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Anglo American plc
20 Carlton House Terrace
London SW1Y 5AN
England
Tel +44 (0)20 7968 8888
Fax +44 (0)20 7968 8500
Registered number 3564138
www.angloamerican.co.uk
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Our strategy in action:
• Engage
• Integrate
• Perform
• Grow
Annual Report 2007
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About Anglo American
Anglo American aims
to become the leading
global mining company
We are committed to delivering
operational excellence in a safe
and responsible way, adding value
for shareholders, customers,
employees and the communities
in which we operate
About Anglo American
58 Governance
01 Highlights of the year
02 Our locations
02 Our operations
04 Chairman’s statement
06 Chief executive’s statement
10 Our strategy in action
14 Operating and fi nancial review
15 Group overview
15 The Group
15 The businesses
17 Key performance indicators (KPIs)
18 Performance against KPIs
25 Resources
27 Group fi nancial performance
31 Business unit overview
31 Platinum
35 Diamonds
38 Base Metals
43 Ferrous Metals
46 Coal
51 Industrial Minerals
54 Discontinued operations
55 Principal risks and uncertainties
58 The Board
60 Executive Committee
61 Directors’ report
65 Corporate governance
70 Remuneration report
83 Independent remuneration report review
84 Statement of directors’ responsibilities
85 Financial statements
86 Independent auditors’ report
87 Principal statements
91 Notes to fi nancial statements
136 Other information
136 Ore Reserves and Mineral
Resources estimates
158 Production statistics
163 Exchange rates and commodity prices
164 Key fi nancial data
166 Summary by business segment
167 Reconciliations of reported earnings
168 The business – an overview
170 Shareholder information
171 Other Anglo American publications
Front cover: This year’s cover features the
faces of 90 of our 100,000 employees who
are helping to shape Anglo American’s future
success. See page 172 for the names of
those employees featured on our cover
Printed on Revive 50:50 Silk and Revive 100
Uncoated paper. Revive 50:50 Silk is made from
pre and post consumer waste and virgin wood fi bre,
Revive 100 Uncoated is made from 100% de-inked
post consumer waste. Both have been independently
certifi ed in accordance with the FSC (Forest
Stewardship Council).
Printed at St Ives Westerham Press Ltd, ISO14001,
FSC certifi ed and CarbonNeutral®
Designed by Addison Corporate Marketing Ltd
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About
Anglo
American
Highlights of the year
Operating profi t
Underlying earnings
Earnings per share
$10.1bn
$5.8bn
$4.40
• Record total Group operating profi t of
$10.1 billion, with operating profi t from
core operations up 12% to $8.9 billion
• Strong performances from Base Metals,
Platinum, Ferrous Metals and Industrial Minerals
• Uplifting our unique portfolio and driving
signifi cant growth
(cid:36)(cid:41)(cid:54)(cid:41)(cid:36)(cid:37)(cid:46)(cid:36)(cid:51)(cid:0)(cid:48)(cid:37)(cid:50)(cid:0)(cid:51)(cid:40)(cid:33)(cid:50)(cid:37)
(cid:53)(cid:51)(cid:0)(cid:67)(cid:69)(cid:78)(cid:84)(cid:83)
(cid:51)(cid:80)(cid:69)(cid:67)(cid:73)(cid:65)(cid:76)
(cid:38)(cid:73)(cid:78)(cid:65)(cid:76)
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:73)(cid:77)
(cid:23)
(cid:22)
(cid:21)
(cid:23)
(cid:19)
(cid:19)
(cid:18)
(cid:22)
(cid:22)
(cid:24)
(cid:17)
(cid:21)
(cid:25)
(cid:19)
(cid:21)
(cid:17)
(cid:25)
(cid:17)
(cid:24)
(cid:18)
(cid:19)
(cid:19)
(cid:24)
(cid:19)
(cid:17)(cid:21)(cid:16)
(cid:17)(cid:20)(cid:16)
(cid:17)(cid:19)(cid:16)
(cid:17)(cid:18)(cid:16)
(cid:17)(cid:17)(cid:16)
(cid:17)(cid:16)(cid:16)
(cid:25)(cid:16)
(cid:24)(cid:16)
(cid:23)(cid:16)
(cid:22)(cid:16)
(cid:21)(cid:16)
(cid:20)(cid:16)
(cid:19)(cid:16)
(cid:18)(cid:16)
(cid:17)(cid:16)
(cid:16)
(cid:53)(cid:46)(cid:36)(cid:37)(cid:50)(cid:44)(cid:57)(cid:41)(cid:46)(cid:39)(cid:0)(cid:37)(cid:33)(cid:50)(cid:46)(cid:41)(cid:46)(cid:39)(cid:51)(cid:0)(cid:48)(cid:37)(cid:50)(cid:0)(cid:51)(cid:40)(cid:33)(cid:50)(cid:37)
(cid:53)(cid:51)(cid:4)
(cid:16)
(cid:20)
(cid:14)
(cid:20)
(cid:19)
(cid:23)
(cid:14)
(cid:19)
(cid:24)
(cid:21)
(cid:14)
(cid:18)
(cid:23)
(cid:24)
(cid:14)
(cid:17)
(cid:16)
(cid:18)
(cid:14)
(cid:17)
(cid:21)
(cid:20)
(cid:19)
(cid:18)
(cid:17)
(cid:16)
(cid:18)(cid:16)(cid:16)(cid:19)
(cid:18)(cid:16)(cid:16)(cid:20)
(cid:18)(cid:16)(cid:16)(cid:21)
(cid:18)(cid:16)(cid:16)(cid:22)
(cid:18)(cid:16)(cid:16)(cid:23)
(cid:18)(cid:16)(cid:16)(cid:19)
(cid:18)(cid:16)(cid:16)(cid:20)
(cid:18)(cid:16)(cid:16)(cid:21)
(cid:18)(cid:16)(cid:16)(cid:22)
(cid:18)(cid:16)(cid:16)(cid:23)
Total Group includes both continuing and discontinued operations.
Underlying earnings represents total Group underlying earnings unless otherwise stated. Basis of calculation of underlying earnings is set out in note 12 to the fi nancial statements.
Operating profi t represents total Group operating profi t and includes share of associates’ operating profi t (before share of associates’ tax and fi nance charges) and is before special items
and remeasurements unless otherwise stated.
Operations considered core to the Group are Base Metals, Platinum, Ferrous Metals’ core businesses (Kumba Iron Ore, Scaw Metals, Samancor and Minas-Rio), Coal and Diamonds.
Throughout this report 2003 is presented under UK GAAP. 2004, 2005, 2006 and 2007 results are presented under IFRS. Unless otherwise stated ‘$’ and ‘dollar’ denote US dollars.
Anglo American plc Annual Report 2007 | 01
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About
Anglo
American
Our locations
North America
South America
Europe
Our operations
Precious
Platinum
Diamonds
Base Metals
Base
Business profi le
• The world’s leading primary producer
of platinum, accounting for around
37% of the world’s newly mined
platinum output
Business profi le
• De Beers accounts for about 40%
by value of global rough diamond
production
• The world’s largest supplier and
marketer of gem diamonds
Business profi le
• Comprises primarily copper, nickel,
zinc and niobium operations
• Operates in South America, southern
Africa and Ireland
• Copebrás produces phosphate fertilisers
Products and uses
• Primarily used in jewellery
and autocatalysts
• Also used in chemical, electrical,
electronic, glass and petroleum
industries and medical applications
Products and uses
• About 30% of mined diamonds by
weight are suitable for use in jewellery
• Some natural stones are used for industrial
purposes such as cutting, drilling and other
applications
Products and uses
• Copper is used mainly in wire and cable,
as well as in brass, tubing and pipes
• Zinc is chiefl y employed in galvanising
• Nickel is mostly used in the production
of stainless steel
Financial highlights(1)
Financial highlights(1)(3)
Financial highlights(1)(2)
$ million
Operating profi t
EBITDA
Net operating assets
Capital expenditure
Share of Group operating
profi t (%)
Share of Group net
operating assets (%)
12 months
31 Dec 2007
12 months
31 Dec 2006
$ million
12 months
31 Dec 2007
12 months
31 Dec 2006
$ million
12 months
31 Dec 2007
12 months
31 Dec 2006
2,697
3,155
9,234
1,479
28%
35%
2,398
2,845
7,078
923
27%
33%
Share of associate’s
operating profi t
EBITDA
Group’s aggregate investment
in De Beers
Share of Group operating
profi t (%)
484
587
463
541
1,802
2,062
5%
5%
Operating profi t
EBITDA
Net operating assets
Capital expenditure
Share of Group operating
profi t (%)
Share of Group net
operating assets (%)
4,338
4,683
4,989
610
45%
19%
3,897
4,255
4,599
315
44%
22%
(1) Share of Group operating profi t and share of Group net operating assets for both 2007 and 2006 is based on continuing operations and therefore excludes the contribution of Mondi and AngloGold Ashanti.
(2) In 2007, Copebrás and Yang Quarry were reclassifi ed from Industrial Minerals to Base Metals and Coal respectively to align with internal management reporting. As such, the comparative data has been reclassifi ed.
(3) De Beers is an independently managed associate of the Group.
02 | Anglo American plc Annual Report 2007
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Africa
Asia and Australasia
See right
See below
About
Anglo
American
Key
Corporate and representative offi ces
Operations and
expansions
New
projects
Platinum
Diamonds
Base Metals
Ferrous Metals
Coal
Industrial Minerals
Regions in which exploration is currently
under way
As one of the major diversifi ed mining groups,
Anglo American’s exploration activities cover
many parts of the globe. In its constant search
for minerals, Anglo American is currently
prospecting in 25 countries. In addition to its
focus on areas surrounding its existing mining
operations, Anglo American is now looking at
relatively unexplored new frontiers, including in
the Arctic region through an arc stretching from
Alaska to the Russian far east. During 2007,
$283 million was spent on exploration –
$77 million on base metals, $36 million on
platinum, $32 million on coal, $12 million on
ferrous metals and $126 million by De Beers.
Bulk
Ferrous Metals
Coal
Industrial Minerals
Business profi le
• Operations are mainly in South Africa,
South America, Canada and Australia
• Businesses produce iron ore, manganese
and steel products for the mining and
infrastructure sectors
Business profi le
• Anglo Coal is one of the world’s
largest private sector coal producers
and exporters
• Its operations are in South Africa, Australia,
Colombia, Venezuela and Canada
Business profi le
• Tarmac is the No. 1 UK producer of
aggregates and asphalt and a leading
producer of ready-mixed concrete
• Its operations are primarily in the UK,
continental Europe and the Middle East
Products and uses
• Iron ore is the basic raw material used in
Products and uses
• About 40% of all electricity generated
steel production
• Manganese is a key component in steelmaking
• Steel products serve the construction, railway,
power generation, mining, cement, marine and
offshore oil industries
globally is powered by coal
• Around 70% of the world’s steel industry
uses coal and it is an important fuel for
other industries
Products and uses
• Tarmac is involved in the production of
crushed rock, sand, gravel, concrete and
mortar, lime, cement and concrete products
Financial highlights(1)
Financial highlights(1)(2)
Financial highlights(1)(2)
$ million
Operating profi t
EBITDA
Net operating assets
Capital expenditure
Share of Group operating
profi t (%)
Share of Group net
operating assets (%)
12 months
31 Dec 2007
12 months
31 Dec 2006
$ million
12 months
31 Dec 2007
12 months
31 Dec 2006
$ million
12 months
31 Dec 2007
12 months
31 Dec 2006
1,432
1,561
3,987
471
15%
15%
1,360
1,560
2,796
582
15%
13%
Operating profi t
EBITDA
Net operating assets
Capital expenditure
Share of Group operating
profi t (%)
Share of Group net
operating assets (%)
614
882
3,984
1,052
6%
15%
862
1,082
2,870
782
10%
13%
Operating profi t
EBITDA
Net operating assets
Capital expenditure
Share of Group operating
profi t (%)
Share of Group net
operating assets (%)
474
732
4,509
274
5%
17%
317
539
4,185
279
4%
20%
Anglo American plc Annual Report 2007 | 03
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About
Anglo
American
Chairman’s statement
“ During 2007, Anglo American made great
progress in becoming a focused mining
company and showed it is prepared to pursue
new business opportunities more aggressively
in order to seek out and unlock value”
04 | Anglo American plc Annual Report 2007
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see also
p14
Operating and fi nancial review
About
Anglo
American
p61
Directors’ report
Anglo American delivered another exceptional
fi nancial performance in 2007. We made
signifi cant progress in achieving our strategic
objective of becoming a focused mining group,
principally through the demerger of Mondi,
the decision to sell Tarmac, our construction
materials business, and the further reduction
in our holdings in AngloGold Ashanti and
Tongaat-Hulett. This greater focus provided a
strong platform for the Group to move into a
more expansionary mode where value creating
opportunities exist.
Given the greater homogeneity between
our mining businesses, important steps are
being taken to realise the benefi ts of a
‘One Anglo’ approach in relation to
procurement, support services, talent and
knowledge management.
2007 was another disappointing year for
safety, with 40 fatalities – a reduction of only
four over the prior year. The Board strongly
endorsed the much higher profi le on safety
adopted by our new chief executive.
Cynthia Carroll has succeeded in communicating
that ‘business as usual’ is not an acceptable
approach in the face of the deaths and injuries
occurring at some of our operations. There may
be some loss of production in the short term,
but this is a sacrifi ce well worth making if it
produces a safety performance based upon a
culture of care and respect for our workforce
and contractors. Moreover, we believe that
safe operations generally excel in terms of
effi ciency and productivity. There were signs
of improvement in the second half of the year,
but it is too early to say if this is sustainable.
Changing global economy
The growth of China, India and other emerging
markets is transforming the balance of power
in the world economy at an unprecedented rate.
This will involve the emergence of more
customers and competitors as well as potential
partners from these countries. Given our
well-established presence in China and our
commitment to develop projects there, we are
well placed to build from this platform.
High commodity prices have sharpened
the competition between stakeholders –
governments, communities, unions, suppliers –
to secure a bigger share of the current market
upside. We have seen changes in the fi scal
regime of a number of countries to refl ect this.
As part of our empowerment transactions
in South Africa we have sought to encourage
equity participation by local communities
and employees.
Benefi ts to communities
Energy and water challenges
Throughout the world we are seeking to
increase the benefi cial development impacts of
our operations. I would highlight two strands of
work. Firstly, our Socio-Economic Assessment
Toolbox (SEAT) process which progressed to
an updated version in 2007. This improves the
understanding of people in our operations of the
needs and priorities of their local communities
and enables them to make a greater contribution
to local development. Secondly, we are seeking
to replicate the success of our South African
enterprise development unit, Anglo Zimele.
This is already being achieved in Chile where
our microfi nance initiative helped over
900 business people to get established last
year. During 2008, we hope to establish a
similar initiative in Brazil.
However, if companies are to have a
continuing incentive to invest and to develop
deposits in riskier jurisdictions, all stakeholders
need to recall the cyclical nature of our business
and the current intense cost pressures facing
the industry. Benefi t sharing models have to
refl ect periods of market weakness as well
as the good times.
The current commodity cycle has been
driven by both strong demand and limited
supply. Demand has been strong against a
backdrop of synchronised expansion across the
major economies and has been fuelled by rapid
urbanisation in China.
Signifi cant supply constraints include over-
heating in the supply chain and the fact that
projects are typically taking longer to secure the
necessary consents. But a crucial learning is the
role that sustainable development concepts will
play as we bring new operations to account.
Thus, we fi nd ourselves giving increasing
attention to skills, energy security and climate
change, water shortages and the legacy in a
number of countries of under-investment in
critical infrastructure.
In response to skills shortages, we are
investing strongly in scholarships, bursaries
and internships, pre-employment training and
in raising the educational attainments of some
of our existing workforce to enable them
to progress. For the longer term, the Anglo
American-funded Epoch and Optima trusts have
identifi ed the teaching of maths and science in
South African schools as a priority – resulting
in an annual injection of approximately
$5 million of additional funds.
Last year will be seen as the year when
electricity supplies began to move noticeably
out of balance with demand in a number
of important countries where we operate,
including South Africa, Chile and Brazil. The
ability to resolve these shortfalls is constrained
by the high costs of construction and limited
availability of key capital goods. Thus, a key
objective is to achieve a step-change in our
energy effi ciency. This will, in turn, contribute
to our environmental objective of reducing our
carbon footprint – alongside abatement projects
such as using methane in electricity generation
or carbon capture and storage in Australia;
co-investment in the FutureGen project in the
US; and taking forward Clean Development
Mechanism projects.
Water shortages have become more
pronounced in a number of important mining
countries. This requires us to innovate. In
South Africa, for example, it has led to the
establishment of the Emalahleni water
treatment plant which converts waste mine
water into water suitable for domestic and
industrial uses. We also need to improve
the effi ciency of our production processes.
An example of this is our Los Bronces expansion
project in Chile where we will reduce our use
of fresh water by some 40% per tonne of
copper produced.
Board and employees
In regard to Board membership, I would like to
note the departure of Tony Trahar who stepped
down as chief executive in March; David Hathorn,
chief executive of Mondi; Simon Thompson,
executive director of Anglo American plc; and of
Bobby Godsell, who retired last year as chief
executive of AngloGold Ashanti and who is
stepping down from our Board after many years’
service to the Group in both executive and non-
executive roles. Ralph Alexander also retired as a
non-executive director as a result of other work
commitments. I would like to record our thanks to
each of them. As part of the process of refreshing
the Board, I am pleased that Sir CK Chow has
agreed to submit himself for election as a director
at the AGM.
In closing, I would like to thank our employees
for their work in delivering a further set of
impressive results and in contributing to the
countries and communities where we work. ■
Sir Mark Moody-Stuart
Chairman
Anglo American plc Annual Report 2007 | 05
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About
Anglo
American
Chief executive’s statement
“ 2007 was a year of change for our business – one
in which we continued to deliver strong returns for
shareholders while also streamlining our business
and laying the foundations for greater effi ciency
gains, as well as stronger growth into the future”
06 | Anglo American plc Annual Report 2007
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2007 highlights
$12bn
Projects under development
15%
Increase in fi nal dividend
About
Anglo
American
Record fi nancial performance
In my fi rst year as chief executive, I am pleased
to report a record fi nancial performance by
Anglo American. We achieved our highest ever
operating profi t of $10.1 billion and underlying
earnings of $5.8 billion, with continued strong
cash generation. Once again, we are announcing
an increased fi nal dividend – 86 US cents per
share, up 15% on 2006.
The strength of our performance was due to
improved production volumes of ferrous metals,
copper and zinc, an increased focus on
operational discipline and a continuation of the
supportive trading environment. During 2007,
high prices were realised for most of the Group’s
commodities, although these benefi ts were
partially offset by adverse currency movements,
supply-side constraints and ongoing pressure
on costs across the mining sector.
New approach to safety
2007 marked a turning point in our approach to
safety. Our past and current number of
fatalities and injuries is simply unacceptable.
I strongly believe that optimally run businesses
have good safety records.
We have launched a series of new
initiatives to drive consistent safety messages
and practices across our business.
We have shown that we are prepared to do
what is necessary to meet this challenge head
on by shutting down mine shafts where safety
performance has not been up to standard, to
retrain affected employees and to conduct a
thorough investigation of operating conditions.
Signifi cant progress was made between the
fi rst and second halves of the year and I expect
our operations to build upon this momentum
in 2008.
Delivering our strategic
objectives
I have been very clear about my ambition for
Anglo American – our goal is to become the
leading global mining company.
The year under review has seen a
combination of strategic restructuring and a
period of building from a position of strength,
including the identifi cation and execution of
opportunities to drive new growth and value.
The restructuring of Anglo American is
almost complete and it is now that we can focus
on the operational improvements that will be
delivered by our asset optimisation programme
and the cultural change that we are implementing
across the Group.
During the year, we made good strategic
progress. In May, we disposed of our remaining
29% holding in Highveld Steel and Vanadium,
and, in June, the unbundling of Hulamin from
Tongaat-Hulett was completed.
Mondi, our paper and packaging business,
was demerged in early July and established
as a dual-listed company on the London and
Johannesburg stock exchanges. In line with our
intention to ultimately exit AngloGold Ashanti,
we reduced our holding to 16.6%, realising in
excess of $2.9 billion.
In August, we announced plans to sell
Tarmac. Tarmac has a leading position in the
UK construction materials industry, and is well
positioned in certain key markets in continental
Europe and the Middle East. Tarmac had a
very strong operational performance in 2007,
with a number of its business improvement
initiatives starting to make a signifi cant impact.
It is expected that the performance of Tarmac
will continue to underpin a competitive
sale process; however, it has been decided
not to launch the marketing phase of the
sale process until current credit market
conditions improve.
We also made progress during 2007 in
meeting the employment equity and black
economic empowerment requirements of the
South African Mining Charter, including
groundbreaking equity participation
arrangements in Anglo Platinum’s assets.
In February 2008, the South African
Department of Minerals and Energy confi rmed
it would award Anglo American with all its new
order mining rights, subject to completion of
outstanding documentation, by 31 March 2008.
This is a landmark achievement for the Group
and for the many black empowered businesses
with which we are partnered.
Expanding our asset base
During 2007, we were active in identifying
and acquiring major new projects, particularly
copper and iron ore, to deliver signifi cant
volume growth over the next decade.
The Group has a tremendous project
pipeline, one of the strongest in the sector,
building on our unique portfolio of existing
assets and delivering considerable organic
growth potential. We have a number of major
projects under development, involving
investment of some $12 billion across all our
businesses. In addition, we have a further
$29 billion of projects under consideration.
2008 will also see our planned expansions
delivering signifi cant new production in iron
ore and coal.
EXPANDING OUR ASSET BASE
During 2007, we were active in
identifying and acquiring major new
projects, particularly copper and iron
ore, to deliver signifi cant volume
growth over the next decade
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(cid:35)(cid:79)(cid:80)(cid:80)(cid:69)(cid:82)
(cid:52)(cid:79)(cid:78)(cid:78)(cid:69)(cid:83)(cid:0)(cid:80)(cid:69)(cid:82)(cid:0)(cid:65)(cid:78)(cid:78)(cid:85)(cid:77)(cid:0)(cid:8)(cid:77)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78)(cid:9)(cid:0)
(cid:17)(cid:14)(cid:24)
(cid:17)(cid:14)(cid:21)
(cid:17)(cid:14)(cid:18)
(cid:16)(cid:14)(cid:25)
(cid:16)(cid:14)(cid:22)
(cid:16)(cid:14)(cid:19)
(cid:16)
(cid:18)(cid:16)(cid:16)(cid:24) (cid:16)(cid:25) (cid:17)(cid:16) (cid:17)(cid:17) (cid:17)(cid:18) (cid:17)(cid:19) (cid:17)(cid:20) (cid:17)(cid:21) (cid:17)(cid:22)
• Potential copper output
of 1.6 Mtpa by 2016
(cid:41)(cid:82)(cid:79)(cid:78)(cid:0)(cid:79)(cid:82)(cid:69)
(cid:52)(cid:79)(cid:78)(cid:78)(cid:69)(cid:83)(cid:0)(cid:80)(cid:69)(cid:82)(cid:0)(cid:65)(cid:78)(cid:78)(cid:85)(cid:77)(cid:0)(cid:8)(cid:77)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78)(cid:9)
(cid:17)(cid:21)(cid:16)
(cid:17)(cid:18)(cid:16)
(cid:25)(cid:16)
(cid:22)(cid:16)
(cid:19)(cid:16)
(cid:16)
(cid:18)(cid:16)(cid:16)(cid:24) (cid:16)(cid:25) (cid:17)(cid:16) (cid:17)(cid:17) (cid:17)(cid:18) (cid:17)(cid:19) (cid:17)(cid:20) (cid:17)(cid:21) (cid:17)(cid:22) (cid:17)(cid:23)
• Potential iron ore output
of 150 Mtpa by 2017
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About
Anglo
American
Chief executive’s statement
“ In 2007, we made
considerable progress
towards achieving our aim
of becoming a signifi cant
player in the global
seaborne iron ore trade”
Below: Round-the-clock operations at
Kumba’s Sishen open pit, which yielded
about 30 million tonnes of iron ore in 2007
Several projects were approved in Anglo
Platinum during the year, in particular the
$279 million expansion at the base metals
refi nery, the $139 million Townlands ore
replacement project and the $188 million
Mainstream inert grind projects. The $692 million
PPRust North expansion project is in progress
and will mill an additional 600,000 tonnes of
ore per month.
Anglo Coal has approved expansion
programmes in both South Africa and Australia.
The recently approved $505 million, 6.6 million
tonnes per annum (Mtpa) Zondagsfontein
project will form an important component of
plans to increase Anglo Coal’s South African
production by 50% to around the 90 Mtpa
level by 2015.
In November we announced the approval of
the $1.7 billion expansion of Los Bronces in Chile.
First production is scheduled for 2011 and will
increase copper production to an initial level
exceeding 400,000 tpa, making Los Bronces one
of the ten largest copper mines in the world. Also
in Chile, a two phase expansion at Collahuasi is
being considered. In Brazil, the Barro Alto project is
on schedule to boost the Group’s nickel output,
with fi rst production due in 2010.
At Kumba Iron Ore, the commissioning
of the $754 million, 13 Mtpa Sishen Expansion
Project commenced during the year, with ramp
up to full production anticipated in 2009.
In Canada’s Northwest Territories,
De Beers’ Snap Lake, the country’s only
underground diamond mine, delivered its fi rst
diamonds in October and plans to produce
approximately 1.6 million carats per annum.
In Botswana, De Beers is reviewing a number
of development opportunities.
Turning to acquisitions, we made
considerable progress towards achieving our aim
of becoming a signifi cant player in the global
seaborne iron ore trade. In July, we purchased a
49% stake in the MMX Minas-Rio iron ore
project in Brazil for an effective price of
$1.15 billion, plus a potential payment of
up to $600 million if certain criteria are met.
Furthermore, in January 2008, Anglo American
announced that it was in exclusive discussions
with MMX’s majority shareholder to acquire
control of the Minas-Rio project and the Amapá
iron ore mine for approximately $5.5 billion if
we acquire 100% of the interest held by MMX
in these assets.
In April, we announced the acquisition of
the Michiquillay copper project in northern Peru
for $403 million. Michiquillay is one of the
largest undeveloped copper deposits in the
world. This is our second major investment in
Peru where the feasibility study for the
Quellaveco copper deposit in the south of the
country is at an advanced stage.
In July, we acquired a 50% stake in the
Pebble copper project in Alaska for a staged
cash investment of $1.4 billion. The key assets
of the project, which is co-owned by Northern
Dynasty Minerals, are its open pit Pebble West
deposit and the deeper and higher grade Pebble
East deposit. The Pebble resources rank among
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2007 highlights
71%
Participation rate for HIV/AIDS VCT
About
Anglo
American
next section:
How Anglo American’s
ambition to become the
leading mining company
is being realised
the world’s most important accumulations of
copper, gold and molybdenum.
In both Peru and Alaska, a key priority is
to build supportive relationships with local
communities, consistent with our policy of
developing and operating projects to the highest
standards and to promote truly sustainable
development.
Close to year end we announced the
acquisition of a 70% interest, for $620 million,
in the Foxleigh coal mine in Australia, which
adjoins our German Creek and Lake Lindsay
operations.
We are also widening our horizons
geographically. In an exciting recent development,
Anglo American and China Development
Bank have entered into a Memorandum of
Understanding (MOU). Anglo American is
actively looking for further projects in China and
the MOU represents a long term commitment
from both parties to establish a strategic
relationship to identify and develop a pipeline of
mining projects in China, Africa and elsewhere.
Driving operational excellence
The mining industry continues to experience
signifi cant cost pressures across the supply
chain, including freight, transportation, fuel and
consumables. In spite of the cost pressures, we
achieved $380 million in cost savings, synergies,
effi ciencies and procurement, and we managed
to contain our growth in cash costs to 4%
above infl ation.
Above and beyond these cost-saving
activities, we are bringing greater rigour to our
operating platform by introducing a value based
management (VBM) methodology across all our
businesses. A pilot project has been completed
in Anglo Coal and we are now rolling VBM out
into the other businesses. In addition, an asset
optimisation initiative will maximise operational
effi ciencies at site level and allow us to benchmark
our performance and spread best practices.
We have carried out a comprehensive
review to defi ne the best approach for delivering
key business support functions and, as a result,
we have decided to establish three shared
services centres providing common accounting
and employee services, located in existing
offi ces in Asia Pacifi c, Latin America and South
Africa. We have also launched a centralised
procurement programme to maximise the benefi ts
of being a global operator. Initial projections
indicate that we shall achieve $1 billion worth
of procurement and shared services savings
in the next three years.
Sustainable development
“ In spite of the cost
I am proud to say that we continue to be a
sector leader in terms of our approach to
sustainable development. We are seeking
to play our part in addressing the challenges
of climate change by improving our energy
effi ciency, reducing our greenhouse gas
emissions, contributing to the development
of clean coal technologies and through our
involvement in public-policy discussions.
Our internationally recognised
Socio-Economic Assessment Toolbox (SEAT)
continues to help us understand the
perspectives and concerns of the communities
close to our operations. This year we have made
a three-yearly SEAT assessment mandatory for
all our major operations.
We are gaining ground in the fi ght against
HIV and AIDS with our successful voluntary
counselling and testing (VCT) and treatment
programme. At a number of our collieries in South
Africa, the VCT participation rate exceeds 90%,
while the overall Group fi gure continues to climb
and had reached 71% by the end of 2007.
Important progress was also made this year in
developing a new framework of occupational
health policies called The Anglo Occupational
Health Way.
In 2007, we were an active voice in the
development and promotion of the Extractive
Industries Transparency Initiative (EITI), which
supports improved governance in resource-rich
countries, representing the mining sector on the
EITI’s board.
We were also involved in other multi-
stakeholder initiatives, including the Voluntary
Principles on Security and Human Rights and
the Investment Climate Facility for Africa. We
continue to be involved in and to give our full
support to the UN Global Compact. We report
on progress implementing the principles in our
Report to Society in accordance with the
externally verifi ed Global Reporting Initiative.
We have made clear our commitment to
regular engagement with NGOs at a local,
national and international level. We signed
association agreements with Fauna and Flora
International on biodiversity issues and with
CARE International on development challenges.
pressures, we achieved
$380 million in cost
savings, synergies,
effi ciencies and
procurement”
Outlook
The global economic outlook for 2008 is clouded
by uncertainty. While it seems clear that US
economic activity will be weaker in 2008 than
in recent years, it is less clear how economic
growth will be affected in the rest of the world,
especially in those emerging markets whose
growth has been largely responsible for the strong
demand that has underpinned commodity prices.
In South Africa, electrical power supply
problems are causing disruption to mining
operations across the country. At present, it is
diffi cult to accurately forecast the medium term
impact of power shortages on Anglo American’s
business. We are working with Eskom and
the South African government to implement
solutions.
Global commodity demand remains strong
and seems likely to remain so throughout 2008.
Commodity supply worldwide continues to be
constrained by skills shortages, rising capital
and operating costs, longer permitting processes
and strong exchange rates in many of the
countries where key operations are located.
Industry inventories are therefore likely to
remain low and continue to underpin prices.
The medium to long term secular trend of
strong commodity demand growth – embracing,
as it does, the industrialisation and urbanisation
of developing nations, especially China and
India – will continue to support prices over
a longer time horizon.
As a result, signifi cant new mining
investments will be needed to satisfy that
demand. Anglo American is well placed to
benefi t from this favourable backdrop as
the Group continues to realise its exciting
growth prospects. ■
Cynthia Carroll
Chief executive
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About
Anglo
American
Our strategy
in
action
We are focusing on improvement
in four key areas – integration,
performance, growth and engagement
Integration
As Anglo American continues to extend its
reach across the globe and diversifi es its mining
asset base, the organisation is being reshaped
to ensure we are able to meet the sustained
demand for the commodities we mine.
A high degree of decentralisation through
autonomous business units is making way for a
new ‘One Anglo’ approach. This concept allows
for greater sharing of talent, expertise and
knowledge across the Group and, as a result,
our culture is changing as we move towards
becoming a single, integrated organisation.
One Anglo involves consistently applying a
common framework of values and standards;
putting the structures in place to foster greater
knowledge-sharing; and leveraging our scale
through shared services.
Safety
Nowhere is this integrated concept more
important than in our approach to safety.
The safety of all our employees is paramount.
Our vision of ‘zero harm’, which was endorsed
in 2007 by all our businesses and their
leadership teams, is based on three clear
principles: all injuries are preventable; all
necessary steps must be taken to learn from
incidents in order to prevent reoccurrence; and
common, simple non-negotiable standards must
be consistently applied.
Key to realising this vision is The Anglo Safety
Way, a global framework of risk management
systems and standards, which is being rolled
out across the business. This is being supported
by greater communication and cross-fertilisation
of ideas and experiences around safety within and
between the Group’s businesses, as well as other
organisations in mining and related industries.
People
The increasing technological sophistication
of mining, combined with a serious skills
shortage in the current competitive market,
has further underlined the importance we
already attach to retaining our talent through
appropriate reward, talent development and
people management activities.
Several Group-wide One Anglo initiatives
have provided impetus in these areas. The
introduction of a broad banding system
throughout the businesses underpins our move
towards more consistent and competitive
regional reward strategies and a common
performance management process. It has also
been a key enabler for the introduction of an
improved talent tracking system, an integrated
internal and external vacancy management
system, and the development of Group-wide
people information and shared services
systems.
Our global leadership development portfolio
has been extended during the year and going
forward there will be an increased focus on
common standards in terms of curriculum and
delivery for all our management development
programmes across the Group.
Shared services
Applying common policies, processes and
systems, as well as creating a One Anglo
mindset among our employees, will also
be delivered through our shared services
initiative.
We will create three shared services centres
based in existing offi ces in Asia Pacifi c, Latin
America (serving the whole of the Americas)
and South Africa (serving Africa and Europe).
The centres will provide common accounting
and employee services.
10 | Anglo American plc Annual Report 2007
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About
Anglo
American
In-house technological
capability augmented
by strategic partnerships
In contrast to many mining industry peers,
Anglo American for many years has been
distinguished by its formidable in-house technical
capacity, with the aim of maintaining a technological
edge and, in doing so, enhancing shareholder value.
Based on two main internal units, Technical and
Research, and enhanced by a range of partnered
technologies, the Group has become an industry
standard-setter in fi nding, extracting and refi ning
minerals. For example, advanced airborne
electromagnetic techniques and superconducting
quantum interference devices have identifi ed
prospective mineral deposits; in partnership with
external specialists, a new solvent-extraction and
electro-winning process was developed to yield zinc
ore; while robot laboratories (right) at Anglo
Platinum’s concentrators and smelters have greatly
reduced assay-assessment time.
cost countries such as China, while also
continuing to develop small and medium sized
entrepreneurs close to existing operations.
In recent years, many parts of the mining
industry supply chain have been operating at
or close to full capacity, resulting in constraints
and delays for equipment and services. We are
mitigating these issues by developing clear
plans and engaging more effectively with our
suppliers. For example, we are entering
innovative longer term supply arrangements
with suppliers to secure tyres for our existing
operations and new projects.
Performance
As part of our strategy to become the leading
global mining company, Anglo American has
disposed of a number of non-core assets and is
focusing on ensuring that its assets have
economies of scale, long lives, are in the lowest
quartile in terms of costs and have the potential
to give the Group critical mass in each of our
commodities.
Today, Anglo American is centred around
three core commodity categories – precious
(with our unique platinum and diamond assets),
base and bulk.
We are now progressing into the second
phase of our strategy, where we are seeking
to maximise the value we derive from each of
our assets.
Asset optimisation
We are identifying, and seeking to close, any
value gaps between the performance of our
operations and the industry’s best in class.
To this effect, a major asset optimisation
programme is under way across our business
units. This initiative seeks to identify the full
potential of each operation and put programmes
in place to manage actual performance towards
this goal. This has involved a rigorous, bottom-
up analysis of our assets and operations
and their subsequent benchmarking against
our peers to bring our operations up to the
highest level.
Supply chain effi ciencies
Taking an integrated global approach to
procurement while maximising effi ciencies
through the supply chain are other ways we
are looking to drive performance.
We have made major improvements with
progressively more demanding effi ciency
targets. In 2007, the Group achieved supply
chain effi ciencies of almost $200 million.
We are working closely with our suppliers to
eliminate waste from all areas of our supply
chain by developing a detailed understanding
of cost drivers, standardising requirements and
leveraging economies of scale across the Group.
In addition, we are optimising our sourcing
footprint by increasing purchasing from lower
Anglo American plc Annual Report 2007 | 11
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About
Anglo
American
Our strategy in action continued
Diversity: key to success
As mining technologies become more sophisticated
and skills shortages are fuelled by boom conditions
in the industry, we are constantly looking at
alternative ways of meeting the resourcing needs
of our expanding business. Through our investment
in our bursary and trainee programmes, we have
attracted over 4,000 individuals into our early career
pipeline, some drawn from local communities and
others from further afi eld.
A key element of our future success will rest on
how well we attract, retain and reward women – who
are still represented in only modest numbers. Anglo
American is aiming to steadily increase the proportion of
women throughout its ranks like geologist Dania Tristá
(right) from our Mantos Blancos operation in Chile.
Growth
Anglo American has one of the strongest and
highest quality project pipelines in world mining,
which will deliver substantial volume growth.
Currently under development are projects
spanning a number of countries, totalling
$12 billion. Further out, and encompassing
South Africa, Chile, Peru, Brazil, Alaska and
Canada, are an additional $29 billion of projects
under consideration.
Anglo Platinum has a major expansion
and replacement programme that will deliver
progressively rising quantities of refi ned
platinum, as well as other platinum group
metals and nickel, through to 2015.
Coal is involved in a number of projects.
In South Africa, the $505 million Zondagsfontein
project, to deliver 6.6 million tonnes of coal
annually from 2010, has been given the
go-ahead. In Australia, Dawson and Lake
Lindsay will add an additional 9.7 Mtpa at
full production.
In Base Metals, the $1.5 billion Barro Alto
expansion in Brazil is making good progress
and, when fully on stream in 2011, will boost
Anglo American’s total attributable nickel
production to an average of around
100,000 tonnes a year.
Los Bronces’ $1.7 billion expansion in Chile
will almost double annual copper production at
the mine to an initial production level exceeding
400,000 tonnes per annum, making it one
of the ten largest copper mines in the world
on completion of the expansion in 2011.
In Ferrous Metals, Kumba Iron Ore’s
$754 million Sishen Expansion Project produced
fi rst commercial output in 2007 and is
anticipated to ramp up to design capacity in 2009.
De Beers has two projects, both in Canada,
and with a collective cost of around $2 billion,
at various stages of development. Snap Lake,
De Beers’ fi rst mine in the country, produced its
fi rst diamonds in October and is ramping up to
full output later this year. A second mine, Victor,
is planned to enter production by mid-2008.
12 | Anglo American plc Annual Report 2007
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About
Anglo
American
next section:
How the Group and its
subsidiaries performed in
2007, including business
unit and fi nancial reviews
“ Through our asset
optimisation programme,
we are identifying, and
seeking to close, any
value gaps between
the performance of
our operations and the
industry’s best in class”
Acquisitions and new
business relationships
Complementing Anglo American’s programme
of organic growth, the Group is building its
position in a number of key commodities, in
particular copper and iron ore, through strategic
value enhancing acquisitions.
The aim of becoming a signifi cant player
in the highly consolidated iron ore industry,
with its high barriers to entry, has been boosted
by the acquisition of 49% in the advanced
MMX Minas-Rio project in Brazil. Phase 1 of the
mine is expected to cost $3.46 billion, with total
projected output of 26.5 million tonnes of
iron ore per annum by the end of the decade.
The Minas-Rio project, the Amapá mine and
the expansions at Kumba’s Sishen mine will
contribute towards the goal of lifting the
Group’s annual iron ore output to 150 million
tonnes by 2017.
The Group increased its copper profi le with
its successful tender for the Michiquillay project
in Peru and by becoming a 50% partner,
with Northern Dynasty, in the copper-gold-
molybdenum Pebble project in Alaska for a
staged cash investment of $1.425 billion. If
approval is secured for Quellaveco in Peru, these
three projects, combined with the Los Bronces
and Collahuasi expansions, could see the Group’s
attributable copper production rising to around
1.6 million tonnes a year by 2016.
The acquisition of a 70% stake in the
Foxleigh coal mine in Australia for $620 million
will further support our coal ambitions.
Recently, Anglo American and China
Development Bank entered into a Memorandum
of Understanding (MOU). The MOU represents
a long term mutual commitment to establish
a partnership to identify and develop mining
projects in China, Africa and other parts of
the world.
Engagement
Partnerships for a more
sustainable future
At Anglo American, we believe that the pursuit
of sustainable development goes hand in hand
with best business practice. By our responsible
custodianship of valuable resource endowments,
which often include scarce water supplies, and
our insistence on good governance, we hope
to demonstrate to host governments and
communities that resources, when developed
wisely, can be of widespread ongoing benefi t
to their countries.
Through fi nding ways to maximise local
economic linkages and benefi ts – for example,
employing a majority of local people,
establishing supply chain initiatives and
investing in social and physical infrastructure –
and careful management of social and
environmental impacts, we seek to develop
positive outcomes as a result of our presence.
Leading community engagement initiatives
is our Socio-Economic Assessment Toolbox
(SEAT). Anglo American is also an active
member of the UN Global Compact, the
Extractive Industries Transparency Initiative
and the round table on the Voluntary Principles
on Security and Human Rights. We are also
working to be a force for development through
the Investment Climate Facility for Africa,
Business Action for Africa, the International
Council for Mining & Metals and the World
Business Council for Sustainable Development.
In addition, Anglo American has taken steps
towards building a corporate partnership with
the environmental NGO Fauna and Flora
International (FFI). Anglo American and FFI
intend to work together to craft a Biodiversity
Performance Standard that will govern the
approach to diversity management throughout
the Group’s operations.
Our energy partnerships
Anglo American is broadening its range of
relationships in the energy fi eld. These are
helping to create the potential for the Group to
expand into downstream areas closely related
to its core business. Through such relationships,
risk can be shared and there is the mutual
opportunity of accessing each other’s
complementary resources, including markets,
technologies and capital.
Anglo American is involved with various
parties in a number of energy ventures,
including the commercialisation of fuel cell
technology, the capture and commercial sale
of methane from its coal mines, as well as
in researching integrated carbon capture and
storage projects. The Group is a member of the
FutureGen Industrial Alliance, which consists of
major energy and mining companies working in
partnership with the US Department of Energy
(DOE) to design, construct and operate the
world’s fi rst ‘near zero emissions’ coal-fuelled
power generation plant. Although in January
2008, the DOE announced an intention to
establish an alternative programme, the Alliance
intends to continue to work with the US
Administration, Congress and other stakeholders
to advance the project. Anglo American has
also formed a Clean Coal Energy Alliance to
develop the Monash brown coal to liquids
project in Australia. In China, Anglo American,
the Shaanxi Coalfi eld Geological Bureau and
Shell are jointly looking at ways to develop,
including downstream applications, a coal
resource of more than 600 million tonnes. ■
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Anglo American plc Annual Report 2007 | 13
Operating and fi nancial review
Basis of disclosure
Forward looking statements
This operating and fi nancial review (OFR)
describes the main trends and factors
underlying the development, performance
and position of Anglo American plc (the Group)
during the year ended 31 December 2007,
as well as those likely to affect our future
development, performance and position.
It has been prepared in line with the guidance
provided in the reporting statement on the
operating and fi nancial review issued by the UK
Accounting Standards Board in January 2006.
This OFR contains certain forward looking
statements with respect to the fi nancial
condition, results, operations and businesses
of the Group. These statements and forecasts
involve risk and uncertainty because they relate
to events and depend on circumstances that
occur in the future. There are a number of factors
that could cause actual results or developments
to differ materially from those expressed or
implied by these forward looking statements.
38 Base Metals
38 Business overview
38 Industry overview
39 Strategy and growth
40 Financial overview
43 Ferrous Metals
43 Business overview
44 Industry overview
44 Strategy and growth
45 Financial overview
46 Coal
46 Business overview
47 Industry overview
48 Strategy and growth
48 Financial overview
51 Industrial Minerals
51 Business overview
51 Industry overview
52 Strategy and growth
53 Financial overview
54 Discontinued operations
54 AngloGold Ashanti
54 Paper and Packaging
55 Principal risks and uncertainties
Section contents
15 Group overview
15 The Group
15 The businesses
15 Precious
16 Base
16 Bulk
17 Key performance indicators (KPIs)
18 Performance against KPIs
18 Safety
18 People
20 Asset optimisation
20 New capital investment
23 Sustainable development
25 Resources
27 Group fi nancial performance
31 Business unit overview
31 Platinum
31 Business overview
32 Industry overview
32 Strategy and growth
33 Financial overview
35 Diamonds
35 Business overview
35 Industry overview
35 Strategy and growth
36 Financial overview
14 | Anglo American plc Annual Report 2007
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Operating
and fi nancial
review
(cid:53)(cid:46)(cid:36)(cid:37)(cid:50)(cid:44)(cid:57)(cid:41)(cid:46)(cid:39)(cid:0)(cid:37)(cid:33)(cid:50)(cid:46)(cid:41)(cid:46)(cid:39)(cid:51)
(cid:34)(cid:89)(cid:0)(cid:82)(cid:69)(cid:71)(cid:73)(cid:79)(cid:78)(cid:0)(cid:0)(cid:8)(cid:5)(cid:9)
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Group overview
The Group
Anglo American is a global leader in
mining focused on adding value for
shareholders, customers, employees
and the communities in which it operates.
The Group has a range of high quality,
core mining businesses with balanced
participation across precious, base and
bulk commodities.
The fi ve core mining businesses are
Platinum, Diamonds, Base Metals,
Iron Ore (Ferrous Metals) and Coal.
The Group is geographically diverse,
with an operating footprint spanning
45 countries.
The businesses
Precious
Platinum
Anglo Platinum mines, processes and refi nes
the entire range of platinum group metals
(platinum, palladium, rhodium, ruthenium,
iridium and osmium) and is the world’s largest
primary producer of platinum, accounting for
some 37% of global supply. Anglo Platinum has
the largest platinum reserves in the world, as
well as extensive resource capabilities and the
ability to grow production in line with projected
demand for the foreseeable future. The industry
outlook for platinum is positive, supported in
particular by autocatalyst and Chinese jewellery
demand, and industrial growth. All of Anglo
Platinum’s current operations are located in
South Africa.
Further details on Anglo Platinum’s
strategy, the demand drivers behind the
business and fi nancial results for the year
can be found on pages 31 to 34 of the OFR.
Diamonds
Anglo American’s diamond interests are
represented by its 45% shareholding in
De Beers, the other shareholders being Central
Holdings Ltd (an Oppenheimer family holding
company) (40%), and the Government of the
Republic of Botswana (15%).
De Beers is the world’s leading diamond
exploration, mining and marketing company.
Its expertise extends to all aspects of the
diamond pipeline including prospecting, mining
and recovery and through its marketing arm, the
Diamond Trading Company International (DTCI),
the sorting, valuing and sale of rough gem
diamonds. De Beers produces around 40%
by value of global rough diamond production
from its mines in South Africa and through its
partnerships with the governments of Botswana,
Namibia and Tanzania. The long term supply
and demand characteristics for the diamond
industry are favourable, driven by continued
strong jewellery demand in mature markets
such as the US and increasing demand from
emerging markets such as China and India.
Further details on De Beers’ strategy,
the demand drivers behind the business
and fi nancial results for the year can be
found on pages 35 to 37 of the OFR.
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Anglo American plc Annual Report 2007 | 15
Operating
and fi nancial
review
Group overview continued
“ The Group is
geographically diverse,
with an operating
footprint spanning
45 countries”
see also
p10Our strategy in action
p27Group fi nancial performance
p31Review by business unit
Coal
The Group’s coal interests are held through its
wholly owned Anglo Coal business, one of the
world’s largest private sector coal producers
and exporters. In 2007, Anglo Coal produced
95.6 million tonnes (Mt) from three geographic
regions: South Africa, Australia and South
America (Venezuela and Colombia).
Anglo Coal produces thermal and
metallurgical coals for international customers in
the Med-Atlantic and Indo-Pacifi c markets as well
as local customers in South Africa and Australia.
As energy demand and prices continue to
rise, coal remains the world’s most abundant,
affordable and secure fuel source. With the help
of technology it is also becoming a cleaner fuel.
Anglo Coal’s excellent growth prospects in
thermal and metallurgical coal will ensure the
Group is fi rmly placed to help meet increased
global energy needs and will continue to play
an important part in Anglo American’s growth
over the next decade.
Further details on Anglo Coal’s
strategy, the demand drivers behind the
business and fi nancial results for the year
can be found on pages 46 to 50 of the OFR.
Industrial Minerals
In August 2007, Anglo American announced
plans to sell Tarmac, the aggregate products
and building materials business. Tarmac has a
leading position in the UK construction
materials industry and is well positioned in
certain key markets in continental Europe and
the Middle East. It is expected that the
performance of Tarmac will underpin a
competitive sale process; however, it has been
decided not to launch the marketing phase of
the sale process until current credit market
conditions improve.
Further details on Industrial Minerals’
strategy, the demand drivers behind the
business and fi nancial results for the year
can be found on pages 51 to 53 of the OFR.
Base
Base Metals
Anglo Base Metals has 14 operations in six
countries:
• six copper operations in Chile – the wholly
owned Los Bronces, El Soldado, Mantos
Blancos and Mantoverde mines, the
Chagres smelter and a 44% interest in the
Collahuasi mine. The mines also produce
associated by-products such as
molybdenum and silver;
• the Codemin nickel and Catalão niobium
mines in Brazil and the Loma de Níquel
nickel mine in Venezuela;
• the Namakwa mineral sands mine and
plants in South Africa produce titanium
dioxide, zircon and rutile, together with
associated by-products;
• the Lisheen (Ireland), Black Mountain
(South Africa) and Skorpion (Namibia)
zinc mines, producing zinc and associated
by-products such as lead, copper and
silver; and
• a controlling interest in the phosphate
fertiliser and phosphoric acid producer,
Copebrás, in Brazil.
Anglo Base Metals’ world class assets are
supported by a strong project pipeline with the
division’s extensive brownfi eld and greenfi eld
expansion plans underpinned by a positive
outlook for copper, nickel and zinc.
Further details on Anglo Base Metals’
strategy, the demand drivers behind the
business and fi nancial results for the year
can be found on pages 38 to 42 of the OFR.
Bulk
Ferrous Metals
Anglo Ferrous Metals’ primary business is iron
ore. The division has a 63.4% shareholding
in Kumba Iron Ore Limited in South Africa and
a 49% interest, acquired in mid-2007, in the
MMX Minas-Rio project in Brazil. Other interests
principally comprise manganese ore and alloy
operations and carbon steel products.
Through Kumba, Anglo American is already
the world’s fourth largest iron ore producer,
with the capacity to double output over the next
fi ve years.
Further details on Ferrous Metals’
strategy, the demand drivers behind the
business and fi nancial results for the year
can be found on pages 43 to 46 of the OFR.
16 | Anglo American plc Annual Report 2007
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Operating
and fi nancial
review
Key performance indicators (KPIs)
In order to realise its strategic aims, Anglo American identifi ed areas of strategic focus and has put in place a number of
key performance indicators to measure and assess progress against them. These encompass both fi nancial and
non-fi nancial indicators as well as quantitative and qualitative measures. While these KPIs are helpful in measuring the
Group’s performance, it should be stressed that they are not exhaustive and that many additional performance measures
are used to monitor progress.
Strategic aim
Strategic focus
KPI
Description
Integration
Safety
Work related fatal injuries
and fatal injury frequency
rate (FIFR)*
Lost time injury frequency
rate (LTIFR)*
People
Voluntary labour turnover†
FIFR is calculated as the number of fatal injuries to
employees or contractors per 200,000 hours worked
The number of lost-time injuries (LTIs) per 200,000
hours worked. An LTI is an occupational injury which
renders the person unable to perform his/her duties
for one full shift or more the day after the injury was
incurred, whether a scheduled work day or not
Number of permanent employee resignations as a
percentage of total permanent employees
Gender diversity†
Percentage of women and female managers employed
by the Group
Voluntary counselling and
testing (VCT) for HIV/AIDS
Percentage of employees undertaking voluntary
annual HIV tests with compulsory counselling support
Results and target (if applicable)
2006: 44 fatalities, 0.017 FIFR
2007: 40 fatalities, 0.018 FIFR
2008 target: zero incidents
2006: 1.16
2007: 1.15
2008 target: 0.68
The ultimate goal of zero harm remains
2006: 5.4% (includes discontinued
operations)
2007: 4.3%
2006: 14% females, 15% female managers
(includes discontinued operations)
2007: 11% females, 15% female managers
2006: 63% (includes discontinued
operations)
2007: 71%
2008 target: 100% VCT in high disease
burden countries (100% is the long term goal)
Performance
Asset optimisation
Return on capital employed
Calculated as total operating profi t before impairments
for the year divided by the average total capital less
other investments and adjusted for impairments
2006: 32.4%
2007: 37.8%
Year on year cost savings
($m)†
Cost savings and effi ciencies to the Group relating to
operating effi ciencies, procurement savings and
restructuring and synergies
Underlying earnings
per share†
Total shareholder return (TSR)
Growth
New capital investment
Capital projects and
investment
Underlying earnings is net profi t attributable to equity
shareholders, adjusted for the effect of special items
and remeasurements, and any related tax and minority
interests
TSR is defi ned as share price growth plus dividends
reinvested over the performance period. The Group
uses a performance period of three years and
calculates TSR annually
Optimise the pipeline of projects and ensure that new
capital is only committed to projects that show a
positive net present value on a risk adjusted basis
Engagement
Sustainable
development
CO2 emission intensity*
Reduction in CO2 emissions are measured from a
2004 baseline
Energy effi ciency*
Improvements in energy effi ciency are measured from
a 2004 baseline
2006: $343m ($590m on a total
Group basis)
2007: $280m ($380m on a total
Group basis)
2006: $3.42 ($3.73 on a total Group basis)
2007: $4.18 ($4.40 on a total Group basis)
Please refer to Remuneration report on
pages 70 to 82
A summary of the Group’s project pipeline is
on pages 20 to 22
2006: 36.4 million tonnes CO2 equivalents
2007: 24.4 million tonnes CO2 equivalents
Target: A 10% reduction in CO2 emissions
per unit of production by 2014
2006: 304 million GJ total energy used
2007: 196 million GJ total energy used
Target: A 15% improvement in energy
effi ciency by 2014
Total water use*
Water is a critical resource and is managed at
catchment level. Baselines and targets are being
revised in 2008
2006: 582 million m3
2007: 251 million m3
Corporate social investment*
Social investment as defi ned by the London
Benchmarking Group includes donations, gifts in kind
and staff time for administering community
programmes and volunteering in company time
2006: Spend – $50.3m, 0.55% of profi t
before tax
2007: Spend – $60.5m, 0.70% of profi t
before tax
* Includes data from Mondi until 3 July 2007 and Highveld until April 2007. 2006 results include data from Mondi and Highveld for the full year.
† Excludes discontinued operations unless otherwise stated.
The Group believes the Corporate social investment KPI refl ects neither the strategic value of the initiative nor is it sufficiently reflective of the value
of the outcome of the initiative. We are in the process of developing new KPIs which seek to address some of these issues.
Anglo American plc Annual Report 2007 | 17
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Operating
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Group overview continued
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Performance against KPIs
KPIs are employed across the Group
to assess how well the strategic aims
are being met
supervisory and operator training are being
developed with the aim of making suitable risk
management qualifi cations and good safety
performance essential to career advancement.
Integration
Adopting a ‘One Anglo’ approach includes
applying common standards and systems in
areas such as safety and people management.
Safety
Sadly, 40 people lost their lives at Anglo American
operations in 2007 (2006: 44), with 11 of
those fatalities occurring in the second half of
the year. There was also a reduction in lost time
injuries (LTIs) in the second half of the year,
although the LTI frequency rate for the year as
a whole remained fl at compared to 2006.
Fatal incidents at Anglo American
operations remain a major concern and triggered
signifi cant executive response during 2007,
including the temporary suspension of
production at all shafts at Anglo Platinum’s
Rustenburg mine.
Following a summit called by the chief
executive, a new strategy was launched in
mid-2007 and is in the process of being
rolled out.
The new strategy lays stress on the role
of leadership and the need for a sound and
comprehensive risk management strategy and
is founded on:
• results from our own Safety Peer Reviews
conducted during the year;
• results from an in-depth safety audit
conducted at a mine that had gone for
almost two years LTI-free and then had
a spate of three fatalities;
• the Baker Report on BP’s Texas City explosion
which highlighted the necessary distinction
between process safety and personal safety;
and
• the International Council for Mining & Metals
Safety and Health Conference which
introduced some valuable lessons from
our peers.
The Anglo Safety Way is a framework of
management systems and standards which will
guide the way the Group works. These have
now been supported by the adoption of a Fatal
Risk Standards and a Safety Risk Management
Programme. In support of the latter, the Group
has funded Professor Jim Joy as the Anglo
American Professor of Safety Risk Management
at the University of Queensland, Australia.
Programmes for executive, management,
People
Underpinning Anglo American’s strategy to
become a leading focused mining company
are the combined efforts of all its employees
who number more than 90,000 permanent
employees around the globe (excluding
joint ventures and our independently
managed businesses).
With a demanding project and growth
agenda, the Group’s people strategies are key
to attracting, developing and retaining great
employees at every level (often in the context
of tight labour markets) and in supporting the
highest standards of performance.
Talent management
Talent management activities are well
supported across the Group and are not limited
to those areas of the business that are currently
challenged by resource constraints. A three-tier
approach to talent management (with reviews
at divisional, functional and Board level)
continued during 2007, with increasing focus
on the actions arising from our talent audit work,
including demanding assessment interventions
as well as extensions to our world class
development programmes.
During 2007, the Group successfully
introduced new enablers like the Global Banding
Framework (see Reward, retention and
performance) and a talent management system
(AngloTrack) to streamline the management
of talent data. Web-based work spaces, known
as QuickPlaces, were established to allow
development programme alumni to keep in
touch and share insights and learning, while the
internal enterprise information portal,
theSource, has provided an excellent platform
for sharing core management tools and
techniques across the businesses.
Increased sharing of ideas and resources
has resulted in an increase in effi ciencies and
effectiveness in the Group’s talent initiatives.
For example, from 2008, our previously diverse
foundation Management Development
Programmes will have a common curriculum
and standard of delivery throughout the world.
On the resourcing front, several initiatives
are under way at executive and broader levels,
including a single web-based internal and
external recruitment system. The recent
appointment of a Group head of resourcing
will result in greater benefi ts arising from more
unifi ed recruitment strategies.
18 | Anglo American plc Annual Report 2007
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Operating
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Reward, retention and performance
Reward and retention initiatives continue to be
a major focus across the Group, as is the linking
of the highest levels of reward with the highest
standards of performance.
Compensation and benefi t programmes are
regularly benchmarked externally (using a range
of market data) to confi rm the Group’s
competitiveness and are subject to review by
the Remuneration Committee to ensure that
they continue to be effective and appropriate.
The introduction of the Global Banding
Framework paved the way for a Group-wide
common system and language for assessing
management and professional roles, replacing
a range of disparate local legacy grading
systems. The common system will bring
considerable benefi ts in the drive to achieve
a more unifi ed performance culture throughout
the business. This includes facilitating global
consistency and understanding of roles across
all business units, functions and locations,
and enhancing the retention aspects of the
organisation’s talent and career development
processes through support for greater mobility
across the Group.
One of the Group’s key measures of
employee retention is voluntary labour
turnover. On a Group-wide basis, resignation
rates fell in 2007 to 4.3%, despite increasing
pressure in the resource constrained labour
market. During the year supplementary
retention measures were introduced within
targeted areas, which helped contain labour
turnover and reverse previously upward trends
in this area.
During a year which saw the major
divestment of Paper and Packaging, the Group’s
reward and retention initiatives, together with a
share consolidation, successfully dealt with the
impact of the demerger.
The year also marked the launch of Project
Fusion, a payroll, benefi t and employee life
cycle information-management system that will
enhance online people-management capability
at the transactional level and provide a more
sophisticated platform for Group-wide HR
initiatives. The initiative has also laid the
foundation for the development of a Group-
wide HR shared services function.
Transformation
Within South Africa, the Group has seen
consolidation of its representation of historically
disadvantaged South Africans (HDSAs) in its
management ranks in this reporting period
(target 40%), with the streamlined and more
focused mining business refl ecting an increased
percentage (42%) of HDSAs in management
(2006: 39%).
There has also been growth in the representation
of women in senior management roles in South
Africa. The fi gure at the end of 2007 was 17%,
up from 14% a year earlier. These upward trends
are expected to continue in 2008, with further
growth in the overall HDSA complement and
female representation in management roles.
Within the Group, overall gender diversity
profi les mirror the changed focus from a
conglomerate to a mining business. Since the
divestment of our Paper and Packaging interests,
although the percentage of female managers has
remained constant at 15%, the overall percentage
of females in the Group has decreased to 11%
(2006: 14%). Initiatives like “Women in Mining”
are seeking to change perceptions about the
attractiveness of careers in mining.
HIV and AIDS response
The burden of disease in developing countries
is a signifi cant global development challenge.
The Group encounters this challenge at many
of its operations and through its various health
initiatives is able to make a signifi cant contribution
towards achieving health development goals.
The Group’s main exposure is to the impact
of the HIV/AIDS and tuberculosis epidemics in
sub-Saharan Africa, and especially South Africa,
where ongoing management responses, both in
the workplace and the community, are making
a signifi cant difference.
The Group’s own HIV/AIDS programmes,
based on a foundation of non-discrimination,
stigma reduction, gender equality and equitable
access to care, support and treatment, continue
to make good progress in reducing the burden of
disease. More than 70% of Group employees in
southern Africa discovered, or updated their
knowledge of, their HIV status by participating
in VCT initiatives during 2007.
Early diagnosis of HIV allows early access
to treatment and can signifi cantly delay and
possibly prevent the onset of AIDS. By the end
of 2007, the Group directly supported around
3,600 employees on treatment for AIDS;
virtually all of them being able to continue with
their normal jobs and support their families.
During the year the Group made signifi cant
funding commitments and took major strides to
improve access to care, support and treatment
for the dependants of all employees. Anglo
American supports many community based
initiatives, which benefi t from the Group’s
workplace experience managing HIV/AIDS and
tuberculosis.
The Group is taking a leading role in
recognising the vulnerability of young women and
girls to HIV infection and is actively involved in
supporting initiatives to improve women’s rights
and access to quality health care around the world.
Anglo American plc Annual Report 2007 | 19
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Operating
and fi nancial
review
Group overview continued
“ This array of projects
stretching well into
the future, building
on the Group’s unique
suite of existing assets,
has created formidable
organic growth potential”
the Group won the tender for the Michiquillay
copper project for a staged cash investment of
$403 million. Michiquillay, which will exploit one
of the largest undeveloped copper deposits in
the world, has the potential to produce up to
300,000 tpa.
In Brazil, the $1.5 billion Barro Alto project
is on schedule for fi rst production in 2010 and
will provide a signifi cant boost to the Group’s
growing market position in nickel. Also in Brazil,
Ferrous Metals acquired a 49% stake in the
MMX Minas-Rio iron ore project for a
consideration of $1.15 billion during the year,
plus a potential payment of $600 million if
certain criteria are met. Phase 1 of the project
consists of a 26.5 million tonnes per annum
(Mtpa) mine and a 525-kilometre slurry pipeline
to transport pellet feed to a port facility which is
being developed. The mine is also being planned
to produce 3 Mtpa of lump for domestic sale.
First production is scheduled for 2010. The
capital cost, on a 100% basis, for the
construction of the mine, the pipeline and the
port for phase 1, is estimated at $3.46 billion. In
January 2008, Anglo American announced that
it was in exclusive discussions with MMX’s
majority shareholder to acquire control of the
Minas-Rio project and the Amapá iron ore mine
for approximately $5.5 billion, if the Group
acquires 100% of the interests held by MMX in
these assets. The resource statements for
Minas-Rio and Amapá are currently being
updated.
In Alaska, a 50% stake in the Pebble copper
project has been acquired for a staged cash
investment of $1.425 billion. The key assets
of the project, which is co-owned by Northern
Dynasty Minerals, are its open pit style Pebble
West copper-gold-molybdenum deposit and
the adjacent deeper and higher grade Pebble
East deposit. The objective is to complete a
pre-feasibility study by the end of 2008.
Performance
Asset optimisation
2007 was a year of change for the Group – one
in which it continued to deliver strong returns
for shareholders while also streamlining the
business and laying the foundations for greater
effi ciency gains and stronger growth into
future. For information on our asset
optimisation programme, see pages 10 to 13
and see pages 27 to 30 of the OFR for analysis
of the Group’s fi nancial performance in the
year.
Growth
New capital investment
Several major projects are under development
across the Group’s platinum, diamond, coal, base
metals and iron ore businesses. These projects
amount to $12 billion on an attributable basis.
Under active consideration, and at the pre-
feasibility or feasibility stages are further major
projects with an estimated potential cost of
around $29 billion. This array of projects
stretching well into the future, building on
the Group’s unique suite of existing assets,
has created formidable organic growth potential.
In South Africa, Anglo Platinum approved
several projects in 2007, including the
$279 million expansion at the base metals
refi nery, the $139 million Townlands ore
replacement project, and the $188 million
Mainstream inert grind projects.
The $692 million PPRust North expansion
project is in progress, with the mine expected
to mill an additional 600,000 tonnes of ore per
month when it reaches full capacity in 2009.
The $224 million East Upper UG2 project at
Amandelbult, to exploit mainly the UG2 reef,
will raise the mine’s platinum output by
100,000 ounces a year by 2012. Accessing
Merensky reef, the $316 million Paardekraal 2
shaft project aims to replace 120,000 ounces
of platinum annually by 2015.
Base Metals has several projects in
South America to ensure that the Group
retains its signifi cant market position in
copper. In Chile, approval has been given for
a $1.7 billion expansion of Los Bronces to take
production to an average initial level exceeding
400,000 tonnes per annum (tpa) of copper from
2011, while investigations are under way on
a potential two phase expansion at Collahuasi.
In Peru, the Quellaveco project, currently the
subject of a revised feasibility study, is scheduled
to be submitted for Board approval in the second
half of 2008. If approved, this copper mine
would produce in the region of 200,000 tpa,
at a capital cost of $1.7 billion. Also in Peru,
20 | Anglo American plc Annual Report 2007
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At Kumba Iron Ore’s $754 million
Sishen Expansion Project in South Africa, fi rst
commercial output was delivered by the end of
2007. The project is expected to ramp up to full
production capacity of 13 Mtpa of iron ore
in 2009. Further brownfi eld and greenfi eld
projects should increase Kumba’s annual
output to more than 70 Mtpa.
In 2007, Coal progressed expansion
programmes in all its major countries of
operation. The recently approved $505 million,
6.6 Mtpa, Zondagsfontein project will form
an important part of Coal’s plans to increase
its South African coal production by 50%
to around the 90 Mtpa level by 2015.
Zondagsfontein will produce thermal coal
for Eskom.
In Australia, the $835 million Dawson mine
continues to ramp up towards full production of
an additional 5.7 Mtpa (100%) of metallurgical
and thermal coal for the export market.
Also in Australia, the $690 million Lake
Lindsay greenfi eld project is on schedule for
fi rst production in the fi rst quarter of 2008.
Annual saleable production will be 4.0 Mtpa
(100%), comprising mainly metallurgical coal.
De Beers is progressing a number of projects
to maintain its role as a leading global diamond
producer. The major expansion focus is in
Canada, where De Beers has two signifi cant
projects. The technically and logistically
challenging Snap Lake development close to
the Arctic Circle in the Northwest Territories
was brought into production late in the fourth
quarter of 2007 and plans to produce
approximately 1.6 million carats per annum.
In Ontario, the province’s fi rst diamond mine,
Victor, is set to enter production in the second
quarter of 2008, yielding 0.6 million carats per
annum. In South Africa, the South African
Sea Areas marine mining vessel (mv) was
launched off the Atlantic coast in June. As
De Beers’ newest vessel, the mv Peace in Africa
is expected to yield approximately 0.2 million
carats per annum. Work continues in South
Africa on reopening the long dormant
Voorspoed mine, with fi rst production due in
the fourth quarter of 2008, yielding 0.7 million
carats per annum.
Operating
and fi nancial
review
“ It is estimated that about
55% of the total investment
in the Los Bronces
expansion project will
be spent in the Chilean
economy”
FOCUS ON:
Copper expansion at Los Bronces
The $1.7 billion Los Bronces development
project in Chile will nearly double the mine’s
current annual production of copper by 2011.
The investment will make Los Bronces
one of the world’s largest copper mines and
marks another important stage in the Group’s
pipeline of copper expansion projects, which
aims to increase attributable copper
production to approximately 1.6 million
tonnes per annum by 2016.
Los Bronces is an open pit copper mine
located in the Andes, 65 kilometres north-
east of Santiago and more than 3,500 metres
above sea level. The mine is connected to
the treatment plants via a 56-kilometre slurry
pipeline and includes copper and molybdenum
fl otation plants and two solvent-extraction/
electro-winning (SX-EW) plants for the low-
grade ore dump leaching process.
The project will involve the construction
of new grinding facilities and a fl otation plant.
In addition to the 3,700 new jobs created in
the construction period, 400 permanent
employees will be taken on once the project is
completed. It is estimated that about 55% of
the total investment ($935 million) will be
spent in the Chilean economy. The project is
expected to be completed in three years and
have a mine life of more than 30 years.
Anglo American plc Annual Report 2007 | 21
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Operating
and fi nancial
review
Group overview continued
Selected major projects
Completed
Sector
Project
Country
Completion date
Capex $m(1)
Production volume(2)
Diamonds
South African Sea Areas
South Africa
Coal
Bundoora
Australia
Q2 2007
Q1 2007
159
90
0.2 M carats pa
Replace 2.6 Mt coking over life of mine
Approved
Sector
Platinum
Project
Mototolo JV
Marikana JV
PPRust North expansion
PPRust North replacement
Newly approved
Mainstream inert grind projects
Lebowa Brakfontein Merensky
Newly approved
Base metals refi nery expansion
Newly approved
Townlands ore replacement
Amandelbult East Upper UG2
Newly approved
Twickenham(8)
Paardekraal
Diamonds
Coal
Snap Lake
Victor
Voorspoed
Dawson
Lake Lindsay
Mafube
Cerrejón
MacWest
Newly approved
Zondagsfontein implementation
Base Metals
Collahuasi debottlenecking
Newly approved
Los Bronces expansion
Barro Alto
Country
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Canada
Canada
South Africa
Australia
Australia
South Africa
Colombia
South Africa
South Africa
Chile
Brazil
Chile
Ferrous Metals
Sishen Expansion
Newly approved
MMX Minas-Rio phase 1
South Africa
Brazil
Future unapproved
Sector
Coal
Project
Heidelberg Opencast
Elders Opencast
Heidelberg Underground
Elders Underground
New Largo
Waterberg
Base Metals
Quellaveco
Ferrous Metals
Collahuasi expansion phase 1
Collahuasi expansion phase 2
Michiquillay
Pebble
Sishen South
Sishen Pellet
Sishen Expansion 2
MMX Minas-Rio phase 2
Country
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Peru
Chile
Chile
Peru
USA
South Africa
South Africa
South Africa
Brazil
Full
production date
Estimated
capex $m(1)
2008
2009
2009
2009
2009
2010
2010
2012
2014
2015
2016
2008
2009
2009
2008
2008
2008
2008
2009
2010
2009
2011
2011
2009
2011
200
36
692
230
188
179
279
224
139
316
735
997
1,021
185
835
690
292
129
47
505
64
1,500
1,700
754
3,456
Production volume(2)
130 kozpa refi ned platinum
145 kozpa refi ned platinum
230 kozpa refi ned platinum
Replace 200 kozpa refi ned platinum
Improved process recoveries
Replace 108 kozpa refi ned platinum
11 ktpa nickel
100 kozpa refi ned platinum
Replace 70 kozpa refi ned platinum
Replace 120 kozpa refi ned platinum
180 kozpa refi ned platinum
1.6 M carats pa
0.6 M carats pa
0.7 M carats pa
5.7 Mtpa coking, semi-soft and thermal
4.0 Mtpa coking and semi-soft
5.4 Mtpa thermal
3.0 Mtpa (2nd stage) thermal
2.7 Mtpa thermal
6.6 Mtpa thermal
30 ktpa copper
36 ktpa nickel
170 ktpa copper(4)
13 Mtpa iron ore
26.5 Mtpa iron ore pellet feed (wet base)(7)
Full
production date
Estimated
capex $m(3)
Production volume(2)
2009
2011
2013
2013
2016
TBD
2013
2010
2014
2016
TBD
2011
2013
2013
TBD
20
365
270
185
690
TBD
1,700
750
TBD
2,000-2,500
TBD
645
145
560
TBD
1 Mtpa thermal
7 Mtpa thermal
5 Mtpa thermal
4 Mtpa thermal
14.7 Mtpa thermal
N/A
200 ktpa copper
650 ktpa copper(9)
1,000 ktpa copper(9)
300 ktpa copper(5)
350 ktpa copper(6)
9 Mtpa iron ore
1.5 Mtpa iron ore pellets
10 Mtpa iron ore
26.5 Mtpa pellet feed (wet base)
(1) Shown on 100% basis unless otherwise stated.
(2) Production represents 100% of average incremental or replacement
(4) Production represents average over the fi rst ten years of the project.
(5) Michiquillay will also produce 7 ktpa molybdenum, 230 kozpa gold,
production, at full production, unless otherwise stated.
(3) Shown on 100% basis, approximate amounts.
and 2.3 Mozpa silver by-products.
(6) Pebble will also produce around 12 ktpa molybdenum and 600
(7) MMX Minas-Rio phase 1 is also expected to produce 3 Mtpa lump
iron ore.
(8) Twickenham was approved in February 2008.
(9) Total production of mine when project ramps up to full production.
kozpa gold by-products.
The Group has a number of other unapproved projects under evaluation including Der Brochen, Pandora JV and Styldrift in Platinum and AK06, Gahcho Kué and Jwaneng in Diamonds.
22 | Anglo American plc Annual Report 2007
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Operating
and fi nancial
review
(cid:52)(cid:47)(cid:52)(cid:33)(cid:44)(cid:0)(cid:37)(cid:46)(cid:37)(cid:50)(cid:39)(cid:57)(cid:0)(cid:53)(cid:51)(cid:37)(cid:36)(cid:0)
(cid:39)(cid:42)(cid:0)(cid:8)(cid:77)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78)(cid:9)
Engagement
(cid:18)(cid:16)(cid:16)(cid:21)
(cid:18)(cid:16)(cid:16)(cid:22)
(cid:18)(cid:16)(cid:16)(cid:23)
(cid:48)(cid:65)(cid:80)(cid:69)(cid:82)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:48)(cid:65)(cid:67)(cid:75)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:10)
(cid:38)(cid:69)(cid:82)(cid:82)(cid:79)(cid:85)(cid:83)(cid:0)(cid:45)(cid:69)(cid:84)(cid:65)(cid:76)(cid:83)
(cid:41)(cid:78)(cid:68)(cid:85)(cid:83)(cid:84)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:45)(cid:69)(cid:84)(cid:65)(cid:76)(cid:83)
(cid:34)(cid:65)(cid:83)(cid:69)(cid:0)(cid:45)(cid:69)(cid:84)(cid:65)(cid:76)(cid:83)
(cid:35)(cid:79)(cid:65)(cid:76)
(cid:48)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:85)(cid:77)
(cid:35)(cid:47)(cid:18)(cid:0)(cid:37)(cid:45)(cid:41)(cid:51)(cid:51)(cid:41)(cid:47)(cid:46)(cid:51)(cid:0)
(cid:52)(cid:79)(cid:78)(cid:78)(cid:69)(cid:83)(cid:0)(cid:8)(cid:77)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78)(cid:9)(cid:0)
(cid:48)(cid:65)(cid:80)(cid:69)(cid:82)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:48)(cid:65)(cid:67)(cid:75)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:10)
(cid:38)(cid:69)(cid:82)(cid:82)(cid:79)(cid:85)(cid:83)(cid:0)(cid:45)(cid:69)(cid:84)(cid:65)(cid:76)(cid:83)
(cid:41)(cid:78)(cid:68)(cid:85)(cid:83)(cid:84)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:45)(cid:69)(cid:84)(cid:65)(cid:76)(cid:83)
(cid:34)(cid:65)(cid:83)(cid:69)(cid:0)(cid:45)(cid:69)(cid:84)(cid:65)(cid:76)(cid:83)
(cid:35)(cid:79)(cid:65)(cid:76)
(cid:48)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:85)(cid:77)
(cid:19)(cid:16)(cid:16)
(cid:18)(cid:21)(cid:16)
(cid:18)(cid:16)(cid:16)
(cid:17)(cid:21)(cid:16)
(cid:17)(cid:16)(cid:16)
(cid:21)(cid:16)
(cid:16)
(cid:19)(cid:22)
(cid:19)(cid:16)
(cid:18)(cid:20)
(cid:17)(cid:24)
(cid:17)(cid:18)
(cid:22)
(cid:16)
(cid:18)(cid:16)(cid:16)(cid:21)
(cid:18)(cid:16)(cid:16)(cid:22)
(cid:18)(cid:16)(cid:16)(cid:23)
* Results of Paper and Packaging included up to point of
demerger (July 2007)
Sustainable development
Anglo American made a fi rm commitment
to sustainable development in 2000. It has
since worked to ensure that its policies and
strategies address the key economic, social and
environmental risks and concerns that underpin
this agenda through daily good business practice,
as well as working in partnership with other
industry leaders, international agencies and
non-governmental organisations (NGOs). This
has highlighted real business opportunities.
Sustainability development priorities
are sanctioned by the Group’s Executive
Committee. Strategy and results are presented
to the Board’s Safety and Sustainable
Development Committee for regular review.
Sustainable development risks and
opportunities are assessed and reported
periodically through the Group’s internal risk
management procedures. Corporate oversight
and analysis are also provided by the corporate
sustainable development team of the longer term
consequences of emerging trends and the risks
and opportunities identifi ed by business units.
The Group’s approach to sustainable
development and measurement of its
performance are reported in more detail in
the Report to Society 2007. The report is
published annually in April and is available
both in printed form and electronically on our
website. It provides extensive detail of the
Group’s commitment to its principles of
sustainable development as well as analysis
of its performance in 2007.
Energy use, CO2 emissions and
water resources
Climate change is one of the most signifi cant
global challenges. Anglo American reports
energy use and carbon emissions annually and
is committed to ongoing operational efforts
to reduce the Group’s impact – particularly
through increasing energy effi ciency and
reducing the carbon intensity of the Group’s
products. Employees are also actively engaged
in long term international research and
development programmes for zero-emissions
power generation and carbon sequestration.
From a 2004 baseline, we are aiming to
achieve a 10% reduction in CO2 emissions
per unit of production (emissions intensity)
by 2014 and increase energy effi ciency by 15%.
Energy use
The Group’s managed companies used
196 million Gigajoules (GJ) of energy in 2007
(including energy use by Mondi and Highveld
Steel up to the point of divestment). Energy
use by the Group, excluding divestments,
was 120 million GJ in 2007 and 109 million GJ
in 2006.
During 2007, Group-wide attention was
given to developing appropriate metrics for
improving and reporting our energy effi ciency
initiatives. This has the dual purpose of enabling
improved management focus on the design and
management of these initiatives within the long-
term continuous improvement programme, as well
as improving the ability to report the results.
In addition, the Group has made progress
in the use of market-based mechanisms such
as the Carbon Development Mechanism of the
UN’s Kyoto Protocol and the European Trading
System to maximise business benefi ts from
these approaches. Anglo American continues
to engage both peers and other industry leaders
as well as a variety of experts on issues of energy
strategy and management. This is to ensure
that the Group addresses the energy security
needs of its operations and markets as well as
the urgent need to respond to the now well-
documented challenge of climate change. With
oil prices high throughout the year, energy costs
remain a major focus of management attention.
Reducing CO2 emissions
In 2007, the Group’s total greenhouse gas
emissions were 24.4 million tonnes of CO2
equivalents (CO2e) (34.6 in 2006 – the
difference due mainly to demergers and
disposals). The core companies (excluding
Mondi and Highveld) generated greenhouse
gas (GHG) emissions of 20.9 million tonnes
of CO2e including 3 million tonnes of CO2e from
coal mine methane. The comparable fi gure for
2006 was 20.8 million tonnes. As part of
Anglo American’s commitment to work
responsibly wherever it operates, all investment
proposals are required to factor in a cost of
carbon in order to raise awareness and support
efforts to reduce emissions. During 2007,
we rolled out a toolkit that enables design
engineers to test and evaluate the impact of
sustainable development concerns, including
climate change, at the design stage and to
incorporate these into the fi nancial evaluation
from the outset. We recognise the risk that
current policies on carbon emissions may
increase the cost of energy.
Anglo American plc Annual Report 2007 | 23
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Operating
and fi nancial
review
Group overview continued
Water use
Anglo American is a major user of water – the
most fundamental of all resources – the
distribution of which is being visibly affected
by climate change. Many operations are in arid
regions with many users competing for this
scarce resource. The Group’s ongoing
stewardship of water will be a major factor
in the viability of existing operations in such
regions, and even more so in weighing up
whether a brownfi eld expansion or a greenfi eld
new mine should be given the go-ahead.
During 2007, Anglo American held its fi rst
cross-business unit water summit to raise
awareness of its global responsibility in
this area.
Group operations consumed a total of
251 million m3 of water in 2007, of which
130 million m3 was in businesses core to its
future strategy. Major water users exited the
Group in 2006 and 2007 – Exxaro Hippo Valley
(November 2006), Highveld Steel (2007) and
Mondi (2007), which accounts for most of
the 57% decrease in water use from fi gures
published in 2006.
Water consumption in coal production
increased by 54% – attributed mainly to losses
due to evaporation and a greater need for dust
suppression as a result of the Australian
drought. Anglo Platinum’s water consumption
increased by 8% refl ecting an improvement
in its water accounting, the introduction of
a wet scrubbing system and high chloride levels
in the Rustenburg Base Metals Refi nery effl uent
dams that prevented recycling of the water
at the plant.
Social and community development
The Group increasingly seeks to promote wider
development in the countries and communities
where it operates. Among the ways in which
this is achieved are enterprise development,
which aids capacity building and economic
diversifi cation, and the innovative Socio-
Economic Assessment Toolbox (SEAT) process,
which aims to improve operations’
understanding of the concerns, needs and
priorities of the communities associated with
them. During 2007, Anglo Zimele in South
Africa began to develop a new network of ten
regional hubs to increase the reach of the
programme; early indications are that these
hubs will signifi cantly increase deal fl ow
especially amongst start-ups. In Chile,
the Anglo American enterprise development
programme has two main elements: a microloans
project with the NGO, Fondo Esperanza,
and a scheme to assist existing small to medium
sized companies to expand and to become
more signifi cant suppliers to the mining sector.
Both schemes were recognised for their
achievements in 2007.
The SEAT process has been used at nearly
60 sites in 16 countries. During 2007, the
Group launched an updated version of SEAT,
which among other things, provides greater
guidance on relationship issues such as confl ict
prevention and the handling of complaints.
SEAT was also hailed as industry best practice
in a review by US NGO Business for Social
Responsibility.
Involuntary resettlement is a key risk in the
social sphere. During 2007, Anglo Platinum
FOCUS ON:
Water reclamation project which brings benefi ts to business
and communities
Water management is set to be one of the key sustainability challenges
of the 21st century and Anglo American is already focusing its attention
on fi nding solutions.
In 2007, the Emalahleni Water Reclamation Plant (EWRP) produced
its fi rst water for the Emalahleni community in South Africa.
