ANNUAL REPORT 2013
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FOCUSED
ON DELIVERY
FOCUSED ON DELIVERY
In a world where people want to build a better life for
themselves and their families, but where resources are
limited, Anglo American seeks to generate sustainable
value from a country’s mineral resources for the
benefit of its people.
We will deliver an attractive and differentiated value
proposition to our shareholders, business partners
and other stakeholders by having the right assets and
technical expertise, the right people working with our
partners, and a commitment to responsible mining that
will support us in delivering the products that make
our world work.
We are focused on delivering our targeted returns to
shareholders while creating value for all our partners
and stakeholders.
Other sources
of information
You can find this report
and additional information
about Anglo American on
our corporate website.
Although we have
chosen not to produce
an ‘integrated report’,
we have included a
comprehensive overview
of our non-financial
performance in this report.
More detailed information
on our sustainability
performance is provided
in our Sustainable
Development Report.
This can be found on
our corporate website.
For more information, visit
www.angloamerican.com/
reportingcentre
PERFORMANCE HIGHLIGHTS
CONTENTS
FINANCIAL
PERFORMANCE
2009
0
0
2010
2011
2012
2013
Interim
Final
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
1.4
25
28
40
46
32
32
53
53
4.8
5.0
5.8
6.0
6.3
11.3
7.4
8.5
10.7
UNDERLYING
OPERATING PROFIT
(2012: $6.3 bn)
$6.6 bn
UNDERLYING EARNINGS
(2012: $2.9 bn)
$2.7 bn
UNDERLYING EARNINGS
PER SHARE
(2012: $2.28)
$2.09
LOSS ATTRIBUTABLE TO
EQUITY SHAREHOLDERS
(2012: $(1.5) bn)
$(1.0) bn
Underlying operating profit is presented before special items and remeasurements
and includes the Group’s attributable associates’ and joint ventures’ operating profit
before special items and remeasurements, unless otherwise stated. See notes 3
and 5 to the financial statements for underlying operating profit. For definition of
special items and remeasurements, see note 6 to the financial statements. See note
9 to the financial statements for the basis of calculation of underlying earnings.
‘Tonnes’ are metric tons, ‘Mt’ denotes million tonnes, ‘kt’ denotes thousand
tonnes and ‘koz’ denotes thousand ounces;‘$’ and ‘dollars’ denote US dollars
and ‘cents’ denotes US cents.
Net debt includes related hedges and net cash in disposal groups.
See note 24 to the financial statements.
Certain balances related to 2012 have been restated to reflect the adoption of new
accounting pronouncements. See note 2 to the financial statements for details.
Throughout the Strategic report, attributable ROCE, shown in terms of historical
performance, reflects the realised prices and foreign exchange during the period,
and in line with commitments made as part of Driving Value. For more detail on this
calculation and its methodology, please refer to page 250.
Cover Image
Laboratory technician
David Tlaka (back cover);
maintenance planner
Pieter Grobler and shift
leader Silas Mongwe at
the Eastern Bushveld
Research Laboratory
control room at Anglo
American Platinum’s
Polokwane smelter in
South Africa.
Opposite
At Polokwane,
concentrate is smelted
to produce furnace matte
before being sent for
further processing at
the Waterval Smelter
in Rustenburg.
Key performance indicators
Strategic report
02 Chairman’s statement
04 At a glance
06 Marketplace
08 Chief Executive’s statement
12 Why mining matters
14 Our strategy
16 Our business model
18
20 Strategic elements
46 Risk
54
60 Metallurgical Coal
64
Thermal Coal
68 Copper
72 Nickel
76 Niobium and Phosphates
80 Platinum
86 Diamonds
90 Other Mining and Industrial
Iron Ore and Manganese
Leadership
Governance
92 Chairman’s introduction
94
103 Effectiveness
105 Engagement
107
Safety and Sustainable
Development Committee
108 Nomination Committee
109 Audit Committee
111 Audit Committee report
117 Remuneration Committee
118 Directors’ remuneration report
144 Directors’ report
150 Statement of directors’ responsibilities
150 Responsibility statement
Independent auditor’s report
Financial statements
152
154 Principal statements
158 Notes to the financial statements
Financial statements of the
212
parent company
215 Summary by business operation
216 Key financial data
217 Reconciliation of reported earnings
218 Exchange rates and commodity prices
Ore Reserves and Mineral Resources
Introduction
219
220
Iron Ore
223 Manganese
224 Coal
232 Copper
237 Nickel
238 Niobium
240 Phosphates
241 Platinum Group Metals
244 Diamonds
Other information
250 Attributable ROCE definition
251 Production statistics
254 Quarterly production statistics
255 Non-financial data
256 The business – an overview
258 Shareholder information
IBC Other Anglo American publications
011
Anglo American plc Annual Report 2013 STRATEGIC REPORT CHAIRMAN’S STATEMENT
CHAIRMAN’S STATEMENT
INDUSTRY BACKDROP
SAFETY
I have long admired the commitment of our people at
Anglo American and the considerable changes they have
implemented to help us achieve ‘zero harm’ across the entire
organisation. I am therefore personally saddened when I am
told of our people losing their lives at our operations. In 2013,
14 people lost their lives on company business, four of
whom died following a major geological event at the
now-divested Amapá iron ore operation in Brazil, with a
further two still missing. With a rigorous eye on the progress
to zero harm, a further decline in lost-time injuries was
achieved, while the great majority of our sites remain fatality-
free. I speak for the whole Board in expressing our sympathy
for those who have been bereaved and I wish to reassure all
our stakeholders that we will strive unremittingly to achieve
our goal of an incident-free workplace.
CAPITAL PROJECTS
As we enter 2014, the Minas-Rio iron ore project is now
84% complete and, while risk remains in such a vast project,
I am pleased to report that it remains on target for first ore
on ship at the end of 2014, and within the expected capital
budget. Its completion will ease our capital commitments
from 2015 onwards and should also enhance our free cash
flow. The Board continues to exercise discipline and scrutiny
of costs around capital expenditures – be it ‘stay in business’
or ‘expansionary’.
DIVIDEND
The focus on increasing free cash flow from operational
efficiency and cash-saving initiatives is a measure of
the Board’s determination to protect our dividend to
shareholders until higher sustainable free cash flow
is generated.
The Board has recommended a final dividend of 53 cents
per share, to maintain a total dividend of 85 cents for the
year. That we were able to do so during a period when
substantial expenditure was being incurred on major capital
projects underlines our confidence in the business and its
ability to keep returns to our shareholders competitive with
those of our peer group.
A COMPANY THAT LIVES OUT ITS VALUES
One of the things that attracted me to Anglo American
some 4½ years ago was that it was known as a company
that has always had a social conscience, which endeavours
to live out its values. Within the ranks of natural resource
companies, Anglo American has invariably been at the
forefront in engaging with stakeholders and with civil society
more broadly.
In 2013, the world economy experienced a flat
growth rate of 3%, the same as in 2012. This
led to weak activity in the first six months of
the year in Western Europe, China and other
emerging economies.
Sir John Parker
The global mining industry encountered considerable
challenges, and for much of the year it experienced
lacklustre demand and falling prices for most commodities
– exacerbated by persistent above-inflation cost pressures,
labour disputes and low productivity.
ANGLO AMERICAN’S STRATEGIC RESPONSE
Against this backdrop, Anglo American faced its share of
operational challenges as we continued to restructure our
Platinum business, pursue the turnarounds of copper in
Chile, the Sishen iron ore mine in South Africa and the
flagship Jwaneng diamond mine in Botswana. A recovery
plan was also put in place at Nickel following the need to
rebuild the two new furnaces at Barro Alto.
April saw a smooth and professional transition from
Cynthia Carroll to Mark Cutifani as our new chief executive.
Since that time, Mark and his new top management team
have worked closely with our Board in finalising an agreed
Group strategy and clear targets – Driving Value. At its
heart we aim to shift the Group to achieve at least a 15%
attributable return on capital employed by 2016, and place
it on a sounder footing to deliver sustainable returns into
the future. It will involve cost reductions on a range of fronts,
controlled expenditure on our pipeline of new projects,
withdrawing from some longer-term future projects (as we
have done with Pebble in Alaska), and being ready to exit
those businesses that cannot achieve the target returns.
Mark, as the industry recognises, is a ‘miner’s miner’ who
brings his decades-long experience of mining at the sharp
end with a relentless focus on improving the operational
performance of all our assets, while also redesigning the
organisation to be more effective and efficient.
The Board is heartened by the improving trend in
operational performance during the second half, which
has contributed to the delivery of a creditable financial
performance, ahead of budget.
The Board has
recommended
a final dividend
of 53 cents
per share, to
maintain a
dividend of
85 cents for
the year.
02
Anglo American plc Annual Report 2013 Our chief executive, Mark Cutifani, is totally committed
to living out Anglo American’s social values. He has
recently played a major role in engaging with the Catholic
Church and the Kellogg Innovation Network to look at how
mining companies, which can be key development players,
can come together with their stakeholders in focusing
on the shared purpose of creating sustainable value
long after a mine’s gates close for the last time. I am also
proud that Anglo American’s sustainable development
performance has been recognised by both the Dow Jones
Sustainability Index 2013 and the Carbon Disclosure
Project’s Global 500 Climate Performance Leadership
Index. Furthermore, our dedicated corporate social
investment (CSI) arm in South Africa, the Chairman’s Fund,
was recognised by Trialogue, a knowledge leader in the CSI
field, for the ninth consecutive time, for its excellence in
being a true partner in development.
BOARD RENEWAL
I regard it as a prime responsibility of a chairman to be
looking continually to refresh and strengthen the Board
of directors. During the period from August 2009, when
I became chairman, and the AGM in April 2014, there will
have been a complete change in non-executive directors.
I consider our current Board to have the right mix of talent,
with the appropriate bandwidth of skills and experience.
This necessarily extends beyond mining experience on
the Board and in our Group Management Committee to
encompass such fields as major project management,
engineering, finance, healthcare, corporate leadership
and global business experience.
As well as the change of chief executive leadership, several
changes took place within the ranks of the non-executive
directors. At the AGM in April 2013, Peter Woicke stood
down from the Board and Jack Thompson replaced him
as chairman of the Safety and Sustainable Development
(S&SD) Committee.
Byron Grote, who has spent more than 30 years in the
extractives industry, also joined the Board at the last
AGM, and he will take over the chairmanship of the Audit
Committee from David Challen who is standing down at
the forthcoming AGM. I would like to take this opportunity
to thank David for his utmost professionalism in this
demanding role and his exceptional and dedicated
service to the Board in general.
