| Tue 14 May 2024, 8:20 | | ANGLO AMERICAN PLC - Anglo American accelerates delivery of strategy to unlock significant value |
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Anglo American accelerates delivery of strategy to unlock significant value
Anglo American plc (the "Company")
Registered office: 17 Charterhouse Street, London EC1N 6RA
Registered number: 3564138 (incorporated in England and Wales)
Legal Entity Identifier: 549300S9XF92D1X8ME43
ISIN: GBOOB1XZS820
JSE Share Code: AGL
NSX Share Code: ANM
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY,
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
14 May 2024
Anglo American accelerates delivery of strategy to unlock significant value
Radically simplified portfolio of world-class assets in copper, premium iron ore
and crop nutrients
Anglo American plc ("Anglo American") is today setting out a clear, compelling and decisive plan to unlock
significant value from its portfolio and accelerate the delivery of consistently stronger shareholder
returns.
Following completion of the asset review initiated during 2023, Anglo American plans to implement a
number of major structural changes to accelerate delivery against its strategic priorities of operational
excellence, portfolio simplification, and growth:
Undiluted Anglo American shareholder participation in a simpler portfolio of world-class assets with
full value transparency
- Copper
o 3 of the top 10 producing copper mines in South America, with outstanding resource
endowments
o Set for multiple decades of competitive production and growth, with a defined pathway to
>1mtpa of copper production
- Premium iron ore
o Focused producer of 100% premium product, ideally suited to support steel decarbonisation
o Attractive resource endowments in Brazil and South Africa
- Crop nutrients
o Slow down development to support balance sheet deleveraging, while critical technical studies
are completed in 2025, to then support syndication. Capex reduced to $200 million in 2025 and
no capex in 2026
o Preserving long term value from high quality asset with multi-generational resource scale
Compelling value proposition exclusively for Anglo American's shareholders
- Portfolio and structure transformation – 100% future-enabling portfolio, including 54% copper
production, in products that support the energy transition, improving global living standards and
food security
- Outstanding organic growth – Proven project delivery and sustainability leadership
- High quality financial profile – EBITDA margin increases to 46% from 31% on a 2023 pro forma basis1
- Efficiency and accountability – $1.7 billion lower cost of new portfolio configuration. This includes
$0.8 billion of additional pre-tax recurring annual run rate cost benefits from the end of 20252
- Disciplined capital allocation – less than 1.5x net debt:EBITDA leverage at bottom of the cycle, with
40% dividend payout maintained
Clear pathway for portfolio value delivery – in the right way and for value
- Steelmaking Coal – To be divested and currently responding to strong buyer interest
- Nickel – Exploring options for care and maintenance and divestment
- Anglo American Platinum – To be demerged in a responsible and orderly way to optimise value for
both Anglo American's and Anglo American Platinum's shareholders
- De Beers – To be divested or demerged, to improve strategic flexibility for both De Beers and Anglo
American
Duncan Wanblad, Chief Executive of Anglo American, said:
"We set out our clear strategic priorities earlier this year – operational excellence, portfolio simplification,
and growth. Our decision to focus Anglo American's portfolio in our world-class resource asset base in
copper and premium iron ore – while retaining our crop nutrients optionality at Woodsmith – marks a
major new phase in executing our strategy.
"We expect that a radically simpler business will deliver sustainable incremental value creation through
a step change in operational performance and cost reduction.
"Anglo American's shareholders will see the full undiluted upside from these extensive changes, with the
value of our copper and iron ore assets brought to the fore. This next step in the transformation of Anglo
American's portfolio is set to accelerate the recognition of value that has been inherent in our business
for many years and provide Anglo American's shareholders with undiluted and differentiated
participation in the major structural demand trends, while minimising any frictional costs associated with
this major portfolio transformation.
"These actions represent the most radical changes to Anglo American in decades. I believe these are the
right decisions to position Anglo American to capitalise on the outstanding resource endowment
opportunities within our portfolio today. Our proven and differentiated capabilities within Anglo
American, our global relationship networks and our longstanding reputation as a responsible mining
company will help us unlock numerous of these and other opportunities in the jurisdictions where our
experience and track record are most valuable and most valued, namely in South America and Southern
Africa.
"Of course, we are conscious of the impacts of making such far-reaching changes, particularly on our
employees. We see considerable opportunities for our employees, both in delivering the full potential of
Anglo American and in the businesses that we will be divesting or demerging, all of which are high quality
businesses in their own right. By implementing these portfolio changes ourselves, we will be able to do
so in a manner that is respectful of our employees, host communities and countries, including ensuring
that in South Africa in particular Anglo American continues to play its role as a responsible business leader
to support the country's national priorities.
"We are taking clear and decisive action to deliver value – safely, responsibly and reliably – in the long
term interests of our shareholders and other stakeholders, and to deliver the products that are so critical
to enabling the energy transition and supporting improved global living standards and food security."