This innovative public-private partnership between Anglo Coal and
BHP Billiton has turned a liability into a valuable resource. Underground
mine water is pumped from three Anglo Coal collieries, as well as
BHP Billiton’s now defunct South Witbank mine, and is desalinated to
potable quality for supply to the Emalahleni Local Authority’s fi nal
bulk reservoirs.
The leading-edge technology selected was the result of many years
of research and development and the plant will generate a yield or water
recovery of greater than 99%, with less than 1% ending up as waste.
Underground water in mines sterilises valuable coal reserves and
poses environmental, safety and productivity risks. At the same time,
severe water shortages have been prevalent in the region for a number
of years.
24 | Anglo American plc Annual Report 2007
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29/2/08 23:15:59
see also
p136
Ore Reserves and Mineral Resources estimates
Operating
and fi nancial
review
(cid:39)(cid:44)(cid:47)(cid:34)(cid:33)(cid:44)(cid:0)(cid:51)(cid:48)(cid:37)(cid:46)(cid:36)(cid:0)(cid:34)(cid:57)(cid:0)(cid:35)(cid:33)(cid:53)(cid:51)(cid:37)(cid:0)(cid:51)(cid:53)(cid:48)(cid:48)(cid:47)(cid:50)(cid:52)(cid:37)(cid:36)
(cid:4)(cid:0)(cid:8)(cid:77)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78)(cid:9)
(cid:40)(cid:69)(cid:65)(cid:76)(cid:84)(cid:72)(cid:15)(cid:40)(cid:41)(cid:54)
(cid:37)(cid:68)(cid:85)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:89)(cid:79)(cid:85)(cid:84)(cid:72)
(cid:37)(cid:78)(cid:86)(cid:73)(cid:82)(cid:79)(cid:78)(cid:77)(cid:69)(cid:78)(cid:84)
(cid:35)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:84)(cid:89)(cid:0)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)
(cid:33)(cid:82)(cid:84)(cid:83)(cid:12)(cid:0)(cid:67)(cid:85)(cid:76)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:72)(cid:69)(cid:82)(cid:73)(cid:84)(cid:65)(cid:71)(cid:69)
(cid:40)(cid:79)(cid:85)(cid:83)(cid:73)(cid:78)(cid:71)
(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)
(cid:0) (cid:19)(cid:14)(cid:25)
(cid:17)(cid:17)(cid:14)(cid:16)
(cid:0)(cid:0)(cid:16)(cid:14)(cid:24)
(cid:17)(cid:24)(cid:14)(cid:21)
(cid:0)(cid:0)(cid:20)(cid:14)(cid:20)
(cid:0)(cid:0)(cid:22)(cid:14)(cid:16)
(cid:17)(cid:21)(cid:14)(cid:25)
(cid:39)(cid:44)(cid:47)(cid:34)(cid:33)(cid:44)(cid:0)(cid:51)(cid:48)(cid:37)(cid:46)(cid:36)(cid:0)(cid:34)(cid:57)(cid:0)(cid:50)(cid:37)(cid:39)(cid:41)(cid:47)(cid:46)
(cid:4)(cid:0)(cid:8)(cid:77)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78)(cid:9)
(cid:51)(cid:79)(cid:85)(cid:84)(cid:72)(cid:0)(cid:33)(cid:70)(cid:82)(cid:73)(cid:67)(cid:65)
(cid:50)(cid:69)(cid:83)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:33)(cid:70)(cid:82)(cid:73)(cid:67)(cid:65)
(cid:53)(cid:78)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)(cid:43)(cid:73)(cid:78)(cid:71)(cid:68)(cid:79)(cid:77)
(cid:50)(cid:69)(cid:83)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:37)(cid:85)(cid:82)(cid:79)(cid:80)(cid:69)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:33)(cid:77)(cid:69)(cid:82)(cid:73)(cid:67)(cid:65)(cid:83)
(cid:33)(cid:85)(cid:83)(cid:84)(cid:82)(cid:65)(cid:76)(cid:73)(cid:65)(cid:15)(cid:33)(cid:83)(cid:73)(cid:65)
(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)
(cid:0) (cid:20)(cid:19)(cid:14)(cid:23)
(cid:0)(cid:0)(cid:0)(cid:0)(cid:16)(cid:14)(cid:18)
(cid:0)(cid:0)(cid:0)(cid:0)(cid:19)(cid:14)(cid:17)
(cid:0)(cid:0)(cid:0)(cid:0)(cid:20)(cid:14)(cid:19)
(cid:0)(cid:0)(cid:0)(cid:0)(cid:24)(cid:14)(cid:17)
(cid:0)(cid:0)(cid:0)(cid:0)(cid:17)(cid:14)(cid:16)
(cid:0)(cid:0)(cid:0)(cid:0)(cid:16)(cid:14)(cid:17)
began a major relocation of almost 1,000
families in the Limpopo province of South Africa
amid some controversy. The resettlement is
now more than 50% complete and the families
involved have secured a clear improvement in
the standard of their housing. However, the
Group has drawn some important lessons in
relation to the handling of direct communication
with community members and the importance
of long term planning if economic development
commitments are to be made good.
Corporate social investment
Anglo American and its managed subsidiaries
and joint ventures contributed $60.5 million
(0.7% of pre-tax profi t) to charitable causes
and community development initiatives
compared with $50.3 million (0.5% of pre-tax
profi t) in 2006. These fi gures include cash
donations, gifts in kind and staff time spent
delivering community benefi t programmes.
In addition, the Group is providing approximately
$5 million a year for fi ve years to two
independent trusts, Optima and Epoch, to
raise standards of maths and science teaching
in South African schools.
The Anglo American Chairman’s Fund, the
Group’s main social investment vehicle in South
Africa, was rated for the sixth time in seven
years as the top corporate giver by NGOs and
peer group companies. In 2007, it supported
over 300 projects. In Chile, the Group’s
enterprise development programme was
recognised through the award of one of only
seven Bicentennial Medals by President
Bachelet. In its fi rst year, in partnership with the
Fondo Esperanza, it supported loans to 900
small-scale entrepreneurs and worked with
20 more established businesses to assist them
in moving to the next stage of growth.
To mirror the work of the Chairman’s Fund,
the Anglo American Group Foundation was
established in 2006 aimed at supporting projects
in the UK and other parts of the world where the
Group operates. Amongst the causes supported
by the Foundation during 2007 were projects
for Plan International in China, SightSavers
International in West Africa, Children of the Andes
in Colombia, Starfi sh, which works with HIV/AIDS
impacted families in South Africa, and Engineers
Without Borders. Within the UK, Anglo American
worked with homelessness charities Centrepoint
and the Connection at St Martin-in-the-Fields
in London, and the National AIDS Trust.
In addition, the Group built on a longstanding
involvement with the international development
charity CARE in countries like Brazil and
Zimbabwe, by forming a global relationship
aimed at poverty alleviation and improving local
development outcomes.
Resources
The resources Anglo American
considers critical to achieving its
strategic aims include:
• Knowledge and expertise
• Proved and Probable reserves. Full
details of the Group’s Ore Reserves
and Mineral Resources estimates are
found on pages 136 to 157
Knowledge and expertise
Technology capability
Anglo American has long been distinguished by
its strong in-house technology capability. Anglo
Technical Division (ATD) is the custodian of the
specialised technologies employed throughout
the Group, while Anglo Research identifi es
emerging technologies and develops them to
pilot-plant scale and also assists in the rapid
transfer of technologies across the Group.
They are key members of Anglo American’s
Technology Council, which meets quarterly
to examine developing trends in the mining
industry and to ensure that the Group takes full
advantage of new and emerging technologies.
The Group’s wide portfolio of technology
expertise makes it an attractive partner for
other companies wishing to develop mineral
properties that had previously been considered
too diffi cult or uneconomic to mine successfully.
ATD continues to assist operations at Group
sites worldwide, particularly in such fi elds as
safety improvement, asset optimisation and
energy effi ciency. In the exploration fi eld,
the superconducting interference device
(SQUID) has been successfully tested in two
airborne applications and holds great promise to
improve the sensitivity of exploration surveys.
Investigation into the cause and effect of
parametric resonance in large grinding mill
systems has led to a whole new area of
expertise in systems studies to prolong
mechanical life and increase availability of large
mills. ATD has developed guidelines for roll-
over protection for mobile equipment and has
assisted operations in designing appropriate
structures for low-height vehicles and other
special applications. A new electro-hydraulic rig
for shaft sinking has been designed and
developed by ATD engineers in conjunction with
a major contracting company and is being tested
at the Paardekraal 2 shaft of Anglo Platinum.
Faster than conventional pneumatic drills, the rig
can also drill the horizontal holes needed to
insert ground support anchors, reducing the
number of people needed in the congested area
at the sinking face. In Australia, Anglo Coal is
Anglo American plc Annual Report 2007 | 25
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29/2/08 23:16:00
29/2/08 23:16:00
Operating
and fi nancial
review
Group overview continued
“ The Group’s wide
portfolio of technology
expertise makes it an
attractive partner for other
companies wishing to
develop mineral properties
that had previously been
considered too diffi cult
or uneconomic to mine
successfully”
deploying the world’s largest underground mine
hydraulic roof supports, with almost 50% more
thrust than existing designs, at its Moranbah
North longwall operation. ATD is assisting the
equipment’s manufacturer with fi nite element
analysis on the design to ensure that the
supports are mechanically reliable and have
the necessary structural strength to withstand
the diffi cult geological conditions there.
At Anglo Research, innovative processes
are being developed for the production of
titanium and to extract nickel from laterite ores,
with extensive pilot plant testing scheduled
during 2008. Anglo Research has also upgraded
its pressure leach pilot plant facility with new
controls and instrumentation, enabling more
precise data to be collected during test runs
while simultaneously allowing operators to
be removed from the immediate vicinity of the
high-pressure equipment and the potentially
aggressive chemical environment. This equipment
is being used to study potential processes for the
Mantoverde and Pebble orebodies. A new X-ray
photo-electron spectroscope was commissioned
during 2007 and is being used to study the
surface chemistry of complex mineralogical
samples, so that more precisely tailored
processes can be developed for recovering them.
Anglo American has one of the largest project
development portfolios in the mining industry.
The growing infl uence of governments, local
communities and NGOs, coupled with constraints
on skills and resources such as water and energy,
has prompted a reassessment of the way in
which major projects are designed, assessed
and implemented. A suite of tools and procedures,
developed internally and in conjunction with
international partners, is being rolled out across
the Group to assist project managers in ensuring
that due consideration is given to all relevant
factors over the lifetime of each project.
Exploration
Exploration continues to be one of the key
growth activities for Anglo American, in
greenfi eld and brownfi eld exploration, and in
the identifi cation of exploration properties for
acquisition or company involvement. The
continuing strong markets for mineral products,
worries about global energy security and an
upsurge in ‘resource nationalism’ are producing
a challenging environment for mineral discovery
and production. This is prompting an intense
competition for exploration land holdings,
moves towards increasing around-mine
exploration for a ‘quick’ exploration discovery,
and the growth of mergers and acquisitions,
joint ventures and inter-company exploration
alliances. In 2007, the Group spent $283 million
on exploration in 25 countries, (including
De Beers at 100%, but excluding the activities
of Anglo Gold Ashanti).
Anglo Base Metals (which spent
$77 million) continued exploration around its
Chilean copper mines and Brazilian nickel and
phosphate mines, in addition to zinc exploration
adjacent to operations in Namibia and South
Africa. A number of new nickel and copper
projects entered the project pipeline and
advanced project work continued on the
Boyongan-Bayugo copper-gold discoveries in the
Philippines, the Jacaré nickel discovery in Brazil,
the Sulfatos copper discovery in the Los Bronces
region in central Chile, and the Gamsberg East
zinc discovery in South Africa. Elsewhere, the
Michiquillay copper project in Peru was added to
the exploration portfolio through a successful
bid, and a 50% interest in the Pebble copper-
gold-molybdenum project in southern Alaska
was negotiated successfully in 2007.
Anglo Coal ($32 million) continues to
evaluate, assess and extend resources for
thermal and coking coal, coal bed methane and
oil sands. In South Africa in 2007 it successfully
retained 94% of its coal prospecting rights, and
continued its evaluation of coal bed methane
(CBM) production in the Waterberg project area.
Exploration activities in Australia concentrated
on the Moranbah South, Dartbrook and Dawson
projects. In Canada, Roman Mountain was the
focus of exploration adjacent to the Trend Mine
in British Columbia. In China, a two-phase
exploration programme was aimed at bringing
the Xiwan project geological data close to
feasibility study level.
Anglo Platinum ($36 million) continues its
programme of exploration around existing
operations in South Africa’s Bushveld Complex,
where new exploration permits were granted.
Drilling was undertaken at the Danba project in
southern China and in Murmansk Oblast in
western Russia following encouraging
exploration results. Exploration continued for
platinum group elements with strategic partners
in Brazil, Canada and Zimbabwe.
Anglo Ferrous Metals’ ($12 million)
exploration for iron ore comprised both greenfi eld
(Northern Cape) and brownfi eld (Sishen and
Thabazimbi) activities in South Africa, and the
initiation of greenfi eld exploration within the MMX
Minas-Rio project area in Minas Gerais, Brazil at
the Itapanhoacanga, Serro and Serra do Sapo sites.
De Beers ($126 million) is concentrating its
search for diamonds in Angola, the Democratic
Republic of Congo (DRC), Botswana, South
Africa, Namibia, Canada, India and Russia.
Projects have moved to an advanced stage in
Botswana, especially with regard to the potential
development of a kimberlite pipe in the Orapa
region, and in Angola and the DRC.
26 | Anglo American plc Annual Report 2007
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29/2/08 23:16:01
29/2/08 23:16:01
Operating
and fi nancial
review
Group fi nancial
performance
2007 was a year of change for the Group – one
in which it continued to deliver strong returns
for shareholders while streamlining the
business and laying the foundations for greater
effi ciency gains and stronger growth into
the future.
Throughout the fi nancial review, the Group
results are presented on a continuing basis
unless otherwise stated.
Financial review of
Group results
Group underlying earnings per share on a
continuing basis for the year were $4.18,
an increase of 22% compared with 2006.
On a total Group basis, including results from
discontinued operations, underlying earnings
per share were $4.40. Group underlying
earnings on a continuing basis totalled
$5,477 million, with record contributions from
Base Metals, Platinum, Ferrous Metals’ core
businesses and Industrial Minerals, as well as
a strong contribution from De Beers. Higher prices
realised in the year, in particular for the
platinum group metals (PGMs), nickel, lead,
niobium and iron ore, were the main driver for
the increase in Group underlying earnings.
Increased volumes at copper, zinc and iron ore
operations also contributed to the increase.
Underlying earnings at De Beers were higher
than the prior year, principally refl ecting higher
income from joint ventures and a modest
increase in diamond prices in 2007. Coal
recorded lower underlying earnings due to a
signifi cant reduction in Australia’s contribution.
This was driven by the impact of port and rail
constraints necessitating stockpiles and slowing
of production, resulting in higher demurrage
charges, as well as the impact of the weak
dollar relative to local currency and lower sales
prices. The contributions from both Paper and
Packaging and AngloGold Ashanti were lower
than the prior year due to the demerger of
Mondi in early July and the reduction of the
Group’s shareholding in AngloGold Ashanti from
41.6% to 17.3% on 2 October. At 31 December
2007, the Group’s shareholding in AngloGold
Ashanti was 16.6%. The results of both
AngloGold Ashanti and Paper and Packaging are
shown as discontinued operations.
Profi t for the year after special items and
remeasurements increased by 2.8% to
$5,294 million compared with $5,149 million
in the prior year. The increase relates mainly to
strong operational results, as discussed above
and in the chief executive’s statement, and an
increase in net profi t on disposals, partly
offset by higher operational special charges,
particularly in the Group’s associates.
Net profi t on disposals of $484 million
which, including associates, was $37 million
higher than 2006, includes the net profi t of
$140 million on disposal of the remaining
29.2% shareholding in Highveld and the part-
disposal of the investment of shares in Exxaro
generating a $234 million profi t on disposal.
The Group’s results are infl uenced by
a variety of currencies owing to the geographic
diversity of the Group. The South African rand
on average weakened slightly against the dollar
compared with the prior year, with an average
exchange rate of R7.05 compared with R6.77
in 2006. Currency movements positively
impacted underlying earnings by $27 million.
Operating results benefi ted from weaker
average rates for the rand, although this was
offset by the stronger Chilean peso, Brazilian
real and Australian dollar. Industrial Minerals’
operations benefi ted from the strength of
certain European currencies against the dollar.
There was a signifi cant benefi cial effect on
underlying earnings from increased prices
amounting to $1,302 million, particularly
in respect of nickel and PGMs.
Underlying earnings
$ million
Year ended
31 Dec 2007
Year ended
31 Dec 2006(1)
Profi t for the fi nancial year attributable to equity shareholders
Operating special items including associates
Operating remeasurements including associates
Net profi t on disposals including associates
Financing special items
Financing remeasurements including associates:
Exchange loss/(gain) on De Beers preference shares
Unrealised net gains on non-hedge derivatives
Tax on special items and remeasurements including associates
Minority interests on special items and remeasurements including
associates
Underlying earnings – continuing operations
Underlying earnings – discontinued operations
Underlying earnings – total Group
Underlying earnings per share ($) – continuing operations
Underlying earnings per share ($) – discontinued operations
Underlying earnings per share ($) – total Group
(1)Comparatives have been adjusted to reclassify amounts relating to discontinued operations.
5,294
713
(2)
(484)
–
3
(28)
15
(34)
5,477
284
5,761
4.18
0.22
4.40
5,149
458
(35)
(447)
4
(40)
(4)
(58)
(8)
5,019
452
5,471
3.42
0.31
3.73
Anglo American plc Annual Report 2007 | 27
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29/2/08 23:16:02
29/2/08 23:16:02
Operating
and fi nancial
review
Group overview continued
Operating special items and remeasurements,
including associates, amounted to $711 million,
with $653 million operating special charges in
respect of impairments, restructurings and mine
and operation closures, including a $434 million
impairment relating to the Group’s share of
an impairment of De Beers’ Canadian assets,
$153 million impairment against certain Coal
Australia assets and a combined impairment
and restructuring charge relating to certain
non-core assets to be sold and other assets
to be restructured at Industrial Minerals of
$43 million.
Net profi t on sale of operations, including
associates, amounted to $484 million
(2006: $447 million), and is mainly a result of
the profi t on disposal of the remaining 29.2%
shareholding in Highveld ($140 million) and
the part disposal of the investment in shares
in Exxaro generating a $234 million profi t
on disposal.
Financing remeasurements, including
associates, are made up of unrealised net gains
of $28 million on non-hedge derivatives and
a $3 million foreign exchange loss on De Beers
dollar preference shares held by a rand
denominated entity.
The De Beers US dollar preference shares
held by a rand functional currency entity are
classifi ed as ‘fi nancial asset investments’ and
are retranslated at each period end. The resulting
rand:US dollar foreign exchange gains and
losses are reported through the income
statement as a remeasurement charge.
Net fi nance costs
Net fi nance costs from continuing operations,
excluding special items and remeasurements
of $29 million gain (2006: gain of $39 million),
increased from $110 million in 2006 to
$137 million. The increase refl ects higher
interest costs due to the increase in net debt.
Summary income statement
$ million
Operating profi t before special items and remeasurements
Operating special items
Operating remeasurements
Operating profi t from subsidiaries and joint ventures
Net profi t on disposals
Share of net income from associates – continuing operations(1)
Total profi t from operations and associates
Net fi nance costs before special items and remeasurements
Financing special items and remeasurements
Profi t before tax
Income tax expense
Profi t for the fi nancial year – continuing operations
Minority interests
Profi t for the fi nancial year attributable to equity shareholders –
continuing operations
Profi t for the fi nancial year attributable to equity shareholders –
discontinued operations
Profi t for the fi nancial year attributable to equity shareholders –
total Group
Basic earnings per share ($) – continuing operations
Basic earnings per share ($) – discontinued operations
Basic earnings per share ($) – total Group
Group operating profi t including associates before special items and
remeasurements – continuing operations
Group operating profi t including associates before special items and
remeasurements – discontinued operations
Year ended
31 Dec 2007
Year ended
31 Dec 2006(2)
8,518
8,048
(251)
(424)
5
18
8,272
7,642
460
197
265
607
8,929
8,514
(137)
29
(110)
39
8,821
8,443
(2,693)
(2,518)
6,128
(834)
5,925
(776)
5,294
5,149
2,010
1,037
7,304
6,186
4.04
1.54
5.58
3.51
0.70
4.21
9,590
8,888
526
944
Group operating profi t including associates before special items and
remeasurements – total Group
10,116
9,832
(1) Operating profi t from associates before special items and remeasurements – continuing operations
Operating special items and remeasurements(3)
Net profi t on disposals(3)
Net fi nance costs (before remeasurements)
Financing remeasurements(3)
Income tax expense (after special items and remeasurements)
Minority interests (after special items and remeasurements)
Share of net income from associates – continuing operations
(2) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
(3) See note 7 to the fi nancial statements.
Special items and remeasurements
1,072
(465)
24
(85)
(4)
(303)
(42)
197
840
(17)
182
(70)
1
(300)
(29)
607
$ million
Operating
special items
Operating
remeasurements
Operating
special items and
remeasurements
Excluding
associates
31 Dec 2007
Associates
31 Dec 2007
Total
31 Dec 2007
Excluding
associates
31 Dec 2006(1)
Associates
31 Dec 2006(1)
Total
31 Dec 2006(1)
(251)
(462)
(713)
(424)
(34)
(458)
5
(3)
2
18
17
35
(246)
(465)
(711)
(406)
(17)
(423)
28 | Anglo American plc Annual Report 2007
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
8549_AA_Rep_p14-32_im_250208.ind28 28
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29/2/08 23:16:03
29/2/08 23:16:03
Operating
and fi nancial
review
Discontinued operations
On 2 July 2007, the Paper and Packaging
business was demerged from the Group
by way of a dividend in specie paid to
shareholders.
On 2 October 2007, the Group sold
67.1 million shares in AngloGold Ashanti,
which reduced the Group’s shareholding from
41.6% to 17.3%. The remaining investment
is accounted as a fi nancial asset investment.
The Group has subsequently reduced its
shareholding in AngloGold Ashanti, which at
31 December 2007 was 16.6%.
Net profi t after tax on disposal and
demerger of discontinued operations amounted
to $1,803 million and is principally as a result of
the sale of 67.1 million shares in AngloGold
Ashanti on 2 October 2007. Proceeds on sale of
these shares are the major contributor to net
cash infl ows from investing activities of
discontinued operations of $2.6 billion.
Both of these operations are considered
discontinued. Please refer to note 33 for
further details on the demerger of Paper
and Packaging and the disposal of
AngloGold Ashanti.
Taxation
IAS 1 Presentation of Financial Statements
requires income from associates to be presented
net of tax on the face of the income statement.
Associates’ tax is therefore not included within
the Group’s total tax charge on the face of the
income statement. Associates’ tax before
special items and remeasurements included
within ‘Share of net income from associates’
for the year ended 31 December 2007 was
$305 million (2006: $278 million).
The effective rate of tax before special
items and remeasurements including share of
associates’ tax on a continuing basis was 31.8%.
This was a decrease from the equivalent
effective rate of 33.0% in the year ended
31 December 2006. The main reasons for this
net decrease are reduced levels of tax on
distributions, changes in statutory tax rates,
prior year adjustments and the availability of
enhanced tax depreciation on certain assets.
Discontinued operations
$ million
Profi t for the fi nancial year – discontinued operations
Special items and remeasurements
Profi t for the fi nancial year after special items and
remeasurements – discontinued operations
Net profi t after tax on disposal and demerger
of discontinued operations
Total profi t for the fi nancial year – discontinued operations
Minority interests – discontinued operations
Profi t for the fi nancial year attributable to equity
shareholders – discontinued operations
Year ended
31 Dec 2007
Year ended
31 Dec 2006
318
(77)
241
1,803
2,044
(34)
593
404
997
–
997
40
2,010
1,037
Taxation
$ million (unless
otherwise stated)
Before special
items and
remeasure-
ments
31 Dec 2007
Associates’
tax and
minority
interests
31 Dec 2007
Before special
items and
remeasure-
ments
31 Dec 2006(1)
Associates’
tax and
minority
interests
31 Dec 2006(1)
Including
associates
31 Dec 2007
Including
associates
31 Dec 2006(1)
Profi t before tax
9,021
347
9,368
8,401
307
8,708
Tax
(2,676)
(305)
(2,981)
(2,598)
(278)
(2,876)
Profi t for the
fi nancial year
Effective tax
rate including
associates (%)
6,345
42
6,387
5,803
29
5,832
31.8
33.0
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
Balance sheet
Equity attributable to equity shareholders
of the Company was $22,461 million compared
with $24,271 million at 31 December 2006.
The $3 billion share buyback programme
announced in February was completed in
October 2007 and the additional share buyback
programme of $4 billion, announced in August, is
33% complete with around $1.3 billion of shares
having been repurchased at 19 February 2008.
Net debt, excluding hedges but including
balances that have been reclassifi ed as held
for sale ($69 million), was $5,239 million, an
increase of $1.9 billion from 31 December 2006.
The increase refl ects the impact of the share
buyback, increased planned capital expenditure
on projects in Platinum, Base Metals and Coal
and the acquisition of MMX Minas-Rio for
$1.15 billion, partly offset by strong operating
cash fl ows, proceeds from disposals and the
impact of the Mondi demerger.
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Anglo American plc Annual Report 2007 | 29
Operating
and fi nancial
review
Group overview continued
Net debt at 31 December 2007 comprised
$8,313 million of debt, offset by $3,074 million
of cash and cash equivalents. Net debt to total
capital(1) at 31 December 2007 was 20.0%,
compared with 12.9% at 31 December 2006.
Cash fl ow
$ million
Net cash infl ows from
operating activities –
continuing operations
Net cash infl ows from
operating activities –
discontinued operations
Net cash infl ows from
operating activities –
total Group
Year
ended
31 Dec
2007
Year
ended
31 Dec
2006
6,800
7,337
464
973
7,264
8,310
Net cash infl ows from operating activities on a
continuing basis were $6,800 million compared
with $7,337 million in 2006. EBITDA from
continuing operations was $11,171 million, an
increase of 7% from $10,431 million in 2006.
Acquisition expenditure from continuing
operations accounted for an outfl ow of
$1,934 million compared with $197 million in
2006. This included $1.15 billion in respect of
the Group’s acquisition of a 49% interest in the
MMX Minas-Rio integrated iron ore project in
Brazil and $658 million in respect of the Group’s
investment in 4.4 million ordinary shares in
Anglo Platinum Limited.
Proceeds from disposals on a continuing
basis totalled $711 million, including net
proceeds on the sale of the remaining 29.2%
shareholding in Highveld of $182 million and
$456 million proceeds from the part-disposal
of the investment in shares in Exxaro.
Repayment of loans and capital from
associates on a continuing basis amounted
to $119 million, of which $43 million relates
to the redemption of De Beers preference shares.
Purchases of tangible assets amounted to
$3,931 million, an increase of $1,022 million.
Increased capital expenditure by Platinum, Coal,
and Base Metals was partly offset by lower
spend at Ferrous Metals and Industrial Minerals.
(1) Net debt to total capital is calculated as net debt divided by total
capital less investments in associates. Total capital is net assets
excluding net debt.
30 | Anglo American plc Annual Report 2007
Analysis of depreciation and
amortisation by business segment
(subsidiaries and joint ventures)
Dividends
A fi nal dividend of 86 cents per share, to be paid
on 30 April 2008, has been recommended.
$ million
Platinum
Coal
Base Metals
Industrial Minerals
Ferrous Metals and
Industries
Other
Year
ended
31 Dec
2007
Year
ended
31 Dec
2006
455
221
344
258
100
20
444
173
357
224
199
17
Analysis of dividends
US cents per share
Interim dividend
Recommended fi nal
dividend
Normal dividend
Special dividend
previously paid
1,398
1,414
Total dividends
Year
ended
31 Dec
2007
Year
ended
31 Dec
2006
38
33
86
124
–
124
75
108
67
175
* In 2007, Copebrás and Yang Quarry were reclassifi ed from
Industrial Minerals to Base Metals and Coal respectively, to align
with internal management reporting. As such, the comparative data
has been reclassifi ed.
Analysis of capital expenditure on a
cash fl ow basis by business segment
(subsidiaries and joint ventures)
Return on capital employed (ROCE)
ROCE on a continuing basis in 2007 was 37.8%
compared with 32.4% in 2006. The increase
was mainly due to strong operational results,
as discussed on page 27.
$ million
Platinum
Coal
Base Metals
Industrial Minerals
Ferrous Metals and
Industries
Other
Purchase of tangible
assets
Investment in biological
assets
Year
ended
31 Dec
2007
1,479
1,052
610
274
470
46
Year
ended
31 Dec
2006
923
782
315
279
581
29
3,931
2,909
1
1
3,932
2,910
* In 2007, Copebrás and Yang Quarry were reclassifi ed from
Industrial Minerals to Base Metals and Coal respectively, to align
with internal management reporting. As such, the comparative data
has been reclassifi ed.
Weighted average number of shares
The weighted average number of shares used
to determine earnings per share in 2007 was
1,309 million compared with 1,468 million in
2006. This refl ects the effect of the share
buyback programme, as well as the Anglo
American share consolidation on the demerger
of Mondi which, on 2 July 2007, resulted in
100 existing Anglo American ordinary shares
being exchanged for 91 new Anglo American
ordinary shares.
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Business unit overview
In each business unit overview on the
following pages, operating profi t
includes associates’ operating profi t
and is before special items and
remeasurements, unless otherwise
stated. Capital expenditure relates
to cash expenditure on tangible and
biological assets. Share of Group
operating profi t and share of Group
net operating assets for both 2007
and 2006 are based on continuing
operations and therefore exclude
the contribution of Mondi and
AngloGold Ashanti.
“ Anglo Platinum’s
operations exploit the
world’s richest reserve
of PGMs, known as the
Bushveld Complex, which
contains PGM-bearing
Merensky, UG2 and
Platreef ores”
Below: Section of Rustenburg Platinum
Mines’ Waterval smelter where PGM-bearing
ore is smelted prior to further refi ning
Platinum
Operating profi t
2006
$2,398 m
2007
$2,697 m
EBITDA
2006
$2,845 m
2007
$3,155 m
• World’s leading primary producer
of platinum
• Seven greenfi eld developments
under way
• Ongoing strong demand from
autocatalyst and jewellery sectors
Business overview
Anglo Platinum Limited, based in South Africa,
is the world’s leading primary producer of
platinum, accounting for about 37% of global
newly mined output. It mines, processes and
refi nes the entire platinum group metals
Operating
and fi nancial
review
(PGMs) range: platinum, palladium, rhodium,
ruthenium, iridium and osmium. Although PGMs
are the primary products of its operations,
base metals such as nickel, copper and cobalt
sulphate are important secondary products and
are signifi cant contributors to earnings.
Anglo Platinum’s operations exploit the
world’s richest reserve of PGMs, known as the
Bushveld Complex, which contains PGM-bearing
Merensky, UG2 and Platreef ores. The company
has access to an excellent portfolio of ore
reserves to ensure that it is well placed to be
the world’s leading platinum producer for many
years to come.
Anglo Platinum currently wholly owns
fi ve mining operations, a tailings retreatment
facility, three smelters, a base metals refi nery
and a precious metals refi nery, all in the Limpopo
and North West provinces of South Africa.
Each of its mines operates its own concentrator
facilities, with smelting and refi ning of the
output being undertaken at its Rustenburg
Platinum Mines’ metallurgical facilities.
The company’s 100% owned mining
operations comprise Rustenburg Platinum Mines’
Rustenburg, Amandelbult and Twickenham
sections, as well as Potgietersrust Platinums
Limited (PPRust) and Lebowa Platinum Mines
Limited, 51% of which is held for sale. Rustenburg
Platinum Mines’ Union Section is 85% held,
with a black economic empowerment (BEE)
consortium, the Bakgatla-Ba-Kgafela traditional
community, holding the remainder.
Anglo Platinum also has a 50:50 joint
venture with a BEE consortium, led by African
Rainbow Minerals, over the Modikwa platinum
mine; a joint venture with Royal Bafokeng
Resources, a BEE partner, over the combined
Bafokeng-Rasimone platinum mine and Styldrift
properties; and a joint venture with Xstrata over
the Mototolo mine. In addition, Anglo Platinum
has joint ventures with Aquarius Platinum
covering the shallow reserves of the Kroondal
and Marikana mines and portions of the reserves
at Anglo Platinum’s Rustenburg Section.
In September 2007, Anglo Platinum agreed
to sell assets for R7.6 billion (about $1.1 billion)
to historically disadvantaged South African
(HDSA) companies Anooraq Resources and
Mvela Resources. As part of the deal, an effective
51% of Lebowa Platinum and 1% of the adjacent
Ga-Phasha project are being sold to Anooraq,
which will then own 51% of Lebowa and
Ga-Phasha. Mvela is to acquire Anglo Platinum’s
50% interest in the Booysendal project as well
as Anglo Platinum’s 22.4% shareholding in
Northam Platinum Limited.
Anglo American plc Annual Report 2007 | 31
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Operating
and fi nancial
review
Business unit overview continued
(cid:48)(cid:44)(cid:33)(cid:52)(cid:41)(cid:46)(cid:53)(cid:45)(cid:0)(cid:51)(cid:53)(cid:48)(cid:48)(cid:44)(cid:57)(cid:0)(cid:33)(cid:46)(cid:36)(cid:0)(cid:36)(cid:37)(cid:45)(cid:33)(cid:46)(cid:36)(cid:0)
(cid:47)(cid:85)(cid:78)(cid:67)(cid:69)(cid:83)(cid:0)(cid:8)(cid:84)(cid:72)(cid:79)(cid:85)(cid:83)(cid:65)(cid:78)(cid:68)(cid:9)
(cid:52)(cid:79)(cid:84)(cid:65)(cid:76)(cid:0)(cid:80)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:85)(cid:77)(cid:0)(cid:83)(cid:85)(cid:80)(cid:80)(cid:76)(cid:89)
(cid:52)(cid:79)(cid:84)(cid:65)(cid:76)(cid:0)(cid:80)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:85)(cid:77)(cid:0)(cid:68)(cid:69)(cid:77)(cid:65)(cid:78)(cid:68)
(cid:23)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:22)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:21)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:20)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:19)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:18)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:17)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:16)
(cid:51)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:26)(cid:0)(cid:42)(cid:79)(cid:72)(cid:78)(cid:83)(cid:79)(cid:78)(cid:0)(cid:45)(cid:65)(cid:84)(cid:84)(cid:72)(cid:69)(cid:89)(cid:0)(cid:208)(cid:0)(cid:48)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:85)(cid:77)(cid:0)(cid:18)(cid:16)(cid:16)(cid:23)(cid:0)(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:73)(cid:77)(cid:0)(cid:50)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)
(cid:17)(cid:25)(cid:25)(cid:24)
(cid:17)(cid:25)(cid:25)(cid:25)
(cid:18)(cid:16)(cid:16)(cid:16)
(cid:18)(cid:16)(cid:16)(cid:17)
(cid:18)(cid:16)(cid:16)(cid:18)
(cid:18)(cid:16)(cid:16)(cid:19)
(cid:18)(cid:16)(cid:16)(cid:20)
(cid:18)(cid:16)(cid:16)(cid:21)
(cid:18)(cid:16)(cid:16)(cid:22)
(cid:18)(cid:16)(cid:16)(cid:23)
(cid:33)(cid:53)(cid:52)(cid:47)(cid:35)(cid:33)(cid:52)(cid:33)(cid:44)(cid:57)(cid:51)(cid:52)(cid:0)(cid:36)(cid:37)(cid:45)(cid:33)(cid:46)(cid:36)(cid:0)
(cid:47)(cid:85)(cid:78)(cid:67)(cid:69)(cid:83)(cid:0)(cid:8)(cid:84)(cid:72)(cid:79)(cid:85)(cid:83)(cid:65)(cid:78)(cid:68)(cid:9)(cid:0)
(cid:50)(cid:72)(cid:79)(cid:68)(cid:73)(cid:85)(cid:77)
(cid:48)(cid:65)(cid:76)(cid:76)(cid:65)(cid:68)(cid:73)(cid:85)(cid:77)
(cid:48)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:85)(cid:77)
(cid:24)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:23)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:22)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:21)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:20)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:19)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:18)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:17)(cid:12)(cid:16)(cid:16)(cid:16)
(cid:16)
(cid:18)(cid:16)(cid:16)(cid:17)
(cid:51)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:26)(cid:0)(cid:42)(cid:79)(cid:72)(cid:78)(cid:83)(cid:79)(cid:78)(cid:0)(cid:45)(cid:65)(cid:84)(cid:84)(cid:72)(cid:69)(cid:89)(cid:0)(cid:208)(cid:0)(cid:48)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:85)(cid:77)(cid:0)(cid:18)(cid:16)(cid:16)(cid:23)(cid:0)(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:73)(cid:77)(cid:0)(cid:50)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)
(cid:17)(cid:25)(cid:25)(cid:25)
(cid:17)(cid:25)(cid:25)(cid:24)
(cid:18)(cid:16)(cid:16)(cid:16)
(cid:18)(cid:16)(cid:16)(cid:18)
(cid:18)(cid:16)(cid:16)(cid:19)
(cid:18)(cid:16)(cid:16)(cid:20)
(cid:18)(cid:16)(cid:16)(cid:21)
(cid:18)(cid:16)(cid:16)(cid:22)
(cid:18)(cid:16)(cid:16)(cid:23)
Industry overview
PGMs have a wide range of industrial and
high-technology applications. Demand for
platinum is driven by its use in autocatalysts
to control emissions from both petrol and diesel
engine vehicles, and in jewellery. These uses
are responsible for 71% of net total platinum
consumption. Platinum, however, also has an
enormous range of lesser-known applications,
predominantly in the chemical, electrical,
medical, glass and petroleum industries.
The platinum jewellery market requires
constant promotion and development and
Anglo Platinum is the major supporter of the
Platinum Guild International, which since its
inception in 1975 has played a key role in
encouraging demand for platinum and establishing
new platinum jewellery markets. Since 2000,
China has been the number one platinum
jewellery market, followed by Japan and
North America.
Industrial applications for platinum are
driven by technology and, especially in the case
of autocatalysts, by legislation. Technological
development continues to drive industrial
demand and ongoing research into new
applications will create further growth in
this sector. With the rapid spread of exhaust
emissions legislation, more than 93% of new
vehicles sold in the world now have autocatalysts
fi tted. The intensifying stringency of emissions
legislation will drive growth in PGM demand for
autocatalysts as new legislation is applied to
trucks and off road vehicles in the US. In Europe,
the increasing popularity of diesel powered
vehicles, which can only use autocatalysts that
are predominantly platinum-based, continues
and will further intensify demand.
32 | Anglo American plc Annual Report 2007
Interest in fuel cell technology has accelerated
dramatically over the past decade, largely on
the back of rising concerns about environmental
degradation and energy costs. At present,
demand is small, but gradual medium to long
term growth, fi rst in small battery replacement
applications and stationary fuel cells, and later
with the commercialisation of fuel cell vehicles,
is envisaged.
Palladium’s principal application is in
autocatalysts (around 50% of net demand).
Palladium is also used in electronic components,
in dental alloys and more recently as an
emerging jewellery metal in markets such as
China. Palladium demand growth is expected
to slow against a backdrop of increasing supply
expected from South African expansions and
recycling from spent autocatalysts.
Rhodium is an important metal in
autocatalytic activity, which accounts for nearly
85% of net demand. The metal is also used in
industrial applications such as glass-making for
fl at panel display units. In the short to medium
term, the market supply and demand balance
is expected to remain tight, supported by
autocatalyst growth and glass demand for
fl at screen televisions. Thrifting (using less
metal, typically in thinner coatings, to achieve
the same catalytic effect) and increased supply
from UG2 reef expansions may ease the market
balance in the longer term.
The other three PGMs produced are
ruthenium, iridium and osmium. In recent times,
ruthenium has enjoyed strong uptake on the
back of heavy demand from the electronics
sector, where the metal is utilised to increase
magnetic data-recording memory in hard disks
and in plasma display panels of fl at screen
televisions. Ruthenium, along with iridium,
is also used in chemical and electronic
applications. Osmium is employed as a catalyst
in the pharmaceutical industrial sector and
to stain specimens for microscopic analysis.
Strategy and growth
Anglo Platinum’s strategy is to develop the
market for PGMs, expand production into that
growth opportunity and conduct its business
safely, cost effectively and competitively.
Growing demand is achieved by substantial
investment in research and development into new
uses for PGMs, through partners and customers
including Johnson Matthey plc (Anglo Platinum
has a 17.5% stake in Johnson Matthey Fuel Cells
Limited), and global development campaigns for
jewellery through the Platinum Guild International.
These investments enable Anglo Platinum to meet
its objective of growing the market.
8549_AA_Rep_p14-32_im_250208.ind32 32
8549_AA_Rep_p14-32_im_250208.ind32 32
29/2/08 23:16:06
29/2/08 23:16:06
see also
p27Group financial performance
p10Our strategy in action
Operating
and financial
review
In order to meet increased demand, Anglo
Platinum is targeting expanding production at an
average compound growth rate of 5% per annum.
Expansion will come from the development of
Anglo Platinum’s own extensive resources as well
as those where Anglo Platinum is in joint venture
partnerships. This growth profile requires projects
that will create additional new production as
well as maintain existing production levels owing
to reserve depletion from current mining activities.
Anglo Platinum’s announced expansion
programme and ore replacement projects
underpin a sustained high level of exploration
activities. Exploration is mainly directed at
accumulating geological data in areas where
PGM orebodies are known to occur and is thus
primarily focused on quantifying ore reserves
and mineral resources in the Bushveld Complex.
Anglo Platinum is involved in developing
mining activity for PGMs on the Great Dyke of
Zimbabwe. The Great Dyke is the second largest
known repository of platinum after the Bushveld
Complex. Development and exploration work is
focused on new projects in the area, including
the Unki mine, as well as establishing extensions
to the resource base for future projects. In addition,
Anglo Platinum is involved in exploration
activities in Canada, Russia, Brazil and China.
Financial overview
Anglo Platinum’s operating profit rose by 12%
to $2,697 million. This was mainly due to a
higher price achieved for the basket of metals
sold and a weaker average rand relative to the
dollar, offset by lower sales volumes on the back
of reduced production from mining operations.
The average dollar price realised for the
basket of metals sold equated to $2,579 per
platinum ounce, 27% higher than in 2006,
with firmer platinum, rhodium and nickel prices
making the largest contribution to the increase.
The average realised price for platinum was
$162 higher than in 2006 at $1,302 per ounce,
while nickel averaged $17.04 per pound against
$10.73 in 2006. The realised rhodium price
averaged $4,344 per ounce, an increase of
$802 per ounce over 2006, and includes the
effect of existing long term contractual
arrangements with some customers, entered
into to support and develop the rhodium market.
Anglo Platinum is at an advanced stage of
negotiations to achieve mutual recognition with
its relevant customers of structural changes to
the rhodium market affecting the dollar price of
the metal. The objective of the negotiations is
to move towards a contractual price for rhodium
which is market related. The year also saw a
significant increase in the price of ruthenium
following strong growth in demand, driven by
its use in hard disk drives. This new use and
its relative price insensitivity have resulted in
a structural change to the market.
Markets
Current high dollar PGM market prices partly
reflect the up-cycle being enjoyed by most
commodities, but are supported by strong
market fundamentals, in particular for platinum.
Long term demand for the metal is expected to
remain robust, based on tightening automotive
emissions legislation, buoyant demand in the
relatively price resilient Chinese jewellery
market, growth in existing applications and
emerging fuel cell technology.
Supplies of and demand for platinum are
expected to grow and the market is expected to
remain balanced over the medium term, with
short term deficits associated with reduced
South African output. Palladium demand is also
expected to grow but, against a backdrop of
increasing supply from South African expansions
on higher palladium content UG2 ore, remains
adequately supplied. The increased supply of
rhodium from expansionary activity should ease
pressure on current prices in the longer term.
Operating performance
Anglo Platinum remains committed to the
principle of zero harm and has implemented a
major shift in its approach to safety. In addition,
steps have been implemented to align Anglo
Platinum’s approach to employee safety to that
adopted by the Group.
The creation of a culture in which safety
standards are paramount, with effective learning
from safety incidents to ensure ‘no repeats’,
underlines this new approach. This includes
a visible, felt commitment from leadership to
eliminate harm and increase capacity to manage
safety risks wherever they may occur.
Clarity of personal and collective
responsibilities, and rigid and consistent
application of standards, lie at the heart of the
new approach to safety, which is being
implemented at all Anglo Platinum operations.
A significant deterioration in safety
performance occurred in the first half of 2007,
with 18 fatal incidents, 12 of which occurred at
Rustenburg mine. A decision was taken to suspend
production at all Rustenburg shafts on a staggered
basis. Following the temporary closure of
Rustenburg, senior management and other
relevant stakeholders developed a comprehensive
enhanced safety improvement plan, which is
being implemented over the next three years.
In the second half of 2007, following the initial
intervention, the lost time injury frequency rate at
managed operations reduced to 1.71 compared
with 2.37 as recorded in the first half of the year.
$ million
(unless otherwise stated)
Operating profit
EBITDA
Net operating assets
Capital expenditure
Share of Group
operating profit
Share of Group net
operating assets
2007
2006
2,697
3,155
9,234
1,479
2,398
2,845
7,078
923
28%
27%
35%
33%
“ Anglo Platinum’s strategy
is to develop the market
for PGMs, expand
production into that
growth opportunity
and conduct its business
safely, cost effectively
and competitively”
Anglo American plc Annual Report 2007 | 33
Operating
and financial
review
Business unit overview continued
new concentrator has commenced. The relocation
of the Ga-Puka and Ga-Sekhaolelo communities
commenced in July 2007 under the guidance
of a representative task team facilitated by the
office of the premier of Limpopo.
The Amandelbult East Upper UG2 project,
which will contribute an additional 100,000 ounces
of refined platinum per annum by 2012,
is progressing on schedule. The Rustenburg
Paardekraal 2 shaft replacement project is
in progress and is expected to produce
120,000 ounces of refined platinum annually by
2015, replacing decreasing production as a result
of continuing Merensky ore reserve depletion.
The strong global demand for resources is
placing material inflationary pressure on capital
expenditure and the ability to meet project
schedules, the effect of which was experienced
in the latter part of 2007. These pressures are
likely to continue in the foreseeable future.
Outlook
Anglo Platinum’s commitment to safety, including
the principle of zero harm, will continue to be an
area of focus in 2008. The new approach to safety,
together with operational difficulties, has had
a material impact on performance in 2007,
which is likely to continue in 2008. Production
disruptions arising from Eskom’s inability to supply
sufficient power have been experienced in 2008.
Consequently, refined platinum production for
2008 is expected to be 2.4 million ounces.
A combination of a weak dollar, robust
demand for platinum and slower than
anticipated supply growth is supportive of
higher dollar prices. The autocatalyst sector
remains buoyant, driven by rising European
demand for diesel vehicles and their associated
catalyst and filter requirements as well as
growing Asian automotive production.
Purchases of newly mined platinum for
jewellery manufacturing in China are holding up
well in the face of record prices, but new metal
demand is declining in the Japanese and US
jewellery markets as recycling of old jewellery is
encouraged by the higher price levels. Industrial
demand remains firm, particularly in the
electrical and petroleum sectors.
Palladium demand for autocatalyst and
industrial applications continues to grow,
supported by the low price relative to platinum.
Jewellery demand is expected to take
increasing market share from white gold
as palladium prices have lagged the recent
significant increase in the gold price. Palladium
prices continue to trade in a narrow band and
remain vulnerable to a change in investor and
fund sentiment.
The cash operating cost per equivalent refined
platinum ounce in rand terms increased by 34%
due to reduced production, substantial
inflationary pressures including above inflation
increases in wages, diesel, tyres, chemicals and
steel grinding media, costs associates with the
safety intervention, increased support costs
and ramp up costs at Mototolo and Marikana.
In addition, an increase in labour complement
to support a planned increase in production in
mining operations in 2007 further contributed
to the increase in unit cost.
Projects
The implementation of the majority of Anglo
Platinum’s mining and processing projects, to
expand and maintain production, continues on
schedule. Marikana and Mototolo (which delivered
first production in the last quarter of 2006) both
increased production in 2007, adding a combined
92,800 equivalent refined platinum ounces.
Anglo Platinum approved capital
expenditure totalling $1,520 million in 2007.
Major items included the expansion of the base
metals refinery plant to 33,000 tonnes per
annum of contained nickel by the end of 2010
and the Townlands ore replacement project, at
a capital cost of $139 million, which will replace
70,000 ounces of refined platinum per annum
from 2014, with production expected from the
new Merensky and UG2 areas at the Rustenburg
Townlands shaft.
The $188 million Mainstream inert grind
projects were approved in November 2007.
These projects will improve mineral liberation
and metallurgical performance within the
process flow of the current concentrators,
and will result in an increase in PGM recovery.
The PPRust North expansion project, which
will mill an additional 600,000 tonnes of ore
per month, is progressing. Commissioning of the
Prices for rhodium are anticipated to stay
strong as the market remains finely balanced.
Equivalent refined platinum production
(equivalent ounces are mined ounces converted
to expected refined ounces) from the mines
managed by Anglo Platinum and its joint
venture partners for 2007 decreased by
167,200 ounces or 6% when compared with
2006. This was due to the intervention aimed
at achieving a significant improvement in
employee safety, as well as reduced production
efficiency following a shortage of skilled labour,
strike action at joint ventures, the unsettled
labour situation associated with wage
negotiations and lower grades at Potgietersrust.
Refined platinum production for 2007
decreased by 12% to 2.47 million ounces. The
decrease is attributable to the reduced production
experienced in 2007 as well as the one-off
release of 112,000 ounces from the process
pipeline in 2006, due to the effect of the
shutdown of the Polokwane smelter in late 2005.
34 | Anglo American plc Annual Report 2007
see also
p27Group financial performance
p10Our strategy in action
Operating
and financial
review
Diamonds
Business overview
Share of associate’s operating profit
2006
$463 m
2007
$484 m
EBITDA
2006
$541 m
2007
$587 m
• De Beers remains world leader
in diamonds after 120 years
• Diamond production again exceeds
51 million carats
• Resilience of diamond jewellery
market underpinned by China
going forward
Anglo American’s diamond interests are
represented by its 45% shareholding in
De Beers. The other shareholders in De Beers
are Central Holdings Limited (an Oppenheimer
family owned company), which owns 40%,
and the Government of the Republic of
Botswana (GRB) with 15%.
De Beers is the world’s leading diamond
business, with expertise in the exploration,
mining and marketing of diamonds. De Beers
and its joint venture partners operate in more
than 20 countries across five continents,
employing nearly 22,000 people. From its
15 mines across Botswana, Canada, Namibia,
South Africa and Tanzania, De Beers produces
approximately 40% of the world’s rough
diamonds by value.
Rough or uncut diamonds are broadly classified
either as gem diamonds or industrial quality
diamonds, with gem representing by far the
larger of the two markets by value. The primary
world market for gem diamonds is in retail
jewellery where aspects such as size, colour,
shape and clarity have a large impact on
valuation. De Beers, through DTCI, supplies its
clients – known as sightholders – with parcels of
rough diamonds that are specifically aligned to
their respective cutting and polishing needs.
De Beers and Moët Hennessy Louis Vuitton
have established a high-end retail jewellery joint
venture, through De Beers Diamond Jewellers,
with stores in the most fashionable areas of
some of the world’s great cities, including
New York, Los Angeles, London, Paris, Tokyo,
Moscow and Dubai, with aggressive plans for
expanding the global network in future.
De Beers holds a 50% interest in both the
De Beers, through Element Six, is a major
Debswana Diamond Company (Proprietary)
Limited and Namdeb Diamond Corporation
(Proprietary) Limited, owned jointly with the
GRB and the Government of the Republic of
Namibia (GRN), respectively, and a 70%
shareholding in De Beers Marine Namibia.
The company also has a 75% interest in
Williamson Diamonds Limited in Tanzania.
In addition, De Beers holds a 74% interest
in South African-based De Beers Consolidated
Mines Limited (DBCM), with a black economic
empowerment (BEE) group (the Ponahalo interest
consortium) holding an indirect 26% interest.
De Beers owns 100% of Diamond Trading
Company International (DTCI). It also has a
50% interest with the GRB in Diamond Trading
Company Botswana (DTCB), which will sort and
value Botswana’s diamond output as well as
performing local sales and marketing activities.
Additionally, a 50% interest is held, along with
the GRN, in Namibia Diamond Trading Company
(NDTC) which will sort and value Namibia’s
diamond output and carry out local sales and
marketing activities.
Industry overview
Up to two-thirds of the world’s diamonds
by value originate from southern and central
Africa, while significant sources have been
discovered in Russia, Australia and Canada.
Annual diamond output amounts to
approximately 156 million carats.
Most diamonds come from the mining of
kimberlite deposits. Another important source
of gem diamonds, however, has been secondary
alluvial deposits formed by the weathering
of primary kimberlites and the subsequent
deposition of released diamonds in rivers and
beach gravels.
producer of synthetic industrial diamond
material; applications include cutting, grinding,
polishing, wire making and other technical and
scientific uses. Element Six has a significant
share in the oil and gas drilling business and has
expanded recently by building an industrial
diamond plant in China and the acquisition of
a majority stake in a plant in Ukraine. In 2007,
Element Six further enhanced its hard material
portfolio by successfully completing the
acquisition of Barat Carbide in Germany.
With this step, Element Six acquired significant
materials competence in carbide as well as
market channels and application know-how in
mining, road construction and for wear parts.
With sales of well above $100 million, Barat
Carbide is a large addition to the Element Six
group, resulting in total annual sales of over
$500 million for the combined entities.
Strategy and growth
During 2007, De Beers refocused its exploration
activities, conducted a strategic review of
mining assets and continued to invest in new
mines. The company also restructured its mine
portfolio, distribution and marketing activities
and established new sales and marketing
partnerships with producers in southern Africa.
The review is an essential part of De Beers’
transformation and its business model is now
focused on maximising consumer demand for
diamonds, and not in maximising its market
share. As part of its review, De Beers prioritised
future investment in mining opportunities that fit
its long term strategy. The sale of Cullinan,
Koffiefontein and Kimberley underground mines
together with some of the Kimberley tailings
operations have been agreed and the merger of
the West Coast operations of Alexkor with the
Anglo American plc Annual Report 2007 | 35
Operating
and financial
review
Business unit overview continued
With the establishment of the State Diamond
Trader (SDT) in South Africa, De Beers and the
Department of Minerals and Energy (DME) of
the Republic of South Africa have agreed that
De Beers will make its management and
technical expertise available to the DME for the
next three years to facilitate the start up of the
SDT. De Beers, like all other South African
diamond producers, will be selling up to 10%
of its production to the SDT.
Following a review of the DTCI operations,
a decision was taken to maximise downstream
effectiveness by establishing two separate
divisions. The new De Beers Group Marketing
(DBGM) unit will now be responsible for the
marketing activity previously undertaken by
DTCI, while DTCI will concentrate on purchasing,
sorting and selling rough diamonds.
Downstream, DBGM continues to drive
consumer demand and stimulate growth in the
industry through its own marketing initiatives
and an increase in advertising programmes by
the DTC’s clients, its downstream trade partners.
In exploration, De Beers is concentrating
on projects in Angola, the Democratic Republic
of Congo (DRC), Botswana, South Africa,
Namibia, Canada and India. Exploration in the
DRC and Angola, in conjunction with partners,
is beginning to yield results as projects move
from early to advanced stages. Advanced stage
evaluation in Botswana has resulted in the
potential development of AK06, a kimberlite mine
in the Orapa region of Botswana. De Beers is
conducting both early and advanced stage
exploration activities in Canada focusing on the
Slave and Superior craton target areas.
In collaboration with Namdeb and DBCM and
their associated partners, prioritised early stage
exploration is being undertaken in northern
Namibia and South Africa, respectively.
Financial overview
The Group’s share of operating profit from
De Beers increased by 5% to $484 million.
Earnings from joint ventures were higher than
in 2006 and there was a modest rise in diamond
prices in 2007, although the weakening of the
dollar in the second half of the year had an impact
on costs and margins. Diamond sales were
lower than in 2006, resulting from diminishing
supplies of rough diamonds to DTCI from the
Russian state producer Alrosa. Underlying earnings
at De Beers were higher than the prior year,
principally reflecting an increased share of
earnings from joint ventures and a tax refund to
DBCM, which offset lower preference share income
arising as a result of the June 2006 redemptions
and higher minorities due to the Ponahalo BEE
transaction which was completed in April 2006.
Namaqualand Mines into a new, stand-alone
diamond mining company has been announced.
The Koffiefontein mine in South Africa was sold
to Petra Diamonds Limited in July 2007. Petra
also reached agreement with De Beers to
purchase the Kimberley underground mines in
September 2007, with this transaction expected
to be concluded in early 2008. The Cullinan mine
has also been sold as a going concern to Petra in
a BEE consortium for approximately R1 billion.
The sale of Cullinan, consistent with the
company’s strategy to operate mines best suited
to the future plans of De Beers in South Africa,
completes the restructuring of DBCM’s portfolio
and will lead to improved returns on capital as
new projects are commissioned in 2008.
De Beers is fully committed to
implementing agreements with government
partners that will lead to greater beneficiation
in producer countries. Both NDTC and DTCB
were established during 2006 to sort and value
local diamond output as well as to perform local
sales and marketing activities. The new joint
ventures with the respective government
partners will work towards the development
of sustainable downstream diamond industries
in Namibia and Botswana.
DTCB is expected to be fully operational
in early 2008 and all 16 of the country’s licence
holders have been approved as sightholders,
with contracts concluded for the years 2008
to 2011. In total, approximately $360 million
of rough diamonds are expected to be sold by
DTCB to sightholders in 2008.
NDTC announced its client list consisting
of 11 sightholders on 3 October 2007. On
29 October, those companies with operational
factories as of 18 July received their first
supplies for cutting and polishing in Namibia
and the remainder will receive supply from
31 March 2008.
Above: Namdeb vessel Ya Toivo mines for
diamonds off the coast of Namibia. Today,
about half of Namdeb’s production comes
from its marine operations
$ million
(unless otherwise stated)
Share of associate’s
operating profit
EBITDA
Group’s aggregate
investment in De Beers
Share of Group
operating profit
2007
2006
484
587
463
541
1,802
2,062
5%
5%
36 | Anglo American plc Annual Report 2007
Operating
and financial
review
In the US, preliminary agreement was reached
in March 2006 with all of the plaintiffs, which
resolved all outstanding class actions in the
US and settlements were paid into an escrow
account pending conclusion of the settlement
process. The matter is proceeding according
to the timetable of the Court and De Beers
anticipates that a Fairness Hearing will occur
in the first half of 2008.
The Court of First Instance in Luxembourg
announced in July 2007 that it had annulled
the European Commission’s decision to accept
commitments offered by De Beers to cease
all purchase of rough diamonds from Alrosa
from 1 January 2009. De Beers will continue
to purchase goods from Alrosa, up to the agreed
levels and within the proposed timeframe set
out in the prior commitments.
In South Africa, De Beers was informed by
the DME on 4 February 2008 that it has granted
a new order mining right in respect of the
Venetia mine, to be executed in March.
De Beers has already been granted new order
mining rights for Voorspoed and Cullinan and
conversions for Namaqualand, Kimberley and
Finsch mines are being processed by the DME.
De Beers has made an impairment charge
of $965 million ($434 million attributable)
against its Canadian assets. This non-cash
valuation adjustment has been brought about
by the strengthening of the Canadian dollar
against the US dollar, revised long term crude
oil prices, labour cost pressures and the effect
of capital expenditure overruns at Snap Lake.
Markets
Early estimates indicate that the all important
period from Thanksgiving to Christmas in the
US saw sales of jewellery, including diamond
jewellery, underperform against analysts’ and
retailers’ expectations – despite a surge in the
week before Christmas – with the result that
sales are likely to have declined in comparison
with prior years. Retail experts point to the
2007 holiday season having started well,
but consumers reduced spending amid financial
concerns in the worsening economic
environment, resulting in soft retail sales across
the board, particularly for diamond jewellery.
The majority of chains also reported lacklustre
sales, with Tiffany, a benchmark for higher end
branded jewellers, reporting negative sales
growth in the US for November and December.
Notwithstanding this, diamond jewellery sales
growth was positive in the US for the first three
quarters of 2007 and it is likely that full year
results will show positive growth, though in low
single digits.
“ In 2007, De Beers’
production was
51.1 million carats,
maintaining the
record output
achieved in 2006”
Operating performance
In 2007, De Beers’ production was 51.1 million
carats, maintaining the record production
achieved in 2006. Output from the South African
operations increased by 3% to 15.0 million
carats, mainly due to improvements made to
the diamond recovering process at Venetia mine
which increased carat recovery by 9%. Output
in Namibia rose by 4% to 2.2 million carats
reflecting increased production from offshore
operations. This offset a 2% decline in
production from Debswana to 33.6 million
carats. The industrial diamond arm, Element
Six, continued to expand and recorded sales
growth of 18% and organic growth of 10%.
Projects
Snap Lake in the Northwest Territories of
Canada was brought into production in the
fourth quarter of 2007. The mine is currently
being commissioned and full production of
1.6 million carats per year is expected to be
achieved during 2008. By mid-2008, the Victor
mine in Ontario is scheduled to enter production
and is expected to produce 0.6 million carats of
high quality diamonds per year.
In Botswana, Debswana is reviewing
expansion opportunities, the most significant of
which is for a continuation of open pit operations
at Jwaneng until 2022, when a transition to
underground mining is planned. In mid-2007,
the mv Peace in Africa, De Beers’ latest marine
mining vessel, started operations off South
Africa’s Atlantic coastline. It is expected to yield
approximately 0.2 million carats per annum.
Also in South Africa, the Voorspoed mine in the
Free State is scheduled to commence production
in the fourth quarter of 2008, reaching full
production in 2009. Voorspoed is expected to
produce 0.7 million carats per annum.
Outlook
The outlook for 2008 is tempered by uncertainty
over global economic growth.
The economic conditions in the US could
continue to impact consumer diamond jewellery
sales through the first half, particularly at the
lower end. Nevertheless, strong demand from
China, India and the Middle East is expected,
sustaining pricing for larger and better quality
diamonds.
Looking beyond 2008, De Beers is confident
about the diamond market fundamentals. With
strong growth in the emerging markets of China,
India and Russia, demand should exceed new
supply, with the opportunity for future price
growth. In this environment, De Beers continues
to focus on transforming itself to ensure it
remains the leading company in an increasingly
competitive diamond industry.
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Anglo American plc Annual Report 2007 | 37
Operating
and financial
review
Business unit overview continued
Base Metals
Business overview
Operating profit
2006
$3,897 m
2007
$4,338 m
EBITDA
2006
$4,255 m
2007
$4,683 m
• Increased production volumes for
copper in 2007
• Further upside potential in copper
through Quellaveco and Michiquillay
in Peru and Pebble in Alaska
• Barro Alto to boost attributable
nickel output by an average of
36,000 tpa from 2011
38 | Anglo American plc Annual Report 2007
Anglo Base Metals has interests in 14
operations in six countries, producing copper,
nickel, zinc, niobium, phosphate fertilisers,
titanium dioxide and zircon, together with
associated by-products including lead,
molybdenum and silver.
In Chile, its six copper operations comprise
the wholly owned Los Bronces, El Soldado,
Mantos Blancos and Mantoverde mines, the
Chagres smelter and a 44% interest in the
Collahuasi mine. The mines also produce
associated by-products such as molybdenum
and silver.
Other South American operations are
the Loma de Níquel nickel mine in Venezuela,
and the Codemin nickel and Catalão niobium
mines in Brazil. Anglo Base Metals also has
a controlling interest in Copebrás, a leading
Brazilian producer of phosphate fertilisers and
phosphoric acid. Phosphate fertilisers are used
to supplement natural soil nutrients to achieve
high agricultural yields.
In southern Africa, Black Mountain and
Skorpion mines produce zinc and associated
by-products such as lead, copper and silver.
Anglo Base Metals’ sole European operation
is the Lisheen zinc and lead mine in Ireland.
In January 2007, black economic
empowerment company Exxaro Resources
agreed to acquire Anglo Base Metals’ Namakwa
mineral sands operation in South Africa, which
produces titanium dioxide, zircon and rutile,
together with associated by-products, along
with 26% each of Black Mountain and Gamsberg,
a large, moderate-grade zinc undeveloped
deposit located in the Northern Cape province
of South Africa. Black Mountain and Gamsberg
will remain subsidiaries of, and continue to be
managed and operated by, Anglo Base Metals.
Industry overview
The majority of copper produced is used by the
wire and cable markets and takes advantage
of the metal’s electrical conductivity, corrosion
resistance and thermal conductivity. Applications
that make use of copper’s electrical conductivity,
such as wires (including building wire), cables
and electrical connectors, account for around
60% of total demand, while about 20% comes
principally from the construction industry, which
uses copper to produce plumbing pipe and roof
sheeting, owing to the metal’s corrosion resistant
qualities. Copper’s thermal conductivity also makes
it suitable for use in heat transfer applications
such as air conditioning and refrigeration, which
make up some 10% of total demand. Other
applications include structural and aesthetic uses.
Around 65% of all refined nickel goes into
stainless steel. Other uses include high
corrosion-resistant alloys for use in chemical
plants, superalloys that can withstand extreme
temperatures and are predominantly used
in aviation, high-tech electronic uses and as
a substitute for chromium plating.
Zinc is used predominantly in galvanising
and alloys. Steel coated with zinc (galvanised
steel) exhibits high levels of corrosion
resistance. This application is responsible for
around 50% of total demand. Zinc based alloys
in die casting, ranging from automotive
components to toys and models, account for
around 10-12% of demand, with copper-based
zinc alloys (brass) accounting for 15-17%. Zinc
semis are used as roofing products and in dry
cell batteries (8-10%). Chemical and other
applications make up the remainder of refined
demand (approximately 13-15%), where zinc
is used in a diverse range of products and
applications, including tyres, paints,
pharmaceuticals and chemical processing.
With the exception of nickel, base metals
industry ownership is presently relatively
fragmented. The global market shares of the
four largest copper, nickel and zinc metal
producers are approximately 25%, 52% and
23% respectively (but subject to ongoing
consolidation in the base metals industry).
Producers are price takers and there are
relatively few opportunities for product
differentiation.
The industry is capital intensive and is likely
to become more so as high grade surface
deposits are exhausted and deeper and/or lower
grade deposits, requiring greater economies
of scale in order to be commercially viable,
are developed. Real prices of copper, nickel and
zinc have declined over the long term, although
there have been material and sustained
deviations from this trend, most notably over
the past five years. The decline in real prices
reflects the long term reduction in costs as a
result of improvements in technology and lower
input costs. Average margins have, therefore,
tended to be maintained.
For the past five years, the ongoing
industrialisation and urbanisation of China has
driven demand for a range of commodities.
This, together with interest from speculative
and investor funds, has resulted in a base metal
price up-cycle which has been unprecedented
both in its extent and its longevity. China now
comprises an estimated 27%, 24% and 31%
of global demand for copper, nickel and zinc
respectively, the markets for which have all
benefited materially.
Strategy and growth
Anglo Base Metals’ strategy is to find or acquire,
develop and operate long life, low cost mines
in a socially and environmentally responsible
manner, with a strong focus on efficient
resource allocation, continuous improvement
and capital and operating excellence.
The business is constantly developing and
evaluating growth options from a combination
of sources, including greenfield and brownfield
projects, acquisitions, exploration and
technology development.
In addition to the growth potential arising
from approved expansions at Los Bronces,
Collahuasi and Barro Alto, and studies into
further growth potential in particular at Collahuasi
and Quellaveco (these projects are discussed
further in the projects section on page 42),
Anglo American, through its Base Metals
division, has invested in a number of major
new copper projects.
In April 2007, Anglo American tendered
$403 million and won the Michiquillay
privatisation auction in Peru. The consideration
for this world class resource, with a production
potential of up to 300,000 tpa, will be payable
over five years. However, there is a right to
exit the project, at any time after the first year,
by paying 30% of the difference between monies
expended and the $403 million. During the first
year there is a minimum work commitment of
$1 million with no exit payment. The Peru based
team has been mobilised and the primary focus
of efforts in the first 12 months will be the
development of a productive relationship with
the local communities.
In July 2007, Anglo American became
a 50% partner with the Northern Dynasty
Partnership (a wholly owned affiliate of
see also
p27Group financial performance
p10Our strategy in action
Operating
and financial
review
Above: Washing down copper cathodes in
the solvent-extraction/electro-winning plant
at Mantos Blancos in Chile
Northern Dynasty Minerals Limited) in the
Pebble Limited Partnership for a staged cash
investment of $1.425 billion. The partnership
owns the Pebble Project, the key assets of
which are the open pit style Pebble West
copper-gold-molybdenum deposit and the
adjacent, deeper and higher grade Pebble East
deposit. The objective is to complete a pre-
feasibility study in 2008, a feasibility study
around 2011 and to have a world class mine
in operation by 2015. A key priority is to build
supportive relationships with local communities,
consistent with Anglo American’s policy of
developing and operating projects to the highest
social and environmental standards and to
promote development that is truly sustainable.
Anglo American plc Annual Report 2007 | 39
Operating
and financial
review
Business unit overview continued
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In 2007, Copebrás was reclassified from Industrial Minerals to Base Metals to align with internal management reporting. Only the 2006
comparative has been restated to reflect this.
In addition to reserve life extensions, significant
new ore deposits have been discovered at
Paloma Sulfatos and San Enrique Monolito (both
near Los Bronces), while, at Collahuasi, Rosario
Oeste has been further extended.
In 2007, Anglo Base Metals spent
$77 million on exploration and has increased
its exploration around its Chilean copper mines,
adding significant resources at Los Bronces and
making two major discoveries in the immediate
vicinity of Los Bronces. Collahuasi continues
to drill out its very exciting Rosario Oeste
discovery. In Brazil, drilling is ongoing at the
Jacaré nickel discovery. Work continues in the
Philippines to complete a pre-feasibility study
at Boyongan. At Gamsberg East in South Africa,
orebody expansions are being drilled. Copper
exploration is being undertaken in Brazil, Chile,
Indonesia, Mexico, Peru and the US. Nickel
sulphide mineralisation is being sought in
Arctic Canada, Russia and Scandinavia (through
alliances) and zinc programmes continue in
Australia, South Africa and Namibia.
(64)
Financial overview
Operating profit at Anglo Base Metals reached
an all time high of $4,338 million, surpassing
the previous year’s record of $3,897 million.
This resulted from increased copper, zinc and
phosphate fertiliser production, combined with
higher nickel, lead, niobium and fertiliser prices,
partially offset by adverse exchange rate
movements and further rises in the costs
of energy, labour and most key consumables.
Although the London Metal Exchange copper
price was higher than in 2006, a significant
$ million
(unless otherwise stated)
Operating profit
Copper
Nickel, niobium,
mineral sands and
phosphates
Zinc
Other
EBITDA
Net operating assets
Capital expenditure
Share of Group
operating profit
Share of Group net
operating assets
2007
2006
4,338
2,983
3,897
3,019
786
654
(85)
4,683
4,989
610
426
516
4,255
4,599
315
45%
44%
19%
22%
In 2007, Copebrás was reclassified from Industrial Minerals to
Base Metals to align with internal management reporting. As
such, the comparative data has been reclassified.
40 | Anglo American plc Annual Report 2007
mark to market and final liquidation adjustment
as at 31 December 2007 resulted in realised
copper prices being little changed from 2006.
Markets
Average prices (c/lb)
Copper
Nickel
Zinc
Lead
2007
323
2006
305
1,686
1,095
147
118
148
58
During 2007, the copper market was broadly
in balance, with prices recovering strongly in the
first half as the Chinese restocked, but then
moved lower in the fourth quarter. Nickel had
a buoyant first six months, with very tight
terminal market stocks, but weakened materially
in the second half as ongoing stainless steel
production cutbacks, greater scrap availability,
substitution and increases in nickel pig-iron
production all contributed to a material build up
of stock across the year. Zinc prices weakened,
particularly in the second half, owing to market
concerns about the impact of increasing 2008
supply on terminal market stocks.
Operating performance
Copper division
2007
2006
Operating profit
($ million)
Attributable
production
(tonnes)
2,983
3,019
655,000
643,800
All of the division’s mines, with the exception
of Mantos Blancos, increased production.
In addition, Mantos Blancos, Mantoverde
and Collahuasi all successfully renegotiated
collective bargaining agreements without any
disruption to the operations.
Los Bronces increased output by 2%,
principally due to a 14% increase in cathode
production. Despite the attributable loss of
9,200 tonnes of production owing to the
shutdown of the SAG mill number 3 (for
replacement of its stator motor) and planned
lower oxide and sulphide grades, Collahuasi
increased its attributable production by 3%.
El Soldado lifted production by 6%. Output
from Mantoverde was marginally up, while
Mantos Blancos was affected by planned and
unplanned maintenance shutdowns as well as
an earthquake and was unable to offset the
impact of lower grades with higher throughputs,
leading to a marginal production decline.
Molybdenum production rose 8% to
4,400 tonnes, primarily as a result of increases
at Collahuasi. Chagres’ output fell by 5%
mainly due to the lower average grade of
concentrate treated. Adverse exchange rate
movements and further rises in the costs of
energy, labour and most key consumables
impacted all Chilean operations.
Nickel, niobium, mineral sands
and phosphates
2007
2006
Operating profit ($ million)
786
426
Attributable nickel
production (tonnes)
25,600 26,400
At Codemin, output moved up marginally,
but sales were 5% lower following a slowdown
in stainless steel producer offtake. At Catalão,
niobium production was flat, with higher mill
throughput being offset by lower metallurgical
recoveries arising from a change in ore
characterisation. Copebrás had a spectacular
year, with much improved prices and fertiliser
sales climbing by 14% to exceed 1 million tonnes
for the first time. All of the Brazilian operations
saw costs increase as a consequence of adverse
currency movements and cost increases in fuel
oil, aluminium powder and sulphur.
Loma de Níquel’s production declined by
5% due to heavy rains and strike action, while
tonnage processed was affected by a planned
maintenance stoppage and a series of refractory
and equipment failures. These also had a
bearing on operating costs which were impacted
further by numerous cost and indirect tax
increases within a fixed exchange rate and
increasingly difficult operating environment.
Sales fell from 16,900 tonnes to 14,500 tonnes
arising out of a combination of administrative
delays by the Venezuelan authorities and
weakening stainless steel customer demand.
The Venezuelan Ministry of Basic Industries
and Mining (MIBAM) commenced administrative
proceedings in January 2007 in relation to the
16 nickel exploration and exploitation
concessions held by the Company’s subsidiary,
Minera Loma de Níquel (MLdN), alleging that
MLdN had failed to fulfil certain conditions of its
concessions. MLdN submitted a timely response
to MIBAM’s administrative writ in February
2007. By means of a series of resolutions
published in two Official Gazettes made
available in January 2008, MIBAM declared the
termination of 13 of MLdN’s nickel concessions.
The 13 concessions do not include the
concessions where the current mining operations
and the metallurgical facilities are located.
MLdN is in the process of filing administrative
appeals seeking the annulment of all of these
resolutions and requesting that their effects be
suspended pending a final decision by MIBAM.
As at 31 December 2007, Anglo American’s
interest in the book value of MLdN, including
its mineral rights, was $616 million (as
included in the Group’s balance sheet). In the
12 months to December 2007, MLdN’s
production and contribution to Group operating
profit were, respectively, 15,700 tonnes of
nickel in ferronickel and $370 million. The
average price of nickel in 2007 was 1,686 c/lb.
As of 19 February 2008, the price of nickel was
1,259 c/lb.
Anglo American is proud of its record
in Venezuela, where it has invested substantial
amounts in exploration and subsequently
the construction of the country’s only primary
nickel producer. It is a major contributor to, and
employer in, the Venezuelan economy as well
as a significant taxpayer. The operation
continues, as it has always done, to work
constructively with all stakeholders –
employees, local communities and government
– and to the highest sustainable development,
social and environmental standards.
Anglo American and MLdN are seeking
further clarification from MIBAM, with which
they have maintained a constructive working
relationship in the past. Anglo American and
MLdN believe that there is a valid legal basis
to reverse the notices of termination and will
pursue all appropriate legal and other remedies
and actions to protect their respective interests
both under Venezuelan and international law.
As a result, the Group continues to consolidate
MLdN and no impairment has been recorded
for the year ended 31 December 2007.
Operating
and financial
review
Anglo American plc Annual Report 2007 | 41
Operating
and financial
review
Business unit overview continued
“ Organic growth will
be boosted by the two
major acquisitions made
in 2007 – Pebble and
Michiquillay”
42 | Anglo American plc Annual Report 2007
Zinc division
2007
2006
Operating profit
($ million)
Attributable zinc
production (tonnes)
Attributable lead
production (tonnes)
654
516
343,100 334,700
62,100
71,400
Skorpion operated at design capacity throughout
the year, producing a record 150,100 tonnes.
Mine operating unit costs fell, reflecting tight
cost control and higher volumes, partially offset
by increases in royalties and the costs of key
consumables. At Lisheen, zinc production
decreased by 4% while lead output was down
13%. Higher than anticipated water inflows and
poor ground conditions limited mining flexibility,
resulting in lower tonnages, grades and
metallurgical recoveries. At Black Mountain,
mining difficulties related to limited stope
availability were compounded by a slower than
anticipated ramp up of the infrastructure and
ore handling systems of the new Deeps shaft,
as well as seven weeks of industrial action.
Overall, declining mill throughput and lower
grades were only partly offset by material
improvements in metallurgical recoveries and
28,300 tonnes of zinc and 41,900 tonnes of
lead were produced.
The previously announced sale of
Namakwa Sands (R2.0 billion subject to
contractual adjustments), and 26% of each
of Black Mountain and Gamsberg (combined
R180 million subject to contractual adjustments),
to Exxaro Resources has yet to be completed,
awaiting the approval of the conversion of old
order to new order mining rights. The sale
is expected to be completed in 2008.
Projects
Anglo Base Metals has a strong project pipeline
which provides significant scope for organic
growth. The pipeline includes the Barro Alto nickel
project, which is on track for first production in
2010 and is due to increase existing nickel
production by an average 36,000 tpa from
2011. To date, in excess of $900 million of the
$1.5 billion capital expenditure required has
been committed to this project and the strength
of the Brazilian currency is putting ongoing
material upward pressure on the domestic
component of capital expenditure.
The $1.7 billion Los Bronces expansion
project, which aims to increase sulphide mill
throughput from 61,000 tonnes per day (tpd)
to 148,000 tpd and increase copper production
by an average of 170,000 tpa to an initial
production level exceeding 400,000 tpa, has
been approved. Construction is under way,
with first production scheduled for 2011.
A debottlenecking project at Collahuasi,
which will increase sulphide mill throughput
from 130,000 tpd to 140,000 tpd, has been
approved at a total cost of $64 million, with
ramp up due to commence in the second half
of 2008. The first phase of a potential two
phase expansion at Collahuasi, which will
increase throughput to 170,000 tpd, plus the
addition of a separate 30,000 tpd sulphide
leach circuit (equivalent to around 650,000 tpa
of copper on a 100% basis), will be evaluated
during 2008. Recent exploration success at
Rosario Oeste suggests that there is potential
to further increase production to around
1 million tpa by 2014.
The revised feasibility study on the
Quellaveco project in Peru, which contemplates
an operation producing approximately
200,000 tpa of copper in concentrate at
a capital cost of approximately $1.7 billion,
will be completed in 2008.
In addition, this organic growth will be
boosted by the two major acquisitions made
in 2007 – Pebble and Michiquillay.
Chagres, Mantoverde, Mantos Blancos,
El Soldado, Catalão, Gamsberg, Copebrás,
Boyongan and Kalayaan have early stage
studies under way examining options for
projects that will either increase production
and/or extend mine lives.
Outlook
Production of copper, zinc, lead, niobium and
fertilisers are all forecast to increase in 2008,
while there is a risk that the nickel production
profile will be affected by uncertainties in
Venezuela. With the base metals industry
operating at capacity and, on the assumption
that the currencies of the countries where the
division produces continue to remain firm in
relation to the dollar, cost pressures will remain,
with sulphur and sulphuric acid prices forecast
to rise dramatically. In Chile, the energy supply
situation in the northern grid is very tight and
the risk of periodic requests for load shedding
cannot be ruled out.
It seems likely that certain base metal
markets will move into surplus in 2008,
with some modest build up of stock forecast
(except in the case of zinc, which is likely to
see a material market surplus), the extent of
which will be dependent on the magnitude of
any supply side disruptions. Notwithstanding
these shorter term uncertainties, medium and
longer term fundamentals remain positive.
see also
p27Group financial performance
p10Our strategy in action
Operating
and financial
review
Ferrous Metals
Business overview
Operating profit
2006
$1,360 m
2007
$1,432 m
EBITDA
2006
$1,560 m
2007
$1,561 m
• Highest ever iron ore production
in 2007 at 32.4 Mtpa
• MMX Minas-Rio and Kumba
expansions to lift Group iron ore
production to 150 Mtpa by 2017
• Iron ore price to remain firm
through to 2009
Anglo Ferrous Metals’ primary business is iron
ore. It holds a 63.4% shareholding in Kumba
Iron Ore in South Africa and a 49% interest,
acquired in mid-2007, in the MMX Minas-Rio
project in Brazil. Other interests principally
comprise manganese ore and alloy operations
and carbon steel products.
Kumba was created as a pure-play iron
ore company, listed on the Johannesburg Stock
Exchange (JSE) following its unbundling from
Kumba Resources in November 2006. The
transaction also resulted in the formation of
Exxaro, South Africa’s largest black economic
empowerment (BEE) mining group.
In 2007, Kumba exported more than 70%
of its 32.4 million tonnes of iron ore production,
mostly to customers in Europe and Asia. The
company currently operates two mines in South
Africa – Sishen in the Northern Cape, which
achieved a record output in 2007 of 29.7 million
tonnes per annum (Mtpa), and Thabazimbi,
in Limpopo, which produced 2.7 Mtpa.
Scaw Metals is a global group that
manufactures a diverse range of steel products.
With principal operations in southern Africa,
Chile, Peru, Canada and Mexico, it produces
rolled steel products, steel and iron castings,
cast alloy iron and forged steel grinding media
and steel chain, wire rope and strand products.
Scaw’s products serve the construction,
railway, power generation, mining, cement,
marine and offshore oil industries worldwide.
In March 2007, Scaw’s South African operation
completed a landmark empowerment
transaction by including an employee trust and
broad-based BEE consortium as owners in the
company. Scaw is the first steel producer in
South Africa to achieve a BEE rating.
Ferrous Metals also holds a 40%
shareholding, with BHP Billiton having 60% and
management control, in Samancor Manganese,
the world’s largest integrated producer, by
sales, of manganese ore and alloys. Samancor
has plants in South Africa and Australia, the
manganese operations in the latter consisting
of Groote Eylandt Mining Company (GEMCO)
and Tasmanian Electro Metallurgical Company
(TEMCO).
Ferrous Metals has a 37% voting interest
in JSE-listed Tongaat-Hulett, an agri-processing
business which includes integrated components
of land management, agriculture and property
development. Through its sugar and starch
operations in southern Africa, Tongaat-Hulett
produces a range of refined carbohydrate products
from sugar cane and maize. The company
balances the operational requirement for cane
supplies to its sugar operations with the transition
Anglo American plc Annual Report 2007 | 43
Operating
and financial
review
Business unit overview continued
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prices in the coming year should remain
underpinned by higher ore prices and
expectations of reducing exports from China,
as government there continues its efforts to
curtail alloy production through such measures
as increased export tariffs.
