese (577) (632)
Metallurgical Coal (968) (827)
Thermal Coal (764) (786)
Copper (1,124) (1,009)
Nickel (120) (109)
Platinum (1,097) (1,223)
Other Mining and Industrial (722) (755)
Exploration (3) (12)
Corporate Activities and Unallocated
Costs (584) (377)
(5,959) (5,730)
Other assets and liabilities
Investments in associates(3) - -
Financial asset investments - -
Deferred tax assets/(liabilities) (5,730) (5,641)
Other financial assets/(liabilities) -
derivatives (1,112) (835)
Cash and cash equivalents - -
Other non-operating assets/(liabilities) (2,715) (2,233)
Borrowings (12,873) (13,439)
Other provisions for liabilities and charges (864) (807)
Net assets (29,253) (28,685)
Net segment assets/(liabilities)
US$ million 2011 2010
Iron Ore and Manganese 13,069 11,701
Metallurgical Coal 4,692 4,332
Thermal Coal 1,886 2,111
Copper 7,643 6,291
Nickel 2,535 2,334
Platinum 11,191 13,478
Other Mining and Industrial 3,201 3,393
Exploration (1) (9)
Corporate Activities and Unallocated
Costs (209) 25
44,007 43,656
Other assets and liabilities
Investments in associates(3) 5,240 4,900
Financial asset investments 2,896 3,220
Deferred tax assets/(liabilities) (5,200) (5,252)
Other financial assets/(liabilities) -
derivatives (272) 7
Cash and cash equivalents 11,732 6,401
Other non-operating assets/(liabilities) (1,477) (715)
Borrowings (12,873) (13,439)
Other provisions for liabilities and charges (864) (807)
Net assets 43,189 37,971
(1) Segment assets at 31 December 2011 are operating assets and consist of
intangible assets of $2,322 million (2010: $2,316 million), property, plant
and equipment of $40,549 million (2010: $39,810 million), biological assets of
$17 million (2010: $2 million), environmental rehabilitation trusts of $360
million (2010: $379 million), retirement benefit assets of $70 million (2010:
$112 million), inventories of $3,517 million (2010: $3,604 million) and
operating receivables of $3,131 million (2010: $3,163 million).
(2) Segment liabilities at 31 December 2011 are operating liabilities and
consist of non-interest bearing current liabilities of $3,982 million (2010:
$3,834 million), environmental restoration and decommissioning provisions of
$1,338 million (2010: $1,305 million) and retirement benefit obligations of
$639 million (2010: $591 million).
(3) Investments in associates are split by segment as follows: Iron Ore and
Manganese $936 million (2010: $880 million), Metallurgical Coal $294 million
(2010: $223 million), Thermal Coal $932 million (2010: $749 million), Platinum
$848 million (2010: $1,112 million) and Diamonds $2,230 million (2010: $1,936
million).
Revenue by product
The Group`s analysis of segment revenue by product (including attributable
share of revenue from associates) is as follows:
US$ million 2011 2010
Iron ore 6,830 5,234
Manganese ore and alloys 926 983
Metallurgical coal 3,444 2,711
Thermal coal 4,621 3,707
Copper 5,023 4,782
Nickel 948 824
Platinum 4,578 4,053
Palladium 1,076 697
Rhodium 703 782
Diamonds 3,320 2,644
Phosphates 571 461
Heavy building materials 2,347 2,376
Steel products 931 1,568
Other 1,230 2,107
36,548 32,929
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:
Revenue
US$ million 2011 2010
South Africa 3,589 3,307
Other Africa 618 502
Brazil 1,177 1,135
Chile 2,030 1,940
Other South America 50 207
North America 1,861 1,805
Australia 312 474
China 6,446 5,075
India 2,343 2,021
Japan 4,925 4,198
Other Asia 3,487 2,818
United Kingdom (Anglo American plc`s country of domicile) 3,962 3,980
Other Europe 5,748 5,467
36,548 32,929
Non-current segment assets (1)
US$ million 2011 2010
South Africa 15,215 17,389
Other Africa 357 373
Brazil 12,622 11,159
Chile 7,001 5,628
Other South America 655 589
North America 685 540
Australia 4,170 4,022
China - 5
India - -
Japan - -
Other Asia 47 42
United Kingdom (Anglo American plc`s country of domicile) 2,117 2,331
Other Europe 2 48
42,871 42,126
(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:
Revenue
US$ million 2011 2010
South Africa 17,855 15,711
Other Africa 2,763 2,329
Brazil 1,404 1,127
Chile 5,170 5,224
Other South America 1,364 1,141
North America 615 679
Australia and Asia 5,058 4,141
Europe 2,319 2,577
36,548 32,929
Operating profit/(loss) before special
items and remeasurements
US$ million 2011 2010
South Africa 6,059 5,001
Other Africa 501 501
Brazil 152 82
Chile 2,581 2,967
Other South America 512 367
North America 256 14
Australia and Asia 1,318 911
Europe (284) (80)
11,095 9,763
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 2011 2010
South Africa 18,364 21,294
Other Africa 385 377
Brazil 13,188 11,576
Chile 7,950 6,727
Other South America 808 679
North America 782 611
Australia and Asia 5,450 4,849
Europe 3,039 3,273
49,966 49,386
Segment liabilities
US$ million 2011 2010
South Africa (2,620) (2,815)
Other Africa (20) (26)
Brazil (303) (358)
Chile (1,101) (1,005)
Other South America (48) (21)
North America (107) (38)
Australia and Asia (953) (851)
Europe (807) (616)
(5,959) (5,730)
Net segment assets
US$ million 2011 2010
South Africa 15,744 18,479
Other Africa 365 351
Brazil 12,885 11,218
Chile 6,849 5,722
Other South America 760 658
North America 675 573
Australia and Asia 4,497 3,998
Europe 2,232 2,657
44,007 43,656
(1) Investments in associates of $5,240 million (2010: $4,900 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 $1,950 million (2010: $2,334 million), Other Africa $996 million
(2010: $1,220 million), Other South America $917 million (2010: $729 million),
North America $343 million (2010: $376 million), Australia and Asia $794
million (2010: $698 million) and Europe $240 million (2010: $(457) million).
3. Operating profit and underlying earnings by segment
The following table analyses operating profit (including attributable share of
associates` operating profit) by segment and reconciles it to underlying
earnings by segment. In 2011 Peace River Coal has been reclassified from Other
Mining and Industrial to Metallurgical Coal to align with internal management
reporting. Comparatives have been reclassified to align with current year
presentation.
Underlying earnings is an alternative earnings measure, which the directors
consider to be a useful additional measure of the Group`s performance.
Underlying earnings is profit for the financial year attributable to equity
shareholders of the Company before special items and remeasurements and is
therefore presented after net finance costs, income tax expense and non-
controlling interests. For a reconciliation from `Profit for the financial
year attributable to equity shareholders of the Company` to `Underlying
earnings for the financial year`, see note 9.
Operating Operating Operating
profit/(loss) before profit/(loss) after special items and
special items and (1) special items and remeasurements
US$ million remeasurements remeasurements (note 4)
Iron Ore
and Manganese 4,520 4,441 79
Metallurgical Coal 1,189 1,189 -
Thermal
Coal 1,230 1,231 (1)
Copper 2,461 2,460 1
Nickel 57 (15) 72
Platinum 890 884 6
Diamonds 659 641 18
Other
Mining and
Industrial 195 125 70
Exploration (121) (121) -
Corporate
Activities and
Unallocated Costs 15 13 2
Total 11,095 10,848 247
Analysed as:
Core operations 11,088 10,911 177
Non-core operations (2) 7 (63) 70
Net finance 2011
costs, income
tax expense and
non-controlling Underlying
US$ million interests earnings
Iron Ore and Manganese (2,995) 1,525
Metallurgical Coal (345) 844
Thermal Coal (328) 902
Copper (851) 1,610
Nickel (34) 23
Platinum (480) 410
Diamonds (216) 443
Other Mining and Industrial (88) 107
Exploration 3 (118)
Corporate Activities and
Unallocated Costs 359 374
Total (4,975) 6,120
Analysed as:
Core operations (4,962) 6,126
Non-core operations (2) (13) (6)
Operating Operating Operating
profit/(loss) before profit/(loss) after special items and
special items and special items and remeasurements
US$ million remeasurements (1) remeasurements (note 4)
Iron Ore
and Manganese 3,681 4,037 (356)
Metallurgical Coal 780 803 (23)
Thermal Coal 710 708 2
Copper 2,817 2,832 (15)
Nickel 96 45 51
Platinum 837 765 72
Diamonds 495 466 29
Other
Mining and
Industrial 664 564 100
Exploration (136) (136) -
Corporate
Activities and
Unallocated Costs (181) (192) 11
Total 9,763 9,892 (129)
Analysed as:
Core operations 9,245 9,460 (215)
Non-core operations (2) 518 432 86
Net finance 2010
costs, income
tax expense and
non-controlling Underlying
US$ million interests earnings
Iron Ore and Manganese (2,258) 1,423
Metallurgical Coal (194) 586
Thermal Coal (198) 512
Copper (1,096) 1,721
Nickel (21) 75
Platinum (412) 425
Diamonds (193) 302
Other Mining and Industrial (143) 521
Exploration 8 (128)
Corporate Activities and
Unallocated Costs (280) (461)
Total (4,787) 4,976
Analysed as:
Core operations (4,706) 4,539
Non-core operations (2) (81) 437
(1) Operating profit includes attributable share of associates` operating
profit which is reconciled to `Share of net income from associates` in note 2.
(2) Non-core operations relate to Tarmac and Scaw Metals and, until February
2011, the zinc operations.
Underlying earnings by origin
US$ million 2011 2010
South Africa 2,726 2,218
Other Africa 326 350
South America 2,080 2,154
North America 218 (12)
Australia and Asia 967 668
Europe (197) (402)
6,120 4,976
4. 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 Presentation of Financial
Statements paragraph 97. Special items that relate to the operating
performance of the Group are classified as operating special items and
principally include impairment charges and reversals and restructuring costs.
Non-operating special items include profits and losses on disposals of
investments and businesses as well as certain adjustments 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
the year end (in respect of future transactions) and the reversal of the
historical marked to market value of such instruments settled in the year.
Where the underlying transaction is recorded in the income statement, the
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 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.
2011
Subsidiaries and
US$ million joint ventures Associates (1) Total
Impairment and related charges (154) - (154)
Restructuring costs (10) (9) (19)
Operating special items (164) (9) (173)
Operating remeasurements (65) (9) (74)
Operating special items and
remeasurements (229) (18) (247)
Disposal of Lisheen and Black
Mountain 397 - 397
Platinum BEE transactions and
related charges (141) - (141)
Disposal of Tarmac businesses (75) - (75)
Disposal of Moly-Cop and
AltaSteel - - -
Gain on Bafokeng-Rasimone
Platinum mine transaction - - -
Disposal of undeveloped coal assets - - -
Disposal of Skorpion - - -
Other 2 20 22
Net profit on disposals 183 20 203
Financing special items - (9) (9)
Financing remeasurements 203 2 205
Total special items and
remeasurements before tax and
non-controlling interests 157 (5) 152
Special items and remeasurements tax (119) 1 (118)
Non-controlling interests on special
items and remeasurements 12 3 15
Net total special items and
remeasurements attributable to
equity shareholders of the Company 50 (1) 49
2010
Subsidiaries and
US$ million joint ventures Associates (1) Total
Impairment and related charges (107) (15) (122)
Restructuring costs (121) (10) (131)
Operating special items (228) (25) (253)
Operating remeasurements 386 (4) 382
Operating special items and
remeasurements 158 (29) 129
Disposal of Lisheen and Black
Mountain - - -
Platinum BEE transactions and
related charges - - -
Disposal of Tarmac businesses (294) - (294)
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 244 - 244
Other 23 19 42
Net profit on disposals 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
(1) Relates to the Diamonds segment.