Three strategic priorities
Operational excellence
- Simplification of structure and portfolio to facilitate step change in performance
Anglo American is focused on operational and cost performance to deliver superior margins. The
organisational re-design simplifies work execution and provides clear accountabilities for delivery. Anglo
American is on track to achieve the previously announced run rate of US$1 billion annual savings in
operating expenditure in 2024. Additionally, a further $0.8 billion of cost out from the end of 2025 2 is
targeted. The capital expenditure reduction of US$1.6 billion over the next three years set out in
December 2023 is also on track. Technology is being deployed into each operation in a targeted fashion
to deliver improvements in safety, costs and productivity.
These initiatives are creating a more focused and robust platform to deliver consistent operational
performance and give confidence in the effectiveness of further change. The portfolio simplification and
organisation streamlining will also support greater focus on operational excellence and value creation.
Portfolio simplification
- Transformation of the portfolio to focus on world class assets in copper, premium iron ore and
crop nutrients
- Changes implemented in the most effective manner, with timing to optimise shareholder and
stakeholder value
A comprehensive asset review been completed. Each asset was assessed for competitiveness and
performance optimisation potential, and for its role in the portfolio. The review examined how the
portfolio as a whole can deliver the most attractive through the cycle returns for Anglo American's
shareholders considering asset competitive positioning, commodity outlook and the cash flow required
to realise both growth potential and sustainable shareholder returns. The impact of portfolio composition
on the recognition of the value of the underlying assets by the market has also been considered.
The principle behind the portfolio changes is to deliver the best value outcome for assets and businesses
over time, leading to decisions relating to the following businesses, to be implemented as separate
transactions and for value:
Steelmaking coal –. Anglo American intends to divest its high quality Steelmaking Coal business, with
proceeds used to reset Anglo American's balance sheet.
Anglo American Platinum – Anglo American Platinum's assets have exceptional geological potential and
Anglo American is currently setting up Anglo American Platinum to be resilient and deliver sustainable
returns through the cycle as one of the world's leading PGMs producers, despite the current cyclical
downturn. Anglo American and Anglo American Platinum are working together to transform Anglo
American Platinum to generate multi-decade cash flows, high returns and delivering its full potential. The
ongoing reconfiguration of Anglo American Platinum and associated employee consultation process,
announced in February 2024, continue and are not affected by this announcement.
It is, however, increasingly clear that if Anglo American were to retain Anglo American Platinum in its
portfolio, it limits the ability to have the full value of both businesses fully reflected, limiting the ability of
both Anglo American and Anglo American Platinum to achieve their full potential. Anglo American's
portfolio and structure are simpler without Anglo American Platinum, Anglo American's portfolio will
have strong geographic balance and less complexity in future capital allocation. As a standalone business,
Anglo American Platinum will be best positioned to set its own priorities to deliver its full potential, with
Anglo American's shareholders able to participate in full through the demerger.
De Beers – Having made significant progress towards finalising the sales agreement with the Government
of the Republic of Botswana, Anglo American is exploring the full range of options to separate the
business in order to set it up for success in unlocking full value from its new Origins strategy, its world-
class assets and its iconic brand. This will provide both Anglo American and De Beers with a new level of
strategic flexibility to maximise value for both company's shareholders.
Growth
- Outstanding growth potential across the portfolio with well-sequenced, value accretive
opportunities in copper, premium iron ore and crop nutrients
- Leveraging differentiated and proven technical and sustainability capabilities, and multi-decade
relationship networks in South America and Southern Africa
- A proven track record of major copper greenfield project delivery
- On plan and on budget with Woodsmith development
Each of the three portfolio verticals has the benefit of a number of value accretive growth and
replacement options already owned by Anglo American and that can be developed at the right time.
Integral to Anglo American's growth trajectory is the Woodsmith crop nutrients project. Anglo American
will continue to work towards the completion of the feasibility study in the first half of 2025, as an
essential building block for syndication to a strategic partner. In the meantime, we will slow the
investment - which we now expect to be reduced to $0.2 billion in 2025 and no capex in 2026, to support
balance sheet deleveraging.
Three major benefits for Anglo American's shareholders
1. Undiluted Anglo American shareholder participation in a simpler portfolio of world-class assets
with value transparency
The streamlined portfolio is underpinned by strong industrial logic, with each asset playing a clear role,
and is uniquely positioned to enable and benefit from global decarbonisation, the ongoing pull for
improved living standards, and food security.
- Copper
2023 EBITDA US$3.2 billion
2022 EBITDA US$2.2 billion
o Copper is critical for ongoing global economic development and the decarbonisation of the
global economy through electrification. Copper demand is therefore expected to grow strongly
whilst there are key constraints on the supply side including increasing timelines and
requirements for licensing and permitting. Anglo American has an established track record of
successfully developing such new supply, responsibly and profitably.
o Anglo American's market position: Anglo American has an outstanding copper endowment
through its interests in three world class copper assets – Quellaveco, Los Bronces and Collahuasi
- set for multiple decades of competitive production and growth. In 2024 Anglo American has
set guidance of 730-790kt of production with well-sequenced and self-funded brownfield and
greenfield prospects (including at Sakatti) for value-accretive growth to more than 1 million
tonnes of annual copper production in the next decade and for decades to come. For example,
at Quellaveco, the 35-year current life of mine is based on Reserves of ~8 million tonnes of
contained copper, but there are an additional ~8 million tonnes in Resources and further
Exploration Targets with upside estimated at up to ~59 million tonnes of copper.