Strategy and growth
The core strategy of the business is to grow
Anglo American’s position in iron ore and make it
the cornerstone of the Ferrous Metals portfolio.
As part of that process, in mid-2007 Anglo
American acquired a 49% interest in the MMX
Minas-Rio iron ore project in Brazil for an
effective price of $1.15 billion plus a potential
payment of up to $600 million if certain criteria
are met. Planned annual capacity will be
26.5 Mtpa of iron ore pellet feed, for start-up
during 2010 at an anticipated cost of
$3.46 billion. On 17 January 2008,
Anglo American announced that it had entered
into a period of exclusive discussions with the
controlling shareholder of MMX Mineração e
Metálicos S.A. (MMX) to acquire a 63.6%
shareholding in a new company ‘Newco’ which
will be demerged from MMX and will own MMX’s
current 51% interest in the Minas-Rio iron ore
project and 70% interest in the Amapá iron ore
mine. After the acquisition of the 63.6% stake,
Anglo American will offer to purchase the
Newco shares held by the minority shareholders
of Newco at the same price per share, for a total
of approximately $5.5 billion on a 100% basis
or approximately $361.12 per Newco share
(assuming one Newco share for each current
MMX share), as well as royalty payments to
MMX beginning in 2025 for the Minas-Rio
project and 2023 for the Amapá mine.
Kumba, through the Sishen Expansion
Project, will expand its iron ore production
to 44 Mtpa by 2009, and further brownfield
and greenfield opportunities will extend this
to more than 70 Mtpa.
The process of selling down Anglo
American’s stake in Exxaro from 23% to 10%
was completed in September, realising a profit
of $234 million in 2007. Anglo American will
continue to hold a 10% shareholding until 2016.
to property development. The unbundling of
Hulamin from Tongaat-Hulett, and its separate
JSE listing, was completed in June 2007 together
with the simultaneous injection of broad-based
BEE ownership into both companies.
Hulamin, in which Ferrous Metals has a 38%
voting interest, is Africa’s largest producer
of aluminium rolled, extruded and other semi-
fabricated and finished products, with its main
operations situated in Pietermaritzburg, South
Africa. As an independent niche producer of
technically demanding and higher value products,
Hulamin supplies customers spread among all the
major aluminium consuming regions of the world.
Industry overview
Steel is the most widely used of all metals, with
world crude steel production increasing by 7.5%
in 2007 to reach a total of 1.34 billion tonnes.
The seaborne iron ore market, which is a
critical component of the global steel industry,
has grown from 454 Mtpa in 2000 to 782 Mtpa
at the end of 2007. This increase has arisen
mainly from Chinese demand growth. China is
expected to continue being the main driver of
global steel production growth and is forecast
to increase production from 489 Mtpa in 2007
to 750 Mtpa by 2012. This level of production
will require iron ore imports in excess of
730 Mtpa. Growth in steel production in the
short to medium term will occur in former
Soviet Union countries, supported by steady
growth rates in the rest of Asia and Europe.
Further support for iron ore demand will come
from steel prices which have stabilised at
historically high levels.
The global market for iron ore is expected
to remain tight in the short to medium term,
with major suppliers experiencing difficulties
in bringing on new production in time to meet
increasing demand, owing, inter alia, to the
global shortage in engineering and construction
resources. Logistical constraints associated
with rail and port capacity and shortages in dry
bulk vessel capacity at times, are expected to
continue having an impact on the supply side
of the seaborne iron ore market. As a result,
spot prices are expected to remain near their
historical highs in the short to medium term.
Manganese ore is smelted to produce
manganese ferro-alloys (such as ferromanganese
and silicomanganese). World consumption
of manganese ore (based on International
Manganese Institute statistics) increased by 7%
in 2007, having declined by 0.5% the previous
year. As 96% of manganese ore is consumed
in ferro-alloy production, the performance of
the manganese alloy industry is the key
determinant of ore demand. Manganese alloy
44 | Anglo American plc Annual Report 2007
Operating
and financial
review
pressure owing to significant price increases
in key raw materials and import competition
for certain South African product lines.
Anglo American’s attributable share of
Samancor’s operating profit increased more
than four-fold to $225 million as strong global
demand for both manganese ore and alloys,
together with constrained global manganese
ore production, resulted in surging ore prices
during the second half of the year. Higher ore
and alloy sales volumes also contributed to the
strong performance.
The Tongaat-Hulett and Hulamin
contribution to operating profit declined by
26% to $114 million following the unbundling
of Hulamin from Tongaat-Hulett and related
empowerment transactions in June 2007.
These businesses, which were consolidated
for the first six months of 2007, were equity
accounted in the second half of the year.
The sale of the remaining 29% stake in
Highveld to Evraz was completed in April 2007.
$ million
(unless otherwise stated)
Operating profit
Kumba Iron Ore
Scaw Metals
Samancor Group
Other
Core businesses
Highveld Steel
Tongaat-Hulett/Hulamin
Kumba Resources
Other businesses
EBITDA
Net operating assets
2007
2006
1,432 1,360
834
172
225
565
160
52
(21)
(14)
1,210
108
114
–
222
763
230
154
213
597
1,561 1,560
3,987 2,796
Capital expenditure (including
biological assets)
471
582
Share of Group operating
profit
15% 15%
Share of Group net operating
assets
15% 13%
Financial overview
Ferrous Metals’ operating profit of $1,432 million
was up by 5% on 2006 and operating profit
from core businesses increased by 59%. The
iron ore and manganese markets experienced
favourable market conditions and stronger prices.
Markets
Demand for iron ore and manganese ore
continues to be robust, driven by healthy
demand by steel manufacturers in China and
other markets. The American, European and
Asian manganese alloy markets all remain
generally strong, driven by continuing buoyant
demand for manganese alloys and ongoing
concerns around security of supply.
Operating performance
The unbundled Kumba Iron Ore achieved its
highest ever operating profit of $834 million,
48% up on 2006, on the back of strong iron
ore prices. Global demand for iron ore in 2007
rose by 5.7% to 1.89 billion tonnes, fuelled
by increasing demand for seaborne iron ore in
China and other developing markets. The company
produced 32.4 million tonnes of iron ore, an
increase of 4% on 2006 production volumes.
Operating costs, however, remained under
pressure owing to above inflation cost increases,
particularly in energy, labour, contractors and
raw materials.
Scaw delivered a record operating profit
of $172 million, with strong demand for most
of its products. Margins remained under
Right: Drill assistant Allowize Strauss
(right) and learner Maureen Tshetlho
at Kumba Iron Ore’s Sishen open pit in
South Africa
Anglo American plc Annual Report 2007 | 45
Operating
and financial
review
Business unit overview continued
Projects
In October 2007, the $754 million, 13 Mtpa
Sishen Expansion Project commenced
commercial production, with ramp up to
full design capacity expected to be achieved
in 2009.
The Sishen South Project, which involves
the development of a new opencast operation
some 70 kilometres south of Sishen mine,
is currently being considered for development.
A decision to proceed with this 9 Mtpa new
mine is imminent, and is dependent on finalising
logistical arrangements and the granting of
mining rights. A pre-feasibility study on a further
expansion at the Sishen mine of 10 Mtpa by
beneficiating lower grade resources is due to
be completed during 2008.
The $183 million GEMCO expansion project
in Australia’s Northern Territory is on target
to increase the company’s annual manganese
ore production capacity from 3.0 dry metric
tonne units (dmtu) to 4.0 dmtu by the first half
of 2009.
Outlook
Global demand for steel is expected to remain
strong through 2008, underpinning demand for
iron ore and manganese products. 2008 also
promises to be a year of healthy steel
production growth, with year on year global
output forecast to rise by 6.8%. With iron ore
producers struggling to bring on new capacity,
China and other major steel producing regions
remain undersupplied. As a result, the annual
iron ore price increase with effect from 1 April
2008 is expected to be significant.
Demand for manganese ore and alloy
is forecast to remain firm which, together with
supply constraints in manganese ore, should
result in the record ore prices seen in the latter
part of 2007 continuing well into 2008.
Manganese alloy prices will be supported
by higher iron ore and other production costs.
Scaw’s volumes in the South African market
are expected to grow, driven by infrastructural
expansion and construction and mining
industry activity.
Demand for Scaw’s products is forecast
to remain strong, driven by mining demand and
infrastructure growth. Increasing input costs
will, however, place further pressure on margins.
46 | Anglo American plc Annual Report 2007
Coal
Business overview
Operating profit
2006
$862 m
2007
$614 m
EBITDA
2006
$1,082 m
2007
$882 m
• Anglo Coal is one of the world’s biggest
coal producers and exporters
• Current expansion programme to raise
consolidated coal production to
115 Mtpa by 2010
• Coal is likely to remain an essential
part of the energy mix well into
the future
Anglo Coal is the world’s sixth largest private
sector coal producer and exporter, with operations
in South Africa, Australia, South America
and Canada.
In South Africa, Anglo Coal owns and
operates eight mines and has a 50% interest
in Mafube mine. Four mines are in the Witbank
coalfield which supplies some 20 million tonnes
per annum (Mtpa) of thermal coals to the
export and local markets and a small volume
of metallurgical coal to the export market. Coal
is exported through Richards Bay Coal Terminal,
in which Anglo Coal has a 27% interest. In
addition the New Vaal, New Denmark and Kriel
mines supply some 35 Mtpa of thermal coal
to Eskom, the South African state-owned
electric power utility. Anglo Coal’s Isibonelo
mine produces some 5 Mtpa for Sasol Synthetic
Fuels under a 21 year supply contract.
Anglo Coal is the fourth largest producer
of coal in Australia, with one wholly owned mine
and a controlling interest in another four, as well
as significant undeveloped coal reserves. Its mines
are located in Queensland and New South Wales
and produce some 34 Mtpa (25 Mtpa
attributable). It also owns an effective 23%
interest in the Jellinbah mine in Queensland.
In South America, Anglo Coal has a 33%
shareholding in Cerrejón Coal, which has the
capacity to produce at a rate of more than
28 Mtpa, with approved expansion plans to
increase production to 32 Mtpa. Cerrejón
produces thermal coal for export to Europe
and the Americas. In addition, Anglo Coal has
a 25% interest in Carbones del Guasare (CDG)
which owns and operates the Paso Diablo mine
in northern Venezuela. CDG produces around
6 Mtpa of thermal and metallurgical coal for
pulverised coal injection (PCI).
Anglo Coal has a 66% interest in Peace
River Coal, which has one operating
metallurgical coal mine and significant coal
resources in western Canada. Peace River Coal
is expected to produce approximately 1.5 Mtpa
in 2008. Anglo Coal also has a 60% interest
in the Xiwan coal mine lease area in China,
where the feasibility of developing the mine
is under evaluation in conjunction with Anglo
Coal’s joint venture partners, the Shaanxi Coal
Geological Bureau.
Anglo Coal signed shareholder agreements
with Inyosi, a broad-based black economic
empowerment (BEE) company, in November
2007, to create an empowered coal company
housing key current and future domestic and
export-focused coal operations in South Africa.
In terms of the agreements, Inyosi will acquire,
subject to certain conditions precedent, 27% of
see also
p27Group financial performance
p10Our strategy in action
Operating
and financial
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(cid:18)(cid:16)(cid:16)(cid:22)
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(cid:51)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:26)(cid:0)(cid:34)(cid:48)(cid:0)(cid:51)(cid:84)(cid:65)(cid:84)(cid:73)(cid:83)(cid:84)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0)(cid:50)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0)(cid:79)(cid:70)(cid:0)(cid:55)(cid:79)(cid:82)(cid:76)(cid:68)(cid:0)(cid:37)(cid:78)(cid:69)(cid:82)(cid:71)(cid:89)(cid:0)(cid:18)(cid:16)(cid:16)(cid:23)
resulted in a move away from longer term
contracts towards a mix of short term contracts,
spot pricing, the development of various price
indices, hedging and derivative instruments.
However, the extent to which the full range
of pricing instruments is used, varies across
the world.
Anglo Coal exports thermal coal from
South Africa, South America and Australia
to customers throughout the Med-Atlantic
and Indo-Pacific markets. The balance of
Anglo Coal’s production is sold domestically
in Australia and South Africa. In South Africa
a large portion of domestic sales are made
to the domestic power utility, Eskom, on long
term (i.e. life of mine) cost-plus contracts.
Sales also take place to domestic industrial
sector consumers. In Australia, domestic sales
are predominantly to power utilities under long
and shorter term contractual arrangements.
Coal produced in Colombia and Venezuela
is marketed by the respective companies.
“ Coal is the most abundant
source of fossil fuel
energy in the world,
considerably exceeding
known reserves of oil
and gas”
Anglo American plc Annual Report 2007 | 47
Anglo Inyosi Coal, creating a company valued at
R7 billion and incorporating several key Anglo
Coal assets; namely Kriel Colliery, which is an
existing mine, and the Elders, Zondagsfontein,
New Largo and Heidelberg projects.
Industry overview
Coal is the most abundant source of fossil fuel
energy in the world, considerably exceeding
known reserves of oil and gas. The bulk of coal
produced worldwide is thermal coal used for
power generation. Thermal coal is also supplied
as a fuel to other industries such as the cement
sector. Metallurgical coal is a key raw material
for 70% of the world’s steel industry.
Approximately 5 billion tonnes of hard coal
is produced globally each year, with the majority
used in the country of production. A small volume
is traded across land borders such as those
between the US and Canada or between the
former Soviet Union countries. The international
seaborne coal market comprises some
0.8 billion tonnes, of which some 0.6 billion
tonnes is thermal coal and 0.2 billion tonnes
is metallurgical coal.
Produced in a relatively limited number
of countries, metallurgical coal is primarily used
in the steelmaking industry and includes hard
coking coal, semi-soft coking coal and PCI coal.
The chemical composition of the coal is
fundamental to the steel producers’ raw
material mix and product quality. The market for
this coal has a majority of larger volume, longer
term, annually priced contracts, but with some
steel companies increasingly using short term
contracts to meet their requirements.
Demand in this sector is fundamentally
driven by economic, industrial and steel demand
growth, but the Med-Atlantic and Indo-Pacific
markets have their own particular supply and
demand profiles. Price negotiations between
Australian suppliers and Japanese steel producers
generally, but not always, set the trend that
influences settlements throughout the market.
Anglo Coal is a significant supplier to virtually
all the major steel producing groups in the world.
The thermal coal market is supplied by
a larger number of countries and producers than
the metallurgical coal market, spread across
the world. Production companies vary in size
and operate in a highly competitive market.
Demand for thermal coal is driven by
demand for electricity and is also affected by
the availability and price of competing fuels
such as oil and gas, as well as nuclear power.
Driven by varying degrees of deregulation
in electricity markets, customers focus
increasingly on securing the lowest cost fuel
supply at any particular point in time. This has
$ million
(unless otherwise stated)
Operating profit
South Africa
Australia
South America
Projects and corporate
EBITDA
2007
614
414
9
227
(36)
882
Net operating assets
Capital expenditure
3,984
1,052
2006
862
380
279
227
(24)
1,082
2,870
782
Share of Group
operating profit
Share of Group net
operating assets
6%
10%
15%
13%
In 2007, Yang Quarry was reclassified from Industrial Minerals to
Coal to align with internal management reporting. As such, the
comparative data has been reclassified.
Operating
and financial
review
Business unit overview continued
Strategy and growth
Anglo Coal’s strategy is focused on globalisation
to secure a balanced and profitable mix of
metallurgical and thermal coal assets, supplying
international markets in the Med-Atlantic and
Indo-Pacific basins and, where appropriate,
selected domestic customers in the country in
which the production takes place. This will be
achieved by expanding existing assets, acquiring
new assets and by forming strategic alliances
that facilitate, protect and augment this strategy.
The current and forecast growth rates in
the South African economy present numerous
opportunities for the coal industry, especially
in connection with the supply and demand of
electricity. Anglo Coal is evaluating a number of
opportunities in order to continue to participate
in the domestic electricity supply sector and
is currently reviewing these opportunities with
potential historically disadvantaged South
African partners and Eskom.
In line with its growth strategy, Anglo Coal
has recently agreed to acquire 70% of the
Foxleigh coal mine joint venture in Queensland,
Australia, for $620 million. This adds to Anglo
Coal’s existing coal mining operations in the
Bowen Basin, one of the world’s premier coal
regions. Foxleigh currently produces 2.5 Mtpa
of PCI coal for the steelmaking industry.
The mine has production capacity of 3.3 Mtpa,
which it is expected to reach following completion
of rail and port expansion projects. The Foxleigh
mine adjoins Anglo Coal’s Capcoal (German
Creek) operations and the associated Lake
Lindsay mine development, offering potential
synergies. The mine and surrounding tenements
will be the subject of ongoing exploration and
feasibility studies.
The impact of climate change is an area of
focus for the sector and Anglo Coal’s strategy is
to participate where appropriate to help address
the issue of carbon emissions and climate
change as the demand for energy continues to
grow. Its Clean Coal Energy Alliance with Shell,
formed last year, is evaluating the Monash
Energy project, incorporating carbon capture
and storage, in the state of Victoria, Australia.
Anglo Coal is also part of The FutureGen
Industrial Alliance, which consists of major
energy and mining companies working in
partnership with the US Department of Energy
(DOE) to design, construct, and operate the
world’s first ‘near zero emissions’ coal-fuelled
power generation plant. Although in January
2008, the DOE announced an intention to
establish an alternative programme, the Alliance
intends to continue to work with the
Administration, Congress and other stakeholders
to advance the project. Anglo Coal is also a
member of the World Coal Institute. Through
this and several other policy influencing bodies
Anglo Coal contributes to promoting the
interests and addressing the concerns of the
wider coal industry.
While Anglo Coal continues to grow and
expand its operations in its existing geographies,
it is also looking at potential opportunities
in new regions. It has spent $49 million on
exploration and new business development
activities, investigating resources for thermal
and coking coal, coal bed methane and oil
sands, mainly looking in southern Africa, China,
Australia and Canada. It has conducted
advanced resource evaluations of the Xiwan
project in China and projects in South Africa,
Canada and Australia.
Financial overview
Anglo Coal’s operating profit decreased by 29%
to $614 million. This was mainly brought about
by a disappointing performance from Australian
operations, where port and rail infrastructure
constraints across the industry, lower sales prices
and an 11% appreciation of the local currency
against the dollar resulted in significantly
lower earnings.
During the period under review, Anglo Coal
Australia has recorded an impairment of
$153 million against certain Australian assets to
reflect the latest commercial and operational
conditions relating to those assets.
Markets
An increase in global thermal coal demand,
buoyed by the influential Indian and Chinese
markets and coupled with periods of significant
supply disruptions in key producing countries,
resulted in a particularly strong market in the
second half of 2007. In addition to the supply
fundamentals, competing energy oil and gas
prices further supported the renaissance of
coal. Recently, thermal coal price indices have
set new highs.
In Australia, 2007 opened with a
strengthened market for thermal coal on the
back of strong Asia Pacific demand, particularly
from China, which experienced a reduction in
export tonnage and a rise in domestic prices.
Continued port congestion at Newcastle
throughout the year, and storm and flood events
kept supply tight and further strengthened the
export thermal market. Prices steadily increased
throughout the year and are likely to remain
high into 2008. Export performance from South
Africa and from Colombia was steady.
Metallurgical coal prices turned lower at the
start of the year in the wake of the high 2006
prices that were driven by increasing global
48 | Anglo American plc Annual Report 2007
Operating
and financial
review
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“ The increasing demand
for thermal coal from
China continues to
demonstrate coal’s
strategic importance
within the global
energy mix”
Anglo American plc Annual Report 2007 | 49
this could not be realised owing to the port
constraints and operating shifts were reduced
here and at existing operations. The Lake
Lindsay project to expand operations at Capcoal
will be completed in late 2008.
Operating profit from South America was
in line with 2006 at $227 million. Coal sales
at Cerrejón increased by 4% to 29.8 Mt as the
expansion project to 32 Mtpa progressed,
however operating costs also rose as a result
of the appreciation of the Colombian peso and
high fuel prices. In Venezuela, sales volumes
at Carbones del Guasare were marginally ahead
of 2006.
The 66% held Peace River Coal operation
in Canada began producing high quality coking
coal from the Trend Mine at the end of 2007.
Projects
In South Africa, the $505 million Zondagsfontein
project has been approved and is expected to
deliver 6.6 Mtpa from 2010. The $292 million
development of the Mafube Macro project is
progressing well, with plant commissioning
commencing in mid-December 2007. Mafube
will supply coal to Eskom and to the export
market and it is anticipated that the mine will
increase thermal coal production by a total of
5.4 Mtpa, the attributable share being 2.7 Mtpa.
In Australia, the expansion of the Dawson
Complex, to increase production by 5.7 Mtpa
(100%), is operational and ramping up to full
capacity and is expected to achieve design rates
by the end of 2008. At Capcoal the Lake
Lindsay development is progressing with
estimated completion during the second half
of 2008. The additional production from both
Dawson and Lake Lindsay will increase coal
production at these mines by approximately
9.7 Mtpa. In addition to the current developments,
Anglo Coal is reviewing a number of studies
for key future development prospects, including
Moranbah South, Grosvenor, Dartbrook and
Saddlers Creek.
In Colombia, the approved expansion at
Cerrejón to 32 Mtpa is on schedule and should
be achieved in 2008. Feasibility studies are
currently under way reviewing possibilities
of expanding the Cerrejón operation beyond
32 Mtpa.
steel demand. However, supply constraints
from Australia’s congested Dalrymple Bay port,
declining Russian exports, and China’s net
importer status, resulted in a steady price
increase from April, with prices remaining high
at year end.
As most sales in respect of both thermal
and metallurgical are concluded for delivery
some months hence, the full value of the rising
market will only be felt next year.
Operating performance
Operating profit from South African sourced coal
was 9% higher at $414 million, mainly because
of a 10% rise in export prices and despite a
decrease of nearly 1% in export sales volumes.
Production was maintained at around
59 million tonnes (Mt), with a reduction of
0.6 Mt for the trade mines being offset by
a modest increase from Eskom and domestic
production. Total sales, however, declined by
just over 1% to 58.7 Mt, mainly because export
sales volumes were below 2006 due to poor
rail performance, adverse weather conditions
at the Richards Bay Coal Terminal, together with
some production issues.
Capital expenditure was $150 million higher
than in 2006, the Mafube Macro and New Vaal
MacWest projects being the primary contributors
of the significant increase in expansionary capital
expenditure of $121 million.
Operating profit from the Australian
operations fell to $9 million. This was primarily
due to lower realised prices, an unfavourable
exchange rate and higher port demurrage charges.
Port and rail infrastructure constraints limited the
ability to then offset through volume increases.
Delays in the port and rail infrastructure
programme have affected the operations.
Significantly, high value metallurgical coal
capacity allocation was reduced by 2.7 Mt,
on a 100% basis, and material additional costs
were suffered owing to lengthening port queues.
Mitigating actions have included building
stockpiles, adjusting production profiles, securing
coal sales via alternative routes, rescheduling
high rate vessels and renegotiating demurrage
rates. Thermal coal prices strengthened by 7%
over 2006. However, the 2007 coking coal
settlement was below the high levels of 2006.
Operational performance improvements
were limited by infrastructure constraints for
all export mines except Dawson. The Dawson
expansion project will ramp up production
to achieve design rates by the end of 2008.
It incurred an operating loss during 2007 following
transitional issues and a change in the mine plan.
The Grasstree project at Capcoal became
operational in 2007 and delivered an increase
in volumes over 2006. The full benefits of
Operating
and financial
review
Business unit overview continued
Right: Night-time operations in the open
pit at New Vaal colliery, which supplies
thermal coal to South Africa’s electricity
utility, Eskom
“ The $505 million
Zondagsfontein project
has been approved and
is expected to deliver
6.6 Mtpa from 2010”
50 | Anglo American plc Annual Report 2007
Outlook
The increasing demand for thermal coal from
China continues to demonstrate coal’s strategic
importance within the global energy mix.
Compared to oil and gas, coal’s security of
supply from widely distributed reserves make it
one of the world’s most reliable energy sources.
This, together with the development and
implementation of clean coal technologies will,
over time, provide coal with the opportunity
to make a significant contribution towards
satisfying future global energy demand while
addressing environmental concerns.
In South Africa, the rand/dollar exchange
rate and coal prices will continue to be the
two main variables in 2008. Export spot coal
prices have doubled over the past six months,
reaching record highs. Globally, the high
demand for electricity and increased economic
activity are expected to continue into 2008,
which will have a positive impact on earnings.
In Australia, port and rail expansions and
related constraints are set to continue in 2008.
Alternative sales routes have been secured,
enabling the large stockpiles built in 2007 to be
reduced. Infrastructure related supply constraints
will result in a return to higher prices in the
current contract negotiations for delivery later
in 2008. Growth from projects will deliver
higher volumes in 2008.
see also
p27Group financial performance
p10Our strategy in action
Operating
and financial
review
Industrial Minerals
Business overview
Operating profit
2006
$317 m
2007
$474 m
EBITDA
2006
$539 m
2007
$732 m
• Tarmac occupies leading position
in aggregates and ready-mix concrete
in the UK
• Operating profits climb by 38%
(excluding benefit from exchange rate
movements) on prior year
• Tarmac is a cash generative business
with strong prospects in the UK and
continental Europe
Following a strategic review and as
announced in August, the decision was
taken to sell Tarmac. It is expected that
the performance of Tarmac will underpin
a competitive sale process; however it
has been decided not to launch the
marketing phase of the sale process until
current credit market conditions improve.
Anglo Industrial Minerals’ (AIM) sole business
is Tarmac, an international heavy building
materials producer. In the UK it is a market
leader in aggregates, asphalt, mortar and ready-
mixed concrete and it has significant operations
in concrete products, lime and cement. It has
operations in continental Europe and the Middle
East, where it is principally involved in the
production of crushed rock, sand and gravel,
asphalt, ready-mixed concrete and concrete
products.
Tarmac’s UK organisation consists of two
business units, Aggregate Products and Building
Products, which are supported by a shared service
centre based in central England. Aggregate
Products comprises aggregates, asphalt,
contracting, recycling and ready-mixed concrete.
The organisation is based in seven geographical
areas, enabling strong local customer focus.
Building Products is made up of those businesses
that have essentially national markets, including
cement, lime, mortar and concrete products.
Tarmac International is a combination of
six businesses operating in 11 countries. It is
a leading producer of hard rock, sand and gravel
and concrete products in its Central European
countries of operation, and of ready-mixed
concrete in the Madrid and Alicante areas of
Spain. In France and Poland, it has important
and growing shares of the concrete products
markets. In 2006, the company entered Turkey
and acquired a developing business in Romania,
involving interests in quarries and ready-
mixed concrete.
Industry overview
Tarmac’s sand and gravel products are used
mostly in the production of ready-mixed concrete,
but are also used for fills and drainage. Extracted
from pits and dredged from coastal waters,
materials are washed and graded prior to use.
Its crushed rock is predominantly used
for road construction (where it is used both
as a foundation and, when heated and mixed
with bitumen, as a surfacing material), other
foundations, drainage, railway ballast and
concrete products. Crushed rock may also
be used in ready-mixed concrete.
Tarmac’s ready-mixed concrete is
manufactured at production units located
close to its market and is composed of sand,
gravel, crushed rock, water, cement, cement
replacements and other components dependent
upon the performance required from the
resultant mix. Ready-mixed concrete is
transported to site in specialist truck mixers
designed to mix the material during transit.
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Anglo American plc Annual Report 2007 | 51
Operating
and financial
review
Business unit overview continued
“ Tarmac recently increased
to 100% its ownership of
United Marine Holdings,
a significant UK marine
dredged aggregates
business”
Right: National Contracting is part of
Tarmac’s Aggregates Products business,
which saw profits rise 21% on 2006.
Mortar and screeds consist of sand, cement
and various admixtures dependent on their
application and performance requirements.
Mortar is predominantly used for masonry
applications such as bricklaying and will often
contain lime to improve working properties.
Asphalt, which is manufactured by coating
graded, crushed rock with bitumen, is the main
product used for surfacing roads. Applied hot
or cold to road foundations, asphalt is either
supplied to site or collected by contractors
from strategically located plants.
Using extracted materials, Tarmac’s concrete
products sector provides the construction
industry with a variety of pre-fabricated
products, including blocks for walling,
pre-stressed structural flooring and engineered
pre-cast elements.
Tarmac’s lime and cement, which employ
similar production processes, are added value
materials used widely within construction.
Lime is also an important product in the
environmental and industrial sectors.
The aggregates, asphalt and ready-mix
markets in which Tarmac participate are
consolidated in the UK, with the top five players
accounting for more than 70% of each market.
The cement market is also consolidated, with
the leading five companies making up nearly
90% of the market. The main aggregates
players also compete, though to a lesser
extent, in the more fragmented concrete
products market.
Strategy and growth
Tarmac’s strategy is to maximise shareholder
value by exploiting its core competitive advantage
of maintaining reserves in established territories
and continuing acquisitive and organic growth
in selected regions. In January 2008, Tarmac
increased to 100% its ownership of United
Marine Holdings, a significant UK marine
dredged aggregates business. Tarmac will focus
on the UK and Europe, with increasing emphasis
on central and eastern Europe, where it can
develop businesses of scale. It will also
concentrate on aggregates and downstream
activities where the latter provide routes to
market for aggregates. Tarmac aims to be the
supplier of choice across its full product range.
Several programmes are under way across
the UK and international businesses which will
deliver improvements in business performance
and lay the foundations of a culture of continuous
improvement in all businesses. Within Tarmac
as a whole, there remains significant upside
potential from operational and commercial
business improvements and focused growth,
with initiatives planned to deliver that upside
by 2010.
Tarmac’s management team combines
significant industry experience with new
perspectives from complementary industries.
During 2007, changes were made to the
management teams and accountability and
delivery ownership were clarified.
52 | Anglo American plc Annual Report 2007
$ million
(unless otherwise stated)
Operating profit
EBITDA
2007
474
732
2006
317
539
Net operating assets
4,509
4,185
Capital expenditure
274
279
Share of Group
operating profit
Share of Group net
operating assets
5%
4%
17%
20%
In 2007, Copebrás and Yang Quarry were reclassified from
Industrial Minerals to Base Metals and Coal respectively, to align
with internal management reporting. As such, the comparative
data has been reclassified.
Operating
and financial
review
Tarmac International’s higher operating profits
were partially offset by market weaknesses
and high cost pressures in Spain and Romania.
The year witnessed a rebalancing of the
company’s international activities, with a
$20 million expansion programme in growth
areas such as Dubai and the benefits coming
through in 2007 from the disposal of non-core
or underperforming businesses in 2006.
Outlook
A three year business plan is now in place that
will deliver performance gains through to 2010,
driven by efficiency improvements and targeted
capital expenditure. In the UK, a predicted
downturn in the housing market and low
investment levels in road building are expected
to have a modest effect in the short term.
The outlook for non-residential and civil
construction is stable, with further demand
support in the London area from the 2012
Olympics and other major infrastructure
projects such as the widening of the M25
and the potential Crossrail east-west rail link.
Internationally, Tarmac has a presence in
attractive markets with strong fundamentals
and compelling growth prospects. At a time
when industrial minerals are in high demand,
Tarmac has access to substantial reserves
(3.2 billion tonnes of quarry reserves worldwide)
and has direct and stable routes to end-markets.
Anglo American plc Annual Report 2007 | 53
Financial overview
In 2007, Tarmac’s operating profit climbed
by 38% (excluding benefit from exchange
rate movements) to $474 million. Although the
year was characterised by high cost pressures
and volatile energy prices in a tight and highly
competitive market, disciplined margin
management, procurement initiatives and
healthy demand from certain sectors had a
major positive bearing on results. In the UK,
operating profits grew by 41% with sales
growing ahead of the market. At Tarmac
International, operating profits were 32%
higher, benefiting from milder weather and
buoyant markets in France, Poland and the
Czech Republic.
Markets
The construction industry has experienced
challenging market conditions over the past
few years, and some weakness could continue,
particularly with roads and housing. The volatility
of energy prices and the impact on cement and
distribution costs will also continue to affect
the industry.
Operating performance
The year was marked by a range of initiatives
to drive and unlock further shareholder value
from the current portfolio of businesses.
Overall, within the UK market, volumes
in aggregates and concrete products were in line
with growth in the construction markets, with
lower demand in housing and roads being offset
by improved demand in the commercial and
infrastructure sectors.
In the UK Aggregate Products business,
operating profits increased by 21% compared
with the 2006 figure, mainly as a consequence
of the business being well placed to capitalise
on benign markets as well as successful cost
savings initiatives aimed at ensuring that
aggregates and asphalt deliveries come from
the lowest cost source available.
In the UK Building Products business,
operating profits increased by 27% compared
with 2006. Its commercial strategy was
focused around offering customers
comprehensive building solutions. Cement
achieved record turnover in 2007, driven by
increased output in a favourable market
environment. A thorough review of the
operational and commercial structure of
Buxton Lime and Cement has been undertaken,
a process that is now largely complete, with the
consequent improvements expected to
contribute $10 million of additional cost savings
during the period 2008 to 2010.
Operating
and financial
review
Business unit overview continued
2007
Paper and Packaging
$ million
Operating profit(1)
Packaging
Business Paper
Other
EBITDA
324
195
105
24
560
2006
477
287
130
60
923
(1) On 2 July 2007 the Paper and Packaging business was demerged
from the Group by way of a dividend in specie paid to shareholders.
The results for 2007 are reported up to the date of demerger.
Attributable operating profit from Paper and
Packaging of $324 million represents a 32%
decrease against the prior year. The decrease
was due to the demerger of the Paper and
Packaging business from the Group by way
of a dividend in specie on 2 July 2007. The results
for the year ended 31 December 2007 are,
therefore, reported up to the date of demerger.
For the six months to the date of demerger,
Mondi experienced a substantial improvement
in performance compared with the same period
in the prior year, with operating profit up 53%
to $324 million. There was a significant pick-up
in the trading environment, particularly in
Packaging, with price increases across all major
paper grades. Business Paper also benefited
from better operability of the PM31 paper machine
in Merebank, South Africa, complemented by
modest increases in uncoated woodfree paper
pricing. These positive developments were
partially offset by significant cost inflation in
fibre costs as a result of Chinese fibre demand
and alternative uses for wood in Europe.
Discontinued operations
AngloGold Ashanti
$ million
Share of associates’
operating profit(1)
EBITDA
2007
2006
202
401
467
843
(1) The results for 2007 are reported as an associate up to
2 October 2007. After this date the remaining investment is
accounted for as a financial asset investment. The results for 2006
are reported as a subsidiary up to 20 April 2006 and thereafter as
an associate at 42% attributable.
Attributable operating profit from AngloGold
Ashanti of $202 million represented a 57%
decrease against the prior year. The decrease
is due to the Group accounting for AngloGold
Ashanti as an associate until 2 October 2007
when the Group sold 67.1 million shares in
AngloGold Ashanti, which reduced the Group’s
shareholding from 41.6% to 17.3%, as well as
four months of contribution as a subsidiary in
2006. The Group’s shareholding in AngloGold
Ashanti is 16.6% at 31 December 2007.
The remaining investment is accounted for
as a financial asset investment. The AngloGold
Ashanti business is presented in the Group’s
financial statements as a discontinued operation.
54 | Anglo American plc Annual Report 2007
Operating
and financial
review
Principal risks and uncertainties
Understanding our key risks and developing
appropriate responses to those risks is key
to Anglo American’s success
Anglo American is exposed to a variety of risks
and uncertainties which may have a financial
or reputational impact on the Group and which
may also impact the achievement of social,
economic and environmental objectives. These
risks include strategic, commercial, operational,
compliance and financial risks. The principal
risks and uncertainties facing the Group have
been categorised into headline risk areas. The
Group’s approach to risk management is set out
in the corporate governance section on pages
65 to 69.
The key headline risks identified for 2008,
potential impacts on the Group and the
mitigation strategies are summarised below.
Key headline risks
Safety, health and environment
Mining is a hazardous industry and failure
to adopt high levels of safety management can
result in a number of negative outcomes; harm
to our employees and the communities that
live near our mines, harm to the environment
as well as fines and penalties, liability to
employees and third parties for injury and loss
of reputation. Anglo American sets a very high
priority on safety, health and environmental
issues. Anglo American recognises the HIV/
AIDS epidemic in sub-Saharan Africa is a
significant threat to economic growth and
development. In 2002 the Group announced
it would provide anti-retroviral therapy to
employees with HIV/AIDS. Anglo American
also invests considerable resources in research
and development to minimise the impact the
Group’s operations have on the environment,
for example seeking ways to improve energy
efficiency. The Group believes it must make
an enduring contribution to the societies in
which it operates, and implements principles
of sustainable development. In doing so the
Group aspires to forge good relationships with
its local communities.
Treasury and capital risk management
The Group’s principal treasury policies are set by
the Board. The Group treasury acts as a service
centre and operates within clearly defined
guidelines that are approved by the Board.
Treasury front office and treasury back office
are segregated and report to separate executive
positions. The Anglo American accounting
department provides an independent control
function to monitor and report on treasury
activities, which are also subject to regular
review by internal and external audit.
The treasury operations of the Group’s
associate, De Beers, are independently managed.
The Group is exposed to liquidity risk arising
from the need to finance its ongoing operations
and growth. As a consequence of its global
operations the Group is exposed to currency
risk where transactions are not conducted in
dollars, where assets and liabilities are not
determined in dollars or where assets and
liabilities are not dollar denominated.
Commodity prices determined primarily
by international markets and global supply
and demand give rise to commodity price risk
across the Group. The recent strong commodity
price cycle has been due in part to economic
growth in China and other developing nations.
Any reduction in growth could have a negative
impact on commodity prices with a resulting
adverse effect on financial performance.
Cash deposits and other financial instruments,
including trade receivables due from third
parties, give rise to counterparty credit risk.
Further details of these risks and their
management are provided in note 25 to the
financial statements. In addition, the Group’s
capital structure and its capital risk management
policy is set out in note 25 to the financial
statements.
The main exchange rates giving rise
to currency risk in the Group are shown on
page 109.
Sensitivity analysis in respect of currency and commodity prices
Set out below is the impact on underlying earnings of a 10% fluctuation in some of the Group’s
commodity prices and exchange rates.
Commodity currency
Average price/rate(6)
10% sensitivity US$ million(1)
Platinum
Palladium
Coal
Copper
Nickel
Zinc
Iron ore
ZAR/USD
AUD/USD
CLP/USD
GBP/USD
$1,304/oz
$355/oz
$63/t(2)
323 c/lb(3)(4)
1,686 c/lb(3)
147 c/b(3)
$61/t(5)
7.05
1.19
522
0.50
152
25
199
333
104
85
91
278
95
27
4
(1) Excludes the effect of any hedging activities. Stated after tax at marginal rate. Sensitivities are the average of the positive and negative and reflect
the impact of a 10% change in the average prices received and exchange rates during 2007. Increases in commodity prices increase underlying
earnings and vice versa. A strengthening of the rand, Australian dollar and Chilean peso relative to the US dollar reduces underlying earnings and
vice versa. A strengthening of the pound sterling relative to the US dollar increases underlying earnings and vice versa.
(2) Average price represents RSA-API 4 index. Sensitivity reflects the impact of a 10% change in the average price across the entire Anglo Coal
product portfolio.
(3) Being the average LME price. Sensitivity reflects the impact of a 10% change in the average price received.
(4) Copper sensitivity excludes the impact of provisionally priced copper from 2006. At 31 December 2007 there were 140,137 tonnes of
provisionally priced copper sales, marked at 302 c/lb (2006: 140,098 tonnes, marked at 287 c/lb).
(5) Average price represents iron ore lump. Sensitivity reflects the impact of a 10% change in the average price across lump and fine.
(6) ‘oz’ denotes ounces, ‘t’ denotes tonnes, ‘c’ denotes US cents, ‘lb’ denotes pounds.
Anglo American plc Annual Report 2007 | 55
Operating
and financial
review
Principal risks and uncertainties continued
Supplier risk
The strong commodity cycle experienced
in recent years has resulted in increased
competition for critical supplies. This increased
demand can cause circumstances where
supplies are unable to be fulfilled as required
or involves cost increases above normal
inflation rates. The Group has a proactive
approach to procurement that aims to minimise
the impact of this risk through maximisation
of purchasing leverage across the business.
Contractors
Mining contractors are used at certain of our
operations to mine and deliver ore to processing
plants. In periods of high commodity prices,
demand for contractors may exceed supply,
resulting in increased costs or a lack of availability
of key contractors. The group mitigates this
risk through relationship management and
planning activity.
Political, legal and regulatory
Businesses may be affected by any political
or regulatory developments in any of the
countries and jurisdictions in which they
operate, including changes to fiscal regimes
or other regulatory regimes, which may result
in restrictions on the export of currency,
expropriation of assets and imposition of
royalties. The Group has no control over
changes in local inflation, market interest
rates or political acts or omissions which may
deprive the Group of the economic benefits
of ownership of its assets. The Group actively
monitors regulatory and policy developments.
The Venezuelan mining ministry has
initiated proceedings to terminate
Anglo American’s exploration and exploitation
concessions. Further details are provided on
page 41.
56 | Anglo American plc Annual Report 2007
Inflation
As the Group is unable to control the market
price at which the commodities it produces are
sold (except for any forward sales or derivative
contracts) it is possible that higher inflation in
the countries Anglo American operates may
result in an increase in future operational costs
without a concurrent devaluation of the local
currency against the dollar or an increase in
the dollar price of the applicable commodities.
Cost inflation in the mining sector is more
apparent during periods of high commodity
prices as demand can exceed supply.
Anglo American mitigates this risk through
a close monitoring of costs, implementation of
cost saving strategies and maximising leverage
of purchasing spend across the business.
Event risk
Damage to or breakdown of a physical asset
including risk of fire and explosion, can result
in loss of revenue or consequential losses.
The Group’s operations can be exposed to
natural risks such as extreme weather
conditions. Specialist consultants are engaged
to provide information regarding key event
exposures and recommendations to reduce
exposures. Anglo American seeks to purchase
insurance to protect against catastrophic event
risk though conditions in global insurance
markets mean this is not always possible
or economic at certain times.
Reserves and resources
The Group’s mineral resources and ore reserves
estimates are subject to a number of assumptions,
including the price of commodities, production
costs and recovery rates. Fluctuations in these
variables may have an impact on the long term
financial condition and prospects of the Group.
In South Africa, the Minerals and Petroleum
Resources Development Act (2002) provides
for conversion of existing mining and exploration
rights to ‘new order rights’. Conversion of these
rights is subject to a variety of conditions
and undertakings by the applicant, including
employment, skills development and ownership
by historically disadvantaged South Africans
(HDSAs), specifically 15% ownership by 2009
and 26% by 2014. In February 2008, the South
African Department of Minerals and Energy
confirmed it would award Anglo American with
all its new order mining rights, subject to
completion of outstanding documentation,
by 31 March 2008. Details of this conversion
process and the Group’s policy on reporting
of Ore Reserves and Mineral Resources with
reference to the Act are expanded on in the
specific section on Ore Reserves and Mineral
Resources estimates.
Exploration
Exploration and development of mines is costly
and can be unproductive but failure to discover
new reserves in sufficient amounts could
adversely affect future results and the Group’s
financial condition. Anglo American mitigates this
risk through a dedicated Exploration Division with
experience and expertise in mine development.
Employees
The ability to recruit, develop and retain the
appropriate skills for Anglo American is made
difficult by global competition for skilled labour
amongst resource companies, particularly
in periods of high commodity prices. A number
of strategies are implemented to mitigate this
risk including attention to an appropriate suite
of reward and benefit structures and ongoing
refinement of Anglo American as an attractive
employee proposition.
Employees in the key countries that Anglo
operates are unionised and risk of strike or
other industrial relations disputes could have
an adverse effect on results of operations.
Anglo American mitigates this risk through
a process of constructive dialogue with unions
and relationship management.
Operational performance
Failure to meet production targets results
in increased unit costs. The impact is more
pronounced at operations with a high level of
fixed costs. Mitigation strategies include efforts
to secure strategic supplies at competitive
prices, energy reduction, increased use of green
energy and sale of excess emission credits,
use of cheaper alternative inputs, application
of group water management guidelines and
business improvement initiatives to reduce unit
costs. In addition, the Group manages a strong
project pipeline. In doing so the Group must
manage the associated risk of meeting project
delivery times and costs.
Community relations
The Group operates in several countries where
ownership of rights in respect of land and
resources are uncertain and where disputes
in relation to ownership or other community
matters may arise. These disputes cannot be
predicted and hence they may cause disruption
to projects. The Group has implemented a process
to assess and manage community relationship
issues and will work to form good relationships
with local communities.
Operating
and financial
review
These factors could include:
• changes of proven and probable mineral
reserves;
• the grade of mineral reserves varying
significantly from time to time;
• differences between actual commodity
prices and commodity price assumptions
used in the estimation of mineral reserves;
• unforeseen operational issues at mine sites;
and
• changes in capital, operating mining,
processing and reclamation costs, discount
rates and foreign exchange rates possibly
adversely affecting the economic viability
of mineral reserves.
The majority of other tangible assets are
depreciated on a straight line basis over their
useful economic lives. Management reviews
the appropriateness of assets useful economic
lives at least annually and, again, any changes
could affect prospective depreciation rates
and asset carrying values.
Impairment of assets
The Group reviews the carrying amounts of
its tangible and intangible assets to determine
whether there is any indication that those
assets are impaired. In making the assessment
for impairment, assets that do not generate
independent cash flows are allocated to an
appropriate cash generating unit (CGU).
The recoverable amount of those assets, or CGU,
is measured as the higher of their fair value
less costs to sell and value in use.
Management necessarily applies its
judgement in allocating assets that do not
generate independent cash flows to appropriate
CGUs, and also in estimating the timing and
value of underlying cash flows within the
value in use calculation. Subsequent changes
to the CGU allocation or to the timing of cash
flows could impact the carrying value of the
respective assets.
Restoration, rehabilitation and
environmental costs
Provision is made, based on net present values,
for restoration, rehabilitation and environmental
costs as soon as the obligation arises. Costs
incurred at the start of each project are
capitalised and charged to the income statement
over the life of the project through depreciation
of the asset and the unwinding of the discount
on the provision. Costs for restoration of
subsequent site damage are provided at net
present value and charged against profits as
extraction progresses. Environmental costs
are estimated using either the work of external
consultants or internal experts. Management
uses its judgement and experience to provide
for and amortise these estimated costs over the
life of the mine.
Retirement benefits
The expected costs of providing pensions and
post retirement benefits under defined benefit
arrangements relating to employee service
during the period are charged to the income
statement. Any actuarial gains and losses,
which can arise from differences between
expected and actual outcomes or changes
in actuarial assumptions, are recognised
immediately in the consolidated statement
of recognised income and expense.
Assumptions in respect of the expected
costs are set after consultation with qualified
actuaries. While management believes the
assumptions used are appropriate, a change
in the assumptions used would impact the
earnings of the Group.
Special items
Operating special items are those that
management considers, by virtue of their size
or incidence, should be disclosed separately to
ensure that the financial information also allows
an understanding of the underlying performance
of the business. The determination as to which
items should be disclosed separately requires
a degree of judgement.
Acquisitions
The Group has undertaken a number of
acquisitions in the past. With these, as with
any such future transaction, there is the risk
that any benefits or synergies identified at
acquisition may not be achieved. Rigorous
guidelines are applied to the evaluation and
execution of all acquisitions, which require
approval of the Investment Committee and
Chief Executive’s Committee and, in the
case of acquisitions beyond a certain value,
the approval of the Board.
Infrastructure
Inadequate supporting facilities, services,
installations (water, power, transportation,
etc.) may impact the sustainability and/or
growth of the business, leading to loss of
competitiveness, market share and reputation.
An example of the type of transportation risks
that can have an effect on the Group’s
businesses are described in further detail on
page 49. Anglo American promotes early
development of strategy and alignment with
infrastructure owner/operator, development of
relationships, participation in industry groups
and lobbying to ensure effective provision of
services by key utility providers.
Critical accounting judgements
and key sources of estimation and
uncertainty
In the process of applying the Group’s accounting
policies, which are presented in note 1 to the
financial statements, management necessarily
makes judgements and estimates that have a
significant effect on the amounts recognised
in the financial statements. Changes in the
assumptions underlying the estimates could
result in a significant impact on the financial
statements. The most critical of these are:
Useful economic lives of assets and ore
reserves estimates
The Group’s mining properties, classified
within tangible assets, are depreciated over
the respective life of the mine using the unit
of production (UOP) method based on proven
and probable reserves. When determining ore
reserves, assumptions that were valid at the
time of estimation may change when new
information becomes available. Any changes
could affect prospective depreciation rates and
asset carrying values.
The calculation of the UOP rate of
amortisation could be impacted to the extent
that actual production in the future is different
from current forecast production based on
proven and probable mineral reserves.
Anglo American plc Annual Report 2007 | 57
Governance
The Board
Left to right:
Sir Mark Moody-Stuart, Cynthia Carroll, René Médori,
Bobby Godsell, David Challen, Sir Rob Margetts
Sir Mark Moody-Stuart KCMG N
PhD, MA, FGS
67, was appointed a non-executive
director on 16 July 2002 and non-executive
chairman on 1 December 2002. He also sits
on the Remuneration, Safety and Sustainable
Development (S&SD) and Nomination
Committees. He is a director of HSBC Holdings
plc, Accenture Ltd and Saudi Aramco. Sir Mark
was chairman of The Shell Transport and
Trading Company plc from 1997 to 2001 and
is a member of the board of the UN Global
Compact and Chairman of the Global
Compact Foundation.
Cynthia Carroll E
MSc, MBA
51, was appointed chief executive on
1 March 2007, having joined the Board on
15 January 2007. Cynthia Carroll chairs the
Executive Committee (ExCo) and the Chief
Executive’s Committee (CeCom) and sits on
the S&SD Committee. She is the former
president and chief executive offi cer of Alcan’s
Primary Metals Group and a former director of
AngloGold Ashanti Limited and the Sara Lee
Corporation. She is a non-executive director of
BP plc, Anglo Platinum Limited and De Beers.
E – Executive director
N – Non-executive director
58 | Anglo American plc Annual Report 2007
René Médori E
Doctorate in Economics
50, was appointed to the Board on
1 June 2005, becoming fi nance director on
1 September 2005. René Médori is a member
of ExCo, CeCom and chairman of the
Investment Committee. He is a former fi nance
director of The BOC Group plc and is a
non-executive director of Scottish and
Southern Energy plc, De Beers, DB Investments
and Anglo Platinum Limited. Mr Médori is being
proposed for re-election at the AGM on
15 April 2008.
Bobby Godsell N
MA
55, joined the Board on 18 March 1999.
He is a member of the S&SD Committee and
has been with the Group since 1974. He is a
former chief executive of AngloGold Ashanti.
He is chairman of South Africa’s national
business organisation, BUSA, and a past
president of South Africa’s Chamber of Mines.
Mr Godsell will retire from the Board at the
AGM on 15 April 2008.
David Challen CBE N
MA, MBA
64, joined the Board on 9 September 2002.
He is chairman of the Audit Committee and a
member of the Remuneration Committee. David
Challen is currently vice chairman of Citigroup
European Investment Bank and a non-executive
director of Smiths Group plc. Previously he was
chairman of J. Henry Schroder & Co. Limited,
where he spent most of his professional career.
He is currently deputy chairman of the UK’s
Takeover Panel. Mr Challen will succeed Sir Rob
Margetts as senior independent non-executive
director on 15 April 2008.
Sir Rob Margetts CBE N
BA, FREng
61, joined the Board on 18 March 1999 and
was appointed as the senior independent
non-executive director in April 2003. He will
be succeeded as the senior independent
non-executive director by David Challen
on 15 April 2008. He is chairman of the
Remuneration Committee and a member of the
Nomination Committee. He is chairman of Legal
& General Group Plc, Ensus Limited and the
Energy Technologies Institute. He was formerly
chairman of The BOC Group plc and vice
chairman of ICI PLC. Sir Rob was also chairman
of the UK Natural Environment Research Council
and a member of the UK Council for Science and
Technology. In accordance with the provisions
of the Combined Code, directors who have
served longer than nine years are subject to
annual re-election and, accordingly, Sir Rob is
being proposed for re-election at the AGM on
15 April 2008.
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see also
p61directors’ report
p70directors’ remuneration
About
Anglo
Governance
American
Left to right:
Professor Karel Van Miert, Nicky Oppenheimer, Fred Phaswana,
Dr Chris Fay, Dr Mamphela Ramphele, Peter Woicke
Professor Karel Van Miert N
Graduate in Diplomatic Sciences
66, joined the Board on 19 March 2002.
He is a member of the Audit and Nomination
Committees. He is currently a member of the
supervisory boards of German utility RWE,
Philips NV, Munich Re and Vivendi Universal.
He is also a member of the advisory boards of
Goldman Sachs and Eli Lilly and a member of
the boards of Solvay s.a. and Agfa-Gevaert.
He was previously President of Nyenrode
University, Netherlands Business School,
a member of the European Parliament from
1979 to 1985 and a member of the European
Commission from 1989 to 1999. Professor
Van Miert is being proposed for re-election at
the AGM on 15 April 2008.
Nicky Oppenheimer N
MA
62, joined the Board on 18 March 1999.
He is a member of the Nomination Committee.
Nicky Oppenheimer joined the Group in 1968
and subsequently became an executive director
and a deputy chairman of Anglo American
South Africa Limited. He became deputy
chairman of De Beers Consolidated in 1985
and has been chairman of De Beers since 1998.
Fred Phaswana N
MA, BCom
63, joined the Board on 12 June 2002. He is
chairman of the Nomination Committee
and a member of the Audit Committee.
Fred Phaswana is currently chairman of Anglo
Platinum and Transnet Limited and a director
of Naspers and was previously BP regional
president: Africa, a director of BP Oil (Benelux),
an associate president of BP Netherlands and
chairman and chief executive of BP Southern
Africa. He is also a member of the South African
Institute of International Affairs.
Dr Chris Fay CBE N
BSc, PhD, FREng, FRSE, FICE, FEI
62, joined the Board on 19 April 1999. He is
chairman of the S&SD Committee and a
member of the Remuneration and Audit
Committees. He is a non-executive director of
Conister Trust plc and non-executive chairman
of Stena International S.àr.l and Expro
International Group plc. He is a former
non-executive director of BAA plc. Chris Fay
is a former chairman of Shell UK and of the
British government’s Advisory Committee on
Business and the Environment. In accordance
with the provisions of the Combined Code,
directors who have served longer than nine
years are subject to annual re-election and,
accordingly, Dr Fay is being proposed for
re-election at the AGM on 15 April 2008.
Dr Mamphela Ramphele N
PhD, BComm
60, joined the Board on 25 April 2006.
She is a member of the Nomination and S&SD
Committees. Dr Ramphele is the chair of Circle
Capital Ventures, a black empowerment
company, and is a non-executive director of the
Mediclinic and Business Partners S.A. She was
formerly co-chair of the Global Commission on
International Migration, a World Bank managing
director and vice-chancellor at the University of
Cape Town.
Peter Woicke N
MBA
65, joined the Board on 1 January 2006
and is a member of the Audit, Nomination and
S&SD Committees. From 1999 to January
2005 he was chief executive offi cer of the
International Finance Corporation. He was also
a managing director of the World Bank. Prior to
joining the International Finance Corporation,
Peter Woicke held numerous positions over
nearly 30 years with J.P. Morgan. He is currently
a member of the Plugpower Inc. and Saudi
Aramco boards and was previously a member
of the Raiffeisen International Holding and
MTN Group boards.
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Anglo American plc Annual Report 2007 | 59
Governance
Executive Committee
The Executive Committee develops corporate and
business unit strategy, monitors strategic process
in terms of key milestones and reviews operational
and safety procedures of the Group’s business units
1
6
2
7
3
8
4
9
5
10
1. Cynthia Carroll
See page 58 for biographical
details.
2. René Médori
See page 58 for biographical
details.
3. Russell King
BA Hons
50, has held a variety of business
and functional responsibilities in
the UK and Australia with ICI PLC.
From 1997 to 2000 he was
managing director of Orica
Consumer Products. He joined
Anglo American in July 2001 as
executive vice president, Group
human resources and business
development, and is responsible for
sustainable development issues.
4. Tony Redman
MSc, BSc
59, worked for Anglo American
on the Zambian Copperbelt from
1970 to 1974. In 1976 he started
working at Vaal Reefs gold mine
before moving to the Anglo Coal
division in 1979, where he was
appointed managing director in
1996 and chairman in 2002.
In January 2005 he took up the
position of Group technical director
of Anglo American. He is a member
of the Executive Committee, the
Investment Committee and the
S&SD Committee.
5. Philip Baum
BCom, LLB, Higher Dip Tax Law
53, is chief executive of Anglo
Ferrous Metals and acting chief
executive of Anglo American
South Africa. He joined the Group
in 1979 and became a member of
the Executive Committee in
January 2006.
6. Duncan Wanblad
BSc (Eng) Mech, GDE
(Eng Management)
41, has been joint acting chief
executive of Anglo Platinum since
August 2007. He joined
Johannesburg Consolidated
Investment Company Limited in
1990 and was appointed executive
director: projects and engineering
of Anglo Platinum in 2004.
7. Norman Mbazima
FCCA, FZICA
49, has been joint acting chief
executive of Anglo Platinum since
August 2007. He joined the Group
in 2001 and was appointed
executive director: fi nance of
Anglo Platinum in 2006.
8. Brian Beamish
BSc (Mechanical Engineering)
51, is chief executive of Anglo Base
Metals. From 1995 to 1999 he was
executive director: operations at
Anglo Platinum. He transferred to
Anglo Base Metals in January 2000
and was chief operating offi cer from
April 2005 until April 2007 when he
became chief executive.
9. John Wallington
BSc
50, started his career at Anglo
American as a mining graduate
in 1981. He was appointed
executive vice president: South
African operations at Anglo Coal in
2001 and has been chief executive
of Anglo Coal since January 2005.
10. David Weston
MBA, BSc (Eng)
49, is chief executive of Anglo
Industrial Minerals. He spent
25 years with Shell and was
President, Shell Canada Products,
before joining the Anglo American
Group in 2006.
60 | Anglo American plc Annual Report 2007
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Governance
Sustainable development
The Report to Society 2007 will be available
from the Company in April. This report focuses
on the safety, sustainable development, health
and environmental performance of the Group’s
managed operations, their performance with
regard to the Company’s Good Citizenship:
Our Business Principles, and the operational
dimensions of their social programmes.
Payment of suppliers
Anglo American plc is a holding company and,
as such, has no trade creditors.
Businesses across the Group are responsible
for agreeing the terms under which transactions
with their suppliers are conducted, refl ecting
local and industry norms. The Group values its
suppliers and recognises the benefi ts to be derived
from maintaining good relationships with them.
Anglo American acknowledges the importance
of paying invoices, especially those of small
businesses, promptly.
Value of land
Land is mainly carried in the fi nancial statements
at cost. It is not practicable to estimate the market
value of land and mineral rights, since these
depend on product prices over the next 20 years
or longer, which will vary with market conditions.
Post balance sheet events
Post balance sheet events are set out in note 42
to the fi nancial statements on page 132.
Audit information
The directors confi rm that, so far as they are
aware, there is no relevant audit information
of which the auditors are unaware and that all
directors have taken all reasonable steps to
make themselves aware of any relevant audit
information and to establish that the auditors
are aware of that information.
Directors’ report
The directors have pleasure in submitting the
statutory fi nancial statements of the Group for
the year ended 31 December 2007.
Principal activities and business review
Anglo American plc is one of the world’s largest
mining and natural resource groups. With its
subsidiaries, joint ventures and associates, it
is a global leader in platinum group metals and
diamonds, with signifi cant interests in coal,
base and ferrous metals, as well as an industrial
minerals business and a stake in AngloGold
Ashanti. The Group is geographically diverse
with operations in Africa, Europe, South and
North America, Australia and Asia.
More detailed information about the Group’s
businesses, activities and fi nancial performance
is incorporated into this report by reference and
can be found in the chairman’s and chief
executive’s statements on pages 4 to 9,
the operating and fi nancial review on pages
14 to 57 and the section entitled “substantial
shareholdings” in the Notice of Meeting
booklet.
Going concern
The directors have made enquiries and the
Group’s business is a going concern as
interpreted by the Guidance on Going Concern
and Financial Reporting for directors of listed
companies registered in the UK, published in
November 1994.
Dividends
An interim dividend of 38 US cents per ordinary
share was paid on 20 September 2007. The
directors are recommending that a fi nal dividend
of 86 US cents per ordinary share, be paid on
30 April 2008 subject to shareholder approval
at the Annual General Meeting (AGM) to be held
on 15 April 2008. This would bring the total
dividend in respect of 2007 to 124 US cents per
ordinary share. However, in accordance with
International Financial Reporting Standards
(IFRS), the fi nal dividend will be accounted for in
the fi nancial statements for the year ended 31
December 2008.
Three shareholders have waived their rights
to receive dividends. In both cases, these
shareholders act as trustees/nominees holding
shares for use solely in relation to the Group’s
employee share plans. These shareholders
and the value of dividends waived during the
year were:
Greenwood Nominees Limited $17,353,803.20
Security Nominees Limited $128,503.87
Rose Nominees Limited $7,791.09
Share capital
The Company’s authorised and issued share
capital as at 31 December 2007, together with
details of share allotments and purchases of
own shares during the year, is set out in note 29
on pages 116 to 120.
The Company was authorised by
shareholders at the Extraordinary General
Meeting (EGM) held on 25 June 2007 to
purchase its own shares in the market up to a
maximum of 10% of the issued share capital.
This authority will expire at the 2008 AGM
and in accordance with current best practice,
the Company will propose a resolution to
increase the maximum authority to purchase
its own shares on the market to 14.99% of
issued capital.
Material shareholdings
Details of interests of 3% or more in the
ordinary share capital of the Company are
shown within the shareholder information
section of the Notice of Meeting booklet.
Directors
Biographical details of the directors currently
serving on the Board are given on pages 58 and
59. Details of directors’ interests in shares and
share options of the Company can be found in
the Remuneration report on pages 70 to 83.
Cynthia Carroll was appointed to the Board
on 15 January 2007 and succeeded Tony Trahar
as Group chief executive on 1 March 2007.
Tony Trahar retired from the Board at the
conclusion of the AGM on 17 April 2007.
Simon Thompson, David Hathorn and
Ralph Alexander resigned from the Board on
13 April, 3 July and 26 October 2007 respectively.
Upon the recommendation of the Board,
Sir CK Chow is being proposed for election as an
independent non-executive director at the AGM.
Sir CK (56) is currently chief executive of the
MTR Corporation, a position he has held since
December 2003. He was formerly chief
executive of Brambles Industries and GKN. Prior
to joining GKN he worked for the BOC Group for
20 years, becoming chief executive of its Gases
Division and joining its board in 1993. Sir CK is a
chartered engineer and holds Bachelor of
Science and Master of Science degrees in
Chemical Engineering from the Universities of
Wisconsin and California respectively. Sir CK
was knighted in 2000 for his contribution in
industry. He is a non-executive director of
Standard Chartered plc and the non-executive
chairman of Standard Chartered Bank
(Hong Kong) Limited.
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Anglo American plc Annual Report 2007 | 61
Governance
Directors’ report continued
Employment and other policies
The Anglo American Group’s key operating
businesses are empowered to manage, within
the context of their own industry and the
different legislative and social demands of the
diverse countries in which those businesses
operate, subject to the standards embodied in
Anglo American’s Good Citizenship: Our
Business Principles.
Within all the Group’s businesses, the safe
and effective performance of employees and
the maintenance of positive employee relations
are of fundamental importance. Managers are
charged with ensuring that the following key
principles are upheld:
• adherence to national legal standards on
employment and workplace rights at all
times;
• adoption of fair labour practices;
• prohibition of child labour;
• prohibition of inhumane treatment of
employees and any form of forced labour,
physical punishment or other abuse;
• continual promotion of safe and healthy
working practices;
• promotion of workplace equality and
elimination of all forms of unfair
discrimination;
• provision of opportunities for employees to
enhance their work-related skills and
capabilities;
• recognition of the right of our employees to
freedom of association; and
• adoption of fair and appropriate procedures
for determining terms and conditions of
employment.
Further, the Group is committed to treating
employees at all levels with respect and
consideration, to investing in their development
and to ensuring that their careers are not
constrained by discrimination or arbitrary barriers.
Copies of the Good Citizenship: Our Business
Principles booklet are available from the Company
and may be accessed on the Company’s website
www.angloamerican.co.uk
As in previous years, numerous employee
communication and education presentations
and workshops took place covering, among
others, AIDS awareness, the Company’s
charitable giving, climate change, exploration
technologies and health and safety. The aim
was to inform and consult employees on
matters of concern to them and to raise
awareness of fi nancial and economic factors
affecting the performance of the Group.
62 | Anglo American plc Annual Report 2007
Additional information for shareholders
Set out below is a summary of certain
provisions of the Company’s current Articles of
Association (the Articles) and applicable English
law concerning companies (the Companies Act
1985 and the Companies Act 2006, together
the Companies Acts) required as a result of the
implementation of the Takeovers Directive in
English law. This is a summary only and the
relevant provisions of the Articles or the
Companies Acts should be consulted if further
information is required. Certain amendments to
the Articles will be proposed at the AGM to be
held on 15 April 2008. Details are set out in the
enclosed notice of the AGM. Copies of the
Company’s Articles marked up to show the
proposed amendments, are available by
application to the Company Secretary at the
Registered Offi ce.
Dividends and distributions
Subject to the provisions of the Companies Acts,
the Company may by ordinary resolution from
time to time declare dividends not exceeding
the amount recommended by the Board. The
Board may pay interim dividends whenever the
fi nancial position of the Company, in the opinion
of the Board, justifi es such payment.
The Board may withhold payment of all
or any part of any dividends or other monies
payable in respect of the Company’s shares
from a person with a 0.25% interest or more
(as defi ned in the Articles) if such a person
has been served with a notice after failing
to provide the Company with information
concerning interests in those shares required
to be provided under the Companies Acts.
Rights and obligations attaching to shares
The rights and obligations attaching to the
ordinary and preference shares are set out in
the Articles. The Articles may only be changed
by the shareholders by special resolution.
In addition, the Company regularly publishes
Optima (available on the Company’s website)
and AngloWorld, which contain items of news,
current affairs and information relevant to Group
employees. During the year, the Company
continued to enhance the functionality of its
enterprise information portal, theSource, aimed
at promoting knowledge-sharing across the
Group and keeping employees up to date with
business developments. The availability
of theSource continues to grow and it is now
available to over 18,000 employees across
the Group.
Charitable donations
During the year, Anglo American, its
subsidiaries and the Anglo American Group
Foundation made donations for charitable
purposes or wider social investments
amounting to $60.5 million (0.7% of pre-tax
profi t). Charitable donations of $3.09 million
were made in the UK, consisting of payments in
respect of education, sport and youth $1.321
million (43 %); community development
$0.642 million (21%); health and HIV/AIDS
$0.28 million (9%); environment $0.135
million (4%); arts, culture and heritage $0.241
million (8%), and other charitable causes
$0.469 million (15%). These fi gures were
compiled with reference to the London
Benchmarking Group model for defi ning and
measuring social investment spending. A fuller
analysis of the Group’s social investment
activities can be found in the Report to Society
2007.
Political donations
No political donations were made during 2007.
Anglo American has an established policy of not
making donations to, or incurring expenses for
the benefi t of, any political party in any part of
the world, including any political party or
political organisation as defi ned in the Political
Parties, Elections and Referendums Act 2000.
Annual General Meeting
The AGM will be held on 15 April 2008. A separate
booklet enclosed with this report contains the
notice convening the meeting together with a
description of the business to be conducted.
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Governance
Voting
Subject to the Articles generally and to any
special rights or restrictions as to voting
attached by or in accordance with the Articles to
any class of shares, on a show of hands every
member who is present in person at a general
meeting shall have one vote and on a poll every
member who is present in person or by proxy
shall have one vote for every share of which he/
she is the holder. It is, and has been for some
years, the Company’s practice to hold a poll on
every resolution at Annual and Extraordinary
shareholder meetings.
Where shares are held by trustees/
nominees in respect of the Group’s employee
share plans and the voting rights attached to
such shares are not directly exercisable by the
employees, it is the Company’s practice that
such rights are not exercised by the relevant
trustee/nominee.
Under the Companies Acts, members are
entitled to appoint a proxy, who need not be a
member of the Company, to exercise all or any
of their rights to attend and to speak and vote on
their behalf at a general meeting or class meeting.
A member may appoint more than one proxy in
relation to a general meeting or class meeting
provided that each proxy is appointed to exercise
the rights attached to a different share or shares
held by that member. A member that is a
corporation may appoint one or more individuals
to act on its behalf at a general meeting or class
meetings as a corporate representative.
The Company is aware of the debate
concerning section 323 of the Companies Act
2006, related to the voting rights of corporate
representatives. Anglo American is committed
to ensuring all investors have the opportunity to
exercise their voting rights and, to this end, will
adopt the guidance issued by the Institute of
Chartered Secretaries and Administrators
(available at www.icsa.org.uk) in respect of its
2008 AGM.
Restrictions on voting
No member shall, unless the directors
otherwise determine, be entitled in respect of
any share held by him/her to vote either
personally or by proxy at a shareholders’
meeting or to exercise any other right conferred
by membership in relation to shareholders’
meetings if any call or other sum presently
payable by him/her to the Company in respect
of that share remains unpaid. In addition,
no member shall be entitled to vote if he/she
has been served with a notice after failing
to provide the Company with information
concerning interests in those shares required
to be provided under the Companies Acts.
Issue of shares
Subject to the provisions of the Companies Acts
relating to authority and pre-emption rights and
of any resolution of the Company in a general
meeting, all unissued shares of the Company
shall be at the disposal of the directors and they
may allot (with or without conferring a right of
renunciation), grant options over or otherwise
dispose of them to such persons, at such times
and on such terms as they think proper.
meeting the quorum shall be two persons
holding or representing by proxy at least one-
third in nominal value of the issued shares of
the class (calculated excluding any shares held
as treasury shares). The rights conferred upon
the holders of any shares shall not, unless
otherwise expressly provided in the rights
attaching to those shares, be deemed to be
varied by the creation or issue of further shares
ranking pari passu with them.
Shares in uncertifi cated form
Directors may determine that any class of
shares may be held in uncertifi cated form
and title to such shares may be transferred
by means of a relevant system or that shares
of any class should cease to be held and
transferred. Subject to the provisions of the
Companies Acts, the CREST Regulations and
every other statute, statutory instrument,
regulation or order for the time being in force
concerning companies and affecting the
Company (together, the Statutes), the directors
may determine that any class of shares held on
the branch register of members of the Company
resident in South Africa or any other overseas
branch register of the members of the Company
may be held in uncertifi cated form in accordance
with any system outside the UK which enables
title to such shares to be evidenced and
transferred without a written instrument and
which is a relevant system. The provisions of
the Articles shall not apply to shares of any
class which are in uncertifi cated form to the
extent that the Articles are inconsistent with
the holding of shares of that class in
uncertifi cated form, the transfer of title to
shares of that class by means of a relevant
system or any provision of the CREST Regulations.
Deadlines for exercising voting rights
Votes are exercisable at a general meeting of
the Company in respect of which the business
being voted upon is being heard. Votes may be
exercised in person, by proxy, or in relation to
corporate members, by corporate representative.
The Articles provide a deadline for submission
of proxy forms of not than less than 48 hours
before the time appointed for the holding of the
meeting or adjourned meeting.
Variation of rights
Subject to statute, the Articles specify that
rights attached to any class of shares may be
varied with the written consent of the holders
of not less than three-quarters in nominal value
of the issued shares of that class, or with the
sanction of an extraordinary resolution passed
at a separate general meeting of the holders of
those shares. At every such separate general
Transfer of shares
All transfers of shares which are in certifi cated
form may be effected by transfer in writing in
any usual or common form or in any other form
acceptable to the directors and may be under
hand only. The instrument of transfer shall be
signed by or on behalf of the transferor and
(except in the case of fully-paid shares) by or on
behalf of the transferee. The transferor shall
remain the holder of the shares concerned until
the name of the transferee is entered in the
register. All transfers of shares which are in
uncertifi cated form may be effected by means
of the CREST system.
The directors may decline to recognise any
instrument of transfer relating to shares in
certifi cated form unless it:
(a) is in respect of only one class of share; and
(b) is lodged at the transfer offi ce (duly stamped
if required) accompanied by the relevant
share certifi cate(s) and such other evidence
as the directors may reasonably require to
show the right of the transferor to make the
transfer (and, if the instrument of transfer is
executed by some other person on his/her
behalf, the authority of that person so to do).
The directors may, in the case of shares in
certifi cated form, in their absolute discretion and
without assigning any reason therefor, refuse to
register any transfer of shares (not being fully-
paid shares) provided that, where any such
shares are admitted to the Offi cial List of the
London Stock Exchange, such discretion may
not be exercised in such a way as to prevent
dealings in the shares of that class from taking
place on an open and proper basis. The directors
may also refuse to register an allotment or
transfer of shares (whether fully paid or not)
in favour of more than four persons jointly.
If the directors refuse to register an allotment
or transfer, they shall send within two months
after the date on which the letter of allotment or
transfer was lodged with the Company, to the
allottee or transferee, notice of the refusal.
A shareholder does not need to obtain the
approval of the Company, or of other
shareholders of shares in the Company,
for a transfer of shares to take place.
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Signifi cant agreements: Change
of control
In the event of a takeover (change of control),
employee share plans would be affected.
Purchases of own shares
At the EGM held on 25 June 2007, authority was
given for the Company to purchase, in the market,
up to 134,544,000 Ordinary Shares of 54 86/91
US cents each. Details of purchases made
during the year are set out in Note 29 on
page 116.
Indemnities
At the date of this report, indemnities are in
force under which the Company has agreed to
indemnify the directors, to the extent permitted
by law and the Company’s Articles in respect of
all losses arising out of, or in connection with,
the execution of their powers, duties and
responsibilities as directors of the Company and
its associated companies.
By order of the Board
Nicholas Jordan
Company Secretary
19 February 2008
Governance
Directors’ report continued
Directors
Directors shall not be less than ten nor more
than 18 in number. A director is not required to
hold any shares of the Company by way of
qualifi cation. The Company may by ordinary
resolution increase or reduce the maximum or
minimum number of directors.
Powers of directors
Subject to the Articles, the Companies Acts and
any directions given by special resolution, the
business of the Company will be managed by
the Board who may exercise all the powers of
the Company.
The Board may exercise all the powers of
the Company to borrow money and to mortgage
or charge any of its undertaking, property and
uncalled capital and to issue debentures and
other securities, whether outright or as
collateral security for any debt, liability or
obligation of the Company or of any third party.
The Company may by ordinary resolution
declare dividends but no dividend shall be
payable in excess of the amount recommended
by the directors. Subject to the provisions of the
Articles and to the rights attaching to any
shares, any dividends or other monies payable
on or in respect of a share may be paid in such
currency as the directors may determine. The
directors may deduct from any dividend payable
to any member all sums of money (if any)
presently payable by him/her to the Company
on account of calls or otherwise in relation to
shares of the Company. The directors may retain
any dividends payable on shares on which the
Company has a lien, and may apply the same in
or towards satisfaction of the debts, liabilities or
engagements in respect of which the lien exists.
Appointment of directors
The directors may from time to time appoint one
or more directors.
The Board may appoint any person to be a
director (so long as the total number of directors
does not exceed the limit prescribed in the
Articles). Any such director shall hold offi ce
only until the next AGM and shall then be
eligible for election.
Retirement of directors
At each AGM all those directors who have been
in offi ce for three years or more since their
election or last re-election shall retire from
offi ce. In addition, a director may at any AGM
retire from offi ce and stand for re-election.
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Governance
Corporate governance
Combined Code compliance
Anglo American is committed to the highest
standards of corporate governance – the way in
which the Company is directed and controlled –
and complied fully with the Combined Code on
Corporate Governance June 2006 (the Code)
throughout the year under review.
Role of the Board
The Board of directors is responsible to
shareholders for the performance of the
Company. Its role includes the establishment,
review and monitoring of strategic objectives,
approval of major acquisitions, disposals and
capital expenditure and overseeing the Group’s
systems of internal control, governance and risk
management. A schedule of matters reserved
for the Board’s decision details key aspects of
the Company’s affairs that the Board does not
delegate (including, among other things,
approval of business plans and budgets, material
expenditure and alterations to share capital).
Board composition and directors’
independence
The Board is chaired by Sir Mark Moody-Stuart.
The chairman is responsible for leading the
Board and for its effectiveness. Cynthia Carroll
is the chief executive and is responsible for the
execution of strategy and the day-to-day
management of the Group, supported by the
Chief Executive’s Committee (CeCom) and the
Executive Committee (ExCo), both of which she
chairs. Sir Rob Margetts will be succeeded as
the senior independent non-executive director
by David Challen on 15 April 2008.
The Board has a strong independent
element and currently comprises, in addition
to the chairman, two executive and nine
non-executive directors, seven of whom are
independent according to the defi nition
contained in the Code. The independent
directors are indicated within the table on this
page, and full biographical details for each
director are given on pages 58 and 59. The
letters of appointment of the non-executive
directors are available for inspection at the
registered offi ce of the Company.
The Company is conscious of the need to
maintain an appropriate mix of skills and
experience on the Board, and to progressively
refresh its composition over time. Cynthia
Carroll was appointed to the Board as an
executive director on 15 January 2007 and
succeeded Tony Trahar as chief executive on
1 March 2007. Tony Trahar retired from the
Board at the conclusion of the 2007 AGM.
Simon Thompson, an executive and Ralph
Alexander, a non-executive director resigned
from the Board on 13 April and 26 October
2007 respectively. David Hathorn resigned
from the Board after the Mondi demerger on
3 July 2007 and Bobby Godsell has informed the
Company he wishes to retire at the conclusion
of the AGM in April 2008.
The Board has proposed Sir CK Chow for
election as a director at the AGM. Sir CK’s
biographical details are set out in the Directors’
Report on page 61.
René Médori and Karel van Miert will be
proposed for re-election at the AGM. René
Médori is the fi nance director of Anglo American,
and serves as a member of CeCom and ExCo as
well as the Investment Committee and Karel
van Miert is a member of the Audit and
Nomination Committees. Chris Fay and Sir Rob
Margetts will again be proposed for re-election
at the AGM. Each has served three three-year
terms as an independent non-executive director,
having been fi rst appointed during 1999, and
hence their nomination for re-election has been
subject to particularly rigorous review. Chris Fay
chairs the Safety and Sustainable Development
Committee and serves as a member of the Audit
and Remuneration Committees. Sir Rob Margetts
is the senior independent non-executive
director, chairs the Remuneration Committee
and is a member of the Nomination Committee.
The Board values their wide experience and
contributions to its proceedings, and is satisfi ed
that they both remain remain robustly
independent.
Since January 2007, three executive
directors and one non-executive director have
resigned or retired and one executive director
has been appointed. The Company considers
that its programme of progressively refreshing
the composition of the Board remains effective.
Directors’ training
Anglo American’s directors have a wide range of
expertise as well as signifi cant experience in
strategic, fi nancial, commercial and mining
activities. Training and briefi ngs are also
available to all directors on appointment and
subsequently, as necessary, taking into account
existing qualifi cations and experience. Directors
also have access to management, and to the
advice of the Company Secretary. Furthermore,
all directors are entitled to seek independent
professional advice concerning the affairs of
Anglo American at its expense, although no
such advice was sought during 2007.
Presentations are made to the Board by
business management on the activities
of operations. Directors undertake regular
visits to operations and projects and, in 2007,
operations in Australia, Botswana, Brazil, Chile,
China, Colombia, Oman, South Africa,
Venezuela and the US were visited. In addition,
during the year directors attended courses/
seminars on risk management, remuneration,
corporate responsibility, fi nancial reporting
and pensions.
Board and Committee meetings – frequency and attendance
Independent
in terms
of Code?
Board
(seven
meetings)
Audit
(three
meetings)
S&SD
(four
meetings)
Remuneration
(four
meetings)
Nomination
(three
meetings)
Sir Mark Moody-Stuart
A J Trahar
C B Carroll
D A Hathorn
R Médori
S R Thompson
R C Alexander
D J Challen
C E Fay
R M Godsell
Sir Rob Margetts
K A L M Van Miert
N F Oppenheimer
F T M Phaswana
M Ramphele
P Woicke
n/a
No
No
No
No
No
Yes
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
All
3(1)
All
3(1)
All
2(1)
5(1)
All
All
6
All
All
All
All
6
All
(1) Meetings attended prior to retirement or since appointment.
n/a
n/a
n/a
n/a
n/a
n/a
n/a
All
All
n/a
n/a
2
n/a
2
n/a
All
All
1(1)
2(1)
n/a
n/a
n/a
2(1)
n/a
All
All
n/a
n/a
n/a
n/a
3
2
All
n/a
n/a
n/a
n/a
n/a
n/a
All
All
n/a
All
n/a
n/a
n/a
n/a
n/a
All
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
All
All
All
All
All
All
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Governance
Corporate governance continued
Board effectiveness
A formal evaluation of the performance of the
Board, its committees and individual directors is
carried out annually by means of detailed
questionnaires and interviews. The results of
the most recent evaluation were collated and
analysed by the Company Secretary and
presented to the Board. The aim is to ensure
continuous improvement in the functioning of
the Board. The analysis in respect of 2007
confi rmed that the Board and its committees
were functioning appropriately. As a result of
the evaluation, certain changes to committee
membership are under consideration and
changes to the Board meeting process and
timetable have already been implemented.
As in past years, the evaluation process also
included a review, chaired by the senior
independent non-executive director (without
the chairman present), of the performance of
the chairman. It is the Board’s current intention
to engage an external reviewer for the Board
effectiveness evaluation process from time
to time.
Committees of the Board
Subject to those matters reserved for its
decision, the Board delegates certain
responsibilities to a number of standing
committees – the Audit, Remuneration,
Nomination and Safety & Sustainable
Development committees. The terms of
reference for each of these committees are
published on the Company’s website.
Remuneration Committee
The Remuneration Committee is responsible for
establishing and developing the Group’s general
policy on executive and senior management
remuneration and determining specifi c
remuneration packages for executive directors.
The directors’ remuneration report, setting
out Anglo American’s policy on executive
remuneration, is set out on pages 70 to 82 of
this Annual Report. A resolution to approve the
remuneration report will be proposed at the
forthcoming AGM.
The Remuneration Committee presently
comprises: Sir Rob Margetts (chairman),
David Challen and Chris Fay, all of whom are
independent non-executive directors, and
Sir Mark Moody-Stuart.
Safety & Sustainable Development
Committee (S&SD)
The S&SD Committee is responsible for
developing framework policies and guidelines for
the management of sustainable development
issues, including safety, health and environment
matters, and ensuring their progressive
implementation throughout the Group.
The S&SD Committee normally meets three
or four times each year, including a visit to an
operation, and business unit heads are invited
to attend Committee meetings. Each business
unit head makes a safety and sustainable
development presentation to the Committee.
A separate Report to Society 2007 will be
published in April. This report focuses on the
safety, sustainable development, health and
environmental performance of the Group’s
managed operations, their performance with
regard to the Company’s Good Citizenship
principles and the operational dimensions of
their social programmes.
The S&SD Committee presently comprises:
Chris Fay (chairman), Cynthia Carroll, Bobby
Godsell, Sir Mark Moody-Stuart, Mamphela
Ramphele, Tony Redman and Peter Woicke.
Nomination Committee
The Nomination Committee makes
recommendations to the Board on the
appointment of new executive and non-
executive directors, including making
recommendations as to the composition of the
Board and its committees and the balance
between executive and non-executive directors.
The Nomination Committee meets as and when
required and engages external consultants to
identify appropriate candidates. During 2007,
the services of Spencer Stuart were used by
the Committee.