Operating special items
Impairment and related charges were $154 million in the year ended 31 December
2011 (2010: $122 million). This principally comprises an impairment of Tarmac
Building Products of $70 million (Other Mining and Industrial segment) and
accelerated depreciation of $84 million (2010: $97 million), mainly arising at
Loma de Niquel (Nickel segment). The accelerated depreciation charge at Loma
de Niquel has arisen due to ongoing uncertainty over the renewal of three
concessions that expire in 2012 and over the restoration of 13 concessions
that have been cancelled.
Restructuring costs principally relate to retrenchment and consultancy costs
within the Platinum and Diamond segments (2010: Other Mining and Industrial,
Platinum and Diamond segments).
Operating remeasurements
Operating remeasurements reflect a net loss of $74 million (2010: gain of $382
million) principally in respect of non- hedge derivatives of capital
expenditure in Iron Ore Brazil. Derivatives which have been realised in the
year had a cumulative net operating remeasurement gain since their inception
of $383 million (2010: gain of $255 million).
Profits and losses on disposals
In February 2011 the Group completed the disposal of its 100% interest in the
Lisheen operation (Lisheen) and its 74% interest in Black Mountain Mining
(Proprietary) Limited (Black Mountain), which holds 100% of the Black Mountain
mine and the Gamsberg project, resulting in a net cash inflow of $499 million,
generating a profit on disposal of $397 million. Lisheen and Black Mountain
were included in the Other Mining and Industrial segment.
The charge for Platinum black economic empowerment (BEE) transactions
principally relates to an IFRS 2 Share- based Payment charge of $131 million
resulting from a community economic empowerment transaction involving certain
of Platinum`s host communities, which completed in December 2011.
The Group sold Tarmac`s businesses in China, Turkey and Romania in July,
October and November respectively. Tarmac is included in the Other Mining and
Industrial segment.
Financing remeasurements
Financing remeasurements reflect a net gain of $205 million (2010: gain of
$106 million) and relate to an embedded interest rate derivative, non-hedge
derivatives of debt and other financing remeasurements.
Special items and remeasurements tax
Special items and remeasurements tax amounted to a charge of $118 million
(2010: charge of $112 million). This relates to a credit for one-off tax items
of $137 million (2010: nil), a tax remeasurement charge of $230 million (2010:
credit of $122 million) and a tax charge on special items and remeasurements
of $25 million (2010: charge of $234 million).
The total tax charge relating to subsidiaries and joint ventures of $119
million (2010: charge of $110 million), comprises a current tax charge of $12
million (2010: charge of $107 million) and a deferred tax charge of $107
million (2010: charge of $3 million).
The credit relating to one-off tax items of $137 million (2010: nil)
principally relates to the recognition of deferred tax assets in Iron Ore
Brazil which were originally written off as part of the impairment charges
related to the Amapa iron ore system in 2009, and a capital gains tax refund
related to a prior year disposal.
5. EBITDA
Earnings before interest, tax, depreciation and amortisation (EBITDA) is
operating profit before special items and remeasurements, depreciation and
amortisation in subsidiaries and joint ventures and includes attributable
share of EBITDA of associates.
US$ million 2011 2010
Iron Ore and Manganese 4,733 3,856
Metallurgical Coal(1) 1,577 1,134
Thermal Coal 1,410 872
Copper 2,750 3,086
Nickel 84 122
Platinum 1,672 1,624
Diamonds 794 666
Other Mining and Industrial(1) 393 894
Exploration (121) (136)
Corporate Activities and Unallocated Costs 56 (135)
EBITDA 13,348 11,983
(1) In 2011 Peace River Coal has been reclassified from Other Mining and
Industrial to Metallurgical Coal to align with internal management reporting.
Comparatives have been reclassified to align with current year presentation.
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 2011 2010
Total profit from operations and associates 10,599 11,067
Operating special items and remeasurements 229 (158)
Net profit on disposals (183) (1,579)
Associates` net special items and remeasurements 1 23
Share of associates` net finance costs, tax and
non-controlling interests 449 410
Operating profit, including associates, before special
items and remeasurements 11,095 9,763
Depreciation and amortisation: subsidiaries and joint
ventures 1,967 1,919
Depreciation and amortisation: associates 286 301
EBITDA 13,348 11,983
EBITDA is reconciled to `Cash flows from operations` as
follows:
US$ million 2011 2010
EBITDA 13,348 11,983
Share of operating profit of associates before special
items and remeasurements (1,427) (1,255)
Cash element of operating special items (59) (94)
Share of associates` depreciation and amortisation (286) (301)
Share-based payment charges 254 219
Provisions 6 (37)
Increase in inventories (352) (309)
Increase in operating receivables (264) (587)
Increase in operating payables 457 516
Deferred stripping (171) (196)
Other adjustments (8) (15)
Cash flows from operations 11,498 9,924
6. Exploration expenditure
US$ million 2011 2010
By commodity
Iron ore 5 14
Metallurgical coal 5 3
Thermal coal 9 21
Copper 27 19
Nickel 26 27
Platinum group metals 5 11
Zinc - 3
Central exploration activities 44 38
121 136
7. Net finance income/(costs)
Finance costs and exchange gains/(losses) are presented net of hedges for
respective interest bearin g and foreign currency borrowings.
The weighted average capitalisation rate applied to qualifying capital
expenditure was 5.0% (2010: 4.8%).
US$ million 2011 2010
Investment income
Interest income from cash and cash equivalents 239 118
Other interest income 194 224
Expected return on defined benefit arrangements 199 205
Dividend income from financial asset investments 59 30
691 577
Less: interest income capitalised (23) (9)
Total investment income 668 568
Interest expense
Interest and other finance expense (615) (632)
Interest payable on convertible bond (68) (68)
Unwinding of discount on convertible bond (71) (65)
Interest cost on defined benefit arrangements (205) (219)
Unwinding of discount relating to provisions and other
non-current liabilities (80) (73)
(1,039) (1,057)
Less: interest expense capitalised 344 256
Total interest expense (695) (801)
Other financing gains/(losses)
Net foreign exchange (losses)/gains (16) 17
Net fair value gains/(losses) on fair value hedges 16 (7)
Other net fair value gains/(losses) 7 (21)
Total other financing gains/(losses) 7 (11)
Net finance costs before remeasurements (20) (244)
Remeasurements (see note 4) 203 105
Net finance income/(costs) after remeasurements 183 (139)
8. Income tax expense
a) Analysis of charge for the year
US$ million 2011 2010
United Kingdom corporation tax at 26.5% (2010: 28%) 16 24
South Africa tax 1,307 1,199
Other overseas tax 1,067 1,333
Prior year adjustments (92) (7)
Current tax 2,298 2,549
Deferred tax 443 150
Income tax expense before special items and remeasurements 2,741 2,699
Special items and remeasurements tax 119 110
Income tax expense 2,860 2,809
b) Factors affecting tax charge for the year
The effective tax rate for the year of 26.5% (2010: 25.7%) is the same as
(2010: lower than) the applicable weighted average statutory rate of
corporation tax in the United Kingdom of 26.5% (2010: 28%). The reconciling
items, excluding the impact of associates, are:
US$ million 2011 2010
Profit before tax 10,782 10,928
Less: share of net income from associates (977) (822)
Profit before tax (excluding associates) 9,805 10,106
Tax on profit (excluding associates) calculated at United
Kingdom corporation tax rate of 26.5%
(2010: 28%) 2,598 2,830
Tax effects of:
Items not taxable/deductible for tax purposes
Exploration expenditure 27 13
Non-deductible/taxable net foreign exchange loss/(gain) 24 (3)
Non-taxable/deductible net interest (income)/expense (20) 2
Other non-deductible expenses 60 125
Other non-taxable income (57) (40)
Temporary difference adjustments
Current year losses not recognised 38 19
Utilisation of losses not previously recognised - (8)
Recognition of losses not previously recognised (103) (61)
Enhanced tax depreciation - (41)
Other temporary differences (57) (69)
Special items and remeasurements 77 (406)
Other adjustments
Secondary tax on companies and dividend withholding taxes 407 657
Effect of differences between local and United Kingdom rates (61) (218)
Prior year adjustments to current tax (92) (7)
Other adjustments 19 16
Income tax expense 2,860 2,809
IAS 1 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 2011 is $384 million
(2010: $315 million). Excluding special items and remeasurements this becomes
$385 million (2010: $313 million).
The effective rate of tax before special items and remeasurements including
attributable share of associates` tax for the year ended 31 December 2011 was
28.3%. The decrease compared to the equivalent effective rate of 31.9% for the
year ended 31 December 2010 is due to a number of non-recurring factors that
include the recognition of previously unrecognised tax losses and the
reassessment of certain withholding tax provisions across the Group. In future
periods it is expected that the effective tax rate, including associates` tax,
will remain above the United Kingdom statutory tax rate.
c) Tax amounts included in total comprehensive income
An analysis of tax by individual item presented in the Consolidated statement
of comprehensive income is presented below:
US$ million 2011 2010
Tax on items recognised directly in equity
Net gain on revaluation of available for sale investments (26) (46)
Net loss on cash flow hedges 20 (2)
Net exchange difference on translation of foreign operations 11 (82)
Actuarial net loss/(gain) on post employment benefit plans 19 (19)
24 (149)
Tax on items transferred from equity
Transferred to income statement: cash flow hedges (2) (1)
Transferred to initial carrying amount of hedged items: cash
flow hedges (12) 2
(14) 1
d) Tax amounts recognised directly in equity
Capital gains tax of $1,017 million relating to the profit on sale of a 24.5%
share in Anglo American Sur SA (AA Sur) in November 2011, has been charged
directly to equity. There were no other material current tax amounts charged
directly to equity in 2011 or 2010. Deferred tax of $127 million has been
charged (2010: $68 million credited) directly to equity.
9. Earnings per share
US$ 2011 2010
Profit for the financial year attributable to equity
shareholders of the Company
Basic earnings per share 5.10 5.43
Diluted earnings per share 4.89 5.18
Headline earnings for the financial year (1)
Basic earnings per share 4.89 4.27
Diluted earnings per share 4.69 4.09
Underlying earnings for the financial year (1)
Basic earnings per share 5.06 4.13
Diluted earnings per share 4.85 3.96
(1) Basic and diluted earnings per share are also 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 basic and diluted earnings per share is based on the
following data:
US$ million (unless otherwise stated) 2011 2010
Earnings
Basic earnings, being profit for the financial year
attributable to equity shareholders of the Company 6,169 6,544
Effect of dilutive potential ordinary shares
Interest payable on convertible bond (net of tax) 50 49
Unwinding of discount on convertible bond (net of tax) 52 47
Diluted earnings 6,271 6,640
Number of shares (million)
Basic number of ordinary shares outstanding (1)
Effect of dilutive potential ordinary shares (2) 1,210 1,206
Share options and awards 10 14
Convertible bond 62 61
Diluted number of ordinary shares outstanding (1) 1,282 1,281
(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 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 2011 there were 270,095 (2010: nil) share
options which were potentially dilutive but were not included in the
calculation of diluted earnings because they were anti-dilutive. The Group has
$1.7 billion of senior convertible notes in issue (see note 10). The impact of
the potential conversion of these notes has been included in diluted earnings
and diluted number of ordinary shares outstanding.