Sir CK Chow also retires as a director at the 2014 AGM
and I wish to acknowledge the important contribution he
has made to our deliberations, particularly as a member
of the Remuneration and Nomination committees.
In July, we appointed Mphu Ramatlapeng to the Board and
to the S&SD Committee. Mphu brings to our team a great
deal of international board and governmental experience in
both the public and private health sectors.
Jim Rutherford joined the Board in November and has
been appointed to the S&SD Committee. He has more
than 25 years’ experience in investment management and
investment banking, both as an institutional investor and
analyst. He brings to the Board considerable knowledge
of the capital markets as well as a deep strategic
understanding of the mining industry.
Most recently, in January 2014, Judy Dlamini, a former
medical practitioner and occupational-health specialist
who now chairs a leading South African pharmaceuticals
company, became a director and a member of the Audit
Committee. Judy has been a non-executive director on a
major South African platinum board for nine years and
has extensive South African business experience.
I am pleased to report that by the end of this year’s AGM
25% of our Board will be female, which is ahead, in time,
of the aspirational 2015 targets of the Davies Report.
BOARD SUPPORT OF THE EXECUTIVE
Although 2013 was a testing year for management,
I believe that the strategic debate between the Board and
the executive following the appointment of Mark Cutifani
as chief executive is helping to lay the foundations for a
real transformation in the performance of our Group. We
have turned the spotlight on enhancing the efficiency
of our operations, with the focus on improving day-to-day
performance, stringent cost control and capital
discipline. On the back of Mark’s Driving Value recovery
programme, a number of assets are already showing
performance improvements.
Anglo American is now on a journey to emerge as a
revitalised company over the next two to three years.
The Board has lent its full support to Driving Value and
the initiatives and changes Mark Cutifani has put in
place to bring this about.
OUR PEOPLE
Despite the challenges of change that Driving Value
inevitably brings, I sense our people are enthused and
up for the challenge of returning Anglo American to being
a company that is respected for its performance, along
with its values.
I want to express my sincere appreciation to all employees
for their daily commitment to constant improvement.
OUR STRATEGIC REPORT
Our 2013 Strategic report, from pages 2–91, was
reviewed and approved by the Board of directors on
13 February 2014.
Sir John Parker
Chairman
03
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT AT A GLANCE
OUR BUSINESS
AROUND THE WORLD
Anglo American’s portfolio of mining businesses
meets our customers’ changing needs, and spans:
bulk commodities – iron ore and manganese,
metallurgical coal and thermal coal;
base metals and minerals – copper,
nickel, niobium and phosphates; and,
precious metals and minerals – in which we
are a global leader in both platinum and diamonds.
Headquarters
London,
United Kingdom
North America
South America
Corporate and
representative offices
Africa
Beijing, China
Belo Horizonte, Brazil
Brisbane, Australia
Johannesburg, South Africa
Luxembourg
Maputo, Mozambique
New Delhi, India
Rio de Janeiro, Brazil
Santiago, Chile
São Paulo, Brazil
Singapore
Ulaanbaatar, Mongolia
Australia and Asia
Business units
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
04
EUROPEEmployees(1)2,100Revenue by origin$2,076 mTaxes paid(2)$205 mSOUTH AFRICAEmployees(1)99,500Revenue by origin$14,132 mTaxes paid(2)$1,953 mOTHER AFRICAEmployees(1)13,100Revenue by origin$4,544 mTaxes paid(2)$298 mAUSTRALIA/ASIAEmployees(1)6,800Revenue by origin$4,255 mTaxes paid(2)$541 mCHILEEmployees(1)10,800Revenue by origin$5,392 mTaxes paid(2)$1,056 mBRAZILEmployees(1)23,600Revenue by origin$965 mTaxes paid(2)$384 mNORTH AMERICAEmployees(1)1,600Revenue by origin$882 mTaxes paid(2)$82 mOTHER SOUTH AMERICAEmployees(1)1,400Revenue by origin$817 mTaxes paid(2)$8 mAnglo American plc Annual Report 2013 3,119
Iron Ore and Manganese
Metallurgical Coal
46
Thermal Coal
541
Copper
Nickel
(44)
Niobium and Phosphates
150
Platinum
464
Diamonds
1,003
Other Mining and Industrial
1,739
(13)
(207)
(178)
Exploration
Corporate
Total: $6,620 m
11,034
11,351
8,380
8,622
Iron Ore and Manganese
Metallurgical Coal
4,630
Thermal Coal
1,422
Copper
Nickel
1,597
Niobium and Phosphates
854
Platinum
Diamonds
Other Mining and Industrial
25
Exploration
3
Corporate
(120)
Total: $47,798 m
Bulk
Base metals and minerals
IRON ORE AND
MANGANESE
METALLURGICAL
COAL
THERMAL
COAL
COPPER
NICKEL
34,600 employees(1)
6,300 employees(1)
19,000 employees(1)
12,100 employees(1)
2,500 employees(1)
• Anglo American has a
unique iron ore profile,
with extensive, high
quality resource bases in
South Africa and Brazil.
• Iron ore is a key component
in steel, the most widely
used of all metals.
For more information
See page 54
• Metallurgical Coal
is Australia’s No. 2
metallurgical coal producer
and the world’s third
biggest exporter of
metallurgical coal.
• It operates six mines in
Australia and Peace River
Coal in Canada.
• Metallurgical coal is
the key raw material for
around 70% of the world’s
steel industry.
For more information
See page 60
• In South Africa, Thermal
Coal wholly owns and
operates seven mines, with
a 73% interest in the Kriel
and Zibulo collieries. In
Colombia, Anglo American
has a one-third
shareholding in Cerrejón,
the country’s biggest
thermal coal exporter.
• Around 40% of all
electricity generated
globally is powered by
thermal coal.
For more information
See page 64
• Copper has interests
in six operations in Chile,
producing copper in
concentrate, copper
cathode and associated
by-products such as
molybdenum and silver.
• Copper is used mainly
in wire and cable,
brass, tubing and pipes,
air conditioning and
refrigeration.
For more information
See page 68
Precious metals and minerals
Other Mining and Industrial
NIOBIUM AND
PHOSPHATES
PLATINUM
DIAMONDS
OTHER MINING
AND INDUSTRIAL
4,300 employees(1)
55,900 employees(1)
20,800 employees(1)
1,700 employees(1)
• Our Brazilian-based
• Platinum, principally based
• De Beers is the world’s
• Consists of our Tarmac
Niobium unit owns two
niobium mines, while the
Phosphates business
comprises a mine and
two chemical-processing
facilities.
• Niobium’s principal
application is as an alloying
agent in high-strength
steel alloys; phosphates
are a principal ingredient
of fertilisers.
For more information
See page 76
in South Africa, is the
leading primary producer
of PGMs, accounting for
~40% of the world’s newly
mined platinum.
• Platinum and other
platinum group metals
(PGMs) are primarily used
in autocatalysts for both
diesel and petrol vehicles,
and in jewellery.
For more information
See page 80
leading diamond company.
• Together with its joint
venture partners, it
produces about one-third
of global rough diamonds
by value from operations
in Botswana, South Africa,
Namibia and Canada.
• The largest diamond
jewellery market is the US,
followed by China, Japan
and India.
For more information
See page 86
(1)
(2)
Average number of employees and contractors excluding employees and contractors from non-managed operations.
Taxes paid relates to payments to government, borne and collected by Anglo American managed entities, and are
included in various places within the consolidated income statement.
Building Products
and Middle East
businesses, and our
share in the Lafarge
Tarmac joint venture.
• We disposed of our interest
in the Amapá iron ore
system in November 2013.
For more information
See page 90
• Nickel has two operating
assets, both in Brazil,
which produce ferronickel:
Barro Alto and Codemin.
• Around two-thirds of nickel
is used in the production of
stainless steel.
For more information
See page 72
05
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT MARKETPLACE
MARKETPLACE REVIEW
THE ECONOMY
GROWTH DISAPPOINTMENT
According to the IMF, global GDP growth was 3% in 2013,
unchanged from 2012. Activity was particularly weak in
the first half of the year, especially in Europe, China and
other major emerging economies. But there were more
encouraging signs of stabilisation in the second half. The
IMF estimates that real GDP growth in the advanced
economies declined to 1¼% in 2013 from 1½% in 2012.
In emerging market and developing economies, real GDP
growth dropped to 4¾% from 5%, its slowest rate since the
global recession in 2008–09. The growth in world trade was
unchanged at 2¾% in 2013.
After robust growth of close to 3% in 2012, the US economy
slowed appreciably in 2013, with GDP growth of just 2%,
principally reflecting the negative effects of a significant
fiscal tightening. With the administration and Congress
unable to agree on a programme to reduce the federal
budget deficit, temporary tax cuts expired in January 2013
and automatic spending cuts (‘sequestration’) took effect in
March. This represented an aggregate tightening of around 2%
of GDP, offsetting the steady improvement in private demand
during the year. In the spring, the Federal Reserve hinted
that it might start to scale back its asset buying programme,
which triggered a sharp rise in market interest rates. The
consequent tightening of financial conditions appeared to
dampen activity in the late summer and early autumn.
After the turmoil of its debt crisis in 2011–12, the European
economy stabilised in 2013. The European Central Bank’s
commitment to ‘back stop’ government bond markets
calmed fears of a possible fragmentation of the euro. In
addition, the European Commission and the German
government adopted a more pragmatic approach to fiscal
consolidation in the troubled economies. After falling back
into recession in late 2012 and early 2013, the euro zone
has recovered in recent quarters. While Germany has led
the improvement, there are also encouraging signs the
worst is over in the crisis-hit ‘peripheral’ economies.
China’s economy slowed abruptly in the first half of 2013,
causing some concern that growth might fall below the
government’s 7½% objective. Apparent disagreement
among policymakers added to the uncertainty. But in the
summer, the authorities signalled their determination to
support economic growth. The subsequent ‘mini-stimulus’
brought forward some infrastructure projects and pushed
economic growth above 7½% for the year. In November,
the Third Plenum of the Chinese Communist Party’s 18th
Central Committee laid out a comprehensive programme
of reform to encourage rebalancing and restructuring in the
economy. The programme is the most ambitious since Deng
Xiaoping’s reforms in the late 1970s and, if implemented, it
could transform the economy’s longer term growth potential.
There was considerable turbulence in other major emerging
economies in 2013. Following the Federal Reserve’s hint
about scaling back its asset buying programme, US interest
rates and the dollar spiked higher in the summer. This
triggered a significant reversal of capital flows to emerging
economies and their currencies fell sharply. Brazil, India,
Indonesia and South Africa experienced intense
financial volatility given their perceived macro-economic
vulnerability: slow growth, stubborn inflation, and persistent
budget and trade deficits. The turbulence eased in the
autumn though financial markets remained nervous.