The Board, via the Nomination Committee,
has taken steps to ensure that the Human
Resources function of the Group regularly
reviews and updates the succession plans of
directors and senior managers.
The Nomination Committee presently
comprises: Fred Phaswana (chairman),
Sir Rob Margetts, Sir Mark Moody-Stuart,
Nicky Oppenheimer, Mamphela Ramphele,
Karel Van Miert and Peter Woicke. In accordance
with the provisions of the Combined Code, the
majority of members and the chairman of the
Committee are independent non-executive
directors.
Audit Committee
The primary role of the Audit Committee is to
ensure the integrity of fi nancial reporting and
the audit process, and that a sound risk
management and internal control system is
maintained. In pursuing these objectives, the
Audit Committee oversees relations with the
external auditors and reviews the effectiveness
of the internal audit function. The Committee
also monitors developments in corporate
governance to ensure the Group continues to
apply high and appropriate standards.
In fulfi lling its responsibility of monitoring
the integrity of fi nancial reports to shareholders,
the Audit Committee has reviewed accounting
principles, policies and practices adopted in the
preparation of public fi nancial information and
has examined documentation relating to the
Annual Report, Interim Report, preliminary
announcements and related public reports. The
clarity of disclosures included in the fi nancial
statements was reviewed by the Audit
Committee, as was the basis for signifi cant
estimates and judgements. In assessing the
accounting treatment of major transactions open
to different approaches, the Committee
considered written reports by management and
the external auditors. The Committee’s
recommendations are submitted to the Board
for approval.
The chief fi nancial offi cers of all operations
have provided confi rmation, on a six-monthly
basis, that fi nancial and accounting control
frameworks operate satisfactorily. The Committee
considered summaries of the signifi cant risk and
control issues arising from these reports. The
Committee also received regular internal and
external audit reports on the results of audits at
various operations. Further information on risk
management processes is provided in the internal
control disclosure statement on page 67.
External audit
Anglo American’s policy on auditors’
independence, which came into effect on
1 January 2003, is consistent with the ethical
standards published by the Auditing Practices
Board in December 2004.
A key factor that may impair auditors’
independence is a lack of control over non-audit
services provided by the external auditors. In
essence, the external auditors’ independence is
deemed to be impaired if the auditors provide a
service which:
• results in auditing of own work by the
auditors;
• results in the auditors acting as a manager
or employee of the Group;
• puts the auditors in the role of advocate for
the Group; or
• creates a mutuality of interest between the
auditors and the Group.
Anglo American addresses this issue through
three primary measures, namely:
• disclosure of the extent and nature of non-
audit services;
• the prohibition of selected services; and
• prior approval by the Audit Committee
chairman of non-audit services where the
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Governance
cost of the proposed assignment is likely to
exceed $50,000.
Disclosure entails reporting non-audit services
to the Group’s audit committees and inclusion of
prescribed detail, i.e. the breakdown of fees
paid to external auditors for audit and non-audit
work in the Annual Reports of listed entities.
The policy’s defi nition of prohibited non-audit
services corresponds with the European
Commission’s recommendations
on auditors’ independence.
Other safeguards encapsulated in the
policy include:
• the external auditors are required to adhere
to a rotation policy based on best practice
and professional standards in the United
Kingdom. The standard period for rotation
of the audit engagement partner is fi ve
years and, for any key audit principal, seven
years.
• any partner designated as a key audit
principal of Anglo American shall not be
employed by Anglo American in a key
management position unless a period of
at least two years has elapsed since the
conclusion of the last relevant audit.
• the external auditors are required to
periodically assess, in their professional
judgement, whether they are independent
from the Group.
• the Audit Committee ensures that the
scope of the auditors’ work is suffi cient and
that the auditors are fairly remunerated.
• the Audit Committee has primary
responsibility for making recommendations
to the Board on the appointment,
reappointment and removal of the external
auditors.
• the Audit Committee has the authority to
engage independent counsel and other
advisors as they determine necessary in
order to resolve issues on auditor
independence.
The Audit Committee has satisfi ed itself that
the United Kingdom professional and regulatory
requirements for audit partner rotation and
employment of former employees of the
external auditors have been complied with.
The Audit Committee considered
information pertaining to the balance between
fees for audit and non-audit work for the Group
in 2007 and concluded that the nature and
extent of non-audit fees do not present a threat
to the external auditors’ independence.
Furthermore, after reviewing a report from the
external auditors on all their relationships with
Anglo American that might reasonably have a
bearing on the external auditors’ independence
and the audit engagement partner and staff’s
objectivity, and the related safeguards and
procedures, the Committee has concluded that
the external auditors’ independence was not
impaired.
The Audit Committee approved the external
auditors’ terms of engagement, scope of work,
the process for the 2007 interim review, the
annual audit and the applicable levels of
materiality. Based on written reports submitted,
the Committee reviewed, with the external
auditors, the fi ndings of their work and
confi rmed that all signifi cant matters had been
satisfactorily resolved.
The Committee’s assessment of the
external auditors’ performance and
independence underpins its recommendation
to the Board to propose to shareholders the
re-appointment of Deloitte & Touche LLP as
auditors until the conclusion of the AGM in
2009. Resolutions to authorise the Board to
re-appoint and determine their remuneration
will be proposed at the AGM on 15 April 2008.
Internal audit
Following an independent review of the
structure of the internal audit function in 2006
a central department was created with
responsibility for reviewing and providing
assurance on the adequacy of the internal
control environment across all of Anglo
American’s operations. The head of internal
audit is responsible for reporting the fi ndings of
this internal audit work to the Audit Committee
on a regular basis. Internal audit teams operated
in all of the Group’s principal divisions in the
period under review, reporting fi ndings to local
senior management. Internal audit function’s
mandates and annual audit coverage plans were
approved by the Audit Committee.
The internal audit activities are performed
either by teams of appropriate, qualifi ed and
experienced employees, or through the
engagement of external practitioners upon
specifi ed and agreed terms. A summary of audit
results and risk-management information was
presented to the Committee at regular intervals
throughout the year. The Group’s head of
internal audit reports to the Audit Committee
on the internal audit function’s performance
against Group standards.
Assurance regarding the accuracy and
reliability of mineral resources and ore reserves
disclosures is provided through a combination of
internal technically profi cient staff and
independent third parties.
Composition
The Audit Committee presently comprises:
David Challen (chairman), Chris Fay, Fred
Phaswana, Karel Van Miert and Peter Woicke,
all of whom are independent non-executive
directors. The Board, in consultation with the
Audit Committee chairman, makes
appointments to the Committee. The Board has
determined that the Committee members have
the skills and experience necessary to
contribute meaningfully to the Committee’s
deliberations. In addition, the chairman has
requisite experience in accounting and fi nancial
management.
The Committee met three times during
2007, and on one of those occasions the
members held discussions with the external
audit partners and the head of internal audit in
the absence of management.
Effectiveness of internal control and
risk management
The Chief Executive’s Committee, (CeCom) as
mandated by the Board, has established a
Group-wide system of internal control to
manage signifi cant Group risks. This system,
which has been operating throughout the year
and to the date of this report, supports the
Board in discharging its responsibility for
ensuring that the wide range of risks associated
with the Group’s diverse international
operations is effectively managed in support of
the creation and preservation of shareholder
wealth. Where appropriate, necessary action
has been or is being taken to remedy any
failings or weaknesses identifi ed from review of
the effectiveness of the internal control system.
Internal control
The system of internal control, which is
embedded in all key operations, provides
reasonable rather than absolute assurance that
the Group’s business objectives will be achieved
within the risk tolerance levels defi ned by the
Board. Regular management reporting, which
provides a balanced assessment of key risks and
controls, is an important component of Board
assurance. In addition, certain Board committees
focus on specifi c risks such as safety and capital
investment and provide assurance to the Board
on those matters. The chief fi nancial offi cers
provide confi rmation, on a six-monthly basis,
that fi nancial and accounting control frameworks
have operated satisfactorily. The Board also
receives assurance from the Audit Committee,
which derives its information, in part, from
regular internal and external audit reports on risk
and internal control throughout the Group. The
Group’s internal audit function has a formal
collaboration process in place with the external
auditors to ensure effi cient coverage of internal
controls. The Anglo American internal audit
function is responsible for providing independent
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Governance
Corporate governance continued
assurance to CeCom and the Board on the
effectiveness of the risk management process
throughout the Group.
Anglo American seeks to have a sound
system of internal control, based on the Group’s
policies and guidelines, in all material associates
and joint ventures. In those companies that are
independently managed, as well as joint
ventures, the directors who are represented on
these organisations’ boards seek assurance that
signifi cant risks are being managed.
Risk management
The Board’s policy on risk management
encompasses all signifi cant business risks to
the Group, including, fi nancial, operational and
compliance risk, which could undermine the
achievement of business objectives. This
system of risk management is designed so that
the different businesses are able to tailor and
adapt their risk management processes to suit
their specifi c circumstances. This fl exible
approach has the commitment of the Group’s
senior management. There is clear
accountability for risk management, which is
a key performance area of line managers
throughout the Group. The requisite risk and
control capability is assured through Board
challenge and appropriate management
selection and skills development. Managers
are supported in giving effect to their risk
responsibilities through policies and guidelines
on risk and control management. Continuous
monitoring of risk and control processes, across
headline risk areas and other business-specifi c
risk areas, provides the basis for regular and
exception reporting to business management
and boards, CeCom and the Board.
Some of the headline risk areas, which have
been elaborated upon in the fi nancial review,
set out on pages 55 to 57 are:
• commodity price risk;
• political risk;
• legal and regulatory risk;
• counterparty risk; and
• infrastructure and operational
performance risks.
The risk assessment and reporting criteria are
designed to provide the Board with a consistent,
Group-wide perspective of the key risks. The
reports to the Board, which are submitted at
least every six months, include an assessment
of the likelihood and impact of risks
materialising, as well as risk mitigation
initiatives and their effectiveness.
In conducting its annual review of the
effectiveness of risk management, the Board
considers the key fi ndings from the ongoing
monitoring and reporting processes,
management assertions and independent
assurance reports. The Board also takes account
of material changes and trends in the risk profi le
and considers whether the control system,
including reporting, adequately supports the
Board in achieving its risk management
objectives.
During the course of the year the Board
considered the Group’s responsiveness to
changes within its business environment.
The Board is satisfi ed that there is an ongoing
process, which has been operational during the
year, and up to the date of approval of the
Annual Report, for identifying, evaluating and
managing the signifi cant risks faced by the
Group. This includes social, environmental and
ethical risks as highlighted in the Disclosure
Guidelines on Socially Responsible Investment
issued by the Association of British Insurers. A
detailed report on social, environmental and
ethical issues will be included in the Company’s
Report to Society 2007.
Accountability and audit
The Board is required to present a balanced and
understandable assessment of Anglo
American’s fi nancial position and prospects.
Such assessment is provided in the chairman’s
and chief executive’s statements set out on
pages 4 to 9 and the fi nancial review set out
on pages 15 to 57 of this Annual Report. The
respective responsibilities of the directors and
external auditors are set out on pages 84 and
86. As referred to in the directors’ report on
page 61, the directors have expressed their
view that Anglo American’s business is a
going concern.
Whistleblowing programme
Following adoption in December 2003 of a
whistleblowing policy that is aligned with the
Public Interest Disclosure Act 1998, the Group
has implemented a whistleblowing programme
in virtually all of the managed operations. The
programme, which is monitored by the Audit
Committee, is aimed at enabling employees,
customers, suppliers, managers or other
stakeholders, on a confi dential basis, to raise
concerns in cases where conduct is deemed to
be contrary to our values. It may include:
• actions that may result in danger to the
health and / or safety of people or damage
to the environment;
• unethical practice in accounting, internal
accounting controls, fi nancial reporting and
auditing matters;
• criminal offences, including money
laundering, fraud, bribery and corruption;
• failure to comply with any legal obligation;
• miscarriage of justice;
• any conduct contrary to the ethical
principles embraced in our Good
Citizenship: Our Business Principles or any
similar policy;
• any other legal or ethical concern; and
• concealment of any of the above.
The programme makes available a selection of
telephonic, e-mail, web-based and surface mail
communication channels to any person in the
world who has information about unethical
practice in Anglo American and its managed
operations. The multilingual communication
facilities are operated by independent service
providers who remove all indications from
information received as to the identity of the
callers before submission to designated persons
in the Group.
During 2007, 230 reports were received via
the global Speakup facility, covering a broad
spectrum of concerns, including ethical,
criminal, supplier relationships, health and
safety, and human resource-type issues.
Reports received were kept strictly confi dential
and were referred to appropriate line managers
within the Group for resolution. Where
appropriate, action was taken to address the
issues raised.
Executive management
Chief Executive’s Committee (CeCom)
CeCom is responsible for implementing the
strategies and policies determined by the Board,
managing the business and affairs of the
Company, prioritising the allocation of capital,
technical and human resources and establishing
best management practices. CeCom is also
responsible for senior management
appointments and monitoring their performance
and acts as the risk committee for the purpose
of reviewing and monitoring Anglo American’s
systems of internal control.
CeCom presently comprises: Cynthia Carroll
(chair), René Médori, Russell King and
Tony Redman.
Executive Committee (ExCo)
ExCo inter alia develops corporate and business
unit strategy, monitors strategic process in
terms of key milestones and reviews
operational and safety procedures of the
Group’s business units.
The current members of ExCo are;
Cynthia Carroll (chair), René Médori, Russell
King, Tony Redman, Philip Baum, Brian
Beamish, Norman Mbazima, John Wallington,
Duncan Wanblad and David Weston.
68 | Anglo American plc Annual Report 2007
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Governance
Shareholders will have the opportunity
at the forthcoming AGM, notice of which is
contained in the booklet enclosed herewith,
to put questions to the Board, including the
chairmen of the various committees. Facilities
have been put in place to enable shareholders
on the UK register to receive Company
communications electronically rather than by
mail and, for those unable to attend the
meeting, to cast their votes by electronic
means, including those shareholders whose
shares are held in the CREST system.
Voting on each resolution to be proposed at
the AGM will be conducted on a poll rather than
by a show of hands. The results of the poll will
be announced to the press and on the
Company’s website.
Investment Committee
The role of the Investment Committee, which is
a sub-committee of CeCom, is to manage the
process of capital allocation by ensuring that
investments and divestments increase
shareholder value and meet Anglo American’s
fi nancial criteria. The Committee makes
recommendations to CeCom and/or the Board
on these matters. The Committee meets
as required.
The Investment Committee presently
comprises: René Médori (chairman), Dorian
Emmett, Tony Redman and Peter Whitcutt.
Relations with shareholders
The Company maintains an active dialogue with
its key fi nancial audiences, including
institutional shareholders and sell-side
analysts. The Investor and Corporate Affairs
department manages the ongoing dialogue with
these audiences and regular presentations take
place at the time of interim and fi nal results as
well as during the rest of the year. An active
programme with potential shareholders is also
maintained.
Any concerns raised by a shareholder in
relation to the Company and its affairs are
communicated to the Board as a whole. The
Board is briefed on a regular basis by the
Investor and Corporate Affairs Department and
analysts’ reports are circulated to the directors.
During the year there have been regular
presentations and meetings with institutional
investors in the UK, South Africa, continental
Europe and the US to communicate the strategy
and performance of Anglo American. Executive
directors as well as key corporate offi cers host
such presentations and meetings. The
chairman, senior independent non-executive
director and other non-executive directors are
also available to shareholders to discuss any
matter they wish to raise. The Company’s
website www.angloamerican.co.uk provides
the latest and historical fi nancial and other
information on Anglo American.
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Anglo American plc Annual Report 2007 | 69
Governance
Remuneration report
1. Remuneration Committee
This report sets out the Company’s
remuneration policy and practice for executive
and non-executive directors and provides
details of their remuneration and share interests
for the year ended 31 December 2007.
1.1 Role of the Remuneration Committee
and Terms of Reference
The Remuneration Committee (the Committee)
is responsible for considering and making
recommendations to the Board on:
• the Company’s general policy on executive
and senior management remuneration;
• the specifi c remuneration packages for
executive directors of the Company,
including basic salary, performance-based
short- and long-term incentives, pensions
and other benefi ts; and
1.2 Membership of the Committee
The Committee comprised the following
non-executive directors during the year ended
31 December 2007:
• Sir Rob Margetts (chairman);
• David Challen;
• Chris Fay; and
• Sir Mark Moody-Stuart.
The Company’s chief executive attends the
Committee meetings by invitation and assists
the Committee in its considerations, except
when issues relating to her own compensation
are discussed. No directors are involved in
deciding their own remuneration. In 2007, the
Committee was advised by Russell King and
Chris Corrin (Group Human Resources) and the
Company’s Finance function. It also took
external advice as shown in Figure 1.
• the design and operation of the Company’s
Certain overseas operations within the
2. Remuneration policy on executive
directors’ remuneration
The Company’s remuneration policy is
formulated to attract and retain high-calibre
executives and to motivate them to develop and
implement the Company’s business strategy in
order to optimise long-term shareholder value
creation. The policy is framed around the
following key principles:
• total rewards will be set at levels that are
suffi ciently competitive to enable the
recruitment and retention of high-calibre
executives;
• total incentive-based rewards will be
earned through the achievement of
demanding performance conditions
consistent with shareholder interests;
• incentive plans, performance measures and
targets will be structured to operate
soundly throughout the business cycle;
• the design of long-term incentives will be
prudent and will not expose shareholders to
unreasonable fi nancial risk;
share incentive schemes.
The full Terms of Reference of the Committee
can be found on the Anglo American website
www.angloamerican.co.uk and copies are
available on request.
The Committee met four times during 2007.
Group are also provided with audit and
non-audit related services from PwC’s, Mercer’s
and Deloitte’s worldwide member fi rms.
A summary of the letter from Mercer
• in considering the market positioning of
containing the conclusions of their review of the
Committee’s executive remuneration processes
for 2007 can be found on page 83, while the full
letter can be found on the Company’s website.
reward elements, account will be taken of
the performance of the Company and of the
individual executive director; and
• reward practice will conform to best practice
standards as far as reasonably practicable.
Figure 1:
EXTERNAL ADVICE PROVIDED TO THE REMUNERATION COMMITTEE
Advisers
Services provided to the Committee
Other services provided to the Company
PricewaterhouseCoopers LLP
(PwC)
Appointed by the Company, with the agreement
of the Committee, to provide specialist valuation
services
Appointed by the Company, with the agreement
of the Committee, to provide legal advice on
long-term incentives and directors’ service
contracts
Engaged by the Committee to review the
Committee’s processes on an annual basis, in
order to provide shareholders with assurance
that the remuneration processes the Committee
has followed are in line with the stated policy as
set out below and that the Committee has
operated within its Terms of Reference
Appointed by the Company, with the agreement
of the Committee, to provide market
remuneration data
Linklaters LLP
(Linklaters)
Mercer Limited
(Mercer)
Towers Perrin
Deloitte & Touche LLP
(Deloitte)
70 | Anglo American plc Annual Report 2007
Investment advisers, actuaries and auditors
for various pension schemes; advisers on
internal audit projects and the adoption of
International Financial Reporting Standards;
taxation, payroll and executive compensation
advice
Legal advice on certain corporate matters
Investment advisers and actuaries for various
pension schemes
In their capacity as Group auditors, Deloitte
undertakes an audit of sections 10 and 11 of
the remuneration report annually. However,
they provide no advice to the Committee
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This policy applied for 2007. In 2008, the
Committee is reviewing the current executive
remuneration policy and package to ensure that
it remains aligned with the Company’s strategic
priorities over the near-term. These priorities,
which were communicated at the interim results
presentation on 3 August 2007, are as follows:
• achieving production, cost and productivity
improvements;
• aggressively pursuing identifi ed growth
opportunities;
• embedding a stronger performance culture
and streamlined management model; and
• ensuring a sharper focus on safety.
Representatives of the Company’s principal
investors will be consulted on any changes to
the remuneration policy.
3. Elements of executive director
remuneration
3.1 Remuneration mix
Each executive director’s total remuneration
consists of salary, annual bonus, long-term
incentives and benefi ts. An appropriate balance
see also
p77Bonus Share Plan
p83Independent remuneration report review
Governance
is maintained between fi xed and performance-
related remuneration and between elements
linked to short-term fi nancial performance and
those linked to longer-term shareholder value
creation.
Assuming on-target performance, the
Committee’s policy is that at least 50% (60%
for Cynthia Carroll) of total executive director
remuneration is performance-related. In 2007,
70% of the chief executive’s remuneration on
an expected-value basis was performance-
related; for René Médori, the fi gure was also
70% (see illustrative charts).
The Bonus Share Plan (BSP) and the Long
Term Incentive Plan (LTIP) are designed to align
the longer-term interests of shareholders and
executives and to underpin the Company’s
performance culture. The Committee monitors
the relevance and appropriateness of the
performance measures and targets applicable to
both plans. Further details of the BSP and of the
LTIP are set out below and on pages 72 and 73.
3.2 Basic salary
The basic salary of each executive director is
reviewed annually and is targeted at the market
median of companies of comparable size,
market sector, business complexity and
international scope. This is adjusted either way
based on experience and other relevant factors.
The market for executives of main board calibre,
in large international resource companies in
particular, remains very competitive and it is
therefore deemed sensible to position basic
salary for executive directors at no lower than
the median point. Company performance,
individual performance and changes in
responsibilities are also taken into consideration
in setting salary levels each year.
3.3 Bonus Share Plan (BSP)
The BSP was fi rst operated in 2004 and
executive directors are normally eligible to
participate in it.
The BSP requires executive directors to
invest a signifi cant proportion of their
remuneration in shares, thereby more closely
aligning their interests with those of
shareholders, and encourages management at
all levels to build up a meaningful personal
stake in the Company. Awards under the BSP
are not pensionable, are made annually and
consist of three elements:
• a performance-related cash element;
• Bonus Shares as a conditional award,
currently to a value equal to the cash
element; and
• an additional performance-related element
in the form of Enhancement Shares.
The BSP operates as follows:
• the value of the bonus is calculated by
reference to achievement against annual
performance targets which include
measures of corporate (and, where
applicable, business unit) performance as
well as the achievement of specifi c
individual objectives. For executive
directors, the corporate element is based on
stretching Earnings Per Share (EPS) targets
which are calculated using underlying
earnings (reconciled in note 12 of the
fi nancial statements). The key individual
objectives are designed to support the
Company’s strategic priorities and in 2007
included safety improvement, strategy
implementation, production growth, people
management, succession planning, cost
reduction and operational effi ciencies;
• the Committee reviews these measures
annually to ensure they remain appropriate
and suffi ciently stretching in the context of
the economic and performance
expectations for the Company and its
operating businesses;
• in 2007, 50% of each annual bonus was
based on the corporate fi nancial measure
and the remaining 50% on key individual
performance measures. This split refl ects
the importance of the current strategic
repositioning of the Group and the volatile
nature of commodity prices in recent years,
with the implications of this on setting
earnings targets. The level of bonuses
payable is reduced if certain overall safety
improvement targets are not met. Bonus
parameters are set on an individual basis;
• in the case of the directors and top tier of
management, currently half of the bonus is
payable in cash. The maximum cash
element for 2007 was 75% of basic salary
in the case of both Cynthia Carroll and
René Médori. The maximum bonus is
payable only for meeting targets which,
in the opinion of the Committee, represent
an exceptional performance for the Group.
The other part of the bonus is in the form
of a conditional award of Bonus Shares,
currently equal in value to the cash element.
These Bonus Shares vest only if the
participant remains in employment with the
Group until the end of a three-year holding
period (or is regarded by the Committee as
a ‘good leaver’); and
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Governance
Remuneration report continued
Figure 2:
LTIP – SECTOR INDEX
Category weighting
Comparator companies
Mining
94%
BHP Billiton plc
Rio Tinto plc
Teck Cominco
Vale
Vedanta Resources plc
Xstrata plc
Industrial Minerals
6%
CRH plc
Holcim Limited
Lafarge
Hanson plc
Figure 3:
LTIP – SECTOR INDEX COMPARISON
The Company’s relative TSR compared with the Sector Index
% Proportion of total TSR element vesting
Below Target
Target (matching the weighted median of the Sector Index)
Target plus 5% per annum
Target plus 7.5% per annum (or above)
0
20
50
75
in special circumstances relating to the
recruitment or retention of key executives in
countries where share options are the normal
means of long-term incentivisation. As the
current ESOS will expire in early 2009, the
Anglo American Discretionary Option Plan
will be proposed to shareholders at the Annual
General Meeting (AGM) in April 2008.
Executive directors remain eligible to
participate in the Company’s Save As You Earn
(SAYE) and Share Incentive Plan (SIP) schemes.
As these schemes are offered to all UK-based
employees, performance conditions do not
apply to them. At the AGM in April 2008
shareholders will be asked to approve a new
SAYE scheme to replace the existing SAYE
scheme, which expires in early 2009.
3.5 Long Term Incentive Plan (LTIP)
Grant levels
Conditional LTIP awards are made annually to
executive directors. The maximum grant level
under the LTIP is currently 200% of basic salary
and it is anticipated that, in 2008, grants under
the LTIP will be made at 200% of basic salary
for the executive directors, including the chief
executive. The Committee is content that the
performance conditions that need to be satisfi ed
for these awards to vest in full are suffi ciently
stretching in the context of the award levels.
In determining annual award levels, the
Committee also gives consideration to market
competitiveness and has set the levels taking
account of median expected value of long-term
incentives relative to other companies of a similar
size. These awards are discretionary and are
considered on a case-by-case basis.
Performance measures
As in previous years, vesting of the LTIP awards
made during 2007 is subject to the achievement,
over a fi xed three-year period, of stretching
Group performance targets relating to Total
Shareholder Return (TSR) and to an operating
measure, currently return on capital employed
(ROCE).
Half of each award is subject to a Group TSR
measure, while the other half is subject to a
Group ROCE measure. These performance
measures were selected on the basis that they
clearly foster the creation of shareholder value
and their appropriateness is kept under review by
the Committee. At the end of each performance
period, the level of ROCE performance achieved
and the level of award earned will be published in
the subsequent remuneration report. There is no
retesting of performance.
The LTIP closely aligns the interests of
shareholders and executive directors by
rewarding superior shareholder return and
fi nancial performance and by encouraging
executives to build up a shareholding in
the Company.
Total shareholder return (TSR)
The Committee considers comparative TSR to
be a suitable long-term performance measure
for the Company’s LTIP awards. Executives
would benefi t under this measure only if
shareholders have enjoyed returns on their
investment which are superior to those that
could have been obtained in other comparable
companies.
The portion of each award that is based on
TSR is measured 50% against the Sector Index
and 50% against the constituents of the
• in order to encourage continuing focus on
medium-term performance, executive
directors also receive a conditional award
of Enhancement Shares at the same time
as the award of Bonus Shares. The
maximum potential, at face value, of the
Enhancement Shares is 75% of the face
value of the Bonus Shares (i.e. in 2007 a
maximum of 56% of basic salary). Awards
of Enhancement Shares made in 2007 will
vest after three years only to the extent
that a challenging performance condition
(real EPS growth, based on earnings per
share growth against growth in the UK
Retail Price Index (RPI)) is met (see
illustrative chart). There is no retesting of
this performance condition.
Real EPS growth is viewed as the most
appropriate performance measure for this
element of the BSP because it is a fundamental
fi nancial performance indicator, both internally
and externally, and links directly to the
Company’s long-term objective of improving
earnings. The targets have been approved by
the Committee after reviewing performance
over a number of years and have been set at
a level which provides stretching performance
levels for management. At the end of each
performance period, the level of performance
achieved and the proportion of awards vesting
will be published in the subsequent
remuneration report.
3.4 Share options and all-employee
share schemes
No share options have been granted to
executive directors under the Company’s
Executive Share Option Scheme (ESOS) since
2003 and there is currently no intention to make
future grants under the ESOS to executive
directors. However, the ESOS is retained for use
72 | Anglo American plc Annual Report 2007
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see also
p75TSR performance
p78Long Term Incentive Plan
Governance
Figure 4:
LTIP – FTSE 100 COMPARISON
The Company’s relative TSR compared with the FTSE 100
% Proportion of total TSR element vesting
Below the median TSR of the FTSE 100
Equal to the median TSR of the FTSE 100
Equal to the 90th percentile TSR of the FTSE 100
Above the 90th percentile TSR of the FTSE 100
0
20
50
75
Figure 5:
LTIP – ROCE TARGETS
Minimum ROCE Target
Maximum ROCE Target
Figure 6:
LTIP – ROCE VESTING
Existing capital employed
Incremental capital employed
37.47%
39.47%
10%
10%
Below or equal to the Minimum Target
Equal to or greater than the Maximum Target
Proportion of ROCE element vesting
0%
100%
FTSE 100. Maximum vesting on the TSR element
of an award will only be possible if the Company
outperforms by a substantial margin both the
sector benchmark (as described below) and the
largest UK companies across all sectors.
Maximum vesting of the whole LTIP award,
would, in addition, depend on the Company’s
performance exceeding demanding ROCE targets
(also as described below). Taken as a whole,
vesting depends on a very challenging set of
performance hurdles.
Sector Index comparison
One half of the TSR element of an LTIP award
vests according to the Company’s TSR over the
performance period relative to a weighted
basket of international natural resource
companies (the Sector Index). The Committee
may amend the list of comparator companies in
the Sector Index, and relative weightings, if
circumstances make this necessary (for
example, as a result of takeovers or mergers of
comparator companies or signifi cant changes in
the composition of the Group, such as the
future sale of Tarmac). In calculating TSR it is
assumed that all dividends are reinvested.
For awards made in 2007, the companies
constituting the Sector Index are shown in
Figure 2.
Target performance for the Sector Index
is assessed by calculating the median TSR
performance within each sub-sector category,
and then weighting these medians by the
category weightings shown. That part
of any award that is contingent upon the
Sector Index element of the TSR performance
will vest as shown in Figure 3 (on a straight-line
basis for performance between the levels shown).
FTSE 100 comparison
The vesting of the other half of the TSR
element of an LTIP award will depend on
the Company’s TSR performance over the
performance period compared with the
constituents of the FTSE 100 Index, as
outlined in Figure 4 (on a straight-line basis
for performance between the levels shown).
The targets above were calibrated such that
for the TSR element of the award there is
approximately a 10% chance of achieving full
vesting and a 25% chance of two-thirds vesting.
These probabilities were assessed by PwC using
the same Monte Carlo model used for calculating
fair values of the LTIP under IFRS 2 (Share-based
Payments). The estimated average fair value of
an award under the TSR element is 48% of the
value of shares awarded.
Graphs of the Company’s TSR performance
against the weighted average of the Sector Index
and against the FTSE 100 for the fi ve years from
1 January 2003 to 31 December 2007 are shown
in Figure 9 on page 75.
Return on capital employed
Group ROCE is the second performance
measure for LTIP grants. The Committee
considers this to be among the most important
factors which drive sustainable improvements
in shareholder value in a natural resource
business, as well as one of the most important
measures of differentiation in performance in
this sector.
The proportion of shares vesting based on
Group ROCE will vary according to the degree of
improvement in the Group’s average annualised
ROCE over the performance period. Unless
certain minimum targets for improvement in
returns (on both capital employed for the
fi nancial year preceding the start of the
performance period (existing capital employed)
and on the additional capital employed during
the performance period (incremental capital
employed)) are met, no shares will vest under
this performance measure. The maximum ROCE
targets are based on stretching levels of return
on the existing capital employed.
The ROCE targets for each element
conditionally awarded in 2007 are shown in
Figure 5. To ensure that the targets do act as an
effective incentive, they are adjusted for factors
outside management’s control such as
movements in commodity prices, certain foreign
exchange rate effects, capital in progress, and for
relevant changes in the composition of the Group.
Vesting of the ROCE elements is as shown
in Figure 6. Shares will vest on a straight-line
basis for performance between the Minimum
Target and the Maximum Target.
3.6 Vesting of share incentives in the
event of change of control or
termination of employment
In the event of a change of control of the
Company, the following provisions apply under
the Company’s incentive plans:
• share options granted under the former
ESOS may be exercised irrespective of
whether the applicable performance
conditions have been met;
• the number of shares that vest under the
LTIP will be calculated by reference to the
extent to which the applicable performance
conditions have been met at the time of the
change of control;
• Bonus Shares awarded under the BSP will
be released, but Enhancement Shares
awarded under the BSP will vest only to the
extent that the performance condition has
been met at the time of the change of
control;
• SAYE options may be exercised (to the extent
of savings at the date of exercise); and
• participants may direct the SIP trustee as to
how to deal with their SIP shares (although
Matching Shares may be forfeited in some
circumstances).
In the event that a director’s employment is
terminated, vesting of outstanding share
options under the former ESOS is dependent
upon the reasons the contract is terminated.
Performance conditions fall away in the event of
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Governance
Remuneration report continued
redundancy. However, if a director resigns
voluntarily, then all such options lapse unless
the Committee determines otherwise.
In the case of LTIP interests, if a director
resigns voluntarily, then his/her interests lapse.
If he/she is made redundant, vesting at the end
of the performance period is based on the
normal performance criteria and then pro rated
for the proportion of the performance period for
which the director served.
In the case of the BSP, if a director ceases
to be employed before the end of the year in
respect of which the annual performance
targets apply, then no award will be made
unless the Committee determines otherwise
(taking into account the proportion of the year
for which the director was an employee of the
Group and of performance to date against the
annual performance targets at the date of
cessation). If a director resigns voluntarily
before the end of the three-year vesting period,
the Bonus Share awards lapse and the
Enhancement Shares are forgone. If a director is
made redundant, Bonus Shares already awarded
will be transferred as soon as practicable after
the date of leaving and Enhancement Shares
will vest at the end of the performance period
(to the extent that the performance conditions
have been met).
3.7 Employee Share Ownership Trust
and policy on provision of shares for
incentive schemes
The Group established an Employee Share
Ownership Trust (the Trust) in 1999 to acquire
and hold shares to facilitate the operation of the
Company’s share schemes. As at 31 December
2007, the Trust held 9,693,835 ordinary shares
in the Company, registered in the name of
Greenwood Nominees Limited. Shares held by
the Trust are not voted at the Company’s
general meetings. It is the Company’s current
policy and practice not to use newly issued
shares to meet the requirements of share
incentives. Such shares are currently provided
from the Trust or by market purchase. However,
shareholders will be asked at the AGM in April
2008 to approve the use of newly issued shares
or treasury shares in the future in connnection
with the SIP to give the Company greater
fl exibility in this regard.
3.8 Pensions
Details of individual pension arrangements are
set out on pages 78, 79 and 82. Since the
inception of the new UK pensions regime on 6
April 2006, the Committee has been prepared
to consider requests from executive directors
that their contracts be altered for future service,
so that further pension benefi ts are reduced or
cease to accrue and that a pension allowance be
paid having the same cost as the defi ned
contribution benefi ts forgone.
Similarly, the Committee is prepared to
consider requests from executive directors
(as is the case for employees more generally)
that their contracts be altered for future service,
so that supplementary pension contributions
are made into their defi ned contribution pension
arrangements, in return for equivalent cost
reductions in their future basic salary and/or
in the cash element of the BSP.
3.9 Other benefi ts
Executive directors are entitled to the provision of
a car allowance, medical insurance, death and
disability insurance, social club membership (in
accordance with local market practice), limited
personal taxation/fi nancial advice and
reimbursement of reasonable business expenses.
The provision of these benefi ts is considered to be
market-competitive in the appropriate locality for
executive director positions.
4. Executive shareholding targets
Within fi ve years of their appointment,
executive directors are expected to acquire a
holding of shares with a value of two times’
basic salary in the case of the chief executive
and one times’ basic salary in the case of other
executive directors.
The Committee takes into consideration
achievement against these targets when
making grants under the Company’s various
long-term incentive plans.
5. External appointments
Executive directors are not permitted to hold
external directorships or offi ces without the
prior approval of the Board; if approved, they
may each retain the fees payable from one
such appointment. During the year ended
31 December 2007, Cynthia Carroll and
René Médori each retained fees from such
appointments, amounting to £108,000
and £57,000 respectively.
6. Policy on non-executive directors’
remuneration
Non-executive directors’ remuneration is approved
by the Board as a whole on the recommendation
of the chairman and executive directors.
The Company’s policy on non-executive
directors’ remuneration is based on the
following key principles:
• Remuneration should be:
– suffi cient to attract and retain world-class
non-executive talent;
– consistent with recognised best practice
standards for non-executive directors’
remuneration;
– in the form of cash fees, but with the
fl exibility to forgo all or part of such fees
(after deduction of applicable income tax
and social security contributions) to
acquire shares in the Company if the non-
executive director so wishes; and
– set by reference to the responsibilities
taken on by the non-executives in chairing
the Board and its committees.
• Non-executive directors may not participate
in the Company’s share incentive schemes
or pension arrangements.
It is the intention that this policy will continue to
apply for 2008 and subsequent years, subject
to ongoing review as appropriate.
The Board reviews non-executive directors’
fees periodically to ensure they remain market-
competitive. Additional fees are paid to the
chairmen of Board committees and to the senior
independent director (SID). If non-executive
directors were to acquire executive board roles
within subsidiaries of the Company, then they
might also receive additional remuneration from
the relevant subsidiaries on account of these
increased responsibilities.
7. Chairman’s fees
The chairman’s fees are reviewed periodically
(on a different cycle from the review of non-
executive directors’ fees). A recommendation is
made to the Board (in the absence of the
chairman) by the Committee and chief
executive, which takes external advice on
market comparators.
8. Directors’ service contracts
Cynthia Carroll is employed by Anglo American
Services (UK) Limited (AAS). René Médori was
employed by Anglo American International
(IOM) Limited (AAI(IOM)) until 31 December
2007 and by AAS thereafter (the terms of his
employment by AAS are similar to those
applicable to his contract with AAI(IOM) and
the change of employer was made for
administrative simplicity). Tony Trahar and
David Hathorn were employed by both
AAI(IOM) and by Anglo Operations Limited
until they left service. Simon Thompson was
employed by AAS until he left service.
It is the Company’s policy that the period of
notice for executive directors will not exceed
12 months and that the employment contracts
of the executive directors are terminable at
12 months’ notice by either party. In accordance
with her terms upon joining, Cynthia Carroll
was, up to 31 December 2007, entitled to
24 months’ notice in the event of termination of
her employment by the Company, although her
74 | Anglo American plc Annual Report 2007
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see also
p78Pension arrangements
Governance
Figure 7:
EXECUTIVE DIRECTORS(1)
Cynthia Carroll (chief executive from
1 March 2007)
Tony Trahar (chief executive to 1 March 2007;
ceased to be a director 17 April 2007)(2)
Date of
appointment
Next AGM re-election
or election
15 January 2007
April 2010
18 March 1999
n/a
David Hathorn (ceased to be a director 3 July 2007)
20 April 2005
n/a
René Médori (fi nance director)
01 June 2005
April 2008
Simon Thompson (ceased to be a director 13 April 2007)(2) 20 April 2005
n/a
(1) At each Annual General Meeting (AGM) all those directors who have been in offi ce for three years or more since their election or last
re-election shall retire from offi ce. Details of any retiring by rotation this year are contained in the Notice of AGM.
(2) Tony Trahar and Simon Thompson left service on 30 June 2007 and 31 May 2007 respectively.
Figure 8:
NON-EXECUTIVE DIRECTORS(1)(2)
Date of
appointment
Next AGM re-election
or election
Sir Mark Moody-Stuart (chairman)
16 July 2002
April 2009
Ralph Alexander (resigned 26 October 2007)
20 April 2005
n/a
David Challen (chairman, Audit Committee)
09 September 2002 April 2009
Chris Fay (chairman, S&SD Committee)(3)
19 April 1999
April 2008
Bobby Godsell (retires on 15 April 2008)
18 March 1999
n/a
Sir Rob Margetts (SID and chairman, Remuneration
Committee)(3)
18 March 1999
April 2008
Nicky Oppenheimer
18 March 1999
April 2010
Fred Phaswana (chairman, Nomination Committee)
12 June 2002
Mamphela Ramphele
Karel Van Miert
Peter Woicke
April 2009
April 2009
25 April 2006
19 March 2002
April 2008
01 January 2006
April 2009
(1) At each AGM all those non-executive directors who have been in offi ce for three years or more since their election or last re-election
shall retire from offi ce. Details of those retiring by rotation this year are contained in the Notice of AGM.
(2) There is no fi xed notice period; however, the Company may, in accordance with, and subject to the provisions of, the Companies Act,
by Ordinary Resolution of which special notice has been given, remove any director from offi ce. The Company’s Articles of Association
also permit the directors, under certain circumstances, to remove a director from offi ce.
(3) In accordance with the provisions of the Combined Code, independent non-executive directors who have served longer than nine
years are subject to annual re-election and, accordingly, Chris Fay and Sir Rob Margetts are being proposed for re-election at the
AGM in April 2008.
Non-executive directors
The fees and other emoluments paid to
non-executive directors during the year ended
31 December 2007 amounted to £1,237,000
(2006: £1,807,000) and are shown in Figure 11.
10.2 Bonus Share Plan
Details of shares awarded under the BSP to
executive directors during 2007 and their
current holdings are shown in Figure 12.
Anglo American plc Annual Report 2007 | 75
contract thereafter became terminable at
12 months’ notice by either party.
The contracts of executive directors do not
provide for any enhanced payments in the event
of a change of control of the Company, nor for
liquidated damages.
All non-executive directors have letters
of appointment with the Company for an
initial period of three years from their date
of appointment, subject to reappointment
at the AGM.
9. Historical comparative TSR
performance graphs
The graphs shown in Figure 9 represent the
comparative TSR performance of the Company
from 1 January 2003 to 31 December 2007.
In drawing up these graphs it has been assumed
that all dividends paid have been reinvested.
The fi rst graph shows the Company’s
performance against the performance of the
FTSE 100 Index, chosen as being a broad equity
market index comprising companies of a
comparable size and complexity to Anglo
American. This graph has been produced in
accordance with the requirements of Schedule 7A
to the Companies Act 1985.
The second graph shows the Company’s
performance against the weighted Sector Index
comparator group used to measure company
performance for the purposes of the vesting of
LTIP interests conditionally awarded in 2005.
This graph gives an indication of how the
Company is performing against the targets in
place for LTIP interests already granted,
although the specifi cs of the comparator
companies for each year’s interests may vary
to refl ect changes such as mergers and
acquisitions amongst the Company’s competitors
or changes to the Company’s business mix.
TSR is calculated in US dollars, and the TSR
level shown as at 31 December each year
is the average of the closing daily TSR levels
for the fi ve day period up to and including
that date.
10. Remuneration outcomes
during 2007
The information set out in this section and
section 11 has been subject to audit.
10.1 Directors’ emoluments
Executive directors
Figure 10 sets out an analysis of the pre-tax
remuneration during the years ended
31 December 2007 and 2006, including
bonuses but excluding pensions, for executive
directors who held offi ce in the Company during
the year ended 31 December 2007.
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Governance
Remuneration report continued
Figure 10:
EXECUTIVE DIRECTORS’ EMOLUMENTS(1)
Basic salary
as paid
Plus: Basic
salary sacrifi ced
into Pension
Scheme(2)
Total
basic salary
Annual
performance
bonus
– cash element(2)(3)
Benefi ts
in kind(4)
2007
£000
2006
£000
2007
£000
2006
£000
2007
£000
2006
£000
2007
£000
2006
£000
2007
£000
2006
£000
2007
£000
Other
2006
£000
2007
£000
Total
2006
£000
Cynthia Carroll(5)
Tony Trahar(6)*
David Hathorn*
René Médori
Simon Thompson(7)*
900
333
290
565
238
–
–
–
900
–
786
520
485
495
200
239
533 1,025
–
45
4
–
75
25
290
610
242
520
560
520
641
857
435
407
224
–
426
–
700
–
2,667
–
830
277
370
316
51
14
28
12
56
1,300
2,741 1,967
56
26
800
– 1,045
61
–
530
9 1,008
24
25
25
847
955
870
* Up to the date of leaving service.
(1) Subsequent to his retirement from the Board in 2004, Bill Nairn has provided consultancy services to Anglo American, receiving £38,000 (2006: £120,000) for the provision of these services during the year.
He also held non-executive directorships with certain listed subsidiaries of the Group and received fees of £15,000 for the provision of these services during the year.
(2) Their employing companies contractually agreed with the executive directors (other than Cynthia Carroll and David Hathorn) that supplementary pension contributions be made into their pension arrangements
in return for equivalent-cost reductions in their basic salaries and/or in the cash elements payable under the BSP.
(3) The annual bonus amounts in respect of Tony Trahar, David Hathorn and Simon Thompson include the release of the share element of the BSP paid in cash as well as the cash element, in view of the executives’
departure from the Company.
(4) Each executive director receives a car allowance and a limited amount of personal taxation/fi nancial advice. Executive directors also receive death and disability benefi ts as well as medical insurance. Tony Trahar
and Simon Thompson also received club membership.
(5) Cynthia Carroll was, in accordance with her terms upon joining, entitled to be reimbursed by the Company certain expenses incurred as a result of her recruitment and relocation to the United Kingdom. Accordingly,
the Company has incurred expenses in 2007 amounting in the aggregate to £402,000, which are included in the above table. This includes the cost of temporary accommodation, physical removal costs and the
provision of specialist relocation services. The Company has agreed to reimburse Cynthia Carroll for the additional income tax payable in due course on such expenses. Cynthia Carroll’s other emoluments include a
relocation allowance and compensation made in respect of incentives forgone at her previous employer (as reported in the 2006 Annual Report).
(6) Tony Trahar’s other emoluments include the pro-rated value of the 2006 BSP and 2007 LTIP which was paid out in cash upon his retirement from the Company. Subsequent to his retirement from the Board in
2007, the Committee agreed that Tony Trahar could purchase a residential property from the Group, on the basis that the property be valued by three independent specialist valuers and that the selling price
would be the average of the two highest valuations. The property was subsequently valued on this basis and was sold to Tony Trahar for £6,930,000, which was paid on completion. The Committee also agreed
that certain contents of the property could be sold to Tony Trahar at their market value as assessed by an independent valuer and such contents were subsequently sold to Tony Trahar for £61,800.
(7) Subsequent to his leaving service, Simon Thompson received £899,000, comprising payments in lieu of notice for salary and benefi ts, including a pro-rated bonus (all included in the above table) and pension
contributions amounting to £152,000 as reported separately in Figure 16.
Figure 11:
NON-EXECUTIVE DIRECTORS’ EMOLUMENTS(1)(2)
Sir Mark Moody-Stuart(3)
Ralph Alexander (resigned 26 October 2007)
David Challen
Chris Fay
Bobby Godsell(4)(5)
Sir Rob Margetts
Nicky Oppenheimer(4)
Fred Phaswana(4)
Mamphela Ramphele
Karel Van Miert
Peter Woicke
2007
£000
450
54
80
80
71
93
71
143
65
65
65
Fees
2006
£000
360
65
80
80
70
93
70
95
45
65
65
Other emoluments
2007
£000
2006
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
698
–
–
–
–
–
–
2007
£000
450
54
80
80
71
93
71
143
65
65
65
Total
2006
£000
360
65
80
80
768
93
70
95
45
65
65
(1) Each non-executive director, with the exception of Sir Mark Moody-Stuart, is paid a fee of £65,000 (2006: £65,000) per annum, and those non-executive directors who act as chairmen of the Audit, Safety &
Sustainable Development and Remuneration Committees are paid an additional sum of £15,000 (2006: £15,000) per annum. The chairman of the Nomination Committee is paid an additional sum of £7,500
(2006: £7,500) per annum. Sir Rob Margetts received additional fees of £13,000 (2006: £13,000) in his capacity as senior independent director.
(2) In addition to the fees reported above for 2006, Maria Silvia Bastos Marques, who resigned on 20 April 2006, received fees of £21,000.
(3) Sir Mark Moody-Stuart’s fees were reviewed in January 2007, having been last reviewed as at January 2005. His fees for 2007 were adjusted after taking into account the median fees paid to chairmen of
FTSE-20 companies.
(4) Bobby Godsell and Nicky Oppenheimer received fees for their services as non-executive directors of Anglo American South Africa Limited amounting to £6,000 (2006: £5,000) and £6,000 (2006: £5,000)
respectively, which are included in the above table. Fred Phaswana is the non-executive chairman of Anglo American South Africa Limited and of Anglo Platinum and received fees for these services amounting
to £71,000 (2006: £22,000), which are included in the above table.
(5) Bobby Godsell’s fees for 2006 include fees and emoluments under his service contract with AngloGold Ashanti, which was a subsidiary of the Company until 20 April 2006. As AngloGold Ashanti is no longer a
subsidiary, no such emoluments have been reported for 2007.
76 | Anglo American plc Annual Report 2007
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Governance
Figure 12:
BONUS SHARE PLAN INTERESTS(1)
Number
of Bonus
Shares
condition-
ally
awarded
during
2007
Number
of
Bonus
Shares
lapsed
during
2007(2)
Number
of
Enhance-
ment
Shares
condition-
ally
awarded
during
2007
–
–
–
–
–
–
–
–
–
Total
interest at
1 January
2007
–
218,688
57,464
Number of
Enhance-
ment
shares
vested
during
2007
Number of
Enhance-
ment
shares
lapsed
during
2007
Number of
Bonus shares
vested
during 2007
–
–
(124,965)
(37,178)
–
–
Total
interest at
31
December
2007
–
56,545
(32,837)
(20,125)
(4,502)
–
Market
price at
date of
2007
award
£
Date of
vesting of
Bonus Shares
awarded
during 2007
End date of
performance
period for
Enhancement
Shares
awarded
during 2007
–
–
–
–
–
–
–
–
–
Cynthia Carroll(3)
Tony Trahar(4)
David Hathorn(5)
René Médori(6)
15,266
17,187
(2,333)
12,889
–
–
Simon Thompson(7)
72,390
14,689
–
11,016
(56,055)
(9,642)
–
–
43,009
24.73 01/01/2010 31/12/2009
32,398
24.73
– 31/12/2009
(1) The performance period applicable to each award is three years. The performance period relating to the 2004 BSP awards (which were granted on 28 May 2004) ended on 31 December 2006. The release of
Bonus Shares was subject to continued employment to this date and the vesting of Enhancement Shares was subject to both continued employment and a performance condition based on the Company’s EPS
growth over the performance period.
Shares vested (2004 BSP award)
Tony Trahar
David Hathorn
Simon Thompson
Number of
shares
vested
Date of
award
86,748
28/5/2004
17,913
28/5/2004
22,498
28/5/2004
Market
price at
date of
award
£
11.36
11.36
11.36
Market price at
date of vesting
£
Money value at
date of vesting
£
24.62
24.62
24.62
2,135,736
441,018
553,901
In the case of the BSP awards granted in 2004, the determinant for the vesting of Enhancement Shares was real EPS growth, based on earnings per share growth against growth in the UK Retail Price Index (RPI)
over the performance period. 44% of the Enhancement Shares would vest if EPS growth was RPI + 9%, and 100% would vest if EPS growth was RPI + 15%. As the EPS growth achieved was RPI + 147% over the
period, full vesting of the Enhancement Shares occurred.
(2) Where permitted by Finance legislation, awards of Bonus Shares under the BSP are granted as forfeitable shares, which would be forfeited in the event that an executive director leaves service before the shares
are released. As a result of the share consolidation following the demerger of Mondi, a portion of any forfeitable Bonus Shares lapsed as indicated above (details of the share consolidation were disclosed in the
demerger prospectus).
(3) Cynthia Carroll was, in accordance with her terms upon joining, granted 132,718 forfeitable shares in compensation for long-term incentives forgone at her previous employer. The market price of the shares at
the date of this award was £24.91. These shares are forfeitable in the event that she leaves service before they are released to her. As a result of the share consolidation following the demerger of Mondi,
11,945 of these shares lapsed and the remaining forfeitable award amounted to 120,773 shares, of which 72,464 are due to be released to her in 2008, 24,155 will be released in 2009 and 24,154 will be
released in 2010, subject to her continued employment. These awards are as follows:
Interests
Cynthia Carroll
Benefi cial interest in
forfeitable shares at date of
appointment
Number of forfeitable
shares awarded upon
appointment
Number of forfeitable shares
vested during the year
Number of forfeitable shares
lapsed during the year
Total benefi cial interest in
forfeitable shares at 31
December 2007
Latest
performance
period end date
–
132,718
–
(11,945)
120,773
–
(4) Following his retirement on 30 June 2007, Tony Trahar’s entitlement to 75,395 Bonus Shares under the BSP was released to him and the shares were subsequently sold. The value of the entitlement was
£2,281,517. Tony Trahar’s unvested awards of Enhancement Shares under the BSP remain subject to performance conditions which will be assessed at the end of each relevant performance period.
(5) Following the demerger of Mondi, David Hathorn’s entitlement to 22,601 Bonus Shares under the BSP was released to him and a proportion of his Enhancement Shares vested (12,448) and the remainder lapsed.
The value of the entitlement was £1,112,806. David Hathorn has no remaining entitlement under the BSP.
(6) In addition to the BSP award disclosed above, René Médori, in accordance with his terms upon joining, was granted 50,600 forfeitable shares, in compensation for long-term incentives forgone at his previous
employer. The market price of the shares at the date of this award was £13.34. Of these shares, 30,360 were released to him in May 2006 and 20,240 were released to him in May 2007.
Interests
René Médori
Shares vested
René Médori
Benefi cial
interest in
forfeitable
shares at 1
January 2007
Number of
forfeit-
able
shares
vested
during
2007
Total benefi cial
interest in
forfeitable
shares at 31
December 2007
Latest
performance
period end date
20,240
(20,240)
–
–
Number of
shares
vested
Date of
conditional
award
Market
price at
date of
award
£
Market price at
date of vesting
£
Money value at
date of vesting
£
20,240
2/6/2005
13.34
26.46
535,550
(7) Following his leaving service on 31 May 2007, Simon Thompson’s entitlement to 43,199 Bonus Shares under the BSP was released to him and the shares were subsequently sold. The value of the entitlement
was £1,330,097. Simon Thompson’s unvested awards of Enhancement Shares under the BSP remain subject to performance conditions which will be assessed at the end of each relevant performance period.
8549_AA_Rep_p58-84_dg_260208.ind77 77
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Anglo American plc Annual Report 2007 | 77
Governance
Remuneration report continued
Figure 13:
LONG TERM INCENTIVE PLAN
LTIP interests(1)(2)
Cynthia Carroll
Tony Trahar
David Hathorn(3)
René Médori
Simon Thompson
Total benefi cial
interest in LTIP at
1 January 2007
Number of shares
conditionally
awarded during
2007
–
73,538
331,675
126,560
115,414
150,959
–
3,733
49,842
Number
of shares
vested
during 2007
–
(55,763)
(95,554)
–
Number
of shares lapsed
during 2007
Total benefi cial
interest in LTIP at
31 December 2007
Latest performance
period
end date
–
73,538
31/12/2009
(55,762)
(34,739)
–
220,150
31/12/2008
–
165,256
107,732
–
31/12/2009
31/12/2008
–
(21,614)
(21,613)
(1) The LTIP awards made in 2007 are conditional on two performance conditions as outlined on pages 72 and 73: the fi rst is based on the Company’s TSR relative to a weighted group of international natural
resource companies and to the constituents of the FTSE 100, and the second is based on an underlying operating measure which focuses on raising the Company’s ROCE in the medium term. Further details on
the structure of the LTIP, the required level of performance for the 2007 award and how performance against targets is measured can be found on pages 72 and 73. The market price of the shares at the date of
award was £24.63.
(2) The performance period applicable to each award is three years. The performance period relating to the two LTIP awards in 2004 (which were granted on 25 March 2004 and 26 April 2004) ended on
31 December 2006. Vesting was subject to two performance conditions: the fi rst based on the Company’s TSR relative to a weighted group of international natural resource companies and the second based on
an underlying operating measure which focused on improvements in the Company’s ROCE in the medium term. Part of each award was based on the TSR measure and part on the operating measure.
Shares vested
Tony Trahar
David Hathorn
Simon Thompson
Number of shares
vested
Dates of conditional
award
Market price at date of
award £
Market price at date of
vesting £
Money value at date of
vesting £
41,557
14,206
12,250
4,190
14,088
7,526
25/3/2004
26/4/2004
25/3/2004
26/4/2004
25/3/2004
26/4/2004
12.85
12.53
12.85
12.53
12.85
12.53
27.02
27.02
27.02
27.02
27.02
27.02
1,122,870
383,846
330,995
113,214
380,658
203,353
In the case of the LTIP awards granted in 2004, the determinants for vesting were 50% on relative TSR and 50% on meeting specifi ed Group ROCE targets. The ROCE targets are a function of targeted
improvement in returns on existing capital employed at the start of the performance period and targeted returns in excess of the cost of capital on new capital investment over that period. The entry level target
for any LTIP has been the actual return achieved on the capital employed, excluding capital work in progress, in the year immediately preceding the commencement of the performance period. In order to maintain
the effectiveness of the plan in driving long-term performance, the actual returns in the fi nal performance year are adjusted for movements in commodity prices, certain foreign exchange rate effects
(e.g. translation windfalls), capital in progress (to refl ect the fact that mines under construction absorb large amounts of capital before producing a return), relevant changes in the composition of the Group
(e.g. signifi cant acquisitions and disposals) and other one-off factors which would otherwise result in a misleading outcome.
The threshold blended target (i.e. the target on existing and new capital) for the performance period for the 2004 LTIP was 14.4% and the upper blended target 15.99%. The ROCE achieved was 17.5% and the
outcome on this element of the LTIP was thus 100%. On the TSR measure, Anglo American achieved a TSR over the three-year performance period of 155%, which generated a nil vesting in terms of the 2004
Comparator Group. The overall vesting level for those directors with a 50% Group ROCE, 50% TSR split was therefore 50%.
(3) Following the demerger of Mondi, a proportion of David Hathorn’s outstanding LTIP awards from 2005 and 2006 vested as follows:
Shares vested
David Hathorn
Number of
shares vested
Dates of
conditional award
Market price at
date of award £
Market price at
date of vesting £
Money value at
date of vesting £
53,494
25,620
5/4/2005
29/3/2006
12.54
20.72
31.75
31.75
1,698,435
813,435
10.3 Long Term Incentive Plan
Conditional awards of shares were made in
2007 to executive directors under the LTIP
as shown in Figure 13.
10.4 Directors’ share options
No executive share options have been granted
to executive directors since 2003 (Figure 14).
Details of the share options exercised by
the executive directors in 2007 are shown in
Figure 15.
The highest and lowest mid-market prices
of the Company’s shares during the period
1 January 2007 to 31 December 2007 were
£36.41 and £23.30 respectively. The
mid-market price of the Company’s shares
at 31 December 2007 was £30.80.
10.5 Share Incentive Plan (SIP)
Cynthia Carroll purchased 28 shares under the SIP
scheme during the year. René Médori purchased
53 shares under the SIP scheme during the year in
addition to the 38 shares held by him at 1 January
2007. If these shares are held for three years,
they will be matched by the Company on a one-
for-one basis, conditional upon the director’s
continued employment. Tony Trahar purchased
20 shares under the SIP scheme during the year
whilst still a director, in addition to the 297 shares
held by him at the beginning of the year. Simon
Thompson purchased 20 shares under the SIP
scheme during the year whilst still a director,
in addition to the 297 shares held by him at
1 January 2007.
Participants in the SIP scheme are entitled
to receive dividends on the matching shares.
Shares purchased prior to 3 July 2007 were
subject to the share consolidation following the
demerger of Mondi.
The information provided in sections 10.2
to 10.5 is a summary. However, full details of
directors’ shareholdings and options are
contained in the Registers of Directors’ Interests
of the Company, which are open to inspection.
10.6 Pensions
10.6.1 Directors’ pension arrangements
Cynthia Carroll participated in defi ned contribution
pension arrangements in terms of her contract
with AAS. In 2007, normal contributions were
payable on her behalf at the rate of 30% of the
basic salary payable under this contract.
Tony Trahar participated in defi ned
contribution pension arrangements in terms of
his contract with AAI(IOM), for services to be
rendered outside South Africa. In 2007, normal
contributions were payable at the rate of 35%
of the basic salary payable under this contract.
He also participated in the Anglo American
Corporation Pension Fund (the Fund) in respect
of his South African contract, whereby he
78 | Anglo American plc Annual Report 2007
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Governance
Figure 14:
DIRECTORS’ SHARE OPTIONS
Anglo American options(1)
Tony Trahar
René Médori
Benefi cial
holding at
1 January
2007(2)
5,553
951
Granted
Exercised
Lapsed
Benefi cial
holding at
31 December
2007
Weighted
average option
price £
Earliest date from
which exercisable
Latest expiry date
–
–
(4,497)
(1,056)
–
–
–
951
–
–
–
17.97
1/9/2013
28/2/2014
(1) Share options in respect of shares, the market price for which as at 31 December 2007 is equal to, or exceeds, the option exercise price. As at 31 December 2007, there were no share options with an exercise
price above the market price.
(2) Benefi cial holdings include SAYE options held by Tony Trahar, of 3,792 and 1,761 options, with option prices of £4.85 and £10.15 respectively. There were no performance conditions attached to these options.
Benefi cial holdings include SAYE options held by René Médori of 951 options with an option price of £17.97. There are no performance conditions attached to these options.
Figure 15:
ANGLO AMERICAN OPTIONS
Tony Trahar
accrued an annual pension at the rate of 2.2%
of pensionable salary (as defi ned in the rules of
that scheme) for each year of pensionable
service. This scheme provides spouse’s benefi ts
of two-thirds of the member’s pension on the
death of a member. It does not have provision
for guaranteed pension increases.
David Hathorn participated in defi ned
contribution pension arrangements in terms of
his contract with AAI(IOM), for services to be
rendered outside South Africa. In 2007, normal
contributions were payable at the rate of 30%
of the basic salary payable under this contract.
He also participated in the Fund in respect of
his South African contract, on the same terms
as above.
René Médori participated in defi ned
contribution pension arrangements in terms of
his contract with AAI(IOM). In 2007, normal
contributions were payable on his behalf at the
rate of 30% of the basic salary payable under
this contract.
Simon Thompson participated in defi ned
contribution pension arrangements in terms of
his contract with AAS. In 2007, normal
contributions were payable on his behalf at the
rate of 30% of the basic salary payable under
this contract.
10.6.2 Defi ned contribution pension
schemes
The amounts paid into defi ned contribution
pension schemes by the Group in respect of the
individual directors are shown in Figure 16.
Number exercised
Option price £
3,792
705
4.85
10.15
Market price at date of
exercise £
27.59
29.84
Gain £
86,230
13,881
Figure 16:
DEFINED CONTRIBUTION PENSION SCHEMES
Directors
Cynthia Carroll(1)
Tony Trahar(2)*
David Hathorn*
René Médori(2)
Simon Thompson(2)(3)*
Normal contributions
2007
£000
270
186
86
183
73
2006
£000
–
354
143
168
156
* Up to date of leaving service.
(1) The actual contributions paid into pension arrangements for Cynthia Carroll amounted in 2007 to £203,000, the balance being payable
in the form of a cash allowance to an equivalent cost to the employer. This allowance does not form part of basic salary nor is it included
in determining awards under the BSP.
(2) Tony Trahar, René Médori and Simon Thompson contractually agreed with their employing companies that supplementary pension
contributions should be made into their defi ned contribution pension arrangements in return for reductions in their future basic salaries
and/or reductions in the cash element awarded under the BSP for performance in 2006. These supplementary contributions, of
£1,353,000 (2006: £866,000), £68,000 (2006: £145,000) and £4,000 (2006: £242,000) respectively, are included in the directors’
emoluments table on page 76.
(3) In addition, as part of the terms upon which he left service, the Company contributed an additional amount of £152,000 into the pension
arrangements of Simon Thompson.
Figure 17:
DEFINED BENEFIT PENSION SCHEMES
Additional benefi t
earned/(expended)
(excluding infl ation)
during the year
ended 31 December
2007
£000
Accrued
entitlement
as at
31 December
2007
£000
Transfer value
of accrued
benefi ts as at
31 December
2007
Transfer value
of accrued
benefi ts as at
31 December
2006
Increase/
(decrease)
transfer value
in the year
less any
personal
contributions(1)
(16)
(12)
7
–
130
–
329
131
(199)
(131)
Executive directors
Tony Trahar
David Hathorn
(1) The transfer value, less any personal contributions, of the increase/(decrease) in additional benefi ts earned/(expended) during 2007
amounted for Tony Trahar and David Hathorn to £7,000 and £nil respectively.
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Anglo American plc Annual Report 2007 | 79
Governance
Remuneration report continued
Figure 18:
SHARES IN ANGLO AMERICAN PLC As at 31 December 2007 (or, if earlier, date of resignation)
Directors
Cynthia Carroll(1)
Tony Trahar(2)
David Hathorn(2)
René Médori(3)
Simon Thompson(2)
Sir Mark Moody-Stuart(4)
Ralph Alexander(2)
David Challen
Chris Fay
Bobby Godsell
Sir Rob Margetts(5)
Nicky Oppenheimer(6)
Fred Phaswana
Mamphela Ramphele
Karel Van Miert
Peter Woicke
Benefi cial
27
103,674
124,841
10,952
78,715
23,300
1,179
1,820
6,827
83
12,097
33,557,016
14,021
612
455
2,531
SIP
27
279
–
84
277
–
–
–
–
–
–
–
–
–
–
–
LTIP
73,538
331,675
–
165,256
150,959
BSP
Bonus Shares
BSP Enhancement
Shares
–
75,395
–
23,578
43,199
–
56,545
–
19,431
32,398
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Figure 19:
SHARES IN ANGLO AMERICAN PLC As at 1 January 2007(7) (or, if later, date of appointment)
Benefi cial
–
40,291
17,851
38
78,655
24,167
784
2,000
7,503
92
12,346
42,126,048
13,920
102
500
1,484
SIP
–
297
–
38
297
–
–
–
–
–
–
–
–
–
–
–
LTIP
–
331,675
126,560
115,414
150,959
BSP
Bonus Shares
BSP Enhancement
Shares
–
124,965
32,837
8,724
41,366
–
93,723
24,627
6,542
31,024
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Directors
Cynthia Carroll(1)
Tony Trahar(2)
David Hathorn(2)
René Médori(3)
Simon Thompson(2)
Sir Mark Moody-Stuart(4)
Ralph Alexander(2)
David Challen
Chris Fay
Bobby Godsell
Sir Rob Margetts(5)
Nicky Oppenheimer(6)
Fred Phaswana
Mamphela Ramphele
Karel Van Miert
Peter Woicke
80 | Anglo American plc Annual Report 2007
Conditional
Other
120,773
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Conditional
Other
132,718
–
–
20,240
–
–
–
–
–
–
–
–
–
–
–
–
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Figure 20:
SHARES IN ANGLO AMERICAN PLC As at 1 January 2008 (or, if later, date of appointment)
Directors
Cynthia Carroll(1)
René Médori(3)
Sir Mark Moody-Stuart(4)
David Challen
Chris Fay
Bobby Godsell
Sir Rob Margetts(5)
Nicky Oppenheimer(6)
Fred Phaswana
Mamphela Ramphele
Karel Van Miert
Peter Woicke
Benefi cial
27
10,952
23,300
1,820
6,827
83
12,097
33,557,016
14,021
612
455
2,531
SIP
27
84
–
–
–
–
–
–
–
–
–
–
LTIP
73,538
165,256
BSP
Bonus Shares
BSP Enhancement
Shares
–
23,578
–
19,431
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Figure 21:
SHARES IN ANGLO AMERICAN PLC As at 19 February 2008 (or, if earlier, date of resignation)
Directors
Cynthia Carroll(1)
René Médori(3)
Sir Mark Moody-Stuart(4)
David Challen
Chris Fay
Bobby Godsell
Sir Rob Margetts(5)
Nicky Oppenheimer(6)
Fred Phaswana
Mamphela Ramphele
Karel Van Miert
Peter Woicke
Benefi cial
36
10,961
23,743
1,820
6,827
83
12,343
33,557,016
14,451
777
455
2,911
SIP
36
93
–
–
–
–
–
–
–
–
–
–
LTIP
73,538
165,256
BSP
Bonus Shares
BSP Enhancement
Shares
–
23,578
–
19,431
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Governance
Conditional
Other
120,773
–
–
–
–
–
–
–
–
–
–
–
Conditional
Other
120,773
–
–
–
–
–
–
–
–
–
–
–
(1) Following her appointment as an executive director on 15 January 2007, Cynthia Carroll was granted 132,718 forfeitable shares in compensation for long-term incentives forgone at her previous employer, the release
of which is conditional on her continued employment with the Group. As a result of the share consolidation following the demerger of Mondi, 11,945 shares lapsed and the resultant forfeitable award was 120,773
forfeitable shares, of which 72,464 are due to be released to her in 2008, 24,155 will be released in 2009 and 24,154 will be released in 2010, subject to her continued employment.
(2) Tony Trahar resigned from the Board at the conclusion of the AGM on 17 April 2007. Messrs Thompson, Hathorn and Alexander resigned on 13 April, 3 July and 26 October 2007 respectively.
(3) René Médori received 50,600 shares upon joining Anglo American plc, 30,360 were released on 1 May 2006 and 20,240 were released to him on 1 May 2007.
(4) Sir Mark Moody-Stuart’s benefi cial interest includes 12,500 Shares arising as a result of his interest in a family trust.
(5) Sir Rob Margetts’ benefi cial interest arises as a result of his wife’s interest in these Shares.
(6) Nicky Oppenheimer’s benefi cial interest in 33,556,927 of these Shares arises as a result of his interest in a discretionary trust which is treated as interested in 27,300,000 Shares in which E Oppenheimer & Son
Holdings Limited is treated as interested and 6,252,377 Shares in which Central Holdings Limited is treated as interested. The 6,252,377 Shares referred to above are Shares held by Debswana Diamond
Company (Pty) Limited, in which Nicky Oppenheimer and Central Holdings Limited have no economic interest. His interest in 4,550 of these Shares arises as a result of his wife’s interest in a trust which has an
indirect economic interest in those Shares.
(7) Before the share consolidation of 2 July 2007.
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Anglo American plc Annual Report 2007 | 81
Governance
Remuneration report continued
10.6.3 Defi ned benefi t pension schemes
Tony Trahar and David Hathorn were eligible up
to 30 June 2007 for membership of the Anglo
American Corporation Pension Fund (the Fund)
in respect of their South African remuneration.
The Fund is a funded fi nal salary occupational
pension scheme approved by the Financial
Services Board and the Commissioner of Inland
Revenue in South Africa (Figure 17).
The transfer values disclosed above do not
represent a sum paid or payable to the
individual director; instead, they represent
potential liabilities of the pension scheme.
10.6.4 Excess retirement benefi ts
No person who served as a director of the
Company during or before 2007 has been paid
or received retirement benefi ts in excess of the
retirement benefi ts to which he or she was
entitled on the date on which benefi ts fi rst
became payable (or 31 March 1997, whichever
is later).
12. Directors’ share interests
The interests of directors who held offi ce during
the period 1 January 2007 to 31 December
2007 in ordinary shares of the Company and
its subsidiaries were as shown in Figures 18
and 19.
Figures 20 and 21 outline the changes in
the above interests which occurred between
1 January 2008 and the date of this report.
Approval
This directors’ remuneration report has been
approved by the Board of directors of Anglo
American plc.
Signed on behalf of the Board of directors
Sir Rob Margetts
Chairman, Remuneration Committee
11. Sums paid to third parties in
19 February 2008
respect of a director’s services
No consideration was paid to or became
receivable by third parties for making available
the services of any person as a director of the
Company, or while a director of the Company,
as a director of any of the Company’s subsidiary
undertakings, or as a director of any other
undertaking of which he/she was (while a
director of the Company) a director by virtue
of the Company’s nomination, or otherwise
in connection with the management of the
Company or any undertaking during the year
to 31 December 2007.
82 | Anglo American plc Annual Report 2007
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Governance
Independent remuneration
report review
We are satisfi ed that the Committee
challenges the proposals put forward by
executive management and adopts a rigorous
and robust approach to decision making.
We are also satisfi ed that the Committee
seeks the advice of external consultants on
technical issues where appropriate and gives
careful consideration to the information and
recommendations that it receives, before
reaching an informed decision.
Conclusions
On the basis of the document review referred to
above and the interviews with the Chairman
and Secretary of the Committee, we are
comfortable that the Committee has discharged
its duties in line with the Principles of Executive
Remuneration stated in Anglo American’s
Annual Report.
As noted in previous years we consider that
the members of the Committee are an effective
and cohesive team and that the Committee is an
exemplar of best practice. We understand that
in order to maintain this high standard
consideration is being given to refreshing the
membership of the Committee in line with the
requirements of the Combined Code.
Further detail regarding the Mercer Review
is included in a letter of this date addressed to
the Committee Chairman which we understand
will be made available on the Company’s website.
Yours sincerely,
Mark Hoble
Principal
Mercer Limited
Tower Place
London EC3R 5BU
7 February 2008
This letter contains the fi ndings and conclusions
from our review of the processes followed by
Anglo American’s Remuneration Committee
(the Committee) during 2007. The review was
undertaken at the request of the Chairman of
the Committee in order to provide shareholders
with assurance that the processes followed by
the Committee supported the policy stated in
Anglo American’s Remuneration Report.
It is our view that the processes followed by
the Committee during 2007 fully supported the
Company’s remuneration policy. Please fi nd
below a description of the process that we
followed in coming to our conclusion, along with
our detailed observations and
recommendations.
Review process
In order to reach our view we undertook the
following:
• a review of the Committee’s terms of
reference;
• a review of the minutes of the Committee
covering the period from January to December
2007;
• a review of any briefi ng materials prepared for
the Committee during the year;
• an interview with Chris Corrin in his capacity
as Secretary to the Committee; and
• an interview with the Chairman of the
Committee.
Findings
The Committee comprises entirely independent
non-executive directors. It met formally on four
occasions in 2007.
We reviewed the minutes of each meeting
along with any supporting papers or
documentation that was tabled. We found that
the decisions taken by the Committee were in
line with Anglo American’s stated remuneration
policy, namely that levels of reward, whilst
competitive, require demanding performance
conditions to be met which are consistent with
shareholder interests. We are satisfi ed that the
Committee closely adheres to the stated policy
of setting base pay levels at the median of
comparable companies, that at least 50% of
remuneration for the executive directors is
performance-related and that variable pay is
consistent with business performance, market
conditions and retention of talent.
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Anglo American plc Annual Report 2007 | 83
Governance
Statement of directors’ responsibilities
The directors have elected to prepare the parent
company fi nancial statements in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards and applicable law).
The parent company fi nancial statements are
required by law to give a true and fair view of
the state of affairs of the Company. In preparing
these fi nancial statements, the directors are
required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable and prudent; and
• state whether applicable UK Accounting
Standards have been followed, subject to any
material departures disclosed and explained
in the fi nancial statements.
The directors are responsible for keeping proper
accounting records that disclose with
reasonable accuracy at any time the fi nancial
position of the Company and enable them to
ensure that the parent company fi nancial
statements comply with the Companies
Act 1985. They are also responsible for
safeguarding the assets of the Company
and hence for taking reasonable steps for
the prevention and detection of fraud and
other irregularities.
The directors are responsible for preparing the
Annual Report and the fi nancial statements in
accordance with applicable law and regulations.
Company law requires the directors to
prepare fi nancial statements for each fi nancial
year. The directors are required by the IAS
Regulation to prepare the Group fi nancial
statements under International Financial
Reporting Standards (IFRS) as adopted by
the European Union. The Group fi nancial
statements are also required by law to be
properly prepared in accordance with the
Companies Act 1985 and Article 4 of the
IAS Regulation.
International Accounting Standard 1
requires that IFRS fi nancial statements present
fairly for each fi nancial year the Company’s
fi nancial position, fi nancial performance and
cash fl ows. This requires the faithful
representation of the effects of transactions,
other events and conditions in accordance with
the defi nitions and recognition criteria for
assets, liabilities, income and expenses set out
in the International Accounting Standards
Board’s ‘Framework for the preparation and
presentation of fi nancial statements’. In
virtually all circumstances, a fair presentation
will be achieved by compliance with all
applicable IFRS. However, directors are also
required to:
• properly select and apply accounting policies;
• present information, including accounting
policies, in a manner that provides relevant,
reliable, comparable and understandable
information; and
• provide additional disclosures when
compliance with the specifi c requirements
in IFRS are insuffi cient to enable users to
understand the impact of particular
transactions, other events and conditions
on the entity’s fi nancial position and
fi nancial performance.
84 | Anglo American plc Annual Report 2007
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Financial statements
Contents
Independent auditors’ report to the members
of Anglo American plc
Principal statements
Consolidated income statement
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement of recognised income and expense
Reconciliation from EBITDA to cash inflows from
continuing operations
Notes to the financial statements
1 Accounting policies
2 Segmental information
3 Profit for the financial year
4 Group operating profit from subsidiaries and joint ventures
5 Exploration expenditure
6 Employee numbers and costs
7 Special items and remeasurements
8 Net finance costs
9 Financial instrument gains and losses
10 Tax on profit on ordinary activities
11 Dividends
12 Earnings per share
13 Intangible assets
14 Tangible assets
15 Biological assets
16 Environmental rehabilitation trusts
17 Investments in associates
18 Joint ventures
19 Financial asset investments
20 Inventories
21 Trade and other receivables
22 Trade and other payables
23 Financial assets
24 Financial liabilities
25 Financial risk management and derivative financial
assets/liabilities
26 Provisions for liabilities and charges
27 Deferred tax
28 Retirement benefits
29 Called-up share capital and share-based payments
30 Reconciliation of changes in equity
31 Consolidated cash flow analysis
32 EBITDA by business segment
33 Discontinued operations
34 Acquisitions
35 Disposals and demerger of subsidiaries and businesses
36 Disposal groups and non-current assets held for sale
37 Capital commitments
38 Contingent liabilities and contingent assets
39 Operating leases
40 Related party transactions
41 Group companies
42 Events occurring after end of year
43 Financial statements of the parent company
Page
86
87
88
89
90
90
91
95
98
99
100
100
100
102
102
102
103
103
104
104
105
105
105
106
106
107
107
107
107
107
108
112
112
113
116
121
122
123
124
125
127
129
130
130
130
130
131
132
133
Financial
statements
Anglo American plc Annual Report 2007 |
85
Financial
statements
Independent auditors’ report to the members of Anglo American plc
We read the other information contained in the Annual Report as
described in the contents section and consider whether it is consistent
with the audited Financial statements. We consider the implications
for our report if we become aware of any apparent misstatements
or material inconsistencies with the Financial statements.
Basis of audit opinion
We conducted our audit in accordance with International Standards
on Auditing (UK and Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant
to the amounts and disclosures in the Financial statements and the
part of the Remuneration report to be audited. It also includes an
assessment of the significant estimates and judgments made by the
directors in the preparation of the Financial statements, and of whether
the accounting policies are appropriate to the Group’s and Company’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide
us with sufficient evidence to give reasonable assurance that the
Financial statements and the part of the Remuneration report to be
audited are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in the Financial
statements and the part of the Remuneration report to be audited.
Opinion
In our opinion:
• the Group financial statements give a true and fair view,
in accordance with IFRSs as adopted by the European Union,
of the state of the Group’s affairs as at 31 December 2007
and of its profit for the year then ended;
• the Group financial statements have been properly prepared in
accordance with the Companies Act 1985 and Article 4 of the
IAS Regulation;
• the Company financial statements give a true and fair view,
in accordance with United Kingdom Generally Accepted Accounting
Practice, of the state of the parent Company’s affairs as at
31 December 2007;
• the Company financial statements and the part of the Remuneration
report to be audited have been properly prepared in accordance with
the Companies Act 1985; and
• the information given in the directors’ report is consistent with
the Financial statements.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
19 February 2008
We have audited the Group and Company financial statements
(the ‘Financial statements’) of Anglo American plc for the year
ended 31 December 2007 which comprise the Consolidated income
statement, the Consolidated balance sheet, the Consolidated cash
flow statement, the Consolidated statement of recognised income
and expense, the Reconciliation from EBITDA to cash inflows from
continuing operations, the Accounting policies, the related notes 2 to
42 and the Company balance sheet and related notes. These Financial
statements have been prepared under the accounting policies set out
therein. We have also audited the information in the Remuneration
report that is described as having been audited.
This report is made solely to the Company’s members, as a body,
in accordance with section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an auditors’ report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report and
the Group financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the
European Union, and for preparing the Company financial statements
and the Remuneration report in accordance with applicable law and
United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice) are set out in the Statement of
directors’ responsibilities.
Our responsibility is to audit the Financial statements and the part of
the Remuneration report to be audited in accordance with relevant legal
and regulatory requirements and International Standards on Auditing
(UK and Ireland).
We report to you our opinion as to whether the Financial statements
give a true and fair view and whether the Financial statements
and the part of the Remuneration report to be audited have been
properly prepared in accordance with the Companies Act 1985 and
whether, in addition, the Group financial statements have been
properly prepared in accordance with Article 4 of the IAS Regulation.
We also report to you whether in our opinion the information given
in the directors’ report is consistent with the Financial statements.
The information given in the directors’ report includes that specific
information presented in the operating and financial review that is
cross referred from the business review section of the directors’ report.
In addition we report to you if, in our opinion, the Company has
not kept proper accounting records, if we have not received all the
information and explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and other
transactions is not disclosed.
We review whether the corporate governance statement reflects the
Company’s compliance with the nine provisions of the 2006 Combined
Code specified for our review by the Listing Rules of the Financial
Services Authority, and we report if it does not. We are not required to
consider whether the board’s statements on internal control cover all
risks and controls, or form an opinion on the effectiveness of the Group’s
corporate governance procedures or its risk and control procedures.
86 | Anglo American plc Annual Report 2007
Financial
statements
Before
special items
Special
items and
and remeasurements
remeasurements (note 7)
Before
special items
and
remeasurements
2007
Special
items and
remeasurements
(note 7)
2007
Consolidated income statement
for the year ended 31 December 2007
US$ million
Group revenue
Total operating costs
Note
2
Operating profit from subsidiaries and joint ventures 2,4
7
Net profit on disposals
2,17
Share of net income from associates
2
Total profit from operations and associates
Investment income
Interest expense
Net finance costs
Profit before tax
Income tax (expense)/income
8
10
Profit for the financial year – continuing operations
Profit for the financial year – discontinued operations 33
Profit for the financial year – total Group
Attributable to (continuing operations):
Minority interests
Equity shareholders of the Company
Attributable to (discontinued operations):
Minority interests
Equity shareholders of the Company
Attributable to (total Group):
Minority interests
Equity shareholders of the Company
Earnings per share (US$)
Basic – continuing operations
Basic – discontinued operations
Basic – total Group
Diluted – continuing operations
Diluted – discontinued operations
Diluted – total Group
Dividends
Proposed ordinary dividend per share (US cents)
Proposed ordinary dividend (US$ million)
3
3
3
12
12
12
12
12
12
11
11
Ordinary dividends paid during the year per share
(US cents)
11
Ordinary dividends paid during the year (US$ million) 11
Dividend in specie
11
Special dividends paid during the year per share
(US cents)
Special dividends paid during the year (US$ million)
11
11
25,470
(16,952)
8,518
–
640
9,158
684
(821)
(137)
9,021
(2,676)
6,345
318
6,663
868
5,477
34
284
902
5,761
2007
25,470
(17,198)
8,272
460
197
8,929
742
(850)
(108)
8,821
(2,693)
6,128
2,044
8,172
–
(246)
(246)
460
(443)
(229)
58
(29)
29
(200)
(17)
(217)
1,726
1,509
(34)
(183)
834
5,294
–
1,726
34
2,010
(34)
1,543
868
7,304
4.04
1.54
5.58
3.99
1.51
5.50
86
1,031
113
1,527
3,718
–
–
(1) Comparatives have been adjusted to reclassify amounts relating to discontinued operations.
Underlying earnings and underlying earnings per share are set out in note 12.