Anglo American's differentiated technical, project delivery and sustainability capabilities built
over many decades, coupled with its global relationship networks and longstanding reputation
as a responsible mining company, are critical to unlocking the value of these endowments and
supplying the copper needed for the energy transition and improved living standards.
This is expected to be achieved through faster permitting, mutually reinforcing community and
stakeholder relationships, and seamless execution, as demonstrated most recently at
Quellaveco – a $5.5 billion greenfield investment delivered on time and on budget – while many
comparable projects across the industry remain undeveloped due to social and environmental
challenges, face significant delays and cost overruns, or experience ongoing operational
disruptions.
- Premium iron ore
2023 EBITDA US$4.0 billion
2022 EBITDA US$3.5 billion
o Premium iron ore, in particular the types suitable for the transition towards green steel and for
direct reduction iron ("DRI"), is essential for steel industry decarbonisation and is expected to
experience growth an order of magnitude more than that of lower quality iron ore, while
benefitting from meaningful price premium potential.
o Anglo American's market position: Anglo American's portfolio is exceptionally well-positioned
to benefit from this trend through its integrated Minas-Rio operation in Brazil that produces a
67% Fe product ideal for DRI pellet feed. Kumba in South Africa also produces premium quality
lump iron ore at 63% Fe that generates product premium with excellent thermal shock
resistance, lower fines formation in the blast furnace and increased sinter plant productivity,
with potential for further upgrading of product quality. Both Minas-Rio and Kumba assets have
contributed significantly to group cash flow in recent years and are well set to underpin
shareholder returns and growth ambitions across the portfolio. The recently announced
addition to Minas-Rio of the Serpentina endowment, with a strike length more than double that
of Minas-Rio's, provides a high value option to double Minas-Rio production by the mid-2030s,
with meaningful synergies.
- Woodsmith
Woodsmith is a Tier 1 resource entirely aligned with the demand trends of decarbonisation and food
security. Woodsmith has outstanding long term potential given the sheer scale and thickness of the
polyhalite orebody, lending itself to fully mechanised, low cost bulk mining, with minimal processing
required. This is as close as you can get to a mine-to-field multi-nutrient fertiliser product, translating
into its organic status and lower carbon footprint, ideally suited to the long term demand trend
caused by threats to food security and the increasing challenges around access to arable land and
the need to increase crop yield and support improved soil health.
Anglo American has high confidence, backed by its proven track record in project delivery, to develop
the Woodsmith project, which is currently on plan and on budget. In the near term, Anglo American
will slow the development of the Woodsmith project to support Anglo American's balance sheet
deleveraging, with capex for critical studies and other activities expected to total $200 million in 2025
and no capex in 2026. Anglo American continues to recognise the asset's unique resource and long
term value potential and will complete critical technical studies in 2025 to then enable syndication
for value with one or more strategic partners.
- Proven capabilities for value delivery:
Supporting Anglo American's more focused portfolio will be an aligned organisation structure that is
fit for purpose to leverage Anglo American's differentiated capabilities and global relationship
networks to deliver the full potential of the portfolio and each asset within it. The organisation will
be set up to unlock numerous future resource opportunities in the jurisdictions where Anglo
American's experience is most valuable and valued, in two of the most prospective mining regions –
South America and Southern Africa.
Such proven capabilities include the projects, technical and sustainability expertise that was integral
to delivering the Quellaveco project on time and budget despite numerous headwinds over many
years, including the global pandemic. This also benefited from Anglo American's deep-seated
regional capabilities that provide confidence in future project execution – these capabilities will be
of increasing importance given the social and environmental challenges associated with bringing to
the market new sources of critical raw materials, such as copper, particularly given the likely
locations of new high quality assets. Anglo American's global Marketing business will also be focused
accordingly and will continue to ensure the optimisation of Anglo American's products across the
value chain.
2. Compelling value proposition exclusively for Anglo American shareholders
This simplification of the portfolio stands to accelerate – and step up – value delivery exclusively for Anglo
American shareholders:
- Portfolio and structure transformation – 100% future-enabling product portfolio including 54% of
pro forma production from copper (2023 CuEq production basis), focused solely on products that
support the energy transition, improving global living standards, and food security.
- Outstanding organic growth – Defined pathway to >1mtpa copper by early 2030s through growth
options within the portfolio, with proven sustainability and project delivery capabilities.
- High quality financial profile – EBITDA margin increases from 31% to 46% on a 2023 pro forma
basis1.
- Efficiency and accountability – $1.7 billion lower cost with new portfolio configuration. This includes
an additional $0.8 billion of cost out from the end of 2025 2. The additional cost out will be achieved
from: additional reductions in operating expenditure; reduced corporate initiatives and other
funding commitments; implementing a fit for purpose organisation at the headquarters and country
offices to leverage Anglo American's differentiated capabilities and global relationship networks to
deliver the portfolio's full potential; and delivering the targeted operating model for the simplified
Anglo American portfolio.
