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AngloAmerican results 2009-02-20

This document provides an annual review and financial results for Anglo American for 2008. Key points include: - Anglo American achieved record operating profits from core operations despite a significant reduction in commodity prices in the second half of 2008. - Safety performance showed continued improvement over 2007. - Actions were taken to position the company for the downturn, including a over 50% reduction in capital expenditures for 2009 and cost reduction programs. - Underlying earnings were $5.8 billion for 2008, down 9% from 2007, with an effective tax rate of 31.8% and return on capital employed of 36.8%.

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1 2008 Annual Results 20 February 2009
2 Agenda • Cynthia Carroll, CEO: – Operational review of 2008 – Positioning Anglo American through the cycle • René Médori, FD: – Financial review of 2008 • Cynthia Carroll: – Outlook • Question and Answer session
3 2008 Review Cynthia Carroll
4 Summary • Strong performance in 2008 – Major improvement in safety record – Record operating profit from core operations – Secured new order mining rights across Anglo American’s businesses in South Africa • Substantial progress on our key strategic initiatives – New $1 billion operating profit target from Asset Optimisation – Continued delivery on cost reduction programmes – Further portfolio restructuring and enhancements • Significant reduction of commodity prices in H2 • Positioning Anglo American through the cycle – 2009 capital expenditure reduced by over 50% – Cost reduction programme underway – Dividend payments suspended – Long term growth options preserved, new projects well timed to enter production from 2011
5 Safety Fatality Rate LTIFR 2007 2008 • Continued downward trend in fatalities • 17% improvement in Lost Time Injury Frequency Rate • Virtually all major divisions progressed towards eliminating fatalities and improved lost time injury rate performance • Examples of outstanding achievements: — Anglo Platinum’s Union Mine in South Africa: more than 6 million fatality-free shifts — Barro Alto nickel project in Brazil: 966 days without a Lost Time Injury — Anglo Ferrous Brazil: 3.5 million hours without a Lost Time Injury 40 27 Anglo Managed Operations 1.27 1.05 Anglo Managed Operations
6 Record core operating profit • More than tripling of operating profit in Coal with record production in all major locations • Doubling of operating profit in Ferrous Metals and Industries with record production of iron ore and manganese ore and alloys • Strong financial performance in Base Metals and Platinum despite rapidly deteriorating H2 pricing environment Base Metals 24% Platinum 22% Ferrous 27% Coal 22% Diamonds 5% 2008 Split of Operating Profit(1) Base Metals 46% Platinum 29% Ferrous 13% Coal 7% Diamonds 5% 2007 Split of Operating Profit(1) (1) Core operations excluding Corporate Activities and Unallocated costs and Exploration costs
7 Precious • Refined platinum production of 2.39m oz, despite flooding at Amandelbult, Eskom load shedding and safety stoppages • Improved H2 08: refined production of 1.39m oz; +38% vs. H1 08 and +8% vs. H2 07 • Targeting 2.4m oz refined platinum production in FY09 • Production of 48.1 m carats, 6% lower than 2007 • Operating profit (Anglo share) up 5% to $508m • Three new mines opened in FY08: Snap Lake, Victor and Voorspoed • 2009 production will be significantly reduced 2007 2008 2007 2008 Platinum Diamonds Operating Profit ($m) Operating Profit ($m) 2,697 2,226 484 508
8 Base Metals and Industrial Minerals • Record production volumes at Los Bronces, Mantoverde; higher production at Collahuasi • Sharply lower H2 demand and pricing environment combined with higher input costs (e.g. fuel, power, sulphur and sulphuric acid) for the year • Targeting 5% growth in copper production in 2009; other base metals production flat (1) Includes Nickel, Niobium, Mineral Sands and Phosphates Zinc Nickel(1) Copper 2007 2008 4,338 2,505 • Held market share in difficult UK markets • Successfully maintained Tarmac International’s operating profit year-on-year • $101m of cost savings generated 2007 2008 474 228 Base Metals Industrial Minerals Operating Profit ($m) Operating Profit ($m)
9 • Record operating profit of $2.9bn – Higher iron ore production, up 13% to 36.7mtpa at Kumba Iron Ore; higher iron ore and manganese ore prices, partially offset by higher costs of fuels & lubricants, labour and mobile crushing • Acquired control of Minas-Rio and Amapá • FY09 production +14% at Kumba Iron Ore, driven by Sishen Expansion Project Bulks • Record operating profit of $2.2bn – Higher met coal production and higher met and thermal coal prices, partially offset by higher royalties, port & rail costs and fuel & power costs • Rapid decline in global steel production continues to affect demand for met coal • Thermal coal demand remains relatively strong • FY09 production to decrease year-on-year 2007 2008 2,240 614 South America Australia South Africa Coal Ferrous Metals and Industries Operating Profit ($m) 2007 2008 2,935 1,432 Kumba Iron Ore Samancor Manganese Other Operating Profit ($m)