2006 (1)
2006 (1)
2006 (1)
24,991
(16,943)
8,048
–
463
8,511
559
(669)
(110)
8,401
(2,598)
5,803
593
6,396
784
5,019
141
452
925
5,471
–
(406)
(406)
265
144
3
50
(11)
39
42
80
122
404
526
24,991
(17,349)
7,642
265
607
8,514
609
(680)
(71)
8,443
(2,518)
5,925
997
6,922
(8)
130
776
5,149
(181)
585
(40)
1,037
(189)
715
736
6,186
3.51
0.70
4.21
3.43
0.69
4.12
75
1,107
95
1,391
–
100
1,448
Anglo American plc Annual Report 2007 |
87
Financial
statements
Consolidated balance sheet
as at 31 December 2007
US$ million
Intangible assets
Tangible assets
Biological assets
Environmental rehabilitation trusts
Investments in associates
Financial asset investments
Deferred tax assets
Other non-current assets
Total non-current assets
Inventories
Trade and other receivables
Current tax assets
Other current financial assets (derivatives)
Cash and cash equivalents
Total current assets
Assets classified as held for sale
Total assets
Trade and other payables
Short term borrowings
Short term provisions
Current tax liabilities
Other current financial liabilities (derivatives)
Total current liabilities
Medium and long term borrowings
Retirement benefit obligations
Other financial liabilities (derivatives)
Deferred tax liabilities
Provisions for liabilities and charges
Total non-current liabilities
Liabilities directly associated with assets classified as held for sale
Total liabilities
Net assets
Equity
Called-up share capital
Share premium account
Other reserves
Retained earnings
Equity attributable to equity shareholders of the Company
Minority interests
Total equity
The financial statements were approved by the Board of directors on 19 February 2008.
Cynthia Carroll
Chief executive
René Médori
Finance director
Note
13
14
15
16
17
19
27
20
21
25
31b
36
22
24
26
25
24
28
25
27
26
36
29,30
30
30
30
30
2007
2006
1,556
23,534
3
252
3,341
4,780
474
102
34,042
2,344
3,731
223
535
3,129
9,962
758
44,762
(3,950)
(5,895)
(142)
(992)
(501)
2,134
23,498
324
197
4,780
1,973
372
173
33,451
2,974
5,312
225
329
3,004
11,844
1,188
46,483
(5,040)
(2,028)
(62)
(1,453)
(216)
(11,480)
(8,799)
(2,404)
(444)
(85)
(4,650)
(1,082)
(8,665)
(287)
(4,220)
(775)
(304)
(3,687)
(1,024)
(10,010)
(547)
(20,432)
(19,356)
24,330
27,127
738
2,713
3,155
15,855
22,461
1,869
24,330
771
2,713
1,049
19,738
24,271
2,856
27,127
88 | Anglo American plc Annual Report 2007
Consolidated cash flow statement
for the year ended 31 December 2007
US$ million
Cash inflows from continuing operations
Dividends from associates
Dividends from financial asset investments
Income tax paid
Net cash inflows from operating activities – continuing operations
Net cash inflows from operating activities – discontinued operations
Net cash inflows from operating activities – total Group
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and cash equivalents acquired
Investment in associates
Investment in joint ventures
Purchase of tangible assets
Investment in biological assets
Purchase of financial asset investments
External loans granted
Loans granted to related parties
Interest received and other investment income
Disposal of subsidiaries, net of cash and cash equivalents disposed
Sale of interests in associates
Repayment of loans and capital from associates
Proceeds from disposal of tangible assets
Proceeds from sale of financial asset investments
Other investing activities
Net cash used in investing activities – continuing operations
Net cash inflows from/(used in) investing activities – discontinued operations
Net cash used in investing activities – total Group
Cash flows from financing activities
Issue of shares by subsidiaries to minority interests
Sale of treasury shares to employees
Purchase of treasury shares
Interest paid
Dividends paid to minority interests
Dividends paid to Company shareholders
Receipt of short term borrowings
Receipt of medium and long term borrowings
Capital element of finance leases
Other financing activities
Net cash used in financing activities – continuing operations
Net cash inflows from/(used in) financing activities – discontinued operations
Net cash used in financing activities – total Group
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Cash movements in the year
Effects of changes in foreign exchange rates
Cash and cash equivalents at end of year
(1) Comparatives have been adjusted to reclassify amounts relating to discontinued operations.
Financial
statements
2007
2006 (1)
9,375
275
36
(2,886)
6,800
464
7,264
(772)
(1)
(1,114)
(3,931)
(1)
(47)
(108)
–
228
110
–
119
111
601
(31)
(4,836)
2,575
9,012
241
10
(1,926)
7,337
973
8,310
(142)
(8)
(7)
(2,909)
(1)
(40)
–
(65)
193
786
40
394
100
72
(33)
(1,620)
(185)
(2,261)
(1,805)
29
134
(6,217)
(483)
(728)
(1,538)
2,780
341
–
21
73
259
(3,922)
(294)
(311)
(2,888)
421
267
(16)
51
(5,661)
(6,360)
692
(315)
(4,969)
(6,675)
34
(170)
2,980
34
60
3,074
3,319
(170)
(169)
2,980
Note
31a
34
34
35
17
31c
31c
Anglo American plc Annual Report 2007 |
89
Financial
statements
Consolidated statement of recognised income and expense
for the year ended 31 December 2007
US$ million
Net gains on revaluation of available for sale investments
Net gains on revaluation of available for sale investments – associates
Impairment of available for sale investments
Loss on cash flow hedges
Loss on cash flow hedges – associates
Exchange losses on translation of foreign operations
Actuarial net (losses)/gains on post retirement benefit schemes
Actuarial net (losses)/gains on post retirement benefit schemes – associates
Deferred tax
Net income/(expense) recognised directly in equity
Transferred to income statement: sale of available for sale investments
Transferred to income statement: impairment of available for sale investments
Transferred to income statement: cash flow hedges
Transferred to income statement: exchange differences on disposal of foreign operations
Tax on items transferred from equity
Total transferred to equity
Profit for the year
Total recognised income and expense for the year(1)
Attributable to:
Minority interests
Equity shareholders of the Company
(1) Total recognised income and expense for the year of $2,026 million (2006: $987 million) relates to discontinued operations.
Reconciliation from EBITDA to cash inflows from continuing operations
for the year ended 31 December 2007
US$ million
EBITDA – continuing operations(2)
Share of operating profit of associates before special items and remeasurements
Underlying depreciation and amortisation in associates
Share-based payment charges
Fair value gains before special items and remeasurements
Additional pension contributions
Provisions
Increase in inventories
Increase in operating receivables
Increase in operating payables
Other adjustments
Cash inflows from continuing operations
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
2007
2,326
10
–
(286)
(41)
(303)
(37)
(6)
(123)
1,540
(298)
–
315
337
3
357
8,172
10,069
2006
492
–
(13)
(502)
(117)
(439)
102
3
60
(414)
(27)
13
148
9
(33)
110
6,922
6,618
844
9,225
603
6,015
2007
2006 (1)
11,171
(1,072)
(183)
138
(12)
–
77
(352)
(389)
53
(56)
9,375
10,431
(840)
(129)
182
(13)
(188)
14
(299)
(602)
511
(55)
9,012
(2) EBITDA is operating profit before special items, remeasurements, depreciation and amortisation in subsidiaries and joint ventures and share of EBITDA of associates:
US$ million
Operating profit including associates’ operating profit before special items and remeasurements – continuing operations(3)
Depreciation and amortisation
Subsidiaries and joint ventures
Associates
EBITDA – continuing operations
2007
9,590
1,398
183
11,171
2006 (1)
8,888
1,414
129
10,431
(3) ‘Operating profit including associates’ operating profit before special items and remeasurements’ is reconciled to ‘Profit for the financial year’ in note 2.
90 | Anglo American plc Annual Report 2007
Financial
statements
Notes to the financial statements
1. Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) and International Financial Reporting Interpretation
Committee (IFRIC) interpretations adopted for use by the European Union and with
those parts of the Companies Act 1985 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical cost convention
as modified by the recording of pension assets and liabilities and the revaluation of
biological assets and certain financial instruments. A summary of the principal Group
accounting policies is set out below with an explanation of changes to previous policies
following adoption of new accounting standards and interpretations in the year.
Associates
Associates are investments over which the Group is in a position to exercise
significant influence, but not control or joint control, through participation in the
financial and operating policy decisions of the investee. Typically the Group owns
between 20% and 50% of the voting equity of its associates. Investments in
associates are accounted for using the equity method of accounting except when
classified as held for sale.
The Group’s share of associates’ net income is based on their most recent audited
financial statements or unaudited interim statements drawn up to the Group’s
balance sheet date.
The details of the elections made on conversion to IFRS were set out in the
31 December 2005 Annual Report.
The preparation of financial statements in conformity with generally accepted
accounting principles, requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management’s best knowledge of the
amount, event or actions, actual results ultimately may differ from those estimates.
The total carrying values of investments in associates represent the cost of each
investment including the carrying value of goodwill, the share of post acquisition
retained earnings, any other movements in reserves and any long term debt interests
which in substance form part of the Group’s net investment. The carrying values
of associates are reviewed on a regular basis and if an impairment in value has
occurred, it is written off in the period in which those circumstances are identified.
The Group’s share of an associate’s losses in excess of its interest in that associate
is not recognised unless the Group has an obligation to fund such losses.
Details of the Group’s significant accounting policies and critical accounting estimates
are set out in the ‘Operating and financial review’ and form part of these financial
statements; these are set out on page 57.
Joint venture entities
A joint venture entity is an entity in which the Group holds a long term interest and
shares joint control over the strategic, financial and operating decisions with one or
more other venturers under a contractual arrangement.
Significant areas of estimation uncertainty include:
• useful economic lives of assets and ore resources estimates;
• impairment of assets;
• restoration, rehabilitation and environmental costs; and
• retirement benefits.
Adoption of standards and changes in accounting policies
The Group has adopted early with effect from 1 January 2007 the revision to IAS 23
Borrowing costs. This did not have any impact on the Group.
The Group has adopted IFRS 7 Financial Instruments: Disclosures and the associated
revisions to IAS 1 Presentation of Financial Statements. This has resulted in the
financial instrument disclosures previously required by IAS 32 Financial Instruments:
Presentation and Disclosure being replaced by those required under IFRS 7 as well
as the inclusion of capital risk management disclosures.
Discontinued operations
On 2 July 2007 the Paper and Packaging business was demerged from the Group
by way of a dividend in specie paid to shareholders.
On 2 October 2007 the Group sold 67.1 million shares in AngloGold Ashanti
Limited which reduced the Group’s shareholding from 41.6% to 17.3%. The Group’s
representation on the company’s board was also withdrawn at this time. The
remaining investment is accounted for as a financial asset investment.
Both of these operations are considered discontinued and therefore the prior
period Consolidated income statement and Consolidated cash flow statement have
been adjusted in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations.
Basis of consolidation
The financial statements incorporate a consolidation of the financial statements
of the Company and entities controlled by the Company (its subsidiaries) made up
to 31 December each year. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in
the Consolidated income statement from the effective date of acquisition or up to
the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the results of subsidiaries, joint ventures
and associates to bring their accounting policies into line with those used by the
Group. Intra-group transactions, balances, income and expenses are eliminated
on consolidation, where appropriate.
For non-wholly owned subsidiaries, a share of the net assets and profit for the financial
year is attributed to the minority interests as shown on the Consolidated income
statement and Consolidated balance sheet. Any losses applicable to the minority
interests in excess of the total recognised minority interests are allocated against
the interests of the parent until such time as future profits have exceeded the losses
previously absorbed.
The Group’s share of the assets, liabilities, income, expenditure and cash flows of
such jointly controlled entities are accounted for using proportionate consolidation.
Proportionate consolidation combines the Group’s share of the results of the joint venture
entity on a line by line basis with similar items in the Group’s financial statements.
Joint venture operations
The Group has contractual arrangements with other participants to engage in
joint activities other than through a separate entity. The Group includes its assets,
liabilities, expenditure and its share of revenue in such joint venture operations
with similar items in the Group’s financial statements.
Revenue recognition
Revenue is derived principally from the sale of goods and is measured at the fair
value of consideration received or receivable, after deducting discounts, volume
rebates, value added tax and other sales taxes. Sales of concentrate are stated
at their invoiced amount which is net of treatment and refining charges. A sale
is recognised when the significant risks and rewards of ownership have passed.
This is usually when title and insurance risk have passed to the customer and the
goods have been delivered to a contractually agreed location.
Revenue from metal mining activities is based on the payable metal sold.
Sales of certain commodities are ‘provisionally priced’ such that the price is not
settled until a predetermined future date based on the market price at that time.
Revenue on these sales is initially recognised (when the above criteria are met)
at the current market price. ‘Provisionally priced’ sales are marked to market at each
reporting date using the forward price for the period equivalent to that outlined in
the contract. This mark to market adjustment is recorded in revenue.
Revenues from the sale of material by-products are included within revenue.
Where a by-product is not regarded as significant, revenue may be credited against
the cost of sales.
Interest income is accrued on a time basis, by reference to the principal outstanding
and at the effective interest rate applicable.
Dividend income from investments is recognised when the shareholders’ rights
to receive payment have been established.
Business combinations and goodwill arising thereon
At the date of acquisition, the identifiable assets, liabilities and contingent liabilities
of a subsidiary, joint venture entity or an associate, which can be measured reliably
are recorded at their provisional fair values at the date of acquisition. Any excess
of the cost of acquisition over the fair values of the identifiable net assets acquired
is attributed to goodwill. Provisional fair values are finalised within 12 months of the
acquisition date.
Goodwill in respect of subsidiaries and joint ventures is included within intangible
assets. Goodwill relating to associates is included within the carrying value of
the associate.
Anglo American plc Annual Report 2007 |
91
Financial
statements
Notes to the financial statements continued
1. Accounting policies continued
Where the fair value of the identifiable net assets acquired exceeds the cost of the
acquisition, the surplus, which represents the discount on the acquisition, is credited
to the income statement in the period of acquisition.
Where an impairment subsequently reverses, the carrying amount of the asset
or CGU is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment been recognised for the asset or CGU in prior years.
A reversal of an impairment is recognised as income immediately.
For non-wholly owned subsidiaries, minority interests are initially recorded at the
minorities’ proportion of the fair values for the assets and liabilities recognised
at acquisition.
Tangible assets
Mining properties and leases include the cost of acquiring and developing mining
properties and mineral rights.
Mining properties are depreciated down to their residual values using the unit
of production method based on proven and probable reserves. Depreciation is
charged on new mining ventures from the date that the mining property is capable
of commercial production. When there is little likelihood of a mineral right being
exploited, or the value of the exploitable mineral right has diminished below cost,
a write down to the recoverable amount is charged to the income statement.
For open pit operations the removal of overburden or waste ore is required to obtain
access to the orebody. To the extent that the actual waste material removed per
tonne of ore mined (known as the stripping ratio) is higher than the average stripping
ratio in the early years of a mine’s production phase, the costs associated with this
process are deferred and charged to operating costs using the expected average
stripping ratio over the average life of the area being mined. This reflects the fact
that waste removal is necessary to gain access to the orebody and therefore realise
future economic benefit. The average stripping ratio is calculated as the number
of tonnes of waste material expected to be removed during the life of mine, per
tonne of ore mined. The average life of mine cost per tonne is calculated as the total
expected costs to be incurred to mine the orebody divided by the number of tonnes
expected to be mined. The cost of stripping in any period will therefore be reflective
of the average stripping rates for the orebody as a whole. However, where the pit
profile is such that the actual stripping ratio is below the average in the early years
no deferral takes place as this would result in recognition of a liability for which
there is no obligation. Instead this position is monitored and when the cumulative
calculation reflects a debit balance deferral commences. The average life of mine
stripping ratio and the average life of mine cost per tonne are recalculated annually
in light of additional knowledge and changes in estimates. Changes in the life of mine
stripping ratio are accounted for prospectively as a change in estimate.
Land and properties in the course of construction are carried at cost, less any recognised
impairment. Depreciation commences when the assets are ready for their intended
use. Buildings and plant and equipment are depreciated down to their residual values
at varying rates, on a straight line basis over their estimated useful lives or the life of
mine, whichever is shorter. Estimated useful lives normally vary from up to 20 years
for items of plant and equipment to a maximum of 50 years for buildings.
Impairment of goodwill
Goodwill arising on business combinations is allocated to the group of CGU that
are expected to benefit from the synergies of the combination and represents the
lowest level at which goodwill is monitored by the Group’s Board of directors for
internal management purposes. Details of the CGU to which goodwill is allocated are
provided in note 13. The recoverable amount of the CGU or group of CGU to which
goodwill has been allocated is tested for impairment annually on a consistent date
during each financial year, or when such events or changes in circumstances indicate
that it may be impaired.
Any impairment is recognised immediately in the income statement. Impairments
of goodwill are not subsequently reversed.
Research and exploration expenditure
Research and exploration expenditure is written off in the year in which it is incurred.
When a decision is taken that a mining property is economically feasible and should be
developed for commercial production, all further directly attributable, pre-production
expenditure is capitalised within tangible assets. Capitalisation of pre-production
expenditure ceases when the mining property is capable of commercial production.
Capitalised pre-production expenditure prior to commercial production is assessed
for impairment in accordance with the Group accounting policy stated above.
Biological assets: afforestation and other agricultural activity
Afforestation and other agricultural assets are measured at their fair values less
estimated selling costs during the period of biological transformation, from initial
recognition up to the point of harvest. The fair values are determined based on
current market prices for the assets in their present location and condition.
Changes in fair value are recognised in the income statement within other gains and
losses for the period between planting and harvest. At point of harvest, the carrying
value of afforestation and other agricultural assets is transferred to inventory.
Directly attributable costs incurred during the period of biological transformation
are capitalised and the associated cash flows are presented within ‘Cash flows from
investing activities’ in the Consolidated cash flow statement.
Inventory
Inventory and work in progress are valued at the lower of cost and net realisable
value. The production cost of inventory includes an appropriate proportion of
depreciation and production overheads. Cost is determined on the following bases:
Residual values and estimated useful lives are reviewed at least annually.
• Raw materials and consumables are valued at cost on a first in, first out (FIFO) basis.
• Finished products are valued at raw material cost, labour cost and a proportion
Assets held under finance leases are depreciated over the shorter of the lease term
and the estimated useful lives of the assets.
of manufacturing overhead expenses.
• Metal and coal stocks are included within finished products and are valued at
Non-mining licences and other intangibles
Non-mining licences and other intangibles are measured initially at purchase cost and
are amortised on a straight line basis over their estimated useful lives. Estimated
useful lives vary between three and five years.
At precious metals operations that produce ‘joint products’, cost is allocated
between products according to the ratio of contribution of these metals to gross
sales revenues.
average cost.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets
are impaired. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment, if any. Where the asset
does not generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash generating unit (CGU) to which the
asset belongs. An intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying
amount, the carrying amount of the asset or CGU is reduced to its recoverable amount.
An impairment is recognised immediately as an expense.
Retirement benefits
The Group operates both defined benefit and defined contribution schemes for its
employees as well as post retirement medical plans. For defined contribution schemes
the amount charged to the income statement is the contributions paid or payable during
the year.
For defined benefit pension and post retirement medical plans, full actuarial valuations
are carried out every three years using the projected unit credit method and updates are
performed for each financial year end. The average discount rate for the plans’ liabilities
is based on AA rated corporate bonds of a suitable duration and currency or, where there
is no ‘deep market’ for such bonds, based on government bonds. Pension plan assets are
measured using period end market values.
Actuarial gains and losses, which can arise from differences between expected and
actual outcomes or changes in actuarial assumptions, are recognised immediately in the
‘Consolidated statement of recognised income and expense’. Any increase in the present
value of plan liabilities expected to arise from employee service during the period is
charged to operating profit. The expected return on plan assets and the expected increase
during the period in the present value of plan liabilities are included in investment income
and interest expense.
92 | Anglo American plc Annual Report 2007
Financial
statements
1. Accounting policies continued
Past service cost is recognised immediately to the extent that the benefits are already
vested and otherwise is amortised on a straight line basis over the average period until
the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present
value of the defined benefit obligation as adjusted for unrecognised past service costs
and as reduced by the fair value of scheme assets. Any asset resulting from this
calculation is limited to past service cost, plus the present value of available refunds
and reductions in future contributions to the plan.
Tax
The tax expense represents the sum of the current tax charge and the movement
in deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs
from net profit as reported in the income statement because it excludes items of income
or expense that are taxable or deductible in other years and it further excludes items
that are not taxable or deductible. The Group’s liability for current tax is calculated using
tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between
the carrying amount of assets and liabilities in the financial statements and the
corresponding tax basis used in the computation of taxable profit and is accounted
for using the balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary differences arise from the initial
recognition of goodwill or an asset or liability in a transaction (other than in a
business combination) that affects neither the tax profit nor accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on
investments in subsidiaries, joint ventures, and associates, except where the Group
is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date
and is adjusted to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period
when the liability is settled or the asset is realised. Deferred tax is charged or
credited in the income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also taken directly to equity.
Deferred tax assets and liabilities are offset when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its current tax assets
and liabilities on a net basis.
Leases
In addition to lease contracts, other significant contracts are assessed to determine
whether, in substance, they are or contain a lease. This includes assessment of
whether the arrangement is dependent on use of a specific asset and right to use
that asset is conveyed through the contract.
Rental costs under operating leases are charged to the income statement in equal
annual amounts over the lease term.
Assets held under finance leases are recognised as assets of the Group on inception
of the lease at the lower of fair value or the present value of the minimum lease
payments derived by discounting at the interest rate implicit in the lease. The interest
element of the rental is charged against profit so as to produce a constant periodic
rate of interest on the remaining balance of the liability, unless it is directly
attributable to qualifying assets, in which case it is capitalised in accordance with
the Group’s general policy on borrowing costs (see below).
Non-current assets held for sale and discontinued operations
Non-current assets (and disposal groups) are classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than through
continuing use. This condition is regarded as met only when it is highly probable and
the asset (or disposal group) is available for immediate sale in its present condition.
Management must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.
statement as a special item. On classification as held for sale the assets are no
longer depreciated. Comparative amounts are not adjusted.
Where an asset or business has been sold or is classified as held for sale and is either
a, or part of a, single co-ordinated plan to dispose of either a separate major line of
business or geographical area of operation, or is a subsidiary acquired exclusively with
a view to sale, it is considered to be a ‘discontinued operation’. Once an operation has
been identified as discontinued, its net profit and cash flows are separately presented
from continuing operations. Comparative information is reclassified so that net profit
and cash flows of prior periods are also separately presented.
Restoration, rehabilitation and environmental costs
An obligation to incur restoration, rehabilitation and environmental costs arises when
environmental disturbance is caused by the development or ongoing production of
a mining property. Such costs arising from the decommissioning of plant and other
site preparation work, discounted to their net present value, are provided for and
capitalised at the start of each project, as soon as the obligation to incur such costs
arises. These costs are charged against profits over the life of the operation, through
the depreciation of the asset and the unwinding of the discount on the provision.
Costs for restoration of subsequent site damage which is created on an ongoing basis
during production are provided for at their net present values and charged against
profits as extraction progresses.
Changes in the measurement of a liability relating to the decommissioning of plant
or other site preparation work that result from changes in the estimated timing or
amount of the cash flow, or a change in the discount rate, are added to, or deducted
from, the cost of the related asset in the current period. If a decrease in the liability
exceeds the carrying amount of the asset, the excess is recognised immediately in
the income statement. If the asset value is increased and there is an indication that
the revised carrying value is not recoverable, an impairment test is performed in
accordance with the accounting policy above.
For some South African operations annual contributions are made to dedicated
environmental rehabilitation trusts to fund the estimated cost of rehabilitation
during and at the end of the life of the relevant mine. The Group exercises full
control of these trusts and therefore the trusts are consolidated. The trusts’ assets
are recognised separately on the balance sheet as non-current assets at fair value.
Interest earned on funds invested in the environmental rehabilitation trusts is accrued
on a time proportion basis and recognised as interest income.
Foreign currency transactions and translation
Foreign currency transactions by Group companies are booked in their functional
currencies at the exchange rate ruling on the date of transaction. At each balance
sheet date, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the balance sheet date. Gains and losses
arising on retranslation are included in profit or loss for the period and are classified
as either operating or financing depending on the nature of the monetary item giving
rise to them.
On consolidation, the assets and liabilities of the Group’s overseas operations are
translated into the presentation currency of the Group at exchange rates prevailing
on the balance sheet date. Income and expense items are translated at the average
exchange rates for the period where these approximate the rates at the dates of
transactions. Exchange differences arising, if any, are classified within equity and
transferred to the Group’s cumulative translation adjustment reserve. Exchange
differences on foreign currency loans for which settlement is neither planned nor
likely to occur and therefore form part of the Group’s net investment in these foreign
operations are offset in the cumulative translation adjustment reserve.
Cumulative translation differences are recognised as income or expense in the period
in which the operation they relate to is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity
are treated as assets of the foreign entity and translated at the closing rate.
Borrowing costs
Interest on borrowings directly relating to the financing of qualifying capital projects
under construction is added to the capitalised cost of those projects during the
construction phase, until such time as the assets are substantially ready for their
intended use or sale which, in the case of mining properties, is when they are
capable of commercial production. Where funds have been borrowed specifically
to finance a project, the amount capitalised represents the actual borrowing costs
incurred. Where the funds used to finance a project form part of general borrowings,
the amount capitalised is calculated using a weighted average of rates applicable
to relevant general borrowings of the Group during the period.
Non-current assets (and disposal groups) are classified as held for sale from the date
these conditions are met and are measured at the lower of carrying amount and fair
value less costs to sell. Any resulting impairment is reported through the income
All other borrowing costs are recognised in profit or loss in the period in which they
are incurred.
Anglo American plc Annual Report 2007 |
93
Financial
statements
Notes to the financial statements continued
1. Accounting policies continued
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance
with the transitional provisions, IFRS 2 has been applied to all grants of equity
instruments after 7 November 2002 that had not vested as at 1 January 2005.
Current financial asset investments consist mainly of bank term deposits and fixed
and floating rate debt securities. Debt securities that are intended to be held to
maturity are recorded on the amortised cost basis. Debt securities that are not
intended to be held to maturity are recorded at the lower of cost and market value.
The Group makes equity settled share-based payments to certain employees, which
are measured at fair value at the date of grant. For those share schemes, excluding
share options, which do not include non-market vesting conditions, the fair value
is determined using the Monte Carlo method at the grant date and expensed on
a straight line basis over the vesting period, based on the Group’s estimate of shares
that will eventually vest. The fair value of share options issued with non-market
vesting conditions has been calculated using the Black Scholes model. For all other
share awards, the fair value is determined by reference to the market value of the
share at the date of grant. For all share schemes with non-market related vesting
conditions, the likelihood of vesting has been taken into account when determining
the relevant charge. Vesting assumptions are reviewed during each reporting period
to ensure they reflect current expectations.
Black economic empowerment (BEE) transactions
Where the Group disposes of a portion of a South African based subsidiary or
operation to a BEE company at a discount to fair value, the transaction is considered
to be a share-based payment (in line with the principle contained in South Africa
interpretation AC 503 Accounting for Black Economic Empowerment (BEE)
Transactions). The discount provided or value given is calculated in accordance with
IFRS 2 and included in the determination of the profit or loss on disposal.
Employee benefit trust
The carrying value of shares held by the employee benefit trust are recorded as
treasury shares, shown as a reduction in retained earnings within shareholders’ equity.
Presentation currency
As permitted by UK company law, the Group results are presented in US dollars,
the currency in which most of its business is conducted.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and on demand deposits, together
with short term, highly liquid investments that are readily convertible to a known
amount of cash and that are subject to an insignificant risk of changes in value.
Bank overdrafts are, however, shown within short term borrowings in current
liabilities on the balance sheet. Cash and cash equivalents in the cash flow statement
are shown net of overdrafts.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal value
(with the exception of receivables relating to provisionally priced sales – as set out in
the revenue recognition accounting policy) net of appropriate allowance for estimated
irrecoverable amounts. Such allowances are raised based on an assessment of debtor
ageing, past experience or known customer circumstances.
Trade payables
Trade payables are not interest bearing and are stated at their nominal value with the
exception of amounts relating to purchases of provisionally priced concentrate which
are marked to market (using the appropriate forward price) until settled.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
Investments
Investments, other than investments in subsidiaries, joint ventures and associates,
are financial asset investments and are initially recorded at fair value. At subsequent
reporting dates, financial assets that the Group has the expressed intention and
ability to hold to maturity (‘held to maturity’) as well as loans and receivables are
measured at amortised cost, less any impairment. The amortisation of any discount
or premium on the acquisition of a held to maturity investment is recognised in the
income statement in each period using the effective interest method.
Investments other than those classified as held to maturity or loans and receivables
are classified as either at fair value through profit or loss (which includes investments
held for trading) or available for sale investments. Both sub-categories are measured
at each reporting date at fair value. Where investments are held for trading purposes,
unrealised gains and losses for the period are included in the income statement
within other gains and losses. For available for sale investments, unrealised gains
and losses are recognised in equity until the investment is disposed or impaired, at
which time the cumulative gain or loss previously recognised in equity is included in
the income statement.
Provision is raised against these assets when there is doubt over the future
realisation of value as a result of a known event or circumstance.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified and accounted for as debt
or equity according to the substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest in the assets
of the Group after deducting all of its liabilities.
Convertible debt
Convertible bonds denominated in the functional currency of the entity issuing the
shares are regarded as compound instruments, consisting of a liability and an equity
component. At the date of issue, the fair value of the liability component is estimated
using the prevailing market interest rate for similar non-convertible debt and is
recorded within borrowings. The difference between the proceeds of issue of the
convertible bond and the fair value assigned to the liability component, representing
the embedded option to convert the liability into equity of the Group, is included
in equity.
Where the embedded option is in a convertible bond denominated in a currency other
than the functional currency of the entity issuing the shares, the option is classified
as a liability. The option is marked to market with subsequent gains and losses being
recorded through the income statement within net finance costs.
Issue costs are apportioned between the liability and equity components of the
convertible bonds where appropriate based on their relative carrying amounts at
the date of issue. The portion relating to the equity component is charged directly
against equity.
The interest expense on the liability component is calculated by applying the
effective interest rate for similar non-convertible debt to the liability component of the
instrument. The difference between this amount and the interest paid is added to the
carrying amount of the convertible bond.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds received,
net of direct transaction costs. Finance charges, including premiums payable on
settlement or redemption and direct issue costs, are accounted for on an accruals
basis and charged to the income statement using the effective interest method.
They are added to the carrying amount of the instrument to the extent that they
are not settled in the period in which they arise.
Derivative financial instruments and hedge accounting
In order to hedge its exposure to foreign exchange, interest rate and commodity
price risk, the Group enters into forward, option and swap contracts. The Group
does not use derivative financial instruments for speculative purposes. Commodity
based (normal purchase or normal sale) contracts that meet the requirements of
IAS 39 are recognised in earnings when they are settled by physical delivery.
All derivatives are held at fair value in the balance sheet within other financial
assets (derivatives) or other financial liabilities (derivatives) and, when designated
as hedges, are classified as current or non-current depending on the maturity of the
derivative. Derivatives that are not designated as hedges are classified as current,
in accordance with IAS 1, even when their actual maturity is expected to be greater
than one year.
Changes in the fair value of derivative financial instruments that are designated and
effective as hedges of future cash flows are recognised directly in equity. The gain
or loss relating to the ineffective portion is recognised immediately in the income
statement. If the cash flow hedge of a firm commitment or forecast transaction
results in the recognition of a non-financial asset or a liability, then, at the time the
asset or liability is recognised, the associated gains or losses on the derivative that
had previously been recognised in equity are included in the initial measurement
of the asset or liability. For hedges that do not result in the recognition of a non-
financial asset or a liability, amounts deferred in equity are recognised in the income
statement in the same period in which the hedged item affects profit or loss.
For an effective hedge of an exposure to changes in fair value, the hedged item
is adjusted for changes in fair value attributable to the risk being hedged with the
corresponding entry in profit or loss. Gains or losses from remeasuring the associated
derivative are recognised in profit or loss.
94 | Anglo American plc Annual Report 2007
1. Accounting policies continued
The gain or loss on hedging instruments relating to the effective portion of a net
investment hedge is recognised in equity. The ineffective portion is recognised
immediately in the income statement. Gains or losses accumulated in equity are
included in the income statement when the foreign operations are disposed of.
Changes in the fair value of any derivative instruments that are not hedge accounted
are recognised immediately in the income statement and are classified within other
gains and losses or net finance costs depending on the type of risk the derivative
relates to.
Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated, exercised, revoked, or no longer qualifies for hedge accounting. At that
time, any cumulative gain or loss on the hedging instrument recognised in equity is
retained in equity until the forecast transaction occurs. If a hedge transaction is no
longer expected to occur, the net cumulative gain or loss previously recognised in
equity is included in the income statement for the period.
Derivatives embedded in other financial instruments or non-financial host contracts
are treated as separate derivatives when their risks and characteristics are not closely
related to those of their host contracts and the host contracts themselves are not
carried at fair value with unrealised gains or losses reported in the income statement.
Derecognition of financial assets and liabilities
Financial assets are derecognised when the rights to receive cash flows from
the asset have expired, the right to receive cash flows has been retained but an
obligation to on-pay them in full without material delay has been assumed or the
right to receive cash flows has been transferred together with substantially all the
risks and rewards of ownership.
Financial liabilities are derecognised when the associated obligation has been
discharged, cancelled or has expired.
New IFRS accounting standards and interpretations not yet adopted
IFRS 8 Operating Segments replaces the segmental reporting requirements of
IAS 14 Segment Reporting. The key change is to align the determination of segments
in the financial statements with that used by management in their resource allocation
decisions. This standard is not expected to have significant impact on existing disclosure.
The amendment to IAS 1 Financial statement presentation released in September
2007 redefines the primary statements and expands on certain disclosures within
these. Once adopted the Group’s primary statements will be amended to reflect the
presentation required.
IFRIC 11 Group and Treasury Share Transactions clarifies that the manner in which an
entity obtains the shares to satisfy its obligations in terms of a share-based payment
transaction does not influence the classification of that transaction as equity settled
or cash settled. In addition, where an entity satisfies a share-based payment by
issue of its parent’s shares (rather than the parent making the share-based payment
directly) the interpretation requires that these be treated as cash settled rather
than equity settled. From the Group perspective this is not expected to have a
material impact.
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding requirements and
their Interaction clarifies when refunds and reductions in future contributions would
be regarded as available in determining the appropriate defined benefit asset to be
recognised under IAS 19 Employee benefits. It further clarifies the impact of minimum
funding requirements. This is not expected to have a material impact for the Group.
2. Segmental information
Based on risks and returns the directors consider the primary reporting format is by
business segment and the secondary reporting format is by geographical segment.
The analysis of associates’ revenue by business segment is provided here for
completeness and consistency. The segmental analysis of associates’ net income
is shown below and the Group’s aggregate investment in those associates required
by IAS 14 Segment Reporting, is set out in note 17.
In 2007 Copebrás and Yang Quarry have been reclassified from Industrial Minerals
to Base Metals and from Industrial Minerals to Coal respectively. This is to align
with internal management reporting. As such, the comparative data has been
reclassified.
Discontinued operations comprise the Paper and Packaging and Gold segments.
The Paper and Packaging segment was demerged from the Group on 2 July 2007
and following a partial disposal on 2 October 2007 (which reduced the Group’s
shareholding from 41.6% to 17.3%) the Group ceased to equity account for the
Gold segment. The results for discontinued operations are disclosed in note 33.
Financial
statements
Primary reporting format – by business segment
2007
US$ million
Subsidiaries and joint ventures
6,673
Platinum
2,880
Coal
7,129
Base Metals
Ferrous Metals and Industries 4,207
4,581
Industrial Minerals
–
Exploration
Corporate Activities
–
Total subsidiaries and
joint ventures – continuing
operations
Revenue and net income
from associates
116
Platinum
3,076
Diamonds
694
Coal
Ferrous Metals and Industries 1,193
10
Industrial Minerals
Total associates –
continuing operations
Total Group operations
including net income from
associates – continuing
operations
Net profit on disposals –
continuing operations
Total profit from operations and
associates – continuing operations
5,089
Segment
revenue
Segment result
Segment result
after special items
before special items
and remeasurements(1) and remeasurements(1)
2006(2)
2007
2006(2)
2007
2006(2)
5,766
2,757
6,534
5,973
3,961
–
–
2,635
365
4,338
1,155
474
(157)
(292)
2,337
605
3,897
1,303
315
(132)
(277)
2,635
224
4,338
1,158
407
(157)
(333)
2,337
452
3,905
1,324
46
(132)
(290)
25,470(3) 24,991(3) 8,518 8,048
8,272
7,642
95
3,148
607
546
17
38
223
190
189
–
40
199
185
38
1
38
(229)
190
198
–
40
337
185
44
1
4,413
640
463
197
607
30,559 29,404
9,158
8,511
8,469
8,249
460
265
8,929
8,514
(1) Segment result is defined as being segment revenue less segment expense; that is operating profit. In
addition ‘Share of net income from associates’ is shown by segment. There are no material inter-segment
transfers or transactions that would affect the segment result. Special items and remeasurements are set
out in note 7.
(2) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
(3) This represents segment revenue; the Group’s share of associates’ revenue figures are provided for
additional information.
The table above represents continuing operations only, as disclosed in the income
statement. Total Group revenue including share of revenue from associates and
revenue from discontinued operations is $35,674 million (2006: $38,637 million)
being $30,559 million (2006: $29,404 million) from continuing operations and
$5,115 million (2006: $9,233 million) from discontinued operations. See note 33
for summarised segmental disclosures relating to discontinued operations.
Anglo American plc Annual Report 2007 |
95
Financial
statements
Notes to the financial statements continued
2. Segmental information continued
For information, a segmental analysis of associates’ operating profit is set out below
to show operating profit for the Group’s continuing operations including associates.
Primary segment disclosures for segment assets, liabilities and capital expenditure
are as follows:
Segment
assets(1)
Segment
liabilities(2)
Net segment
assets
Capital
expenditure(3)
Operating profit
Operating profit
after special items
before special items
and remeasurements(1) and remeasurements(1)
2006(2)
2007
8,518 8,048
US$ million
Total subsidiaries and joint ventures
– continuing operations
Associates
Platinum
Diamonds
Coal
Ferrous Metals and Industries
Industrial Minerals
Total associates – continuing operations
Total Group operations including operating
profit from associates – continuing operations 9,590 8,888
62
484
249
277
–
1,072
61
463
257
57
2
840
2007
2006(2)
8,272
7,642
62
19
249
277
–
607
61
446
257
57
2
823
8,879
8,465
(1) Associates’ operating profit is reconciled to ‘Share of net income from associates’ as follows:
US$ million
Operating profit from associates before special items and remeasurements
– continuing operations
Operating special items and remeasurements
Operating profit from associates after special items and remeasurements
– continuing operations
Net profit on disposals
Net finance costs (before remeasurements)
Financing remeasurements
Income tax expense (after special items and remeasurements)
Minority interests (after special items and remeasurements)
Share of net income from associates – continuing operations
2007
2006(2)
1,072
(465)
607
24
(85)
(4)
(303)
(42)
197
840
(17)
823
182
(70)
1
(300)
(29)
607
(2) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
The segment result and associates’ operating profit before special items and
remeasurements, as shown above, is reconciled to ‘Profit for the financial year’ as follows:
US$ million
Operating profit, including associates, before special items
and remeasurements – continuing operations
Operating special items and remeasurements
Subsidiaries and joint ventures
Coal
Base Metals
Ferrous Metals and Industries
Industrial Minerals
Corporate Activities
Associates
Diamonds
Operating profit, including associates, after
special items and remeasurements – continuing operations
Net profit on disposals
Subsidiaries and joint ventures
Associates
Associates’ net finance costs
Associates’ financing remeasurements
Associates’ income tax expense
Associates’ tax on special items and remeasurements
Associates’ minority interests
Total profit from operations and associates – continuing
operations
Net finance costs before special items and remeasurements
Financing special items
Financing remeasurements
Profit before tax – continuing operations
Income tax expense
Profit for the financial year – continuing operations
2007
2006 (1)
9,590 8,888
(246)
(141)
–
3
(67)
(41)
(465)
(465)
(406)
(153)
8
21
(269)
(13)
(17)
(17)
8,879
8,465
460
24
(85)
(4)
(305)
2
(42)
265
182
(70)
1
(278)
(22)
(29)
8,514
8,929
(110)
(137)
(4)
–
43
29
8,821
8,443
(2,693) (2,518)
5,925
6,128
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
96 | Anglo American plc Annual Report 2007
–
–
–
–
–
–
–
–
–
–
–
–
–
1
1
44
(1)
(2)
315
935
791
383
660
352
225
2006
582
200
2007
2007
2007
2006
2006
(121)
8,113
8,113
7,019
(861)
4,185
(530)
(204)
(346)
(404)
– (1,094)
– (1,094)
(733) 3,987
(895) 4,509
(643) 9,234
7,078 2,512
2,796 2,412
(692) 4,989 4,599
(791) 3,984 2,870 1,052
30,923 33,596 (4,340) (5,254) 26,583 28,342
4,517 3,529
5,370 5,080
1
2007
2006
9,926 7,721
(692)
4,987 3,661 (1,003)
5,897 5,291
(908)
US$ million
Platinum
Coal
Base Metals
Ferrous Metals and
Industries
Industrial Minerals
Exploration
Corporate Activities
29
Continuing operations 30,923 25,483 (4,340) (4,160) 26,583 21,323 6,954 3,113
Gold
196
Paper and Packaging
Discontinued operations
Total Group
Unallocated
Investments in
associates
Financial asset
investments
Deferred tax assets/
(liabilities)
Cash and cash
equivalents
Other financial assets/
(liabilities) – derivatives
Other non-operating
assets/(liabilities)
Other provisions
Borrowings
Net assets
– (8,299) (6,248) (8,299) (6,248)
44,762 46,483 (20,432) (19,356) 24,330 27,127
372 (4,650) (3,687) (4,176) (3,315)
1,580 2,429 (2,264) (3,308)
– 3,341 4,780
3,341 4,780
4,780 1,973
3,129 3,004
3,129 3,004
7,152 4,013
– 4,780
(684)
(586)
1,973
(520)
(879)
(293)
(293)
(339)
(339)
7,019
(191)
535
474
–
–
(51)
329
198
198
900
704
–
–
–
–
–
–
(1) Segment assets at 31 December 2007 are operating assets and consist of tangible assets of $23,534
million (2006: $23,498 million), intangible assets of $1,556 million (2006: $2,134 million), biological
assets of $3 million (2006: $324 million), environmental rehabilitation trusts of $252 million (2006:
$197 million), inventories of $2,344 million (2006: $2,974 million), pension and post retirement
healthcare assets of $52 million (2006: $110 million) and operating receivables of $3,182 million
(2006: $4,359 million).
(2) Segment liabilities at 31 December 2007 are operating liabilities and consist of non-interest bearing
current liabilities of $2,965 million (2006: $3,732 million), restoration and decommissioning provisions
of $931 million (2006: $747 million) and retirement benefit obligations of $444 million (2006:
$775 million).
(3) Capital expenditure reflects cash payments and accruals in respect of additions to tangible assets
of $4,129 million (2006: $3,702 million), intangible assets of $9 million (2006: $9 million) (see notes
14 and 13 respectively) and additions resulting from acquisitions through business combinations of
$3,014 million (2006: $302 million).
Other primary segment items included in the income statement are as follows:
US$ million
Platinum
Coal
Base Metals
Ferrous Metals
and Industries
Industrial Minerals
Exploration
Corporate Activities
Continuing operations
Gold
Paper and Packaging
Discontinued operations
Total Group
Depreciation and
amortisation
(Impairments)/
reversal(1)(2)
Other non-
cash expenses(3)
2007
455
221
344
100
258
–
20
1,398
–
234
234
1,632
2006
444
173
357
199
224
–
17
1,414
183
439
622
2,036
2007
–
(153)
–
–
(43)
–
–
(196)
–
(5)
(5)
(201)
2006
–
(143)
–
11
(255)
–
(13)
(400)
–
(100)
(100)
(500)
2007
8(4)
42
94
2006
72
27
124
48
55
–
45
292
32
12
44
336
37
20
2
40
322
12
21
33
355
(1) See operating special items in note 7.
(2) Amounts include negative goodwill in 2006.
(3) Other non-cash expenses include share-based payment charges and charges in respect of environmental
rehabilitation provisions and other provisions.
(4) Includes the reversal of a share-based payment over provision of $30 million relating to prior periods.
Financial
statements
2. Segmental information continued
Secondary reporting format – by geographical segment
The Group’s geographical analysis of revenue, allocated based on the country in
which the customer is located, is as follows. The geographical analysis of the Group’s
attributable revenue from associates is provided for completeness and consistency.
US$ million
Subsidiaries and joint ventures
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Total subsidiaries and joint ventures – continuing operations
Associates
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Total associates – continuing operations
Total Group operations including
associates – continuing operations
Revenue
2007
2006(1)
4,014
178
10,718
1,686
2,545
6,329
4,767
276
9,142
1,817
2,797
6,192
25,470 24,991
796
82
1,498
520
52
2,141
5,089
467
40
1,532
421
41
1,912
4,413
30,559 29,404
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
The Group’s geographical analysis of segment assets, liabilities and capital
expenditure, allocated based on where assets and liabilities are located, is as follows:
Segment
assets
Segment
liabilities
Net segment
assets
Capital
expenditure
2006
2007
2007
2007
2006
2006
526
US$ million
South Africa
Rest of Africa
Europe
388
North America
South America
7,212 4,594
Australia and Asia 3,183 2,530
650
5,658 11,208 (1,057) (1,858) 4,601 9,350
280
2006
13,879 14,144 (1,661) (2,056) 12,218 12,088 3,303 1,935
75
927
202
301
573
30,923 33,596 (4,340) (5,254) 26,583 28,342 7,152 4,013
64
526
151
(108)
(646) 6,277 3,948 2,436
672
(504) 2,634 2,026
(106)
(935)
(549)
494
(82)
(32)
465
359
732
2007
Additional disclosure of secondary segmental information by origin (including
attributable revenue and operating profit from associates) is as follows:
US$ million
Subsidiaries and joint ventures
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Total subsidiaries and
joint ventures –
continuing operations
Associates
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Total associates – continuing
operations
Total Group operations
including associates –
continuing operations
Operating profit/(loss) Operating profit/(loss)
Revenue
before special items
and remeasurements(1) and remeasurements(1)
after special items
2007
2006(2)
2007
2006(2)
2007
2006(2)
12,003 11,693
417
5,395
185
5,687
1,614
540
4,995
230
6,234
1,468
25,470 24,991
4,043
351
425
30
3,697
(28)
3,692 4,044
351
320
31
3,697
(171)
213
476
29
3,389
249
3,704
214
193
43
3,389
99
8,518 8,048
8,272
7,642
1,374
2,160
872
63
96
524
5,089
943
2,094
469
38
542
327
248
342
88
17
198
179
162
295
98
25
190
70
222
342
88
(422)
198
179
170
295
98
–
190
70
4,413
1,072
840
607
823
30,559 29,404
9,590 8,888
8,879
8,465
(1) Special items and remeasurements are set out in note 7.
(2) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
Anglo American plc Annual Report 2007 |
97
Financial
statements
Notes to the financial statements continued
3. Profit for the financial year
The table below analyses the contribution of each business segment to the Group’s operating profit including operating profit from associates for the financial year and
its underlying earnings, which the directors consider to be a useful additional measure of the Group’s performance. A reconciliation from ‘Profit for the financial year’
to ‘Underlying earnings for the financial year’ is given in note 12.
In 2007 Copebrás and Yang Quarry have been reclassified from Industrial Minerals to Base Metals and from Industrial Minerals to Coal, respectively. This is to align with
internal management reporting. The comparative data has been reclassified.
Group operating profit including operating profit from associates is reconciled to ‘Underlying earnings’ and ‘Profit for the financial year attributable to equity shareholders
of the Company’ in the table below:
Operating
profit/(loss)
before special
items and
Operating
profit/(loss)
after special
items and
remeasurements(1) remeasurements
Operating
special
items and
remeasurements(2)
Net
profit on
disposals(2) remeasurements(2)
Financing
special
items and
US$ million
By business segment
Platinum
Diamonds
Coal
Base Metals
Ferrous Metals and Industries
Industrial Minerals
Exploration
Corporate Activities
Total/Underlying earnings – continuing operations
Underlying earnings adjustments – continuing operations
Profit for the financial year attributable to equity shareholders of the Company – continuing operations
2,697
484
614
4,338
1,432
474
(157)
(292)
9,590
2,697
19
473
4,338
1,435
407
(157)
(333)
8,879
–
465
141
–
(3)
67
–
41
711
(711)
Total/Underlying earnings – discontinued operations
Underlying earnings adjustments – discontinued operations
Profit for the financial year attributable to equity shareholders of the Company – discontinued operations
291
526
235
(235)
–
–
–
–
–
–
–
–
–
484
–
2,086
Total/Underlying earnings – total Group
Underlying earnings adjustments – total Group
Profit for the financial year attributable to equity shareholders of the Company – total Group
10,116
9,170
946
(946)
–
2,570
(1) Operating profit includes associates’ operating profit which is reconciled to ‘Share of net income from associates’ in note 2.
(2) Special items and remeasurements are set out in note 7.
Operating
profit/(loss)
before special
items and
Operating
profit/(loss)
after special
items and
remeasurements(1) remeasurements
Operating
special
items and
remeasurements(2)
Net
profit on
disposals(2) remeasurements(2)
Financing
special
items and
US$ million
By business segment
Platinum
Diamonds
Coal
Base Metals
Ferrous Metals and Industries
Industrial Minerals
Exploration
Corporate Activities
Total/Underlying earnings – continuing operations
Underlying earnings adjustments – continuing operations
Profit for the financial year attributable to equity shareholders of the Company – continuing operations
2,398
463
862
3,897
1,360
317
(132)
(277)
8,888
2,398
446
709
3,905
1,381
48
(132)
(290)
8,465
–
17
153
(8)
(21)
269
–
13
423
(423)
568
(568)
–
–
–
–
–
–
–
–
–
447
–
920
Total/Underlying earnings – discontinued operations
Underlying earnings adjustments – discontinued operations
Profit for the financial year attributable to equity shareholders of the Company – discontinued operations
944
376
–
(14)
(492)
247
Total/Underlying earnings – total Group
Underlying earnings adjustments – total Group
Profit for the financial year attributable to equity shareholders of the Company – total Group
9,832
8,841
991
(991)
–
1,367
–
26
(4,361)
313
(1) Operating profit includes associates’ operating profit which is reconciled to ‘Share of net income from associates’ in note 2.
(2) Special items and remeasurements are set out in note 7.
98 | Anglo American plc Annual Report 2007
Net
interest,
tax and
minority
interests
(1,398)
(245)
(124)
(1,238)
(827)
(90)
12
(203)
(4,113)
19
(242)
(138)
(4,355)
(119)
Net
interest,
tax and
minority
interests
(1,133)
(236)
(225)
(1,242)
(777)
(56)
19
(219)
(3,869)
66
–
–
–
–
–
–
–
–
–
25
–
13
–
38
–
–
–
–
–
–
–
–
–
40
2007
Total
1,299
239
490
3,100
605
384
(145)
(495)
5,477
(183)
5,294
284
1,726
2,010
5,761
1,543
7,304
2006
Total
1,265
227
637
2,655
583
261
(113)
(496)
5,019
130
5,149
452
585
1,037
5,471
715
6,186
4. Group operating profit from subsidiaries and joint ventures
US$ million
Group revenue
Cost of sales(2)
Gross profit – continuing operations
Selling and distribution costs
Administrative expenses(2)
Other gains and losses (see below)
Exploration expenditure (see note 5)
Group operating profit from subsidiaries and joint ventures
– continuing operations
2007
2006(1)
25,470 24,991
(14,095) (14,115)
11,375 10,876
(1,453) (1,276)
(1,510) (1,857)
31
(132)
17
(157)
8,272
7,642
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
(2) Includes special items of $251 million (2006: $424 million), see note 7.
US$ million
Operating profit is stated after charging:
Depreciation of tangible assets (see note 14)
Amortisation of intangible assets (see note 13)
Rentals under operating leases
Research and development expenditure
Operating special items(2)
Employee costs (see note 6)
Foreign currency losses/(gains)
Adjustment due to provisional pricing(3)
Other gains and losses comprise:
Fair value gains on derivatives – unrealised
Fair value losses on derivatives – realised
Cash flow hedge ineffectiveness on operating items
Fair value (losses)/gains on other monetary assets
Gains on valuation of biological assets (see note 15)
On initial recognition
Change in fair value less estimated point of sale costs
Total other gains and losses
US$ million
Auditors’ remuneration – continuing operations
Audit
United Kingdom
Overseas
Other services provided by Deloitte(4)
United Kingdom
Overseas
2007
2006(1)
1,396
2
183
41
251
3,691
4
4
1,413
1
147
37
424
3,511
(39)
282
5
–
–
(4)
16
–
16
17
18
(32)
(1)
39
7
–
7
31
2007
2006
3
7
2
2
3
7
1
4
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
(2) For further information on special items and remeasurements see note 7.
(3) Provisionally priced contracts resulted in a total (realised and unrealised) gain in revenue of $38 million
(2006: $323 million gain) and loss in operating costs of $34 million (2006: $41 million loss).
(4) ‘Other services provided by Deloitte’ includes charges incurred in respect of the interim review.
Financial
statements
A more detailed analysis of auditors’ remuneration is provided below. This
information for both years includes continuing and discontinued operations.
Paid/payable
to Deloitte
Paid/payable to auditor
(if not Deloitte)
2007
United
United
Kingdom Overseas
Total
Kingdom Overseas
Total
2.2
–
2.2
–
–
–
–
4.8
4.8
0.5
0.5
2.7
0.7
0.4
–
–
0.9
2.0
4.6
9.4
9.4
0.5
0.7
–
0.1
1.1
2.4
5.1
9.9
12.1
1.2
1.1
–
0.1
2.0
4.4
–
–
–
–
–
–
–
–
–
–
0.1
0.1
–
0.1
0.1
–
0.1
–
–
0.2
0.3
–
0.1
0.1
–
0.1
–
–
0.2
0.3
US$ million
Statutory audit services(1)
Anglo American plc
Annual Report paid to the
Company’s auditor
Subsidiary entities –
for purposes of
Anglo American plc
Annual Report
Subsidiary entities –
additional local statutory
requirements
Subsidiary entities – total
Total
Other services(1)
Other services pursuant
to legislation
Tax services
Internal audit services
Corporate finance
Other
Total
(1) $0.1 million was paid/payable in respect of the audit of Group pension schemes. Other services to these
schemes amounted to $0.1 million.
Paid/payable
to Deloitte
Paid/payable to auditor
(if not Deloitte)
2006(1)
United
United
Kingdom Overseas
Total
Kingdom Overseas
Total
1.7
–
1.7
–
–
–
–
5.8
5.8
0.1
1.6
1.7
1.4
1.4
3.1
5.5
0.1
–
0.1
0.8
6.5
4.6
10.4
10.4
1.9
1.7
0.1
–
2.0
5.7
6.0
11.8
13.5
7.4
1.8
0.1
0.1
2.8
12.2
–
0.1
0.1
–
–
–
0.5
–
0.5
1.0
2.6
2.6
1.2
0.2
0.9
0.2
1.1
3.6
1.0
2.7
2.7
1.2
0.2
0.9
0.7
1.1
4.1
US$ million
Statutory audit services(2)
Anglo American plc
Annual Report paid to the
Company’s auditor
Subsidiary entities –
for purposes of
Anglo American plc
Annual Report
Subsidiary entities –
additional local statutory
requirements
Subsidiary entities – total
Total
Other services(2)
Other services pursuant
to legislation
Tax services
Internal audit services
Corporate finance
Other
Total
(1) The comparatives have been reclassified to align with current year presentation.
(2) $0.1 million was paid/payable in respect of the audit of Group pension schemes. Other services to these
schemes amounted to less than $0.1 million.
Fees payable to Deloitte and their associates for non-audit services to the Company
are not required to be disclosed because the consolidated financial statements are
required to disclose such fees on a consolidated basis.
Anglo American plc Annual Report 2007 |
99
Financial
statements
Notes to the financial statements continued
5. Exploration expenditure
US$ million
By business segment
Platinum
Coal
Base Metals
Ferrous Metals and Industries
Gold
2007
2006
36
32
77
12
–
157
30
24
53
9
16
132
6. Employee numbers and costs
The average number of employees, excluding associates’ employees and including
a proportionate share of employees within joint venture entities, for continuing
operations was:
Thousands
By business segment
Platinum
Coal
Base Metals
Ferrous Metals and Industries
Industrial Minerals
Corporate Activities
Continuing operations
2007
2006(1)
53
12
10
13
11
1
100
44
10
8
37
13
1
113
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations. Amounts
relating to discontinued operations are disclosed in note 33. Average number of employees, excluding
associates’ employees and including a proportionate share of employees within joint venture entities,
for continuing and discontinued operations was 116,000 (2006: 162,000).
The average number of employees for continuing operations by principal location
of employment was:
Thousands
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Continuing operations
2007
76
1
11
1
7
4
100
2006(1)
77
14
12
–
6
4
113
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
Payroll costs in respect of the employees included in the tables above were:
Disclosure of directors’ emoluments, pension entitlements, share options and long
term incentive plan awards required by the Companies Act 1985 and those specified
for audit by the Directors’ Remuneration Report Regulations 2002 are included in the
Remuneration report.
7. Special items and remeasurements
‘Special items’ are those items of financial performance that the Group believes
should be separately disclosed on the face of the income statement to assist in the
understanding of the underlying financial performance achieved by the Group and its
businesses. Such items are material by nature or amount to the year’s results and
require separate disclosure in accordance with IAS 1 paragraph 86. Special items that
relate to the operating performance of the Group are classified as operating special
items and include impairment charges and reversals and other exceptional items,
including significant legal provisions. Non-operating special items include profits and
losses on disposals of investments and businesses.
Remeasurements comprise other items which the Group believes should be reported
separately to aid an understanding of the underlying performance of the Group.
This category includes (i) unrealised gains and losses on ‘non-hedge’ derivative
instruments open at year end (in respect of future transactions) and the reversal
of the historical marked to market value of such instruments settled in the year.
The full realised gains or losses are recorded in underlying earnings in the same
year as the underlying transaction for which such instruments provide an economic,
but not formally designated, hedge and (ii) foreign exchange gains and losses
arising on the retranslation of dollar denominated De Beers preference shares
held by a rand functional currency subsidiary of the Group. Remeasurements are
defined as operating, non-operating or financing according to the nature of the
underlying exposure.
Subsidiaries and joint ventures’ special items and remeasurements
Operating special items
US$ million
Impairment of Coal Australia assets
Costs associated with proposed sale of Tarmac
Impairment of Tarmac assets and restructuring costs
Impairment of Yang Quarry
Impairment and closure costs of Dartbrook
Other
Total operating special items – continuing operations
Tax
Minority interests
Net total attributable to equity shareholders of the Company
– continuing operations
2007
(153)
(55)
(43)
–
–
–
(251)
60
–
2006
–
–
(250)
(28)
(125)
(21)
(424)
88
1
(191)
(335)
US$ million
Wages and salaries
Social security costs
Post retirement healthcare costs
Defined contribution pension plan costs
Defined benefit pension plan costs
Share-based payments
Continuing operations
2007
3,145
158
13
180
57
138
3,691
2006(1)
2,955
142
6
170
56
182
3,511
Operating special items relate principally to impairment, restructuring and
closure costs.
Anglo Coal has recorded an impairment of $153 million against certain Australian
operations to reflect the latest commercial and operational conditions relating to
those operations. The impairment brings the carrying value in line with value in use.
Value in use was determined using discounted cash flow models (with a discount
rate of 6%).
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations. Amounts
relating to discontinued operations are disclosed in note 33. Total payroll costs, including discontinued
operations, were $4,266 million (2006: $4,860 million).
In accordance with IAS 24 Related Party Disclosures, key management personnel
are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including any director
(executive and non-executive) of the Group.
Operating remeasurements
US$ million
Unrealised net gains on non-hedge derivatives
Tax
Net total attributable to equity shareholders of the Company
– continuing operations
2007
5
(1)
2006
18
–
4
18
Compensation for key management was as follows:
US$ million
Salaries and short term employee benefits
Post employment benefits
Termination benefits
National insurance and social security
Share-based payments
Continuing operations
2007
28
4
4
6
9
51
2006
19
7
–
3
10
39
Key management includes members of the Board, the Chief Executive’s Committee
(CeCom) and business unit heads.
100 | Anglo American plc Annual Report 2007
Financial
statements
Notes to the financial statements continued
7. Special items and remeasurements continued
Profits and (losses) on disposals
US$ million
Part disposal of Exxaro (formerly Kumba Resources)
Disposal of remaining interest in Highveld(1)
Part disposal of AngloGold Ashanti
Tongaat-Hulett and Hulamin BBBEE transactions(1)
Tarmac land sales
Disposal of Boschendal Phase II
Part disposal of Kumba non-iron ore(1)
Bakgatla-Ba-Kgafela BEE transaction(1)
Part disposal of Western Areas
Disposal of mineral rights – Anglo American Brazil
Disposal of interests in Eyesizwe
Disposal of Ferroveld joint venture
Other
Net profit on disposals – continuing operations(2)
Tax
Minority interests
Net total attributable to equity shareholders of the Company
– continuing operations
(1) See Disposals and demerger of subsidiaries and businesses note 35.
2007
234
140
67
(68)
25
21
–
–
–
–
–
–
41
460
(71)
34
2006
–
301
–
–
–
–
(52)
(84)
31
14
17
13
25
265
(8)
7
423
264
Associates’ special items and remeasurements
Associates’ operating special items and remeasurements
US$ million
Impairment of De Beers’ Canadian assets
Share of De Beers’ restructuring costs
Share of De Beers’ class action payment and related costs
Unrealised net (losses)/gains on non-hedge derivatives
Other impairments
Total operating special items and remeasurements –
continuing operations
2007
(434)
(15)
(5)
(3)
(8)
2006
–
–
(25)
17
(9)
(465)
(17)
In accordance with an amended valuation methodology, De Beers now conducts
impairment reviews at a producing country level. This has been necessitated by
changes in the distribution model whereby a proportion of De Beers’ sales are now
conducted in those producing countries.
Due to a combination of the strengthening of the Canadian dollar against the US
dollar during 2007, revised long term crude oil prices, labour cost pressures and the
effect of previously reported capital expenditure overruns at Snap Lake, De Beers has
recorded an impairment of $965 million (attributable share $434 million) in respect
of its Canadian asset portfolio. The impairment brings the carrying value of the
Canadian asset portfolio in line with fair value (less costs to sell), determined using
discounted cash flow techniques.
(2) Includes associated IFRS 2 charges on BBBEE and BEE transactions of $68 million (2006: $34 million).
In April 2007, the Group sold 19.0 million shares in Exxaro, generating a profit
on disposal of $68 million. A number of the shares sold were subject to an option
granted by the Group to Exxaro, whereby Exxaro could buy back 10.0 million shares
at a discount to market value. The remaining shares were sold at a market related
price. On 5 and 6 September 2007, the Group sold a further 29.5 million shares,
generating a total profit on disposal of Exxaro shares for the year of $234 million.
In May 2007, the Group disposed of the remaining 29.2% shareholding in Highveld
to the Evraz Group SA for $238 million. As such the Group has recorded a profit
on disposal of $140 million.
On 25 October 2007, the Group sold 2.0 million shares in AngloGold Ashanti,
generating a profit on disposal of $67 million. At 31 December 2007, the Group’s
shareholding in AngloGold Ashanti was 16.6%. Details of the sale of AngloGold
Ashanti shares on 2 October 2007 (which reduced the Group’s shareholding in
AngloGold Ashanti from 41.6% to 17.3%) are included in note 35.
The introduction of broad based black economic empowerment (BBBEE) credentials
into the Tongaat-Hulett Group and Hulamin resulted in the recognition of a
$68 million associated share-based payment charge which arose on the transaction.
Financing special items
US$ million
Financing special items
Net total attributable to equity shareholders of the Company
– continuing operations
2007
–
2006
(4)
–
(4)
Financing remeasurements
US$ million
Foreign exchange (loss)/gain on De Beers preference shares
Unrealised net gains on non-hedge derivatives
Total financing remeasurements – continuing operations
Tax
Net total attributable to equity shareholders of the Company
– continuing operations
2007
(3)
32
29
(5)
2006
40
3
43
–
24
43
The Group holds US dollar preference shares issued by De Beers which are held in a
rand functional currency subsidiary of the Group. These shares are classified as financial
asset investments and are retranslated at each period end. As a result, a loss of
$3 million (2006: $40 million gain) has been included in financing remeasurements.
Total special items and remeasurements – continuing operations
US$ million
Total special items and remeasurements before
tax and minority interests – continuing operations
Tax
Minority interests
Net total special items and remeasurements attributable
to equity shareholders of the Company – continuing operations
2007
2006
243
(17)
34
(102)
80
8
260
(14)
Associates’ profits on disposals
US$ million
Disposal of interests in Acerinox
Disposal of interest in Gope Exploration Company
Gain on partial sale of De Beers Consolidated Mines
Disposal of Fort à la Corne
Other
Net profit on disposals – continuing operations
2007
12
8
–
–
4
24
2006
–
–
103
69
10
182
During the year Samancor Holdings disposed of its shareholding in Acerinox,
generating a gain of $12 million. On 16 April 2007, De Beers concluded an
agreement of sale in respect of its interest in Gope Exploration Company which
resulted in a profit on disposal of $17 million (attributable share $8 million).
Associates’ financing remeasurements
US$ million
Unrealised net (losses)/gains on non-hedge derivatives
Total financing remeasurements – continuing operations
2007
(4)
(4)
2006
1
1
Total associates’ special items and remeasurements – continuing operations
US$ million
Total associates’ special items and remeasurements before
tax and minority interests – continuing operations
Tax
Net total associates’ special items and remeasurements
– continuing operations
2007
2006
(445)
2
166
(22)
(443)
144
Operating special items and remeasurements – continuing operations
US$ million
Operating special items
Operating remeasurements
Total operating special items and remeasurements
(excluding associates) – continuing operations
Associates’ operating special items
Associates’ operating remeasurements
Total associates’ operating special items and remeasurements
– continuing operations
Total operating special items and remeasurements
(including associates) – continuing operations
Operating special items (including associates)
Operating remeasurements (including associates)
Total operating special items and remeasurements
(including associates) – continuing operations
2007
(251)
5
2006
(424)
18
(246)
(406)
(462)
(3)
(34)
17
(465)
(17)
(711)
(423)
(713)
2
(458)
35
(711)
(423)
The above tables relate to continuing operations only. Refer to note 33 for an
analysis of special items and remeasurements for discontinued operations.
Anglo American plc Annual Report 2007 |
101
Financial
statements
Notes to the financial statements continued
8. Net finance costs
Finance costs and exchange gains/(losses) are presented net of effective cash flow
hedges for respective interest bearing and foreign currency borrowings. Fair value
gains/(losses) on derivatives, presented below, include the mark to market value
changes of interest rate and currency derivatives designated as fair value hedges,
net of fair value changes in the associated hedged risk; and fair value changes of
non-hedge derivatives of non-operating items.
Before special
items and
After special
items and
remeasurements remeasurements remeasurements remeasurements
Before special
items and
After special
items and
US$ million
Investment income
Interest and other
financial income
Expected return on defined
benefit arrangements
Foreign exchange gains
Dividend income from
financial asset investments
Fair value gains on derivatives
Other fair value gains
Total investment income
– continuing operations
Interest expense
Amortisation discount
relating to provisions
Interest and other
finance expense
Unwinding of discount on
convertible bonds
Interest on defined benefit
arrangements
Foreign exchange losses
Dividend on redeemable
preference shares
Fair value losses on derivatives
Other fair value losses
Less: interest capitalised
Total interest expense
– continuing operations
Net finance costs
– continuing operations
2007
2007
2006(1)
2006(1)
323
257
68
36
–
–
323
257
68
36
34
24
266
234
38
13
–
8
266
234
78
13
10
8
684
742
559
609
(36)
(36)
(30)
(30)
(565)
(565)
(378)
(378)
–
–
(4)
(4)
(229)
(9)
(9)
(1)
(14)
(863)
42
(229)
(12)
(9)
(22)
(19)
(892)
42
(226)
(19)
(22)
(2)
–
(681)
12
(226)
(20)
(22)
(8)
(4)
(692)
12
(821)
(850)
(669)
(680)
(137)
(108)
(110)
(71)
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
The weighted average interest rate applicable to interest on general borrowings
capitalised for continuing operations was 11.4% (2006: 7.8%). Financing special
items and remeasurements are set out in note 7.
Financial instrument gains and losses
9.
The net gains and losses recorded in the Consolidated income statement, for the total
Group, in respect of financial instruments were as follows:
US$ million
At fair value through profit and loss
Cash flow hedge derivatives(1)
Fair value hedge derivatives
Fair value hedge underlying instruments
Other fair value movements
Loans and receivables
Foreign exchange
Interest income at amortised cost
Available for sale
Net gain transferred on sale
Other financial liabilities
Foreign exchange
Interest expense at amortised cost
2007
2006
(315)
(10)
4
198
(148)
(43)
39
460
108
308
87
218
298
27
(152)
(565)
(210)
(328)
(1) Gains and losses on derivative instruments designated in cash flow hedge relationships which have been
realised in the year have been recorded in Group revenue (2006: Group revenue).
102 | Anglo American plc Annual Report 2007
10. Tax on profit on ordinary activities
a) Analysis of charge for the year from continuing operations
US$ million
United Kingdom corporation tax at 30%
South Africa tax
Other overseas tax
Current tax (excluding tax on special items
and remeasurements)
Total deferred tax (excluding tax on special items
and remeasurements)
Total tax (excluding tax on special items and remeasurements)
Tax on special items and remeasurements
Total tax charge – continuing operations
2007
145
830
1,258
2006 (1)
37
878
1,403
2,233
2,318
443
2,676
17
2,693
280
2,598
(80)
2,518
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
b) Factors affecting tax charge for the year
The effective tax rate for the year of 30.5% (2006: 29.8%) is marginally higher than
the standard rate of corporation tax in the United Kingdom (30%). The differences
are explained below:
US$ million
Profit on ordinary activities before tax
– continuing operations
Tax on profit on ordinary activities calculated at
United Kingdom corporation tax rate of 30%
2007
2006 (1)
8,821
8,443
2,646
2,533
Tax effect of share of net income from associates
(59)
(182)
Tax effects of:
Expenses not deductible for tax purposes
Operating special items and remeasurements
Exploration expenditure
Other non-deductible expenses
Non-taxable income
Profits and losses on disposals and financing remeasurements
Other non-taxable income
Temporary difference adjustments
Changes in tax rates
Movements in tax losses
Enhanced tax depreciation
Other temporary differences
Other adjustments
South African secondary tax on companies
Effect of differences between local and UK rates
Other adjustments
Tax charge for the year – continuing operations
15
19
85
(71)
(41)
12
13
(91)
(14)
34
17
86
(83)
(48)
–
(86)
–
(9)
175
(48)
52
2,693
227
69
(40)
2,518
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
IAS 1 requires income from associates to be presented net of tax on the face of the
income statement. The associates’ tax is therefore not included within the Group’s
total tax charge. Associates’ tax included within ‘Share of net income from associates’
for the year ended 31 December 2007 is $303 million (2006: $300 million).
Excluding special items and remeasurements this becomes $305 million
(2006: $278 million).
The effective rate of tax before special items and remeasurements including share of
associates’ tax for the year ended 31 December 2007 was 31.8%. This was a decrease
from the equivalent effective rate of 33.0% in the year ended 31 December 2006.
The main reasons for this net decrease are reduced levels of tax on distributions,
changes in statutory tax rates, prior year adjustments and the availability of enhanced
tax depreciation on certain assets. In future periods it is expected that the effective tax
rate, including associates’ tax, will remain at or above the UK statutory tax rate.
11. Dividends
US$ million
Final ordinary paid – 75 US cents per ordinary share
(2006: 62 US cents)
Final special paid – nil (2006: 33 US cents)
Interim ordinary paid – 38 US cents per ordinary share
(2006: 33 US cents)
Interim dividend paid – in specie(1)
Interim special paid – nil (2006: 67 US cents)
2007
2006
1,058
–
469
3,718
–
5,245
918
488
473
–
960
2,839
(1) In specie dividend relates to the Mondi demerger. See Disposals and demerger of subsidiaries and
businesses note 35.
The directors are proposing a final dividend in respect of the financial year ending
31 December 2007 of 86 US cents per share. Based on shares eligible for dividends
at 31 December 2007, this will result in an estimated distribution of $1,031 million of
shareholders’ funds. These financial statements do not reflect this dividend payable as
it is still subject to shareholder approval.
As stated in note 29, the employee benefit trust has waived the right to receive
dividends on the shares it holds although the waiver was temporarily suspended in
respect of the Mondi demerger dividend in specie. Immediately after the dividend was
paid, the waiver was reinstated.
12. Earnings per share
2007
2006
Continuing Discontinued
operations
operations Group operations
Total Continuing Discontinued
Total
operations Group
US$
Profit for the financial year
attributable to equity
shareholders of the Company
Basic earnings per share
Diluted earnings per share
Headline earnings for the
financial year(1)
Basic earnings per share
Diluted earnings per share
Underlying earnings for the
financial year(1)
Basic earnings per share
Diluted earnings per share
4.04
3.99
1.54
1.51
5.58
5.50
3.51
3.43
0.70
0.69
4.21
4.12
4.10
4.04
0.08
0.08
4.18
4.12
3.42
3.34
0.15
0.15
3.57(2)
3.49(2)
4.18
4.13
0.22
0.21
4.40
4.34
3.42
3.34
0.31
0.30
3.73
3.64
(1) Basic and diluted earnings per share are shown based on headline earnings, a Johannesburg Stock
Exchange Limited defined performance measure, and underlying earnings, which the directors believe
to be a useful additional measure of the Group’s performance. Both earnings measures are further
explained below.
(2) Comparatives have been adjusted to comply with revised guidance on headline earnings.
Financial
statements
The weighted average number of ordinary shares, and accordingly earnings per share,
of the Group have been impacted by the effect of the share buyback programme
as well as the Anglo American share consolidation which on 2 July 2007 resulted
in 100 existing Anglo American ordinary shares being exchanged for 91 new Anglo
American ordinary shares.
‘Underlying earnings’ is an alternative earnings measure, which the directors believe
provides a clearer picture of the underlying financial performance of the Group’s
operations. Underlying earnings is presented after minority interests and excludes
special items and remeasurements (see note 7). Underlying earnings is distinct
from ‘Headline earnings’, which is a Johannesburg Stock Exchange Limited defined
performance measure.
The calculation of basic and diluted earnings per share for continuing operations,
based on headline and underlying earnings for continuing operations, uses the
following earnings data:
Continuing operations
Profit for the financial year attributable
to equity shareholders of the Company –
continuing operations
Operating special items
Operating special items – tax
Operating special items – minority interests
Financing special items
Net profit on disposals(2)
Net profit on disposals – tax
Net profit on disposals – minority interests
Associates’ special items
Associates’ special items – tax
Headline earnings for the financial year
– continuing operations
Operating special items(3)
Operating special items – tax
Operating remeasurements
Operating remeasurements – tax
Financing remeasurements
Financing remeasurements – tax
Associates’ remeasurements
Associates’ special items(4)
Associates’ special items – tax
IFRS 2 charges on BBBEE and BEE transactions
Underlying earnings for the financial year
– continuing operations
Earnings
(US$ million)
Basic earnings
per share (US$)
2007
2006(1)
2007
2006(1)
5,294
196
(54)
–
–
(528)
71
(34)
418
–
5,363
55
(6)
(5)
1
(29)
5
7
20
(2)
68
5,149
409
(86)
(1)
4
(299)
8
(7)
(182)
22
5,017
15
(2)
(18)
–
(43)
–
(18)
34
–
34
4.04
0.15
(0.04)
–
–
(0.40)
0.05
(0.02)
0.32
–
4.10
0.04
–
–
–
(0.02)
–
–
0.01
–
0.05
3.51
0.28
(0.06)
–
–
(0.20)
–
–
(0.12)
0.01
3.42
0.01
–
(0.01)
–
(0.03)
–
(0.01)
0.02
–
0.02
5,477
5,019
4.18
3.42
The calculation of the basic and diluted earnings per share is based on the following data:
(1) Comparatives have been reclassified to comply with revised guidance on headline earnings.
2007
2006
Continuing Discontinued
operations
operations Group operations
Total Continuing Discontinued
Total
operations Group
(2) Excluding associated IFRS 2 charges on BBBEE and BEE transactions.
(3) Includes costs associated with proposed sale of Tarmac and restructuring costs.
(4) Includes restructuring costs and legal settlements.
US$ million
(unless otherwise stated)
Earnings
Basic earnings, being profit
for the financial year
attributable to equity
shareholders of the Company 5,294
Effect of dilutive potential
ordinary shares
Interest on convertible
bonds (net of tax)
Unwinding of discount
on convertible bonds
(net of tax)
Diluted earnings
Number of shares (million)
Basic number of ordinary
shares outstanding(1)
Effect of dilutive potential
ordinary shares(2)
Share options
Convertible bonds
Diluted number of ordinary
shares outstanding(1)
–
5,294
–
2,010
7,304
5,149
1,037
6,186
–
–
4
–
4
–
2,010
–
7,304
3
5,156
–
1,037
3
6,193
1,309
18
–
1,327
1,468
23
13
1,504
(1) Basic and diluted number of ordinary shares outstanding represent the weighted average for the year.
The average number of ordinary shares in issue excludes the shares held by the employee benefit trusts
and other Anglo American shares held by the Group.
(2) Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares
in issue on the assumption of conversion of all potentially dilutive ordinary shares. All outstanding share
options and awards are potentially dilutive and have been included in the calculation of diluted earnings
per share. No instruments are anti-dilutive for the year ended 31 December 2007 (2006: nil).
Anglo American plc Annual Report 2007 |
103
Financial
statements
Notes to the financial statements continued
12. Earnings per share continued
The calculation of basic and diluted earnings per share for discontinued operations,
based on headline and underlying earnings for discontinued operations, uses the
following earnings data:
Discontinued operations
Profit for the financial year attributable
to equity shareholders of the Company –
discontinued operations
Operating special items
Operating special items – tax
Operating special items – minority interests
Financing special items
Financing special items – tax
Net profit on disposals
Net profit on disposals – tax
Associates’ special items
Associates’ special items – tax
Headline earnings for the financial year
– discontinued operations
Operating remeasurements
Operating remeasurements – tax
Operating remeasurements – minority interests
Financing remeasurements
Financing remeasurements – tax
Financing remeasurements – minority interests
Associates’ remeasurements
Associates’ remeasurements – tax
Underlying earnings for the financial year
– discontinued operations
Earnings
(US$ million)
Basic earnings
per share (US$)
2007
2006
2007
2006
2,010
13
(2)
–
2
(8)
(2,079)
165
1
2
104
(3)
1
–
(2)
–
–
204
(20)
1,037
100
(26)
(1)
–
–
(903)
24
(13)
3
221
362
(42)
(159)
39
1
(21)
77
(26)
1.54
0.01
–
–
–
(0.01)
(1.59)
0.13
–
–
0.08
–
–
–
–
–
–
0.16
(0.02)
0.70
0.07
(0.02)
–
–
–
(0.62)
0.02
–
–
0.15
0.25
(0.03)
(0.11)
0.03
–
(0.01)
0.05
(0.02)
284
452
0.22
0.31
13. Intangible assets
2007
2006
Licences
and other
Licences
and other
intangibles Goodwill(1)
Total intangibles Goodwill(1)
Total
US$ million
Cost
At 1 January
Acquired through business
combinations
Additions
Impairments
Transfer to assets held for sale
Disposal of assets
Disposal and demerger
of businesses(2)
Reclassifications
Currency movements
At 31 December
Accumulated amortisation
At 1 January
Charge for the year(3)
Transfer to assets held for sale
Disposal and demerger
of businesses(2)
Currency movements
At 31 December
Net book value
88
2,101
2,189
139
2,514
2,653
–
3
–
–
–
51
6
–
–
(2)
51
9
–
–
(2)
(78)
–
2
15
(633)
–
23
1,546
(711)
–
25
1,561
55
5
–
–
–
–
55
5
–
(57)
2
5
10
–
–
–
1,546
(57)
2
5
1,556
4
9
–
(13)
(1)
(49)
3
(4)
88
81
7
(3)
(24)
(6)
55
33
41
–
(21)
(6)
–
45
9
(21)
(19)
(1)
(562)
(8)
143
2,101
(611)
(5)
139
2,189
–
–
–
81
7
(3)
–
–
–
2,101
(24)
(6)
55
2,134
(1) The goodwill balances provided are net of cumulative impairment charges of $45 million as at
31 December 2007 (2006: $45 million).
(2) Includes cost of $711 million and accumulated amortisation of $55 million relating to the demerger
of Mondi in 2007. Includes cost of $604 million and accumulated amortisation of $24 million which
were transferred to ‘Investments in associates’ in 2006.
(3) Includes amounts in respect of discontinued operations of $3 million (2006: $6 million).
The increase in goodwill relating to acquisition of subsidiaries represents the excess
of fair value of the purchase price over the fair value of the net assets, including
mining reserves, of businesses acquired. Further detail is given in note 34.
104 | Anglo American plc Annual Report 2007
Impairment tests for goodwill
a)
Goodwill is allocated for impairment testing purposes to cash generating units (CGU)
which reflect how it is monitored for internal management purposes. This allocation
largely represents the Group’s primary reporting segments set out below. Any goodwill
associated with CGU subsumed within these primary segments is not significant when
compared to the goodwill of the Group, other than in Paper and Packaging where the
goodwill associated with CGU subsumed within the primary segment is split out below.
US$ million
Platinum
Coal
Base Metals
Ferrous Metals and Industries
Industrial Minerals
Paper and Packaging
Mondi Business Paper
Mondi Packaging
Mondi – other
2007
230
88
162
75
991
2006
230
88
157
16
970
–
–
–
1,546
49
552
39
2,101
The recoverable amount of a CGU is determined based on a fair value or value in use
calculation as appropriate. Value in use calculations use cash flow projections based on
financial budgets and life of mine or non-mine production plans covering a five year period
that are based on latest forecasts for commodity prices and exchange rates. Cash flow
projections beyond five years are based on life of mine plans where applicable and internal
management forecasts and assume constant long term real prices for sales revenue.
Cash flow projections are discounted using pre-tax discount rates equivalent to a
real post tax discount rate of 6%, that have been adjusted for any risks that are not
reflected in the underlying cash flows. Where the recoverability of goodwill allocated
to CGU is supported by fair value less costs to sell, market observable data (in the
case of listed subsidiaries, market share price at 31 December of the respective listed
entity) or detailed cash flow models are used.
Expected future cash flows are inherently uncertain and could materially change over
time. They are significantly affected by a number of factors including reserves and
production estimates, together with economic factors such as commodity prices,
discount rates, currency exchange rates, estimates of costs to produce reserves
and future capital expenditure. Management believes that any reasonably possible
change in the key assumptions on which the recoverable amount is based would not
cause the carrying amounts to exceed their recoverable amounts.