PROSPECTS
The world economy should strengthen in 2014 and 2015,
with real GDP growth picking up to around 3½-4%, close to
its historical average. In the US and Europe, the diminishing
effects of fiscal tightening should support a solid recovery.
In Japan, the new government’s ‘Abenomics’ should also
contribute to stronger growth. After the sharp slowdown in
late 2012 and 2013, the major emerging economies should
grow in line with their underlying or ‘potential’ growth rates.
Beyond the short term cyclical rebound, there is some
uncertainty around medium term trends in economic
growth. Most economists believe the US economy should
grow at around 3% a year, though there are concerns that
sluggish investment might depress productivity growth for
some considerable time. In Europe and Japan, there are still
significant concerns around the overhang of government
debt and the fragility of the banking system.
The turbulence in emerging economies has led to a more
cautious assessment of their medium term growth
prospects. With a less favourable external environment
and increasing domestic challenges, the IMF recently
revised down its forecasts for growth. Still, the powerful
logic of convergence in living standards suggests there is
considerable growth potential. But there is a great onus
on domestic policymakers to implement much-needed
reforms to unlock this potential.
Real GDP
% change on a year earlier, using PPP weighting
Forecast
10
8
6
4
2
0
(2)
(4)
(6)
1990
1994
1998
2002
2006
2010
2014
2018
Advanced economies
Emerging and developing economies
World
Source: IMF
06
Anglo American plc Annual Report 2013 Indexed 2013 commodity prices(1)
.
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c
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,
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1.25
1.20
1.15
1.10
1.05
1.00
0.95
0.90
0.85
0.80
0.75
0.70
Dec 2012
Feb 2013
Apr 2013
Jun 2013
Aug 2013
Oct 2013
Dec 2013
Iron Ore (FOB Aus)
Metallurgical Coal
Thermal Coal
(1) Monthly average prices
Copper
Nickel
Platinum
Manganese
Palladium
Phosphates
COMMODITY MARKETS
From a commodity price perspective, 2013 was characterised
by its lack of homogeneity, with our core commodities
showing varied price trends in line with the structural
fundamentals of each market. Iron ore and palladium prices,
for example, were robust in the context of supportive market
conditions, while annual average prices for thermal coal,
hard coking coal (HCC), nickel and platinum weakened
materially. Although there were steep declines in the prices
of a number of commodities in the year, the global economic
situation, and hence the prospects for commodities,
appeared to stabilise and even showed some improvement
during the final months of the year.
The monthly average copper price declined by 9% over the
year. After falling through the first half, driven by concerns
over the global macro-economic outlook, prices then
stabilised for most of the rest of the year, underpinned by
falling inventories on the three principal metal exchanges.
But, against a backdrop of reasonable global demand
growth, mine output increased at its fastest rate for nine
years, pushing the underlying metal market into modest
surplus, with inventories being built up either off-exchange,
downstream or in Chinese bonded warehouses.
The monthly average nickel price fell by 20% over the year.
After a marked decline during the first half, driven by a
growing market surplus and more general economic
uncertainty, prices then stabilised at a depressed level.
There was a rapid increase in finished nickel production and,
particularly, a surge in the output of nickel pig iron in China.
Strong growth in global demand was insufficient to prevent
LME inventories climbing to record highs. Prices during the
second half were at a level at which, according to some
estimates, around one-third of the global nickel industry
was cash negative.
Platinum group metals experienced contrasting fortunes
during 2013, with the monthly average platinum price
weakening by 14%, while the monthly average palladium
price rose by 4%. For platinum, this price fall came despite
market tightness, as supply was broadly flat. Gross demand,
however, grew by around 6%, with significant incremental
demand generated by the launch of a South African ETF.
Macro-economic developments, and in particular the
weakening of the South African rand, combined with the
calming of tension among platinum producers, government
and unions, reduced the support for dollar-denominated
prices. In contrast, the palladium price was robust during the
Source: Anglo American Commodity Research
year, as continuing market tightness was driven by strong
demand, especially from the Chinese autocatalyst sector,
and a marginal decrease in primary supply.
Robust steel production growth in China supported strong
growth in global demand for steelmaking raw materials
in 2013, but despite similar growth drivers, price trends
differed. For iron ore, low cost seaborne supply has
expanded, though not sufficiently to entirely displace the
need for high cost supply from China’s mines. Iron ore prices
averaged 4% higher during the year with a notably stronger
performance during the second half than many analysts
expected. Manganese ore prices, too, were higher (10% on
an average annual basis), as relatively strong growth in
seaborne supply was offset by a restocking cycle in China.
By contrast, HCC benchmark prices fell by 24%. Supply side
dynamics played a critical role, with a focus on productivity
leading to lower costs and increased production from key
Australian suppliers, while US miners also maintained
exports close to historical highs despite the lower price
environment, as a result of the very high fixed-cost
structures in the industry.
Thermal coal prices also softened owing to excessive
supply, despite opportunistic Chinese buying. Supply
growth outstripped demand growth as a result of producers
hoping to spread fixed costs over greater volumes. This
resulted in prices appearing to find a floor well below some
producers’ cash cost levels at $77/t in the third quarter,
though they subsequently recorded steady improvement
during the final three months of the year.
In early 2013, phosphates prices were under pressure
from weak US demand, while more recently, a reduction
in input costs (ammonia and sulphur) has made lower price
levels more sustainable. Combined, this has deepened the
recent drop in prices from the usual end of year seasonal
lull. Niobium prices also declined slightly over the year,
following the steel market. Recent improvements in
the ferrovanadium market are expected to filter through
to ferroniobium.
Over the next few years, a stabilising global economy
should provide a solid foundation for demand across
Anglo American’s suite of commodities. On the supply
side, the prices of some commodities are likely to be
impacted by the delivery of large projects in the short to
medium term. The consensus outlook reflects this view,
showing price improvements in 2014 and 2015, compared
with 2013, for most of Anglo American’s core commodities,
except iron ore and copper.
07
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
FOCUSED
ON DELIVERY
2013 – A TESTING YEAR
The year under review was an extremely testing
one for the mining industry. Against a backdrop of
weaker growth in the world economy, particularly
in the emerging economies, commodity demand
remained soft with a decline in average realised
prices for most of the commodities the Group
produces. The material exception was iron ore.
Mark Cutifani
For Anglo American, the effects of such a difficult macro-
economic environment were exacerbated by operating
challenges at key operations and adversarial labour relations
in South Africa. Despite the challenges, significant operating
improvements in Copper, Metallurgical Coal and Diamonds
in the second half of the year, and the sharp fall in the South
African rand in the final quarter, drove a 6% increase in
underlying operating profit to $6.6 billion, with underlying
EBITDA increasing to $9.5 billion, up by 7%. After deducting
tax and profits attributable to non-controlling interests
(including Diamonds, Platinum and Copper), which
represented a greater proportion of profit than in 2012,
underlying earnings decreased by 7% to $2.7 billion.
PRODUCTION IMPROVEMENT
AT OUR METALLURGICAL COAL
UNDERGROUND MINES
30%
For more information
See page 60
COMPLETION AT THE MINAS-RIO
IRON ORE PROJECT
84%
For more information
See page 54
08
While the Group continued to make progress on the
broader safety front, the loss of 14 colleagues overshadowed
improvements to lost-time and total accident frequency rates.
The most significant event was the loss of four colleagues,
with a further two still missing, at the now-divested Amapá
iron ore operation in Brazil, where a major geological event
following heavy rainfall led to the loss of the port operation.
Although the lost-time and total injury rates improved, we
are deeply distressed that people are still being killed and
injured while on company business and I am determined
that we elevate our focus on achieving zero harm.
AROUND THE OPERATIONS
As the year progressed we continued to make solid
progress at several of our major operations. At Los Bronces
and Collahuasi, our two biggest copper interests in Chile,
operational improvements in waste stripping volumes and
process tonnages supported a significant increase in
copper production.
At the Sishen iron ore mine in South Africa, which is currently
constrained by waste material, resulting in insufficient
exposed ore and a consequent fall-off in iron ore output, a
redesign of the pit and changes to core operating processes
should result in consistently higher production from 2015
onwards. The Sishen challenges have been partially offset
by an impressive performance from Kolomela, which is now
operating at well above nameplate capacity. Meanwhile, in
Brazil, the 26.5 Mtpa Minas-Rio iron ore project was 84%
complete by the end of the year and remains on track to ship
its first iron ore by the end of 2014.
At our underground metallurgical coal mines, production
improved by 30%, with Moranbah North lifting longwall
output by 39% on the back of an improvement in cutting
hours, an increase in automated cutting rates and reduced
unplanned downtime. Continued focus on discretionary costs
and productivity has resulted in FOB cash unit costs at the
Australian operations reducing by 8%. In South Africa, the
priority is to implement a range of business improvement
initiatives aimed at driving value at our Thermal Coal mines
and expansion projects.
Ahead of the furnace rebuilds at Barro Alto in Brazil, which
will take place from 2014-2016, our Nickel business has put
in place a series of initiatives to improve output, reduce costs
and optimise value. At our Niobium unit, the Boa Vista Fresh
Rock expansion project, which will raise niobium output by
around 50%, is due to be commissioned later this year. On
the Phosphates side of the business, margins are improving
with more efficient sales pricing initiatives, and expansion
opportunities are being evaluated in order to meet the
agriculture market’s growing demand for fertilisers.
In 2013, our Platinum business faced significant challenges.
Cost pressures in the older, deep-level operations have been
driven by double-digit increases in power rates, declining
productivity and labour unrest. If we add continuing price
pressure exerted by declining automotive demand, this was
a severely challenging year for the Platinum business. We
finalised a ‘root-and-branch’ review of the business to address
the changed fundamentals of the platinum industry and to
understand the primary drivers of the dramatic reduction in
profitability across the sector. Following an extensive but
Anglo American plc Annual Report 2013 01 Dr Nkosazana Dlamini
Zuma, Chairperson
of the African Union
Commission, with
Mark Cutifani at the
Anglo American
corporate office in
Johannesburg.
02 Mark Cutifani
in conversation
with finance director
René Médori.
01
02
constructive process of engagement with government and
the unions, our labour force is being aligned with operational
requirements. We are putting the review’s proposals
into action across the business and concentrating on those
assets with sustained profitability potential, while adjusting
production more closely with current product demand.
De Beers had a good year and was able to increase output
against a background of rising demand. In Botswana, flagship
mine Jwaneng drove higher production as it recovered from a
slope failure in mid-2012, while Orapa recorded slightly higher
output. In Canada, Snap Lake lifted the number of carats
recovered by around 50% as it revised mining methods and
operating practices.