- Disciplined capital allocation – less than 1.5x net debt:EBITDA leverage at the bottom of the cycle,
with 40% dividend payout maintained.
3. Clear pathway for portfolio value delivery – in the right way and for value
The pathway to portfolio simplification is designed to have shareholder value at its centre, with actions
intended to ensure that Anglo American's shareholders can maximise their participation in value creation,
while minimising frictional costs and mitigating execution risks. Anglo American intends to execute with
urgency, but not at the expense of shareholder value or without due regard to Anglo American's
stakeholders.
The key steps will include:
- Steelmaking Coal: Divest Anglo American's high quality steelmaking coal interests. Proceeds will be
used to reset Anglo American's balance sheet.
- Nickel: Urgent action is being taken to limit the impact of short term market pressure on cash flow
and, in parallel, exploring options for care and maintenance and divestment.
- Anglo American Platinum: Demerger of Anglo American Platinum in a way that both optimises value
for Anglo American shareholders and Anglo American Platinum shareholders, and ensures that such
separation is implemented in a responsible and orderly way, with due regard for ensuring Anglo
American Platinum's ongoing positive stakeholder value contribution. The demerger will enable
Anglo American's shareholders to gain direct participation in strong PGMs fundamentals and Anglo
American Platinum's leading competitive and market positions.
- De Beers: Having made significant progress towards finalising the sales agreement with the
Government of the Republic of Botswana, Anglo American is exploring the full range of options to
separate the De Beers business. This will give both Anglo American and De Beers a new level of
strategic flexibility to maximise value for both Anglo American and the Government of the Republic
of Botswana, as De Beers' shareholders.
Workforce considerations
- Anglo American acknowledges that many of the intended portfolio and other changes set out above
may create uncertainty for Anglo American's workforce, recognising the scale of the portfolio
transformation. Anglo American intends to implement the changes in a manner that recognises the
impact of such changes on its employees, with appropriate planning and engagement with relevant
stakeholders.
- However, Anglo American also expects the changes to present numerous opportunities for Anglo
American's workforce, particularly in relation to the acceleration of Anglo American's strategy and
the differentiated skills and capabilities required to deliver that strategy, as well as in the standalone
businesses that Anglo American plans to separate and/or divest. Anglo American's workforce will
be key in the delivery of the changes, and in the sustained success of all the businesses.
- Anglo American expects to take steps to retain the skills and talent required to deliver Anglo
American's full potential, as part of its review of its workforce arrangements to ensure alignment
with these portfolio changes.
- Anglo American will need to consider its global workforce arrangements to realise the opportunities
for its employees and to ensure delivery of the accelerated strategy. All options will be considered
and if any restructuring is proposed in due course, Anglo American will comply with all consultation
requirements contained in collective agreements and relevant legislation.
- The ongoing workforce and wider reconfigurations of Anglo American Platinum and Kumba, and
their associated employee consultation processes, as set out in February 2024, continue and are not
affected by this announcement.
Webcast of presentation:
A webcast of the presentation, starting at 11.00am UK time on 14 May 2024, can be accessed through
the Anglo American website at www.angloamerican.com
Footnotes:
1
2023 Pro-forma financials represent 2023 reported performance of the retained business adjusted for
the incremental $0.6bn of Corporate cost savings (relating to Corporate and business overheads and
Corporate projects and initiatives) included in the QFBS and $0.2bn of previously announced Corporate
cost savings not already recognised in 2023, reflecting the cost of the ongoing Corporate business
supporting the retained businesses.
2
The statements above labelled by way of footnote 2 include a quantified financial benefits statement
(the "QFBS Footnoted Statements") for the purposes of Rule 28 of the City Code on Takeovers and
Mergers (the "Takeover Code"), which have been reported on in accordance with the requirements of
the Takeover Code in the form set out in Part A to the Appendix (the "Quantified Financial Benefits
Statement"). Further information on the Quantified Financial Benefits Statement, including the basis of
preparation and principal assumptions, are set out in the Appendix to this announcement. As required
by Rule 28.1(a) of the Takeover Code, the Quantified Financial Benefits Statement has been reported on
by KPMG LLP ("KPMG"), as reporting accountant to Anglo American, and Centerview Partners UK LLP
("Centerview"), Goldman Sachs International ("Goldman Sachs") and Morgan Stanley & Co. International
plc ("Morgan Stanley"), as financial advisers to Anglo American, have provided the relevant reports
required under that Rule. Copies of these reports are included in Parts B and C of the Appendix to this
announcement and references in this announcement to the QFBS Footnoted Statements should be read
in conjunction with those parts of the Appendix. As required by Rule 28.1(a) of the Takeover Code, KPMG,
as reporting accountant to Anglo American, has provided a report (set out in Part B of the Appendix)
stating that, in its opinion, the Quantified Financial Benefits Statement has been properly compiled on
the basis stated. In addition, Centerview, Goldman Sachs and Morgan Stanley, as financial advisers to
Anglo American, have provided a report (set out in Part C of the Appendix) for the purposes of the
Takeover Code stating that, in their opinion and subject to the terms of the report, the Quantified
Financial Benefits Statement, for which the Anglo American directors are responsible, has been prepared
with due care and consideration. Each of KPMG, Centerview Partners, Goldman Sachs and Morgan
Stanley has given and has not withdrawn its consent to the publication of its report in the form and
context in which it is included.