14. Tangible assets
Mining
properties Land and Plant and
buildings equipment
and leases
Other(1)
Total
US$ million
Cost
At 1 January 2007
Additions
Acquired through business
combinations
Transfer to assets held for sale
Disposal of assets
Disposal and demerger of businesses(2)
Reclassifications(3)
Currency movements
At 31 December 2007
Accumulated depreciation
At 1 January 2007
Charge for the year (4)
Impairments(5)
Transfer to assets held for sale
Disposal of assets
Disposal and demerger of businesses(2)
Reclassifications
Currency movements
At 31 December 2007
Net book value
At 31 December 2007
At 31 December 2006
9,250
98
3,833 19,400
379
56
3,481 35,964
4,129
3,596
2,855
(89)
(12)
–
228
322
12,652
21
(19)
(29)
53
(67)
(273)
(1,836) (8,003)
817
596
2,256 12,902
116
114
34
(152)
(20)
2,963
(327)
(334)
(692) (10,531)
67
1,242
5,363 33,173
(1,094)
210
2,136
323
162
(30)
(7)
–
–
68
2,652
114
2
(10)
(13)
1,151 8,901
1,139
31
(33)
(245)
(627) (3,948)
(23)
304
6,126
–
36
653
51
8
(2)
(18)
278 12,466
1,627
203
(75)
(283)
(153) (4,728)
–
429
9,639
23
21
208
10,000
7,114
1,603
6,776
2,682 10,499
5,155 23,534
3,203 23,498
(1) Other tangible assets include $4,850 million (2006: $3,002 million) of assets in the course of
construction, which are not depreciated.
(2) Includes cost of $9,242 million and accumulated depreciation of $4,381 million relating to the demerger
of Mondi.
(3) Relates mainly to amounts transferred from assets in the course of construction and reclassification of
asset values upon finalisation of Peace River Coal acquisition accounting.
(4) Includes amounts in respect of discontinued operations of $231 million.
(5) Includes amounts in respect of discontinued operations of $5 million.
14. Tangible assets continued
Biological assets comprise:
Financial
statements
Mining
properties Land and Plant and
buildings equipment
and leases
Other(1)
Total
18,942
292
3,955 18,607
648
83
2,595 44,099
3,702
2,679
US$ million
Mature
Immature
Forest Agriculture
2
1
3
–
–
–
2007
Total
2
1
3
Forest Agriculture
16
137
17
154
33
291
2006
Total
153
171
324
US$ million
Cost
At 1 January 2006
Additions
Acquired through business
combinations
Transfer to assets held for sale
Disposal of assets
Disposal of businesses(2)
Reclassifications
Currency movements
At 31 December 2006
Accumulated depreciation
At 1 January 2006
Charge for the year(3)
Impairments(4)
Transfer to assets held for sale
Disposal of assets
Disposal of businesses(2)
Reclassifications
Currency movements
At 31 December 2006
Net book value
At 31 December 2006
At 31 December 2005
2
(498)
(28)
(9,672)
294
(82)
9,250
4,542
507
133
(76)
(12)
(3,038)
48
32
2,136
46
157
(221) (1,180)
(301)
(34)
(52)
(64)
(76) 1,243
290
132
3,833 19,400
935
140
115
(41)
(25)
(7)
(23)
57
1,151
7,582
1,288
214
(177)
(257)
(33)
1
283
8,901
52
257
(237) (2,136)
(487)
(124)
(1) (9,789)
33
285
3,481 35,964
(1,428)
(55)
94
17
5
(60)
244 13,303
2,029
479
(289)
(354)
(1) (3,079)
–
377
278 12,466
(26)
5
7,114
14,400
2,682 10,499
3,020 11,025
3,203 23,498
2,351 30,796
(1) Other tangible assets include $3,002 million of properties in the course of construction, which are not
depreciated.
(2) Includes cost of $9,085 million and accumulated depreciation of $3,012 million which were transferred
to ‘Investments in associates’.
(3) Includes amounts in respect of discontinued operations of $616 million.
(4) Includes amounts in respect of discontinued operations of $104 million.
Included in the additions above is $42 million of interest (2006: $16 million) incurred
on qualifying assets which has been capitalised during the year. Aggregate interest
capitalised included in the cost above totals $138 million (2006: $277 million).
The net book value and depreciation charges relating to assets held under finance
leases comprise:
US$ million
Mining properties and leases
Land and buildings
Plant and equipment
Other
Net book
value
18
44
17
1
80
2007
Depreciation
2
13
3
–
18
Net book
value
19
61
51
1
132
2006
Depreciation
2
6
6
–
14
The net book value of land and buildings comprises:
US$ million
Freehold
Leasehold – long
Leasehold – short (less than 50 years)
2007
1,536
51
16
1,603
2006
2,619
60
3
2,682
15. Biological assets
US$ million
At 1 January
Capitalised expenditure
Harvesting
Fair value adjustments(1)
Disposal of assets
Disposal and demerger
of businesses
Transfer to assets held for sale
Currency movements
At 31 December
Forest Agriculture
33
291
11
26
(1)
(35)
16
17
–
–
2007
Total
324
37
(36)
33
–
Forest Agriculture
33
317
1
63
–
(72)
7
47
(1)
(1)
(297)
–
(2)
–
(55)
–
(1)
3
(352)
–
(3)
3
(18)
(16)
(29)
291
(2)
–
(5)
33
2006
Total
350
64
(72)
54
(2)
(20)
(16)
(34)
324
(1) Includes amounts in respect of forest assets for discontinued operations of $17 million (2006: $47
million).
16. Environmental rehabilitation trusts
The Group makes voluntary contributions to controlled funds that were established
to meet the cost of some of its decommissioning, restoration and environmental
rehabilitation liabilities in South Africa.
US$ million
At 1 January
Contributions made
Interest earned
Disposal and demerger of businesses(1)
Transfer to assets held for sale
Currency movements
At 31 December
(1) Relates entirely to amounts transferred to ‘Investments in associates’.
The funds comprise the following investments:
US$ million
Equity
Bonds
Cash
2007
197
37
12
–
(2)
8
252
2006
288
26
26
(101)
(28)
(14)
197
2007
19
85
148
252
2006
16
51
130
197
These assets are primarily rand denominated. Cash is held in short term fixed
deposits or earns interest at floating inter-bank rates and bonds earn interest at a
weighted average fixed rate of 11% (2006: 11%) and are fixed for an average period
of 9.5 years (2006: 9.0 years). These assets are recorded ‘at fair value through
profit and loss’.
These funds are not available for the general purposes of the Group. All income
from these assets is reinvested to meet specific environmental obligations. These
obligations are included in environmental rehabilitation costs under non-current
provisions (see note 26).
17. Investments in associates
US$ million
At 1 January
Net income from associates(1)
Dividends received(2)
Other equity movements
Share of cash injection from associates’ share issues
Transfer to assets held for sale
Transfer to financial asset investments
Movement on cash flow hedge reserves
Movement on available for sale reserves
Reversal of impairment
Actuarial (loss)/gain on post retirement benefits
Acquired
Disposed
Other capital distributions
Transfer from subsidiary
Repayments of capitalised loans(3)
Currency movements
At 31 December(4)
2007
4,780
107
(327)
31
–
(74)
(606)
12
10
1
(6)
2
(957)
(32)
393
(44)
51
3,341
2006
3,165
685
(276)
(23)
225
(64)
–
(24)
–
–
3
11
(40)
–
1,451
(219)
(114)
4,780
(1) Includes loss in respect of discontinued operations of $90 million (2006: $78 million profit).
(2) Dividends received include $52 million (2006: $35 million) relating to discontinued operations.
(3) Excludes the $43 million (2006: $175 million) redemption by De Beers of preference shares included
within financial asset investments.
(4) The fair value of the investments in Tongaat-Hulett and Hulamin at 31 December 2007 are $667 million
and $292 million respectively based on the closing share prices. With effect from 30 June 2007 the
Group began accounting for these investments as associates under the equity method. The fair value
of the investment in AngloGold Ashanti at 31 December 2006 was $5,420 million based on the closing
share price. With effect from 2 October 2007 it was transferred to a financial asset investment.
Anglo American plc Annual Report 2007 |
105
Financial
statements
Notes to the financial statements continued
17. Investments in associates continued
The Group’s total investments in associates comprise:
US$ million
Equity(1)
Loans(2)
Total investments in associates
2007
2,968
373
3,341
2006
4,369
411
4,780
(1) Investments in associates at 31 December 2007 include $377 million of goodwill (2006: $515 million).
(2) The Group’s total investments in associates include long term debt interests which in substance form
part of the Group’s net investments. These loans are not repayable in the foreseeable future.
The Group’s share of the summarised financial information of associates is as
follows:
US$ million
Total non-current assets
Total current assets
Total current liabilities
Total non-current liabilities
Group’s share of associates’ net assets
Revenue
Operating costs
Net profit on disposals
Financing remeasurements
Net finance costs
Income tax expense
Minority interests
Group’s share of associates’ net income – continuing operations
Revenue
Operating costs
Net profit on disposals
Financing remeasurements
Net finance costs
Income tax expense
Minority interests
Group’s share of associates’ net income – discontinued operations
Group’s share of associates’ net income – total Group
2006
2007
7,919
5,734
1,864
2,715
(1,254) (1,961)
(3,003) (3,893)
4,780
3,341
5,089
4,413
(4,482) (3,590)
182
24
1
(4)
(70)
(85)
(300)
(303)
(29)
(42)
607
197
1,053
1,152
(1,072) (1,008)
17
25
(31)
(68)
(9)
78
685
7
13
(30)
(51)
(10)
(90)
107
Segmental information is provided for primary and secondary reporting segments
as follows:
US$ million
By business segment
Platinum
Diamonds
Coal
Ferrous Metals and Industries
Industrial Minerals
Total continuing operations
Gold
Paper and Packaging
Total discontinued operations
Total Group
US$ million
By geographical segment
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Net income
Aggregate
investment
2007
2006
2007
2006
38
(229)
190
198
–
197
(92)
2
(90)
107
40
337
185
44
1
607
72
6
78
685
57
1,802
702
778
2
3,341
–
–
–
3,341
135
2,062
647
302
2
3,148
1,623
9
1,632
4,780
Aggregate
investment
2007
2006
1,704
677
98
36
641
185
3,341
1,860
1,442
(126)
549
687
368
4,780
18. Joint ventures
The Group’s share of the summarised financial information of joint venture entities
that is proportionately consolidated in the Group financial statements is as follows:
US$ million
Total non-current assets
Total current assets
Total current liabilities
Total non-current liabilities
Group’s share of joint venture entities’ net assets
Revenue
Operating costs
Net finance costs
Income tax expense
Total continuing operations
Revenue
Operating costs
Net finance costs
Income tax expense
Total discontinued operations
Group’s share of joint venture entities’ profit for the financial year
2007
3,148
999
(358)
(2,862)
927
1,631
(601)
7
(189)
848
113
(96)
(4)
(4)
9
857
2006
1,296
455
(315)
(681)
755
1,640
(643)
(12)
(187)
798
311
(240)
(10)
(22)
39
837
The Group’s share of joint venture entities’ contingent liabilities incurred jointly with
other venturers is $132 million (2006: nil) and its share of capital commitments
is $457 million (2006: nil).
Details of principal joint ventures are set out in note 41.
19. Financial asset investments
US$ million
At 1 January 2007
Additions
Interest receivable
Net advances
Disposals
Disposal and demerger of businesses(1)
Transfer from investments in associates
Retained investment in Mondi
Movements in fair value
Other movements
Reclassifications
Currency movements
At 31 December 2007(2)
Less: non-current portion
Current portion
Available
for sale
Loans and
receivables investments
1,569
42
–
–
(540)
(79)
606
318
2,326
–
(395)
(5)
3,842
3,842
–
404
–
59
53
–
(12)
–
–
–
1
410
23
938
938
–
(1) See Disposal and demerger of subsidiaries and businesses note 35.
(2) Principally includes investments in AngloGold Ashanti, Exxaro and Shenhua Energy.
US$ million
At 1 January 2006
Additions
Impairments
Net repayments
Disposals
Disposal of businesses(1)
Transfer from subsidiary(2)
Transfer to assets held for sale
Movements in fair value(3)
Reclassifications
Currency movements
At 31 December 2006
Less: non-current portion
Current portion
Available
for sale
Loans and
receivables investments
377
453
(13)
–
(88)
(9)
370
(36)
492
(25)
48
1,569
1,569
–
538
–
–
(130)
–
(12)
–
(15)
–
27
(4)
404
404
–
Total
1,973
42
59
53
(540)
(91)
606
318
2,326
1
15
18
4,780
4,780
–
Total
915
453
(13)
(130)
(88)
(21)
370
(51)
492
2
44
1,973
1,973
–
The Group’s share of associates’ contingent liabilities incurred jointly by investors
is $190 million (2006: $158 million).
(1) Relates entirely to amounts transferred to ‘Investments in associates’.
(2) See Disposal and demerger of subsidiaries and businesses note 35.
(3) Includes amounts in respect of discontinued operations of $1 million loss.
Details of principal associates are set out in note 41.
No items were classified as ‘at fair value through profit or loss’ or ‘held to maturity’
during either period presented.
No provision for impairment is recorded against financial assets classified as loans
and receivables (2006: nil).
106 | Anglo American plc Annual Report 2007
Financial
statements
23. Financial assets
The carrying amounts and fair values of financial assets are as follows:
2007
US$ million
At fair value through profit and loss
Trade and other receivables(1)
Other financial assets (derivatives)(2)
Designated into fair value hedge
Trade and other receivables(1)
Loans and receivables
Cash and cash equivalents
Trade and other receivables(1)
Financial asset investments
Available for sale investments
Financial asset investments
Total financial assets
(1) Trade and other receivables exclude prepayments.
Estimated Carrying Estimated
fair value
fair value
value
2006
Carrying
value
591
535
591
535
424
329
424
329
14
14
–
–
3,129
2,986 2,986
938
918
3,129 3,004 3,004
4,773
4,773
404
408
3,842 3,842
1,569
12,015 12,035 10,507 10,503
1,569
20. Inventories
US$ million
Raw materials and consumables
Work in progress
Finished products
2007
703
812
829
2,344
2006
1,032
733
1,209
2,974
The cost of inventories recognised as an expense and included in cost of sales
amounted to $14,585 million (2006: $18,286 million), of which $2,212 million
(2006: $6,094 million) relates to discontinued operations.
Inventories held at net realisable value amounted to $167 million (2006: $91 million).
21. Trade and other receivables
2007
Due within Due after
one year
30
one year
3,000
Due within Due after
one year
18
one year
4,341
Total
3,030
2006
Total
4,359
US$ million
Trade receivables
Amounts owed by
related parties
Other receivables
Prepayments and
accrued income
16
420
–
125
16
545
14
714
–
110
14
824
136
3,572
4
159
140
3,731
93
5,162
22
150
115
5,312
(2) Derivative instruments are analysed between those which are ‘Held for trading’ and those designated
into hedge relationships in note 25.
The fair values of financial assets represent the market value of quoted investments
and other traded instruments. For non-listed investments and other non-traded
financial assets fair value is calculated using discounted cash flows with market
assumptions, unless carrying value is considered to approximate fair value.
The historical level of customer default is minimal and as a result the ‘credit quality’
of year end trade receivables which are not past due is considered to be high. Of
the year end trade receivables balance the following were past due at 31 December
(stated after associated impairment provision):
US$ million
Less than 1 month
Between 1 - 2 months
Between 2 - 3 months
Greater than 3 months
2007(1)
344
54
16
35
449
2006
329
71
43
45
488
(1) Approximately 50% of this balance is covered by insurance contracts which will guarantee receipt
of 90% of amounts subject to default.
The overdue debtor ageing profile above is typical of the industry in which certain
of our businesses operate. Given this, existing insurance cover, and the nature of the
related counterparties these amounts are considered recoverable.
Total trade receivables are stated net of the following impairment provision:
At 1 January 2006
Charge for the year
Acquired through business combinations
Disposal of businesses
Uncollectible amounts written off, net of recoveries
Currency movements
At 1 January 2007
Charge for the year
Release of provision
Disposal and demerger of businesses
Uncollectible amounts written off, net of recoveries
Currency movements
At 31 December 2007
22. Trade and other payables
US$ million
Trade payables
Tax and social security
Other payables
Accruals and deferred income
US$ million
63
9
1
(2)
(1)
5
75
10
(7)
(56)
(3)
3
22
2007
2,546
115
868
421
2006
3,263
51
1,257
469
3,950 5,040
Financial asset risk exposures are set out in note 25.
24. Financial liabilities
The carrying amounts and fair values of financial liabilities are as follows:
2007
2006
US$ million
At fair value through profit and loss
Trade and other payables(1)
Other financial liabilities (derivatives)(2)
Designated into fair value hedge
Trade and other payables(1)
Borrowings
Financial liabilities at amortised cost
Trade and other payables(1)
Borrowings
Total financial liabilities
Estimated Carrying Estimated Carrying
value
fair value
fair value
value
331
586
331
586
197
520
197
520
12
2,433
12
2,433
–
2,320
–
2,320
3,480 3,480
5,866
4,789
3,928
12,716 12,708 11,768 11,754
4,789
3,942
5,874
(1) Trade and other payables exclude tax and social security and deferred income.
(2) Derivative instruments are analysed between those which are ‘Held for trading’ and those designated
into hedge relationships in note 25.
The fair value of financial liabilities is determined by reference to quoted market
prices for similar issues, where applicable, otherwise the carrying value approximates
to the fair value.
Financial liability risk exposures are set out in note 25.
Anglo American plc Annual Report 2007 |
107
Financial
statements
Notes to the financial statements continued
24. Financial liabilities continued
An analysis of borrowings is set out below:
2007
Due within Due after
one year
one year
Due within Due after
one year
one year
Total
2006
Total
US$ million
Secured(1)
Bank loans and overdrafts
Obligations under
finance leases(2)
Other loans
Unsecured
Bonds issued under
EMTN programme(3)
Bank loans and
overdrafts
Commercial paper
Obligations under
finance leases(2)
Other loans
Total
146
544
690
121
300
421
2
–
148
76
29
649
78
29
797
1
–
122
72
93
465
73
93
587
1,461
800
2,261
25
2,080
2,105
2,383
1,895
482 2,865
1,895
–
1,843
10
1,170
–
3,013
10
9
6
3
472
467
5
5,747
7,502
1,755
5,895 2,404 8,299
4
24
1,906
2,028
22
483
3,755
4,220
26
507
5,661
6,248
(1) Assets with a book value of $711 million (2006: $960 million) have been pledged as security, of which
$431 million (2006: $421 million) are tangible assets, $149 million (2006: $385 million) are financial
assets and $139 million (2006: $86 million) are inventories.
(2) The minimum lease payments under finance leases fall due as follows:
US$ million
Not later than one year
Later than one year but not more than five years
More than five years
Future finance charges on finance leases
Present value of finance lease liabilities
2007
2006
13
42
116
171
(84)
87
13
40
120
173
(74)
99
(3) The Group issued $9 million of bonds under the EMTN programme in 2007 (2006: nil). All notes are
guaranteed by Anglo American plc.
25. Financial risk management and derivative financial assets/liabilities
The Group is exposed in varying degrees to a variety of financial instrument related
risks. The Board has approved and monitors the risk management processes,
inclusive of documented treasury policies, counterparty limits, controlling and
reporting structures. The risk management processes of the Group’s independently
listed subsidiaries are in line with the Group’s own policy.
The types of risk exposure, the way in which such exposure is managed and
quantification of the level of exposure in the balance sheet at year end is provided
as follows (subcategorised into credit risk, liquidity risk and market risk).
Credit risk
The Group’s principal financial assets are bank balances and cash, trade and other
receivables and investments. The Group’s credit risk is primarily attributable to its
trade receivables however it also arises on liquid funds and derivative financial
instruments. The Group’s maximum exposure to credit risk at 31 December 2007
is $8,205 million (2006: $8,937 million).
The Group limits exposure to credit risk on liquid funds and derivative financial
instruments through adherence to a policy of:
• Acceptable minimum counterparty credit ratings assigned by international
credit-rating agencies (including long term ratings of A- (Standard & Poor’s),
A3 (Moody’s) or A- (Fitch) or better).
• Daily counterparty settlement limits (which are not to exceed three times the credit
limit for an individual bank).
• Exposure diversification (the aggregate group exposure to key relationship
counterparties can not exceed 5% of the counterparty’s shareholders’ equity).
Given the diverse nature of the Group’s operations (both in relation to commodity
markets and geographically) it does not have significant concentration of credit risk in
respect of trade receivables, with exposure spread over a large number of customers.
108 | Anglo American plc Annual Report 2007
An allowance for impairment for trade receivables is made where there is an
identified loss event, which based on previous experience, is evidence of a reduction
in the recoverability of the cash flows. Detail of the credit quality of trade receivables
and the associated provision for impairment is disclosed in note 21.
Liquidity risk
The Group ensures that there are sufficient committed loan facilities in order to
meet short term business requirements, after taking into account cash flows from
operations and its holding of cash and cash equivalents, as well as any group
distribution restrictions that exist.
Non-wholly owned subsidiaries in general will arrange and maintain their own
financing and funding requirements. In most cases the financing will be non-recourse
to the Group. In addition, certain projects are financed by means of limited recourse
project finance, if appropriate.
The expected undiscounted cash flow of the Group’s financial liabilities (including
associated derivatives), by remaining contractual maturity, at the balance sheet date
is as follows:
US$ million
31 December 2007
Non-derivative financial
liabilities
Gross settled derivatives
Receive leg
Pay leg
Net settled derivatives
31 December 2006
Non-derivative financial
liabilities
Gross settled derivatives
Receive leg
Pay leg
Net settled derivatives
US$ million
31 December 2007
Non-derivative financial
liabilities
Gross settled derivatives
Receive leg
Pay leg
Net settled derivatives
31 December 2006
Non-derivative financial
liabilities
Gross settled derivatives
Receive leg
Pay leg
Net settled derivatives
Within 1 year
1-2 years
Fixed
interest
Floating
interest
Capital
repayment
Fixed
interest
Floating
interest
Capital
repayment
(144)
(188)
(9,643)
(87)
(95)
(440)
–
–
102
(42)
–
–
(118)
(306)
7
(1)
291
(9,346)
–
–
52
(35)
–
–
(53)
(148)
–
–
(9)
(449)
(145)
(170)
(6,962)
(142)
(112)
(1,655)
–
–
120
(25)
–
–
(147)
(317)
4
(6)
(6)
(6,970)
–
–
120
(22)
–
–
(118)
(230)
–
–
145
(1,510)
2-5 years
+5 years
Fixed
interest
Floating
interest
Capital
repayment
Fixed
interest
Floating
interest
Capital
repayment
(177)
(220)
(1,158)
(47)
(171)
(776)
–
–
130
(47)
–
–
(133)
(353)
–
–
112
(1,046)
–
–
35
(12)
–
–
(35)
(206)
–
–
–
(776)
(225)
(167)
(1,809)
(117)
(51)
(858)
–
–
171
(54)
–
–
(177)
(344)
–
–
78
(1,731)
–
–
68
(49)
–
–
(66)
(117)
–
–
–
(858)
The Group had the following undrawn committed borrowing facilities at 31 December:
US$ million
Expiry date
In one year or less
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
2007
2006
2,877
322
3,865
–
7,064
3,345
80
2,408
119
5,952
25. Financial risk management and derivative financial assets/liabilities
continued
In addition, the Group had the following Commercial Paper programmes:
• A $2 billion Canadian Commercial Paper Programme on which total drawings
of $805 million were made at 31 December 2007 (2006: nil).
• A $2 billion European Commercial Paper Programme established in October 2004.
Drawings of $1,090 million were made at 31 December 2007 (2006: $10 million).
Subsequent to year end the Group also secured access to a $10 billion borrowing facility.
Market risk
This is the risk that financial instrument fair values will fluctuate owing to changes in
market prices. The significant market risks to which the Group is exposed are foreign
exchange risk, interest rate risk and commodity price risk. These are discussed
further below:
Foreign exchange risk
As a global group, the Group is exposed to many currencies principally as a result
of non-US dollar operating costs incurred by US dollar functional currency companies
and to a lesser extent, from non-US dollar revenues. The Group’s policy is generally
not to hedge such exposures as hedging is not deemed appropriate given the
diversified nature of the Group though exceptions can be approved by the Board.
In addition, currency exposures exist in respect of non-US dollar approved capital
expenditure projects. The Group’s policy is that such exposure can be hedged at
management’s discretion, within certain pre-defined limits (otherwise Board approval
is required).
The exposure of the Group’s financial assets and liabilities (excluding intra-group loan
balances) to currency risk is as follows:
US$ million
Currency
At 31 December 2007
US$(2)
Rand
Sterling
Euro
Canadian $
Australian $
Other currencies
Total financial assets
At 31 December 2006
US$(2)
Rand
Sterling
Euro
Canadian $
Australian $
Other currencies
Total financial assets
Financial
assets
(excluding
derivatives)
Impact of
currency
derivatives(1)
Derivative
assets
Total financial
asset
exposure to
currency risk
4,260
4,414
839
301
75
221
1,390
11,500
3,321
3,032
1,079
1,058
42
166
1,476
10,174
(99)
88
–
–
2
(3)
12
–
(53)
8
(10)
(49)
(3)
–
107
–
465
17
–
–
53
–
–
535
254
15
–
4
46
–
10
329
4,626
4,519
839
301
130
218
1,402
12,035
3,522
3,055
1,069
1,013
85
166
1,593
10,503
Financial
statements
US$ million
Currency
At 31 December 2007
US$
Rand
Sterling
Euro
Canadian $
Australian $
Other currencies
Total financial liabilities
At 31 December 2006
US$
Rand
Sterling
Euro
Canadian $
Australian $
Other currencies
Total financial liabilities
Financial
liabilities
(excluding
derivatives)
(3,261)
(3,879)
(1,325)
(2,103)
(269)
(406)
(879)
(12,122)
(1,835)
(3,571)
(1,541)
(2,713)
(18)
(333)
(1,223)
(11,234)
Impact of
currency
derivatives(1)
Derivative
liabilities
Total financial
liability
exposure to
currency risk
(2,962)
–
606
1,886
226
–
244
–
(2,178)
1
620
1,323
–
–
234
–
(560)
(26)
–
–
–
–
–
(586)
(508)
(10)
–
(2)
–
–
–
(520)
(6,783)
(3,905)
(719)
(217)
(43)
(406)
(635)
(12,708)
(4,521)
(3,580)
(921)
(1,392)
(18)
(333)
(989)
(11,754)
(1) Where currency derivatives are held to manage financial instrument exposures the notional principal
amount is ‘reallocated’ to reflect the remaining exposure to the Group.
(2) Of these US$ financial assets, $571 million (2006: $497 million) are subject to South African
exchange controls.
Interest rate risk
Fluctuations in interest rates impact on the value of short term investments and
financing activities, giving rise to interest rate risk. Exposure to interest rate
risk is particularly with reference to changes in US dollar, rand, sterling and euro
interest rates.
The Group policy is to borrow funds at floating rates of interest as this is considered
to give somewhat of a natural hedge against commodity price movements, given the
correlation to economic growth (and industrial activity) which in turn shows a high
correlation with commodity price fluctuation. In certain circumstances, the Group
uses interest rate swap and option contracts to manage its exposure to interest rate
movements on a portion of its existing debt. Also strategic hedging using fixed rate
debt may be undertaken from time to time if considered appropriate.
In respect of financial assets, the Group’s policy is to invest cash at floating rates
of interest and cash reserves are to be maintained in short term investments (less
than one year) in order to maintain liquidity, while achieving a satisfactory return
for shareholders.
The exposure of the Group’s financial assets (excluding intra-group loan balances)
to interest rate risk is as follows:
Interest bearing
financial assets
Non-interest bearing
financial assets
Floating
rate
financial
assets
Fixed
rate
financial
assets
Other non-
interest
bearing
financial
assets
Equity
investments
Total
3,013
1
864
11
3,842
–
3,781 11,500
535
523
3,014
875
3,842 4,304 12,035
3,220
1
459
2
1,170
–
5,325 10,174
329
326
3,221
461
1,170
5,651 10,503
US$ million
At 31 December 2007
Financial assets (excluding
derivatives)(1)
Derivative assets
Financial asset exposure to
interest rate risk
At 31 December 2006
Financial assets (excluding
derivatives)(1)
Derivative assets
Financial asset exposure to
interest rate risk
(1) At 31 December 2007 and 2006 no interest rate swaps were held in respect of financial asset exposures.
Floating rate financial assets consist mainly of cash and bank term deposits. Interest
on floating rate assets is based on the relevant national inter-bank rates. Fixed rate
financial assets consist mainly of financial asset investments and cash, and have
a weighted average interest rate of 11% (2006: 7%) and are fixed for an average
period of four years (2006: seven months). Equity investments are fully liquid and
have no maturity period.
Anglo American plc Annual Report 2007 |
109
Financial
statements
Notes to the financial statements continued
25. Financial risk management and derivative financial assets/liabilities
continued
The exposure of the Group’s financial liabilities (excluding intra-group loan balances)
to interest rate risk is as follows:
Floating rate
financial
liabilities
Fixed rate
Non-interest
financial bearing financial
liabilities
liabilities
Total
(5,425)
(2,336)
(45)
(2,822)
2,336
–
(3,875) (12,122)
–
(586)
–
(541)
(7,806)
(486)
(4,416) (12,708)
Derivatives
In accordance with IAS 32 and IAS 39, the fair value of all derivatives are separately
recorded on the balance sheet within other financial assets (derivatives) and other
financial liabilities (derivatives). Derivatives that are designated as hedges are
classified as current or non-current depending on the maturity of the derivative.
Derivatives that are not designated as hedges are classified as current in accordance
with IAS 1 even when their actual maturity is expected to be greater than one year.
The Group utilises derivative instruments to manage its market risk exposures
as explained above. The Group does not use derivative financial instruments for
speculative purposes, however it may choose not to designate certain derivatives as
hedges. Such derivatives that are not hedge accounted are classified as non-hedges
and fair value movements are recorded in the income statement.
The use of derivative instruments is subject to limits and the positions are regularly
monitored and reported to senior management.
(3,019)
(2,402)
(40)
(3,168)
2,402
(1)
(5,047) (11,234)
–
(520)
–
(479)
(5,461)
(767)
(5,526) (11,754)
Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are
treated as separate derivatives when their risks and characteristics are not closely
related to those of their host contract and the host contract is not carried at fair
value. Embedded derivatives may be designated as a hedge and are accounted for
in accordance with the Group’s accounting policy set out in note 1.
US$ million
At 31 December 2007
Financial liabilities (excluding
derivatives)
Impact of interest rate swaps(1)
Derivative liabilities
Financial liability exposure to
interest rate risk
At 31 December 2006
Financial liabilities (excluding
derivatives)
Impact of interest rate swaps(1)
Derivative liabilities
Financial liability exposure to
interest rate risk
Cash flow hedges
In certain cases the Group classifies its forward exchange and commodity price
contracts hedging highly probable forecast transactions as cash flow hedges.
Where this designation is done, changes in fair value are recognised in equity until
the hedged transactions occur, at which time the respective gains or losses are
transferred to the income statement (or hedged balance sheet item) in accordance
with the Group’s accounting policy set out in note 1.
Fair value hedges
The majority of interest rate swaps (taken out to swap the Group’s fixed rate
borrowings to floating rate, in accordance with the treasury policy) have been
designated as fair value hedges. The respective carrying values of the hedged debt are
adjusted to reflect the fair value of the interest rate risk being hedged. Subsequent
changes in the fair value of the hedged risk are offset against fair value changes in
the interest rate swap and classified within financing costs, in the income statement.
Non-hedges
The Group may choose not to designate certain derivatives as hedges, for example
certain forward contracts that economically hedge forecast commodity transactions
and relatively low value or short term derivative contracts where the potential
mark to market exposure on the Group’s earnings is not considered material. Where
derivatives have not been designated as hedges, fair value changes are recognised
in the income statement in accordance with the Group’s accounting policy set out
in note 1 and are classified as financing or operating depending on the nature of the
associated hedged risk.
Cross currency swaps are also taken out to protect the Group’s non-US dollar debt
against future currency movements. The respective carrying values of the hedged
debt are translated at the closing exchange rate in accordance with the Group’s
accounting policy and as such a natural hedge of the currency risk is achieved.
(1) Where interest rate swaps are held to manage financial instrument exposures the notional principal
amount is ‘reallocated’ to reflect the remaining exposure to the Group.
Interest on floating rate instruments is based on the relevant national inter-bank
rates. Remaining fixed rate borrowings accrue interest at 8% (2006: 5%) and are at
fixed rates for an average period of two years (2006: two years). Average maturity
on non-interest bearing instruments is three months (2006: two months).
Commodity price risk
The Group’s earnings are exposed to movements in the prices of the commodities it
produces. Commodity price risk can be reduced through the negotiation of long term
contracts or through the use of financial derivatives.
In respect of the use of derivative instruments, the Group policy is generally not to
hedge price risk, although some hedging may be undertaken for strategic reasons. In
such cases, the Group uses forward, spot, deferred and option contracts to hedge the
price risk.
The exposure of the Group’s financial assets and liabilities to commodity price risk
is as follows:
US$ million
At 31 December 2007
Total net financial instruments
(excluding derivatives)
Commodity derivatives (net)
Other derivatives not related to
commodity (net)
Total financial instrument exposure
to commodity risk
At 31 December 2006
Total net financial instruments
(excluding derivatives)
Impact of commodity derivatives(1)
Commodity derivatives (net)
Other derivatives not related to
commodity (net)
Total financial instrument exposure
to commodity risk
Commodity price linked
Subject to
price
movements
Fixed
price(2)
Not linked
to
commodity
price
Total
325
(480)
461
–
(1,408)
–
(622)
(480)
–
–
429
429
(155)
461
(979)
(673)
248
(9)
(423)
521
9
(1)
(1,829) (1,060)
–
(424)
–
–
–
–
233
233
(184)
529
(1,596) (1,251)
(1) Where commodity derivatives are held to manage financial instrument exposures the notional principal
amount is ‘reallocated’ to reflect the remaining exposure to the Group.
(2) Includes financial instruments whose commodity prices are set annually or via contract negotiations.
110 | Anglo American plc Annual Report 2007
Financial
statements
25. Financial risk management and derivative financial assets/liabilities
continued
The fair value of the Group’s open derivative position at 31 December (excluding
normal purchase and sale contracts held off-balance sheet), recorded within other
financial assets (derivatives) and other financial liabilities (derivatives) is as follows:
The Group monitors capital on the basis of the ratio of net debt to total capital.
Net debt is calculated as total borrowings less cash and cash equivalents (excluding
derivatives which provide an economic hedge of debt and including the net debt
of disposal groups). Total capital is calculated as ‘Net assets’ (as shown in the
‘Consolidated balance sheet’) excluding net debt and investments in associates.
US$ million
Current
Cash flow hedge(1)
Forward foreign currency contracts
Forward commodity contracts(2)
Other
Fair value hedge
Forward foreign currency contracts
Other
Non-hedge (‘Held for trading’)(3)
Forward foreign currency contracts
Cross currency swaps
Other
Total current derivatives
Non-current
Cash flow hedge(1)
Forward commodity contracts(2)
Other(4)
Fair value hedge
Interest rate swaps
Total non-current derivatives
2007
2006
Asset
Liability
Asset
Liability
2
–
11
1
–
31
404
86
535
–
(304)
–
(12)
–
(25)
(10)
(150)
(501)
11
2
–
1
4
14
242
55
329
(2)
(162)
–
(1)
(1)
(2)
(19)
(29)
(216)
–
–
–
–
(53)
–
(32)
(85)
–
–
–
–
(140)
(126)
(38)
(304)
(1) The timing of the expected cash flows associated with these hedges is as follows:
US$ million
Within one year
Greater than one year, less than two years
Greater than two years, less than five years
Greater than five years
2007
2006
(289)
(61)
–
–
(174)
(166)
(62)
(181)
(350)
(583)
The periods when these hedges are expected to impact the income statement generally follow the
cash flow profile with the exception of hedging associated with capital projects which is included in
the capitalised asset value and depreciated over the life of the asset. There are no material capital
expenditure related hedges included in the above.
(2) Forward commodity contracts include forward copper derivatives taken out to hedge the future prices
of sales from Anglo American Norte (formerly Mantos Blancos). The contracted forward price of 116 US
cents/lb covers 3,338 tonnes per month for three years starting January 2006. At 31 December 2007
there is one year remaining on the contract which represents 41% of Anglo American Norte cathode
sales over the same period.
(3) $160 million (2006: $289 million) of derivative assets and $126 million (2006: $36 million) of
derivative liabilities not designated as hedges and that are classified as current in accordance with IAS 1
are due to mature after more than one year.
(4) Other cash flow hedges in 2006 includes a derivative instrument embedded in a long term purchase
power agreement which was designated as a hedge against market risk exposures on sales.
This relationship was de-designated at the commencement of 2007.
These marked to market valuations are in no way predictive of the future value of the
hedged position, nor of the future impact on the profit of the Group. The valuations
represent the cost of buying all hedge contracts at the time of valuation, at market
prices and rates available at the time.
Normal purchase and normal sale contracts
Commodity based contracts that meet the requirements of IAS 39 in that they are
settled through physical delivery of the Group’s production or are used within the
production process are classified as normal purchase and normal sale contracts.
In accordance with IAS 39 these contracts are not marked to market when they are
settled through physical delivery.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to
continue as a going concern in order to provide returns for shareholders and benefits
for other stakeholders and, with cognisance of forecast future market conditions and
structuring, to maintain an optimal capital structure to reduce the cost of capital.
In order to manage the short and long term capital structure, the Group adjusts the
amount of ordinary dividends paid to shareholders, returns capital to shareholders
(via, for example, share buybacks and special dividends), arranges debt to fund new
acquisitions and also may sell non-core assets to reduce debt.
During 2007, the Group’s strategy, which was unchanged from 2006, was to
maintain certain credit ratios consistent with long term credit ratings of A2 from
Moody’s and A from Standard & Poor’s. Net debt to total capital as at 31 December
2007 was 20.0% (2006: 12.9%). The increase during 2007 resulted primarily from
share buybacks and acquisitions, partially offset by strong operating cash flows
and asset disposals.
Financial instrument sensitivities
Financial instruments affected by market risk include borrowings, deposits, derivative
financial instruments and trade receivables and trade payables. The following analysis,
required by IFRS 7, is intended to illustrate the sensitivity of the Group’s financial
instruments (as at year end) to changes in market variables, being commodity prices,
exchange rates and interest rates.
The sensitivity analysis has been prepared on the basis that the components of net
debt, the ratio of fixed to floating interest rates of the debt and derivatives portfolio
and the proportion of financial instruments in foreign currencies are all constant
and on the basis of the hedge designations in place at 31 December. In addition,
the commodity price impact for provisionally priced contracts is based on the amount
of trade receivables and trade payables (and the make up thereof) at 31 December.
As a consequence, this sensitivity analysis relates to the position as at 31 December.
The following assumptions were made in calculating the sensitivity analysis:
• All income statement sensitivities also impact equity.
• The majority of debt and other deposits are carried at amortised cost and therefore
carrying value does not change as interest rates move.
• No sensitivity is provided for accrued interest as accruals are based on pre-agreed
interest rates and therefore are not susceptible to further rate movements.
• Changes in the carrying value of derivatives (from movements in commodity prices
and interest rates) designated as cash flow hedges are assumed to be recorded
fully within equity on the grounds of materiality.
• No sensitivity has been calculated on derivatives and related underlying
instruments designated into fair value hedge relationships as these are assumed
to materially offset one another.
• All hedge relationships are assumed to be fully effective on the grounds of
materiality.
• Debt with a maturity below one year is floating rate, unless it is a long term fixed
rate debt in its final year.
• Translation of foreign subsidiaries and operations into the Group’s presentation
currency have been excluded from the sensitivity.
Using the above assumptions, the following tables show the illustrative effect on
the income statement and equity that would result from reasonably possible changes
in the relevant commodity price, foreign currency or interest rates:
US$ million
Commodity price sensitivities
2007
10% increase in the copper price
5% fall in the copper price
10% increase in the platinum price
15% fall in the platinum price
5% increase in the coal price
5% fall in the coal price
2006
10% fall in the copper price
10% increase in the platinum price
10% fall in the platinum price
Interest rate sensitivities
2007
75 bp fall in US interest rates
50 bp fall in South African interest rates
75 bp fall in UK interest rates
2006
25 bp increase in US interest rates
25 bp fall in US interest rates
50 bp increase in South African interest rates
50 bp fall in South African interest rates
Income statement
Equity
89
(45)
(8)
13
–
–
(76)
(4)
4
(2)
10
5
1
(1)
21
(21)
66
(33)
(8)
13
(15)
15
24
(4)
4
(2)
10
5
1
(1)
21
(21)
Anglo American plc Annual Report 2007 |
111
Financial
statements
Notes to the financial statements continued
25. Financial risk management and derivative financial assets/liabilities
continued
US$ million
Foreign currency sensitivities(1)
2007
+5% US$ to rand
-5% US$ to rand
+5% US$ to Australian dollar
-5% US$ to Australian dollar
+5% US$ to Brazilian real
-5% US$ to Brazilian real
+5% US$ to sterling
-5% US$ to sterling
+5% US$ to Chilean peso
-5% US$ to Chilean peso
2006
+10% US$ to rand
-5% US$ to rand
+10% US$ to Australian dollar
-5% US$ to Australian dollar
+10% US$ to Chilean peso
-5% US$ to Chilean peso
Income statement
Equity
18
(18)
(19)
23
(46)
46
(7)
8
8
(9)
49
(23)
7
(2)
20
(11)
18
(17)
(19)
23
(46)
46
(7)
8
8
(9)
45
(21)
6
(3)
19
(11)
(1) + represents strengthening of US dollar against respective currency.
The above sensitivities are calculated with reference to a single moment in time and
will change due to a number of factors including:
• fluctuating trade receivable and trade payable balances;
• derivative instruments and borrowings settled throughout the year;
• fluctuating cash balances;
• changes in currency mix; and
• commercial paper with short term maturities, which is regularly replaced or settled.
As the sensitivities are limited to year end financial instrument balances they do not
take account of the Group’s sales and operating costs which are highly sensitive to
changes in commodity prices and exchange rates.
26. Provisions for liabilities and charges
US$ million
At 1 January 2007
Acquired through business combinations
Disposal and demerger of businesses(2)
Transfer to liabilities directly associated with
assets held for sale
Charged to the income statement
Capitalised(3)
Reclassifications
Unwinding of discount
Unused amounts reversed to the income
statement
Amounts applied
Currency movements
At 31 December 2007
Maturity analysis of total provisions:
Environmental Decommi-
restoration(1) ssioning(1)
531
9
(22)
(2)
83
37
5
23
(3)
(12)
26
675
216
1
–
(5)
–
37
(12)
13
–
(1)
7
256
US$ million
Current
Non-current
Decommissioning
Provision is made for the present value of costs relating to the decommissioning of
plant or other site preparation work. It is anticipated that these costs will be incurred
over a period in excess of 20 years.
Other
Other provisions primarily relate to cash settled share-based payments, indemnities,
warranties and legal claims. It is anticipated that these costs will be incurred over
a five year period.
27. Deferred tax
Deferred tax assets
US$ million
At 1 January
Credited to the income statement(1)
Credited to the statement of recognised income and expense
Credited directly to equity
Acquired through business combinations
Transfer to assets held for sale
Disposal and demerger of businesses(2)
Reclassifications
Currency movements
At 31 December
2007
372
109
30
(2)
10
–
(55)
(2)
12
474
2006
337
43
35
39
3
(58)
(59)
41
(9)
372
(1) Includes amounts in respect of discontinued operations of $9 million (2006: $3 million).
(2) In 2006, includes a $59 million deferred tax asset which was transferred to ‘Investments in associates’.
Deferred tax liabilities
US$ million
At 1 January
Charged to the income statement(1)
Charged to the statement of recognised income and expense
Acquired through business combinations
Transfer to liabilities directly associated
with assets held for sale
Disposal and demerger of businesses(2)
Reclassifications
Currency movements
At 31 December
2007
3,687
456
150
904
2006
5,201
115
8
12
(77)
(298)
(649) (1,268)
35
(118)
3,687
2
177
4,650
(1) Includes amounts in respect of discontinued operations of $12 million (2006: $60 million credit).
(2) In 2006, includes a $1,267 million deferred tax liability which was transferred to ‘Investments
in associates’.
The amount of deferred tax provided in the accounts is as follows:
Other
339
1
(62)
Total
1,086
11
(84)
(4)
97
–
19
–
(11)
180
74
12
36
US$ million
Deferred tax assets
Tax losses
Other temporary differences
(15)
(92)
10
293
(18)
(105)
43
1,224
Deferred tax liabilities
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses
Other temporary differences
2007
2006
14
460
474
53
319
372
2,640
2,121
(46)
(65)
4,650
2,448
1,160
(66)
145
3,687
2007
142
1,082
1,224
2006
62
1,024
1,086
The amount of deferred tax charged/(credited) to the income statement (including
amounts related to discontinued operations) is as follows:
US$ million
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses
Convertible bond equity component
Other temporary differences
2007
373
(63)
(27)
–
64
347
2006
297
(38)
(54)
(1)
(132)
72
(1) The Group makes voluntary contributions to controlled funds to meet the cost of some of its
decommissioning, restoration and environmental rehabilitation liabilities in South Africa (see note 16).
(2) Includes environmental restoration of $22 million and other of $54 million relating to the demerger
of Mondi.
(3) Amounts capitalised in the environmental restoration provision relate to amounts that will be recovered
from third parties when the actual expenditure is incurred.
Environmental restoration
The Group has an obligation to incur restoration, rehabilitation and environmental
costs when environmental disturbance is caused by the development or ongoing
production of a mining property. A provision is recognised for the present value of
such costs. It is anticipated that these costs will be incurred over a period in excess
of 20 years.
112 | Anglo American plc Annual Report 2007
27. Deferred tax continued
The current expectation regarding the maturity of deferred tax balances is:
US$ million
Deferred tax assets
Recoverable within 12 months
Recoverable after 12 months
Deferred tax liabilities
Payable within 12 months
Payable after 12 months
2007
2006
163
311
474
103
269
372
790
3,860
4,650
67
3,620
3,687
The Group has the following balances at 31 December 2007 in respect of which
no deferred tax asset has been recognised:
US$ million
Within one year
One to five years
After five years
No expiry date
Tax
losses –
revenue
8
1
22
2,248
2,279
Tax
Other
losses – temporary
capital differences
–
–
6
–
6
–
–
–
1,430
1,430
Total
8
1
28
3,678
3,715
The Group had the following balances at 31 December 2006 in respect of which
no deferred tax asset was recognised:
US$ million
Within one year
One to five years
After five years
No expiry date
Tax
losses –
revenue
11
36
21
2,867
2,935
Tax
Other
losses – temporary
capital differences
–
–
–
–
–
–
–
5
714
719
Total(1)
11
36
26
3,581
3,654
(1) Includes amounts in respect of discontinued operations of $845 million revenue tax losses and
$45 million capital tax losses.
The Group also has unused tax credits of $211 million (2006: $65 million) for which
no deferred tax asset is recognised in the balance sheet. These tax credits have no
expiry date.
No liability has been recognised in respect of temporary differences associated with
investments in subsidiaries, branches and associates and interests in joint ventures,
where the Group is in a position to control the timing of the reversal of the temporary
differences and it is probable that such differences will not reverse in the foreseeable
future. The aggregate amount of temporary differences associated with investments
in subsidiaries, branches and associates and interests in joint ventures, for which
a deferred tax liability has not been recognised is $20,724 million (2006: $16,946
million), on which tax may be payable up to $5,906 million (2006: $5,084 million).
28. Retirement benefits
The Group operates defined contribution and defined benefit pension plans for the
majority of its employees. It also operates post retirement medical arrangements
in southern Africa and North America.
Defined contribution plans
The defined contribution pension cost represents the actual contributions payable
by the Group to the various plans. At 31 December 2007, there were no material
outstanding or prepaid contributions and so no accrual or prepayment has been
disclosed in the balance sheet in relation to these plans.
The assets of the defined contribution plans are held separately in independently
administered funds. The charge in respect of these plans is calculated on the basis
of the contribution payable by the Group in the financial year. The charge for the year
for continuing operations was $180 million (2006: $170 million).
Defined benefit pension plans and post retirement medical plans
The majority of the defined benefit pension plans are funded. The assets of these
plans are held separately from those of the Group in independently administered
funds, in accordance with statutory requirements or local practice throughout
the world. In 2007 the unfunded pension plans are principally in South America
(2006: principally South America and Europe).
Financial
statements
The post retirement medical arrangements provide health benefits to retired
employees and certain dependants. Eligibility for cover is dependent upon certain
criteria. The majority of these plans are unfunded.
The Group’s provision of anti-retroviral therapy to HIV positive staff has not
significantly impacted the post retirement medical plan liability.
Independent qualified actuaries carry out full valuations every three years using the
projected unit method. The actuaries have updated the valuations to 31 December 2007.
The Group’s plans in respect of pension and post retirement healthcare are
summarised as follows:
2007
2006
US$ million
Assets(1)
Defined benefit
pension plans
in surplus
Southern
The
Africa Americas
Europe
Total
Southern
The
Africa Americas
Europe
Total
48
–
4
52
107
–
3
110
(1) Amounts are included in ‘Other non-current assets’.
2007
2006
US$ million
Liabilities
Defined benefit
pension plans
in deficit
Post retirement
medical plans
in deficit
Southern
The
Africa Americas
Europe
Total
Southern
The
Africa Americas
Europe
Total
–
129
6
135
–
116
253
369
277
277
32
161
–
6
309
444
381
381
25
141
–
253
406
775
US$ million
Defined benefit pension plans
Present value of liabilities
Fair value of plan assets
Net surplus/(deficit)
Surplus restriction
Net deficit after surplus restriction
2007
2006
2005
2004
(3,095) (4,256) (3,985) (4,041)
3,479
3,148
(562)
53
(136)
–
(562)
(83)
3,539
(446)
(107)
(553)
4,160
(96)
(163)
(259)
Actuarial gain on plan assets(1)
Actuarial loss on plan liabilities(2)
39
(48)
308
(156)
438
(435)
163
(198)
Post retirement medical plans
Present value of liabilities
Fair value of plan assets
Net deficit
(329)
20
(309)
(422)
16
(406)
(650)
22
(628)
(654)
15
(639)
Actuarial gain on plan assets(3)
Actuarial (loss)/gain on plan liabilities(4)
1
(29)
–
15
–
(67)
–
(22)
(1) Net experience gains on pension plan assets were $32 million (2006: $314 million).
(2) Net experience losses on pension plan liabilities were $112 million (2006: $113 million).
(3) Net experience losses on medical plan assets were $1 million (2006: $1 million).
(4) Net experience losses on medical plan liabilities were $4 million (2006: gains of $36 million).
Cumulative net actuarial losses recognised in the Consolidated statement of recognised
income and expense are $163 million (2006: $126 million; 2005: $228 million; 2004:
$57 million).
The market value of assets was used to determine the funding level of the plans.
The market value of the assets of the funded plans was sufficient to cover 105%
(2006: 104%) of the benefits that had accrued to members after allowing for
expected increases in future earnings and pensions. Companies within the Group
are paying contributions as required in accordance with local actuarial advice.
As the majority of the defined benefit pension plans are closed to new members,
it is expected that contributions will increase as the members age.
The actual return on plan assets in respect of defined benefit pension schemes for
continuing and discontinued operations was $307 million (2006: $577 million).
Anglo American plc Annual Report 2007 |
113
Financial
statements
Notes to the financial statements continued
28. Retirement benefits continued
Income statement
The amounts recognised in the income statement are as follows:
US$ million
Analysis of the amount
charged to operating profit
Current service costs
Past service costs
Total within operating costs
– continuing operations
Analysis of the amount
charged to net finance costs
Expected return on
plan assets(2)
Interest costs on
plan liabilities(3)
Net (credit)/charge to
net finance costs
– continuing operations
Total charge to the
income statement
– continuing operations
Post
retirement
Pension medical
plans
plans
54
3
57
8
–
8
2007
Total
plans
62
3
65
Post
retirement
Pension medical
plans
plans
2006(1)
Total
plans
55
1
56
6
–
6
61
1
62
(255)
(2)
(257)
(233)
(1)
(234)
207
22
229
201
25
226
(48)
20
(28)
(32)
24
(8)
9
28
37
24
30
54
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
(2) Included in ‘Investment income’.
(3) Included in ‘Interest expense’.
2006
Europe
%
4.8
2.6
3.3
2.9
Actuarial assumptions
The principal assumptions used to determine the actuarial present value of
benefit obligations and pension costs under IAS 19 are detailed below (shown
as weighted averages):
2007
Southern
The
Africa Americas
%
%
Southern
The
Africa Americas
%
%
Europe
%
Defined benefit pension plans
Average discount rate
for plan liabilities
Average rate of inflation
Average rate of increase
in salaries
Average rate of increase
of pensions in payment
Average long term rate
of return on plan assets(1)
Post retirement medical plans
Average discount rate
for plan liabilities
Average rate of inflation
Expected average increase
in healthcare costs
8.2
5.5
7.5
3.6
5.7
3.4
7.9
4.5
7.7
3.6
6.8
4.5
3.5
5.5
4.7
5.5
1.8
3.4
4.5
2.1
8.5
10.6
6.8
9.2
9.6
6.0
8.0
5.3
5.5
2.6
n/a
n/a
7.9
4.7
5.0
–
6.8
4.4
n/a
5.7
4.4
n/a
n/a
n/a
(1) The long term expected return on plan assets has been set with reference to current market yields on
government and corporate bonds and expected equity bond-outperformance in the relevant jurisdictions.
The expected return on cash assets has been set with reference to expected inter-bank rates. The overall
long term expected rate of return for each class is weighted by the asset allocation to the class at the
balance sheet date.
Mortality assumptions are determined based on standard mortality tables with
adjustments, as appropriate, to reflect experience of conditions locally. In southern
Africa, the SA85-90 and the PA90 tables are used. The main schemes in Europe
use the PA92 tables. The main schemes in the Americas use the GAM94 tables.
The mortality tables used for the main schemes imply that a male aged 60 at the
balance sheet date has an expected future lifetime of 20.3 years in southern Africa
(2006: 20.3 years), 25.3 years in Europe (2006: 25.3 years) and 22.0 years in the
Americas (2006: 21.7 years).
The market value of the pension assets in defined benefit pension plans and long term expected rate of return as at 31 December 2007 and 31 December 2006 are as follows:
At 31 December 2007
Equity
Bonds
Other
Fair value of pension plan assets
Present value of unfunded obligations
Present value of funded obligations
Present value of pension plan liabilities
Net surplus/(deficit) in the pension plans
Surplus restriction related to pension plans
Recognised pension plan assets/(liabilities)
Amounts in the balance sheet
Pension assets
Pension liabilities
Southern Africa
The Americas
Rate of
return
%
11.0
7.6
7.1
Fair value
US$
million
273
654
54
981
–
(853)
(853)
128
(80)
48
48
–
48
Rate of
return
%
10.7
10.8
7.8
Fair value
US$
million
68
167
10
245
(105)
(269)
(374)
(129)
–
(129)
–
(129)
(129)
Rate of
return
%
8.1
5.2
5.5
Europe
Fair value
US$
million
1,021
568
333
1,922
(4)
(1,864)
(1,868)
54
(56)
(2)
4
(6)
(2)
Total
Fair value
US$
million
1,362
1,389
397
3,148
(109)
(2,986)
(3,095)
53
(136)
(83)
52
(135)
(83)
114 | Anglo American plc Annual Report 2007
Financial
statements
28. Retirement benefits continued
At 31 December 2006
Equity
Bonds
Other
Fair value of pension plan assets
Present value of unfunded obligations
Present value of funded obligations
Present value of pension plan liabilities
Net surplus/(deficit) in the pension plans
Surplus restriction related to pension plans
Recognised pension plan assets/(liabilities)
Amounts in the balance sheet
Pension assets
Pension liabilities
Southern Africa
The Americas
Rate of
return
%
11.0
7.4
6.9
Fair value
US$
million
1,016
649
337
2,002
–
(1,737)
(1,737)
265
(158)
107
107
–
107
Rate of
return
%
10.4
5.8
8.9
Fair value
US$
million
44
132
10
186
(87)
(215)
(302)
(116)
–
(116)
–
(116)
(116)
Rate of
return
%
7.5
4.7
4.2
Europe
Fair value
US$
million
1,042
555
375
1,972
(167)
(2,050)
(2,217)
(245)
(5)
(250)
3
(253)
(250)
Total
Fair value
US$
million
2,102
1,336
722
4,160
(254)
(4,002)
(4,256)
(96)
(163)
(259)
110
(369)
(259)
Movement analysis
The changes in the present value of defined benefit obligations are as follows:
The changes in the fair value of plan assets are as follows:
US$ million
At 1 January
Current service costs(1)
Acquisition, disposal
and demerger
of businesses(2)
Transfer to assets held for sale
Past service costs and
effects of settlements
and curtailments(3)
Interest costs(4)
Actuarial (losses)/gains
Benefits paid
Contributions paid by
other members
Reclassifications
Currency movements
At 31 December
2007
2006
Post
retirement
Pension medical
Total
plans
plans
plans
(422) (4,678) (3,985)
(68)
(66)
Post
retirement
Pension medical
Total
plans
plans
(650) (4,635)
(75)
plans
(4,256)
(57)
(9)
(7)
1,442
–
150
–
1,592
–
153
15
165
18
318
33
(1)
(220)
(48)
137
–
(25)
(29)
18
(1)
(245)
(77)
155
6
(241)
(156)
155
–
(33)
15
24
6
(274)
(141)
179
(7)
(2)
(83)
(3,095)
(2)
–
(10)
(14)
(9)
(7)
(2)
(114)
(93)
(329) (3,424) (4,256)
(1)
5
42
(15)
(2)
(72)
(422) (4,678)
US$ million
At 1 January
Expected return(1)
Actuarial gains
Acquisition, disposal
and demerger
of businesses(2)
Transfer to assets held for sale
Contributions paid
by employer
Contributions paid
by other members
Benefits paid
Effects of settlements
and curtailments
Reclassifications
Currency movements
At 31 December
Post
retirement
Pension medical
plans
16
2
1
plans
4,160
268
39
2007
Total
plans
4,176
270
40
Post
retirement
Pension medical
plans
22
1
–
plans
3,539
264
308
2006
Total
plans
3,561
265
308
(1,329)
–
–
–
(1,329)
–
(173)
(15)
(6)
–
(179)
(15)
69
16
85
309
25
334
7
(137)
2
(18)
9
(155)
14
(155)
1
(24)
15
(179)
–
2
69
3,148
–
–
1
20
–
2
70
3,168
(6)
6
69
4,160
–
–
(3)
16
(6)
6
66
4,176
(1) Includes $3 million (2006: $13 million) for pension plans and $1 million (2006: $1 million) for post
(1) Includes $13 million (2006: $31 million) for pension plans in respect of discontinued operations.
retirement medical plans in respect of discontinued operations.
(2) 2006 includes $435 million which was transferred to ‘Investments in associates’.
(3) Includes a gain of $2 million (2006: a gain of $1 million) for pension plans in respect of discontinued
operations.
(4) Includes $13 million (2006: $40 million) for pension plans and $3 million (2006: $8 million) for post
retirement medical plans in respect of discontinued operations.
(2) 2006 includes $246 million which was transferred to ‘Investments in associates’.
Assumed healthcare trend rates have a significant effect on the amounts recognised
in the income statement. A 1% change in assumed healthcare cost trend rates would
have the following effects:
US$ million
Effect on the sum of service
costs and interest costs
Effect on defined benefit obligations
1%
increase
1%
decrease
2007
2006
2007
2006
4
39
6
53
(2)
(22)
(5)
(44)
The Group expects to contribute approximately $50 million to its defined benefit
pension plans and $24 million to its post retirement medical plans in 2008.
Anglo American plc Annual Report 2007 |
115
Financial
statements
Notes to the financial statements continued
29. Called-up share capital and share-based payments
Called-up share capital
Number of shares US$ million
Number of shares US$ million
2007
2006
Authorised:
5% cumulative preference
shares of £1 each
Ordinary shares of
5486/91 US cents
(2006: 50 US cents) each 1,820,000,000
50,000
–
50,000
–
1,000 2,000,000,000
1,000
1,000
1,000
Called-up, allotted and fully paid:
5% cumulative preference
shares of £1 each
Ordinary shares of
5486/91 US cents
(2006: 50 US cents) each:
At 1 January
Share consolidation
Treasury share cancellation
Convertible bonds
Other
At 31 December
50,000
–
50,000
–
1,541,653,607
(138,749,193)
(60,000,050)
–
7,533
1,342,911,897
–
(33)
–
–
771 1,493,855,896
–
–
47,789,096
8,615
738 1,541,653,607
747
–
–
24
–
771
Following the demerger of Mondi on 2 July, a share consolidation became effective
with the result that for every 100 existing ordinary shares of 50 US cents each,
shareholders received 91 new ordinary shares of 5486/91 US cents each. This resulted
in a reduction in the number of ordinary shares held of 138,749,193.
During 2007 4,143 ordinary shares of 50 US cents each and 3,390 ordinary
shares of 5486/91 US cents each were allotted to certain non-executive directors by
subscription of their after tax directors’ fees (2006: 8,615 ordinary shares of 50
US cents each). During 2006 47,789,096 ordinary shares of 50 US cents each were
allotted upon the conversion of Anglo American plc convertible bonds due 2008.
On 20 June 2007, the Company cancelled 50 ordinary shares of 50 US cents
previously held in treasury. On 3 August 2007, the Company cancelled 60,000,000
ordinary shares of 5486/91 US cents previously held in treasury. As at 31 December
2007 the Company held 20,783,518 ordinary shares of 5486/91 US cents in treasury
(2006: 45,621,369 ordinary shares of 50 US cents).
In 2007 27,073,161 ordinary shares of 50 US cents each and 14,631,542 ordinary
shares of 5486/91 US cents each were purchased by the Company and held in treasury
(2006: 45,621,369 ordinary shares of 50 US cents each). Excluding shares held in
treasury (but including the shares held by the Group in other structures, as outlined
in the Tenon and Employee benefit trust sections below) the number of called-up,
allotted and fully paid ordinary shares as at 31 December 2007 was 1,322,128,379;
$726 million (2006: 1,496,032,238; $748 million).
At general meetings, every member who is present in person has one vote on a show
of hands and, on a poll, every member who is present in person or by proxy has one
vote for every ordinary share held.
In the event of winding up, the holders of the cumulative preference shares will be
entitled to the repayment of a sum equal to the nominal capital paid up, or credited
as paid up, on the cumulative preference shares held by them and any accrued
dividend, whether such dividend has been earned or declared or not, calculated
up to the date of the winding up.
No ordinary shares were allotted on exercise of employee share option plans
(2006: nil).
116 | Anglo American plc Annual Report 2007
Tenon
Tenon Investment Holdings (Pty) Limited (Tenon), a wholly owned subsidiary of
Anglo American South Africa Limited (AASA), has entered into agreements with
Epoch Investment Holdings Limited (Epoch), Epoch Two Investment Holdings
Limited (Epoch Two) and Tarl Investments Holdings Limited (Tarl) (collectively
the Investment Companies), each owned by independent charitable trusts whose
trustees are independent of the Group. Under the terms of these agreements, the
Investment Companies have purchased Anglo American plc shares on the market and
have granted to Tenon the right to nominate a third party (which may include Anglo
American plc but not any of its subsidiaries) to take transfer of the Anglo American
plc shares each has purchased on the market. Tenon paid the Investment Companies
80% of the cost of the Anglo American plc shares including associated costs for
this right to nominate which together with subscriptions by Tenon for non-voting
participating redeemable preference shares in the Investment Companies provide all
the funding required to acquire the Anglo American plc shares through the market.
These payments by Tenon are sourced from the cash resources of AASA. Tenon is
able to exercise its right of nomination at any time up to 31 December 2025 against
payment of an average amount of $7.96 per share to Epoch, $12.09 per share to
Epoch Two and $9.62 per share to Tarl which will be equal to 20% of the total costs
respectively incurred by Epoch, Epoch Two and Tarl in purchasing shares nominated
for transfer to the third party. These funds will then become available for redemption
of the preference shares issued by the Investment Companies. The amount payable
by the third party on receipt of the Anglo American plc shares will accrue to Tenon
and, in accordance with paragraph 33 of IAS 32, any resulting gain or loss recorded
by Tenon will not be recognised in the income statement of Anglo American plc.
Under the agreements, the Investment Companies will receive dividends on the
shares they hold and have agreed to waive the right to vote those shares. The
preference shares issued to the charitable trusts are entitled to a participating right
of up to 10% of the profit after tax of Epoch and 5% of the profit after tax of Epoch
Two and Tarl. The preference shares issued to Tenon will carry a fixed coupon of 3%
plus a participating right of up to 80% of the profit after tax of Epoch and 85% of
the profit after tax of Epoch Two and Tarl. Any remaining distributable earnings in the
Investment Companies, after the above dividends, are then available for distribution
as ordinary dividends to the charitable trusts.
The structure effectively provides Tenon with a beneficial interest in the price risk on
these shares together with a participation in future dividend receipts. The Investment
Companies will retain legal title to the shares until Tenon exercises its right to
nominate a transferee.
At 31 December 2007, the Investment Companies together held 106,356,408
(2006: 45,569,127) Anglo American plc shares with a market value of $6,521
million (2006: $2,226 million) which represented 8% (2006: 3%) of the ordinary
shares in issue (excluding treasury shares). The Investment Companies are not
permitted to hold more than an aggregate of 10% of the issued share capital of
Anglo American plc at any one time.
Although the Group has no voting rights in the Investment Companies and cannot
appoint or remove trustees of the charitable trusts, the Investment Companies meet
the accounting definition of a subsidiary in accordance with IAS 27 Consolidated and
Separate Financial Statements (IAS 27). As a result, the Investment Companies are
consolidated in accordance with the definitions of IAS 27 and the principles set out
in SIC 12 Consolidation – Special Purpose Entities.
Employee benefit trust
The provision of shares to certain of the Company’s share option and share incentive
schemes is facilitated by an employee benefit trust. During 2007 9,007,694
(2006: 17,764,975) shares were sold to employees on exercise of their options,
and provisional allocations were made to options already awarded. The cost of
shares purchased by the trust is presented against retained earnings (see note 30).
The employee benefit trust has waived the right to receive dividends on these
shares although the waiver was temporarily suspended in respect of the Mondi
demerger dividend in specie. Immediately after the dividend was paid, the waiver
was reinstated.
The market value of the 9.7 million shares held by the trust at 31 December 2007
was $594 million. At 31 December 2006 the market value of the 19.8 million shares
held by the trust was $966 million.
The costs of operating the trust are borne by the Group but are not material.
Financial
statements
29. Called-up share capital and share-based payments continued
Share-based payments
During the year ended 31 December 2007, the Group had six share-based payment arrangements with employees, the details of which are described in the remuneration
report. All of the Group’s schemes are equity settled, either by award of options to acquire ordinary shares (ESOS, SAYE and former AAC Executive Share Incentive Scheme)
or award of ordinary shares (BSP, LTIP and SIP). The share option schemes are now closed to new participants, having been replaced with the BSP.
The total share-based payment charge for continuing operations relating to Anglo American shares for the year was made up as follows:
US$ million
ESOS
BSP
LTIP
Other schemes
2007
3
41
43
7
94
2006(1)
13
23
29
6
71
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
The fair values of options granted under the ESOS and SAYE schemes, being the more material option schemes, were calculated using a Black Scholes model. No ESOS
awards were granted in 2007 or 2006. The assumptions used in these calculations for the current and prior years are set out in the tables below:
Arrangement
Date of grant
Number of instruments
Exercise price (£)
Share price at the date of grant (£)
Contractual life (years)
Vesting conditions(2)
Expected volatility
Expected option life (years)
Risk free interest rate
Expected departures
Expected outcome of meeting performance criteria (at date of grant)
Fair value per option granted (weighted average) (£)
2007
SAYE(1)
2006
SAYE(1)
26/04/07
315,716
21.42
26.78
3.5-7.5
3-7
30%
3.5-7.5
5.2%
5%pa
n/a
8.68
27/04/06
476,417
17.97
22.46
3.5-7.5
3-7
30%
3.5-7.5
4.6%
5%pa
n/a
7.54
The fair value of ordinary shares awarded under the BSP and LTIP – ROCE, being the more material share schemes, was calculated using a Black Scholes model. The fair value
of shares awarded under the LTIP – TSR scheme was calculated using a Monte Carlo model. The assumptions used in these calculations for the current and prior years are set
out in the tables below(4):
Arrangement
Date of grant
Number of instruments
Exercise price (£)
Share price at the date of grant (£)
Contractual life (years)
Vesting conditions
Expected volatility
Expected option life (years)
Risk free interest rate
Expected departures
Expected outcome of meeting performance criteria (at date of grant)
Fair value per option granted (weighted average) (£)
BSP(1)
09/03/07
1,642,336
–
24.73
3
(3)
30%
3
5.1%
5%pa
44-100%
24.67
LTIP – ROCE(1)
23/03/07
841,211
–
24.63
3
(4)
30%
3
5.2%
5%pa
100%
23.96
2007
LTIP – TSR(1)
23/03/07
841,211
–
24.63
3
(5)
30%
3
5.2%
5%pa
n/a
18.34
BSP(1)
06/03/06
1,861,834
–
21.59
3
(3)
30%
3
4.3%
5%pa
44-100%
20.04
LTIP – ROCE(1)
29/03/06
749,826
–
20.72
3
(4)
30%
3
4.4%
5%pa
65%
19.46
2006
LTIP – TSR(1)
29/03/06
749,826
–
20.72
3
(5)
30%
3
4.4%
5%pa
n/a
13.10
(1) The number of instruments used in the fair value models differs to the total number of instruments awarded in the year due to awards made subsequent to the fair value calculations taking place.
The fair value calculated per the assumptions above has been applied to the total number of awards. The difference in income statement charge is not considered significant.
(2) Number of years continuous employment.
(3) Three years continuous employment with enhancement shares having variable vesting based on non-market based performance conditions.
(4) Variable vesting dependent on three years continuous employment and Group ROCE target being achieved.
(5) Variable vesting dependent on three years continuous employment and market based performance conditions being achieved.
The expected volatility is based on historic volatility over the last five years. The expected life is the average expected period to exercise. The risk free rate of return
is the yield on zero-coupon UK government bonds with a term similar to the expected life of the option.
The charges arising in respect of the other employee share schemes that the Group operated during the year are not considered material.
A progressive dividend growth policy is assumed in all fair value calculations.
Anglo American plc Annual Report 2007 |
117
Financial
statements
Notes to the financial statements continued
29. Called-up share capital and share-based payments continued
A reconciliation of option movements for the more significant share-based payment arrangements over the year to 31 December 2007 and the prior period is shown below.
All options outstanding at 31 December 2007 with an exercise date on or prior to 31 December 2007 are deemed exercisable. Options were exercised regularly during the
year and the weighted average share price for the year ended 31 December 2007 was £29.09 (2006: £22.36).
Executive Share Option Scheme
Options to acquire ordinary shares of 5486/91 US cents (2006: 50 US cents) were outstanding under the terms of this scheme as follows:
At 31 December 2007
Year of grant
1999
1999
2000
2000
2000
2001
2001
2002
2002
2003
2003
2003
2004
2004
2004
2005
2005
2005
Date exercisable
24 June 2002 to 23 June 2009
19 October 2002 to 18 October 2009
23 March 2003 to 22 March 2010
26 June 2003 to 25 June 2010
12 September 2003 to 11 September 2010
2 April 2004 to 1 April 2011
13 September 2004 to 12 September 2011
18 March 2005 to 17 March 2012
13 September 2005 to 12 September 2012
5 March 2006 to 4 March 2013
13 August 2006 to 12 August 2013
1 October 2006 to 30 September 2013
1 March 2007 to 28 February 2014
10 August 2007 to 9 August 2014
29 November 2009 to 28 November 2014
6 January 2008 to 4 January 2015
1 August 2008 to 31 July 2015
19 August 2008 to 18 August 2015
At 31 December 2006
Year of grant
1999
1999
2000
2000
2000
2001
2001
2002
2002
2003
2003
2003
2004
2004
2004
2005
2005
2005
2005
Date exercisable
24 June 2002 to 23 June 2009
19 October 2002 to 18 October 2009
23 March 2003 to 22 March 2010
26 June 2003 to 25 June 2010
12 September 2003 to 11 September 2010
2 April 2004 to 1 April 2011
13 September 2004 to 12 September 2011
18 March 2005 to 17 March 2012
13 September 2005 to 12 September 2012
5 March 2006 to 4 March 2013
13 August 2006 to 12 August 2013
1 October 2006 to 30 September 2013
1 March 2007 to 28 February 2014
10 August 2007 to 9 August 2014
29 November 2009 to 28 November 2014
6 January 2008 to 4 January 2015
28 February 2008 to 27 February 2015
1 August 2008 to 31 July 2015
19 August 2008 to 18 August 2015
Option price
per share £
6.98
8.00
7.66
7.66
10.19
10.03
8.00
11.50
8.05
9.28
11.41
10.81
13.43
11.52
12.73
12.12
14.40
13.94
Option price
per share £
6.98
8.00
7.66
7.66
10.19
10.03
8.00
11.50
8.05
9.28
11.41
10.81
13.43
11.52
12.73
12.12
12.96
14.40
13.94
Options
outstanding
1 Jan 2007
1,076,806
38,000
1,446,216
5,000
29,000
1,745,658
26,750
1,848,700
11,000
4,022,398
59,760
10,000
6,796,976
194,322
11,147
37,579
18,000
5,500
17,382,812
Options
outstanding
1 Jan 2006
1,844,354
63,504
2,244,700
23,000
68,000
3,290,348
63,350
3,659,521
68,102
11,729,915
237,053
70,000
7,419,462
212,031
11,147
37,579
20,850
18,000
5,500
31,086,416
Options
granted during
the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Options
granted during
the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Options
exercised
in year
288,550
9,000
368,400
5,000
14,000
430,250
–
451,295
–
1,420,359
21,823
10,000
3,955,583
87,949
–
–
–
–
7,062,209
Options
exercised
in year
748,548
25,504
764,484
18,000
39,000
1,452,290
36,600
1,737,862
52,102
7,442,843
150,863
60,000
353,806
4,000
–
–
20,850
–
–
12,906,752
Options
forfeited
in year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Options
forfeited
in year
–
–
–
–
–
–
–
–
–
–
–
–
268,680
13,709
–
–
–
–
–
282,389
Options
expired
in year
16,000
–
21,084
–
–
64,344
–
99,163
–
251,354
5,000
–
200,048
22,000
–
–
–
–
678,993
Options
expired
in year
19,000
–
34,000
–
–
92,400
–
72,959
5,000
264,674
26,430
–
–
–
–
–
–
–
–
514,463
Options
outstanding
31 Dec 2007
772,256
29,000
1,056,732
–
15,000
1,251,064
26,750
1,298,242
11,000
2,350,685
32,937
–
2,641,345
84,373
11,147
37,579
18,000
5,500
9,641,610
Options
outstanding
31 Dec 2006
1,076,806
38,000
1,446,216
5,000
29,000
1,745,658
26,750
1,848,700
11,000
4,022,398
59,760
10,000
6,796,976
194,322
11,147
37,579
–
18,000
5,500
17,382,812
118 | Anglo American plc Annual Report 2007
Financial
statements
29. Called-up share capital and share-based payments continued
SAYE Share Option Scheme(1)
Options to acquire ordinary shares of 5486/91 US cents (2006: 50 US cents) were outstanding under the terms of this scheme as follows:
At 31 December 2007
Year of grant
1999
2000
2001
2001
2002
2002
2003
2003
2003
2004
2004
2004
2005
2005
2005
2006
2006
2006
2007
2007
2007
Date exercisable
1 September 2006 to 28 February 2007
1 July 2007 to 31 December 2007
1 July 2006 to 31 December 2006
1 July 2008 to 31 December 2008
1 September 2007 to 29 February 2008
1 September 2009 to 28 February 2010
1 September 2006 to 28 February 2007
1 September 2008 to 28 February 2009
1 September 2010 to 28 February 2011
1 September 2007 to 29 February 2008
1 September 2009 to 28 February 2010
1 September 2011 to 29 February 2012
1 September 2008 to 28 February 2009
1 September 2010 to 28 February 2011
1 September 2012 to 28 February 2013
1 September 2009 to 28 February 2010
1 September 2011 to 29 February 2012
1 September 2013 to 28 February 2014
1 September 2010 to 28 February 2011
1 September 2012 to 28 February 2013
1 September 2014 to 28 February 2015
At 31 December 2006
Year of grant
1999
2000
2000
2001
2001
2002
2002
2002
2003
2003
2003
2004
2004
2004
2005
2005
2005
2006
2006
2006
Date exercisable
1 September 2006 to 28 February 2007
1 July 2005 to 31 December 2005(2)
1 July 2007 to 31 December 2007
1 July 2006 to 31 December 2006
1 July 2008 to 31 December 2008
1 September 2005 to 28 February 2006
1 September 2007 to 29 February 2008
1 September 2009 to 28 February 2010
1 September 2006 to 28 February 2007
1 September 2008 to 28 February 2009
1 September 2010 to 28 February 2011
1 September 2007 to 29 February 2008
1 September 2009 to 28 February 2010
1 September 2011 to 29 February 2012
1 September 2008 to 28 February 2009
1 September 2010 to 28 February 2011
1 September 2012 to 28 February 2013
1 September 2009 to 28 February 2010
1 September 2011 to 29 February 2012
1 September 2013 to 28 February 2014
Former AAC Executive Share Incentive Scheme(1)
At 31 December 2007
Date exercisable
Year of grant
1990-1997 1 January 1999 to 15 December 2007
1 January 2000 to 4 December 2008
1998
4 January 2001 to 4 January 2009
1999
At 31 December 2006
Date exercisable
Year of grant
1990-1997 1 January 1999 to 15 December 2007
1 January 2000 to 4 December 2008
1998
4 January 2001 to 4 January 2009
1999
Option price
per share £
6.38
4.85
8.45
8.45
9.23
9.23
7.52
7.52
7.52
10.81
10.81
10.81
10.15
10.15
10.15
17.97
17.97
17.97
21.42
21.42
21.42
Option price
per share £
6.38
4.85
4.85
8.45
8.45
9.23
9.23
9.23
7.52
7.52
7.52
10.81
10.81
10.81
10.15
10.15
10.15
17.97
17.97
17.97
Options
outstanding
1 Jan 2007
1,728
330,023
1,531
45,037
105,884
33,704
6,940
176,698
49,827
167,708
92,595
24,050
323,567
288,080
60,555
265,498
146,950
47,708
–
–
–
2,168,083
Options
outstanding
1 Jan 2006
24,292
19,667
337,199
181,426
52,084
7,517
120,423
37,086
444,260
193,406
54,309
190,004
106,383
25,741
374,272
321,011
62,208
–
–
–
2,551,288
Weighted average
option price
per share £
3.21
3.37
2.94
Weighted average
option price
per share £
3.69
3.96
3.31
Options
granted during
the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
185,798
90,656
39,262
315,716
Options
granted during
the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
276,978
150,153
49,286
476,417
Options
outstanding
1 Jan 2007
49,800
2,636,080
95,500
2,781,380
Options
outstanding
1 Jan 2006
163,300
5,357,700
120,100
5,641,100
Options
exercised
in year
1,728
324,172
319
7,792
102,187
7,544
5,776
16,963
6,488
160,787
9,239
1,588
22,208
8,936
4,079
9,868
2,911
1,798
65
–
–
694,448
Options
exercised
in year
22,451
9,880
5,806
176,766
2,977
2,548
7,118
1,294
427,353
5,299
177
6,321
3,021
418
5,236
1,396
40
13
–
–
678,114
Options
exercised
in year
49,800
1,956,280
56,800
2,062,880
Options
exercised
in year
107,100
2,721,620
24,600
2,853,320
Options
forfeited
in year
–
–
1,212
522
143
560
1,164
2,399
–
2,853
4,650
2,929
13,799
11,238
915
28,371
10,326
4,316
6,707
4,332
2,344
98,780
Options
forfeited
in year
113
–
1,370
2,331
4,070
–
5,667
1,739
5,627
10,537
3,928
14,948
10,465
1,013
43,531
27,143
1,261
11,363
3,203
1,483
149,792
Options
forfeited
in year
–
–
–
–
Options
forfeited
in year
4,400
–
–
4,400
Options
expired
in year
–
323
–
429
906
862
–
4,608
2,431
1,562
6,544
1,209
11,833
13,192
7,502
18,807
11,599
7,573
854
–
–
90,234
Options
expired
in year
–
9,787
–
798
–
4,969
1,754
349
4,340
872
377
1,027
302
260
1,938
4,392
352
104
–
95
31,716
Options
expired
in year
–
–
–
–
Options
expired
in year
2,000
–
–
2,000
Options
outstanding
31 Dec 2007
–
5,528
–
36,294
2,648
24,738
–
152,728
40,908
2,506
72,162
18,324
275,727
254,714
48,059
208,452
122,114
34,021
178,172
86,324
36,918
1,600,337
Options
outstanding
31 Dec 2006
1,728
–
330,023
1,531
45,037
–
105,884
33,704
6,940
176,698
49,827
167,708
92,595
24,050
323,567
288,080
60,555
265,498
146,950
47,708
2,168,083
Options
outstanding
31 Dec 2007
–
679,800
38,700
718,500
Options
outstanding
31 Dec 2006
49,800
2,636,080
95,500
2,781,380
The above share option prices have been calculated using a weighted average option price based on the shares outstanding at 31 December 2007 and converted to sterling
using an exchange rate of £1.00 = rand 14.11 (2006: £1.00 = rand 12.51).
See following page for footnotes.
Anglo American plc Annual Report 2007 |
119
Financial
statements
Notes to the financial statements continued
29. Called-up share capital and share-based payments continued
Long Term Incentive Plan(1)(3)
Ordinary shares of 5486/91 US cents (2006: 50 US cents) may be awarded for no consideration under the terms of this scheme. The number of shares outstanding
is shown below:
At 31 December 2007
Year of grant
2003
2004
2004
2004
2005
2005
2006
2007
Date exercisable/Vesting date
11 April 2006 to 10 April 2007
25 March 2007
26 April 2007
1 September 2007
2 April 2008
1 June 2008
29 March 2009
23 March 2010
At 31 December 2006
Year of grant
2002
2003
2004
2004
2004
2005
2005
2006
Date exercisable/Vesting date
25 May 2005 to 24 May 2006
11 April 2006 to 10 April 2007
25 March 2007
26 April 2007
1 September 2007
2 April 2008
1 June 2008
29 March 2009
Shares
outstanding
1 Jan 2007
118,901
1,572,479
170,323
10,000
2,058,193
61,993
1,492,252
–
5,484,141
Shares
outstanding
1 Jan 2006
64,829
1,866,963
1,608,079
170,323
10,000
2,098,393
61,993
–
5,880,580
Shares
conditionally
awarded during
the year
–
–
–
–
–
–
–
1,766,921
1,766,921
Shares
conditionally
awarded during
the year
–
–
–
–
–
–
–
1,499,652
1,499,652
Shares
vested
in year
116,351
738,356
79,975
10,000
233,001
–
31,618
–
1,209,301
Shares
forfeited
in year
–
834,123
90,348
–
18,200
–
36,911
6,350
985,932
Shares
vested
in year
64,829
765,702
–
–
–
–
–
–
830,531
Shares
forfeited
in year
–
982,360
35,600
–
–
40,200
–
7,400
1,065,560
Shares
expired
in year
2,550
–
–
–
–
–
–
–
2,550
Shares
expired
in year
–
–
–
–
–
–
–
–
–
Shares
outstanding
31 Dec 2007
–
–
–
–
1,806,992
61,993
1,423,723
1,760,571
5,053,279
Shares
outstanding
31 Dec 2006
–
118,901
1,572,479
170,323
10,000
2,058,193
61,993
1,492,252
5,484,141
Bonus Share Plan(4)
Ordinary shares of 5486/91 US cents (2006: 50 US cents) may be awarded under the terms of this scheme. The number of shares outstanding is as shown below:
At 31 December 2007
Year of grant
2004
2005
2006
2007
Performance period end date
31 December 2006
31 December 2007
31 December 2008
31 December 2009
At 31 December 2006
Year of grant
2004
2005
2006
Performance period end date
31 December 2006
31 December 2007
31 December 2008
Shares
outstanding
1 Jan 2007
459,737
2,293,706
1,815,462
–
4,568,905
Shares
outstanding
1 Jan 2006
497,738
2,418,612
–
2,916,350
Shares
conditionally
awarded during
the year
–
–
–
1,643,559
1,643,559
Shares
conditionally
awarded during
the year
–
–
1,861,834
1,861,834
Shares
vested
in year
454,053
381,423
283,839
81,808
1,201,123
Shares
vested
in year
38,001
73,749
12,209
123,959
Shares
forfeited
in year
–
64,470
107,065
17,463
188,998
Shares
forfeited
in year
–
51,157
34,163
85,320
Shares
expired
in year
–
–
–
–
–
Shares
expired
in year
–
–
–
–
Shares
outstanding
31 Dec 2007
5,684
1,847,813
1,424,558
1,544,288
4,822,343
Shares
outstanding
31 Dec 2006
459,737
2,293,706
1,815,462
4,568,905
Other share incentive schemes
During the year the Company operated a number of other share schemes under which ordinary shares of 5486/91 US cents may be awarded for no consideration.