OUR STRATEGY IS ALL ABOUT DELIVERY
We are making headway on our strategy, which builds off
three key elements: investing in high quality, competitively
positioned assets to create a portfolio of businesses that meet
our customers’ changing needs; delivering sustainable value
by organising our business, our people and the way we work
to outperform across the value chain, while mining safely and
responsibly; and treating all of our stakeholders with care and
respect and partnering with them to reach their potential,
starting with our employees.
In the short to medium term, we are doing so through a
change programme called Driving Value, which focuses on
the immediate challenges of revitalising our business while
laying the foundation for success over the longer term. We
have set demanding but achievable targets and we are
determined to meet them by working efficiently and
effectively to drive significantly greater value from our asset
base. We are seeing early progress, including in our Platinum
and Metallurgical Coal businesses, across our Commercial
initiatives and in reducing early stage project evaluation costs
by $200 million in 2013 alone. Our pathway to increase
margins and returns by 2016 is clear.
What is very apparent to me, after visiting as many
operations as I could during my first nine months in the job,
is that Anglo American has several assets of the highest
quality. Sishen and Kolomela in iron ore; Los Bronces and
Collahuasi in copper; Jwaneng, Orapa and Venetia in
diamonds; Mogalakwena in platinum; and Moranbah North
in metallurgical coal are all world-class assets in a quality,
diversified commodity portfolio. These assets will be
augmented as major developing projects such as Minas-Rio
and the Metallurgical Coal development at Grosvenor in
Australia come on stream over the next three years.
Just as importantly, we now know what we need to do to
realise the value potential from such an attractive asset
base. Following the comprehensive asset review we put in
train, as part of Driving Value, we have identified a range of
opportunities which will enable us to better utilise the installed
capital across our operations, further driving improved
margins and returns.
Overall, our assets are in reasonable shape, but, crucially,
we need to lift returns by focusing on both capital
deployment and operating performance. During the
downturn we have seen the mining industry’s return on
capital employed (ROCE) plummet from around 24% to
about 10%. Anglo American’s attributable ROCE fell to
11% in 2012 and 2013. Considering the Company’s cost of
capital, that rate of return is not good enough for us, nor our
shareholders, and we have set a target for Anglo American
to reach a sustainable minimum 15% attributable ROCE
by 2016.
Strikingly, more than 80% of our earnings are derived from
assets in the bottom half of the cost curve and, unsurprisingly,
we have put the spotlight on those that do not stack up in
terms of expected ROCE, or which, in our view, do not have
the potential to deliver material improvements.
During September, following a thorough assessment of
our extensive pipeline of long-dated project options, we also
took the decision to withdraw from the Pebble copper project
in Alaska. Our focus for the future is to prioritise capital for
projects with the highest value and lowest risk profiles within
our portfolio, and to reduce the capital required to sustain
such projects during the pre-approval phases of development
as part of a more effective, value-driven capital allocation
model. In 2013, this resulted in a reduction in exploration and
evaluation costs from $731 million in 2012, to $533 million.
Driving Value includes managing our assets more efficiently
and effectively. To achieve that objective, we need to have the
right people in the right roles. We are now making progress
on a far-reaching restructuring programme from top to
bottom of the organisation. We aim to strip out extraneous
layers of management in order to enable more direct
reporting and clearer responsibilities, and have already
reshaped the senior management team. We have also partly
remodelled the business units by integrating our two Coal
businesses and by combining Niobium and Phosphates with
our Nickel business. Across our Commercial unit – which now
has two hubs, in Singapore and London, to be close to our
major markets – we are also making significant changes to
the way we manage our marketing, sales and logistics
09
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
Snap Lake, Canada
Exploration activities at the Snap Lake
diamond mine, located in the
Northwest Territories.
Zibulo, South Africa
Mark Cutifani visited Thermal Coal’s
Zibulo colliery on Anglo American’s
Global Safety Day – 4 November 2013.
Minas-Rio, Brazil
Filtration tanks at the Port of Açu,
from where the first iron ore from
Minas-Rio is scheduled to be
exported by the end of 2014.
Collahuasi, Chile
An operator working at the casting
wheel, where molten copper is poured
into moulds to form copper cathodes.
OPERATIONS VISITED
During his first week in the role, new chief executive,
Mark Cutifani, met a hundred senior managers based
in London and across the businesses. In the first eight
months, he also met and spoke with a significant portion
of the Group’s top 400 managers, as well as several
hundred employees, corporate office staff and mine
operators. In 2013, he visited all business units’ major
operations and projects, including:
Moranbah North, Australia
Monitoring longwall underground
mining operations on a ‘smart board’.
Los Bronces – Chile
Collahuasi – Chile
Quellaveco project – Peru
Cerrejón – Colombia
Minas-Rio project – Brazil
Barro Alto – Brazil
Codemin – Brazil
Niobium mining and processing operations – Brazil
Boa Vista project – Brazil
Phosphates mine and fertiliser plant – Brazil
Moranbah North – Australia
Grosvenor project – Australia
Dawson – Australia
Peace River Coal – Canada
Snap Lake – Canada
Jwaneng – Botswana
Venetia – South Africa
Sishen – South Africa
Bathopele – South Africa
Mogalakwena – South Africa
Zibulo – South Africa
Singapore Commercial office
Beijing representative office
10
Anglo American plc Annual Report 2013 We have
identified
approximately
85% of the
incremental
EBIT necessary
to achieve the
level of return
we expect from
the business.
activities. These are already enhancing margins and are
expected to deliver an additional $400 million a year of
operating profit by 2016 (on an attributable basis).
We have identified approximately 85% of the incremental
EBIT necessary to achieve the level of return we expect from
the business and we are working on the areas where we
see additional potential. Our capital allocation process, for
example, has been rebuilt to enforce more stringent criteria
and controls. This is expected to lead to a $400 million per
annum cash flow improvement in 2014 by recalibrating
our project pipeline. In 2013, we realised proceeds of almost
$400 million from non-core asset sales and we expect to
make further savings of $500 million through a reduction in
overheads as well as supply chain savings of $100 million.
Preserving our resource optionality for the future also
remains a priority within our project development pipeline
and capital allocation analyses. For example, following our
recent stage-gate analysis of the Quellaveco copper project
in Peru, we are re-scoping a larger scale project to enhance
the economic case beyond our return criteria, while retaining
government and community support.
On the environmental front, the implementation of our water
programme, WETT, has once again had a material impact
on improving our water efficiency across the Group. We are
trending ahead of the target set (a 14% reduction against
projected consumption in 2020) and delivered a calculated
saving of more than $85 million in 2013. In addition, around
67% of our total water needs are met by recycled water. The
implementation of 206 energy- and carbon-saving projects
since 2011, as part of our ECO2MAN programme, delivered
savings of 4.3 million GJ of energy and 3.5 million tonnes of
carbon dioxide equivalent emissions in 2013. The resulting
avoided energy cost is estimated at $95.5 million.
THE BIGGER PICTURE
Beyond our own Group, however, there is a bigger picture,
of which we are all a part. We are among seven billion people
who share this planet and in 10 years’ time we are likely to
be a billion more. Yet the mining industry is not supplying
the resources in sufficient quantities to support the world’s
growth. Declining productivity, spiralling costs, community
activism, government intervention, deepening pits and lower
ore grades, infrastructure challenges and the industry’s poor
image are hampering our projects and preventing us from
delivering on society’s needs.
For one thing, we will have to change the way we mine. We
cannot carry on doing ‘business as usual’ if we are to supply
the world’s needs in a responsible and sustainable way.
Many of our business practices and operating models are
years behind other industries’; we have much to learn
from them. All mining companies will have to invest much
more strategically in innovation simply to stay in business.
Furthermore, while many mining companies have made
good progress in securing and retaining their social licences
to operate, becoming pivotal partners in building long term
social and physical infrastructure that creates a positive
benefit for local and regional economies is becoming a
mission-critical imperative.
We must apply our minds to how we can reallocate our
resources to deliver better outcomes for stakeholders.
Mining companies with communities need to take a far
more active role in reshaping our future – to accept that
our long term prosperity depends on the strength of our
relationships with all of our stakeholders, to recognise that
we have a responsibility to work collaboratively to realise
our shared purpose. We need to put aside our sometimes
short term competitive issues and concerns and assist each
other in rebuilding our relationship with our most important
stakeholders. It is only through greater cohesiveness and
co-operation on our part, and the support of our stakeholders,
that we will be able to provide sustainable financial returns
to shareholders. We believe the focus on partnerships is
consistent with delivering sustainable improvements to
our shareholders.
OUTLOOK
The world economy should strengthen in 2014 and 2015
as we continue to emerge from the challenges of the global
financial crisis. China should continue to grow by around
7% and the diminishing effects of fiscal tightening should
support a firmer recovery in the US and beyond.
The turbulence in emerging economies in 2013 has led to
a more cautious assessment of their medium term growth
prospects. Still, there are fundamental trends that indicate
support for continuing growth, particularly with the scope for
further significant catch-up in living standards. But we cannot
be complacent about this growth given the current challenges
in many economies. There is an imperative for domestic
policymakers to implement much-needed reforms to unlock
this potential.
While I expect headwinds to continue in 2014 as we reset
the business, the benefits of much-improved operational
processes and performance will flow through largely in 2015
and 2016. In the immediate term, we have already delivered
significant sustainable improvements, including early
operational improvements, overhead reduction and reducing
early-stage project expenditure.
ACKNOWLEDGEMENT
I would like to thank our employees and contractors, as well
as our many and varied stakeholders, for their dedication and
support through a challenging year. I know I can count on
you all as we continue to pursue our opportunities to deliver
on our potential. Together, we are making a real difference.
Finally, I wish to acknowledge the support and wise counsel
of our chairman Sir John Parker and all members of the
Board during this period of dynamic change, the pursuit
of great opportunities and delivering on our potential.
Mark Cutifani
Chief Executive
11
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT WHY MINING MATTERS
OUR WORLD,
OUR ROLE
The story of mining, and of Anglo American,
is about people and how we live every day. The
smartphone that wakes you, the coffee machine
you’ve just switched on, your journey to work –
none of those could happen without the products
from mining.
MINING TODAY AND TOMORROW
Today, there are 7 billion people in the world, most with the
hope of enjoying a lifestyle that those in the developed world
take for granted. And by 2025 there will be another billion,
with more of us choosing to live in cities than ever before.
It is clear that our need for the products from mining will
continue to grow well into the future. Mining not only enables
the modern world to function and develop, it enables
innovation, with minerals and metals the starting point for
a variety of vital industries – from chemicals and electronics,
to fertilisers and pharmaceuticals. Every day we learn
of more uses for metals and minerals in our daily lives.