10 Positioning Anglo American through the cycle Cynthia Carroll
11 Near-term market weakness • Strong demand across core commodities in H1 08 has softened • Since mid-2008, markets characterised by deteriorating demand, increasing stocks and rapidly declining prices • Demand for commodities in 2009 is likely to remain weak 900 1100 1300 1500 1700 1900 2100 2300 H1 08 H2 08 $/oz Platinum price 1.00 1.50 2.00 2.50 3.00 3.50 4.00 Copper price H1 08 H2 08$/oz $1,526/oz Jan $2,069/oz Jul $922/oz Dec $3.01/lb Jan $3.94/lb Jul $1.32/lb Dec
12 Addressing near-term challenges • Actions taken to deal with rapidly changing price environment and increased level of gearing • Ensuring cash preservation and maximising value for shareholders • Optimisation programmes continue to drive cost and efficiency improvements • Long term growth options preserved: new projects well timed to enter production from 2011
13 (I) Conserving cash through capex reduction • Completed a wide-ranging review of capital expenditure following the unprecedented decline in commodity prices • 2009 capital expenditure plans reduced more than 50% to $4.5bn, including $1.3bn stay-in-business capex (74% of depreciation) • Reducing pressure on balance sheet and maintaining flexibility for future growth when commodity outlook improves Actions taken 4.5TOTAL GROUP 1.3 Group stay-in- business Zondagsfontein Q2 2009—0.4Coal +12 months to Q2 2012Minas-Rio Phase 10.9Ferrous Metals +8 months to Q4 2011 +12 months to Q1 2011 Los Bronces Barro Alto1.4Base Metals 2011-2017 Amandelbult No.4 Shaft Twickenham Styldrift0.6Platinum New project timeframe(1) Projects affected Targeted 2009 project capex ($bn)Business Unit (1)First production date
14 (II) Production cuts • Reduced platinum output: target of 2.4 million ounces for FY09 • Plans to grow metallurgical coal production by 10% for FY09 halted; production to be marginally below FY08 • FY09 thermal coal production to decrease by 2 mt year-on-year • Significantly reduced diamond production • Production levels will be monitored against economic developments and further cuts will be made if necessary; creating maximum flexibility for the future Actions taken
15 (III) Reducing our cost base • Group cost savings: $348 million achieved in 2008, including $217 million from Procurement • Headcount reductions: expected 19,000 reduction in 2009, in line with growth and development plans • Aggressive supply chain management to capture full benefits from recent reduction in input costs Actions taken
16 (IV) New Asset Optimisation target of $1 billion • Asset Optimisation and Procurement to deliver total benefits of $2 billion over three years • Significant progress made during year: – Roll out of AOS structures now complete across all business units – Appointed AOS managers in each division – Global AOS information management platform being developed to aide knowledge and best practice sharing • Emerging common themes across business units: – Mine planning and execution – Capital projects management – Asset management – Equipment performance – Metals recovery quality and market link Actions taken
17 Favourable cost positions across the group • Majority of production in lower half of cost curve: – 66% of our copper production is in the lower half of the industry C1 cost curve, improving to c. 80% post completion of Los Bronces expansion – Iron Ore production at Sishen in 1st quartile of cost curve – 90% of thermal coal production in 1st quartile of cost curve; 95% of Hard Coking Coal production in 1st half of cost curve • Cost reductions at Anglo Platinum through: – Productivity improvements – Restructuring of large mines into smaller units – Reduction of contractor headcount – Supply chain benefits • Continued investment in and development of assets in lower half of cost curve in attractive markets • Actions designed to ensure we create long term value for our shareholders
18 Recap of key messages • Record core operating profit • Major safety improvements • $1 billion three-year Asset Optimisation target set • Decisive actions taken to address market challenges
19 Financial Results René Médori
20 2008 Financial Results 5.2 37.8% 12.1 4.1 5.8 31.8% 2007 -9% change 11.0 36.8% 11.8 5.2 5.2 33.4% 2008 Effective tax rate (%) ROCE (%) Closing Net debt EBITDA Capex Underlying earnings $bn 10.110.1Operating profit Results shown before special items and remeasurements and include share of associates Underlying earnings are stated after minority interests Core operations: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Samancor Manganese, Anglo Ferrous Brazil) 8.9 +10%9.8Operating profit – core Total group financials: Underlying EPS ($) 2007 $4.40 H2 2007 H2 2008H1 2007 2.222.18 1.46 H1 2008 2.90 2008 $4.36 (-1%)