For further information, please contact:
Anglo American
Media Investors
UK UK
James Wyatt-Tilby Tyler Broda
james.wyatt-tilby@angloamerican.com tyler.broda@angloamerican.com
Tel: +44 (0)20 7968 8759 Tel: +44 (0)20 7968 1470
Marcelo Esquivel Emma Waterworth
marcelo.esquivel@angloamerican.com emma.waterworth@angloamerican.com
Tel: +44 (0)20 7968 8891 Tel: +44 (0) 20 7968 8574
Rebecca Meeson–Frizelle Juliet Newth
rebecca.meeson-frizelle@angloamerican.com juliet.newth@angloamerican.com
Tel: + 44 (0)20 7968 1374 Tel: +44 (0)20 7968 8830
South Africa Michelle Jarman
Nevashnee Naicker michelle.jarman@angloamerican.com
nevashnee.naicker@angloamerican.com Tel: +44 (0)20 7968 1494
Tel: +27 (0)11 638 3189
Sibusiso Tshabalala
sibusiso.tshabalala@angloamerican.com
Tel: +27 (0)11 638 2175
The Company has a primary listing on the Main Market of the London Stock Exchange and
secondary listings on the Johannesburg Stock Exchange, the Botswana Stock Exchange, the
Namibia Stock Exchange and the SIX Swiss Exchange.
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Centerview Partners UK LLP (Financial Adviser to Anglo American)
James Hartop Tel: +44 (0) 20 7409 9700
Edward Rowe
Fiona McHardy
Goldman Sachs International (Financial Adviser to Anglo American)
Mark Sorrell Tel: +44 (0) 20 7774 1000
David Hammond
Bertie Whitehead
Morgan Stanley & Co. International plc (Financial Adviser to Anglo American)
Simon Smith Tel: +44 (0) 20 7425 8000
Anthony Zammit
Tom Perry
The person responsible for this announcement is Richard Price, Legal & Corporate Affairs Director
(Company Secretary), Anglo American plc.
IMPORTANT NOTICES
Centerview Partners UK LLP ("Centerview"), which is authorised and regulated in the United Kingdom by
the Financial Conduct Authority, is acting exclusively as financial adviser to Anglo American and no one
else in connection with the matters set out in this announcement and will not be responsible to anyone
other than Anglo American for providing the protections afforded to its clients or for providing advice in
relation to the contents of this announcement or any other matters referred to in this announcement.
Neither Centerview nor any of its affiliates, nor any of Centerview's and such affiliates' respective
members, directors, officers, controlling persons or employees owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, consequential, whether in contract, in tort, in delict,
under statute or otherwise) to any person who is not a client of Centerview in connection with this
announcement, any statement contained herein or otherwise.
Goldman Sachs International, ("Goldman Sachs") which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting exclusively for Anglo American and no one else in connection with the matters
referred to in this announcement and will not be responsible to anyone other than Anglo American for
providing the protections afforded to clients of Goldman Sachs International, or for providing advice in
relation to the matters referred to in this announcement.
Morgan Stanley & Co. International plc ("Morgan Stanley") which is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation
Authority in the UK is acting as financial adviser to Anglo American and no one else in connection with the
matters set out in this announcement. In connection with such matters, Morgan Stanley, its affiliates and
their respective directors, officers, employees and agents will not regard any other person as their client,
nor will they be responsible to any other person for providing the protections afforded to their clients or
for providing advice in relation to the contents of this announcement or any other matter referred to
herein.
Forward-looking statements and third party information
This document includes forward-looking statements. All statements other than statements of historical
facts included in this document, including, without limitation, those regarding Anglo American's financial
position, business, acquisition and divestment strategy, dividend policy, plans and objectives of
management for future operations, prospects and projects (including development plans and objectives
relating to Anglo American's products, production forecasts and Ore Reserve and Mineral Resource
positions) and sustainability performance related (including environmental, social and governance) goals,
ambitions, targets, visions, milestones and aspirations, are forward-looking statements. By their nature,
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, unanticipated
downturns in business relationships with customers or their purchases from Anglo American, mineral
resource exploration and project development capabilities and delivery, recovery rates and other
operational capabilities, safety, health or environmental incidents, the effects of global pandemics and
outbreaks of infectious diseases, the impact of attacks from third parties on our information systems,
natural catastrophes or adverse geological conditions, climate change and extreme weather events, the
outcome of litigation or regulatory proceedings, the availability of mining and processing equipment, the
ability to obtain key inputs in a timely manner, the ability to produce and transport products profitably,
the availability of necessary infrastructure (including transportation) services, the development, efficacy
and adoption of new or competing technology, challenges in realising resource estimates or discovering
new economic mineralisation, the impact of foreign currency exchange rates on market prices and
operating costs, the availability of sufficient credit, liquidity and counterparty risks, the effects of inflation,
terrorism, war, conflict, political or civil unrest, uncertainty, tensions and disputes and economic and
financial conditions around the world, evolving societal and stakeholder requirements and expectations,
shortages of skilled employees, unexpected difficulties relating to acquisitions or divestitures, competitive
pressures and the actions of competitors, activities by courts, regulators and governmental authorities
such as in relation to permitting or forcing closure of mines and ceasing of operations or maintenance of
Anglo American's assets and 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 document. Anglo American expressly disclaims any obligation or undertaking (except as required
by applicable law, the City Code on Takeovers and Mergers, the UK Listing Rules, the Disclosure and
Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities
exchange of the JSE Limited in South Africa, the SIX 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.