Underlying earnings is presented after non-controlling interests and excludes
special items and remeasurements (see note 4). Underlying earnings is distinct
from `Headline earnings`, which is a JSE Limited defined performance measure.
The calculation of basic and diluted earnings per share, based on headline and
underlying earnings, uses the following earnings data:
US$ million 2011 2010
Profit for the financial year attributable to equity
shareholders of the Company 6,169 6,544
Operating special items 70 14
Operating special items - non-controlling interests - (3)
Net profit on disposals (347) (1,684)
Net profit on disposals - tax 36 123
Net profit on disposals - non-controlling interests - 138
Financing special items 9 13
Tax special items (24) -
Headline earnings for the financial year 5,913 5,145
Operating special items (1) 103 239
Operating remeasurements 74 (382)
Net loss on disposals (2) 144 86
Financing remeasurements (205) (106)
Special items and remeasurements tax (3) 106 (11)
Non-controlling interests on special items and remeasurements (15) 5
Underlying earnings for the financial year 6,120 4,976
(1) Includes restructuring costs, accelerated depreciation and related
charges.
(2) Includes amounts related to the Platinum BEE transactions (2010: Anglo
American Inyosi Coal BEE transaction).
(3) Includes certain tax special items.
10. Financial liabilities analysis
An analysis of borrowings, as presented on the Consolidated balance sheet, is
set out below:
2011
Due within Due after
one year one year Total
US$ million
Secured
Bank loans and overdrafts 55 276 331
Obligations under finance leases 4 17 21
59 293 352
Unsecured
Bank loans and overdrafts 673 1,722 2,395
Bonds issued under EMTN programme 163 4,167 4,330
US bonds - 3,408 3,408
Convertible bond (1) - 1,504 1,504
Other loans 123 761 884
959 11,562 12,521
Total 1,018 11,855 12,873
2010
Due within Due after
one year one year Total
US$ million
Secured
Bank loans and overdrafts 57 404 461
Obligations under finance leases 5 5 10
62 409 471
Unsecured
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
Other loans 135 930 1,065
1,473 11,495 12,968
Total 1,535 11,904 13,439
(1) The debt component of the convertible bond includes cumulative unwinding
of discount of $175 million (2010: $104 million) and the effect of conversions
during the year of $1 million (2010: nil).
The Group had the following undrawn committed borrowing facilities at 31
December:
US$ million 2011 2010
Expiry date
Within one year (1) 1,781 3,781
Greater than one year, less than two years 1,268 12
Greater than two years, less than five years 5,294 7,269
Greater than five years 76 58
8,419(2) 11,120
(1) Includes undrawn rand facilities equivalent to $1.6 billion (2010: $1.7
billion) in respect of a series of facilities with 364 day maturities which
roll automatically on a daily basis, unless notice is served.
(2) In February 2011 the Group retired a $2.25 billion revolving credit
facility maturing in June 2011.
Net additional medium and long term borrowings were $964 million (2010: $1,194
million) and net repayments of short term borrowings were $1,261 million
(2010: $2,338 million) as disclosed in the Consolidated cash flow statement.
Additional borrowings during 2011 primarily comprised funding from the Banco
Nacional de Desenvolvimento Economico e Social (BNDES) for the Barro Alto and
Minas-Rio projects in Brazil.
Convertible bond
During 2009 the Group issued $1.7 billion of 4% senior convertible notes (the
Notes) which, at the holders` election, could be exchanged for ordinary shares
of Anglo American plc at a conversion price of GBP18.6370. The Group will have
the option to call the Notes after three years from the date of issuance
subject to certain conditions and, unless the Notes are redeemed, converted or
cancelled, they will mature in 2014. Following the 2010 final dividend
declaration and in accordance with the terms and conditions of the Notes, the
conversion price was adjusted to GBP18.3600 with effect from 13 April 2011.
On issuance of the Notes, the fair values of the debt and equity conversion
feature were $1,330 million and $355 million respectively. The equity
conversion feature is presented in equity within Fair value and other
reserves.
11. Consolidated equity analysis
Fair value and other reserves comprise:
Convertible Available for Cash flow
debt reserve sale reserve hedge reserve
US$ million
Balance at 1 January 2010 355 305 31
Total comprehensive income - 270 7
Changes in ownership interest
in subsidiaries - (107) -
Other - - -
Balance at 1 January 2011 355 468 38
Total comprehensive income - 108 (33)
Other - - -
Balance at 31 December 2011 355 576 5
Total fair value
Other reserves (1) and other reserves
US$ million
Balance at 1 January 2010 838 1,529
Total comprehensive income - 277
Changes in ownership interest in
subsidiaries - (107)
Other (7) (7)
Balance at 1 January 2011 831 1,692
Total comprehensive income - 75
Other (7) (7)
Balance at 31 December 2011 824 1,760
(1) Other reserves comprise a legal reserve of $675 million (2010: $682
million), a revaluation reserve of $34 million (2010: $34 million) and a
capital redemption reserve of $115 million (2010: $115 million).
12. Consolidated cash flow analysis
a) Reconciliation of profit before tax to cash flows from operations
US$ million 2011 2010
Profit before tax 10,782 10,928
Depreciation and amortisation 1,967 1,919
Share-based payment charges 254 219
Net profit on disposals (183) (1,579)
Operating and financing remeasurements (138) (491)
Non-cash element of operating special items 105 134
Net finance costs before remeasurements 20 244
Share of net income from associates (977) (822)
Provisions 6 (37)
Increase in inventories (352) (309)
Increase in operating receivables (264) (587)
Increase in operating payables 457 516
Deferred stripping (171) (196)
Other adjustments (8) (15)
Cash flows from operations 11,498 9,924
b) Reconciliation to the balance sheet
Cash and cash equivalents
US$ million 2011 2010
Balance sheet 11,732 6,401
Balance sheet - disposal groups (1) - 59
Net debt classifications 11,732 6,460
Short term borrowings
US$ million 2011 2010
Balance sheet (1,018) (1,535)
Balance sheet - disposal groups (1) - -
Net debt classifications (1,018) (1,535)
Medium and long term borrowings
US$ million 2011 2010
Balance sheet (11,855) (11,904)
Balance sheet - disposal groups (1) - -
Net debt classifications (11,855) (11,904)
(1) 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
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 1 January
2011 6,460 (1,535) (11,904) -
Cash flow 5,983 1,261 (964) -
Unwinding of discount on
convertible bond - - (71) -
Disposal of
businesses - 5 - -
Reclassifications - (777) 777 -
Movement in fair value - - (264) -
Other non-cash movements - (18) (38) -
Currency movements (711) 46 609 -
Balance at 31
December 2011 11,732 (1,018) (11,855) -
Net debt Net debt
excluding including
US$ million hedges Hedges (2) hedges
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 1 January 2011 (6,979) (405) (7,384)
Cash flow 6,280 (226) 6,054
Unwinding of discount on convertible bond (71) - (71)
Disposal of businesses 5 - 5
Reclassifications - - -
Movement in fair value (264) 404 140
Other non-cash movements (56) - (56)
Currency movements (56) (6) (62)
Balance at 31 December 2011 (1,141) (233) (1,374)
(1) The Group operates in certain countries where the existence of exchange
controls may restrict the use of certain cash balances (principally South
Africa and Venezuela). 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 $82 million (2010: $2 million) and net non-current derivative
liabilities of $315 million (2010: $407 million) which are classified within
Other financial assets (derivatives) and Other financial liabilities
(derivatives) on the balance sheet.
13. Disposals of subsidiaries and joint ventures
Lisheen and Tarmac
US$ million Black Mountain disposals Other
Net assets disposed
Property, plant and equipment 110 54 3
Other non-current assets 53 25 1
Current assets 431 15 15
Current liabilities (39) (7) (9)
Non-current liabilities (100) (7) (1)
Net assets 455 80 9
Non-controlling interests (42) - -
Group`s share of net assets immediately
prior to disposal 413 80 9
Fair value adjustment to retained
investments (1) - - -
Less: retained investments - - -
Net assets disposed 413 80 9
Cumulative translation differences
recycled from reserves 42 5 (2)
Net gain/(loss) on disposals (1) 397 (75) 15
Net sale proceeds 852 10 22
Net cash and cash equivalents disposed (356) (2) -
Non-cash/deferred consideration - - -
Accrued transaction costs and similar items 3 - -
Net cash inflow from disposals (2) 499 8 22
2011 2010
US$ million Total Total
Net assets disposed
Property, plant and equipment 167 1,443
Other non-current assets 79 658
Current assets 461 852
Current liabilities (55) (240)
Non-current liabilities (108) (412)
Net assets 544 2,301
Non-controlling interests (42) (14)
Group`s share of net assets immediately prior to disposal 502 2,287
Fair value adjustment to retained investments (1) - 440
Less: retained investments - (826)
Net assets disposed 502 1,901
Cumulative translation differences recycled from reserves 45 (40)
Net gain/(loss) on disposals (1) 337 1,246
Net sale proceeds 884 3,107
Net cash and cash equivalents disposed (358) (280)
Non-cash/deferred consideration - (83)
Accrued transaction costs and similar items 3 51
Net cash inflow from disposals (2) 529 2,795
(1) Included in net profit on disposals, see note 4.
(2) In addition, in the year ended 31 December 2011, there was a net cash
inflow of $4 million in respect of disposals in 2010, resulting in a total net
cash inflow from disposals of $533 million (2010: $2,795 million). Of this, a
net cash inflow of $514 million (2010: $2,539 million) related to disposals of
subsidiaries and $19 million (2010: $256 million) related to the sale of
interests in joint ventures.
Disposals in 2011
Disposals of subsidiaries during the year ended 31 December 2011 mainly
related to the disposal of Lisheen and a 74% interest in Black Mountain (the
Group`s remaining zinc operations) and disposals of Tarmac businesses (China,
Turkey and Romania) in the Other Mining and Industrial segment.
Lisheen and Black Mountain
The Group announced the sale of its zinc portfolio to Vedanta Resources plc on
10 May 2010, for a total consideration of $1,338 million, on an attributable
debt and cash free basis. The completion of the sale of Lisheen and Black
Mountain took place in February 2011 for a combined net cash inflow of $499
million.
Disposals in 2010
Disposals of subsidiaries and joint ventures during 2010 mainly related to
disposals in the Other Mining and Industrial, Platinum and Metallurgical Coal
segments.
Disposals in the Other Mining and Industrial segment related to Moly-Cop and
AltaSteel, the Skorpion zinc operation and Tarmac`s Polish and French and
Belgian concrete products businesses and the majority of the European
aggregates businesses. Disposals in the Platinum segment mainly related to the
Bafokeng-Rasimone Platinum mine transaction and disposals in the Metallurgical
Coal segment related to undeveloped coal assets.