21 Operating profit variances Operating profit is stated for core operations: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Samancor Manganese, Anglo Ferrous Brazil), before special items and remeasurements and including share of associates $ million (802) 1,215 (919) (740) (1,531) (216) 988 (248) 3,124 8,894 9,765 2007 Price - Traded Price - Bulks Exchange Volume Inflation Cash Costs Non-cash costs Associates Other 2008
22 Operating profit variances: Price (Traded) $ million Stated for core operations: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Samancor Manganese, Anglo Ferrous Brazil) Base Metals $(1,608)m (802)8,894 2007 Price-Traded Traded Metals (484) (491) 806 633 Copper Nickel Zinc PGMs (633) LME - Copper 0 50 100 150 200 250 300 350 400 450 Dec 2007 Mar 2008 Jun 2008 Sep 2008 Dec 2008 USc/lb 30/06/2008 Provisional Pricing 389 USc/lb 31/12/2007 Provisional Pricing 302 USc/lb 31/12/2008 Provisional Pricing 139 USc/lb Cu marked-to-market impact: H1: +$265m H2: -$850m Full Year: -$585m
23 Operating profit variances: Price (Bulks) $ million Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) $ million Price variance breakdown $ million Bulks 585 805 1,734 Coal Iron Ore Fertiliser & Other 3,124 (802)8,894 2007 Price - Traded +206%30098 Goonyella Benchmark – Hard Coking Coal ($/t) 08/09 Japanese Financial Year 2008 Calendar Year 08/09 Japanese Financial Year Period +63%8854 Kumba Iron Ore Achieved Price - Export ($/t)* 120 2008 +90% % change 63 2007 RSA API-4 Benchmark - Thermal Coal ($/t) *Price increase of 93% from 1 April 2008 for 2008/2009 iron ore contracts Price- Bulks
24 Operating profit variances: FX and volume $ million (1)Platinum is equivalent refined production Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) Exchange Sensitivity +/- 0.50 ZAR/USD: $336m +/- 0.10 AUD/USD: $92m (919) 2,322 8,894 2007 Price Exchange Volume H2 +$1,119m H1 +$96m 1,215 Nickel Platinum(1) Coal Copper Iron Ore Production change 2008 vs. 2007 -21% +4% -2% +15% 0% -10% sales volume 6.00 7.00 8.00 9.00 10.00 11.00 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 ZAR/USD 0.50 0.70 0.90 1.10 1.30 1.50 1.70 AUD/USD AUD/USD ZAR/USD Key Exchange Rate Trend ZAR 08 Avg: 8.27 07 Avg 7.05 AUD 08 Avg: 1.17 07 Avg 1.19
25 Operating profit variances: Costs $ million Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil); (1)Source: US Energy Information Administration Oil Price Sensitivity- Operating Profit impact +/- $10/bbl: $70m 7.1% increase in non controllable cash costs 5.5% increase in controllable cash costs (667) (188)(144) (222) (310) (919) (740) 2,322 8,894 2007 Price Exchange Volume Inflation Energy Sulphur/ Sulphuric Acid Royalties Freight/ Transport Other Cash Costs 1,215 ICE Brent Crude ($bbl) 0 20 40 60 80 100 120 140 160 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 $63/bbl $82/bbl $110/bbl $88/bbl -$164m -$21m Operating profit impact (1)
26 Capital expenditure and net debt (0.7)Dividends received (1.6)Currency movement 0.5Net interest paid 0.6Share buyback 11.0 (0.1) 2.3 8.6 (1.5) 2.2 5.1 (9.6) 5.2 $bn 37.8% 20.0% Gearing 2008 Closing net debt Other Dividends paid Acquisitions(2) Disposals Cash tax paid Capital expenditure Operating cashflows 2008 Opening net debt Capex ($ million) 4,500 125 4,5005,1464,117Total 246323579Non-core and other(1) (1) Non-core includes AIM, Mondi, Highveld, Tongaat Hulett and AngloGold Ashanti. Other includes corporate capex Los Bronces Minas-Rio Barro Alto SIB Major Projects (2) Includes $0.7bn debt acquired on acquisitions 1,203 1,591 1,175 1,111 2,335 1,928 1,649 981 549 960 338 459 502 713 506 500 489 2007 2008 2009 2010
27 Debt evolution & gearing External net debt: $3.55bn 3.3 11.0 5.2 37.8% 12.9% 20.0% - 2.0 4.0 6.0 8.0 10.0 12.0 2006 2007 2008 $bn 0% 5% 10% 15% 20% 25% 30% 35% 40% Net Debt Gearing %
28 Overview of committed financing Summary of the Group’s bonds and committed bank facilities 2012$0.9bn$2.5bnCore facility2 2011$4.5bn$4.5bnAcquisition facility 2009$1.1bn$2.9bnBridge loan facility 20184$0.0bn$0.6bnBNDES3 $13.4bn$19.0bnTotal bonds & committed facilities 2009-2018$2.5bn$3.5bnOther committed facilities $10.3bn$15.9bnTotal committed facilities 2009-2012$0.3bn$0.3bnOther Bonds $3.1bn$3.1bnTotal Bonds1 2010$0.4bn$0.4bnGBP 300m Bond 2015$1.6bn$1.6bnEUR 1,000m Bond 2018$0.8bn$0.8bnGBP 400m Bond $1.9bn Facility amount $1.3bn Utilisation at 31Dec 08 2009-2013AASA Bank Facilities2 AA plc bank facilities MaturityDescription 1Including the impact of interest rate and currency swaps 2Deductions to provide back-up for outstanding Commercial Paper of $1.1bn 3Dedicated Barro Alto financing 4Amortising profile Refinancing in 2009/2010 •Anglo American’s only significant maturing debt facility in 2009 is a $3 billion revolving bank facility, of which $1.1 billion was drawn at 31/12/08. In addition, the GBP 300m Bond matures in December 2010 Committed bank facilities: •$0.5 billion (due April 2009) •$1.5 billion (due March 2010) •$2.3 billion (due 2012 and beyond) Agreement to provide shareholder loan of $500m (Anglo share $225m) Undrawn committed facilities and cash •At 31 December, the Group had over $7 billion undrawn committed facilities and cash, after making deductions to provide back-up for outstanding Commercial Paper •In addition, the Group has a $1 billion dedicated, committed financing facility for Minas- Rio, subject to certain disbursement conditions