Share incentive plan
Awards outstanding at
31 December 2007
921,574
921,574
Awards outstanding at
31 December 2006
1,112,139
1,112,139
Latest release date
7 December 2007
(1) The early exercise of share options is permitted at the discretion of the Company upon the termination of employment, ill health or death.
(2) The maturity period has been extended due to missed payments in terms of the scheme rules.
(3) The long term incentive awards are contingent on pre-established performance criteria being met. Further information in respect of this scheme is shown in the remuneration report.
(4) The Bonus Share Plan (BSP) was approved by shareholders in 2004 as a replacement for the ESOS and the Deferred Bonus Plan. Further information in respect of the BSP, including performance conditions, is shown in
the remuneration report.
120 | Anglo American plc Annual Report 2007
Financial
statements
Attributable to equity shareholders of the Company
30. Reconciliation of changes in equity
US$ million
Balance at 1 January 2006
Total recognised income and expense
Dividends paid
Dividends paid to minority interests
Shares issued and reclassification on conversion of bond
Convertible debt reserve transfer to retained earnings
Acquisition and disposal of businesses
Issue of shares to minority interests
Share buybacks
Purchase of shares for share schemes
Current tax on exercised employee share awards
Share-based payment charges on equity settled schemes
Issue of shares under employee share schemes
IFRS 2 charges arising on BBBEE and BEE transactions
Transfer between legal reserve and retained earnings
Revaluation reserve arising from acquisition of minority interests
Conversion of Anglo Platinum’s preference shares
Tax charged directly to equity relating to transactions with shareholders
Tax credit on transactions with equity holders
Other
Balance at 1 January 2007
Total recognised income and expense
Dividends paid
Dividends paid to minority interests
Dividend in specie relating to Mondi demerger
Acquisition, disposal and demerger of businesses
Issue of shares to minority interests
Share buybacks
Purchase of shares for share schemes
Share-based payment charges on equity settled schemes
Issue of shares under employee share schemes
Current tax on exercised employee share awards
Group reinvestment of dividends in Anglo Platinum
Minority conversion of Anglo Platinum’s preference shares
Exercise of share options in Anglo Platinum
Cancellation of treasury shares
IFRS 2 charges arising on BBBEE and BEE transactions
Other
Balance at 31 December 2007
Total
share
capital(1)
2,384
–
–
–
1,100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,484
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(33)
–
–
3,451
Retained
earnings
19,907
6,256
(2,839)
–
–
109
–
–
(3,951)
(19)
34
–
286
28
(3)
–
(62)
(8)
–
–
19,738
7,276
(1,527)
–
(3,718)
41
–
(6,167)
(23)
–
131
23
–
45
–
–
33
3
15,855
Share-
based
payment
reserve
155
–
–
–
–
–
–
–
–
–
–
94
(31)
–
–
–
–
–
29
–
247
–
–
–
–
(45)
–
–
–
156
(94)
–
–
–
–
–
–
(2)
262
Cumulative
translation
adjustment
reserve
339
(377)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(38)
58
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20
(1) Total share capital comprises called-up share capital of $738 million (2006: $771 million) and the share premium account of $2,713 million (2006: $2,713 million).
Fair value and other reserves comprise:
US$ million
Balance at 1 January 2006
Total recognised income and expense
Reclassification on conversion of bond
Convertible debt reserve transfer to retained earnings
Transfer between legal reserve and retained earnings
Revaluation reserve arising from acquisition of minority interests
Tax credit on transactions with equity holders
Balance at 1 January 2007
Total recognised income and expense
Acquisition, disposal and demerger of businesses
Cancellation of treasury shares
Other
Balance at 31 December 2007
Convertible
debt
reserve
131
–
(32)
(109)
–
–
10
–
–
–
–
–
–
Available
for sale
reserve
54
437
–
–
–
–
–
491
1,889
(7)
–
–
2,373
Fair value
and other
reserves
836
136
–
–
(32)
(109)
–
–
–
–
–
–
–
–
3
(4)
–
–
10
–
840
1,891
–
–
–
112
–
–
–
–
–
–
–
–
–
33
–
(3)
2,873
Cash flow
hedge
reserve
(121)
(301)
–
–
–
–
–
(422)
2
116
–
–
(304)
Minority
interests
3,957
603
–
(383)
–
–
(1,454)
37
–
–
–
14
–
6
–
–
62
(3)
–
17
2,856
844
–
(757)
–
(1,196)
28
–
–
–
–
–
86
(45)
51
–
35
(33)
1,869
Total
equity
27,578
6,618
(2,839)
(383)
1,068
–
(1,454)
37
(3,951)
(19)
34
108
255
34
–
(4)
–
(11)
39
17
27,127
10,069
(1,527)
(757)
(3,718)
(1,088)
28
(6,167)
(23)
156
37
23
86
–
51
–
68
(35)
24,330
Other
reserves(1)
772
–
–
–
3
(4)
–
771
–
3
33
(3)
804
Total fair
value and
other reserves
836
136
(32)
(109)
3
(4)
10
840
1,891
112
33
(3)
2,873
(1) Other reserves comprise $689 million (2006: $693 million) legal reserve and $115 million (2006: $82 million) capital redemption reserve. In 2006, these balances were partially offset by a negative revaluation
reserve of $4 million.
Anglo American plc Annual Report 2007 |
121
Financial
statements
Notes to the financial statements continued
31. Consolidated cash flow analysis
a) Reconciliation of profit before tax to cash inflows from continuing operations
US$ million
Profit before tax – continuing operations
Depreciation and amortisation
Share-based payment charges
Special items and remeasurements of subsidiaries and joint ventures
Net finance costs before remeasurements
Fair value gains before special items and remeasurements
Share of net income from associates
Additional pension contributions
Provisions
Increase in inventories
Increase in operating receivables
Increase in operating payables
Other adjustments
Cash inflows from continuing operations
(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations.
b) Reconciliation to the balance sheet
US$ million
Balance sheet
Balance sheet – disposal groups(2)
Bank overdrafts
Bank overdrafts – disposal groups(2)
Net debt classifications
2007
8,821
1,398
138
(243)
137
(12)
(197)
–
77
(352)
(389)
53
(56)
9,375
2006(1)
8,443
1,414
182
102
110
(13)
(607)
(188)
14
(299)
(602)
511
(55)
9,012
Cash and cash equivalents(1)
Short term borrowings
Medium and long term borrowings
2007
3,129
–
(17)
(38)
3,074
2006
3,004
63
(87)
–
2,980
2007
(5,895)
(31)
17
–
(5,909)
2006
(2,028)
(135)
87
–
(2,076)
2007
(2,404)
–
–
–
(2,404)
2006
(4,220)
(8)
–
–
(4,228)
(1) Short term borrowings on the balance sheet include overdrafts which are included within cash and cash equivalents for net debt.
(2) Disposal group balances are shown as ‘Assets classified as held for sale’ and ‘Liabilities directly associated with assets classified as held for sale’ on the balance sheet.
c) Movement in net debt
US$ million
Balance at 1 January 2006
Cash flow(3)
Acquisition and disposal of businesses(4)
Conversion to equity
Unwinding of discount on convertible debt
Reclassifications
Movement in fair value
Other non-cash movements
Currency movements
Balance at 1 January 2007
Cash flow(3)
Acquisition, disposal and demerger of businesses
Reclassifications
Movement in fair value
Other non-cash movements
Currency movements
Balance at 31 December 2007
Cash and
Debt due
cash equivalents(1) within one year
3,319
(170)
–
–
–
–
–
–
(169)
2,980
34
–
–
–
–
60
3,074
(1,965)
(193)
224
311
–
(509)
–
6
50
(2,076)
(2,618)
468
(1,394)
(7)
–
(282)
(5,909)
Debt due
after one year
(6,363)
(374)
1,480
757
(13)
438
5
(13)
(145)
(4,228)
(1,334)
1,858
1,420
10
18
(148)
(2,404)
Current
financial asset
Net debt
investments excluding hedges
(4,993)
(742)
1,703
1,068
(13)
(71)
5
(21)
(260)
(3,324)
(3,918)
2,326
26
3
18
(370)
(5,239)
16
(5)
(1)
–
–
–
–
(14)
4
–
–
–
–
–
–
–
–
Total net debt
Hedges(2) including hedges
(4,980)
(742)
1,703
1,068
(13)
(71)
185
(21)
(260)
(3,131)
(3,918)
2,326
26
198
18
(370)
(4,851)
13
–
–
–
–
–
180
–
–
193
–
–
–
195
–
–
388
(1) The Group operates in certain countries (principally South Africa and Venezuela) where the existence of exchange controls may restrict the use of certain cash balances. These restrictions are not expected to have any
material effect on the Group’s ability to meet its ongoing obligations.
(2) Derivative instruments that provide an economic hedge of assets and liabilities in net debt are included above to reflect the true net debt position of the Group at the year end. This consists of net current derivative
assets of $396 million (2006: $6 million) and net non-current derivative liabilities of $8 million (2006: $187 million net assets) and are classified within other financial assets and liabilities on the balance sheet.
(3) Cash flow on debt due within one year includes repayments of $162 million which relate to discontinued operations (2006: $228 million). Similarly, cash flow on debt due after one year includes receipts of
$993 million (2006: $107 million) which relate to discontinued operations.
(4) Includes net debt of $1,917 million which was transferred to ‘Investments in associates’.
122 | Anglo American plc Annual Report 2007
32. EBITDA by business segment
US$ million
By business segment
Platinum
Diamonds
Coal(1)
Base Metals(1)
Ferrous Metals and Industries
Industrial Minerals(1)
Exploration
Corporate Activities
EBITDA – continuing operations
EBITDA – discontinued operations
EBITDA – total Group
Financial
statements
2007
2006
3,155
587
882
4,683
1,561
732
(157)
(272)
11,171
961
12,132
2,845
541
1,082
4,255
1,560
539
(132)
(259)
10,431
1,766
12,197
(1) In 2007 Copebrás and Yang Quarry have been reclassified from Industrial Minerals to Base Metals and from Industrial Minerals to Coal respectively. This is to align with internal management reporting. The comparative
data has been reclassified accordingly.
EBITDA is stated before special items and remeasurements and is reconciled to ‘Total profit from operations and associates’ as follows:
US$ million
Total profit from operations and associates
Operating special items and remeasurements (including associates)
Net profit on disposals (including associates)
Associates’ financing remeasurements
Depreciation and amortisation: subsidiaries and joint ventures
Share of associates’ interest, tax, depreciation, amortisation and minority interests
EBITDA – continuing operations
EBITDA – discontinued operations
EBITDA – total Group
2007
8,929
711
(484)
4
1,398
613
11,171
961
12,132
2006
8,514
423
(447)
(1)
1,414
528
10,431
1,766
12,197
Anglo American plc Annual Report 2007 |
123
Financial
statements
Notes to the financial statements continued
33. Discontinued operations
On 2 July 2007 the Paper and Packaging business was demerged from the Group by way of a dividend in specie paid to shareholders.
On 2 October 2007 the Group sold 67.1 million shares in AngloGold Ashanti Limited which reduced the Group’s shareholding from 41.6% to 17.3%. The Group’s
representation on the company’s board was also withdrawn at this time. The remaining investment is accounted for as a financial asset investment.
Both of these operations are considered discontinued.
The results of the discontinued businesses are shown below:
US$ million
Revenue
Total operating costs
Operating profit from subsidiaries and joint ventures –
discontinued operations
Net profit on disposals
Share of net income from associates
Total profit from discontinued operations and associates
Net finance costs
Profit before tax – discontinued operations
Income tax (expense)/income
Profit for the financial year – discontinued operations
Profit on partial disposal of AngloGold Ashanti(1)
Transaction costs relating to the demerger of Mondi(1)
Tax on net profit on disposal and demerger of discontinued operations
Net profit after tax on disposal and demerger of discontinued operations
Before special items
and remeasurements
2007
4,062
(3,741)
2006
8,081
(7,387)
321
–
97
418
(19)
399
(81)
318
–
–
–
–
694
–
119
813
(55)
758
(165)
593
–
–
–
–
Special items and
remeasurements
2007
–
(10)
(10)
119
(187)
(78)
–
(78)
1
(77)
1,970
(10)
(157)
1,803
2006
–
(462)
(462)
903
(41)
400
(39)
361
43
404
–
–
–
–
2007
4,062
(3,751)
311
119
(90)
340
(19)
321
(80)
241
1,970
(10)
(157)
1,803
2006
8,081
(7,849)
232
903
78
1,213
(94)
1,119
(122)
997
–
–
–
–
Total profit for the financial year – discontinued operations
318
593
1,726
404
2,044
997
(1) For further details of the demerger of the Paper and Packaging business and disposal of AngloGold Ashanti refer to note 35.
Summary discontinued segment information
Segment revenue and segment result by discontinued business segment were:
US$ million
Subsidiaries and joint ventures
Gold
Paper and Packaging
Total subsidiaries and joint ventures
Revenue and net income from associates
Gold
Paper and Packaging
Total associates
Total discontinued operations including net income from associates
Net profit on disposals
Total profit from discontinued operations and associates
Segment revenue(1)
Segment result before special
items and remeasurements(2)
Segment result after special
items and remeasurements( 2)
2007
2006
2007
2006
2007
2006
–
4,062
4,062(3)
1,004
49
1,053
5,115
857
7,224
8,081(3)
883
269
1,152
9,233
–
321
321
95
2
97
418
–
418
228
466
694
113
6
119
813
–
813
–
311
311
(92)
2
(90)
221
119
340
(142)
374
232
72
6
78
310
903
1,213
(1) By-product revenue credited to Group cost of sales for the year ended 31 December 2006 was $34 million and relates to AngloGold Ashanti’s contribution as a subsidiary; AngloGold Ashanti credit sales of uranium,
silver and acid to cost of sales in accordance with the Gold Industry Standard on production cost.
(2) Segment result is defined as being segment revenue less segment expense; that is operating profit.
(3) This represents segment revenue; the Group’s share of associates of discontinued operations and discontinued associates’ revenue figures are provided for additional information.
124 | Anglo American plc Annual Report 2007
33. Discontinued operations continued
Summary discontinued special items and remeasurements
The following tables provide an analysis of special items and remeasurements for
discontinued operations:
Subsidiaries and joint ventures’ special items and remeasurements
– discontinued operations
Operating special items and remeasurements – discontinued operations
US$ million
Operating special items(1)
Operating remeasurements(2)
Total operating special items and remeasurements
– discontinued operations
Tax
Minority interests
Net total attributable to equity shareholders of the Company
– discontinued operations
2007
(13)
3
(10)
1
–
2006
(100)
(362)
(462)
68
160
(9)
(234)
(1) Includes impairment of Mondi Packaging assets of nil (2006: $80 million) and Mondi Business Paper
assets of $5 million (2006: $24 million).
(2) 2006 principally relates to unrealised net gains/(losses) on non-hedge derivatives of AngloGold Ashanti
incurred during the period it was held as a subsidiary.
Profits on disposals – discontinued operations
US$ million
Net profit on disposals(1)
Tax
Net total attributable to equity shareholders of the Company
– discontinued operations
2007
119
(8)
2006
903
(24)
111
879
(1) Net profit on disposals in 2007 includes part disposal of Mondi Packaging Paper Swiecie ($77 million)
and disposal of Bischof + Klein ($26 million). In 2006 the net profit includes part and deemed disposals
of AngloGold Ashanti (totalling $896 million).
Financing special items and remeasurements – discontinued operations
US$ million
Financing special items
Financing remeasurements(1)
Total financing special items and remeasurements
– discontinued operations
Tax
Minority interests
Net total attributable to equity shareholders of the Company
– discontinued operations
2007
(2)
2
2006
–
(39)
–
8
–
8
(39)
(1)
21
(19)
(1) Financing remeasurements include fair value movements of nil (2006: $43 million loss) on the
AngloGold Ashanti convertible bond.
Total special items and remeasurements – discontinued operations
US$ million
Total special items and remeasurements before tax
and minority interests – discontinued operations
Tax
Minority interests
Net total special items and remeasurements attributable to
equity shareholders of the Company – discontinued operations
2007
2006
109
1
–
402
43
181
110
626
Associates’ special items and remeasurements – discontinued operations
US$ million
Associates’ operating special items and remeasurements(1)
Associates’ net profit on disposals
Associates’ financing remeasurements(2)
Total associates’ special items and remeasurements before
tax and minority interests – discontinued operations
Tax
Net total associates’ special items and remeasurements
– discontinued operations
2007
(225)
7
13
2006
(106)
17
25
(205)
18
(64)
23
(187)
(41)
(1) Includes net losses of $217 million (2006: $102 million) on non-hedge derivatives of AngloGold Ashanti
incurred in the period it was held as an associate.
(2) Relates to fair value gains of $13 million (2006: $25 million) on the AngloGold Ashanti convertible bond
incurred in the period it was held as an associate.
Financial
statements
Employee numbers and costs – discontinued operations
The average number of employees, excluding associates’ employees and including
a proportionate share of employees within joint ventures, was:
Thousands
By business segment
Gold(1)
Paper and Packaging(2)
Discontinued operations
2007
2006
–
16
16
15
34
49
(1) Includes employee numbers for AngloGold Ashanti for the period it was held as a subsidiary pro rated
over the full year.
(2) Includes employee numbers for Mondi for the period it was held as a subsidiary pro rated over the full year.
Payroll costs in respect of the employees included in the table above were:
US$ million
Wages and salaries
Social security costs
Post retirement healthcare costs
Defined contribution pension plan costs
Defined benefit pension plan costs
Share-based payments
Discontinued operations
34. Acquisitions
2007
473
95
1
–
2
4
575
2006
1,114
175
1
40
12
7
1,349
Acquisition of subsidiaries
The Group made no material acquisitions of subsidiaries in the year ended
31 December 2007.
In November 2006, Anglo Coal, Hillsborough Resources Limited and NEMI Northern
Energy & Mining Inc. formed Peace River Coal Partnership, of which Anglo Coal
held a 60% interest. Peace River Coal began production in late 2007. The total
consideration was $89 million which consisted of contribution of assets to the
partnership of $59 million and cash paid of $30 million. Anglo Coal held a 65.9%
interest at 31 December 2007.
In the prior year, the Group also acquired a 100% interest in AltaSteel, including
the remaining 50% of Moly-Cop Canada, on 1 February 2006, for a total cash
consideration of $84 million (including transaction costs).
Anglo American plc Annual Report 2007 |
125
Financial
statements
Notes to the financial statements continued
34. Acquisitions continued
The carrying value and fair value of the net assets at the date of acquisition and related net cash outflows are shown below:
US$ million
Net assets acquired
Tangible assets
Other non-current assets
Current assets
Current liabilities
Non-current liabilities
Minority interests
Add: Value attributable to reserves and resources acquired(2)
Less: Investments in associates previously recorded
Less: Fair value of assets contributed
Fair value of net assets acquired
Partial funding of partner cash calls
Goodwill arising on acquisitions
Negative goodwill arising on acquisitions
Total cost of acquisitions
Satisfied by
Net cash acquired
Deferred consideration
Cash paid in prior period
Net cash paid(3)
Peace River Coal(1)
Fair
value
Carrying
value
70
13
48
(47)
(29)
(11)
44
166
1
12
(3)
(14)
(65)
97
4
–
(59)
42
(12)
–
–
30
–
–
30
–
Other
Fair
value
148
11
53
(51)
(52)
(15)
94
–
(9)
–
85
–
51
(2)
134
11
–
–
123
Total fair
value
Total fair
value
2007
2006
314
12
65
(54)
(66)
(80)
191
4
(9)
(59)
127
(12)
51
(2)
164
11
–
30
123
257
48
172
(114)
(98)
7
272
–
–
–
272
–
41
(10)
303
(1)
18
–
286
(1) Since 1 January 2007, the operating loss for Peace River Coal was $12 million. There was no profit or loss in the period from its creation to 31 December 2006. There has been no revenue in the year ended
31 December 2007 or in the period since its creation to 31 December 2006. As the entity was formed as part of a business combination, there were no carrying values immediately prior to the combination.
Owing to the timing and size of the acquisition, consolidation into the Group balance sheet only occurred in 2007.
(2) Represents the Group’s share of value (implicit in the transaction) of reserves and resources, capitalised within tangible assets.
(3) Includes net cash paid by discontinued operations of $9 million (2006: $144 million).
In the first half of the year the Group acquired 3,353,108 shares in Anglo Platinum Limited through a dividend reinvestment plan. From 4 September 2007 to 31 December 2007,
the Group purchased a further 4,435,086 shares for total consideration of $671 million. Of this, $658 million had been paid before the year end. The Group’s percentage
holding has increased to 76.5% at 31 December 2007.
Acquisition of material joint venture
The Group made one material acquisition of a joint venture in the year ended 31 December 2007.
On 18 July 2007, the Group completed its acquisition of a 49% interest in the MMX Minas-Rio integrated iron ore project in Brazil (Minas-Rio). The acquisition was effected
through the purchase of a 30% interest in the project companies – MMX Minas-Rio Mineração SA and LLX Minas-Rio Logística SA – from Centennial Asset Mining Fund LLC
and the subscription for shares in the project companies equivalent to a 19% interest. The total acquisition cost of $1.2 billion comprises $1.15 billion plus transaction costs
and provision for post closing adjustments. The Group’s 49% interest in Minas-Rio is accounted for as a joint venture entity and, hence, has been proportionately consolidated
with effect from 18 July 2007.
The fair values of the acquired assets and liabilities in the table below are provisional, and will be finalised in 2008 when the final values arising from the fair value
assessment are confirmed.
The carrying value and provisional fair value of the net assets at the date of acquisition and related net cash outflow are shown below:
US$ million
Net assets acquired
Tangible assets
Value attributable to reserves and resources acquired
Other tangible assets
Other non-current assets
Current assets
Current liabilities
Non-current liabilities
Fair value of net assets acquired and total cost of acquisition(2)
Satisfied by
Net cash acquired
Deferred consideration
Costs accrued
Net cash paid
Carrying
value
Minas-Rio(1)
Provisional
fair value
–
84
16
52
(84)
(28)
40
1,770
86
16
52
(84)
(632)
1,208
48
47
1
1,112
(1) Minas-Rio had no revenue for the year ended 31 December 2007. Since acquisition, it has contributed an operating loss of $15 million to the Group’s operating profit. Had the acquisition date been at 1 January 2007,
the operating loss contributed would have been approximately double.
(2) A further potential payment of up to $600 million has not been included in the above as it is contingent on certain criteria being met. Payment of this amount was considered possible at 31 December 2007.
126 | Anglo American plc Annual Report 2007
Financial
statements
35. Disposals and demerger of subsidiaries and businesses
Disposals and demerger of subsidiaries
US$ million
Net assets disposed
Tangible assets
Other non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Minority interests
Group’s share of net assets immediately prior to disposal
Less: Retained investments in associates
Less: Retained financial asset investments
Less: Movement in share of assets arising on deemed disposal
Add: Purchase price adjustment
Net assets disposed
Cumulative translation differences recycled from reserves
Increase in minority share
Fair value losses arising on transactions
Other
Net gain on disposals
Dividend in specie relating to Mondi demerger
Net sale proceeds
Net cash and cash equivalents disposed
Non-cash proceeds
Other
Costs accrued
Net cash (outflow)/inflow from disposals and demerger(1)
2007
2006
6,119
7,925
6,197
1,027
1,208
4,194
3,115
(2,416) (2,878)
(3,064) (4,683)
4,506
(1,200) (1,679)
4,919
2,827
(393) (1,451)
(370)
(318)
(170)
–
10
–
846
4,208
(9)
(334)
220
–
52
68
13
3
1,072
157
–
(3,718)
2,194
384
(283)
(437)
(393)
–
2
–
–
4
(49) 1,520
(1) Includes net cash outflow from disposals in relation to discontinued operations of $159 million
(2006: inflow of $734 million).
Disposals of subsidiaries recorded during the year principally include the demerger
of Mondi, the completion of the disposal of Highveld and the dilution of an effective
12% and 6% interest in Tongaat-Hulett and Hulamin, respectively. Details of these
disposals are included below.
a) Mondi
On 2 July 2007, the Paper and Packaging business, Mondi, was demerged from the
Group by way of a dividend in specie paid to shareholders.
b) Highveld Steel and Vanadium Corporation (Highveld)
On 4 May 2007, the Group announced the disposal of the remaining 29.2%
shareholding in Highveld to the Evraz Group SA (Evraz) for $238 million. Evraz
was granted an option, subject to regulatory approvals, over this stake as part of
the original transaction in which the Group sold 49.8% of Highveld to Evraz and
Credit Suisse (in July 2006). Evraz exercised their option on 26 April 2007 following
requisite regulatory approvals.
The net asset position of Highveld at 4 May 2007, together with the resulting profit
on disposal of shares and related net cash inflow, is shown below:
US$ million
Tangible assets
Other non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Minority interests
Net assets disposed
Cumulative translation differences recycled from reserves
Other
Net gain on disposal
Net sale proceeds
Net cash and cash equivalents disposed
Net cash inflow from disposal of Highveld
2007
335
13
360
(338)
(89)
281
(211)
70
25
3
140
238
(56)
182
c) Tongaat-Hulett Group
In December 2006 the Tongaat-Hulett Group announced the proposed unbundling
and listing of Hulamin and simultaneous introduction of BBBEE into both companies.
This transaction was effected on 25 June 2007, and empowerment parties acquired
25% of Tongaat-Hulett and 15% of Hulamin’s operations. The Group commenced
equity accounting both Tongaat-Hulett and Hulamin as of 25 June 2007. However,
in accordance with SIC 12, Tongaat-Hulett and Hulamin are required to consolidate
the entities housing the empowerment interests (as they supplied significant funding
to these parties to effect the transaction). This has the effect, in accounting terms,
of cancelling the shares issued to these parties. As a result, the Group has equity
accounted 49.8% and 44.9% of Tongaat-Hulett and Hulamin, respectively. The
Group’s legal interest in these companies at 31 December 2007 was 37.2% and
38.4%, respectively.
The Paper and Packaging business has been presented as a discontinued operation.
Refer to note 33 for further details of discontinued operations.
Therefore from 25 June 2007 the Group ceased to account for Tongaat-Hulett and
Hulamin as subsidiaries and began accounting for them as associates under the
equity method.
The net asset position at the date of disposal, together with the resulting dividend
in specie paid to shareholders, is shown below:
The net asset position at the date of disposal, together with the reclassification
to investments in associates and related net cash outflow, is shown below:
US$ million
Tangible assets
Other non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Minority interests
Group’s share of net assets immediately prior to disposal
Less: Retained financial asset investments(1)
Net assets disposed
Cumulative translation differences recycled from reserves
Dividend in specie relating to Mondi demerger
Net loss on disposal
Net sale costs
Net cash and cash equivalents disposed
Costs accrued
Net cash outflow from demerger of Mondi
2007
4,861
1,126
3,072
(1,533)
(2,656)
4,870
(476)
4,394
(318)
4,076
(358)
(3,718)
(10)
(10)
(297)
4
(303)
US$ million
Tangible assets
Other non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Minority interests
Group’s share of Tongaat-Hulett’s and Hulamin’s net assets
immediately prior to disposal
Less: Retained investments in associates immediately after disposal(1)
Net assets disposed
Fair value loss arising on transaction
Net loss on disposal
Net sale proceeds
Net cash and cash equivalents disposed
Net cash outflow from partial disposal of Tongaat-Hulett and Hulamin
(1) This relates to investments in associates of $176 million and $217 million in Tongaat-Hulett and
2007
959
49
709
(490)
(305)
922
(529)
393
(393)
–
68
(68)
–
(84)
(84)
(1) This relates to the dividend in specie paid to the investment companies Epoch, Epoch Two and Tarl and
Hulamin respectively.
the shares paid to the Butterfield Trust. The Butterfield Trust shares were sold immediately.
Anglo American plc Annual Report 2007 |
127
Financial
statements
Notes to the financial statements continued
35. Disposals and demerger of subsidiaries and businesses continued
Disposal of associates
The Group made one material disposal of an associate in the year ended
31 December 2007, which was the partial disposal of AngloGold Ashanti Limited.
AngloGold Ashanti
On 2 October 2007, the Group sold 67.1 million shares in AngloGold Ashanti
Limited for $2.9 billion. This reduced the Group’s shareholding from 41.6% to 17.3%.
The Group’s representation on the company’s board was also withdrawn at this time.
The remaining investment is accounted for as a financial asset investment. The Gold
business has been presented as a discontinued operation. Refer to note 33 for further
details of discontinued operations.
The Group’s shareholding has reduced to 16.6% at 31 December 2007.
The net asset position at the date of the disposal, together with the reclassification
to a ‘Financial asset investment’ and related net cash inflow, is shown below:
US$ million
Investment in associate immediately prior to disposal
Less: Retained financial asset investment
Net assets disposed
Cumulative translation differences recycled from reserves
Other
Net gain on disposal
Net sale proceeds
Realised foreign exchange
Costs accrued
Net cash inflow from partial disposal of AngloGold Ashanti
2007
1,458
(606)
852
(3)
29
1,970
2,848
15
4
2,867
Disposals of subsidiaries and businesses in the year ended
31 December 2006
Significant disposals recorded during the year ended 31 December 2006 are
summarised below. For details of these disposals refer to the 2006 Annual Report.
AngloGold Ashanti
On 20 April 2006, the Group completed the sale of 19.7 million ordinary shares held
in AngloGold Ashanti Limited for cash of $978 million. This, together with the Group’s
non-participation in the issue of additional ordinary shares, throughout the year, by
AngloGold Ashanti, diluted the Group’s percentage investment from 50.9% to 41.7%.
With effect from that date, the Group ceased to account for AngloGold Ashanti as
a subsidiary and began accounting for it as an associate under the equity method.
The Group’s shareholding has subsequently reduced to 16.6%.
Kumba (non-iron ore)
In November 2006, the Kumba Resources BEE transaction was effected. Kumba Iron
Ore was accordingly unbundled from Kumba Resources (leaving the non-iron ore
operations) which was renamed Exxaro. The Group retained a 64% interest in Kumba
Iron Ore. The Group disposed of part of its investment in Exxaro through a share
buyback and sale of shares. The Group retained an interest of 23% in Exxaro over
which it does not exercise significant influence and accordingly this has been held
as an available for sale financial asset since 28 November 2006. This interest has
subsequently reduced to 10%.
Highveld Steel and Vanadium Corporation (Highveld)
In July 2006, the Group disposed of its 79% stake in Highveld to Evraz Group SA
and Credit Suisse for a total consideration of $678 million. Following the disposal of
the initial 49.8%, for which the Group received $412 million, and subject to certain
regulatory approvals Evraz had an option to acquire the Group’s remaining 29.2%
stake in Highveld for $266 million. This amount was to be reduced by any dividends
paid by Highveld prior to the Group selling its remaining shares. The Group and Credit
Suisse agreed that the Group would retain the voting rights in respect of the shares
acquired by Credit Suisse until such time as the Group disposed of all its shares in
Highveld. As a result, the Group continued to consolidate Highveld (while recording
an increased minority interest) until the final disposal on 4 May 2007.
Anglo Platinum’s Rustenburg Platinum Mines
On 8 November 2006, Anglo Platinum announced the conclusion of the BEE
transaction with the Bakgatla-Ba-Kgafela (Bakgatla) traditional community.
In terms of this transaction the Bakgatla acquired a 15% interest in Anglo
Platinum’s Rustenburg Platinum Mines’ Union section mining and concentrating
business and interests in prospecting rights of the Rooderand 46 JQ, portion 2
and Magazynskraal 3 JQ properties. The agreements became unconditional on
1 December 2006.
128 | Anglo American plc Annual Report 2007
36. Disposal groups and non-current assets held for sale
Net assets relating to Highveld, which were previously classified as held for sale at 31 December 2006, were disposed of on 4 May 2007 as disclosed in note 35.
The following assets and liabilities relating to disposal groups were classified as held for sale. The Group expects to complete the sale of these businesses within 12 months
of the year end.
Financial
statements
US$ million
Intangible assets
Tangible assets
Biological assets
Environmental rehabilitation trusts
Investments in associates
Financial asset investments
Other non-current assets
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Short term borrowings
Trade and other payables
Other current liabilities
Total current liabilities
Medium and long term borrowings
Provisions for liabilities and charges
Deferred tax liabilities
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Net assets
2007
2006
Namakwa
Platinum
disposal
Sands(1)
groups(2)
Total Highveld
Namakwa
Sands
Other
Total
3
337
–
2
–
–
–
342
38
50
–
88
430
–
(25)
–
(25)
–
(6)
(84)
(4)
(94)
(119)
311
–
252
–
2
74
–
–
328
–
–
–
–
328
(69)
(28)
(4)
(101)
–
(3)
(64)
–
(67)
(168)
160
3
589
–
4
74
–
–
670
38
50
–
88
758
(69)
(53)
(4)
(126)
–
(9)
(148)
(4)
(161)
(287)
471
–
322
–
–
–
15
–
337
116
160
60
336
673
(134)
(166)
(4)
(304)
(3)
(23)
(43)
(15)
(84)
(388)
285
2
278
–
2
–
–
1
283
38
41
–
79
362
–
(21)
–
(21)
–
(5)
(72)
(3)
(80)
(101)
261
4
42
16
–
47
5
–
114
12
24
3
39
153
(1)
(46)
–
(47)
(5)
(2)
(4)
–
(11)
(58)
95
6
642
16
2
47
20
1
734
166
225
63
454
1,188
(135)
(233)
(4)
(372)
(8)
(30)
(119)
(18)
(175)
(547)
641
(1) Namakwa Sands disposal group is included in the Base Metals business. Namakwa Sands continues to be held as a disposal group while awaiting approval of the conversion of old order to new order mining rights.
The sale is expected to complete in 2008.
(2) This reflects the reclassification of operations to be sold under previously announced BEE deals. The split of the total assets, total liabilities and net assets is as follows:
US$ million
Lebowa Platinum Mines Limited
Northam Platinum Mines Limited
Other
Total assets
Total liabilities
Net assets
243
74
11
328
(166)
–
(2)
(168)
77
74
9
160
The net carrying amount of assets and associated liabilities classified as held for sale during the year was written down by nil (2006: $28 million, after tax).
Industrial Minerals has not been classified as held for sale as the criteria in IFRS 5 were not met at 31 December 2007.
Anglo American plc Annual Report 2007 |
129
40. Related party transactions
The Group has a related party relationship with its subsidiaries, associates and joint
ventures (see note 41).
At 31 December 2007, the Group held $131 million (2006: $175 million) of 10%
non-cumulative redeemable preference shares in DB Investments, the holding
company of De Beers Société Anonyme.
The Company and its subsidiaries, in the ordinary course of business, enter into
various sales, purchase and service transactions with joint ventures and associates
and others in which the Group has a material interest. These transactions are under
terms that are no less favourable than those arranged with third parties. These
transactions are not considered to be significant.
Dividends received from associates during the year totalled $275 million (2006:
$241 million), excluding $52 million (2006: $35 million) from discontinued
operations, as disclosed in the Consolidated cash flow statement.
During 2007 Anglo Coal made payments of $8 million in respect of wharfage charges
to the Richards Bay Coal Terminal, an associate of Anglo Coal.
The directors of the Company and their immediate relatives control 3% (2006: 3%)
of the voting shares of the Company.
On 29 June 2007, the Group entered into a contract to sell the freehold property and
all fixtures and fittings of a property owned by the Group to Mr A J Trahar, formerly
Group Chief Executive, for total consideration of £6,991,800 ($14,026,943).
This transaction was carried out at full market value and the proceeds were received
by the Group following completion.
Remuneration and benefits received by directors are disclosed in the directors’
remuneration report. Remuneration and benefits of other key management personnel
are given in note 6.
Information relating to pension fund arrangements is disclosed in note 28.
Financial
statements
Notes to the financial statements continued
37. Capital commitments
US$ million
Contracted but not provided
2007
2,373
2006
1,886
38. Contingent liabilities and contingent assets
The Group is subject to various claims which arise in the ordinary course of business.
Additionally, and as set out in the demerger agreement, Anglo American and
Mondi have agreed to indemnify each other, subject to certain limitations, against
certain liabilities. Having taken appropriate legal advice, the Group believes that
the likelihood of a material liability arising is remote. Contingent liabilities in respect
of the Group’s subsidiaries comprise aggregate amounts of $488 million (2006:
$214 million) in respect of loans and performance guarantees given to banks and
other third parties and are primarily in respect of environmental restoration and
decommissioning obligations. For information relating to contingent liabilities in
respect of associates and joint ventures refer to notes 17 and 18 respectively.
At 31 December 2007, contingent liabilities of nil (2006: nil) were secured on the
assets of the Group.
There were no significant contingent assets in the Group at either 31 December 2007
or 31 December 2006.
The Venezuelan Ministry of Basic Industries and Mining (MIBAM) commenced
administrative proceedings in January 2007 in relation to the 16 nickel exploration
and exploitation concessions held by the Company’s subsidiary, Minera Loma
de Níquel (MLdN) alleging that MLdN had failed to fulfil certain conditions of its
concessions. MLdN submitted a timely response to MIBAM’s administrative writ
in February 2007. By means of a series of resolutions published in two Official
Gazettes made available in January 2008, MIBAM declared the termination of 13 of
MLdN’s nickel concessions. The 13 concessions do not include the concessions where
the current mining operations and the metallurgical facilities are located. MLdN is
in the process of filing administrative appeals seeking the annulment of all of these
resolutions and requesting that their effects be suspended pending a final decision
by MIBAM.
At 31 December 2007 the Group’s interest in the book value of MLdN, including
its mineral rights, was $616 million (as included in the Group’s balance sheet).
In the 12 months to December 2007 MLdN’s contribution to Group operating profit
was $370 million.
Anglo American is proud of its record in Venezuela where it has invested substantial
amounts in exploration and subsequently the construction of the country’s only
primary nickel producer. It is a major contributor to and employer in the Venezuelan
economy as well as a significant tax payer. The operation continues, as it has always
done, to work constructively with all stakeholders – employees, local communities
and government – and to the highest sustainable development, social and
environmental standards.
Anglo American and MLdN are seeking further clarification from MIBAM, with which
they have maintained a constructive working relationship in the past. Anglo American
and MLdN believe that there is a valid legal basis to reverse the notices of
termination and will pursue all appropriate legal and other remedies and actions
to protect their respective interests both under Venezuelan and international law.
As a result, the Group continues to consolidate MLdN and no impairment has been
recorded for the year ended 31 December 2007.
39. Operating leases
At 31 December 2007, the Group had the following outstanding commitments under
non-cancellable operating leases:
US$ million
Expiry date
Within one year
One to two years
Two to five years
After five years
2007
2006
52
42
207
205
506
93
71
202
500
866
Operating leases relate principally to land and buildings and vehicles.
130 | Anglo American plc Annual Report 2007
41. Group companies
The principal subsidiaries, joint ventures, associates and proportionately consolidated joint arrangements of the Group at 31 December 2007, and the Group percentage
of equity capital, joint arrangements and joint venture interests are set out below. All these interests are held indirectly by the parent company and are consolidated within
these financial statements. The Group has restricted the information to its principal subsidiaries as full compliance with Schedule 5 paragraph 15 of the Companies Act 1985
would result in a statement of excessive length.
Financial
statements
Subsidiary undertakings
Continuing operations
Platinum
Anglo Platinum Limited
Coal
Anglo Coal(2)
Anglo Coal Holdings Australia Limited
Peace River Coal Partnership
Country of incorporation
Business
Percentage of equity owned(1)
2007
2006
South Africa
Platinum
76.5%
75.4%
South Africa
Australia
Canada
Coal
Coal
Coal
100%
100%
65.9%
100%
73%
100%
100%
100%
100%
100%
100%
99.9%
100%
91.4%
81.9%
100%
100%
100%
60.0%
100%
73%
100%
100%
100%
100%
100%
100%
99.9%
100%
91.4%
80.5%
100%
100%
29.2%
64.1%
100%
100%
100%
100%
100%
100%
50%
60%
Base Metals
Black Mountain Mineral Development(2)
South Africa
Copebrás Limitada
Brazil
Namakwa Sands(2)
South Africa
Gamsberg Zinc Corporation(2)
South Africa
Anglo American Brasil Limitada (Barro Alto)
Brazil
Ambase Exploration (Namibia) Proprietary Limited (Skorpion)
Namibia
Anglo American Brasil Limitada (Catalão)
Brazil
Chile
Anglo American Sur SA (formerly Minera Sur Andes Limitada)
Anglo American Norte SA (formerly Empresa Minera de Mantos Blancos SA) Chile
Brazil
Anglo American Brasil Limitada (Codemin)
Venezuela
Minera Loma de Níquel, CA
Peru
Minera Quellaveco SA
Lisheen(3)
Ireland
Zinc, lead and copper
Fertilisers and sodium tripolyphosphate
Mineral sands
Zinc project
Nickel project
Zinc
Niobium
Copper
Copper
Nickel
Nickel
Copper project
Zinc and lead
Ferrous Metals and Industries
Scaw Metals/Moly-Cop/AltaSteel
Highveld Steel and Vanadium Corporation Limited(4)
Kumba Iron Ore Limited
Industrial Minerals
Tarmac Group Limited
Tarmac France SA
Lausitzer Grauwacke GmbH
Tarmac Iberia SA
WKSM SA
Tarmac CZ a.s.
Midland Quarry Products Limited
Tarmac SRL
Koca Beton Agrega Mining and Construction Industry and Trading
Company Limited
Discontinued operations
Paper and Packaging
Mondi Business Papers SARL
Mondi South Africa Limited
Mondi Packaging SARL
Mondi Packaging Paper Swiecie SA
Mondi Packaging South Africa
Europapier AG Austria
Steel, engineering works and
South Africa/Chile/Canada grinding media
South Africa
South Africa
Steel, vanadium and ferroalloys
Iron ore
74%-100%
–
63.4%
UK
France
Germany
Spain
Poland
Czech Republic
UK
Romania
Construction materials
Construction materials
Construction materials
Construction materials
Construction materials
Construction materials
Construction materials
Construction materials
100%
100%
100%
100%
100%
100%
50%
60%
Turkey
Construction materials
100%
100%
Luxembourg
South Africa
Luxembourg
Poland
South Africa
Austria
Business paper
Business paper
Packaging
Packaging
Packaging
Paper merchanting
–
–
–
–
–
–
100%
100%
100%
71%
55%
90%
(1) The proportion of voting rights of subsidiaries held by the Group is the same as the proportion of equity owned, unless stated.
(2) A division of Anglo Operations Limited, a wholly owned subsidiary.
(3) The Group’s interest in the Lisheen operations is held through Anglo American Lisheen Mining Limited, Killoran Lisheen Mining Limited and Lisheen Milling Limited. The Group owns 100% of the equity of each of
these companies.
(4) Highveld Steel and Vanadium was consolidated in the Group in 2006 due to an additional 24.9% of the voting rights that the Group controlled through shares held by Credit Suisse. The Group’s interest in Highveld was
disposed of in May 2007.
Anglo American plc Annual Report 2007 |
131
Financial
statements
Notes to the financial statements continued
Country of incorporation
Business
Percentage of equity owned(5)
2007
2006
41. Group companies continued
Joint ventures
Continuing operations
Compania Minera Dona Ines de Collahuasi SCM
United Marine Holdings Limited
AI Futtain Tarmac Quarry Products Limited
MMX Minas-Rio Mineração SA
LLX Minas-Rio Logística SA
Discontinued operations
Aylesford Newsprint Holdings Limited
Mondi Shanduka Newsprint (Pty) Limited
Associates
Continuing operations
DB Investments SA
Queensland Coal Mine Management (Pty) Limited
Cerrejón Zona Norte SA
Carbones del Cerrejón LLC
Carbones del Guasare SA
Tongaat-Hulett Limited(6)
Hulamin Limited(7)
Samancor Holdings (Pty) Limited(8)
Groote Eylandt Mining Company (Pty) Limited (GEMCO)(8)
Tasmanian Electro Metallurgical Company (Pty) Limited (TEMCO)(8)
Discontinued operations
Bischof + Klein GmbH
AngloGold Ashanti Limited(9)
Chile
UK
Dubai
Brazil
Brazil
Copper
Construction materials
Construction materials
Iron ore
Iron ore
UK
South Africa
Newsprint
Newsprint
Luxembourg
Australia
Colombia
Anguilla
Venezuela
South Africa
South Africa
South Africa
Australia
Australia
Germany
South Africa
Diamonds
Coal
Coal
Coal
Coal
Sugar, starch, glucose and property
development
Aluminium
Manganese
Manganese
Manganese
Packaging
Gold
Proportionately consolidated jointly controlled operations(10)
Continuing operations
Drayton
Moranbah North
German Creek
Dawson
Location
Business
Australia
Australia
Australia
Australia
Coal
Coal
Coal
Coal
(5) All equity interests shown are ordinary shares.
(6) Formerly The Tongaat-Hulett Group Limited.
(7) Unbundled from Tongaat-Hulett in June 2007.
(8) These entities have a 30 June year end.
(9) The Group’s holding in AngloGold Ashanti was reduced to 16.6% during the year and is now held as a financial asset investment.
(10) The wholly owned subsidiary Anglo Coal Holdings Australia Limited holds the proportionately consolidated jointly controlled operations.
44%
50%
49%
49%
49%
–
–
45%
33.3%
33.3%
33.3%
24.9%
37.2%
38.4%
40%
40%
40%
–
–
44%
50%
49%
–
–
50%
50%
45%
33.3%
33.3%
33.3%
24.9%
50.3%
–
40%
40%
40%
40%
41.7%
Percentage owned
2007
2006
88%
88%
70%
51%
88%
88%
70%
51%
42. Events occurring after end of year
On 17 January 2008, the Group announced that it was in exclusive discussions with the controlling shareholder of MMX Mineração e Metálicos SA (MMX) to acquire a 63.6%
shareholding in a new company (‘Newco’) which will be demerged from MMX and will own MMX’s current 51% interest in the Minas-Rio iron ore project and 70% interest in
the Amapá iron ore mine. After the acquisition of the 63.6% stake, Anglo American will offer to purchase the Newco shares held by the minority shareholders of Newco at
the same price per share, for a total of approximately $5.5 billion on a 100% basis, or approximately $361.12 per Newco share (assuming one Newco share for each current
MMX share), as well as royalty payments to MMX beginning in 2025 for the Minas-Rio project and 2023 for the Amapá mine.
On 26 January 2008, the Group acquired the remaining 50% shareholding in United Marine Holdings Limited from Hanson Quarry Products Europe Limited, a subsidiary of
HeidelbergCement AG, for $110 million.
With the exception of the above and the proposed final dividend for 2007, disclosed in note 11, there have been no material reportable events since 31 December 2007.
132 | Anglo American plc Annual Report 2007
Financial
statements
Note
43c
2007
2006
12,883
12,875
208
114
–
322
(41)
(596)
(4)
(641)
(319)
12,564
12,564
738
2,713
115
1,955
22
7,021
12,564
630
124
2
756
(70)
(3,946)
(4)
(4,020)
(3,264)
9,611
9,611
771
2,713
82
1,955
15
4,075
9,611
43b
43b
43b
43b
43b
43b
43. Financial statements of the parent company
a) Balance sheet of the Company, Anglo American plc
US$ million
Fixed assets
Fixed asset investments
Current assets
Amounts due from subsidiaries
Prepayments and other debtors
Cash at bank and in hand
Creditors due within one year
Cash held on behalf of subsidiaries
Amounts owed to subsidiaries
Other creditors
Net current liabilities
Total assets less current liabilities
Net assets
Capital and reserves
Called-up share capital
Share premium account
Capital redemption reserve
Other reserves
Share-based payment reserve
Profit and loss account
Total shareholders’ funds (equity)
The financial statements were approved by the Board of directors on 19 February 2008.
Cynthia Carroll
Chief executive
René Médori
Finance director
Anglo American plc Annual Report 2007 |
133
Financial
statements
Notes to the financial statements continued
43. Financial statements of the parent company continued
b) Reconciliation of movements in equity shareholders’ funds
US$ million
Balance at 1 January 2006
Profit for the financial year
Issue of treasury shares under employee
share schemes
Share-based payments
Shares issued and reclassification on
conversion of bond
Convertible debt reserve transfer to
retained earnings
Deferred tax recognised in reserves
Share buybacks
Dividends paid(3)
Balance at 1 January 2007
Profit for the financial year
Issue of treasury shares under employee
share schemes
Share-based payments
Capital contribution to group undertakings
Cancellation of treasury shares
Transfer between share-based payment
reserve and profit and loss account
Share buybacks
Dividends paid(3)
Dividend in specie relating to Mondi demerger
Balance at 31 December 2007
Called-up
share
capital
747
–
–
–
24
–
–
–
–
771
–
–
–
–
(33)
–
–
–
–
738
Share
premium
account
1,637
–
–
–
1,076
–
–
–
–
2,713
–
–
–
–
–
–
–
–
–
2,713
Capital
redemption
reserve
82
–
Other
reserves(1)
1,955
–
Share-based
payment
reserve
9
–
Convertible
debt
reserve
131
–
–
–
–
–
–
–
–
82
–
–
–
–
33
–
–
–
–
115
–
–
–
–
–
–
–
1,955
–
–
–
–
–
–
–
–
–
1,955
–
6
–
–
–
–
–
15
–
–
11
–
–
(4)
–
–
–
22
–
–
(32)
(109)
10
–
–
–
–
–
–
–
–
–
–
–
–
–
Profit
and loss
account(2)
4,193
3,511
265
–
Total
8,754
3,511
265
6
–
1,068
109
(2)
(2,010)
(1,991)
4,075
11,404
143
–
14
–
4
(2,383)
(1,192)
(5,044)
7,021
–
8
(2,010)
(1,991)
9,611
11,404
143
11
14
–
–
(2,383)
(1,192)
(5,044)
12,564
(1) At 31 December 2007 other reserves of $1,955 million (2006: $1,955 million) were not distributable under the Companies Act 1985.
(2) At 31 December 2007 $421 million (2006: $358 million) of the Company profit and loss account of $7,021 million (2006: $4,075 million) was not distributable under the Companies Act 1985.
(3) Dividends paid relate only to shareholders on the United Kingdom principal register excluding dividends waived by Greenwood Nominees Limited as nominees for Butterfield Trust (Guernsey) Limited, the trustee for
the Anglo American employee share scheme. Dividends paid to shareholders on the Johannesburg branch register are distributed by a South African subsidiary in accordance with the terms of the Dividend Access Share
Provisions of Anglo American plc’s Articles of Association.
The audit fee in respect of the parent company was $32,000 (2006: $28,000).
2007
Investments
in subsidiaries
2006
Investments
in subsidiaries
12,883
5,093
14
(5,099)
12,891
(8)
–
(8)
12,883
–
–
–
12,883
(8)
–
(8)
12,883
12,875
c) Fixed asset investments
US$ million
Cost
At 1 January
Additions
Capital contributions
Disposals and demerger
At 31 December
Provisions for impairment
At 1 January
Charge for the year
At 31 December
Net book value
At 31 December
134 | Anglo American plc Annual Report 2007
Financial
statements
43. Financial statements of the parent company continued
d) Accounting policies: Anglo American plc, the Company
The Anglo American plc (the Company) balance sheet and related notes have
been prepared in accordance with United Kingdom Generally Accepted Accounting
Principles (UK GAAP) and in accordance with UK company law. The financial
information has been prepared on a historical cost basis as modified by the
revaluation of certain financial instruments.
A summary of the principal accounting policies is set out below.
Convertible debt
Convertible bonds denominated in the functional currency of the entity issuing
the shares are regarded as compound instruments, consisting of a liability and an
equity component. At the date of issue, the fair value of the liability component is
estimated using the prevailing market interest rate for similar non-convertible debt
and is recorded within borrowings. The difference between the proceeds of issue
of the convertible bond and the fair value assigned to the liability component,
representing the embedded option to convert the liability into equity of the
Company, is included in equity.
Issue costs are apportioned between the liability and equity components of the
convertible bonds where appropriate based on their relative carrying amounts
at the date of issue. The portion relating to the equity component is charged
directly against equity.
The interest expense on the liability component is calculated by applying the
effective interest rate for similar non-convertible debt to the liability component
of the instrument. The difference between this amount and the interest paid is
added to the carrying amount of the convertible bond.
The preparation of financial statements in accordance with UK GAAP requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the period. Although these estimates are based
on management’s best knowledge of the amount, event or actions, following
implementation of these standards, actual results may differ from those estimated.
As permitted by section 230 of the Companies Act 1985, the profit and loss account
of the Company is not presented as part of these financial statements. The profit
after tax for the year of the Company amounted to $11,404 million (2006:
$3,511 million).
Significant accounting policies
Deferred taxation
Deferred taxation is provided in full on all timing differences that result in an
obligation at the balance sheet date to pay more tax, or a right to pay less tax,
at a future date, subject to the recoverability of deferred tax assets. Deferred tax
assets and liabilities are not discounted.
Share-based payments
The Company has applied the requirements of FRS 20 Share-based Payment.
In accordance with the transitional provisions, FRS 20 has been applied to all grants of
equity instruments after 7 November 2002 that had not vested as at 1 January 2005.
The Company makes equity settled share-based payments to the directors, which are
measured at fair value at the date of grant. For those share schemes which do not
include non-market vesting conditions, the fair value is determined using the Monte
Carlo method at the grant date and expensed on a straight line basis over the vesting
period, based on the Company’s estimate of shares that will eventually vest. The fair
value of share options issued with non-market vesting conditions has been calculated
using the Black Scholes model. For all other share awards, the fair value is determined
by reference to the market value of the share at the date of grant. For all share
schemes with non-market related vesting conditions, the likelihood of vesting has
been taken into account when determining the associated charge. Vesting assumptions
are reviewed during each reporting period to ensure they reflect current expectations.
The Company also makes equity settled share-based payments to certain employees
of certain subsidiary undertakings. Equity settled share-based payments that are
made to employees of the Company’s subsidiaries are treated as increases in equity
over the vesting period of the award, with a corresponding increase in the Company’s
investments in subsidiaries, based on an estimate of the number of shares that will
eventually vest.
Any payments received from subsidiaries are applied to reduce the related increases
in investments in subsidiaries.
Accounting for share-based payments is the same as under IFRS 2 and details on the
schemes and option pricing models relevant to the charge included in the Company
financial statements are set out in note 29 to the consolidated financial statements
of the Group for the year ended 31 December 2007.
Investments
Investments represent equity holdings in subsidiaries, joint ventures and associates
and are held at cost less provision for impairment.
Anglo American plc Annual Report 2007 |
135
Other information
Ore Reserves and Mineral Resources estimates
Introduction
The Ore Reserve and Mineral Resource estimates presented in this Annual Report are prepared in accordance with the Anglo American plc Policy
for the Reporting of Ore Reserves and Mineral Resources*. This policy requires that the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves 2004 edition (the JORC Code) be used as a minimum standard. Some Anglo American plc subsidiaries have
a primary listing in South Africa where public reporting is carried out in accordance with the South African Code for Reporting of Mineral
Resources and Mineral Reserves (the SAMREC Code). The SAMREC Code is similar to the JORC Code and the Ore Reserve and Mineral Resource
terminology appearing in this section follows the defi nitions in both the JORC (2004) and SAMREC (2007) Codes.
The information on Ore Reserves and Mineral Resources was prepared by or under the supervision of Competent Persons as defi ned in the
JORC or SAMREC Codes, which include the Recognised Overseas Professional Organisation (ROPO) recognition agreements. All Competent
Persons have suffi cient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they
are undertaking. All the Competent Persons consent to the inclusion in this report of the matters based on their information in the form and
context in which it appears. The names of the Competent Persons are lodged with the Anglo American plc Company Secretary and are available
on request.
Anglo American Group companies are subject to a comprehensive programme of reviews aimed at providing assurance in respect of Ore Reserve
and Mineral Resource estimates. The reviews are conducted by suitably qualifi ed Competent Persons from within a particular division, another
division of the Group or from independent consultants. The frequency and depth of the reviews is a function of the risks and/or uncertainties
associated with a particular Ore Reserve and Mineral Resource, the overall value thereof and time that has lapsed since an independent third
party review has been conducted. Those operations/projects subject to independent third party reviews during the year are indicated in footnotes
to the tables.
The JORC and SAMREC Codes require the use of reasonable economic assumptions. These include long-range commodity price forecasts which are
prepared by in-house specialists largely using estimates of future supply and demand and long term economic outlooks. Ore Reserve estimates
are dynamic and are infl uenced by changing economic conditions, technical issues, environmental regulations and relevant new information and
therefore can vary from year to year. Mineral Resource estimates also change and tend to be infl uenced mostly by new information pertaining
to the understanding of the deposit and secondly by the conversion to Ore Reserves.
The estimates of Ore Reserves and Mineral Resources are stated as at 31 December 2007. Production forecasts for November and December
have been used to produce the estimates of the reported reserve fi gures. Unless otherwise stated, Mineral Resources are additional to those
resources which have been modifi ed to produce the Ore Reserves. The fi gures in the tables have been rounded and, if used to derive totals
and averages, could cause minor computational differences. Ore Reserves in the context of this Annual Report have the same meaning as
‘Mineral Reserves’ as defi ned by the SAMREC Code. Metric units are used throughout the report. In addition alternative units are also used
for Anglo Platinum.
AngloGold Ashanti is not reported as the Group’s shareholding has reduced to 16.6% at 31 December 2007, below the internal threshold for
reporting. Details of AngloGold Ashanti’s 2007 Ore Reserves and Mineral Resources can be found on their website. Highveld and Mondi (reported
previously as Paper & Packaging) are not reported as these businesses have been respectively disposed of and demerged during 2007.
* A ‘Mineral Resource’ is a concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such form, quality and quantity that there are
reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated
or interpreted from specifi c geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confi dence, into Inferred, Indicated and
Measured categories.
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confi dence. It is inferred
from geological evidence and assumed but not verifi ed geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated
with a reasonable level of confi dence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confi rm geological and/or grade continuity but are spaced closely enough for
continuity to be assumed.
A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated
with a high level of confi dence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confi rm geological and grade continuity.
An ‘Ore Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may
occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modifi cation by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could
reasonably be justifi ed. Ore Reserves are sub-divided in order of increasing confi dence into Probable Ore Reserves and Proved Ore Reserves.
A ‘Probable Ore Reserve’ is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. It includes diluting materials and
allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modifi cation
by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of
reporting that extraction could reasonably be justifi ed.
A ‘Proved Ore Reserve’ is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the
material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modifi cation by realistically assumed mining, metallurgical,
economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably
be justifi ed.
136 | Anglo American plc Annual Report 2007
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Other
information
In South Africa, the Minerals and Petroleum Resources Development Act, Number 28 of 2002 (MPRDA) was implemented on 1 May 2004,
and effectively transferred custodianship of the previously privately held mineral rights to the State. Mining companies were given up to two
years to apply for prospecting permit conversions and fi ve years to apply for mining licence conversions for existing operations.
A Prospecting Right is a new order right that is valid for up to fi ve years, with the possibility of a further extension of three years, that can
be obtained either by the conversion of existing old order prospecting permits or through new applications. An Exploration Right is identical
to a Prospecting Right, but is commodity specifi c in respect of petroleum and gas and is valid for up to three years which can be renewed for
a maximum of three periods not exceeding two years each.
A Mining Right is a new order right valid for up to 30 years obtained either by the conversion of an old order mining licence, or as a new order
right pursuant to the exercise of the exclusive right of the holder of a new order Prospecting Right, or pursuant to an application for a new
Mining Right. A Production Right is identical to a Mining Right, but is commodity specifi c in respect of petroleum and gas.
In preparing the Ore Reserve and Mineral Resource statement for South African assets, Anglo American plc has adopted the following reporting
principles in respect of Prospecting Rights and Mining Rights:
relevant regulatory authorities, the relevant reserves and resources have been included in the statement;
• Where applications for new order Mining Rights and Prospecting Rights have been submitted and these are still being processed by the
• Where applications for the conversion of old order mining licences to new order Mining Rights have not yet been submitted and the required
• Where applications for new order Prospecting Rights have been initially refused by the regulatory authorities, but are the subject of ongoing
deadline (typically April 2009) for submission has not passed, the relevant reserves and resources have been included in the statement;
legal process and discussions with the relevant authorities and where Anglo American plc has reasonable expectations that the Prospecting
Rights will be granted in due course, the relevant resources have been included in the statement (any associated comments appear in
the footnotes).
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Anglo American plc Annual Report 2007 | 137
Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Platinum
The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Mineral Resources
and Ore Reserves (The JORC Code, 2004) as a minimum standard. Where relevant, the estimates were also prepared in compliance with regional
codes and requirements (e.g. The South African Code for Reporting of Mineral Resources and Mineral Reserves, The SAMREC Code, 2007).
Rounding of fi gures may cause computational discrepancies. The Mineral Resources are additional to the Ore Reserves. Merensky and UG2 Reef
Mineral Resources are reported over an economic and mineable cut appropriate to the specifi c reef. The mineable cuts collectively form the basis
of the consolidated reef fi gures. Details of the individual operations appear in the Anglo Platinum Annual Report. The fi gures reported represent
100% of the Mineral Resources and Ore Reserves attributable to Anglo Platinum Limited unless otherwise noted. Anglo American plc’s interest
in Anglo Platinum is 76.53%.
Classifi cation
2007
Proved
Probable
Total
Proved
Probable
Total
Proved
88.7
117.2
205.8
415.7
413.5
829.2
284.6
19.8
114.0
418.3
Proved primary ore stockpile (9)
Probable
Total
Anglo Platinum
Ore Reserves
Merensky Reef(3)(4)
UG2 Reef(5)(6)
Platreef(7)(8)
All Reefs
Tailings(11)
Proved
Probable
808.6
644.6
Total
1,453.3
1,399.0
Tonnes(1)
million
2006
95.5
105.9
201.4
347.2
403.5
750.7
319.6
16.4
110.8
446.9
778.7
620.3
Grade(2)
g/t
2006
Contained metal
tonnes
2007
2006
4E PGE
5.54
5.78
5.67
4E PGE
4.57
4.37
4.46
4E PGE
3.27
2.66
3.67
3.35
4E PGE
4.11
4.48
4.28
462.6
598.5
1,061.1
529.1
612.4
1,141.5
1,816.0
1,787.1
3,603.1
1,585.1
1,761.6
3,346.7
923.2
50.1
400.1
1,373.4
1,045.5
43.7
406.9
1,496.0
3,251.9
2,785.7
3,203.3
2,781.0
6,037.6
5,984.2
2007
4E PGE
5.22
5.11
5.16
4E PGE
4.37
4.32
4.35
4E PGE
3.24
2.54
3.51
3.28
4E PGE
4.02
4.32
4.15
Total (alternative units) (10) 1,601.9Mton 1,542.1Mton 0.121oz/t 0.125oz/t
Proved
Probable
Total
–
38.6
38.6
–
43.6
43.6
4E PGE
–
0.92
0.92
4E PGE
–
1.00
1.00
–
35.5
35.5
–
43.7
43.7
Total (alternative units) (10)
42.6Mton
48.1Mton 0.027oz/t 0.029oz/t
Contained metal
million troy ounces
2007
Moz
14.9
19.2
34.1
Moz
58.4
57.5
115.8
Moz
29.7
1.6
12.9
44.2
Moz
104.6
89.6
194.1
Moz
–
1.1
1.1
2006
Moz
17.0
19.7
36.7
Moz
51.0
56.6
107.6
Moz
33.6
1.4
13.1
48.1
Moz
103.0
89.4
192.4
Moz
–
1.4
1.4
(1) Tonnage: quoted as metric tonnes.
(2) Grade: 4E PGE is the sum of platinum, palladium, rhodium and gold grades in grammes per tonne (g/t).
(3) Merensky Reef: The reserve pay-limit varies across all operations between 1.3g/t and 4.8g/t. The variability is a function of various factors including the depth of the
orebody, geological complexity and infrastructure.
(4) Merensky Reef: The decrease in the reserve grade is mainly a function of changes occurring at BRPM and Amandelbult.
BRPM – changes in the mining method and mine design resulted in a higher stope width and consequent drop in grade.
Amandelbult – in-fi ll drilling revealed increased geological complexity resulting in a drop in the resource grade. The drop in the resource grade plus a change in the modifying
factors resulted in a decrease in the reserve grade.
(5) UG2 Reef: The reserve pay-limit varies across all operations between 1.3g/t and 4.4g/t. The variability is a function of various factors including the depth of the orebody,
geological complexity and infrastructure.
(6) UG2 Reef: The increase in reserve tonnage is mainly due to conversion of resources to reserves as a result of Pre-Feasibility studies completed for Rustenburg Section (Frank
and Turffontein).
(7) Platreef: The reserve cut-off is 1.7g/t for fresh ore and 3.0g/t for weathered/oxidised ore.
(8) Platreef: A programme of blast-hole drilling indicated higher than expected proportions of oxidised material below the economically recoverable grade. Approximately half of
the tonnage (~15Mt) was removed as waste and the remainder has been removed from the Ore Reserve due to the change in cut-off grade applied to the oxidised zone.
(9) Platreef stockpiles: These are reported separately as Proved Ore Reserves and aggregated into the summation tabulations.
(10) Alternative units: tonnage in million short tons (Mton) and grade in troy ounces per short ton (oz/t).
(11) Tailings: These are reported separately as Ore Reserves but are not aggregated in the total Ore Reserve fi gures. Operating tailings dams for current mining operations
cannot be geologically assessed and therefore are not reported as part of the Ore Reserves. At Rustenburg and Union Section historical dams have been evaluated and the
tailings are included in the Ore Reserves statement.
The following operations and projects were reviewed during 2007 by independent consultants:
Amandelbult Section, Lebowa Platinum Mines, PPRust, Rustenburg Section, Union Section,
Booysendal Project, Der Brochen Project, BRPM (Styldrift), Twickenham Platinum.
138 | Anglo American plc Annual Report 2007
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Other
information
Contained metal
tonnes
Contained metal
million troy ounces
2007
2006
2007
Anglo Platinum
Mineral Resources
Merensky Reef(3)(4)(5)
Classifi cation
2007
Tonnes(1)
million
2006
Measured
Indicated
Measured and Indicated
Inferred
Total
107.8
276.5
384.3
876.5
1,260.8
96.4
248.3
344.7
1,095.9
1,440.6
Measured
Indicated
Measured and Indicated
Inferred
Total
337.2
499.7
836.9
1,223.2
2,060.0
312.3
634.3
946.6
1,321.4
2,268.0
Measured
Indicated
Measured and Indicated
Inferred
Total
176.8
790.6
967.4
1,408.0
2,375.4
Measured
Indicated
Measured and Indicated
Inferred
621.8
1,566.8
2,188.6
3,507.6
158.8
791.2
950.0
1,449.4
2,399.4
567.6
1,673.8
2,241.4
3,866.7
Total
5,696.2
6,108.1
UG2 Reef(3)(6)(7)
Platreef(8)(9)
All Reefs
Tailings(11)
Grade(2)
g/t
2006
4E PGE
5.42
5.39
5.40
5.48
5.46
574.4
1,462.7
2,037.1
4,633.0
6,670.1
4E PGE
1,919.0
5.52
2,686.9
5.37
4,605.9
5.42
5.54
6,379.8
5.49 10,985.7
4E PGE
1.91
2.22
2.17
1.82
1.96
340.8
1,749.4
2,090.2
2,647.7
4,737.9
4E PGE
2,834.2
4.50
5,899.0
3.88
8,733.2
4.04
4.13 13,660.5
523.0
1,337.8
1,860.7
6,010.9
7,871.6
1,725.3
3,404.9
5,130.3
7,325.5
12,455.7
303.2
1,757.7
2,061.0
2,643.9
4,704.9
2,551.5
6,500.5
9,052.0
15,980.3
4.10 22,393.7 25,032.3
2007
4E PGE
5.33
5.29
5.30
5.29
5.29
4E PGE
5.69
5.38
5.50
5.22
5.33
4E PGE
1.93
2.21
2.16
1.88
1.99
4E PGE
4.56
3.77
3.99
3.89
3.93
Total (alternative units) (10) 6,278.9Mton 6,732.9Mton 0.115oz/t 0.120oz/t
Measured
Indicated
Measured and Indicated
Inferred
Total
–
151.4
151.4
–
151.4
–
152.3
152.3
–
152.3
4E PGE
–
1.05
1.05
–
1.05
4E PGE
–
1.06
1.06
–
1.06
–
159.7
159.7
–
159.7
–
160.9
160.9
–
160.9
Total (alternative units) (10) 166.9Mton 167.9Mton 0.031oz/t 0.031oz/t
Moz
18.5
47.0
65.5
149.0
214.4
Moz
61.7
86.4
148.1
205.1
353.2
Moz
11.0
56.2
67.2
85.1
152.3
Moz
91.1
189.7
280.8
439.2
720.0
Moz
–
5.1
5.1
–
5.1
2006
Moz
16.8
43.0
59.8
193.3
253.1
Moz
55.5
109.5
164.9
235.5
400.5
Moz
9.7
56.5
66.3
85.0
151.3
Moz
82.0
209.0
291.0
513.8
804.8
Moz
–
5.2
5.2
–
5.2
(1) Tonnage: quoted as metric tonnes.
(2) Grade: 4E PGE is the sum of platinum, palladium, rhodium and gold grades in grammes per tonne (g/t).
(3) Merensky and UG2 Reefs: Due to the South African Department of Minerals and Energy’s (DME) refusal to grant certain Prospecting Right applications and an undertaking by
Anglo Platinum Limited not to advance legal proceedings, pending negotiations with the DME and third parties, the following Mineral Resource estimates are not included:
Merensky Reef: 161.3Mt @ 5.78g/t (30.0Moz), UG2 Reef: 189.5Mt @ 6.00g/t (36.5Moz);
94.6% of the above mentioned combined Merensky and UG2 Reef Mineral Resources are in the Inferred Resource category;
The 66.5Moz refl ects a loss of 8.5% of Anglo Platinum’s total Mineral Resources.
(4) Merensky Reef: Depending on the reef characteristics a 2.5g/t to 3.0g/t cut-off has been used to identify Mineral Resources.
(5) Merensky Reef: Measured and Indicated resource tonnages increased mainly due to in-fi ll drilling leading to increased confi dence in the estimates at the Der Brochen and
Booysendal projects. At Union Section, updated economic assumptions showed that the area below 28 level is currently no longer economically viable and therefore reserve
tonnes have been re-allocated to resources.
(6) UG2 Reef: A 1.8g/t cut-off has been used to identify Mineral Resources.
(7) UG2 Reef: A decrease in the total Measured and Indicated Resource tonnages is mainly as a result of conversion of resources to reserves at Rustenburg Section due to the
completion of Pre-Feasibility studies for Frank and Turffontein, and a re-evaluation at Der Brochen due to new information highlighting higher geological complexity.
(8) Platreef: A 1.0g/t cut-off has been used to identify Mineral Resources.
(9) Platreef: In-fi ll drilling resulted in geological re-interpretation, increased confi dence and a consequent increase of Measured Resources.
(10) Alternative units: tonnage in million short tons (Mton) and grade in troy ounces per short ton (oz/t).
(11) Tailings: These are reported separately as Mineral Resources but are not aggregated in the total Mineral Resource fi gures. Operating tailings dams for current mining operations
cannot be geologically assessed and therefore are not reported as part of the Mineral Resources. At Rustenburg and Union Section historical dams have been evaluated and the
tailings are included in the Mineral Resource statement.
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Anglo American plc Annual Report 2007 | 139
Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Platinum continued
Anglo Platinum
Ore Reserves
Other Projects
Zimbabwe
Unki – Great Dyke
Classifi cation
2007
Proved
Probable
Total
5.2
43.2
48.4
Tonnes(1)
million
2006
5.2
43.2
48.4
2007
4E PGE
3.60
3.81
3.78
Grade(2)
g/t
2006
4E PGE
3.60
3.81
3.78
Contained metal
tonnes
Contained metal
million troy ounces
2007
2006
2007
2006
18.8
164.5
183.3
18.8
164.5
183.3
Moz
0.6
5.3
5.9
Moz
0.6
5.3
5.9
Total (alternative units) (3)
53.4Mton 53.4Mton 0.110oz/t 0.110oz/t
Anglo Platinum
Mineral Resources
Other Projects
Zimbabwe
Classifi cation
2007
Unki – Great Dyke
Measured
Indicated
Measured and Indicated
Inferred
7.9
11.7
19.5
98.7
Tonnes(1)
million
2006
7.9
11.7
19.5
98.7
Total
118.2
118.2
Grade(2)
g/t
2006
4E PGE
4.08
4.28
4.20
4.29
4.28
2007
4E PGE
4.08
4.28
4.20
4.29
4.28
Total (alternative units) (3)
130.3Mton 130.3Mton 0.125oz/t 0.125oz/t
South Africa
Anooraq-Anglo Platinum Boikantsho(4)
Measured
Platreef
Indicated
Measured and Indicated
Inferred
–
88.3
88.3
52.0
–
88.3
88.3
52.0
Total
140.4
140.4
3E PGE
3E PGE
–
1.35
1.35
1.23
1.31
–
1.35
1.35
1.23
1.31
Total (alternative units) (3)
154.7Mton 154.7Mton 0.038oz/t 0.038oz/t
Sheba’s Ridge(5)
Measured
Indicated
Measured and Indicated
Inferred
Total
138.2
128.4
266.6
0.9
267.5
143.1
109.6
252.7
18.7
271.4
3E PGE
0.87
0.95
0.91
0.85
0.91
3E PGE
0.74
0.80
0.77
0.71
0.77
Total (alternative units) (3)
294.9Mton 299.1Mton 0.027oz/t 0.022oz/t
Canada
River Valley(6)
Measured
Indicated
Measured and Indicated
Inferred
Total
4.3
11.0
15.3
1.2
16.5
4.3
11.0
15.3
1.2
16.5
3E PGE
1.79
1.20
1.37
1.24
1.36
3E PGE
1.79
1.20
1.37
1.24
1.36
Total (alternative units) (3)
18.2Mton 18.2Mton 0.040oz/t 0.040oz/t
Brazil
Pedra Branca(7)
Measured
Indicated
Measured and Indicated
Inferred
Total
–
–
–
6.6
6.6
–
–
–
6.6
6.6
3E PGE
–
–
–
2.27
2.27
3E PGE
–
–
–
2.27
2.27
Total (alternative units) (3)
7.3Mton
7.3Mton 0.066oz/t 0.066oz/t
Contained metal
tonnes
2007
2006
32.1
49.9
82.0
423.5
505.5
–
119.2
119.2
64.0
183.2
120.4
122.1
242.4
0.8
243.2
7.6
13.3
20.9
1.5
22.4
–
–
–
15.0
15.0
32.1
49.9
82.1
423.5
505.6
–
119.3
119.3
64.0
183.3
106.3
88.1
194.4
13.3
207.7
7.6
13.3
20.9
1.5
22.4
–
–
–
15.0
15.0
Contained metal
million troy ounces
2007
Moz
1.0
1.6
2.6
13.6
16.3
Moz
–
3.8
3.8
2.1
5.9
Moz
3.9
3.9
7.8
0.0
7.8
Moz
0.2
0.4
0.7
0.0
0.7
Moz
–
–
–
0.5
0.5
2006
Moz
1.0
1.6
2.6
13.6
16.3
Moz
–
3.8
3.8
2.1
5.9
Moz
3.4
2.8
6.3
0.4
6.7
Moz
0.2
0.4
0.7
0.0
0.7
Moz
–
–
–
0.5
0.5
140 | Anglo American plc Annual Report 2007
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Other
information
(1) Tonnage: quoted as metric tonnes.
(2) Grade: 4E PGE is the sum of platinum, palladium, rhodium and gold grades in grammes per tonne (g/t).
3E PGE is the sum of platinum, palladium and gold grades in grammes per tonne (g/t).
(3) Alternative units: tonnage in million short tons (Mton) and grade in troy ounces per short ton (oz/t).
(4) Anooraq-Anglo Platinum Boikantsho: Anglo Platinum holds an attributable interest of 50%. A cut-off of US$20.00 gross metal value per tonne was applied.
(5) Sheba’s Ridge: Anglo Platinum holds an attributable interest of 35% which will be affected once a bankable Feasibility Study has been completed. A cut-off of US$10.50 per
tonne total revenue contribution from the constituent metals was applied.
(6) River Valley: Anglo Platinum holds an attributable interest of 50%. A cut-off of 0.7g/t (platinum plus palladium) was applied.
(7) Pedra Branca: Anglo Platinum envisages a 51% controlling share in the project. A cut-off of 0.7g/t (3E) was applied.
The following Operations and Projects contributed to the combined 2007 Ore Reserve and Mineral Resource estimates stated per reef (excluding Other Projects):
(MR = Merensky Reef, UG2 = UG2 Reef, PR = Platreef)
Amandelbult Section – MR/UG2
Booysendal Project – MR/UG2
BRPM – MR/UG2
Der Brochen Project – MR/UG2
Ga-Phasha PGM Project – MR/UG2
Kroondal PSA 1 – UG2
Lebowa Platinum Mines – MR/UG2
Magazynskraal 3 JQ – MR/UG2
Marikana PSA 2 – UG2
Modikwa Platinum Mine – MR/UG2
Mototolo – UG2
Northam – MR/UG2
Other Exploration Projects (Ptn. of Driekop) – UG2
Pandora – UG2
PPRust (Potgietersrust Platinums Ltd.) – PR
Rustenburg Section – MR/UG2
Twickenham Platinum Mine Project – MR/UG2
Union Section – MR/UG2
WBJV – MR/UG2
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Anglo American plc Annual Report 2007 | 141
Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Base Metals
The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Mineral Resources
and Ore Reserves (The JORC Code, 2004) as a minimum standard. Rounding of fi gures may cause computational discrepancies. The Mineral
Resources are additional to the Ore Reserves. The fi gures reported represent 100% of the Ore Reserves and Mineral Resources, the percentage
attributable to Anglo American plc is stated separately.
Attributable
%
100
Copper Division
Ore Reserves
Los Bronces (OP)
Sulphide (TCu)(1)
Flotation
Sulphide (TCu)
Dump Leach
El Soldado (OP and UG)
100
Sulphide (TCu)
Flotation
Oxide (TCu)(2)
Heap Leach
Mantos Blancos (OP)
100
Sulphide (ICu)
Flotation
Oxide (ASCu)(3)
Vat and Heap Leach
Oxide (ASCu)
Dump Leach
Mantoverde (OP)
Oxide (ASCu)
Heap Leach
Oxide (ASCu)
Dump Leach
100
Collahuasi (OP)(4)
44
Oxide, Mixed and Secondary Sulphides (TCu)(5)
Heap Leach
Sulphide (TCu)(6)
Flotation – direct feed
Low Grade Sulphide (TCu)(6)
Flotation – stockpile
Classifi cation
2007
Proved
Probable
Total
Proved
Probable
Total
697.7
782.7
1,480.4
344.8
672.6
1,017.4
68.7
50.7
119.4
1.5
3.0
4.6
9.4
19.3
28.7
1.5
44.0
45.5
0.5
9.4
10.0
53.5
11.2
64.7
28.1
11.5
39.7
43.9
31.2
75.2
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Tonnes
million
2006
581.3
190.3
771.6
583.6
553.8
1,137.4
76.1
49.9
126.0
–
–
–
8.0
24.8
32.8
1.1
28.7
29.8
0.5
8.2
8.7
56.5
10.7
67.2
32.3
11.6
43.9
14.3
16.9
31.2
279.0
1,180.0
1,459.1
–
670.1
670.1
193.5
1,145.8
1,339.3
–
380.5
380.5
Grade
%Cu
2006
0.92
0.74
0.88
0.42
0.34
0.38
1.05
0.83
0.96
–
–
–
1.13
0.88
0.94
0.85
0.56
0.57
0.26
0.29
0.29
0.64
0.59
0.63
0.37
0.39
0.38
0.99
0.97
0.98
1.09
0.97
0.99
–
0.53
0.53
Contained metal
thousand tonnes
2007
2006
5,303
4,540
9,842
1,138
1,682
2,819
715
418
1,133
13
22
36
87
203
291
11
195
205
1
26
27
332
64
395
101
46
147
352
275
626
5,348
1,408
6,756
2,393
1,883
4,276
796
415
1,211
–
–
–
90
217
307
10
160
170
1
24
25
360
63
423
120
45
165
142
164
306
2,762
11,328
14,091
–
3,418
3,418
2,108
11,164
13,272
–
2,003
2,003
2007
0.76
0.58
0.66
0.33
0.25
0.28
1.04
0.82
0.95
0.87
0.74
0.78
0.93
1.05
1.01
0.72
0.44
0.45
0.24
0.27
0.27
0.62
0.57
0.61
0.36
0.40
0.37
0.80
0.88
0.83
0.99
0.96
0.97
–
0.51
0.51
Mining method: OP = Open Pit, UG = Underground.
TCu = total copper, ICu = insoluble copper (total copper less acid soluble copper), ASCu = acid soluble copper.
(1) Los Bronces – Sulphide, Flotation: Updated cut-off grade and fi nal pit design considered in the Los Bronces Development Project and new economic assumptions.
(2) El Soldado – Oxide, Heap Leach: As a result of exploration new Oxide Ore Reserves have been included in this statement.
(3) Mantos Blancos – Oxide, Vat and Heap Leach: Gains in Ore Reserves related mainly to old workings recognised during 2007 and new economic parameters which defi ne a
lower cut-off grade.
(4) Collahuasi: Unlike Xstrata (Collahuasi joint venture partner), Anglo American reports Mineral Resources in excess of those that have been converted to Ore Reserves and only
those Inferred Resources that are in the Life of Mine plan.
(5) Collahuasi – Oxide, Mixed and Secondary Sulphides: Heap Leach ore includes secondary sulphide ore from Ujina Mine.
(6) Collahuasi – Sulphide, Flotation: Gains in Ore Reserves related mainly to new economic parameters, which defi ne a lower cut-off grade, and new Mineral Resources added
in Rosario Oeste due to a brownfi elds exploration programme.
The Ore Reserves and Mineral Resources of the following operations were reviewed during 2007 by independent consultants:
Los Bronces, Mantos Blancos, El Soldado, Mantoverde.