14. Disposal groups and non-current assets held for sale
There were no assets or liabilities in disposal groups or non-current assets
classified as held for sale at 31 December 2011.
US$ million 2010 (1)
Intangible assets 4
Property, plant and equipment 117
Other non-current assets 49
Total non-current assets 170
Inventories 26
Trade and other receivables 75
Cash and cash equivalents 59
Total current assets 160
Total assets 330
Trade and other payables (40)
Total current liabilities (40)
Deferred tax liabilities (23)
Provisions for liabilities and charges (72)
Other non-current liabilities (7)
Total non-current liabilities (102)
Total liabilities (142)
Net assets 188
(1) Related to the Group`s portfolio of zinc operations for which disposal
transactions had not completed at 31 December 2010 (Lisheen and a 74% interest
in Black Mountain). Lisheen and Black Mountain were sold during 2011. See note
13.
15. Contingent liabilities
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 the Mondi Group have agreed to indemnify each other, subject to
certain limitations, against certain liabilities. Anglo American has also
provided Mitsubishi Corporation LLC with indemnities against certain
liabilities as part of the sale of a 24.5% interest in AA Sur. Having taken
appropriate legal advice, the Group believes that a material liability arising
from the indemnities provided is unlikely.
At 31 December 2011 the Group and its subsidiaries had provided aggregate
amounts of $873 million (2010: $813 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 2011 or 31 December 2010.
Other
Anglo American Sur SA (AA Sur)
Anglo American and Enami, a wholly owned Chilean state controlled minerals
company, amended an agreement Anglo American inherited when it acquired AA Sur
in 2002. In 2008 the option under this agreement was transferred by Enami to
Codelco, the Chilean state copper company. AA Sur is majority owned by the
Group and owns the Los Bronces and El Soldado copper mines and the Chagres
smelter. The agreement granted Codelco the right, subject to certain
conditions and limitations, to acquire up to a 49% interest in AA Sur. The
right to exercise the option was restricted to a window that occurred once
every three years in the month of January until January 2027. The previous
option exercise window was in January 2009.
The calculations of the price at which Codelco could have exercised its rights
take account of company profitability over a five year period, shareholder
loans and undistributed earnings. Under IAS 39 Financial Instruments:
Recognition and Measurement, the fair valuation of an option is required to be
performed from the perspective of a market participant in an arm`s length
transaction and does not take into account specific factors relevant to any
individual counterparty. In particular, the IAS 39 valuation does not
incorporate any capital gains tax payable by the Group on exercise of the
option to Codelco`s shareholder, the Chilean government. The valuation also
excludes any commercial or strategic benefit to Anglo American in
extinguishing the option.
The option`s fair value is calculated as the difference between the estimated
fair value of the underlying assets to which the option relates and the
estimated option price. The estimated fair value of the underlying assets may
vary based on a market participant`s assumptions at any point in time,
including, inter alia, commodity prices, foreign exchange rates and discount
rates. In addition, the option price cannot be finalised in advance of the
option window and must be estimated based on assumptions about inputs that are
subject to significant fluctuations.
Further, Anglo American had a right to sell up to 100% of its interest in AA
Sur to a third party at any time prior to the exercise of the option, which
would correspondingly reduce any value attributed to the option during the non-
exercise period.
Based on a range of scenarios for these key variables, it was concluded that
the option had insufficient value to warrant recognition on the balance sheet
at 31 December 2010 and 30 June 2011.
In the fourth quarter of 2011 Anglo American entered into discussions with
Mitsubishi to sell 24.5% of AA Sur, as it was entitled to do under the option
agreement. This highlighted new information about the value of AA Sur from a
third party which was not previously available. The fair value of a 24.5%
equity interest in AA Sur, based on the consideration received by the Group
from its disposal of a 24.5% equity interest in AA Sur to Mitsubishi in
November 2011, was $5.4 billion. The option exercise price in the January 2012
option exercise window would have been $2.8 billion, representing a 24.5%
equity interest in AA Sur for $2.5 billion, plus 24.5% of shareholder loans.
On 22 December 2011 Anglo American filed a writ with the Court of Appeals in
Santiago against Codelco for breach of contract. The breach consisted of
Codelco`s premature attempt to exercise the option outside of a contractual
exercise window and Codelco`s actions aimed at preventing Anglo American from
exercising its contractual rights under the option agreement. The writ seeks
to render ineffective the potential future exercise of the option by Codelco
and also seeks damages. In accordance with Anglo American`s legal advice, as a
result of Codelco`s breach of contract, it is no longer entitled to enforce
the option to acquire shares of AA Sur and any attempt to do so is
ineffective. The Group remains confident that this position will be upheld
should the various claims and counter claims proceed to judgment. As a
liability would only be recognised by the Group where a present obligation,
that could be measured reliably, existed at the balance sheet date, no
liability has been recognised as at 31 December 2011. If the option over 24.5%
of AA Sur had been legally enforceable at 31 December 2011 an option liability
of $2.9 billion would have been recognised by the Group. Had the option been
validly exercised in January 2012 this liability would have been reversed and,
in addition, an accounting gain of approximately $1.0 billion would have been
recognised in equity. The Group remains open to reaching a commercial
settlement with Codelco but to date no settlement has been reached.
Kumba Iron Ore (Kumba)
Sishen Supply Agreement arbitration
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 rights. 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. During 2011, three arbitrators were appointed and May
2012 was set as the date for the arbitration to begin. On 9 December 2011,
SIOC and ArcelorMittal agreed to postpone the arbitration until the final
resolution of the mining right dispute (see below).
SIOC and ArcelorMittal reached an interim pricing arrangement in respect of
the supply of iron ore to ArcelorMittal from the Sishen mine. This interim
arrangement endured until 31 July 2011. SIOC and ArcelorMittal agreed to an
addendum to the interim supply agreement which extended the terms and
conditions of the current interim agreement. The new interim pricing
agreement, which is on the same terms and conditions as the first interim
pricing agreement, commenced on 1 August 2011 and will endure to 31 July 2012.
21.4% undivided share of the Sishen mine mineral rights
After ArcelorMittal failed to convert its old order rights, 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 (Pty) 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.
The High Court Review, in which SIOC challenged the award of the 21.4%
prospecting right over Sishen mine by the DMR to ICT, was presided over by
Judge Raymond Zondo in the North Gauteng High Court in Pretoria, South Africa,
from 15 to 18 August 2011.
On 21 December 2011 judgment was delivered in the High Court regarding the
status of the mining rights at the Sishen mine. The High Court held that, upon
the conversion of SIOC`s old order mining right relating to the Sishen mine
properties in 2008, SIOC became the exclusive holder of a converted mining
right for iron ore and quartzite in respect of the Sishen mine properties. The
High Court held further that as a consequence, any decision taken by the DMR
after such conversion in 2008, to accept or grant any further rights to iron
ore at the Sishen mine properties was void. Finally, the High Court reviewed
and set aside the decision of the Minister of Mineral Resources or her
delegate to grant a prospecting right to ICT relating to iron ore as to a
21.4% share in respect of the Sishen mine properties. On 3 February 2012, both
the DMR and ICT submitted applications for leave to appeal against the High
Court judgment.
The High Court order does not affect the interim supply agreement between
ArcelorMittal and SIOC, which will endure until 31 July 2012 as indicated
above.
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 24 separate
lawsuits in South Africa each one of them brought by a former mineworker (or
his dependant) 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. In addition, AASA is a defendant in one
lawsuit filed in England on behalf of 19 former mineworkers, and a claim form
for a second lawsuit has been filed in the High Court in London on behalf of
756 claimants and a `representative claim` on behalf of all black underground
miners in `Anglo gold mines` seeking damages in relation to silicosis and
related diseases, although this second claim has not yet been served.
The aggregate amount of the 24 South African claims is less than $5 million.
No specific amount of damages has been specified in the claims filed in
England. If these claims are determined adversely to AASA there are a
substantial number of additional former mineworkers (or their dependants) who
may seek to bring similar claims or whose claims could become part of the
representative claim filed in England. The first trials of the South African
claims are not expected before 2013. AASA is contesting the jurisdiction of
the English courts to hear the claims filed against it in that jurisdiction.
16. 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 $344 million
(2010: $255 million), as disclosed in the Consolidated cash flow statement.
At 31 December 2011 the Group had provided loans to joint ventures of $263
million (2010: $319 million). These loans are included in financial asset
investments. No amounts were payable to joint ventures at 31 December 2011
(2010: $59 million).
In addition to the investments in associates disclosed on the Consolidated
balance sheet, the Group had provided loans to associates at 31 December 2011
of $572 million (2010: $531 million). These are included in financial asset
investments.
At 31 December 2011 the directors of the Company and their immediate relatives
controlled 0.1% (2010: 2.5%) of the voting shares of the Company.
Related party transactions with De Beers
The Group has in prior years entered into various transactions with DB
Investments SA and De Beers SA (together De Beers) which were 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 CHL Holdings Limited (CHL) and
certain of its subsidiaries in which Mr N. F. Oppenheimer, a director of the
Company at the time of these transactions, had a relevant interest for the
purpose of the rules. The related party transactions entered into and which
continue to be relevant in the current year are detailed below.
At 31 December 2011 the amount of outstanding loans owed by De Beers (and
included in the loans to associates amount disclosed above) was $301 million
(2010: $355 million), which includes accrued interest of $10 million (2010:
net unamortised discount of $3 million). These loans are subordinated in
favour of third party lenders and include:
- dividend reinvestment loans of $133 million (2010: $133 million) advanced
during 2008 and 2009. These loans were interest free for two years from the
date of advance and subsequently became interest bearing in line with market
rates at the date of the initial reinvestment.
- a further shareholder loan of $158 million (2010: $225 million) advanced in
2009. This loan was interest free for two years after which it reverted to a
rate of interest equal to LIBOR plus 700 basis points. From April 2016,
provided all interest payments are up to date, the rate of interest reduces to
LIBOR plus 300 basis points. During 2011 De Beers repaid $67 million of this
loan, along with accrued interest of $5 million.
On 4 November 2011 Anglo American announced it had entered into an agreement
with CHL and Centhold International Limited, together representing the
Oppenheimer family interests in De Beers, to acquire their 40% interest in De
Beers for a total cash consideration of $5.1 billion, subject to adjustment
and conditions as provided for in the agreement (the `Transaction`).
Under the terms of the existing shareholders` agreement between Anglo
American, CHL and the Government of the Republic of Botswana (GRB), the GRB
has pre-emption rights in respect of the interests in De Beers to be sold,
enabling it to participate in the Transaction and to increase its interest in
De Beers, on a pro rata basis, to up to 25%. In the event that the GRB does
not exercise pre-emption rights, in whole or in part, Anglo American`s
interest in De Beers will, assuming satisfaction of the conditions to the
Transaction, increase to 85%.
In the event that the GRB exercises its pre-emption rights in full, Anglo
American, under the Transaction, would acquire an incremental 30% interest in
De Beers, taking its total interest to 75%, and the consideration payable by
Anglo American to the sellers would be reduced proportionately.
In view of the fact that the CHL Sellers are ultimately controlled through
intermediary companies by trusts (the `Seller Trusts`) of which Mr N. F.