29 Outlook Cynthia Carroll
30 Market outlook • Markets are expected to remain weak and uncertain in the short term • However, medium-to-longer term market fundamentals remain attractive • We continue to invest in profitable growth with a bias towards copper, export bulks and platinum
31 Future production growth is well-timed Copper 2009 2010 2011 2012 2013 Note: Selected approved projects *Production represents average over first ten years of the project **Replacement production Los Bronces +173ktpa* Barro Alto 36ktpa Minas Rio 26.5Mtpa Sishen South 9Mtpa Amandelbult No. 4 Shaft** 271kozpa Seaborne Iron Ore Twickenham 180kozpa Nickel Platinum Full production 2016-2019
32 Major growth projects in: • Copper • Iron ore • Coal Anglo American growth profile 2008 2012 500 900 Ktpa 650 2008 2012 50 75 Mtpa 40 90 100 Mtpa 115 Copper production growth Iron ore production growth Coal production growth 2010 2010 2008 20122010 Well timed to enter production in 2011
33 Outlook • Weak current market conditions, but medium-to-longer term fundamentals remain attractive • Anglo well placed to create long term shareholder value
34 Question and Answer session
35 Appendix
36 Market prices Average Price 2008 2007 Platinum - $/oz 1,585 1,304 Palladium - $/oz 355 355 Copper – cents/lb 315 323 Nickel – cents/lb 953 1,686 Zinc – cents/lb 85 147 Coal: Thermal RSA API-4 index average - $/tonne 120 63
37 Underlying earnings sensitivities US$m 10% change in platinum price + 144 10% change in palladium price + 22 10% change in coal price + 349 10% change in copper price + 275 10% change in nickel price + 50 10% change in zinc price + 45 10% change in iron ore price + 88 10% change in SA rand / US$ + 279 10% change in AUD/US$ + 110 10% change in GBP/US$ + 14 10% change in Chilean Peso/US$ + 45 Stated after tax at marginal rate Sensitivities are the average of the positive and negative and reflect the impact of a 10% change in average prices received and exchange rates during 2008
38 Analysis of underlying earnings $m 2008 2007 Base Metals 1,369 3,100 Platinum 1,313 1,299 Ferrous Metal & Industries 1,396 605 Coal 1,581 490 Diamonds 256 239 Industrial Minerals 173 384 Exploration (200) (145) Corporate Activities & Unallocated Costs (651) (495) Paper & Packaging - 189 Gold - 95 Underlying Earnings 5,237 5,761 Underlying earnings is profit attributable to equity holders before special items and remeasurements and including share of underlying earnings of associates
39 Analysis of operating profit $m 2008 2007 Base Metals 2,505 4,338 Platinum 2,226 2,697 Ferrous Metal & Industries - core 2,843 1,210 Coal 2,240 614 Diamonds 508 484 Exploration (212) (157) Corporate Activities & Unallocated Costs (345) (292) Core 9,765 8,894 Ferrous Metal & Industries – non core 92 222 Industrial Minerals 228 474 Paper & Packaging - 324 Gold - 202 Operating Profit 10,085 10,116 Operating profit before special items and remeasurements and including share of operating profit from associates
40 Regional analysis Operating Profit $m 2008 2007 South Africa 5,107 4,291 Rest of Africa 467 693 Europe (183) 513 Americas 2,956 3,942 Australasia & Asia 1,738 151 Total 10,085 9,590 Operating profit prepared on a continuing business basis (excludes Paper & Packaging and AngloGold Ashanti in 2007) before special items and remeasurements and including share of operating profit from associates
41 Capital expenditure $m 2008 2007 Base Metals 1,494 610 Platinum 1,563 1,479 Ferrous Metal & Industries 831 470 Coal 933 1,052 Industrial Minerals 301 274 Paper & Packaging - 186 Other 24 46 Total 5,146 4,117 Capital Expenditure relates to cash expenditure on tangible assets
42 Operating profit variance: Exchange Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) $ million 1,215 29204 36 264 Platinum Coal Base Ferrous Corporate Total 682
43 Operating profit variance: Price – PGMs $ million (27) 52201 580 Platinum Rhodium Ruthenium Other Total PGMs 806
44 Underlying earnings variance $ million (554) (132)(128) (1,058) (546) (778) 636 725 1,311 5,237 5,761 2007 Price Exchange Volume Inflation Cash Costs Non Cash Costs Interest Associates Structural & Other 2008
45 Operating profit variances: Costs 12.6% increase in cash costs Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) Uncontrollable +7.1% Controllable +5.5% (421) (491) 270 75(263) (144) (125) (162) (1,531) (110) 247 Fuel Electricity Sulphur / Sulphuric Acid Royalties Freight & Transportation TC/RC Stock Movement Labour & Contractors Consumables Maintenance Admin & Other Cost Savings Cash Cost Increase (185) (222)
46 Operating cost reconciliation Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) $ million Operating costs include TC/RCs which for statutory reporting purposes are offset against revenue 222 1,531 216 682 (872) 740 119 14,799 12,161 2007 Exchange Volume Inflation Non Cash Acquisitions & Disposals Other Cash Costs 2008

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AngloAmerican results 2009-02-20

  • 1.
  • 2.