Yet we cannot take the earth’s minerals for granted. The
supply is finite and it is becoming more difficult and more
costly to access these essential commodities. Mining
companies, and their shareholders, invest billions of dollars
to find, develop and deliver the materials that help our
economies grow.
At Anglo American we are proud of doing this for almost a
century. We mine a range of diverse commodities, because
each is needed in different ways by people in countries
around the globe. For example, we mine iron ore and
metallurgical coal, both of which are used to make steel –
a product essential for the creation of emerging urban
environments. We mine copper – a key component in the
electrical and electronics revolution. We mine phosphates
– delivering fertiliser products that help farmers maximise
the crops they grow. The precious metals we mine are
required in car catalytic converters and help improve the
quality of the air we breathe.
158,900
EMPLOYEES AND
CONTRACTORS
AROUND THE WORLD
$24.1 bn
CONTRIBUTION
TO SOCIETY
$1.6 bn
SPENT WITH SUPPLIERS
BASED IN THE
COMMUNITIES CLOSE
TO OUR OPERATIONS
INVESTING IN
PEOPLE
External training spend
across Anglo American
in 2013.
$104 m
BUILDING
COMMUNITIES
New homes built in 2013
for employees at Kumba’s
Kolomela mine.
718
PROTECTING THE
ENVIRONMENT
Proportion of all water
used at Anglo American’s
operations that is recycled.
67%
12
Anglo American plc Annual Report 2013 We mine a
range of diverse
commodities,
because each
is needed in
different ways
by people in
countries
around the
globe.
We believe that by mining such a wide range of metals and
minerals we spread our risk, increase the opportunities
available to us, and can transfer experience and best
practice across commodities and geographies.
We believe that to be a force for good in a changing world, we
must maximise our contribution to sustainable development
globally and act to the benefit of our host communities, both
during and beyond the lives of our operations.
But mining is not just about delivering products to customers.
Mining creates jobs and helps communities develop new
skills and improve education; it builds infrastructure such as
electricity, piped water, telecommunications, roads; mining
can also bring improved healthcare and environmental
stewardship; and mining brings innovation and development.
We have to work hard to make a positive and welcome
impact in the communities and ecosystems around our
mines. We work with our host communities to help improve
healthcare, education, and skills development, protect
scarce resources like land and water, and we use our supply
chain to develop local economies.
We use our scale and reach to ensure a fairer distribution
of the opportunities mining brings. For example, in 2013,
almost 80% of the $24.1 billion Anglo American spent
on suppliers, employees, and in taxes and royalties to
governments, was spent in developing countries, with the
positive economic effects extending well beyond those
direct impacts.
We will continue to explore and invest in new technologies
to ensure more efficient operations, to reduce our impact
on the environment and realise greater value for our
customers and shareholders.
Most importantly, we will endeavour to work in partnership
with our key stakeholders in seeking the best way to deliver
the resources the world needs.
66
INDIVIDUAL MINERALS
THAT CONTRIBUTE TO A
TYPICAL COMPUTER
335
TONNES OF STEEL,
4.7 TONNES OF COPPER,
3 TONNES OF ALUMINIUM
IN A SINGLE WIND
TURBINE
2.6 bn units
WORLDWIDE MOBILE
DEVICE SHIPMENTS
WILL REACH 2.6 BILLION
UNITS BY 2016
1.5 km
THE AVERAGE
CAR CONTAINS
1.5 KILOMETRES
OF COPPER WIRE
CREATING
SHARED VALUE
Percentage of government
revenues in low to middle
income economies
generated by mining.
3–20%
INNOVATING NEW
TECHNOLOGY
The target date for most
major automakers for first
commercial sales of their fuel
cell vehicles. Most fuel cells
contain platinum catalysts.
2015
Source: ICMM, NMA, geology.com, Canalys Research, Johnson Matthey
BUILDING
PARTNERSHIPS
Jobs created or maintained
through our enterprise
development initiatives.
76,500
13
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT OUR STRATEGY
DESIGNED TO DELIVER
VALUE FOR ALL OUR
STAKEHOLDERS
At Anglo American, we recognise that we must
continually adapt and improve if we are to achieve
our ambition to become the investment of choice,
the partner of choice and the employer of choice.
We are clear about our purpose: ‘Together, we create
sustainable value that makes a real difference’, and this
means we need to deliver our promised returns to
shareholders, as well as work with our stakeholders to
find mutually beneficial solutions to our shared challenges.
Our strategy to achieve this hinges on three key elements:
our portfolio; our people; and, ultimately, our performance.
Our shareholders own the business and are entitled to
attractive returns, reflecting the risk they take in funding
the business.
Our employees are the business and must be treated
with care and respect and compensated fairly for their
work. Our stakeholders are partners in the business and
are entitled to fair compensation for their contributions
to business success.
Although we do not have all the answers, we can start
the conversation about what better mining looks like
from both a shareholder and a stakeholder perspective.
And we will
measure value
against our
seven pillars.
Safety and Health
…in realising
our strategy.
Portfolio
Investing in a
portfolio of assets
that deliver superior
margins and returns
through the
cycle
Our purpose
drives us…
Together, we
create sustainable
value that makes a
real difference
…to achieve
our ambition.
The investment
of choice, the
partner of choice
and the employer
of choice
Our values
guide us…
Safety
Care and respect
Integrity
Accountability
Collaboration
Innovation
People
Organising and
developing our people
to deliver on our promises
and build respectful and
mutually beneficial
relationships with our
stakeholders
Performance
Operating safely
and responsibly across
the mining value chain
to deliver sustainable
value and best meet
our customer and
stakeholder
needs
Financial
14
Environment
Socio-political
People
Production
Cost
Anglo American plc Annual Report 2013 OUR SEVEN
PILLARS OF VALUE
Delivering on our commitments to shareholders
while creating an attractive and differentiated
value proposition for our partners and stakeholders
is the very essence of delivering ‘sustainable
long term value’.
We will use a business scorecard to measure the
Group, business unit and asset performance against
our objective of sustainable value creation. The design
is still evolving; however, it will consider seven areas or
‘value pillars’.
OUR STAKEHOLDERS
Continuously improving and maintaining positive
relationships with our many stakeholders is one of
our principal priorities. We believe that establishing
relationships built on trust is fundamental to our ability
to create sustainable value. Our main stakeholder
groups are:
• trade unions
• governments
• communities
• suppliers and contractors
• non-governmental organisations (NGOs)
and civil society bodies
• joint venture and other strategic business partners
• customers
• business peers.
Safety and Health
to do no harm to our employees and contractors
Environment
to do no lasting harm to the environment
Socio-political
to partner in the benefits of mining with local
communities and governments
People
to resource the organisation with an engaged,
productive workforce
Production
to extract our resources in a sustainable way
to create value
Cost
to be competitive by operating as efficiently as possible
Financial
to deliver sustainable value for our shareholders.
Read about our KPIs
See page 18
OUR DELIVERY ROADMAP
IMMEDIATE FOCUS
15%
THE LONGER TERM
SUSTAINABLE
RETURNS
Effective and efficient
Our strategy sets out the path for sustainable
success towards our ambition. We must, however,
address some immediate strategic issues if we are
to deliver long term sustainable value in the future.
We are doing this through Driving Value, a change
programme that sets us on a path to recovery to 2016,
and sets our business up for long term success.
Driving Value initiatives are under way to support
our ambition to achieve at least a 15% attributable
return on capital employed (ROCE) by 2016.
Building on the foundations
As we have defined, 2016 is simply a date by which we
intend to deliver a minimum acceptable return for our
shareholders. Based on this foundation, we aim to
continue to grow our financial performance to deliver
a longer term sustainable return of greater than 15%
through the business cycle.
15
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT OUR BUSINESS MODEL
DESIGNED TO DELIVER NOW
ADDRESSING OUR
IMMEDIATE PRIORITIES
As part of our Driving Value change programme
we have completed the review of our asset portfolio
and now understand what has to be done to achieve
both our short term targets and long term ambitions.
We have focused on four strategic priority areas to
help us deliver now.
CAPITAL ALLOCATION
We have set ourselves a realistic financial target of
delivering at least a 15% attributable ROCE by 2016.
Achieving this target will require a renewed focus on capital
discipline, our capital deployment to be directed towards
high value, low risk projects, and ensuring we manage the
balance between growth and shareholder returns.
For more information
See page 20
BUSINESS EXECUTION
We have a high quality asset base with the potential to
deliver better margins and returns. The asset review process
has identified operational improvement opportunities and
we are working towards executing against our plans while
remaining committed to the highest standards of safe
and sustainable mining.
For more information
See page 34
STAKEHOLDER ENGAGEMENT
We understand that we must work together with our
stakeholders to partner with them to reach their potential. Our
ability to build effective and mutually beneficial partnerships
with host communities and governments is of particular
importance to us and is a prerequisite for investment.
For more information
See page 26
ORGANISATION STRUCTURE
We believe that having the right people in the right roles
doing the right work is critical to achieving our ambition,
and so, we are redesigning our organisation to enable
our people and our business to be successful.
For more information
See page 26
16
HOW WE CREATE VALUE
Anglo American finds, develops, mines, processes
and markets a range of commodities that meet our
customers’ changing needs. We have a diverse portfolio
of high quality assets, with many having significant
scalability potential. We are committed to running our
business all the way from discovery to market in a safe
and responsible way, to deliver long term sustainable
value to all our stakeholders.
OUR OPERATIONAL MODEL
We are developing a new approach to drive and
support change across our value chain. Starting
with clear and realistic expectations, we will plan
appropriately and then put those plans into action,
rigorously measuring and analysing successes and
failures to learn from both.
1. EXPECTATION SETTING AND
OPERATIONAL PLANNING
The first step in understanding how to optimise each
of our assets is to determine the gap between the current
capabilities of the assets versus budgeted expectations.
2. PERFORMANCE ANALYSIS
We then analyse data and key performance indicators
(KPIs) generated by the asset to confirm average
performance levels, assuming no changes to the
current process.
3. CONTINUOUS IMPROVEMENT
Incremental changes are made to the operation of
the assets to deliver a positive and sustainable shift
in performance with minimal capital outlay.
ORGANISATIONAL MODEL
We want to create a more effective and efficient
organisation, where we only carry out the necessary
work – the right work – to achieve our strategy. We aim
to reduce duplication, eliminate tasks that do not add
value, and ensure that the work required is carried out by
people with the right capabilities, resources and tools. We
are clear who makes decisions across the Group and,
therefore, who is accountable for the outcomes of
these decisions.