Oppenheimer is a potential discretionary beneficiary and Mr N. F. Oppenheimer
has been a director of Anglo American within the 12 months preceding agreement
of the Transaction, the Transaction is categorised as a related party
transaction. As a result, the Transaction required the approval of Anglo
American shareholders (other than Mr N. F. Oppenheimer and his associates),
which approval was obtained at a general meeting of the Company held on 6
January 2012. The Transaction remains conditional on the satisfaction or
waiver of certain specified regulatory and government approvals. Further
information in relation to the Transaction is set out in the circular posted
to the Company`s shareholders in December 2011.
17. Events occurring after end of year
On 6 January 2012 the Group`s shareholders approved, by way of resolution, the
acquisition of an incremental interest in De Beers, to take the Group`s
holding from 45% to up to 85%. The transaction remains subject to regulatory
and government approvals.
With the exception of the above and the proposed final dividend for 2011 there
have been no material reportable events since 31 December 2011.
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.
2011 2010
Iron Ore and Manganese segment (tonnes)
Kumba Iron Ore(1)
Lump 25,445,100 25,922,300
Fines 15,822,500 17,462,600
Amapa
Sinter feed 1,401,000 2,136,900
Pellet feed 3,420,500 1,892,500
Total iron ore production 46,089,100 47,414,300
Samancor(2)
Manganese ore 2,786,800 2,952,800
Manganese alloys(3) 300,500 312,000
Coal (tonnes)
Metallurgical Coal segment
Australia
Export metallurgical 13,253,400 14,701,800
Thermal 13,426,500 14,460,500
26,679,900 29,162,300
Canada
Export metallurgical 936,300 868,000
Total Metallurgical Coal segment coal production(4) 27,616,200 30,030,300
Thermal Coal segment
South Africa
Metallurgical 323,400 436,500
Thermal (non-Eskom) 21,388,100 21,612,000
Eskom 35,296,000 36,403,400
57,007,500 58,451,900
Colombia
Export thermal 10,751,700 10,060,100
Total Thermal Coal segment coal production 67,759,200 68,512,000
Other Mining and Industrial segment
South America
Thermal - 441,400
Total Other Mining and Industrial segment coal
production(4) - 441,400
Total coal production 95,375,400 98,983,700
Coal (tonnes)
Metallurgical Coal segment
Australia
Callide 8,038,700 8,515,600
Drayton 3,991,900 4,206,000
Capcoal 5,047,900 5,460,300
Jellinbah 1,829,600 1,792,500
Moranbah North 2,450,100 3,937,800
Dawson 3,904,600 3,584,400
Foxleigh 1,417,100 1,665,700
26,679,900 29,162,300
Canada
Peace River Coal 936,300 868,000
Total Metallurgical Coal segment coal production(4) 27,616,200 30,030,300
(1) Kolomela commenced commercial production on 1 December 2011. Costs
associated with 984,700 tonnes of production (2010: nil) have been capitalised
before commercial production was reached.
(2) Saleable production.
(3) Production includes Medium Carbon Ferro Manganese.
(4) In 2011 Peace River Coal has been reclassified from Other Mining and
Industrial to Metallurgical Coal to align with internal management reporting.
Comparatives have been reclassified to align with current year presentation.
2011 2010
Thermal Coal segment
South Africa
Greenside 2,853,100 3,425,000
Goedehoop 5,200,800 6,026,200
Isibonelo 4,338,200 4,569,100
Kriel 8,151,700 9,526,100
Kleinkopje 4,400,600 4,423,600
Landau 4,171,200 4,085,800
New Denmark 4,812,600 5,051,600
New Vaal 17,399,700 17,235,300
Mafube 2,313,100 2,447,700
Zibulo(1) 3,366,500 1,661,500
57,007,500 58,451,900
Colombia
Carbones del Cerrejon 10,751,700 10,060,100
Total Thermal Coal segment coal production 67,759,200 68,512,000
Other Mining and Industrial segment
South America
Carbones del Guasare - 441,400
Total Other Mining and Industrial segment coal
production (2) - 441,400
Total coal production 95,375,400 98,983,700
Total coal production by commodity (tonnes)
Metallurgical
South Africa 323,400 436,500
Australia - Export 13,253,400 14,701,800
Canada - Export 936,300 868,000
Total metallurgical coal production 14,513,100 16,006,300
Thermal
South Africa - Thermal (non-Eskom) 21,388,100 21,612,000
South Africa - Eskom 35,296,000 36,403,400
Australia 13,426,500 14,460,500
South America 10,751,700 10,501,500
Total thermal coal production 80,862,300 82,977,400
Total coal production 95,375,400 98,983,700
(1) Zibulo commenced commercial production on 1 October 2011. Revenue and
related costs associated with 2,155,200 tonnes (2010: 1,661,500 tonnes) of
production have been capitalised before commercial production was reached. The
2,155,200 tonnes includes Eskom coal of 633,400 tonnes (2010: 764,700 tonnes)
and export thermal coal production of 1,521,800 tonnes (2010: 896,800 tonnes).
(2) In 2011 Peace River Coal has been reclassified from Other Mining and
Industrial to Metallurgical Coal to align with internal management reporting.
Comparatives have been reclassified to align with current year presentation.
Copper segment
Collahuasi
100% basis (Anglo American
share 44%)
Ore mined tonnes
Ore processed Oxide tonnes
Sulphide tonnes
Ore grade processed Oxide % Cu
Sulphide % Cu
Production Copper concentrate dry metric tonnes
Copper cathode tonnes
Copper in concentrate tonnes
Total copper production for
Collahuasi tonnes
Anglo American`s share of
copper
production for Collahuasi tonnes
Anglo American Sur
Los Bronces mine
Ore mined tonnes
Marginal ore mined tonnes
Las Tortolas concentrator Ore processed tonnes
Ore grade processed % Cu
Average recovery %
Confluencia concentrator Ore processed tonnes
Ore grade processed % Cu
Average recovery %
Production Copper concentrate dry metric tonnes
Copper cathode tonnes
Copper in sulphate tonnes
Copper in concentrate tonnes
Total tonnes
El Soldado mine
Ore mined Open pit - ore mined tonnes
Open pit - marginal ore mined tonnes
Underground (sulphide) tonnes
Total tonnes
Ore processed Oxide tonnes
Sulphide tonnes
Ore grade processed Oxide % Cu
Sulphide % Cu
Production Copper concentrate dry metric tonnes
Copper cathode tonnes
Copper in concentrate tonnes
Total tonnes
Chagres Smelter
Copper concentrate smelted tonnes
Production Copper blister/anode tonnes
Acid tonnes
Total copper production for
Anglo American Sur (1) tonnes
Anglo American Norte
Mantos Blancos mine
Ore processed Oxide tonnes
Sulphide tonnes
Marginal ore tonnes
Ore grade processed Oxide % Cu (soluble)
Sulphide % Cu (insoluble)
Marginal ore % Cu (soluble)
Production Copper concentrate dry metric tonnes
Copper cathode tonnes
Copper in concentrate tonnes
Total tonnes
2011
Copper segment
Collahuasi
100% basis (Anglo American share
44%)
Ore mined 45,240,000
Ore processed Oxide 8,075,800
Sulphide 47,747,400
Ore grade processed Oxide 0.7
Sulphide 1.0
Production Copper concentrate 1,535,800
Copper cathode 36,000
Copper in concentrate 417,300
Total copper production for
Collahuasi 453,300
Anglo American`s share of copper
production for Collahuasi 199,500
Anglo American Sur
Los Bronces mine
Ore mined 26,587,500
Marginal ore mined 30,515,600
Las Tortolas concentrator Ore processed 20,595,700
Ore grade processed 0.9
Average recovery 85.8
Confluencia concentrator Ore processed 3,329,400
Ore grade processed 0.7
Average recovery 84.3
Production Copper concentrate 658,300
Copper cathode 38,400
Copper in sulphate 4,600
Copper in concentrate 178,800
Total 221,800
El Soldado mine
Ore mined Open pit - ore mined 10,197,700
Open pit - marginal ore mined -
Underground (sulphide) -
Total 10,197,700
Ore processed Oxide 1,887,000
Sulphide 7,209,100
Ore grade processed Oxide 0.7
Sulphide 0.8
Production Copper concentrate 171,900
Copper cathode 5,000
Copper in concentrate 41,900
Total 46,900
Chagres Smelter
Copper concentrate smelted 143,000
Production Copper blister/anode 138,200
Acid 487,500
Total copper production for
Anglo American Sur (1) 268,700
Anglo American Norte
Mantos Blancos mine
Ore processed Oxide 4,563,400
Sulphide 4,186,600
Marginal ore 5,109,400
Ore grade processed Oxide 0.6
Sulphide 1.0
Marginal ore 0.2
Production Copper concentrate 119,000
Copper cathode 36,000
Copper in concentrate 36,100
Total 72,100
2010
Copper segment
Collahuasi
100% basis (Anglo American share
44%)
Ore mined 84,060,000
Ore processed Oxide 7,226,800
Sulphide 49,119,900
Ore grade processed Oxide 0.5
Sulphide 1.1
Production Copper concentrate 1,789,300
Copper cathode 38,800
Copper in concentrate 465,200
Total copper production for
Collahuasi 504,000
Anglo American`s share of copper
production for Collahuasi 221,800
Anglo American Sur
Los Bronces mine
Ore mined 20,021,600
Marginal ore mined 43,266,400
Las Tortolas concentrator Ore processed 18,909,400
Ore grade processed 1.0
Average recovery 88.2
Confluencia concentrator Ore processed -
Ore grade processed -
Average recovery -
Production Copper concentrate 598,300
Copper cathode 42,600
Copper in sulphate 4,100
Copper in concentrate 174,700
Total 221,400
El Soldado mine
Ore mined Open pit - ore mined 4,890,400
Open pit - marginal ore mined 101,900
Underground (sulphide) 1,390,200
Total 6,382,500
Ore processed Oxide 1,532,200
Sulphide 7,176,100
Ore grade processed Oxide 0.7
Sulphide 0.6
Production Copper concentrate 174,000
Copper cathode 4,700
Copper in concentrate 35,700
Total 40,400
Chagres Smelter
Copper concentrate smelted 142,100
Production Copper blister/anode 137,900
Acid 466,700
Total copper production for
Anglo American Sur (1) 261,800
Anglo American Norte
Mantos Blancos mine
Ore processed Oxide 4,380,900
Sulphide 3,924,700
Marginal ore 5,628,900
Ore grade processed Oxide 0.6
Sulphide 1.1
Marginal ore 0.2
Production Copper concentrate 119,300
Copper cathode 39,100
Copper in concentrate 39,500
Total 78,600
(1) Includes total concentrate, cathode and copper in sulphate production.