    2 Agenda • Cynthia Carroll,CEO: – Operational review of 2008 – Positioning Anglo American through the cycle • René Médori, FD: – Financial review of 2008 • Cynthia Carroll: – Outlook • Question and Answer session
  • 3.
  • 4.
    4 Summary • Strong performancein 2008 – Major improvement in safety record – Record operating profit from core operations – Secured new order mining rights across Anglo American’s businesses in South Africa • Substantial progress on our key strategic initiatives – New $1 billion operating profit target from Asset Optimisation – Continued delivery on cost reduction programmes – Further portfolio restructuring and enhancements • Significant reduction of commodity prices in H2 • Positioning Anglo American through the cycle – 2009 capital expenditure reduced by over 50% – Cost reduction programme underway – Dividend payments suspended – Long term growth options preserved, new projects well timed to enter production from 2011
  • 5.
    5 Safety Fatality Rate LTIFR 2007 2008 •Continued downward trend in fatalities • 17% improvement in Lost Time Injury Frequency Rate • Virtually all major divisions progressed towards eliminating fatalities and improved lost time injury rate performance • Examples of outstanding achievements: — Anglo Platinum’s Union Mine in South Africa: more than 6 million fatality-free shifts — Barro Alto nickel project in Brazil: 966 days without a Lost Time Injury — Anglo Ferrous Brazil: 3.5 million hours without a Lost Time Injury 40 27 Anglo Managed Operations 1.27 1.05 Anglo Managed Operations
  • 6.
    6 Record core operatingprofit • More than tripling of operating profit in Coal with record production in all major locations • Doubling of operating profit in Ferrous Metals and Industries with record production of iron ore and manganese ore and alloys • Strong financial performance in Base Metals and Platinum despite rapidly deteriorating H2 pricing environment Base Metals 24% Platinum 22% Ferrous 27% Coal 22% Diamonds 5% 2008 Split of Operating Profit(1) Base Metals 46% Platinum 29% Ferrous 13% Coal 7% Diamonds 5% 2007 Split of Operating Profit(1) (1) Core operations excluding Corporate Activities and Unallocated costs and Exploration costs
  • 7.
    7 Precious • Refined platinumproduction of 2.39m oz, despite flooding at Amandelbult, Eskom load shedding and safety stoppages • Improved H2 08: refined production of 1.39m oz; +38% vs. H1 08 and +8% vs. H2 07 • Targeting 2.4m oz refined platinum production in FY09 • Production of 48.1 m carats, 6% lower than 2007 • Operating profit (Anglo share) up 5% to $508m • Three new mines opened in FY08: Snap Lake, Victor and Voorspoed • 2009 production will be significantly reduced 2007 2008 2007 2008 Platinum Diamonds Operating Profit ($m) Operating Profit ($m) 2,697 2,226 484 508
  • 8.
    8 Base Metals andIndustrial Minerals • Record production volumes at Los Bronces, Mantoverde; higher production at Collahuasi • Sharply lower H2 demand and pricing environment combined with higher input costs (e.g. fuel, power, sulphur and sulphuric acid) for the year • Targeting 5% growth in copper production in 2009; other base metals production flat (1) Includes Nickel, Niobium, Mineral Sands and Phosphates Zinc Nickel(1) Copper 2007 2008 4,338 2,505 • Held market share in difficult UK markets • Successfully maintained Tarmac International’s operating profit year-on-year • $101m of cost savings generated 2007 2008 474 228 Base Metals Industrial Minerals Operating Profit ($m) Operating Profit ($m)
  • 9.
    9 • Record operatingprofit of $2.9bn – Higher iron ore production, up 13% to 36.7mtpa at Kumba Iron Ore; higher iron ore and manganese ore prices, partially offset by higher costs of fuels & lubricants, labour and mobile crushing • Acquired control of Minas-Rio and Amapá • FY09 production +14% at Kumba Iron Ore, driven by Sishen Expansion Project Bulks • Record operating profit of $2.2bn – Higher met coal production and higher met and thermal coal prices, partially offset by higher royalties, port & rail costs and fuel & power costs • Rapid decline in global steel production continues to affect demand for met coal • Thermal coal demand remains relatively strong • FY09 production to decrease year-on-year 2007 2008 2,240 614 South America Australia South Africa Coal Ferrous Metals and Industries Operating Profit ($m) 2007 2008 2,935 1,432 Kumba Iron Ore Samancor Manganese Other Operating Profit ($m)
  • 10.
    10 Positioning Anglo Americanthrough the cycle Cynthia Carroll
  • 11.
    11 Near-term market weakness •Strong demand across core commodities in H1 08 has softened • Since mid-2008, markets characterised by deteriorating demand, increasing stocks and rapidly declining prices • Demand for commodities in 2009 is likely to remain weak 900 1100 1300 1500 1700 1900 2100 2300 H1 08 H2 08 $/oz Platinum price 1.00 1.50 2.00 2.50 3.00 3.50 4.00 Copper price H1 08 H2 08$/oz $1,526/oz Jan $2,069/oz Jul $922/oz Dec $3.01/lb Jan $3.94/lb Jul $1.32/lb Dec
  • 12.
    12 Addressing near-term challenges •Actions taken to deal with rapidly changing price environment and increased level of gearing • Ensuring cash preservation and maximising value for shareholders • Optimisation programmes continue to drive cost and efficiency improvements • Long term growth options preserved: new projects well timed to enter production from 2011
  • 13.