Anglo American plc Annual Report 2013
OUR KEY RESOURCES AND RELATIONSHIPS
OUR RESERVES AND RESOURCES
COMMUNITIES AND GOVERNMENTS
OUR EMPLOYEES
The quality and extent of its mineral
resource base is the lifeblood of any mining
company, providing it with a range of
development and other value creating
options for the future. At Anglo American,
we have an extensive ore reserve and
mineral resource base across all of the
commodities in our portfolio and across
our wide geographic footprint, providing us
with a suite of options for delivering value
through different commodities’ economic
cycles. The efficient extraction of metals
and minerals from these orebodies
underpins our ongoing profitability.
Governments, as custodians, own the
resources we develop and set the tax and
regulatory frameworks within which we
operate. Our host communities are major
providers of employees and suppliers, and
without their support we cannot succeed.
Both governments and communities
expect us to run safe and environmentally
responsible operations, and to contribute to
the long term development of our host
communities and countries.
Our employees are the business. We can
build our mines and our operations, but if
we do not have an engaged and committed
workforce we will never achieve our true
potential. We must participate in every
individual’s personal development, to
support them to succeed in return for
their commitment to give us their best.
We believe we can be the Employer of
Choice by rewarding our people at
market-competitive rates while providing
them the opportunity to realise their
personal potential.
FIND
SECURE
MINE
PROCESS
MOVE
MARKET
FIND
Our exploration teams
discover mineral
deposits in a safe and
responsible way to
replenish the mineral
resources that underpin
our future success.
SECURE
Gaining and maintaining
our social and legal
licence to operate,
through open and
honest engagement
with our stakeholders, is
critical to the sustainability
of our business.
MINE
We apply more than
95 years of opencast
and deep-level mining
experience, along
with unique in-house
technological expertise,
to extract mineral
resources in the safest,
most efficient way.
PROCESS
We generate extra
value by processing
and refining many of
our commodities.
MARKET
We collaborate with our
customers around the
world to tailor products
to their specific needs.
MOVE
Whether providing
innovative haulage
solutions within a mine,
or co-ordinating global
cargo deliveries, we
offer efficient and
effective transport
of our commodities.
ORGANISATIONAL STRUCTURE
OPERATIONAL WORK
FUNCTIONAL SUPPORT
We believe that the role of our business
units is to carry out core ‘operational work’
and that the role of the Group corporate
functions is to provide support to enable
this to happen. A basic principle of our new
organisation model is that all work should
be done at the operations unless there is
a clear reason for it to be done elsewhere.
Operational work is the core value-
generating work of our business. For
Anglo American, this includes finding,
mining, processing, and moving and
marketing our metals and minerals. We also
believe that building relationships with our
stakeholders is core to operating effectively.
The work of Commercial is considered ‘core
operational’ because it is a fundamental
part of our value chain and is critical to our
ability to deliver value to our shareholders
and stakeholders.
Our mining operations and commercial
business cannot achieve the Group’s
strategic objectives alone; they require
value-adding specialist support and
services by the Group functions at the
corporate centre. These provide expert
advice to our operational managers that
helps improve business performance
across the Group.
17
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT KEY PERFORMANCE INDICATORS
DESIGNED TO BE MEASURED
PILLARS OF VALUE(1)
KEY PERFORMANCE INDICATORS (KPIs)
Safety and Health
To do no harm to
our employees
For more information see
People on page 26
Work-related fatal injury frequency rate (FIFR)
FIFR is calculated as the number of fatal injuries to
employees or contractors per 200,000 hours worked
New cases of occupational disease (NCOD)
Number of new cases of occupational disease
diagnosed among employees during the
reporting period
Lost-time injury frequency rate (LTIFR)
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 the routine
functions of his/her job for one full shift or more the
day after the injury was incurred, whether a
scheduled workday or not
Environment
To do no lasting harm
to the environment
For more information see
Performance on page 34
Energy consumption
Measured in million gigajoules (GJ)
Greenhouse gas (GHG) emissions
Measured in million tonnes of CO2 equivalent
emissions
Total water consumed
Total water consumed includes water used
for primary and non-primary activities, measured
in million m3
Socio-political
To partner in the benefits of
mining with local communities
and governments
For more information see
People on page 26
Corporate social investment
Social investment as defined by the London
Benchmarking Group includes donations, gifts in
kind and staff time for administering community
programmes and volunteering in company time
and is shown as a percentage of profit before tax
Enterprise development
Number of companies supported, and number
of jobs sustained, by companies supported by
Anglo American enterprise development initiatives
People
To resource the organisation
with an engaged, productive
workforce
For more information see
People on page 26
Production
To extract our mineral
resources in a sustainable
way to create value
For more information see
Performance on page 34
Cost
To be competitive by
operating as efficiently
as possible
For more information see
Portfolio on page 20
Performance on page 34
Financial
To deliver sustainable
returns for our shareholders
For more information see
Portfolio on page 20
Performance on page 34
Voluntary labour turnover
Number of permanent employee resignations
as a percentage of total permanent employees
Gender diversity
Percentage of women, and female managers,
employed by the Group
Production volumes
Production volumes for the year are discussed at a
commodity level within each Business Unit section
of the annual report (see pages 54–91). Quarterly
production figures are shown on page 254
Unit costs of production
Unit costs of production are discussed at a commodity
level within each Business Unit section of the annual
report (see pages 54–91). Other factors that impact
costs across the Group are discussed in the
Performance section of the annual report
(see pages 34–45)
Attributable return on capital employed
The return on adjusted capital employed attributable to
equity shareholders of Anglo American. It excludes the
portion of the return and capital employed attributable
to non-controlling interests in operations where
Anglo American has control but does not hold 100%
of the equity. It is calculated as annualised underlying
operating profit divided by adjusted capital employed
Underlying earnings per share
Underlying earnings are net profit attributable
to equity shareholders, before special items
and remeasurements
(1) The table above reflects historically reported KPIs against our seven pillars. It does not represent our new business scorecard.
18
Anglo American plc Annual Report 2013 RESULTS AND TARGETS(2)
Work-related fatal injury
frequency rate (FIFR)
Target: Zero fatal incidents
Lost-time injury frequency rate (LTIFR)
Target: Zero incidents.
The ultimate goal of zero harm remains
New cases of occupational
disease (NCOD)
Target: Zero (long term)
2013
2012
14 fatalities, 0.008 FIFR
13 fatalities, 0.007 FIFR
2013
2012
0.49
0.58
2013
2012
209
174
Energy consumption
Million GJ total energy used
Target: 7% saving against 2015 business as usual (BAU)
Performance: 5% saving against 2013 BAU
2013
2012
106
113
Corporate social investment(3)
2013: 2.2% of profit before tax
2012: 2.8% of profit before tax
GHG emissions
Mt CO2 equivalent
Target: 19% saving against 2015 projected BAU.
Performance: 19% saving against 2013 BAU.
Total water use
Target: 14% saving against 2020 projected BAU
Performance: 22% saving against 2013 BAU
2013
2012
17
18
2013
2012
201 Mm3
156 Mm3
Enterprise development
Businesses supported
Enterprise development
Jobs sustained
2013
2012
$127 m
$146 m
2013
2012
48,111
40,217
2013
2012
76,543
64,927
Voluntary labour turnover
Gender diversity
Managers who are female
Gender diversity
Women as a percentage of total workforce
2013
2012
2.0%
2.4%
Kumba Iron Ore
Metallurgical Coal
2%
Thermal Coal
(2%)
(2%)
2013
2012
(12%)
23%
23%
2013
2012
16%
15%
17%
Copper
Nickel
Niobium
2%
Phosphates
6%
Platinum
5%
Diamonds
12%
(2%)
2013
2012
2011
2010
2009 (5%)
2%
2%
8%
Group attributable ROCE
Underlying EPS
Real cash costs are the annual increase/
decrease in the Group’s operating cash
costs versus the prior year, excluding
depreciation, the impact of CPI and foreign
exchange, and is after capitalisation of
stripping costs
2013
2012
11%
11%
2013
2012
$2.09
$2.28
(2) The results and targets in the KPI table above include wholly owned subsidiaries and joint operations over which
Anglo American has management control. Data reported in 2012 includes results from De Beers from the date of acquisition.
(3) CSI data from 2012 has been restated owing to a change request made by De Beers subsequent to the publication of the 2012 Annual Report.
19
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC ELEMENT: PORTFOLIO
MOGALAKWENA – A WORLD-CLASS
PLATINUM RESOURCE PROVIDING FLEXIBLE
GROWTH OPTIONS
The Platreef, in South Africa’s Limpopo province, is one
of the world’s largest precious-metal deposits and the
location of our Mogalakwena platinum mine. The mine
currently produces around 300,000 ounces of platinum
a year, and a similar by-product value contribution from
palladium, rhodium, nickel, copper and gold. Its open-pit
mining method and significant by-product credits result in
it being the lowest operating cost, and highest cash margin,
platinum operation in our portfolio, and positions
Mogalakwena comfortably in the lowest operating cost
quartile of the platinum industry.
Mogalakwena is an excellent example of an asset where
we feel we can expand production without entering into
significant capital commitments. Based on our early-
stage analysis, we believe the potential is there to reach
400,000 ounces of platinum by 2017, at low capital intensity
– a real opportunity to deliver superior returns on our
invested capital.
Image
(Left to right)
Wi-Fi technician
Lerato Rakobela and
technical specialists
Mzu Hlebo and
Tikoane Sonopo with
ground stability radar
equipment at
Mogalakwena’s
open pit.
Chris Griffith
CEO, Platinum
“ Mogalakwena is an asset of rare scale and quality –
the largest open-pit platinum mine in the world
and our largest reserve base, with the highest-
value contribution from nickel and copper.
Mogalakwena provides us with an enviable
range of development options.”
20
Anglo American plc Annual Report 2013
DISCIPLINED
INVESTMENT TO
DELIVER IMPROVING
RETURNS
MINE LIFE(1)
27 years
RESERVES (4E)
141.6 Moz
MINING RATE POTENTIAL BY 2017
400 koz/pa
Zimbabwe
Botswana
Mozambique
Location
Mogalakwena is situated 30 kilometres
north-west of the town of Mokopane in the
province of Limpopo and is the only operating
platinum mine on the Northern Limb.
Mogalakwena mine
Mogalakwena mines Platreef ore and consists of
five open pits. The mining method is open-pit truck and
shovel and the current pit depths vary from 45 metres
(Mogalakwena North) to 245 metres (Sandsloot).
The ore is milled at the new, fully operational
North Concentrator and the older South Concentrator.
South Africa
Indian Ocean
Pillars of value:
Cost
Financial
For more on pillars of value and our KPIs
See pages 14–15 and 18–19
(1) Mine Life limited to the current Mining Right period.