142 | Anglo American plc Annual Report 2007
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Copper Division
Mineral Resources
Los Bronces (OP)
Sulphide (TCu)(1)
Flotation
Sulphide (TCu)
Dump Leach
Attributable
%
100
Classifi cation
2007
Tonnes
million
2006
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
111.7
1,532.4
1,644.1
43.1
118.1
958.9
1,077.0
17.9
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
El Soldado (OP and UG)
100
Sulphide (TCu)
Flotation
Oxide (TCu)
Heap Leach
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Mantos Blancos (OP)
100
Sulphide (ICu)
Flotation
Oxide (ASCu)
Vat and Heap Leach
Oxide (ASCu)
Dump Leach
Mantoverde (OP)
Oxide (ASCu)
Heap Leach
Oxide (ASCu)
Dump Leach
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
100
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Collahuasi (OP)(4)
44
Oxide, Mixed and Secondary Sulphides (TCu)(5)
Heap Leach
Sulphide (TCu)(6)
Flotation – direct feed
Low Grade Sulphide (TCu)(6)
Flotation – stockpile
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
–
–
–
312.4
61.2
47.9
109.1
10.8
0.1
0.2
0.3
0.9
17.7
112.8
130.5
4.2
1.0
9.7
10.7
2.2
–
–
–
1.1
57.1
59.6
116.7
0.3
–
4.3
4.3
0.6
–
6.0
6.0
1.3
3.5
570.3
573.8
374.0
2.9
154.6
157.5
201.0
–
–
–
66.3
42.9
48.8
91.7
14.2
–
–
–
–
12.6
71.7
84.3
2.8
1.0
12.6
13.6
1.7
–
–
–
0.8
50.6
56.8
107.4
0.3
1.2
1.7
2.9
0.4
0.1
1.8
1.9
0.5
12.3
189.1
201.4
202.2
35.0
238.3
273.3
106.9
Mining method: OP = Open Pit, UG = Underground.
TCu = total copper, ICu = insoluble copper (total copper less acid soluble copper), ASCu = acid soluble copper.
Other
information
Contained metal
thousand tonnes
2007
2006
529
6,896
7,425
289
584
4,411
4,995
120
–
–
–
594
496
349
845
80
1
2
3
8
133
791
924
34
6
53
59
13
–
–
–
3
217
215
432
2
–
14
14
2
–
48
48
16
–
–
–
218
287
363
650
101
–
–
–
–
105
595
700
29
6
72
78
11
–
–
–
2
197
210
407
2
4
5
9
2
1
20
21
4
45
6,274
6,318
3,553
14
773
787
1,005
105
1,680
1,785
1,878
157
1,108
1,265
510
Grade
%Cu
2006
0.50
0.46
0.46
0.67
–
–
–
0.33
0.67
0.74
0.71
0.71
–
–
–
–
0.83
0.83
0.83
1.02
0.66
0.57
0.58
0.67
–
–
–
0.27
0.39
0.37
0.38
0.60
0.32
0.31
0.31
0.34
0.97
1.09
1.09
0.74
0.86
0.89
0.89
0.93
0.45
0.46
0.46
0.48
2007
0.47
0.45
0.45
0.67
–
–
–
0.19
0.81
0.73
0.77
0.74
0.87
0.84
0.85
0.88
0.75
0.70
0.71
0.82
0.59
0.55
0.55
0.57
–
–
–
0.24
0.38
0.36
0.37
0.62
–
0.33
0.33
0.37
–
0.79
0.79
1.18
1.28
1.10
1.10
0.95
0.50
0.50
0.50
0.50
Anglo American plc Annual Report 2007 | 143
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Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Base Metals continued
Zinc Division
Ore Reserves
Black Mountain (UG)(1)
Attributable
%
100
Classifi cation
2007
Tonnes
million
2006
Deeps(2)
Zinc
Copper
Lead
Lisheen (UG)(3)
Zinc
Lead
Skorpion (OP)
Zinc
1.3
7.4
8.7
0.2
11.5
11.7
6.9
2.7
9.7
7.5
3.8
11.3
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
6.4
5.1
11.5
7.7
5.2
13.0
100
100
Grade
2006
%Zn
2.34
3.88
3.84
%Cu
0.25
0.76
0.75
%Pb
3.27
3.92
3.91
%Zn
11.61
12.69
11.97
%Pb
2.07
1.43
1.85
%Zn
12.72
9.68
11.49
Contained metal
thousand tonnes
2007
2006
32
279
311
3
61
63
59
301
360
782
373
1,155
138
44
182
821
491
1,312
6
446
452
1
88
89
8
451
459
869
487
1,356
155
55
210
982
506
1,488
2007
%Zn
2.50
3.75
3.56
%Cu
0.21
0.81
0.72
%Pb
4.48
4.05
4.12
%Zn
11.25
13.68
11.94
%Pb
1.98
1.61
1.88
%Zn
12.74
9.72
11.41
Mining method: OP = Open Pit, UG = Underground.
For the polymetallic deposits, the tonnage fi gures apply to each metal.
(1) Black Mountain: On 18 January 2007, Exxaro exercised its option to acquire a 26% interest in Black Mountain. The sale is contingent on the conversion of old order to new
order mining rights. It is expected that this will take place in 2008.
(2) Black Mountain – Deeps: A new 3D model has been built and the classifi cation criteria changed along with new economic factors being applied. Ore Reserves include 8,745kt
of silver ore at 55g/t as a by-product.
(3) Lisheen: Decrease due to losses on the margins of the orebodies in Main East, Main West and oolite zones following mining and new underground drilling information.
The Ore Reserves of the following operations were reviewed during 2007 by independent consultants: Lisheen.
144 | Anglo American plc Annual Report 2007
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Zinc Division
Mineral Resources
Black Mountain (UG)
Attributable
%
100
Classifi cation
2007
Tonnes
million
2006
Deeps(4)
Zinc
Copper
Lead
Swartberg(5)
Zinc
Copper
Lead
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
0.5
4.5
5.0
3.1
1.8
6.1
7.8
–
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
–
17.3
17.3
–
–
17.3
17.3
–
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Lisheen (UG)
Zinc
100
Lead
Skorpion (OP)
Zinc
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
1.0
0.5
1.4
0.4
1.0
0.6
1.6
0.5
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
100
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
0.0
0.2
0.2
0.8
0.0
0.2
0.2
0.8
Other
information
Contained metal
thousand tonnes
2007
2006
11
160
171
124
3
28
31
38
10
200
210
40
–
109
109
–
–
121
121
–
–
497
497
–
123
61
184
68
22
9
31
11
2
15
17
71
35
218
253
–
8
45
52
–
39
227
266
–
–
109
109
–
–
121
121
–
–
497
497
–
132
74
206
81
24
9
34
13
2
15
17
72
2007
%Zn
2.23
3.53
3.40
3.96
%Cu
0.65
0.61
0.61
1.23
%Pb
1.97
4.40
4.16
1.28
%Zn
–
0.63
0.63
–
%Cu
–
0.70
0.70
–
%Pb
–
2.87
2.87
–
%Zn
12.67
12.95
12.76
18.24
%Pb
2.30
1.86
2.16
3.05
%Zn
6.99
6.94
6.95
9.16
Grade
2006
%Zn
2.00
3.59
3.23
–
%Cu
0.43
0.74
0.67
–
%Pb
2.22
3.74
3.40
–
%Zn
–
0.63
0.63
–
%Cu
–
0.70
0.70
–
%Pb
–
2.87
2.87
–
%Zn
12.84
12.68
12.78
17.16
%Pb
2.38
1.55
2.08
2.84
%Zn
6.99
6.94
6.95
9.18
Mining method: OP = Open Pit, UG = Underground.
For the polymetallic deposits, the tonnage fi gures apply to each metal.
(4) Black Mountain – Deeps: Broken Hill and the Deeps Mineral Resources are combined for reporting purposes. An updated 3D model based on additional information obtained
from underground in-fi ll drilling was completed during 2007. The improved understanding of the orebody led to the introduction of a scorecard classifi cation methodology and
Mineral Resources based on surface drilling only are classifi ed as Inferred Resources. Mineral Resources contain 8,175kt of silver ore at 40g/t as a by-product.
(5) Black Mountain – Swartberg: The Swartberg mine was placed on care and maintenance from January 2007. The Ore Reserves were removed from the mine plan and converted
to Mineral Resources. Mineral Resources contain 17,323kt of silver ore at 35g/t as a by-product.
The Mineral Resources of the following operations were reviewed during 2007 by independent consultants: Lisheen.
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Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Base Metals continued
Nickel Division
Ore Reserves
Barro Alto (OP)(1)
Laterite
Attributable
%
100
Codemin (OP)
Laterite
100
Loma de Níquel (OP)
91.4
Laterite
Nickel Division
Mineral Resources
Barro Alto (OP)
Laterite
Attributable
%
100
Classifi cation
2007
Proved
Probable
Total
12.3
27.1
39.5
Proved
Probable
Total
3.2
0.5
3.7
Proved
Probable
Total
11.9
22.1
34.0
Classifi cation
2007
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
–
16.9
16.9
37.5
Codemin (OP)
Laterite
100
Loma de Níquel (OP)(2)
91.4
Laterite
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
3.3
3.5
6.9
–
1.2
4.8
6.0
1.7
Tonnes
million
2006
13.2
27.2
40.4
3.2
0.5
3.7
11.9
22.6
34.5
Tonnes
million
2006
–
16.9
16.9
37.5
3.3
3.5
6.9
–
1.0
4.6
5.7
1.6
2007
%Ni
1.61
1.81
1.75
%Ni
1.33
1.33
1.33
%Ni
1.49
1.47
1.48
2007
%Ni
–
1.36
1.36
1.56
%Ni
1.29
1.25
1.27
–
%Ni
1.40
1.45
1.44
1.39
Grade
2006
%Ni
1.64
1.81
1.75
%Ni
1.33
1.33
1.33
%Ni
1.51
1.46
1.48
Grade
2006
%Ni
–
1.36
1.36
1.56
%Ni
1.29
1.25
1.27
–
%Ni
1.41
1.44
1.44
1.38
Contained metal
thousand tonnes
2007
2006
199
491
690
42
7
49
178
324
502
216
492
708
42
7
49
180
329
509
Contained metal
thousand tonnes
2007
2006
–
230
230
585
43
44
87
–
16
70
86
23
–
230
230
585
43
44
87
–
15
67
81
22
Mining method: OP = Open Pit.
(1) Barro Alto: The mineral resource model was updated and the mining design optimised to incorporate the new resources into the Ore Reserves. Ore from Barro Alto is currently
being processed at the Codemin plant.
(2) Loma de Níquel: Increases are due to changes to the geological model incorporating new drilling information. Refer to note 38 of the Financial statements for further
information regarding the nickel exploration and exploitation concessions held.
The Ore Reserves and Mineral Resources of the following operations were reviewed during 2007 by independent consultants: Loma de Níquel.
146 | Anglo American plc Annual Report 2007
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Other
information
Contained metal
thousand tonnes
2007
2006
147
48
195
80
98
178
Contained metal
thousand tonnes
2007
2006
2
3
4
5
–
–
–
–
Niobium
Ore Reserves
Catalão (OP)(1)
Carbonatite
Attributable
%
100
Niobium
Mineral Resources
Catalão (OP)
Carbonatite
Attributable
%
100
Classifi cation
2007
Proved
Probable
Total
11.9
4.2
16.0
Classifi cation
2007
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
0.2
0.3
0.5
0.6
Phosphate products
Ore Reserves
Copebrás (OP)(2)
Attributable
%
73
Phosphate products
Mineral Resources
Copebrás (OP)
Attributable
%
73
Classifi cation
2007
Proved
Probable
Total
79.6
152.1
231.7
Classifi cation
2007
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
0.5
20.3
20.8
15.8
Tonnes
million
2006
7.0
6.8
13.8
Tonnes
million
2006
–
–
–
–
Tonnes
million
2006
84.3
152.3
236.6
Tonnes
million
2006
0.5
20.3
20.9
15.8
2007
%Nb2O5
1.24
1.15
1.21
2007
%Nb2O5
1.05
0.91
0.96
0.90
2007
%P2O5
13.3
13.4
13.3
2007
%P2O5
12.4
11.4
11.4
12.9
Grade
2006
%Nb2O5
1.15
1.44
1.29
Grade
2006
%Nb2O5
–
–
–
–
Grade
2006
%P2O5
13.3
13.4
13.3
Grade
2006
%P2O5
12.4
11.4
11.4
12.9
Mining method: OP = Open Pit.
(1) Catalão: Increases due to new information from an exploration programme completed during 2007 and improved outlook for ferro-niobium prices which resulted in a lowering
of the cut-off grade.
(2) Copebrás: Change due to production during 2007.
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Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Base Metals continued
Heavy Minerals
Ore Reserves
Namakwa Sands (OP)(1)
Attributable
%
100
Ilmenite
Zircon
Rutile
Classifi cation
2007
Tonnes
million
2006
Proved
Probable
Total
76.5
250.4
326.8
79.9
268.9
348.8
Proved
Probable
Total
Proved
Probable
Total
Heavy Minerals
Mineral Resources
Namakwa Sands (OP)(1)
Attributable
%
100
Ilmenite
Classifi cation
2007
Measured
Indicated
Measured and Indicated
Inferred in mine plan
117.9
148.4
266.3
184.1
Tonnes
million
2006
116.5
143.6
260.1
175.7
Zircon
Rutile
Measured
Indicated
Measured and Indicated
Inferred in mine plan
Measured
Indicated
Measured and Indicated
Inferred in mine plan
2007
%Ilm
4.9
3.7
4.0
%Zir
1.2
0.9
1.0
%Rut
0.2
0.2
0.2
2007
%Ilm
3.5
3.4
3.4
3.1
%Zir
0.7
0.7
0.7
0.7
%Rut
0.2
0.2
0.2
0.2
Grade
2006
%Ilm
5.0
3.7
4.0
%Zir
1.2
0.9
1.0
%Rut
0.2
0.2
0.2
Grade
2006
%Ilm
3.5
3.4
3.5
2.7
%Zir
0.7
0.7
0.7
0.6
%Rut
0.2
0.2
0.2
0.1
Contained metal
million tonnes
2007
2006
3.7
9.2
12.9
0.9
2.4
3.3
0.2
0.5
0.7
4.0
9.9
13.9
1.0
2.5
3.5
0.2
0.5
0.7
Contained metal
million tonnes
2007
2006
4.1
5.0
9.1
5.6
0.8
1.0
1.8
1.3
0.2
0.2
0.4
0.3
4.1
4.9
9.0
4.7
0.8
1.0
1.8
1.1
0.2
0.2
0.4
0.2
Mining method: OP = Open Pit.
For the multi-product deposits, the tonnage fi gures apply to each product.
(1) Namakwa Sands: On 18 January 2007, Exxaro exercised its option to acquire a 100% interest of Namakwa Sands. The sale is contingent on the conversion of old order
to new order mining rights. It is expected that this will take place in 2008. Change due to production and resource model update during 2007.
148 | Anglo American plc Annual Report 2007
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Projects
Ore Reserves
Quellaveco (OP)(1)
Copper
Sulphide
Flotation
Attributable
%
80
Classifi cation
2007
Tonnes
million
2006
Proved
Probable
Total
250.1
688.3
938.4
250.1
688.3
938.4
Gamsberg (OP)(2)
100
Zinc
Projects
Mineral Resources
Quellaveco (OP)
Attributable
%
80
Proved
Probable
Total
34.3
110.3
144.5
Classifi cation
2007
Copper
Sulphide
Flotation
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
1.5
176.7
178.2
41.1
Pebble East (UG)(3)(4)
50
Copper
Measured
Indicated
Measured and Indicated
–
–
–
Inferred(5) 2,420.0
Pebble West (OP)(3)(6)
50
Copper
Measured and Indicated
Measured(7)
655.0
Indicated(8) 1,760.0
2,415.0
760.0
Inferred(9)
34.4
110.3
144.7
Tonnes
million
2006
1.5
176.7
178.2
–
–
–
–
–
–
–
–
–
Other
information
Grade
2006
%Cu
0.76
0.59
0.64
%Zn
7.55
5.55
6.03
Grade
2006
%Cu
0.53
0.46
0.46
–
%Cu
–
–
–
–
%Cu
–
–
–
–
Contained metal
thousand tonnes
2007
2006
1,901
4,061
5,962
2,585
6,124
8,709
1,901
4,061
5,962
2,597
6,124
8,721
Contained metal
thousand tonnes
2007
2006
8
813
821
222
8
813
821
–
–
–
–
17,182
2,227
5,280
7,507
2,052
–
–
–
–
–
–
–
–
2007
%Cu
0.76
0.59
0.64
%Zn
7.55
5.55
6.03
2007
%Cu
0.53
0.46
0.46
0.54
%Cu
–
–
–
0.71
%Cu
0.34
0.30
0.31
0.27
Mining method: OP = Open Pit, UG = Underground.
(1) Quellaveco: Based on a feasibility study completed in 2000.
(2) Gamsberg: Based on a feasibility study completed in 2000 and reviewed in 2006 to account for prevailing economic and fi nancial assumptions. The Mine Plan includes an
additional 54,200kt at 4.10% Zn of Inferred Mineral Resources.
(3) Pebble: Copper Equivalent (CuEq) calculations use metal prices of $1.00/lb for copper, $400/oz for gold and $6.00/lb for molybdenum. The CuEq used for the tabulated
resources does not include estimates of metallurgical recoveries. Should provisional metallurgical recoveries be included in the CuEq calculation, an indication of the impact on
the resource estimates is shown in the footnotes. It must be emphasised that metallurgical test work is ongoing at both Pebble East and Pebble West and that reliable
estimates of recoveries will only be established during the current pre-feasibility study which is due for completion at end 2008. By defi nition mineral resources do not have
demonstrated economic viability. Due to the uncertainty in the estimates of Inferred Resources, it should not be assumed that all of the Inferred Resources will necessarily
upgrade to Indicated or Measured Resources.
(4) Pebble East: The resources are based on drilling to November 2007 and a block model created in December 2007. A cut-off grade of 0.8% CuEq was used and is considered
reasonable for a large-scale underground operation. The resources occur in a reasonably coherent volume but a more detailed underground design was not undertaken to
constrain the resources or to test for reasonable prospects for eventual economic extraction. At a cut-off of 1% CuEq the estimates of resources are 1,500Mt at 0.82% Cu,
0.49g/t Au and 0.035% Mo (1.32% CuEq). If the estimates of recovery are used in the CuEq calculation, the estimate of Inferred Resources above a cut-off of 0.8% CuEq
drops to 2,100Mt at 0.75% Cu, 0.43g/t Au and 0.035% Mo.
(5) Pebble East co-product estimated grades (Inferred): Gold 0.42g/t, Molybdenum 0.034%.
(6) Pebble West: The resource block model used as the basis for reporting is unchanged from that used by Northern Dynasty Mines to previously publish resources. The resources
in the table are based on a cut-off grade of 0.4% CuEq. Reasonable prospects for eventual economic extraction for the Pebble West Measured and Indicated Resources
is satisfi ed in that more than 96% of the resources fall within a pit generated using Measured, Indicated and Inferred Resources. At a cut-off of 0.5% CuEq the estimates
of Measured plus Indicated Resources are 1,630Mt at 0.35% Cu, 0.39g/t Au and 0.018% Mo (0.69% CuEq). If the estimates of recovery are used in the CuEq calculation,
the estimates of Measured plus Indicated Resources above a cut-off of 0.4% CuEq drops to 1,920Mt at 0.34% Cu, 0.37g/t Au and 0.017% Mo.
(7) Pebble West co-product estimated grades (Measured): Gold 0.37g/t, Molybdenum 0.017%.
(8) Pebble West co-product estimated grades (Indicated): Gold 0.34g/t, Molybdenum 0.016%.
(9) Pebble West co-product estimated grades (Inferred): Gold 0.34g/t, Molybdenum 0.017%.
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Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Ferrous Metals
Kumba Iron Ore
The Ore Reserve and Mineral Resource estimates were compiled in accordance with The SAMREC Code, 2007. Rounding of fi gures may cause
computational discrepancies. The Mineral Resources are reported as inclusive of those Mineral Resources modifi ed to produce the Ore Reserve
fi gures, i.e. the Ore Reserves are included in the Mineral Resource fi gures. The fi gures reported represent 100% of the Ore Reserves and Mineral
Resources, the percentage attributable to Anglo American plc is stated separately.
Iron Ore
Ore Reserves
Attributable
% Classifi cation
2007
Tonnes
million
2006
Sishen Iron Ore Mine (OP)(1)
36.9
Proved
Probable
Total
805
227
1,033
813
241
1,054
Proved
Probable
Total
Proved
Probable
Total
8
1
9
98
78
176
7
2
10
134
31
166
Grade
2006
%Fe
Saleable product
million tonnes
2007
2006
598@65.2% Fe
58.1
57.2
174@65.3% Fe
57.9 772@65.2% Fe
567@65.8% Fe
226@63.9% Fe
793@65.3% Fe
%Fe
61.6
60.9
61.4
%Fe
7@63.5% Fe
1@63.1% Fe
8@63.4% Fe
6@64.5% Fe
2@63.9% Fe
8@64.3% Fe
98@64.7% Fe
65.4
64.2
78@63.6% Fe
65.2 176@64.2% Fe
–
–
–
2007
%Fe
59.5
60.0
59.6
%Fe
62.9
62.7
62.9
%Fe
64.7
63.6
64.2
Thabazimbi Iron Ore Mine (OP)(2)
46.9
Sishen South Iron Ore Project (OP)(3)
46.9
Iron Ore
Mineral Resources
Sishen Iron Ore Mine (OP)
Within Pit(1)
Attributable
%
36.9
Outside Pit(4)
Thabazimbi Iron Ore Mine (OP)
46.9
Within Pit(2)
Outside Pit(5)
Sishen South Iron Ore Project (OP)
46.9
Within Pit(6)
Outside Pit(7)
Zandrivierspoort Project (OP)
23.5
Classifi cation
2007
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred
920
187
1,107
5
618
588
1,206
110
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
11
2
13
0
18
5
23
3
115
70
185
–
31
56
87
10
–
447
447
–
Tonnes
million
2006
1,398
422
1,819
–
115
266
381
–
8
3
11
–
12
14
27
–
122
61
183
–
35
88
123
–
–
447
447
–
2007
%Fe
60.5
59.0
60.2
62.4
55.2
58.6
56.9
61.0
%Fe
61.8
62.4
61.9
61.6
62.4
63.4
62.6
63.4
%Fe
66.1
65.6
65.9
–
65.6
64.3
64.8
63.4
%Fe
–
34.9
34.9
–
Grade
2006
%Fe
57.0
56.2
56.8
–
64.6
64.3
64.4
–
%Fe
62.1
61.4
61.9
–
62.2
61.8
62.0
–
%Fe
65.7
65.2
65.5
–
64.6
64.5
64.5
–
%Fe
–
34.9
34.9
–
Mining method: OP = Open Pit.
The tonnage is quoted as metric tonnes and abbreviated as Mt for million tonnes.
150 | Anglo American plc Annual Report 2007
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Other
information
(1) Sishen Iron Ore Mine: New economic assumptions and revised Optimistic Pit shell applied.
(2) Thabazimbi Iron Ore Mine: New economic assumptions and revised Optimistic Pit shell applied.
(3) Sishen South Iron Ore Project – Ore Reserves: The process of converting Mineral Resources to Ore Reserves is time-consuming and as the geological model update was only
completed late in 2007, the Ore Reserves reported are based on previous geological models. Globally the Mineral Resource estimates between the two models are similar with
local variations which could impact the Ore Reserve estimates when updated in 2008.
(4) Sishen Iron Ore Mine – Outside Pit: Previously reported as ‘Underground’. Updated economic assumptions and a change in the long term outlook on exploitation of these
resources resulted in the underground option no longer being considered.
(5) Thabazimbi Iron Ore Mine – Outside Pit: Previously reported as ‘Underground’. Updated economic assumptions and a change in the long term outlook on exploitation of these
resources resulted in the underground option no longer being considered.
(6) Sishen South – Within Pit: Based on new geological models and a Mineral Resource update late in 2007.
(7) Sishen South – Outside Pit: Previously reported as ‘Underground’. Updated economic assumptions and a change in the long term outlook on exploitation of these resources
resulted in the underground option no longer being considered.
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Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Ferrous Metals continued
Minas-Rio Project
The Minas-Rio Project is located in the Minas Gerais state of Brazil and will include open pit mines and a benefi ciation plant producing high grade
pellet feed which will be transported, through a slurry pipeline, over 500 km to the Port of Açu in the Rio de Janeiro state. The project will largely
be based on the two main deposits of Serra do Sapo and Itapanhoacanga while smaller deposits occur at Serro and João Monlevade. Two ore
types, Friable and Hard Itabirite, have been identifi ed at Serra do Sapo and Itapanhoacanga. Only the Friable Itabirite at Serra do Sapo is being
considered for Phase 1 of the project. The planned annual capacity of Phase 1 is 26.5 Mtpa of iron ore pellet feed (wet tonnes), for start-up
during 2010.
The estimates of Mineral Resources have been audited by an independent Qualifi ed Person from SRK who has compiled a NI 43-101 compliant
Technical Report for MMX. The Mineral Resources are also JORC compliant. The Qualifi ed Person has consented to the inclusion of the resources
in the table below, and associated footnotes, and agrees with the context and form in which they occur. Rounding of fi gures may cause
computational discrepancies. The fi gures reported represent 100% of the Mineral Resources.
Minas-Rio Project(1)(4)(5)(6)(7)
Iron Ore
Mineral Resources
Serra do Sapo (OP)(3)
Friable Itabirite
Hard Itabirite
Attributable
%
49
Classifi cation
2007
Tonnes
million
2006
Measured
Indicated
Measured and Indicated
Inferred(2)
Measured
Indicated
Measured and Indicated
Inferred(2)
Itapanhoacanga (OP)
49
Friable Itabirite
Hard Itabirite
Mining method: OP = Open Pit.
Measured
Indicated
Measured and Indicated
Inferred(2)
Measured
Indicated
Measured and Indicated
Inferred(2)
2007
%Fe
–
41.0
41.0
39.5
–
34.8
34.8
34.2
%Fe
–
40.3
40.3
40.4
–
–
–
34.2
Grade
2006
%Fe
–
–
–
–
–
–
–
–
%Fe
–
–
–
–
–
–
–
–
–
222
222
313
–
171
171
141
–
83
83
284
–
–
–
32
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1) Minas-Rio Project: All Mineral Resources are stated as wet tonnes and the moisture content is estimated at 7%. Cut-off grade used is 33% Fe .
(2) Minas-Rio Project – Inferred Resources: Due to the uncertainty in the estimates of Inferred Resources, it should not be assumed that all of the Inferred Resources will
necessarily upgrade to Indicated or Measured Resources.
(3) Serra do Sapo: Drilling has taken place over less than 50% of the strike length of the deposit and further exploration is expected to yield between 800Mt and 1000Mt
of additional Friable Itabirite resources. It must be emphasised that this potential quantity is conceptual in nature, that there is insuffi cient exploration to defi ne a Mineral
Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.
(4) Serra do Sapo – Further lower grade resources above a cut-off of 20% Fe:
Friable Itabirite – an estimated 125Mt of Indicated and 102Mt of Inferred Mineral Resources at an estimated average grade of 30% Fe and;
Hard Itabirite – an estimated 752Mt of Indicated and 892Mt of Inferred Hard Itabirite at an estimated average grade of 30% Fe;
(5) Itapanhoacanga – Further lower grade resources above a cut-off of 20% Fe:
Friable Itabirite – an estimated 7Mt of Indicated Mineral Resources at an estimated average grade of 32% Fe and;
Friable Itabirite – an estimated 78Mt Inferred Mineral Resources at an estimated average grade of 29% Fe and;
Hard Itabirite – an estimated 19Mt of Inferred Mineral Resources at an estimated average grade of 31% Fe.
(6) Serro deposit – Resources above a cut-off of 33% Fe:
Friable plus Hard Itabirite – an estimated 25Mt of Indicated and 56Mt of Inferred Mineral Resources at an estimated average grade of approximately 38% Fe.
Further lower grade resources above a cut-off of 20% Fe:
Friable plus Hard Itabirite – an estimated 101Mt of Indicated and 256Mt of Inferred Mineral Resources at an estimated average grade of 29% Fe.
(7) João Monlevade deposit – Resources above a cut-off of 30% Fe:
Friable Itabirite – an estimated 133Mt of Inferred Mineral Resources at an estimated average grade of 47% Fe.
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Other
information
Samancor
The Ore Reserve and Mineral Resource estimates were compiled in accordance with The SAMREC Code, 2007 and The JORC Code, 2004
as applicable. Rounding of fi gures may cause computational discrepancies. The Mineral Resources are reported as inclusive of those Mineral
Resources modifi ed to produce the Ore Reserve fi gures, i.e. the Ore Reserves are included in the Mineral Resource fi gures. The fi gures reported
represent 100% of the Ore Reserves and Mineral Resources.
Manganese
Ore Reserves
Hotazel Manganese Mines
Mamatwan (OP)(1)
Attributable
%
40
Wessels (UG)(2)
GEMCO (OP)(3)
40
Classifi cation
2007
Proved
Probable
Total
Proved
Probable
Total
44.0
8.1
52.1
4.6
14.8
19.4
Proved
Probable
Total
81.8
44.7
126.5
Classifi cation
2007
Attributable
%
40
Manganese
Mineral Resources
Hotazel Manganese Mines
Mamatwan (OP)(4)
Wessels (UG)(5)
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
56.2
15.6
71.8
8.8
30.7
39.5
GEMCO (OP)(6)
40
Measured
Indicated
Measured and Indicated
80.1
47.7
127.8
61.2
42.7
103.9
Tonnes
million
2006
42.3
6.7
49.0
2.4
11.6
14.0
55.5
36.0
91.5
Tonnes
million
2006
53.1
10.6
63.7
4.8
19.6
24.4
2007
%Mn
37.6
36.4
37.4
46.0
45.2
45.4
%Mn
48.2
47.2
47.8
2007
%Mn
37.6
36.4
37.3
46.0
45.3
45.5
%Mn
46.5
46.0
46.3
Grade
2006
%Mn
37.6
37.2
37.5
48.0
48.0
48.0
%Mn
48.5
47.2
48.0
Grade
2006
%Mn
37.6
37.2
37.5
48.1
48.0
48.0
%Mn
48.9
47.3
48.2
2007
% Yield
2006
49.3
47.0
48.5
53.4
51.0
52.5
2007
% Yield
2006
44.2
44.0
44.1
42.0
38.0
40.4
Mining method: OP = Open Pit, UG = Underground.
Mamatwan tonnages stated as Wet Metric Tonnes. Wessels and GEMCO tonnages stated as Dry Metric Tonnes.
(1) Mamatwan – Ore Reserves: The fi nal slope angle of the boundary pillar and safety factors have been reviewed and the X zone included.
(2) Wessels – Ore Reserves: Positive changes in market conditions has allowed for the downward adjustment of the cut-off grade to 37.5% Mn as opposed to 43.6% Mn used
in 2006. The mean grade of the high grade product (W1L) was also adjusted to 47% Mn from a traditional mean grade of 48% Mn.
(3) GEMCO – Ore Reserves: Changes are primarily due to enhanced market conditions and the inclusion of J Deposit. The Ore Reserves reported are stated with total tonnage but
report the grade values only above the nominated cut-off of 40% Mn product grade. The grade is reported using benefi ciated grades, as benefi ciated grades are used in mine
scheduling, quality control and blending (rather than in situ grades).
(4) Mamatwan – Mineral Resources: Additional boreholes resulted in an enhanced geological model and along with changes to the classifi cation criteria, have enabled upgrading
of additional resources to Measured and Indicated Resources.
(5) Wessels – Mineral Resources: Changes are due to a revised structural interpretation and geological model along with the inclusion of all material above a revised cut-off
of 37.5% Mn. The downward adjustment of the cut-off from the previous 43.5% Mn is due to positive changes in market conditions. The mean grade of the high grade product
(W1L) was also adjusted to 47% Mn from a traditional mean grade of 48% Mn.
(6) GEMCO – Mineral Resources: Additional drillholes and in-fi ll drilling has resulted in re-classifi cation of ground increasing the Measured Resources signifi cantly.
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Anglo American plc Annual Report 2007 | 153
Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Coal
The Coal Reserve and Coal Resource estimates were compiled in accordance with the Australasian Code for Reporting of Mineral Resources and
Ore Reserves (The JORC Code, 2004) as a minimum standard. Where relevant, the estimates were also prepared in compliance with regional
codes and requirements (e.g. The SAMREC Code, 2007). Rounding of fi gures may cause computational discrepancies. The Coal Resources are
additional to those resources which have been modifi ed to produce the Coal Reserves. Reported and attributable percentages vary and are
therefore stated individually.
Anglo Coal
Coal Reserves(1)
Export Metallurgical
Australia
Canada
South Africa
Export Thermal
Australia
Colombia
South Africa
Venezuela
Total Export
Domestic Power Generation
Australia
South Africa
Domestic Synfuels
South Africa
Total Domestic
Total Coal Reserves
Reported(2) Attributable(2)
%
%
Classifi cation
100
68.5
100
65.9
100
100
92.4
58.5
33.3
33.3
97.5
97.5
24.9
24.9
100
100
100
94.7
100
100
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Tonnes
million(3)
2006
ROM(1)
387
224
611
–
–
–
5
2
7
129
29
158
208
65
272
187
283
470
37
–
37
2007
ROM(1)
382
220
602
11
4
16
4
–
4
129
36
165
216
70
287
191
251
442
35
–
35
968
582
1,550
951
603
1,555
205
27
232
635
163
798
92
–
92
931
190
1,121
1,899
772
2,671
211
32
243
551
194
745
99
–
99
861
226
1,087
1,813
829
2,642
Saleable
Saleable
Yield(4) Heat content(5)
%
2007
77
70
74
67
66
67
72
–
72
87
90
88
100
100
100
61
58
59
100
–
100
81
70
77
99
98
99
94
98
95
100
–
100
96
98
96
88
77
85
kcal/kg
2007
GAR(5)
7,330
7,110
7,260
7,500
7,500
7,500
6,470
–
6,470
6,620
6,620
6,620
6,130
6,220
6,160
6,030
6,130
6,080
7,100
–
7,100
6,700
6,570
6,650
4,610
4,480
4,590
4,050
5,340
4,330
5,290
–
5,290
4,300
5,220
4,460
5,440
6,150
5,620
Tonnes
million(3)
2006
SALEABLE(1)
311
163
474
–
–
–
3
1
4
115
26
141
211
66
277
114
172
287
38
–
38
2007
SALEABLE(1)
305
159
464
8
3
11
3
–
3
114
33
147
220
72
292
119
148
268
36
–
36
806
415
1,221
793
428
1,221
202
26
229
605
163
769
91
–
91
899
190
1,089
1,704
605
2,309
206
32
238
537
194
730
99
–
99
842
225
1,067
1,635
654
2,288
Footnotes appear at the end of the section.
Export Metallurgical refers to operations where the main product is coking coal and/or coal for pulverised coal injection (PCI), primarily for the export market.
Export Thermal refers to operations that primarily produce thermal coal for the export market.
Domestic Power Generation refers to operations that produce thermal coal for, and are typically tied to, power stations.
Domestic Synfuels refers to operations in South Africa that produce coal for supply to Sasol for the production of synthetic fuel and chemicals.
154 | Anglo American plc Annual Report 2007
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Reported(2)
Attributable(2)
%
%
Classifi cation
Other
information
Tonnes(3)
million
2006
Heat content(5)
kcal/kg
2007
2006
MTIS(6)
150
172
323
14
GAR(5)
6,950
6,890
6,920
7,120
GAR (5)
6,990
6,890
6,940
7,120
–
–
–
–
9
16
25
–
1
15
17
3
68
330
398
1
170
170
340
60
–
28
28
–
398
731
1,129
78
251
353
604
1
109
91
200
66
–
26
26
–
360
470
830
67
758
1,201
1,959
144
–
–
–
7,500
6,240
–
6,240
–
7,000
6,960
6,970
5,240
6,520
6,210
6,270
7,220
5,590
5,480
5,530
6,560
7,910
7,860
7,870
–
6,250
6,160
6,190
6,610
4,950
4,790
4,860
3,890
5,490
4,580
5,070
5,850
–
5,330
5,330
–
5,050
4,800
4,910
5,810
5,790
5,690
5,730
6,120
–
–
–
–
6,930
7,080
7,030
–
6,520
6,520
6,520
6,540
6,520
6,210
6,270
7,220
5,970
5,890
5,930
6,530
–
7,880
7,880
–
6,470
6,390
6,420
6,650
5,000
4,800
4,880
3,770
4,170
4,900
4,500
4,640
–
5,330
5,330
–
4,750
4,850
4,810
4,620
5,650
5,790
5,730
5,710
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
2007
MTIS(6)
162
155
318
14
–
–
–
3
1
–
1
–
18
23
41
6
68
330
398
1
236
272
508
27
7
20
26
–
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
492
801
1,293
50
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
254
346
600
1
57
48
105
79
–
26
26
–
311
420
731
80
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
803
1,220
2,024
130
100
73.8
100
65.9
100
100
60
52.1
33.3
33.3
97.5
88.7
24.9
24.9
100
100
100
85.8
100
100
Anglo Coal
Coal Resources(6)
Mine Leases
Export Metallurgical
Australia
Canada
South Africa
Export Thermal
Australia
Colombia
South Africa
Venezuela
Total Export
Domestic Power Generation
Australia
South Africa
Domestic Synfuels
South Africa
Total Domestic
Total Mine Leases
Footnotes appear at the end of the section.
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Anglo American plc Annual Report 2007 | 155
Other
information
Ore Reserves and Mineral Resources estimates continued
for the year ended 31 December 2007
Coal continued
Anglo Coal
Coal Resources(6)
Projects
Australia
China
South Africa
Total Projects
Mine Leases and Projects
Total Coal Resources
Reported(2)
Attributable(2)
%
%
Classifi cation
2007
100
81.1
100
60
100
74.1
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
MTIS(6)
496
733
1,228
110
389
499
843
620
1,462
1,448
1,742
3,190
Tonnes(3)
million
2006
MTIS(6)
489
734
1,223
110
389
499
285
1,311
1,596
883
2,435
3,318
Heat content(5)
2007
kcal/kg
2006
GAR(5)
GAR (5)
6,280
6,390
6,350
6,540
6,600
6,590
4,430
4,910
4,630
5,220
5,910
5,600
6,280
6,390
6,350
6,540
6,600
6,590
4,830
4,640
4,670
5,840
5,480
5,580
Classifi cation
2007
Tonnes(3)
million
2006
Heat content(5)
2007
kcal/kg
2006
MTIS(6)
MTIS(6)
GAR(5)
GAR(5)
Measured
Indicated
Measured and Indicated
Inferred in Mine Plan(7)
2,252
2,962
5,214
130
1,641
3,636
5,277
144
5,420
5,820
5,650
6,120
5,760
5,580
5,640
5,710
Classifi cation
2007
MTIS(6)
Tonnes(3)
million
2006
Heat content(5)
2007
kcal/kg
2006
MTIS(6)
GAR(5)
GAR(5)
Brown Coal Resources
Reported(2)
Attributable(2)
%
%
Australia
100
100
Measured
Indicated
Measured and Indicated
5,095
5,221
10,316
4,028
2,448
6,476
1,820
1,790
1,800
1,820
1,790
1,810
Gas
The Gas Reserve estimates are compiled in accordance with the Society of Petroleum Engineers and World Petroleum Council guidelines.
Anglo Coal
Gas Reserves(8)
Coal Bed Methane
Australia
Reported(2)
Attributable(2)
%
%
100
51
Classifi cation
2007
Proved: 1P
Probable: 2P-1P
Total: 2P
SALEABLE(8)
1,553
2,828
4,381
Volume(8)
million m3
2006
SALEABLE(8)
1,814
2,875
4,689
Energy Content(8)
2007
SALEABLE(8)
58
106
164
PJ
2006
SALEABLE(8)
68
107
175
(1) Coal Reserves are quoted on a Run Of Mine (ROM) reserve tonnage basis, which represent the tonnes delivered to the plant, and on a Saleable reserve tonnage basis,
which represent the product tonnes produced.
(2) Reported (%) and Attributable (%) refers to 2007 only. For the 2006 Reported and Attributable fi gures, please refer to the 2006 Annual Report.
(3) The tonnage is quoted as metric tonnes and where applicable abbreviated as Mt for million tonnes.
(4) Yield (%) represents the ratio of Saleable reserve tonnes to ROM reserve tonnes and is quoted on a constant moisture basis or on an air dried to air dried basis.
(5) The coal quality for the Coal Reserves is quoted as a weighted average of the heat content of all Saleable coal products on a Gross As Received (GAR) basis. The coal quality
for the Coal Resources is reported on an in situ heat content Gross As Received (GAR) basis.
Coal quality parameters for the Coal Reserves for Export Metallurgical and Export Thermal collieries meet the contractual specifi cations for coking coal, PCI, metallurgical coal,
steam coal and domestic coal.
Coal quality parameters for the Coal Reserves for Domestic Power Generation and Domestic Synfuels collieries meet the specifi cations of the individual supply contracts.
(6) Coal Resources are quoted on a Mineable Tonnage In Situ (MTIS) basis in addition to those resources which have been modifi ed to produce the reported Coal Reserves.
(7) Inferred in Mine Plan refers to Inferred Coal Resources that are included in the life of mine schedule of the respective collieries but which are not reported as Coal Reserves.
(8) Gas Reserves are reported in terms of saleable volume (million cubic metres) and saleable energy (Petajoules (PJ), or one thousand trillion Joules).
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Other
information
Reserves
Summary of material changes (+/-10%) at reporting level
Export Metallurgical – Canada: Increase in Coal Reserves by 16Mt (+100%) brought about by the acquisition of Peace River Coal (Anglo American’s interest in Peace River Coal
is 65.9%).
Export Metallurgical – South Africa: Decrease in Coal Reserves by 3Mt (-47%) brought about principally by the transfer out of 2Mt of Coal Reserves at Bank 5 Colliery due to the
closure of the mine for economic reasons.
Domestic Power Generation – South Africa: The increase in reserves of 53Mt (+7%) is due primarily to the conversion of Maccauvlei West Mine Lease Coal Resources to 103Mt
of Coal Reserves at New Vaal (+14%).
Material change in attributable reserves at reporting level
In 2007 Anglo Coal created a black economic empowerment (BEE) company, Anglo Inyosi Coal, into which it is transferring certain of its South African assets. A total of 27% of
these transferred assets will be disposed of to BEE partners and the differences in the attributable ownership percentage between the 2006 and 2007 reporting periods refl ect
this change in ownership within Anglo Coal in the South African Domestic Power Generation Coal Reserves. This change does not impact on the reportable reserves, but reduces
the attributable Coal Reserves of Kriel Colliery to 73% (a reduction of 42Mt).
Assumption with respect to Mineral Tenure
Venezuela: Although the Carbones del Guasare mining concession terminates in 2013, life of mine Coal Reserves extending beyond this date are included in the 2007
Reserve statement.
South Africa: Where applications for Mining Rights have been submitted and these are still being processed by the relevant regulatory authorities, the relevant Coal Reserves
have been included in the statement. Where applications for the conversion of old order mining licences to new order Mining Rights have not yet been submitted these have been
included in the statement, as the deadline for submission is typically April 2009.
Resources
Summary of material changes (+/-10%) at reporting level
Mine Lease Resources
Export Metallurgical – Canada: Increase in Coal Resources by 3Mt (+100%) brought about by the acquisition of Peace River Coal.
Export Metallurgical – South Africa: Decrease in Coal Resources by 24Mt (-95%) brought about by the transfer out of Mine Lease Coal Resources at Bank 5 Colliery due to the
closure of the mine for economic reasons.
Export Thermal – Australia: The increase in Coal Resources of 28Mt (+145%) is due mainly to the acquisition of a 23.3% interest in Jellinbah Colliery. Although Jellinbah was
acquired in 2002, it was not previously reported since a JORC compliant resource and reserve statement was only completed during 2007.
Export Thermal – South Africa: The increase in Coal Resources of 136Mt (+34%) is brought about principally by the transfer of Project Resources to Mine Lease Resources
at Zondagsfontein Colliery (174Mt).
Domestic Power Generation – South Africa: The decrease in resources of 82Mt (-31%) is due primarily to the conversion of 100Mt of Maccauvlei West Mine Lease Resources
to Reserves at New Vaal.
Project Resources
South Africa: The net decrease of 134Mt (-8%) was brought about principally by the transfer of Zondagsfontein Project Resources to Zondagsfontein Colliery Mine Lease
Resources.
Australia – Brown Coal: Monash Energy brown coal resources increased by 3,840Mt (+59%) due to a revised resource evaluation (model refi nement) during 2007.
Material change in attributable resources at reporting level
In 2007 Anglo Coal created a black economic empowerment (BEE) company, Anglo Inyosi Coal, into which it is transferring certain of its South African assets. A total of 27%
of these transferred assets will be disposed of to BEE partners. The differences in the attributable ownership percentage between the 2006 and 2007 reporting periods refl ect
this change in ownership within Anglo Coal in the South African Domestic Power Generation Mine Lease Coal Resources and in the South African Project Coal Resources. This
change does not impact on the reportable resources, but reduces the attributable Mine Lease Resources of Kriel and Zondagsfontein Collieries to 73% (a reduction of 73Mt).
Likewise, the Project Resources of the South Rand, Elders, New Largo, Oogiesfontein and Zondagsfontein projects are reduced to 73% (a reduction of 357Mt).
Assumptions with respect to Mineral Tenure
Venezuela: Although the Carbones del Guasare mining concession terminates in 2013, Mine Lease Coal Resources that may be included in a mine plan beyond this date are
included in the 2007 Resource statement.
South Africa: Where applications for Mining Rights have been submitted and these are still being processed by the relevant regulatory authorities, the relevant Mine Lease Coal
Resources have been included in the statement. Where applications for the conversion of old order mining licences to new order Mining Rights have not yet been submitted these
have been included in the statement, as the deadline for submission is typically April 2009.
Where applications for Prospecting Rights have been submitted and these are still being processed by the relevant regulatory authorities, the relevant Project Coal Resources have
been included in the statement. Where applications for Prospecting Rights have been initially refused by the regulatory authorities, most of these rights have now been granted
and the remaining three refused applications are still the subject of ongoing legal review and Anglo Coal has reasonable expectations that the Prospecting Rights will be granted
in due course, the relevant Project Coal Resources have been included in the statement. As at 31 December 2007, a total of 40.1Mt of the reported Project Coal Resources were
associated with two applications for new order Prospecting Rights that have been initially refused and are now the subject of ongoing legal process and discussions with the
relevant authorities. Consistent with the principles adopted in the reporting of Project Coal Resources in South Africa previously, Anglo Coal currently expects that the outcome
of such review and discussions will be favourable. An application for New Order Mining Rights was submitted for Zondagsfontein Colliery during 2007.
Reviews were carried out in 2007 on the following Operations and Project areas:
South Africa: Goedehoop, Isibonelo, Landau, New Denmark, New Largo, South Rand, Zondagsfontein
Australia: Callide, Dawson South
Colombia: Carbones del Cerrejón.
The following Operations and Projects contributed to the 2007 Coal Reserve and Coal Resource estimates:
Colliery Reserves and Mine Lease Resources
Export South Africa Reserves: Bank, Goedehoop, Greenside, Kleinkopje, Landau, Mafube, Nooitgedacht, Zondagsfontein
Export Australia Reserves: Drayton, Dawson, German Creek, Jellinbah, Moranbah North
Export Colombia Reserves: Carbones del Cerrejón
Export Venezuela Reserves: Carbones del Guasare
Export Canada Reserves: Trend (Peace River)
Domestic South Africa Reserves: Isibonelo, Kriel, New Denmark, New Vaal
Domestic Australia Reserves: Callide
Project Resources
South Africa: Elders, New Largo, Nooitedacht (Kriel), Oogiesfontein, South Rand, Vaalbank, Zondagsfontein
Australia: Dartbrook, Grosvenor, Monash, Moranbah South, Saddlers Creek, Theodore South
China: Xiwan
Gas Reserves
Australia: Dawson Seam Gas
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Other
information
Production statistics
The fi gures below include the entire output of consolidated entities and the Group’s share of joint ventures, joint arrangements and associates
where applicable, except for Collahuasi in Base Metals and De Beers which are quoted on a 100% basis.
2007
2006
Anglo Platinum (troy ounces)(1)(2)
Platinum
Palladium
Rhodium
Nickel (tonnes)(3)
Copper (tonnes)(3)
Gold
Anglo Coal (tonnes)
South Africa
Eskom
Trade – Thermal
Trade – Metallurgical
Australia(4)
Thermal
Metallurgical
South America
Thermal
Total
Anglo Coal (tonnes)
South Africa
Bank
Greenside
Goedehoop
Isibonelo
Kriel
Kleinkopje
Landau
New Denmark
New Vaal
Nooitgedacht
Mafube
Australia(4)
Callide
Drayton
German Creek (Capcoal)
Jellinbah East
Moranbah
Dawson Complex
South America
Carbones del Guasare
Carbones del Cerrejón
Total
2,508,800
1,406,200
333,100
4,248,100
19,500
11,100
99,000
34,064,000
23,952,400
1,143,700
59,160,100
15,059,300
10,145,400
25,204,700
11,259,800
95,624,600
51,900
3,314,900
8,456,200
5,001,000
11,210,100
3,490,700
4,058,200
5,134,700
17,119,500
565,700
757,200
59,160,100
10,031,100
3,902,700
4,115,700
891,800
3,211,600
3,051,800
25,204,700
1,384,400
9,875,400
11,259,800
95,624,600
2,863,900
1,563,000
331,700
4,758,600
21,700
11,400
115,400
34,821,200
22,754,000
1,768,200
59,343,400
15,258,400
9,195,600
24,454,000
11,008,900
94,806,300
477,600
2,778,100
8,534,500
4,020,100
12,318,400
3,898,400
4,102,400
5,508,500
16,275,000
711,000
719,400
59,343,400
9,816,100
4,136,300
3,165,400
887,400
2,928,500
3,520,300
24,454,000
1,531,700
9,477,200
11,008,900
94,806,300
(1) See the published results of Anglo Platinum Limited and Northam Platinum Limited for further analysis of production information.
(2) Includes Anglo Platinum Limited’s 22.5% share of Northam Platinum Limited’s production for 12 months in 2006 and the nine months to 30 September 2007 at which
time Anglo Platinum Limited’s investment in Northam Platinum Limited was transferred to a disposal group.
(3) Also disclosed within total attributable nickel and copper production.
(4) 2006 excludes production at Dartbrook which was closed in the year. Production for Dartbrook was 792,000 tonnes in 2006.
158 | Anglo American plc Annual Report 2007
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De Beers (diamonds recovered – carats)
100% basis (Anglo American 45%)
Debswana
Namdeb
De Beers Consolidated Mines
Williamson
Canada
Anglo Base Metals
Copper(1)
Collahuasi
100% basis (Anglo American 44%)
Ore mined
Ore processed
Ore grade processed
Production
Oxide
Sulphide
Oxide
Sulphide
Copper concentrate
Copper cathode
Copper in concentrate
Total copper production for Collahuasi
Anglo American Sur
(formerly Minera Sur Andes)
Los Bronces mine
Ore mined
Marginal ore mined
Las Tortolas concentrator
Ore processed
Production
El Soldado mine
Ore mined
Ore processed
Ore grade processed
Production
(1) Copper production fi gures exclude Palabora.
Ore grade processed
Average recovery
Copper concentrate
Copper cathode
Copper in concentrate
Total
Open pit – ore mined
Open pit – marginal ore mined
Underground (sulphide)
Total
Oxide
Sulphide
Oxide
Sulphide
Copper concentrate
Copper cathode
Copper in concentrate
Total
Other
information
2007
2006
33,638,000
2,176,000
14,998,000
220,000
81,000
51,113,000
tonnes
tonnes
tonnes
% Cu
% Cu
61,969,800
7,129,200
43,679,900
0.8
1.0
dry metric tonnes 1,346,000
58,100
tonnes
393,900
tonnes
tonnes
452,000
dry metric tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% Cu
%
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% Cu
% Cu
dry metric tonnes
tonnes
tonnes
tonnes
26,503,300
35,744,000
21,125,300
1.0
85.3
607,400
48,300
182,900
231,200
6,283,000
76,600
1,514,900
7,874,500
791,900
7,400,900
1.4
1.1
229,700
7,500
65,300
72,800
34,293,000
2,084,800
14,568,900
189,400
–
51,136,100
45,843,300
6,390,300
41,347,700
1.0
1.0
1,312,400
59,800
380,200
440,000
22,346,200
35,538,000
20,514,700
1.0
88.1
555,900
42,500
183,500
226,000
5,812,300
110,800
2,028,600
7,951,700
654,200
7,527,700
1.4
1.0
222,900
6,500
62,200
68,700
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159
Other
information
Production statistics continued
Anglo Base Metals (continued)
Chagres Smelter
Copper concentrate smelted
Production
Copper blister/anodes
Acid
Total copper production for the Anglo American Sur group
Anglo American Norte
(formerly Mantos Blancos)
Mantos Blancos mine
Ore processed
Ore grade processed
Production
Mantoverde mine
Ore processed
Ore grade processed
Production
Black Mountain
Oxide
Sulphide
Marginal ore mined
Oxide
Sulphide
Marginal ore
Copper concentrate
Copper cathode
Copper in concentrate
Total
Oxide
Marginal ore
Oxide
Marginal ore
Copper cathode
Total Anglo Base Metals copper production
Anglo Platinum copper production
Production(1)
Total attributable copper production
Nickel, Niobium, Mineral Sands and Phosphates
Nickel
Codemin
Ore mined
Ore processed
Ore grade processed
Production
Loma de Níquel
Ore mined
Ore processed
Ore grade processed
Production
Total Anglo Base Metals nickel production
Anglo Platinum nickel production
Production(1)
Total attributable nickel production
Niobium
Catalão
Ore mined
Ore processed
Ore grade processed
Production
2007
2006
168,100
164,100
493,400
304,000
183,200
173,400
499,200
294,700
4,587,900
3,879,800
5,862,900
4,533,800
3,979,800
6,307,300
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% Cu (soluble)
% Cu (insoluble)
% Cu (soluble)
dry metric tonnes
tonnes
tonnes
0.7
1.1
0.3
105,900
48,700
40,200
88,900
0.8
1.1
0.8
123,800
49,100
42,600
91,700
tonnes
tonnes
tonnes
% Cu (soluble)
% Cu (soluble)
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% Ni
tonnes
tonnes
tonnes
% Ni
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
Kg Nb/tonne
tonnes
9,280,700
5,511,100
9,502,300
4,879,900
0.7
0.3
61,000
2,200
655,000
11,100
666,100
539,300
522,600
2.1
9,900
0.7
0.3
60,300
3,400
643,800
11,400
655,200
487,600
518,600
2.1
9,800
1,183,200
1,096,100
1,324,300
1,205,000
1.6
15,700
25,600
19,500
45,100
852,500
831,700
10.9
4,700
1.6
16,600
26,400
21,700
48,100
795,400
813,900
10.9
4,700
(1) Includes Anglo Platinum Limited’s 22.5% share of Northam Platinum Limited’s production for 12 months in 2006 and the nine months to 30 September 2007 at which
time Anglo Platinum Limited’s investment in Northam Platinum Limited was transferred to a disposal group.
160 | Anglo American plc Annual Report 2007
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Anglo Base Metals (continued)
Mineral Sands
Namakwa Sands
Ore mined
Production
Smelter production
Phosphates
Copebrás
Sodium tripolyphosphate
Phosphates
Zinc and Lead
Black Mountain
Ore mined
Ore processed
Ore grade processed
Production
Lisheen
Ore mined
Ore processed
Ore grade processed
Production
Skorpion
Ore mined
Ore processed
Ore grade processed
Production
Total attributable zinc production
Total attributable lead production
Ilmenite
Rutile
Zircon
Slag tapped
Iron tapped
Zinc
Lead
Copper
Zinc in concentrate
Lead in concentrate
Copper in concentrate
Zinc
Lead
Zinc in concentrate
Lead in concentrate
Zinc
Zinc
Other
information
2007
2006
18,111,700
17,382,700
300,300
24,500
114,800
151,300
101,800
56,700
1,037,800
272,200
28,200
128,400
133,900
88,900
71,100
901,500
1,065,200
1,099,600
1,544,500
1,403,800
3.2
4.3
0.3
28,300
41,900
2,200
1,584,700
1,513,600
12.0
1.9
164,700
20,200
1,402,300
1,379,600
11.7
150,100
343,100
62,100
3.4
4.1
0.4
34,100
48,300
3,400
1,605,900
1,527,600
12.3
2.1
170,700
23,100
1,456,500
1,311,800
11.8
129,900
334,700
71,400
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% Zn
% Pb
% Cu
tonnes
tonnes
tonnes
tonnes
tonnes
% Zn
% Pb
tonnes
tonnes
tonnes
tonnes
% Zn
tonnes
tonnes
tonnes
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161
Other
information
Production statistics continued
Anglo Ferrous Metals and Industries
Kumba Iron Ore Limited
Lump
Fines
Total iron ore
Scaw Metals
South Africa – Steel Products
International – Steel Products
Samancor(1)
Manganese ore
Manganese alloys
Anglo Industrial Minerals
Aggregates
Lime products
Concrete
Anglo Paper and Packaging
Mondi Packaging
Packaging papers
Corrugated board and boxes
Paper sacks
Coating and release liners
Pulp – external
Mondi Business Paper
Uncoated wood free paper
Newsprint
Pulp – external
Wood chips
Mondi Packaging South Africa
Packaging papers
Corrugated board and boxes
Newsprint joint ventures and other
Newsprint (attributable share)
Aylesford
Shanduka
(1) Saleable production.
tonnes
tonnes
tonnes
tonnes
tonnes
mtu m
tonnes
tonnes
tonnes
m3
tonnes
m m2
m units
m m2
tonnes
2007
2006
19,043,000
13,357,000
32,400,000
18,639,800
12,470,300
31,110,100
776,000
803,000
104
310,000
723,000
696,000
97
277,200
95,393,300
1,836,300
8,858,400
92,268,200
1,428,900
8,526,800
1,480,577
985
1,910
1,549
91,834
1,039,145
tonnes
99,738
tonnes
84,563
tonnes
green metric tonnes 362,089
tonnes
m m2
tonnes
tonnes
tonnes
141,339
171
156,103
94,354
61,749
2,894,700
2,103
3,606
2,360
180,200
2,012,300
187,100
114,100
886,600
369,300
328
320,900
196,865
124,012
162 | Anglo American plc Annual Report 2007
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Exchange rates and commodity prices
US$ exchange rates
Average spot prices for the year
Rand
Sterling
Euro
Australian dollar
Chilean peso
Closing spot prices
Rand
Sterling
Euro
Australian dollar
Chilean peso
Commodity prices
Average market prices for the year
Platinum
Palladium
Rhodium
Copper
Nickel
Zinc
Lead
Gold
European eucalyptus pulp price (CIF)
(1) Average market price for the six months ended 30 June 2007.
Other
information
2007
2006
7.05
0.50
0.73
1.19
522
6.84
0.50
0.68
1.14
498
6.77
0.54
0.80
1.33
530
7.00
0.51
0.76
1.27
533
2007
2006
1,304
355
6,200
323
1,686
147
118
696
678(1)
1,142
321
4,571
305
1,095
148
58
604
638
US$/oz
US$/oz
US$/oz
US cents/lb
US cents/lb
US cents/lb
US cents/lb
US$/oz
US$/tonne
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163
Other
information
Key fi nancial data
US$ million (unless otherwise stated)
Group revenue including associates
Less: Share of associates’ revenue
Group revenue
Operating profi t including associates before special items and remeasurements
Special items and remeasurements (excluding fi nancing special items and remeasurements)
Net fi nance costs (including remeasurements), tax and minority interests of associates
Total profi t from operations and associates
Net fi nance costs (including special items and remeasurements)
Profi t before tax
Income tax expense
Profi t for the fi nancial year – continuing operations
Profi t for the fi nancial year – discontinued operations
Profi t for the fi nancial year – total Group
Minority interests
Profi t attributable to equity shareholders of the Company
Underlying earnings(2) – continuing operations
Underlying earnings(2) – discontinued operations
Underlying earnings(2) – total Group
Earnings per share ($) – continuing operations
Earnings per share ($) – discontinued operations
Earnings per share ($) – total Group
Underlying earnings per share ($) – continuing operations
Underlying earnings per share ($) – discontinued operations
Underlying earnings per share ($) – total Group
Ordinary dividend per share (US cents)
Special dividend per share (US cents)
Weighted average number of shares outstanding (million)
EBITDA(3) – continuing operations
EBITDA(3) – discontinued operations
EBITDA(3) – total Group
EBITDA interest cover(4) – total Group
Operating margin (before special items and remeasurements) – total Group
Ordinary dividend cover (based on underlying earnings per share) – total Group
Balance sheet
Intangible and tangible assets
Other non-current assets and investments
Working capital
Other net current liabilities
Other non-current liabilities and obligations
Cash and cash equivalents and borrowings(5)
Net assets classifi ed as held for sale
Net assets
Minority interests
Equity attributable to the equity shareholders of the Company
Total capital(6)
Cash infl ows from operations – continuing operations
Cash infl ows from operations – discontinued operations
Cash infl ows from operations – total Group
Dividends received from associates and fi nancial asset investments – continuing operations
Dividends received from associates and fi nancial asset investments – discontinued operations
Dividends received from associates and fi nancial asset investments – total Group
Return on capital employed(7) – total Group
EBITDA/average total capital(6) – total Group
Net debt to total capital(8)
2007
2006(1)
2005(1)
2004(1)
30,559
(5,089)
25,470
9,590
(227)
(434)
8,929
(108)
8,821
(2,693)
6,128
2,044
8,172
(868)
7,304
5,477
284
5,761
4.04
1.54
5.58
4.18
0.22
4.40
124.0
–
1,309
11,171
961
12,132
42.0
28.4%
3.5
25,090
8,952
2,125
(877)
(6,261)
(5,170)
471
24,330
(1,869)
22,461
29,569
9,375
470
9,845
311
52
363
37.8%
40.4%
20.0%
29,404
(4,413)
24,991
8,888
24
(398)
8,514
(71)
8,443
(2,518)
5,925
997
6,922
(736)
6,186
5,019
452
5,471
3.51
0.70
4.21
3.42
0.31
3.73
108.0
67.0
1,468
10,431
1,766
12,197
45.5
25.4%
3.5
25,632
7,819
3,246
(1,177)
(5,790)
(3,244)
641
27,127
(2,856)
24,271
30,451
9,012
1,045
10,057
251
37
288
32.4%
38.7%
12.9%
24,872
(4,740)
20,132
5,549
16
(315)
5,250
(220)
5,030
(1,208)
3,822
111
3,933
(412)
3,521
3,335
401
3,736
2.35
0.08
2.43
2.30
0.28
2.58
90.0
33.0
1,447
7,172
1,787
8,959
20.0
18.5%
2.9
33,368
5,375
3,719
(1,492)
(8,399)
(4,993)
–
27,578
(3,957)
23,621
32,571
5,963
1,302
7,265
468
2
470
19.2%
26.0%
17.0%
22,610
(5,429)
17,181
3,832
556
(391)
3,997
(385)
3,612
(765)
2,847
1,094
3,941
(440)
3,501
2,178
506
2,684
1.84
0.60
2.44
1.52
0.35
1.87
70.0
–
1,434
5,359
1,672
7,031
18.5
14.7%
2.7
35,816
5,375
3,715
(611)
(8,339)
(8,243)
–
27,713
(4,588)
23,125
35,956
3,857
1,434
5,291
380
16
396
14.6%
21.2%
25.4%
164 | Anglo American plc Annual Report 2007
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US$ million (unless otherwise stated)
Group turnover including share of joint ventures and associates
Less: Share of joint ventures’ turnover
Share of associates’ turnover
Group turnover – subsidiaries
Operating profi t before exceptional items
Operating exceptional items
Total operating profi t
Non-operating exceptional items
Net interest expense
Profi t on ordinary activities before tax
Tax on profi t on ordinary activities
Tax on exceptional items
Equity minority interests
Profi t for the fi nancial year
Underlying earnings(2)
Earnings per share ($)
Underlying earnings per share ($)
Dividend per share (US cents)
Basic number of shares outstanding (million)
EBITDA(3)
EBITDA interest cover(4)
Operating margin (before exceptional items)
Dividend cover (based on underlying earnings)
Balance sheet
Intangible and tangible fi xed assets
Investments
Working capital
Provisions for liabilities and charges
Cash and cash equivalents and borrowings
Equity minority interests
Total shareholders’ funds (equity)
Total capital(6)
Net cash infl ow from operating activities
Dividends received from joint ventures and associates
Return on capital employed(7)
EBITDA/average total capital(6)
Net debt to total capital(8)
Other
information
2003 (9)(10)
24,909
(1,060)
(5,212)
18,637
2,892
(286)
2,606
386
(319)
2,673
(749)
13
(345)
1,592
1,694
1.13
1.20
54.0
1,415
4,785
9.3
11.6%
2.2
26,646
7,206
1,903
(3,954)
(8,633)
(3,396)
19,772
31,801
3,184
426
10.7%
17.3%
32.0%
Years 2004, 2005, 2006 and 2007 are prepared under IFRS. 2003 is prepared under UK GAAP.
(1) Comparatives have been adjusted to reclassify amounts relating to discontinued operations where applicable.
(2) Underlying earnings is net profi t attributable to equity shareholders, adjusted for the effect of special items and remeasurements and any related tax and minority interests.
(3) EBITDA is operating profi t before special items, operating remeasurements (2003: exceptional items), depreciation and amortisation in subsidiaries and joint ventures and
share of EBITDA of associates.
(4) EBITDA interest cover is EBITDA divided by net fi nance costs, excluding other net fi nancial income, exchange gains and losses on monetary assets and liabilities, amortisation of
discounts on provisions, special items and fi nancial remeasurements (2003: exceptional items), but including share of associates’ net interest expense.
(5) This differs to the Group’s measure of net debt as it excludes the net debt of Net assets classifi ed as held for sale (2007: ($69) million; 2006: ($80) million), and excludes
the impact of derivative instruments that provide an economic hedge of assets and liabilities in net debt (2007: $388 million; 2006: $193 million). For more detail see note
31 Consolidated cash fl ow analysis.
(6) Total capital is net assets excluding net debt (excluding the impact of derivative instruments).
(7) Return on capital employed is calculated as total operating profi t before impairments for the year divided by the average of total capital less other investments and adjusted
for impairments.
(8) Net debt to total capital is calculated as net debt (excluding the impact of derivative instruments) divided by total capital less investments in associates.
(9) 2003 has been restated to refl ect the adoption of UITF abstract 38 Accounting for ESOP trusts.
(10) The 2003 UK GAAP numbers include all business segments. The results have not been adjusted to reclassify amounts relating to Gold and Paper and Packaging.
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Anglo American plc Annual Report 2007 |
165
Other
information
Summary by business segment
US$ million
Continuing operations
Platinum
Diamonds
Coal(4)
South Africa
Australia
South America
Projects and corporate
Base Metals(4)
Copper
Collahuasi
Anglo American Sur
(formerly Minera Sur Andes)(5)
Anglo American Norte
(formerly Mantos Blancos)(5)
Other
Nickel, Niobium, Mineral Sands and Phosphates 1,583
325
Codemin
553
Loma de Níquel
106
Catalão
184
Namakwa Sands
415
Copebrás
Zinc
Black Mountain
Lisheen
Skorpion
Other
Ferrous Metals and Industries
Kumba
Scaw Metals
Samancor Group
Highveld Steel
Tongaat-Hulett/Hulamin(6)
Other
Industrial Minerals(4)
Exploration
Corporate Activities
1,039
165
364
510
–
5,400
1,635
1,432
665
369
1,293
6
4,591
–
–
2007
6,789
3,076
3,574
1,538
1,389
627
20
7,129
4,507
1,383
Revenue(1)
2006
5,861
3,148
3,364
1,394
1,398
541
31
6,534
4,537
1,442
2007
3,155
587
882
481
166
271
(36)
4,683
3,192
1,062
EBITDA(2)
2006
Operating profi t/(loss)(3)
2007
2006
Underlying earnings
2007
2006
2,845
541
1,082
437
397
271
(23)
4,255
2,697
2,398
1,299
1,265
484
614
414
9
227
(36)
463
862
380
279
227
(24)
239
490
296
24
175
(5)
227
637
279
216
163
(21)
4,338
3,897
3,100
2,655
3,238
1,037
2,983
998
3,019
962
2,060
701
1,908
586
2,273
2,219
1,630
1,640
1,518
1,533
1,026
851
–
507
(7)
563
(2)
474
(7)
526
(2)
340
(7)
876
–
1,081
219
334
66
180
282
916
148
396
372
–
6,519
2,259
1,233
425
1,023
1,572
7
3,978
–
–
842
242
390
57
44
109
729
93
242
394
(80)
1,561
879
204
249
108
140
(19)
732
(157)
(272)
492
144
229
26
52
41
588
42
280
266
(63)
1,560
879
188
51
247
207
(12)
539
(132)
(259)
786
234
370
55
44
83
654
83
227
344
(85)
1,432
834
172
225
108
114
(21)
474
(157)
(292)
426
136
209
25
35
21
516
31
265
220
(64)
1,360
778
160
52
230
154
(14)
317
(132)
(277)
996
328
(2)
278
96
134
15
25
8
525
38
287
200
555
178
243
60
31
43
558
65
174
319
(73)
(56)
605
274
97
169
18
44
3
384
583
302
106
38
79
55
3
261
(145)
(495)
(113)
(496)
Total continuing operations
30,559
29,404
11,171
10,431
9,590
8,888
5,477
5,019
Discontinued operations
Gold
Paper and Packaging
Mondi Packaging
Mondi Business Paper
Other
Total discontinued operations
Total Group
1,004
4,111
2,296
1,204
611
5,115
1,740
7,493
4,132
2,215
1,146
9,233
401
560
316
198
46
961
35,674
38,637
12,132
843
923
528
297
98
1,766
12,197
202
324
195
105
24
526
467
477
287
130
60
944
95
189
137
62
(10)
284
178
274
208
51
15
452
10,116
9,832
5,761
5,471
(1) Revenue includes the Group’s share of revenue of joint ventures and associates. Base Metals’ revenue is shown after deduction of treatment charges and refi ning charges
(TC/RCs).
(2) EBITDA is operating profi t before special items, remeasurements, depreciation and amortisation in subsidiaries and joint ventures and share of EBITDA of associates.
(3) Operating profi t includes operating profi t before special items and remeasurements from subsidiaries and joint ventures and share of operating profi t (before interest, tax,
minority interests, special items and remeasurements) of associates.
(4) Copebrás has been reclassifi ed from Industrial Minerals to Base Metals and Yang Quarry has been reclassifi ed from Industrial Minerals to Coal to align with internal
management reporting. As such the comparative data has been reclassifi ed accordingly.
(5) Revenue in 2007 and 2006 includes intercompany sales between Anglo American Norte and Anglo American Sur. The external revenue in 2007 is $2,266 million
(2006: $2,372 million) for Anglo American Sur and $858 million (2006: $723 million) for Anglo American Norte.
(6) Includes 100% of the results of the Tongaat-Hulett Group from 1 January to 25 June 2007, and the Group’s equity accounted share of Tongaat-Hulett and Hulamin since
that date. For more detail see note 35 to the Financial statements.
166 | Anglo American plc Annual Report 2007
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Reconciliation of subsidiaries’ and associates’ reported earnings to the underlying
earnings included in the consolidated fi nancial statements
for the year ended 31 December 2007. Note only key reported lines are reconciled.
Other
information
US$ million
Anglo Platinum Limited
IFRS headline earnings (US$ equivalent of published)
Exploration
Exchange rate difference
Other adjustments
Minority interests
Depreciation on assets fair valued on acquisition (net of tax)
Contribution to Anglo American plc underlying earnings
DB Investments (DBI)
De Beers underlying earnings (100%)
Difference in IAS 19 accounting policy
De Beers underlying earnings – Anglo American plc basis (100%)
Anglo American plc’s 45% ordinary share interest
Income from preference shares
Contribution to Anglo American plc underlying earnings
Kumba Iron Ore Limited (KIO)
IFRS headline earnings (US$ equivalent of published)(1)
Other adjustments
Minority interests
Depreciation on assets fair valued on acquisition (net of tax)
Contribution to Anglo American plc underlying earnings
(1) The KIO IFRS headline earnings for the year ended 31 December 2007 assume a minority interest of 20% in KIO’s underlying mining assets.
The Tongaat-Hulett Group Limited (THG)
IFRS headline earnings (US$ equivalent of published)
IFRS 2 charge and unbundling cost(1)
Minority interests
Anglo American plc’s share of Hulamin
Contribution to Anglo American plc underlying earnings(2)
2007
1,748
36
4
(10)
1,778
(443)
(36)
1,299
483
13
496
223
16
239
434
7
441
(155)
(12)
274
(22)
47
25
(12)
13
2
15
(1) In terms of the THG BEE transaction, THG issued shares comprising an interest of 18% to a cane-grower BEE Special Purpose Vehicle (SPV) and an infrastructure BEE SPV.
The BEE cost in respect thereof is calculated in accordance with IFRS 2 and amounts to $45 million. This, together with relevant unbundling transaction costs, is excluded
from Anglo American plc’s ‘Underlying earnings’ on the basis that these one-off costs are associated with the THG empowerment transaction and, thus, are not
representative of the ongoing earnings generation of the Group. The costs, however, are included in THG’s ‘Headline earnings’ as defi ned by the JSE Limited.
(2) Relates to the period until 25 June 2007, when the Group ceased to account for THG as a subsidiary and began accounting for Tongaat-Hulett and Hulamin as associates
under the equity method. For further details see note 35 to the Financial statements.
AngloGold Ashanti Limited
IFRS headline earnings (published)
Earnings in period not equity accounted
Other adjustments
Share of earnings not attributable to Anglo American’s 41.6% shareholding to 2 October
Depreciation on assets fair valued on acquisition (net of tax)
Contribution to Anglo American plc underlying earnings
278
(18)
5
265
(155)
(15)
95
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167
Other
information
The business – an overview
Precious
Anglo Platinum
100% owned
South Africa
Rustenburg Section
Amandelbult Section
Potgietersrust Platinums
Lebowa Platinum Mines
Western Limb Tailings Retreatment
Waterval Smelter (including converting process project)
Polokwane Smelter
Rustenburg Base Metals Refi nery
Precious Metals Refi nery
Twickenham Mine
Other interests
South Africa
Union Section
Joint ventures or sharing agreements
Modikwa Platinum Joint Venture
Kroondal Pooling and Sharing Agreement
Bafokeng-Rasimone Joint Venture
Marikana Pooling and Sharing Agreement
Mototolo Joint Venture
Masa Chrome Company
Pandora Venture
Northam Platinum Limited
Overall ownership:
76.5%
85%
50%
50%
50%
50%
50%
74%
42.5%
22.5%
De Beers(1)
100% owned
South Africa
Trading and Marketing
South Africa
Namibia
Other interests
Overall ownership:
45%
De Beers Group Services
(Exploration and Services)
The Diamond
Trading Company
De Beers Marine
Canada
De Beers Canada
Snap Lake
Victor
De Beers Consolidated Mines(2)
Cullinan
Finsch
Kimberley Mines
Namaqualand Mines
The Oaks
Venetia
South African Sea Areas
(SASA)
Botswana
78%
78%
78%
78%
78%
78%
Namdeb (Mining Area No. 1,
Orange River Mines, Elizabeth
Bay and Marine concessions) 50%
De Beers Marine Namibia
70%
Tanzania
Williamson Diamonds
75%
Trading and Marketing
78%
DTC Botswana
Namibia DTC
Debswana (Damtshaa, Jwaneng,
Orapa and Letlhakane mines) 50%
Industrial Diamonds
Companies manufacturing
synthetic diamonds
and abrasive products
50%
50%
60%
Base
Anglo Base Metals
100% owned
Copper
Chagres (Chile)
El Soldado (Chile)
Los Bronces (Chile)
Mantos Blancos (Chile)
Mantoverde (Chile)
Michiquillay (Peru)
Nickel
Codemin (Brazil)
Barro Alto (Brazil)
Zinc/Lead
Black Mountain (South Africa)(3)
Other interests
Copper
Collahuasi (Chile)
Palabora (South Africa)
Quellaveco (Peru)
Pebble (US)
Lisheen (Ireland)
Skorpion (Namibia)
Nickel
Loma de Níquel (Venezuela)
Mineral Sands
Gamsberg (South Africa)(3)
Namakwa Sands (South Africa)(3)
Niobium
Catalão (Brazil)
Phosphate products
Copebrás (Brazil)
168 | Anglo American plc Annual Report 2007
Diamond jewellery retail
De Beers Diamond Jewellers 50%
Overall ownership:
100%
44%
17%
82%
50%
91%
73%
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Other
information
Bulk
Anglo Ferrous Metals and Industries
Overall ownership:
100%
100% owned
Industries
Vergelegen (South Africa)
Anglo Coal
100% owned
South Africa
Bank
Goedehoop
Greenside
Isibonelo
Kleinkopje
Kriel(4)
Landau
New Denmark
New Vaal
Nooitgedacht
Other interests
Ferrous metals
Kumba Iron Ore (South Africa)
Samancor (South Africa and Australia)
MMX Minas-Rio (Brazil)
LLX Minas-Rio (Brazil)
Scaw Metals (worldwide)
Exxaro Resources (southern Africa and Australia)
Industries
Tongaat-Hulett (southern Africa)
Hulamin (South Africa)
63.4%
40%
49%
49%
74% -100%
10%
37.2%
38.4%
Overall ownership:
100%
Australia
Callide
Other interests
South Africa
Mafube
Australia
50%
Dawson Complex
Australia – other
South Africa – other
Monash Energy Holdings Ltd
Richards Bay Coal Terminal 27%
Canada
Peace River Coal
66%
Colombia
Carbones del Cerrejón
33%
Venezuela
Carbones del Guasare
25%
Drayton
German Creek
Jellinbah East
Moranbah North
Australia – other
Dalrymple Bay Coal
Terminal Pty Ltd
Newcastle Coal Shippers
Pty Ltd
51%
88%
70%
23%
88%
32%
20%
Non-core business
Anglo Industrial Minerals
100% owned
Other interests
Overall ownership:
100%
Aggregates and building materials
Aggregates and building materials
Tarmac Romania
Midland Quarry Products
United Marine Holdings(5)
60%
50%
50%
Tarmac Group (UK)
Tarmac France (France and Belgium)
Tarmac Germany
Tarmac Poland
Tarmac Czech Republic
Tarmac Iberia (Spain)
Tarmac Turkey
Tarmac International Holdings (Far East and Middle East)
(1) An independently managed associate.
(2) De Beers’ 78% holdings include a 4% indirect holding via the Key Employee Trust.
(3) In January 2007, Exxaro Resources Limited exercised an option in terms of which, subject to the fulfi lment of conditions precedent, it agreed to acquire 100% of
Namakwa Sands and 26% of each of Black Mountain and Gamsberg.
(4) Kriel forms part of the proposed Anglo Inyosi Coal of which Anglo Coal will own 73%. Heads of Agreement have been signed and the transaction will be effective upon
the fi nalisation and execution of the defi nitive agreement relating to the deal and the fulfi lment of conditions precedent contained therein.
(5) On 26 January 2008, the Group acquired the remaining 50% shareholding in United Marine Holdings.
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Anglo American plc Annual Report 2007 |
169
Other
information
Shareholder information
Annual General Meeting
Will be held at 11:00 am on Tuesday 15 April 2008, at The Royal Society,
6-9 Carlton House Terrace, London, SW1Y 5AG.
Shareholders’ diary 2008/9
Interim results announcement
Interim dividend payment
Annual results announcement
Annual report
AGM
Final dividend
August 2008
September 2008
February 2009
March 2009
April 2009
May 2009
Shareholding enquiries
Enquiries relating to shareholdings should be made to the Company’s
UK Registrars, Equiniti or the South African Transfer Secretaries,
Link Market Services South Africa (Pty) Ltd, at the relevant address below:
UK Registrars
Equiniti
The Causeway
Worthing
West Sussex BN99 6DA
England
Telephone:
In the UK: 0871 384 2026*
* Calls charged at 8p per minute from a BT landline. Other telephony providers’ costs
may vary.
From outside the UK: +44 121 415 7558
Transfer Secretaries in South Africa
Link Market Services South Africa (Pty) Ltd
11 Diagonal Street
Johannesburg 2001, South Africa
(PO Box 4844 Johannesburg 2000)
Telephone: +27 (0) 11 630 0800
Enquiries on other matters should be addressed to the
Company Secretary at the following address:
Registered and Head Offi ce
Anglo American plc
20 Carlton House Terrace
London SW1Y 5AN
England
Telephone: +44 (0)20 7968 8888
Fax: +44 (0)20 7968 8500
Registered number: 3564138
Website: www.angloamerican.co.uk
Additional information on a wide range of shareholder services
can be found in the Shareholder Information section of the Notice
of Annual General Meeting and on the Group’s website.
170 | Anglo American plc Annual Report 2007
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Other
information
Other Anglo American publications
• 2007 Interim Report
• 2007/8 Fact Book
• 2007 Notice of AGM and Shareholder Information Booklet
• 2007 Report to Society
• Optima – Anglo American’s current affairs journal
• Transformation Report
• Good Citizenship: Our Business Principles
If you would like to receive copies of Anglo American’s publications,
please write to:
Investor and Corporate Affairs Department
Anglo American plc
20 Carlton House Terrace
London SW1Y 5AN
England
Alternatively, publications can be ordered online at:
http://www.angloamerican.co.uk/newsandmedia/reportsand
publications/request/requestreportpopup/
The 2007 Annual Report and the booklet containing the Notice
of AGM and other shareholder information are available free of
charge from the Company, its UK Registrars and South African
Transfer Secretaries.
Charitable partners
This is just a selection of the charities which Anglo American,
The Chairman’s Fund and the Anglo American Group Foundation
have worked with in 2007:
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Anglo American plc Annual Report 2007 |
171
Other
information
Cover images from left to right: Luis Araya, Thandeka Sithole,
Ansie Bargiacchi, Norman Barber, Daniel Roux, Inge Zaamwani,
George Xaba, Ben Magara, Yvonne Mfolo, Justin Gill, Danny Stalley,
Benedict Raman, Richelle Matthee, Surabhi Singh, Vusi Khumalo,
Felix Manyanga, Cheryl Freeman, Jeanette Senne, Monica Thirgood,
Michelle Crawford, Marcelo Cohen, Michael Naidoo, Chriscy Thankane,
Reza Bahrehvar, Jan Phehla, Cornelius Geel, Jorge Vasquez Albornoz,
Willie Botha, Sarel van Vuuren, Bertus de Villiers, Amanda Lamprecht,
Brian Albury, Elizly Steyn, Edward Potsana, Martin Rickwood,
Richie Pamma, Cynthia Carroll, Noel Williams, Gert Bosch,
Anne Meyers, Sylvia van den Heever, Ezekiel Mosito, Godfrey Gomwe,
Victor Sepulveda, Paul Jones, Cecile Grobler, Chaha Enock, Glenn Harris,
Phillip Starrett, Billy Mawasha, Jim Coppard, Moatlhodi Oaths,
Mark Moody-Stuart, Pat Lucas, Bongani Kewane, Anne Wang,
Marcelo Glavic, Peter Radfors, Nick Jordan, Corff Maritz, Ted Nohajer,
Jaime Toro, Kathy Squire, Patrick Makati, Katya Mishkina, Alta Naude,
Sam Mokele, Alfred April, Craig Solomon, Thandi Buthelezi,
Clement Visagie, Aaron Sadowyj, Pranill Ramchander,
Mayra Barbosa Beça, Mercia Coetzee, Osnir Cândido de Mesquita,
Chris Minnie, Toni Home, Toni Delany, Mark Farren, Mark Heaton,
Graeme Place, Karen Taylor-Smith, Sean Green, Bernice Mtsweni,
Mike Da Costa, Keith van Deventer, Alexandre Miguel dos Santos,
Athena Avratidis, Thandabantu Ntintile
172 | Anglo American plc Annual Report 2007
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