    13 (I) Conserving cashthrough capex reduction • Completed a wide-ranging review of capital expenditure following the unprecedented decline in commodity prices • 2009 capital expenditure plans reduced more than 50% to $4.5bn, including $1.3bn stay-in-business capex (74% of depreciation) • Reducing pressure on balance sheet and maintaining flexibility for future growth when commodity outlook improves Actions taken 4.5TOTAL GROUP 1.3 Group stay-in- business Zondagsfontein Q2 2009—0.4Coal +12 months to Q2 2012Minas-Rio Phase 10.9Ferrous Metals +8 months to Q4 2011 +12 months to Q1 2011 Los Bronces Barro Alto1.4Base Metals 2011-2017 Amandelbult No.4 Shaft Twickenham Styldrift0.6Platinum New project timeframe(1) Projects affected Targeted 2009 project capex ($bn)Business Unit (1)First production date
  • 14.
    14 (II) Production cuts •Reduced platinum output: target of 2.4 million ounces for FY09 • Plans to grow metallurgical coal production by 10% for FY09 halted; production to be marginally below FY08 • FY09 thermal coal production to decrease by 2 mt year-on-year • Significantly reduced diamond production • Production levels will be monitored against economic developments and further cuts will be made if necessary; creating maximum flexibility for the future Actions taken
  • 15.
    15 (III) Reducing ourcost base • Group cost savings: $348 million achieved in 2008, including $217 million from Procurement • Headcount reductions: expected 19,000 reduction in 2009, in line with growth and development plans • Aggressive supply chain management to capture full benefits from recent reduction in input costs Actions taken
  • 16.
    16 (IV) New AssetOptimisation target of $1 billion • Asset Optimisation and Procurement to deliver total benefits of $2 billion over three years • Significant progress made during year: – Roll out of AOS structures now complete across all business units – Appointed AOS managers in each division – Global AOS information management platform being developed to aide knowledge and best practice sharing • Emerging common themes across business units: – Mine planning and execution – Capital projects management – Asset management – Equipment performance – Metals recovery quality and market link Actions taken
  • 17.
    17 Favourable cost positionsacross the group • Majority of production in lower half of cost curve: – 66% of our copper production is in the lower half of the industry C1 cost curve, improving to c. 80% post completion of Los Bronces expansion – Iron Ore production at Sishen in 1st quartile of cost curve – 90% of thermal coal production in 1st quartile of cost curve; 95% of Hard Coking Coal production in 1st half of cost curve • Cost reductions at Anglo Platinum through: – Productivity improvements – Restructuring of large mines into smaller units – Reduction of contractor headcount – Supply chain benefits • Continued investment in and development of assets in lower half of cost curve in attractive markets • Actions designed to ensure we create long term value for our shareholders
  • 18.
    18 Recap of keymessages • Record core operating profit • Major safety improvements • $1 billion three-year Asset Optimisation target set • Decisive actions taken to address market challenges
  • 19.
  • 20.
    20 2008 Financial Results 5.2 37.8% 12.1 4.1 5.8 31.8% 2007 -9% change 11.0 36.8% 11.8 5.2 5.2 33.4% 2008 Effectivetax rate (%) ROCE (%) Closing Net debt EBITDA Capex Underlying earnings $bn 10.110.1Operating profit Results shown before special items and remeasurements and include share of associates Underlying earnings are stated after minority interests Core operations: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Samancor Manganese, Anglo Ferrous Brazil) 8.9 +10%9.8Operating profit – core Total group financials: Underlying EPS ($) 2007 $4.40 H2 2007 H2 2008H1 2007 2.222.18 1.46 H1 2008 2.90 2008 $4.36 (-1%)
  • 21.
    21 Operating profit variances Operatingprofit is stated for core operations: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Samancor Manganese, Anglo Ferrous Brazil), before special items and remeasurements and including share of associates $ million (802) 1,215 (919) (740) (1,531) (216) 988 (248) 3,124 8,894 9,765 2007 Price - Traded Price - Bulks Exchange Volume Inflation Cash Costs Non-cash costs Associates Other 2008
  • 22.
    22 Operating profit variances:Price (Traded) $ million Stated for core operations: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Samancor Manganese, Anglo Ferrous Brazil) Base Metals $(1,608)m (802)8,894 2007 Price-Traded Traded Metals (484) (491) 806 633 Copper Nickel Zinc PGMs (633) LME - Copper 0 50 100 150 200 250 300 350 400 450 Dec 2007 Mar 2008 Jun 2008 Sep 2008 Dec 2008 USc/lb 30/06/2008 Provisional Pricing 389 USc/lb 31/12/2007 Provisional Pricing 302 USc/lb 31/12/2008 Provisional Pricing 139 USc/lb Cu marked-to-market impact: H1: +$265m H2: -$850m Full Year: -$585m
  • 23.
    23 Operating profit variances:Price (Bulks) $ million Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) $ million Price variance breakdown $ million Bulks 585 805 1,734 Coal Iron Ore Fertiliser & Other 3,124 (802)8,894 2007 Price - Traded +206%30098 Goonyella Benchmark – Hard Coking Coal ($/t) 08/09 Japanese Financial Year 2008 Calendar Year 08/09 Japanese Financial Year Period +63%8854 Kumba Iron Ore Achieved Price - Export ($/t)* 120 2008 +90% % change 63 2007 RSA API-4 Benchmark - Thermal Coal ($/t) *Price increase of 93% from 1 April 2008 for 2008/2009 iron ore contracts Price- Bulks
  • 24.