No statement in this announcement constitutes, or should be construed, as a profit forecast for the
purposes of Rule 28 of the City Code on Takeovers and Mergers (the "City Code") for any period, and
nothing in this document should be interpreted, or construed, to mean that future earnings for Anglo
American or future earnings per share of Anglo American, as appropriate, for the current or future
financial years will necessarily match or exceed its historical published earnings for Anglo American or per
Anglo American share. Certain statistical and other information included in this document is sourced from
third party sources (including, but not limited to, externally conducted studies and trials). As such it has
not been independently verified and presents the views of those third parties, but may not necessarily
correspond to the views held by Anglo American and Anglo American expressly disclaims any responsibility
for, or liability in respect of, such information.
General information
In accordance with Rule 26.1 of the Code, a copy of this announcement will be available subject to certain
restrictions relating to persons resident in restricted jurisdictions on Anglo American's website at
www.anglo american.com by no later than 12 noon (London time) on the business day following the date
of this announcement. The content of the website referred to in this announcement is not incorporated
into and does not form part of this announcement.
The release, publication or distribution of this announcement in jurisdictions outside the United Kingdom
may be restricted by law or regulation and therefore persons into whose possession this announcement
comes should inform themselves about, and observe, such restrictions. Any failure to comply with the
restrictions may constitute a violation of the securities laws or regulations of any such jurisdictions.
This document is for information purposes only and does not constitute, nor is to be construed as, an offer
to sell or the recommendation, solicitation, inducement or offer to buy, subscribe for or sell shares in Anglo
American or any other securities by Anglo American or any other party. Further, it should not be treated
as giving investment, legal, accounting, regulatory, taxation or other advice and has no regard to the
specific investment or other objectives, financial situation or particular needs of any recipient.
Quantified Financial Benefits Statement
Except as expressly stated, nothing in this announcement constitutes a quantified financial benefits
statement for the purposes of Rule 28 of the City Code. The statements which are labelled as containing
a quantified financial benefits statement relate to future actions and circumstances which, by their nature,
involve risks, uncertainties and contingencies. As a result, any targets, actions or outcomes referred to
may not be achieved, may be achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. Further details are set out in the Appendix to this
announcement.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities
of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer period and, if later, following the
announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure
must contain details of the person's interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An
Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30
pm (London time) on the 10th business day following the commencement of the offer period and, if
appropriate, by no later than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first identified. Relevant persons who deal in
the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of
relevant securities of the offeree company or of any securities exchange offeror must make a Dealing
Disclosure if the person deals in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made
by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or
informal, to acquire or control an interest in relevant securities of an offeree company or a securities
exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing
Disclosures must also be made by the offeree company, by any offeror and by any persons acting in
concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position
Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover
Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in
issue, when the offer period commenced and when any offeror was first identified. You should contact the
Panel's Market Surveillance Unit on +44 (0) 20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing Disclosure.
Appendix
Part A
Quantified Financial Benefits Statement
"The Anglo American Directors expect that corporate restructuring intended as part of simplifying the
Anglo American portfolio and incremental opex opportunities can deliver at least $800 million of pre-tax
recurring cost benefits on an annual run-rate basis from the end of 2025.
The quantified cost benefits are expected to be realised primarily from:
- Corporate and business overheads: Right-sizing support functions and delivering the target
operating model for the simplified Anglo American portfolio (approximately 42%);
- Corporate projects and initiatives: Targeted savings from third party spend, investment
prioritisation and reduction of change initiatives within Group and corporate functions
(approximately 39%);
- Opex benefits: Incremental sustainable unit cost benefits driven by operational rightsizing and
restructuring in certain existing cost savings programmes (expected to contribute approximately
19% of full run-rate pre-tax cost benefits).
The Directors estimate that the realisation of the quantified cost benefits will result in one-off costs to
achieve of approximately $400 million, incurred by the end of 2025.
Potential areas of dis-benefit have been considered in quantifying the expected cost benefits and none
have been identified or are expected to arise.
The identified cost benefits reflect both the beneficial elements and relevant costs.
In addition to the quantified benefits identified above, The Directors also believe that incremental value
can be created through evolving to a more operationally and asset-focused structure.
Bases of belief, assumptions and sources
- The assessment and quantification of the potential cost benefits has been informed by the Anglo
American Group's experience of assessing and executing past cost savings programmes and
organisational restructuring activities.
- There is no assumed change to ownership or control of the Anglo American Group.