Mantoverde mine
Ore processed Oxide tonnes
Marginal ore tonnes
Ore grade processed Oxide % Cu (soluble)
Marginal ore % Cu (soluble)
Production Copper cathode tonnes
Total copper production for Anglo
American Norte(1) tonnes
Total Copper segment copper production(1) tonnes
Platinum copper production tonnes
Black Mountain copper production tonnes
Total attributable copper production(1) tonnes
Nickel segment
Codemin
Ore mined(2) tonnes
Ore processed tonnes
Ore grade processed % Ni
Production tonnes
Loma de Niquel
Ore mined tonnes
Ore processed tonnes
Ore grade processed % Ni
Production tonnes
Barro Alto(3)
Ore mined tonnes
Ore processed tonnes
Ore grade processed % Ni
Production tonnes
Total Nickel segment nickel production tonnes
Platinum nickel production tonnes
Total attributable nickel production tonnes
Platinum segment (4)
Platinum troy ounces
Palladium troy ounces
Rhodium troy ounces
Copper(5) tonnes
Nickel(5) tonnes
Gold troy ounces
Equivalent refined platinum troy ounces
Diamonds segment (De Beers)
(diamonds recovered - carats)
100% basis (Anglo American share 45%)
Debswana
Namdeb
De Beers Consolidated Mines
De Beers Canada
Total diamonds production for De Beers
Anglo American`s share of diamonds
production for De Beers
2011
Mantoverde mine
Ore processed Oxide 10,012,200
Marginal ore 8,025,300
Ore grade processed Oxide 0.6
Marginal ore 0.3
Production Copper cathode 58,700
Total copper production for Anglo
American Norte(1) 130,800
Total Copper segment copper production(1) 599,000
Platinum copper production 12,800
Black Mountain copper production 300
Total attributable copper production(1) 612,100
Nickel segment
Codemin
Ore mined(2) 549,900
Ore processed 562,900
Ore grade processed 1.9
Production 9,500
Loma de Niquel
Ore mined 1,302,600
Ore processed 1,014,200
Ore grade processed 1.5
Production 13,400
Barro Alto(3)
Ore mined 978,000
Ore processed 456,500
Ore grade processed 2.0
Production 6,200
Total Nickel segment nickel production 29,100
Platinum nickel production 20,300
Total attributable nickel production 49,400
Platinum segment (4)
Platinum 2,530,100
Palladium 1,430,700
Rhodium 337,600
Copper(5) 12,800
Nickel(5) 20,300
Gold 105,100
Equivalent refined platinum 2,410,100
Diamonds segment (De Beers)
(diamonds recovered - carats)
100% basis (Anglo American share 45%)
Debswana 22,890,000
Namdeb 1,335,000
De Beers Consolidated Mines 5,443,000
De Beers Canada 1,660,000
Total diamonds production for De Beers 31,328,000
Anglo American`s share of diamonds
production for De Beers 14,097,000
2010
Mantoverde mine
Ore processed Oxide 9,223,200
Marginal ore 5,237,000
Ore grade processed Oxide 0.7
Marginal ore 0.3
Production Copper cathode 61,100
Total copper production for Anglo
American Norte(1) 139,700
Total Copper segment copper production(1) 623,300
Platinum copper production 10,900
Black Mountain copper production 2,500
Total attributable copper production(1) 636,700
Nickel segment
Codemin
Ore mined(2) 493,900
Ore processed 488,300
Ore grade processed 1.9
Production 8,500
Loma de Niquel
Ore mined 714,200
Ore processed 798,000
Ore grade processed 1.6
Production 11,700
Barro Alto(3)
Ore mined 723,600
Ore processed -
Ore grade processed -
Production -
Total Nickel segment nickel production 20,200
Platinum nickel production 18,500
Total attributable nickel production 38,700
Platinum segment (4)
Platinum 2,569,900
Palladium 1,448,500
Rhodium 328,900
Copper(5) 10,900
Nickel(5) 18,500
Gold 81,300
Equivalent refined platinum 2,484,000
Diamonds segment (De Beers)
(diamonds recovered - carats)
100% basis (Anglo American share 45%)
Debswana 22,218,000
Namdeb 1,472,000
De Beers Consolidated Mines 7,556,000
De Beers Canada 1,751,000
Total diamonds production for De Beers 32,997,000
Anglo American`s share of diamonds
production for De Beers 14,849,000
(1) Includes total concentrate, cathode and copper in sulphate production.
(2) Represents ore mined at Barro Alto for processing at Codemin.
(3) Barro Alto is currently not in commercial production and therefore all
revenue and related costs associated with 6,200 tonnes (2010: nil) of
production have been capitalised.
(4) See the published results of Anglo American Platinum Limited for further
analysis of production information.
(5) Also disclosed within total attributable copper and nickel production.
Other Mining and Industrial segment
Copebras
Phosphates
Catalao
Niobium
Ore mined
Ore processed
Ore grade processed
Production
Tarmac
Aggregates
Lime products
Concrete
Scaw Metals
South Africa Steel Products
International Steel Products (1)
Zinc and lead
Lisheen(2)
Ore mined
Ore processed
Ore grade processed Zinc
Lead
Production Zinc in concentrate
Lead in concentrate
Black Mountain(2)
Ore mined
Ore processed
Ore grade processed Zinc
Lead
Copper
Production Zinc in concentrate
Lead in concentrate
Copper in concentrate
Skorpion(2)
Ore mined
Ore processed
Ore grade processed Zinc
Production Zinc
Total attributable zinc production
Total attributable lead production
Other Mining and Industrial segment
Copebras
Phosphates tonnes
Catalao
Niobium
Ore mined tonnes
Ore processed tonnes
Ore grade processed Kg Nb/tonne
Production tonnes
Tarmac
Aggregates tonnes
Lime products tonnes
m3
Concrete
Scaw Metals
South Africa Steel Products tonnes
International Steel Products (1) tonnes
Zinc and lead
Lisheen(2)
Ore mined tonnes
Ore processed tonnes
Ore grade processed % Zn
% Pb
Production tonnes
tonnes
Black Mountain(2)
Ore mined tonnes
Ore processed tonnes
Ore grade processed % Zn
% Pb
% Cu
Production tonnes
tonnes
tonnes
Skorpion(2)
Ore mined tonnes
Ore processed tonnes
Ore grade processed % Zn
Production tonnes
Total attributable zinc production tonnes
Total attributable lead production tonnes
2011
Other Mining and Industrial segment
Copebras
Phosphates 1,060,900
Catalao
Niobium
Ore mined 866,600
Ore processed 902,600
Ore grade processed 8.1
Production 3,900
Tarmac
Aggregates 42,878,400
Lime products 1,264,000
Concrete 3,285,700
Scaw Metals
South Africa Steel Products 677,400
International Steel Products (1) -
Zinc and lead
Lisheen(2)
Ore mined 152,800
Ore processed 156,200
Ore grade processed 13.4
2.7
Production 19,200
2,900
Black Mountain(2)
Ore mined 132,800
Ore processed 126,200
Ore grade processed 3.4
4.5
0.4
Production 3,300
5,400
300
Skorpion(2)
Ore mined -
Ore processed -
Ore grade processed -
Production -
Total attributable zinc production 22,500
Total attributable lead production 8,300
2010
Other Mining and Industrial segment
Copebras
Phosphates 1,002,000
Catalao
Niobium
Ore mined 1,209,400
Ore processed 909,300
Ore grade processed 6.6
Production 4,000
Tarmac
Aggregates 58,875,600
Lime products 1,255,900
Concrete 3,305,800
Scaw Metals
South Africa Steel Products 710,000
International Steel Products (1) 794,200
Zinc and lead
Lisheen(2)
Ore mined 1,531,700
Ore processed 1,587,600
Ore grade processed 12.2
1.9
Production 175,100
20,600
Black Mountain(2)
Ore mined 1,415,500
Ore processed 1,378,600
Ore grade processed 3.3
4.2
0.3
Production 36,100
50,600
2,500
Skorpion(2)
Ore mined 1,412,600
Ore processed 1,358,000
Ore grade processed 11.2
Production 138,500
Total attributable zinc production 349,700
Total attributable lead production 71,200
(1) Relates to production from Moly-Cop and AltaSteel. The Group sold its
interests in Moly-Cop and AltaSteel in December 2010.
(2) The Group sold its interest in Skorpion in December 2010 and its interests
in Lisheen and Black Mountain in February 2011.
Quarterly production statistics
31 December 30 September 30 June
2011 2011 2011
Iron Ore and Manganese
segment (tonnes)
Iron ore (1) 12,427,300 12,182,900 11,534,100
Manganese ore (2) 722,500 807,600 716,100
Manganese alloys (2)(3) 78,000 77,600 76,100
Metallurgical Coal segment (tonnes)
Export metallurgical (4) 4,060,600 4,015,000 3,949,400
Thermal 3,358,700 3,978,000 3,087,500
Thermal Coal segment (tonnes) (5)
RSA thermal (non-Eskom) 5,846,000 5,198,400 5,264,400
Eskom 9,487,000 8,751,400 8,782,600
RSA metallurgical 84,500 75,600 83,800
Colombia export thermal 2,752,700 2,851,800 2,537,700
Copper segment (tonnes) (6) 170,000 139,900 150,300
Nickel segment (tonnes) (7)(8) 9,900 6,500 6,600
Platinum segment
Platinum (troy ounces) 710,000 646,500 640,700
Palladium (troy ounces) 392,700 376,000 373,800
Rhodium (troy ounces) 96,800 75,200 79,900
Nickel (tonnes) 5,100 4,900 5,500
Equivalent refined platinum
(troy ounces) 583,200 666,800 592,500
Diamonds segment (De Beers)
(diamonds recovered - carats)
Total diamond production
for De Beers 6,489,000 9,305,000 8,138,000
Anglo American`s share of
diamond production for
De Beers 2,920,000 4,187,000 3,662,000
Other Mining and Industrial
segment (tonnes)(9)
Phosphates 274,900 284,500 260,700
Niobium 1,000 1,100 900
South Africa Steel Products 163,100 158,000 183,100
Coal production by commodity
(tonnes)
Metallurgical 4,145,100 4,090,600 4,033,200
Thermal (non-Eskom) (10) 11,957,400 12,028,200 10,889,600
Eskom 9,487,000 8,751,400 8,782,600
Quarter ended
31 March 31 December
2011 2010
Iron Ore and Manganese segment (tonnes)
Iron ore (1) 9,944,800 11,807,700
Manganese ore (2) 540,600 731,600
Manganese alloys (2)(3) 68,800 76,800
Metallurgical Coal segment
(tonnes)
Export metallurgical (4) 2,164,700 3,891,500
Thermal 3,002,300 3,727,500
Thermal Coal segment (tonnes) (5)
RSA thermal (non-Eskom) 5,079,300 5,885,000
Eskom 8,275,000 9,484,800
RSA metallurgical 79,500 103,000
Colombia export thermal 2,609,500 2,315,700
Copper segment (tonnes) (6) 138,800 154,400
Nickel segment (tonnes) (7)(8) 6,100 4,400
Platinum segment
Platinum (troy ounces) 532,900 872,400
Palladium (troy ounces) 288,200 502,600
Rhodium (troy ounces) 85,700 111,400
Nickel (tonnes) 4,800 5,000
Equivalent refined platinum (troy ounces) 567,600 640,100
Diamonds segment (De Beers)
(diamonds recovered - carats)
Total diamond production for De Beers 7,396,000 8,532,000
Anglo American`s share of
diamond production for
De Beers 3,328,000 3,839,000
Other Mining and Industrial
segment (tonnes)(9)
Phosphates 240,800 270,900
Niobium 900 1,200
South Africa Steel Products 173,200 151,000
Coal production by commodity (tonnes)
Metallurgical 2,244,200 3,994,500
Thermal (non-Eskom) (10) 10,691,100 11,928,200
Eskom 8,275,000 9,484,800
% Change (Quarter ended)
31 December 31 December
2011 v 2011 v
30 September 31 December
2011 2010
Iron Ore and Manganese
segment (tonnes)
Iron ore (1) 2% 5%
Manganese ore (2) (11)% (1)%
Manganese alloys (2)(3) 1% 2%
Metallurgical Coal segment (tonnes)
Export metallurgical (4) 1% 4%
Thermal (16)% (10)%
Thermal Coal segment (tonnes) (5)
RSA thermal (non-Eskom) 12% (1)%
Eskom 8% -
RSA metallurgical 12% (18)%
Colombia export thermal (3)% 19%
Copper segment (tonnes) (6) 22% 10%
Nickel segment (tonnes) (7)(8) 52% 125%
Platinum segment
Platinum (troy ounces) 10% (19)%
Palladium (troy ounces) 4% (22)%
Rhodium (troy ounces) 29% (13)%
Nickel (tonnes) 4% 2%
Equivalent refined platinum (troy ounces) (13)% (9)%
Diamonds segment (De Beers)
(diamonds recovered - carats)
Total diamond production for De Beers (30)% (24)%
Anglo American`s share of diamond production for
De Beers (30)% (24)%
Other Mining and Industrial
segment (tonnes)(9)
Phosphates (3)% 1%
Niobium (9)% (17)%
South Africa Steel Products 3% 8%
Coal production by commodity (tonnes)
Metallurgical 1% 4%
Thermal (non-Eskom) (10) (1)% -
Eskom 8% -
(1) Kolomela commenced commercial production on 1 December 2011. Costs
associated with 984,700 tonnes of production (2010: nil) have been capitalised
before commercial production was reached.