    24 Operating profit variances:FX and volume $ million (1)Platinum is equivalent refined production Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) Exchange Sensitivity +/- 0.50 ZAR/USD: $336m +/- 0.10 AUD/USD: $92m (919) 2,322 8,894 2007 Price Exchange Volume H2 +$1,119m H1 +$96m 1,215 Nickel Platinum(1) Coal Copper Iron Ore Production change 2008 vs. 2007 -21% +4% -2% +15% 0% -10% sales volume 6.00 7.00 8.00 9.00 10.00 11.00 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 ZAR/USD 0.50 0.70 0.90 1.10 1.30 1.50 1.70 AUD/USD AUD/USD ZAR/USD Key Exchange Rate Trend ZAR 08 Avg: 8.27 07 Avg 7.05 AUD 08 Avg: 1.17 07 Avg 1.19
  • 25.
    25 Operating profit variances:Costs $ million Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil); (1)Source: US Energy Information Administration Oil Price Sensitivity- Operating Profit impact +/- $10/bbl: $70m 7.1% increase in non controllable cash costs 5.5% increase in controllable cash costs (667) (188)(144) (222) (310) (919) (740) 2,322 8,894 2007 Price Exchange Volume Inflation Energy Sulphur/ Sulphuric Acid Royalties Freight/ Transport Other Cash Costs 1,215 ICE Brent Crude ($bbl) 0 20 40 60 80 100 120 140 160 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 $63/bbl $82/bbl $110/bbl $88/bbl -$164m -$21m Operating profit impact (1)
  • 26.
    26 Capital expenditure andnet debt (0.7)Dividends received (1.6)Currency movement 0.5Net interest paid 0.6Share buyback 11.0 (0.1) 2.3 8.6 (1.5) 2.2 5.1 (9.6) 5.2 $bn 37.8% 20.0% Gearing 2008 Closing net debt Other Dividends paid Acquisitions(2) Disposals Cash tax paid Capital expenditure Operating cashflows 2008 Opening net debt Capex ($ million) 4,500 125 4,5005,1464,117Total 246323579Non-core and other(1) (1) Non-core includes AIM, Mondi, Highveld, Tongaat Hulett and AngloGold Ashanti. Other includes corporate capex Los Bronces Minas-Rio Barro Alto SIB Major Projects (2) Includes $0.7bn debt acquired on acquisitions 1,203 1,591 1,175 1,111 2,335 1,928 1,649 981 549 960 338 459 502 713 506 500 489 2007 2008 2009 2010
  • 27.
    27 Debt evolution &gearing External net debt: $3.55bn 3.3 11.0 5.2 37.8% 12.9% 20.0% - 2.0 4.0 6.0 8.0 10.0 12.0 2006 2007 2008 $bn 0% 5% 10% 15% 20% 25% 30% 35% 40% Net Debt Gearing %
  • 28.
    28 Overview of committedfinancing Summary of the Group’s bonds and committed bank facilities 2012$0.9bn$2.5bnCore facility2 2011$4.5bn$4.5bnAcquisition facility 2009$1.1bn$2.9bnBridge loan facility 20184$0.0bn$0.6bnBNDES3 $13.4bn$19.0bnTotal bonds & committed facilities 2009-2018$2.5bn$3.5bnOther committed facilities $10.3bn$15.9bnTotal committed facilities 2009-2012$0.3bn$0.3bnOther Bonds $3.1bn$3.1bnTotal Bonds1 2010$0.4bn$0.4bnGBP 300m Bond 2015$1.6bn$1.6bnEUR 1,000m Bond 2018$0.8bn$0.8bnGBP 400m Bond $1.9bn Facility amount $1.3bn Utilisation at 31Dec 08 2009-2013AASA Bank Facilities2 AA plc bank facilities MaturityDescription 1Including the impact of interest rate and currency swaps 2Deductions to provide back-up for outstanding Commercial Paper of $1.1bn 3Dedicated Barro Alto financing 4Amortising profile Refinancing in 2009/2010 •Anglo American’s only significant maturing debt facility in 2009 is a $3 billion revolving bank facility, of which $1.1 billion was drawn at 31/12/08. In addition, the GBP 300m Bond matures in December 2010 Committed bank facilities: •$0.5 billion (due April 2009) •$1.5 billion (due March 2010) •$2.3 billion (due 2012 and beyond) Agreement to provide shareholder loan of $500m (Anglo share $225m) Undrawn committed facilities and cash •At 31 December, the Group had over $7 billion undrawn committed facilities and cash, after making deductions to provide back-up for outstanding Commercial Paper •In addition, the Group has a $1 billion dedicated, committed financing facility for Minas- Rio, subject to certain disbursement conditions
  • 29.
  • 30.
    30 Market outlook • Marketsare expected to remain weak and uncertain in the short term • However, medium-to-longer term market fundamentals remain attractive • We continue to invest in profitable growth with a bias towards copper, export bulks and platinum
  • 31.