- Estimated opex benefits are expected to arise from the Anglo American underlying businesses
(excluding portfolio rationalisation as announced in the Regulated News Service document
"Anglo American accelerates delivery of strategy to unlock significant value" published on 14
May 2024), and are incremental to previously announced savings estimates. Additionally, the
baselines used for the basis of the Quantified Financial Benefits Statement have been adjusted
to reflect this.
- The cost base used as the basis for the Quantified Financial Benefits Statement are Anglo
American audited financial results for the year ending 31 December 2023 (with adjustments
made to reflect expected future changes in certain costs) and headcount information as at 31
March 2024.
- The expected benefits have been assessed and are stated on a pre-recharge and allocation basis.
- Ongoing costs and dis-benefits of delivery have been considered.
- Stretch case of benefits has also been prepared, alongside several potential unquantified
upsides.
- The Anglo American Directors have assumed that the cost benefits are substantively within their
control, albeit that certain elements are dependent in part on negotiations with third parties.
- The Anglo American Directors have, in addition, made the following assumptions, each of which
is outside the influence of the Anglo American Board:
o there will be no material change to macroeconomic, political, inflationary, regulatory
or legal conditions in the markets or regions in which the Anglo American Group
operates that will materially impact the implementation of the benefits plans or costs
to achieve the proposed cost savings;
o there will be no material change in current foreign exchange rates or interest rates;
o there will be no material change in accounting standards; and
o there will be no change in tax legislation or tax rates or other legislation or regulation
in the countries in which the Anglo American Group operate that could materially
impact the ability to achieve any benefits."
Reporting
As required by Rule 28.1(a) of the Code, KPMG, as reporting accountants to Anglo American, have
provided a report (set out in Part B of the Appendix) stating that, in their opinion, the Quantified Financial
Benefits Statement has been properly compiled on the basis stated. In addition, Centerview Partners UK
LLP ("Centerview"), Goldman Sachs International ("Goldman Sachs") and Morgan Stanley & Co.
International plc ("Morgan Stanley"), as financial advisers to Anglo American have provided a report (set
out in Part C of the Appendix) stating that, in their opinion, and subject to the terms of the report, the
Quantified Financial Benefits Statement, for which the Directors of Anglo American are responsible, has
been prepared with due care and consideration. Copies of these reports are included in the next parts of
this Appendix below. Each of KPMG, Centerview, Goldman Sachs and Morgan Stanley have given and not
withdrawn their consent to the publication of their reports in the form and context in which they are
included.
Notes
The assessment and quantification of the potential cost savings relate to future actions and circumstances
which, by their nature, involve risks, uncertainties and contingencies. As a result, the potential cost
savings may not be achieved, or may be achieved later or sooner than estimated, or those achieved could
be materially different from those estimated. As a result, and given the fact that the changes relate to
the future, the resulting cost savings may be materially greater or less than those estimated. No
statement in the Quantified Financial Benefits Statement or in this announcement generally should be
construed as a profit forecast or interpreted to mean that Anglo American's earnings in the year to 31
December 2024, or any subsequent period, would necessarily match or be greater than or be less than
those of Anglo American for the relevant preceding financial period or any other period.
Part B
Accountant's Report on Quantified Financial Benefits Statement
The Directors
Anglo American plc
17 Charterhouse Street
London
EC1N 6RA
Centerview Partners UK LLP
1 Sherwood Street
London
W1F 7BL
Goldman Sachs International
25 Shoe Lane
London
EC4A 4AU
Morgan Stanley & Co. International plc
25 Cabot Square
Canary Wharf
London
E14 4QA
14 May 2024
Ladies and Gentlemen
Anglo American plc
We report on the statement ('the Statement') made by the directors of Anglo American plc ('the
Directors') in Appendix Part A of the Regulated News Service document "Anglo American accelerates
delivery of strategy to unlock significant value" published on 14 May 2024 ('the Announcement') to the
effect that:
"The Anglo American Directors expect that corporate restructuring intended as part of simplifying the
Anglo American portfolio and incremental opex opportunities can deliver at least $800 million of pre-tax
recurring cost benefits on an annual run-rate basis from the end of 2025.
The quantified cost benefits are expected to be realised primarily from:
- Corporate and business overheads: Right-sizing support functions and delivering the target
operating model for the simplified Anglo American portfolio (approximately 42%);
- Corporate projects and initiatives: Targeted savings from third party spend, investment
prioritisation and reduction of change initiatives within Group and corporate functions
(approximately 39%);
- Opex benefits: Incremental sustainable unit cost benefits driven by operational rightsizing and
restructuring in certain existing cost savings programmes (expected to contribute approximately
19% of full run-rate pre-tax cost benefits).
The Directors estimate that the realisation of the quantified cost benefits will result in one-off costs to
achieve of approximately $400 million, incurred by the end of 2025.
Potential areas of dis-benefit have been considered in quantifying the expected cost benefits and none
have been identified or are expected to arise.
The identified cost benefits reflect both the beneficial elements and relevant costs.
In addition to the quantified benefits identified above, The Directors also believe that incremental value
can be created through evolving to a more operationally and asset-focused structure."
This report is required by Rule 28.1(a) of the City Code on Takeovers and Mergers ('the City Code') and
is given for the purpose of complying with that requirement and for no other purpose.