(2) Saleable production.
(3) Production includes Medium Carbon Ferro Manganese.
(4) Includes Peace River Coal which in 2011 has been reclassified from Other
Mining and Industrial to Metallurgical Coal to align with internal management
reporting. Comparatives have been reclassified to align with current year
presentation.
(5) Zibulo commenced commercial production on 1 October 2011. Revenue and
related costs associated with 2,155,200 tonnes (2010: 1,661,500 tonnes) of
production have been capitalised before commercial production was reached. The
2,155,200 tonnes includes Eskom coal of 633,400 tonnes (2010: 764,700 tonnes)
and export thermal coal production of 1,521,800 tonnes (2010: 896,800 tonnes).
(6) Excludes Platinum and Black Mountain mine copper production.
(7) Excludes Platinum nickel production.
(8) Includes Barro Alto which is currently not in commercial production and
therefore all revenue and related costs associated with 6,200 tonnes (2010:
nil) of production have been capitalised.
(9) Excludes Tarmac.
(10) The quarter ended 31 December 2010 excludes 48,600 tonnes of production
from Carbones del Guasare.
Exchange rates and commodity prices
US$ exchange rates 2011 2010
Year end spot prices
Rand 8.11 6.60
Brazilian real 1.87 1.66
Sterling 0.65 0.64
Australian dollar 0.98 0.98
Euro 0.77 0.75
Chilean peso 520 468
Average prices for the year
Rand 7.26 7.32
Brazilian real 1.67 1.76
Sterling 0.62 0.65
Australian dollar 0.97 1.09
Euro 0.72 0.75
Chilean peso 484 510
Commodity prices 2011 2010
Year end spot prices
Iron ore (FOB Australia) (1) US$/tonne 127 163
Thermal coal (FOB South Africa) (2) US$/tonne 105 129
Thermal coal (FOB Australia) (2) US$/tonne 112 126
Hard coking coal (FOB Australia) (3) US$/tonne 285 209
Copper (4) US cents/lb 343 442
Nickel (4) US cents/lb 829 1,132
Platinum (5) US$/oz 1,388 1,755
Palladium (5) US$/oz 636 797
Rhodium (5) US$/oz 1,400 2,425
Average market prices for the year
Iron ore (FOB Australia) (1) US$/tonne 160 136
Thermal coal (FOB South Africa) (2) US$/tonne 116 92
Thermal coal (FOB Australia) (2) US$/tonne 121 99
Hard coking coal (FOB Australia) (6) US$/tonne 289 191
Copper (4) US cents/lb 400 342
Nickel (4) US cents/lb 1,035 989
Platinum (5) US$/oz 1,725 1,610
Palladium (5) US$/oz 736 527
Rhodium (5) US$/oz 2,022 2,453
(1) Source: Platts.
(2) Source: McCloskey.
(3) Source: Represents the quarter four benchmark.
(4) Source: LME daily prices.
(5) Source: Johnson Matthey.
(6) Source: Represents the average quarterly benchmark, with quarter one 2010
being the final quarter of the annual settlement for JFY 2009-2010.
Summary by business operation
Revenue(1) EBITDA (2)
US$ million 2011 2010 2011 2010
Iron Ore and Manganese 8,124 6,612 4,733 3,856
Kumba Iron Ore 6,717 5,310 4,546 3,514
Iron Ore Brazil 481 319 (11) (73)
Samancor 926 983 198 415
Metallurgical Coal(4) 4,347 3,522 1,577 1,134
Australia 4,068 3,377 1,526 1,147
Canada 279 145 82 18
Projects and corporate - - (31) (31)
Thermal Coal 3,722 2,866 1,410 872
South Africa 2,642 2,105 902 539
Colombia 1,080 761 535 358
Projects and corporate - - (27) (25)
Copper 5,144 4,877 2,750 3,086
Anglo American Sur 2,320 2,075 1,247 1,263
Anglo American Norte 1,136 1,073 641 661
Collahuasi 1,688 1,729 1,052 1,276
Projects and corporate - - (190) (114)
Nickel 488 426 84 122
Codemin 203 195 77 83
Loma de Niquel 285 231 86 82
Projects and corporate - - (79) (43)
Platinum 7,359 6,602 1,672 1,624
Diamonds 3,320 2,644 794 666
Other Mining and Industrial (4) 4,039 5,375 393 894
Core(4) 720 613 215 173
Copebras 571 461 160 104
Catalao 149 152 57 71
Projects and corporate - - (2) (2)
Non-core(4) 3,319 4,762 178 721
Tarmac(5) 2,347 2,376 106 188
Scaw Metals(6) 931 1,579 70 213
Lisheen(7) 36 265 17 114
Black Mountain(7) 5 197 3 73
Skorpion(7) - 311 - 154
Projects, corporate and other - 34 (18) (21)
Exploration - - (121) (136)
Corporate Activities and
Unallocated Costs 5 5 56 (135)
36,548 32,929 13,348 11,983
Operating profit/(loss) (3) Underlying earnings
US$ million 2011 2010 2011 2010
Iron Ore and Manganese 4,520 3,681 1,525 1,423
Kumba Iron Ore 4,397 3,396 1,462 1,210
Iron Ore Brazil (42) (97) (81) (77)
Samancor 165 382 144 290
Metallurgical Coal(4) 1,189 780 844 586
Australia 1,161 814 831 616
Canada 59 (3) 44 1
Projects and corporate (31) (31) (31) (31)
Thermal Coal 1,230 710 902 512
South Africa 775 426 611 314
Colombia 482 309 318 223
Projects and corporate (27) (25) (27) (25)
Copper 2,461 2,817 1,610 1,721
Anglo American Sur 1,092 1,125 746 685
Anglo American Norte 606 624 444 419
Collahuasi 957 1,186 617 738
Projects and corporate (194) (118) (197) (121)
Nickel 57 96 23 75
Codemin 73 76 52 48
Loma de Niquel 66 65 29 55
Projects and corporate (82) (45) (58) (28)
Platinum 890 837 410 425
Diamonds 659 495 443 302
Other Mining and Industrial (4) 195 664 107 521
Core(4) 188 146 113 84
Copebras 136 81 80 48
Catalao 54 67 35 38
Projects and corporate (2) (2) (2) (2)
Non-core(4) 7 518 (6) 437
Tarmac(5) (35) 48 (31) 67
Scaw Metals(6) 40 170 27 119
Lisheen(7) 17 114 14 99
Black Mountain(7) 3 73 1 47
Skorpion(7) - 134 - 133
Projects, corporate and other (18) (21) (17) (28)
Exploration (121) (136) (118) (128)
Corporate Activities and
Unallocated Costs 15 (181) 374 (461)
11,095 9,763 6,120 4,976
(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 2011 Peace River Coal has been reclassified from Other Mining and
Industrial to Metallurgical Coal to align with internal management reporting,
and Copebras and Catalao are considered core within the Other Mining and
Industrial segment following a strategic review. Comparatives have been
reclassified to align with current year presentation.
(5) In the year ended 31 December 2011 the Group sold Tarmac`s businesses in
China, Turkey and Romania (2010: the Polish and French and Belgian concrete
products businesses and the majority of the European aggregates businesses).
(6) Results for 2010 include Moly-Cop and AltaSteel, which were disposed of in
December 2010.
(7) Skorpion, Lisheen and Black Mountain comprised the Group`s portfolio of
zinc operations. The Group sold its interest in Skorpion in December 2010 and
its interest in Lisheen and Black Mountain in February 2011. See note 13.