Other platinum mines
Anglo American plc Annual Report 2013
21
Strategic report STRATEGIC ELEMENT: PORTFOLIO
INVESTING TO DELIVER SUPERIOR
MARGINS AND RETURNS THROUGH
THE CYCLE
At Anglo American, we believe that being a
global diversified mining company provides
a natural hedge against price volatility and
geographic pressures, giving us flexibility
to meet the world’s changing needs.
Our portfolio of mining and processing assets is chosen for
the low cost and competitive position of such assets in their
given market, designed to deliver attractive returns through
normal commodity price cycles. We have had operations in
Africa, Australia, and North and South America for many
years, but we are also building strong commercial
relationships in Europe and across Asia, including in India,
China, South Korea and Japan, to strengthen our positions
now and in the future.
We are widely recognised as industry leaders in discovering
new assets in addition to investing in existing ones,
ensuring that we balance the need to grow as a business
while delivering improving returns to shareholders. We
take a long term view to managing our assets, continually
stress-testing our portfolio against investment and
sustainability criteria to ensure it delivers value and that it
continues to meet our customers’ needs today, tomorrow
and into the future.
OUR TARGET FOR 2016
Mining industry returns (return on capital employed,
or ROCE) have dropped significantly from around
24% in 2006 to 10% in 2012, despite a relatively positive
commodity pricing environment over much of the
period. Although there are many reasons for capital
employed increasing at a faster rate than earnings, there
are some common themes across the industry, including:
over-capitalisation of assets in an attempt to grow
production at any cost; an active merger and acquisition
environment when asset prices have been at all-time
highs; and significant overspend in projects as companies
try to bring production on stream as fast as possible.
Anglo American has not been immune to these challenges,
with the result that our attributable ROCE fell from a
pre-financial crisis high of over 30%, to as low as 11% in
2012, a situation that is acceptable neither to ourselves
nor our shareholders. We have, therefore, set ourselves a
clear target of delivering a minimum attributable ROCE of
15% by 2016, and have defined a new approach and rigour
to our capital-allocation process in order to help achieve
our target.
FOCUSED CAPITAL ALLOCATION
Across the Group, we have applied a stringent capital
allocation model that will result in a more disciplined
approach to sustaining and growing our production
with less capital investment.
Our investment priorities have changed, such that our
primary scrutiny is on the quality and return profile of
individual assets within attractive commodity industries,
where previously our focus was directed more towards
building a greater presence in those commodities that
we believed to be most attractive.
When it comes to development of our existing assets,
building new projects or acquiring assets, we will only
pursue an opportunity if the returns are attractive, we are
confident in our delivery of the value, and that it is the best
place to commit our capital when compared against all other
options, including returning capital to our shareholders.
We have improved our investment review and approval
processes to support this approach, building greater
confidence in our assessment of the pipeline of options.
We will continue to review this pipeline to optimise its value
by prioritising opportunities based on their expected
returns and risk profiles, and we will seek new options
at the lowest cost, supported by our industry-leading
exploration capability.
Consistent with this approach, in 2013 we withdrew from
the Pebble copper project in Alaska; reduced capital
expenditure at Platinum, reflecting the industry challenges
and our review of the assets; and reduced spend on
longer-dated projects within the Nickel and Iron Ore
business units. In Peru, the Quellaveco copper project
was evaluated as part of the Group asset review, which
resulted in a decision to reconfigure the project so that
its economic returns are more robust. A final review of the
project is expected during 2015. During the intervening
period, work will continue on the project site, aimed
mainly at progressing the Asana river diversion tunnel,
along with various social and community programmes,
thereby solidifying the already high social support for
the project.
The concept study for the Michiquillay copper project in
northern Peru was also evaluated within the broader context
of the Group asset review. Options are currently being
considered for this project.
As a result of these and other actions, we have identified
$300 million of savings on an attributable basis in
exploration and evaluation costs to be delivered by the
end of 2016, in addition to $252 million of cash from
non-core asset sales.
22
Anglo American plc Annual Report 2013 STRATEGIC REPORT
Iron Ore and Manganese
19%
Metallurgical Coal
1%
Thermal Coal
23%
25%
24%
Copper(1)
Nickel
(2%)
Niobium and Phosphates
Platinum
6%
Diamonds
Group
11%
11%
(1) Removing outstanding tax liability balances relating to the AA Sur
divestment, Copper attributable ROCE would drop to 24%.
THE PATHWAY TO 15% ATTRIBUTABLE ROCE
Over the past eight months we have completed a review
of our asset portfolio and have set out a clear path to
achieve our targeted 15% attributable ROCE. The chart
below shows the steps identified to lift attributable ROCE
(at 30 June 2013 prices and foreign exchange rates)
from 9% in 2012, to in excess of 15% by 2016.
The impact of our approved major projects coming on
stream, the operational improvement plans resulting from
the recent asset review, and our Driving Value programme
(including the benefits from overhead reduction,
commercial and supply chain initiatives, and our review of
the project pipeline) are discussed in more detail on pages
34–45, within the ‘Performance’ section of this report.
Capital structure and balance sheet
Net assets of the Company totalled $37.4 billion at
31 December 2013 (31 December 2012: $43.7 billion).
This decrease resulted from impairments of $2.5 billion,
the impact of the weaker South African rand and Australian
dollar of $4.0 billion and depreciation of $2.6 billion, partially
offset by capital expenditure for the year of $6.3 billion,
including capitalised interest of $0.3 billion.
Attributable ROCE remained flat at 11% as a consequence
of a higher proportion of operating profit coming from our
non-wholly owned businesses: Anglo American Platinum;
De Beers; Anglo American Sur (AA Sur); and Kumba Iron
Ore. Average attributable capital employed increased to
$39 billion (2012: $38 billion), due to capital expenditure
in 2013, partially offset by the weakening of the rand, in
which 29% of our balance sheet is denominated. With the
exception of Foxleigh, Peace River Coal and the Barro Alto
impairment, all impairments and losses on disposal or exit
have been taken as a reduction to capital employed.
The pathway to 15% attributable ROCE
ROCE (%) / EBIT impact ($ bn) (1) (2)
>15%
9%
$3.3 bn
2012 (2)
$0.9 bn
Projects
$1.2 bn
Improvement plans
(asset review) net of
headwinds
$1.3 bn
Driving Value
Further benefits
to be identified
2016 target
2012 and 2016 targets
Minas-Rio, Boa Vista Fresh Rock, Barro Alto, Cerrejón
Identified upside
Defined plans
Ongoing LoM strategy review
(1)
Attributable ROCE defined as operating profit attributable to Anglo American plc shareholders divided by attributable average capital employed.
(2) ROCE and EBIT impact based on commodity prices and exchange rates at 30 June 2013 and including structural changes to portfolio.
23
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC ELEMENT: PORTFOLIO
Net debt
$ million
Opening net debt
EBITDA(2)
Working capital movements
Other cash flows from operations
Cash flows from operations
Capital expenditure including related derivatives
Cash tax paid
Dividends from associates, joint ventures and financial asset investments
Net interest
Dividends paid to non-controlling interests
Attributable free cash flow
Dividends paid to Company shareholders
Tax on sale of non-controlling interest in Anglo American Sur
Acquisitions of subsidiaries
Disposals
Movements in non-controlling interests
Purchase of shares by subsidiaries for employee share schemes
Other net debt movements
Total movement in net debt
Closing net debt
8,806
(1,121)
44
7,729
(6,261)
(1,201)
264
(533)
(1,159)
(1,161)
(1,078)
(395)
–
252
71
(92)
261
2013
(8,510)
2012(1)
(1,278)
7,867
(526)
29
7,370
(6,030)
(1,799)
348
(348)
(1,267)
(1,726)
(970)
(1,015)
(4,816)
439
1,220
(253)
(111)
(2,142)
(10,652)
(7,232)
(8,510)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 of the financial statements for details.
(2) EBITDA is underlying EBITDA, as described in note 3 of the financial statements, less associates and joint ventures.
Liquidity and funding
At 31 December 2013, the Group had undrawn committed
bank facilities of $9.3 billion and cash of $7.7 billion.
The Group’s forecasts and projections, taking account
of reasonably possible changes in trading performance,
indicate the Group’s ability to operate within the level of
its current facilities for the foreseeable future.
Net debt
Net debt is a measure of the Group’s financial position.
The Group uses net debt to monitor the sources and uses
of financial resources, the availability of capital to invest
or return to shareholders, and the resilience of the balance
sheet. Net debt is calculated as total borrowings less
cash and cash equivalents (including derivatives which
provide an economic hedge of debt and the net debt of
disposal groups).
The reconciliation in the table above is the method by
which management reviews movements in net debt and
comprises key movements in cash and any significant
non-cash movements on net debt items.
Net debt increased by $2,142 million to $10,652 million
(2012: $8,510 million) and net debt to total capital at
31 December 2013 was 22.2%, compared with 16.3%
at 31 December 2012. An analysis of key movements in
net debt in the year is detailed on page 24–25.
Cash flow from operations
A reconciliation of underlying EBITDA to underlying
operating profit is provided in note 3 to the financial
statements. The factors driving the operating results
of the Group are discussed in the Performance section
of the annual report on pages 34–45.
The working capital increase of $1,121 million
(2012: increase of $526 million) represents investment
in stock of $562 million (2012: increase of $329 million),
increase in debtors of $541 million (2012: increase of
$32 million) and a decrease in creditors of $18 million
(2012: decrease of $165 million).
Within the investment in stock movement, $395 million
relates to increases in platinum stock owing to the growth
in precious metal stock holdings to manage business risk
and an increase in the average stock valuation due to higher
production costs.
24
Anglo American plc Annual Report 2013 STRATEGIC REPORT
The majority of the remaining stock increases reflect strong
production performance in the closing months of the year at
both Kumba Iron Ore and Copper.
The strong production performance in the closing months
of the year at Kumba Iron Ore and Copper also resulted in
increased sales, with a resultant increase in debtors of
$373 million.
Attributable free cash flow
Attributable free cash flow, as defined in the reconciliation
of net debt, is a measure of the amount of cash generated
by the Group’s operations once all disbursements of tax,
interest and dividends to minority interests have been taken
into account.
Cash tax paid has decreased to $1,201 million from
$1,799 million, owing to tax rebates at both Copper
and Metallurgical Coal. Copper received a $191 million
rebate owing to overpayment in the prior tax year, while
Metallurgical Coal received a net tax refund in 2013
of $43 million (compared to a net payment in 2012 of
$330 million) following a reassessment by the Australian
Tax Office of the tax instalment rate.