Opinion
In our opinion, the Statement has been properly compiled on the basis stated.
The Statement has been made in the context of the disclosures in Appendix Part A of the
Announcement setting out, inter alia, the basis of the Directors' belief (including the principal
assumptions and sources of information) supporting the Statement and their analysis and explanation
of the underlying constituent elements.
Responsibilities
It is the responsibility of the Directors to prepare the Statement in accordance with the requirements of
Rule 28 of the City Code.
It is our responsibility to form an opinion, as required by Rule 28.1(a) of the City Code as to whether the
Statement has been properly compiled on the basis stated and to report that opinion to you.
Save for any responsibility which we may have to those persons to whom this report is expressly
addressed, to the fullest extent permitted by law we do not assume any responsibility and will not
accept any liability to any other person for any loss suffered by any such other person as a result of,
arising out of, or in connection with this report or our statement, required by and given solely for the
purposes of complying with Rule 23.2 of the City Code, consenting to its inclusion in the
Announcement.
Basis of preparation of the Statement
The Statement has been prepared on the basis stated in Appendix Part A of the Announcement.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the Financial
Reporting Council in the United Kingdom (the 'FRC').
We are independent, and have fulfilled our other ethical responsibilities, in accordance with the
relevant ethical requirements of the FRC's Ethical Standard as applied to Investment Circular Reporting
Engagements.
We have discussed the Statement, together with the underlying plans, with the Directors and
Centerview Partners UK LLP, Goldman Sachs International and Morgan Stanley & Co. International plc.
Our work did not involve any independent examination of any of the financial or other information
underlying the Statement.
We planned and performed our work so as to obtain the information and explanations we considered
necessary in order to provide us with reasonable assurance that the Statement has been properly
compiled on the basis stated.
Our work has not been carried out in accordance with auditing or other standards and practices
generally accepted in other jurisdiction(s) and accordingly should not be relied upon as if it had been
carried out in accordance with those standards and practices.
We do not express any opinion as to the achievability of the benefits identified by the Directors in the
Statement. The Statement is subject to uncertainty as described in the Appendix to the
Announcement. Since the Statement relates to the future and may therefore be affected by unforeseen
events, we express no opinion as to whether the actual benefits achieved will correspond to those
anticipated in the Statement and the differences may be material.
Yours faithfully
KPMG LLP
KPMG LLP
15 Canada Square, Canary Wharf
London
E14 5GL
United Kingdom
Part C
Report from Centerview Partners UK LLP, Goldman Sachs International and Morgan Stanley & Co.
International plc
The Board of Directors
Anglo American plc (the "Company")
17 Charterhouse Street
London
EC1N 6RA
14 May 2024
Dear Sirs/Madams,
We refer to the quantified financial benefits statement, the bases of belief thereof and the notes thereto
(the "Statement") set out in Part A of the Appendix of the announcement issued by the Company (the
"Announcement"), for which the board of directors of the Company (the "Directors") are solely
responsible under Rule 28.3 of the City Code on Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions, bases of calculation and sources of
information referred to therein), with the Directors and those officers and employees of the Company
who have developed the financial forecasts underlying the estimated cost savings. The Statement is
subject to uncertainty as described in the Announcement and our work did not involve an independent
examination, or verification, of any of the financial or other information underlying the Statement.
We have relied upon the accuracy and completeness of all the financial and other information provided
to us by or on behalf of the Company, or otherwise discussed with or reviewed by us, in connection with
the Statement, and we have assumed such accuracy and completeness for the purposes of providing this
letter.
We do not express any view as to the achievability of the quantified financial benefits, whether on the
basis identified by the Directors in the Statement, or otherwise.
We have also reviewed the work carried out by KPMG LLP ("KPMG") and have discussed with KPMG its
opinion addressed to you and us on this matter and which is set out in Part B of the Appendix to the
Announcement.
On the basis of the foregoing, we consider that the Statement, for which the Directors are solely
responsible, has been prepared with due care and consideration.
This letter is provided to you solely having regard to the requirements of, and in connection with, Rule
28.1(a)(ii) of the Code and for no other purpose. We accept no responsibility to the Company, its
shareholders or to any person other than the Directors in respect of the contents of this letter. We are
acting exclusively as financial advisers to the Company and no one else and it was for the purpose of
complying with Rule 28.1(a)(ii) of the Code that the Company requested us to prepare this letter relating
to the Statement. No person other than the Directors can rely on the contents of, or the work undertaken
in connection with, this letter, and to the fullest extent permitted by law, we expressly exclude and
disclaim all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter,
its contents or the work undertaken in connection with this letter or any of the results or conclusions that
may be derived from this letter or any written or oral information provided in connection with this letter,
and any such liability is expressly disclaimed except to the extent that such liability cannot be excluded
by law.
Yours faithfully,
For and on behalf of For and on behalf of
Centerview Partners UK LLP Goldman Sachs International
For and on behalf of
Morgan Stanley & Co. International plc
Legal Entity Identifier: 549300S9XF92D1X8ME43
Date: 14-05-2024 08:20:00
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