Key financial data
US$ million (unless otherwise
stated) 2011 2010 2009 2008
Group revenue including associates 36,548 32,929 24,637 32,964
Less: Share of associates` revenue (5,968) (4,969) (3,779) (6,653)
Group revenue 30,580 27,960 20,858 26,311
Operating profit including
associates before
special items and remeasurements 11,095 9,763 4,957 10,085
Special items and remeasurements
(excluding
financing and tax special items
and remeasurements) (44) 1,727 (208) (330)
Net finance costs (including
financing special items
and remeasurements), tax and
non-controlling
interests of associates (452) (423) (313) (783)
Total profit from operations and
associates 10,599 11,067 4,436 8,972
Net finance income/(costs)
(including financing
special items and remeasurements) 183 (139) (407) (401)
Profit before tax 10,782 10,928 4,029 8,571
Income tax expense (including
special items and
remeasurements) (2,860) (2,809) (1,117) (2,451)
Profit for the financial year -
continuing
operations 7,922 8,119 2,912 6,120
Profit for the financial year -
discontinued operations - - - -
Profit for the financial year -
total Group 7,922 8,119 2,912 6,120
Non-controlling interests (1,753) (1,575) (487) (905)
Profit attributable to equity
shareholders of the
Company 6,169 6,544 2,425 5,215
Underlying earnings(2) -
continuing operations 6,120 4,976 2,569 5,237
Underlying earnings(2) -
discontinued operations - - - -
Underlying earnings(2) - total
Group 6,120 4,976 2,569 5,237
Earnings per share (US$) -
continuing operations 5.10 5.43 2.02 4.34
Earnings per share (US$) -
discontinued operations - - - -
Earnings per share (US$) - total
Group 5.10 5.43 2.02 4.34
Underlying earnings per share
(US$) - continuing
operations 5.06 4.13 2.14 4.36
Underlying earnings per share
(US$) - discontinued
operations - - - -
Underlying earnings per share
(US$) - total Group 5.06 4.13 2.14 4.36
Ordinary dividend per share (US
cents) 74.0 65.0 - 44.0
Special dividend per share (US
cents) - - - -
Weighted average basic number of
shares
outstanding (million) 1,210 1,206 1,202 1,202
EBITDA(3) - continuing operations 13,348 11,983 6,930 11,847
EBITDA(3) - discontinued operations - - - -
EBITDA(3) - total Group 13,348 11,983 6,930 11,847
EBITDA interest cover(4) - total
Group n/a 42.0 27.4 28.3
Operating margin (before special
items and
remeasurements) - total Group 30.4% 29.6% 20.1% 30.6%
Ordinary dividend cover (based on
underlying
earnings per share) - total Group 6.8 6.4 - 9.9
US$ million (unless otherwise
stated) 2007 2006 (1) 2005 (1) 2004 (1)
Group revenue including
associates 30,559 29,404 24,872 22,610
Less: Share of associates`
revenue (5,089) (4,413) (4,740) (5,429)
Group revenue 25,470 24,991 20,132 17,181
Operating profit including
associates before
special items and remeasurements 9,590 8,888 5,549 3,832
Special items and
remeasurements (excluding
financing and tax special items
and remeasurements) (227) 24 16 556
Net finance costs (including
financing special items
and remeasurements), tax and
non-controlling
interests of associates (434) (398) (315) (391)
Total profit from operations
and associates 8,929 8,514 5,250 3,997
Net finance income/(costs)
(including financing
special items and
remeasurements) (108) (71) (220) (385)
Profit before tax 8,821 8,443 5,030 3,612
Income tax expense (including
special items and
remeasurements) (2,693) (2,518) (1,208) (765)
Profit for the financial year -
continuing
operations 6,128 5,925 3,822 2,847
Profit for the financial year -
discontinued operations 2,044 997 111 1,094
Profit for the financial year -
total Group 8,172 6,922 3,933 3,941
Non-controlling interests (868) (736) (412) (440)
Profit attributable to equity
shareholders of the
Company 7,304 6,186 3,521 3,501
Underlying earnings(2) -
continuing operations 5,477 5,019 3,335 2,178
Underlying earnings(2) -
discontinued operations 284 452 401 506
Underlying earnings(2) - total
Group 5,761 5,471 3,736 2,684
Earnings per share (US$) -
continuing operations 4.04 3.51 2.35 1.84
Earnings per share (US$) -
discontinued operations 1.54 0.70 0.08 0.60
Earnings per share (US$) -
total Group 5.58 4.21 2.43 2.44
Underlying earnings per share
(US$) - continuing
operations 4.18 3.42 2.30 1.52
Underlying earnings per share
(US$) - discontinued
operations 0.22 0.31 0.28 0.35
Underlying earnings per share
(US$) - total Group 4.40 3.73 2.58 1.87
Ordinary dividend per share (US
cents) 124.0 108.0 90.0 70.0
Special dividend per share (US
cents) - 67.0 33.0 -
Weighted average basic number
of shares
outstanding (million) 1,309 1,468 1,447 1,434
EBITDA(3) - continuing
operations 11,171 10,431 7,172 5,359
EBITDA(3) - discontinued
operations 961 1,766 1,787 1,672
EBITDA(3) - total Group 12,132 12,197 8,959 7,031
EBITDA interest cover(4) -
total Group 42.0 45.5 20.0 18.5
Operating margin (before
special items and
remeasurements) - total Group 28.4% 25.4% 18.5% 14.7%
Ordinary dividend cover (based
on underlying
earnings per share) - total
Group 3.5 3.5 2.9 2.7
See following page for footnotes.
US$ million (unless otherwise
stated) 2011 2010 2009 2008
Balance sheet
Intangible assets and property,
plant and equipment (5) 42,871 42,126 37,974 32,551
Other non-current assets and
investments 10,269 9,852 7,303 7,607
Working capital 2,093 2,385 2,168 861
Other net current liabilities (5)(1,683) (785) (272) (840)
Other non-current liabilities
and obligations (5) (9,220) (8,757) (8,487) (7,567)
Cash and cash equivalents and
borrowings (6) (1,141) (7,038) (11,046) (11,051)
Net assets classified as held
for sale - 188 429 195
Net assets 43,189 37,971 28,069 21,756
Non-controlling interests (4,097) (3,732) (1,948) (1,535)
Equity attributable to equity
shareholders of
the Company 39,092 34,239 26,121 20,221
Total capital (7) 44,563 45,355 39,349 33,096
Cash flows from operations -
continuing
operations 11,498 9,924 4,904 9,579
Cash flows from operations -
discontinued operations - - - -
Cash flows from operations -
total Group 11,498 9,924 4,904 9,579
Dividends received from
associates and financial
asset investments - continuing
operations 403 285 639 659
Dividends received from
associates and financial
asset investments - discontinued
operations - - - -
Dividends received from
associates and financial
asset investments - total Group 403 285 639 659
Return on capital employed(8) -
total Group 26.5% 24.8% 14.4% 36.9%
EBITDA/average total capital(7)
- total Group 29.7% 28.3% 19.1% 38.0%
Net debt to total capital
(gearing) (9) 3.1% 16.3% 28.7% 34.3%
US$ million (unless otherwise
stated) 2007 (1) 2006 (1) 2005 (1) 2004
Balance sheet
Intangible assets and property,
plant and equipment (5) 25,090 25,632 33,368 35,816
Other non-current assets and
investments 9,271 8,258 5,585 5,547
Working capital 1,966 3,096 3,538 3,543
Other net current liabilities
(5) (911) (1,430) (1,429) (611)
Other non-current liabilities
and obligations (5) (6,387) (5,826) (8,491) (8,339)
Cash and cash equivalents and
borrowings (6) (5,170) (3,244) (4,993) (8,243)
Net assets classified as held
for sale 471 641 - -
Net assets 24,330 27,127 27,578 27,713
Non-controlling interests (1,869) (2,856) (3,957) (4,588)
Equity attributable to equity
shareholders of
the Company 22,461 24,271 23,621 23,125
Total capital (7) 29,181 30,258 32,558 35,806
Cash flows from operations -
continuing
operations 9,375 9,012 5,963 3,857
Cash flows from operations -
discontinued operations 470 1,045 1,302 1,434
Cash flows from operations -
total Group 9,845 10,057 7,265 5,291
Dividends received from
associates and financial
asset investments - continuing
operations 311 251 468 380
Dividends received from
associates and financial
asset investments -
discontinued operations 52 37 2 16
Dividends received from
associates and financial
asset investments - total Group 363 288 470 396
Return on capital employed(8) -
total Group 38.0% 32.6% 18.8% 16.9%
EBITDA/average total capital(7)
- total Group 40.8% 38.8% 26.2% 21.3%
Net debt to total capital
(gearing) (9) 16.6% 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 profit attributable to equity shareholders before
special items and remeasurements and is therefore presented after net finance
costs, income tax and non-controlling interests.
(3) 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.
(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, and including
attributable share of associates` net interest expense, which in 2011 results
in a net finance income and therefore the ratio is not applicable.
(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
cash/(debt) of disposal groups (2011: nil; 2010: $59 million; 2009: $48
million; 2008: $8 million; 2007: $(69) million; 2006: $(80) million; 2005:
nil; 2004: nil) and excludes related hedges (2011: net liabilities of $233
million; 2010: net liabilities of $405 million; 2009: net liabilities of $285
million; 2008: net liabilities of $297 million; 2007: net assets of $388
million; 2006: net assets of $193 million; 2005: nil; 2004: nil). See note 12.
(7) Total capital is net assets excluding net debt.
(8) Return on capital employed is calculated as total operating profit before
impairments for the year divided by the average of total capital less other
investments and adjusted for impairments.
(9) Net debt to total capital is calculated as net debt (including related
hedges) divided by total capital. Comparatives are presented on a consistent
basis.
Reconciliation of subsidiaries` and associate`s reported earnings to the
underlying earnings included in the Condensed financial statements for the
year ended 31 December 2011
Note only key reported lines are reconciled.
Kumba Iron Ore Limited
US$ million 2011 2010
IFRS headline earnings (1) 2,366 1,964
Exploration 4 9
Other adjustments 3 1
2,373 1,974
Non-controlling interests (826) (710)
Elimination of intercompany interest (27) 2
Depreciation on assets fair valued on acquisition (net of tax) (9) (9)
Corporate cost allocation (49) (47)
Contribution to Anglo American plc underlying earnings 1,462 1,210
Anglo American Platinum Limited
US$ million 2011 2010
IFRS headline earnings (1) 527 674
Exploration 5 11
Operating and financing remeasurements (net of tax) (27) (21)
Restructuring costs included in headline earnings (net of tax) 6 28
BEE transactions and related charges 141 -
Other adjustments - (1)
652 691
Non-controlling interests (132) (140)
Elimination of intercompany interest (1) 29
Depreciation on assets fair valued on acquisition (net of tax) (55) (102)
Corporate cost allocation (54) (53)
Contribution to Anglo American plc underlying earnings 410 425
De Beers Societe Anonyme
US$ million 2011 2010
De Beers underlying earnings (100%) 968 598
Difference in IAS 19 accounting policy 17 53
De Beers underlying earnings - Anglo American plc basis (100%) 985 651
Anglo American plc`s 45% ordinary share interest 443 293
Income from preference shares - 9
Contribution to Anglo American plc underlying earnings 443 302
(1) The US$ equivalent of the rand IFRS headline earnings published by Kumba
Iron Ore Limited and Anglo American Platinum Limited is calculated by
translating the movement each month at the average exchange rate for the
month.
ANGLO AMERICAN plc
(Incorporated in England and Wales - Registered number 3564138)
(the Company)
Notice of Final Dividend
(Dividend No. 23)
The directors have recommended that a dividend on the Company`s ordinary share
capital in respect of the year ended 31 December 2011 will, subject to
approval by shareholders at the Annual General Meeting to be held at 2.30 pm
on Thursday 19 April 2012, be paid as follows:
Amount (United States currency) 46 cents per ordinary share (note 1)
Amount (South African currency) R3.5998 per ordinary share
Last day to effect removal of shares
between the UK and SA registers Thursday 16 February 2012
Last day to trade on the JSE Limited
(JSE) to qualify for dividend Friday 23 March 2012
Ex-dividend on the JSE from the
commencement of trading on Monday 26 March 2012 (note 2)
Ex-dividend on the London Stock Exchange
from the commencement of trading on Wednesday 28 March 2012
Record date (applicable to both the
United Kingdom principal register and
South African branch register) Friday 30 March 2012
Last day for receipt of US$:GBP/ currency
elections by the UK Registrars (note 1) Tuesday 3 April 2012
Last day for receipt of Dividend
Reinvestment Plan (DRIP) mandate forms by
the UK Registrars (notes 3, 4 and 5) Tuesday 3 April 2012
Last day for receipt of DRIP mandate
forms by Central Securities Depository
Participants (CSDPs) (notes 3, 4 and 5) Thursday 5 April 2012
Last day for receipt of DRIP mandate
forms by South African Transfer
Secretaries (notes 3, 4 and 5) Tuesday 10 April 2012
Currency conversion US$:GBP/ rates announced on Friday 13 April
2012
Removal of shares between the UK and SA
registers permissible from Friday 13 April 2012
Dividend warrants posted SA Tuesday 24 April 2012
Dividend warrants posted UK Wednesday 25 April 2012
Payment date of dividend Thursday 26 April 2012
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 Tuesday 1 May 2012. CREST accounts will be
credited on Wednesday 2 May 2012.
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
13th Floor, Rennie House
19 Ameshoff Street
Braamfontein 2001
South Africa
(PO Box 4844, Johannesburg 2000)
17 February 2012
Sponsor: UBS South Africa (Pty) Ltd
Date: 17/02/2012 08:42:02 Produced by the JSE SENS Department.
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