    31 Future production growthis well-timed Copper 2009 2010 2011 2012 2013 Note: Selected approved projects *Production represents average over first ten years of the project **Replacement production Los Bronces +173ktpa* Barro Alto 36ktpa Minas Rio 26.5Mtpa Sishen South 9Mtpa Amandelbult No. 4 Shaft** 271kozpa Seaborne Iron Ore Twickenham 180kozpa Nickel Platinum Full production 2016-2019
  • 32.
    32 Major growth projectsin: • Copper • Iron ore • Coal Anglo American growth profile 2008 2012 500 900 Ktpa 650 2008 2012 50 75 Mtpa 40 90 100 Mtpa 115 Copper production growth Iron ore production growth Coal production growth 2010 2010 2008 20122010 Well timed to enter production in 2011
  • 33.
    33 Outlook • Weak currentmarket conditions, but medium-to-longer term fundamentals remain attractive • Anglo well placed to create long term shareholder value
  • 34.
  • 35.
  • 36.
    36 Market prices Average Price2008 2007 Platinum - $/oz 1,585 1,304 Palladium - $/oz 355 355 Copper – cents/lb 315 323 Nickel – cents/lb 953 1,686 Zinc – cents/lb 85 147 Coal: Thermal RSA API-4 index average - $/tonne 120 63
  • 37.
    37 Underlying earnings sensitivities US$m 10%change in platinum price + 144 10% change in palladium price + 22 10% change in coal price + 349 10% change in copper price + 275 10% change in nickel price + 50 10% change in zinc price + 45 10% change in iron ore price + 88 10% change in SA rand / US$ + 279 10% change in AUD/US$ + 110 10% change in GBP/US$ + 14 10% change in Chilean Peso/US$ + 45 Stated after tax at marginal rate Sensitivities are the average of the positive and negative and reflect the impact of a 10% change in average prices received and exchange rates during 2008
  • 38.
    38 Analysis of underlyingearnings $m 2008 2007 Base Metals 1,369 3,100 Platinum 1,313 1,299 Ferrous Metal & Industries 1,396 605 Coal 1,581 490 Diamonds 256 239 Industrial Minerals 173 384 Exploration (200) (145) Corporate Activities & Unallocated Costs (651) (495) Paper & Packaging - 189 Gold - 95 Underlying Earnings 5,237 5,761 Underlying earnings is profit attributable to equity holders before special items and remeasurements and including share of underlying earnings of associates
  • 39.
    39 Analysis of operatingprofit $m 2008 2007 Base Metals 2,505 4,338 Platinum 2,226 2,697 Ferrous Metal & Industries - core 2,843 1,210 Coal 2,240 614 Diamonds 508 484 Exploration (212) (157) Corporate Activities & Unallocated Costs (345) (292) Core 9,765 8,894 Ferrous Metal & Industries – non core 92 222 Industrial Minerals 228 474 Paper & Packaging - 324 Gold - 202 Operating Profit 10,085 10,116 Operating profit before special items and remeasurements and including share of operating profit from associates
  • 40.
    40 Regional analysis Operating Profit $m2008 2007 South Africa 5,107 4,291 Rest of Africa 467 693 Europe (183) 513 Americas 2,956 3,942 Australasia & Asia 1,738 151 Total 10,085 9,590 Operating profit prepared on a continuing business basis (excludes Paper & Packaging and AngloGold Ashanti in 2007) before special items and remeasurements and including share of operating profit from associates
  • 41.
    41 Capital expenditure $m 20082007 Base Metals 1,494 610 Platinum 1,563 1,479 Ferrous Metal & Industries 831 470 Coal 933 1,052 Industrial Minerals 301 274 Paper & Packaging - 186 Other 24 46 Total 5,146 4,117 Capital Expenditure relates to cash expenditure on tangible assets
  • 42.
    42 Operating profit variance:Exchange Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) $ million 1,215 29204 36 264 Platinum Coal Base Ferrous Corporate Total 682
  • 43.
    43 Operating profit variance:Price – PGMs $ million (27) 52201 580 Platinum Rhodium Ruthenium Other Total PGMs 806
  • 44.
    44 Underlying earnings variance $million (554) (132)(128) (1,058) (546) (778) 636 725 1,311 5,237 5,761 2007 Price Exchange Volume Inflation Cash Costs Non Cash Costs Interest Associates Structural & Other 2008
  • 45.
    45 Operating profit variances:Costs 12.6% increase in cash costs Variances are stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) Uncontrollable +7.1% Controllable +5.5% (421) (491) 270 75(263) (144) (125) (162) (1,531) (110) 247 Fuel Electricity Sulphur / Sulphuric Acid Royalties Freight & Transportation TC/RC Stock Movement Labour & Contractors Consumables Maintenance Admin & Other Cost Savings Cash Cost Increase (185) (222)
  • 46.
    46 Operating cost reconciliation Variancesare stated for core operations excluding associates: Base Metals, Platinum, Coal, Diamonds, Ferrous Metals (Kumba Iron Ore, Scaw Metals, Anglo Ferrous Brazil) $ million Operating costs include TC/RCs which for statutory reporting purposes are offset against revenue 222 1,531 216 682 (872) 740 119 14,799 12,161 2007 Exchange Volume Inflation Non Cash Acquisitions & Disposals Other Cash Costs 2008