Net interest represents interest income less interest
expense and includes cash flows on financing derivatives.
The increase was driven by higher interest paid of
$907 million (2012: $775 million) due to the timing of the
issue and redemption of corporate bonds as well as the
acquisition, on 16 August 2012, of $1,581 million of debt
in De Beers which, even when refinanced by the Group,
resulted in higher overall debt in 2013.
The majority of dividends paid to non-controlling interests
of $1,159 million (2012: $1,267 million) were to minority
shareholders of Copper and Kumba Iron Ore, where
external dividends of $474 million and $663 million were
paid respectively (2012: $100 million and $1,120 million).
Other movements
Tax on sale of AA Sur of $395 million (2012: $1,015 million)
relates to the profit on sale of the 25.4% share in AA Sur.
Disposals relate mainly to proceeds received in the year
following the disposal of Palabora, certain De Beers
investment properties, the formation of the Lafarge
Tarmac joint venture and Amapá, net of funding provided
by the Group.
Other net debt movements mainly relate to the Main Street
preference share structure, which was established to
provide funding via preference shares for a black economic
empowerment (BEE) company relating to Sishen Iron Ore
Company. In November 2013, the preference shares held
by Anglo American in the company were redeemed for
$279 million and a mezzanine debt facility of $85 million
repaid. This resulted in the Group reducing net debt by
$364 million on the unwinding of the structure.
Evaluation expenditure
Evaluation expenditure decreased by 38% to $326 million,
driven by reductions in Copper and Nickel, partly offset by
increases in De Beers following the acquisition of the
additional interest in August 2012.
Divestment update
On 4 January 2013, Anglo American announced that it had
reached an agreement to sell its 70% interest in Amapá to
Zamin Ferrous Ltd (Zamin). Following the 28 March 2013
major geological event which resulted in the loss of four
lives, with a further two people still missing, as well as the
loss of the Santana port operation of Amapá and the
suspension of all export shipments, Anglo American entered
into further discussions with its partner Cliffs Natural
Resources (Cliffs) and Zamin. Anglo American
subsequently entered into an agreement with Cliffs to
acquire its 30% interest in Amapá, subject to certain
conditions, and entered into an amended sale agreement
with Zamin to reflect Anglo American’s disposal of a 100%
interest in Amapá to Zamin.
On 1 November 2013, Anglo American completed the
acquisition from Cliffs and simultaneously completed the
sale of the 100% interest in Amapá to Zamin for an initial
total consideration of approximately $134 million, net of
certain completion adjustments. In addition, Zamin will pay
Anglo American conditional deferred consideration of up to
a maximum of $130 million in total, payable over a five year
period and calculated on the basis of the market price for
iron ore. As part of the transaction, Anglo American has
assumed responsibility for, and the risks and rewards of,
certain insurance claims including those relating to the
Santana port incident, through the purchase of the claims
from Amapá at the full claim value.
Dividends
Anglo American’s dividend policy is to provide a base
dividend that will be maintained or increased through
the cycle. Consistent with the policy, the Board has
recommended to maintain the final dividend of 53 US cents
per share, giving a total dividend of 85 US cents per share
for the year (2012: 85 US cents per share), subject to
shareholder approval at the Annual General Meeting to
be held on 24 April 2014. The maintenance of the level
of the dividend reflects the Board’s confidence in the
underlying business. This recommendation is consistent
with the commitment to have a disciplined balance between
the maintenance of a strong investment grade rating,
returns to shareholders and sequencing of future
investment in line with resulting funding capacity. From
time to time, any cash surplus to requirements will be
returned to shareholders.
Outlook
Cash capital expenditure is expected to be between
$7.0 billion and $7.5 billion in 2014. Net debt is expected
to continue to rise in 2014, as expenditure on the Group’s
projects more than offsets cash generated from operations.
25
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC ELEMENT: PEOPLE
ORGANISED TO
REALISE OUR
POTENTIAL
Mervyn Walker, Group Director
Human Resources and Corporate Affairs
REDESIGNING OUR ORGANISATION
The aim of the new organisation design is to ensure we have the right
people in the right roles doing the right work. The resulting structure will
be more effective, allowing greater clarity on roles and accountabilities
while also removing unnecessary work and duplication.
The first aspect of the new organisation was announced in July 2013, with
the creation of two new commodity groups; Base Metals and Minerals –
made up of the newly integrated Nickel, Niobium and Phosphates business,
and Copper; and Coal – comprising Thermal Coal and Metallurgical Coal.
These businesses have been brought together to realise the synergies
available from having either geographical or operational similarities.
“ Our new organisation aims to create an environment
in which we are all able to work more effectively and
efficiently. By creating a meritocracy in which each and
every employee is encouraged to strive to reach their
potential, we hope to unlock significant value.”
We reduced the number of direct reports to the chief executive from
15 to 11. The new Group Management Committee (GMC) was expanded
to incorporate the chief executive and his direct reports. The GMC is
supported by two sub-committees (Corporate and Operating) with
delegated authorities.
By the end of 2013, we had appointed senior management roles
across the corporate centres and have been designing proposals for
the remaining structures and roles. We plan to complete the design
implementation in 2014.
26
Anglo American plc Annual Report 2013
Group Management Committee
Chief Executive
Mark Cutifani
Kumba Iron Ore
Norman
Mbazima
Iron Ore Brazil
Paulo Castellari-
Porchia
Coal
Seamus French
Base Metals
and Minerals
Duncan Wanblad
Platinum
Chris Griffith
De Beers
Philippe Mellier
Executive
Director RSA
Khanyisile
Kweyama
Human
Resources and
Corporate Affairs
Mervyn Walker
Technical
Tony O’Neill
Strategy, Business
Development
and Commercial
Peter Whitcutt
Finance
René Médori
Image
Mark Cutifani meets Quellaveco community
relations manager Francisco Raunelli during
a recent visit to the Quellaveco copper project
in southern Peru.
Operations visited
In his first eight months in the role, new
chief executive Mark Cutifani met and
spoke with most of Anglo American’s top
400 managers, as well as several hundred
employees, corporate office staff and mine
operators. During the year, he visited all of
our major operations and projects, travelling
to Australia, Brazil, Chile, Peru, Botswana,
South Africa, Canada, Singapore and China.
Pillars of value:
Safety and Health
Socio-political
People
For more on Pillars of value and our KPIs
See pages 14–15 and 18–19
Anglo American plc Annual Report 2013
27
Strategic report STRATEGIC ELEMENT: PEOPLE
PROVIDING
OPPORTUNITIES
Assets alone do not generate value. It is our
people who are inspired to deliver sustainable
value that makes a real difference.
Guided by our values – safety, care and respect, integrity,
accountability, collaboration, innovation – our people apply
their skills, knowledge and expertise to ensure we operate
successfully and responsibly. They develop trusting and
respectful relationships with communities, governments,
suppliers, partners and peers to ensure that we deliver on
our promises.
In return, we reward and recognise our people, supporting
them in their careers and providing opportunities to help
them develop and grow.
THE RIGHT PEOPLE IN THE RIGHT JOBS
A key enabler in the implementation of our business strategy
is the design of organisational structures, roles and systems
that support our business objectives.
We have for some time been reviewing our organisational
model and structures. Following the arrival of Mark Cutifani
as chief executive in April 2013, this work culminated in:
• bringing Business Unit CEOs into the Group Management
Committee (GMC), previously comprised only of the
Group Directors of functions, and so collapsing the
two-tier executive governance structure that preceded it;
• the decision to bring together our Thermal and
Metallurgical Coal businesses to realise further
technical synergies;
• the move to integrate our Nickel, and Niobium and
Phosphates businesses in Brazil and to locate their head
office in Belo Horizonte, seeking to realise performance
and efficiency improvements for these businesses;
• the grouping of our Copper, Nickel, and Niobium and
Phosphates businesses to form Base Metals and
Minerals – a regional grouping of commodities aimed
at transforming the performance of the underlying
businesses;
• centralising, and further advancing, our
Commercial activity; and
• the decision to redesign our Group and business
unit corporate centres.(1)
The aim of our redesign is to increase the organisation’s
effectiveness by prioritising work that adds value, removing
any duplication of work and implementing an organisation
design that creates clarity as to our business priorities, the
work and authorities of each role, and the requirements of
role incumbents. The resultant organisation provides the
minimum amount of structure needed to support productive
work and so, by placing the right employees in the right
roles, empowers them to help reach their full potential.
South Africa
Brazil
Other Africa
Chile
Australia/Asia
Europe
North America
Other South America
99,500
23,600
13,100
10,800
6,800
2,100
1,600
1,400
%
63
15
8
7
4
1
1
1
Total
158,900
100
Our approach to the organisation redesign began with
a team of organisational design experts conducting over
350 reviews to understand the current nature and extent
of work being done across the business – hearing first hand
what our employees feel impedes their ability to contribute
to our overall business effectiveness. Establishing this ‘as is’
inventory has informed GMC debate on the work that is
important to us, and where this work is best carried out –
this forms the cornerstone of our organisational model.
With the model agreed, organisation structures have been
aligned with this, as well as with our organisation design
principles – an approach that is grounded in stratified
systems theory and other proven frameworks and models.
We aim to implement the majority of proposed changes to
structures and roles for the in-scope areas in 2014.
Talent management and skills development
To attract and retain the best talent, we seek to offer safe,
worthwhile and stimulating work, provide opportunities for
personal development, pay people competitively, recognise
and reward excellence, encourage diversity and protect
employee rights. Our approach is underpinned by our
human resources (HR) standards, management systems
and processes.
During the year, voluntary turnover accounted for 2.0%
of the total workforce, in comparison with 2.4% in 2012.
Our Group-wide performance management process and
system aligns individual objectives with the company’s
strategy. We continue to embed the People Development
Way, our global capability framework detailing the
behaviours, knowledge, skills and experience required
of our employees to achieve our strategic objectives. In
conjunction with this, a range of functional ‘People Ways’
have been introduced, to outline the specific capabilities
required in different specialisms across the organisation.
Providing high quality training is a key attraction and
retention tool. During the year we supported 2,974
graduates, bursars, apprentices and other trainees
(2012: 2,845).
(1) With the exception of De Beers (given its integration into the Anglo American
(2) Average number of employees and contractors, excluding employees and
Group in 2013), Iron Ore Brazil (for its project structure), and Platinum (following
the portfolio restructuring conducted in 2013).
contractors from non-managed operations and our Other Mining and Industrial
business unit.
28
Anglo American plc Annual Report 2013
STRATEGIC REPORT
Total number of fatal injuries and fatal injury
frequency rate 2009–2013
Total number of lost-time injuries and lost-time
injury frequency rate 2009–2013
Fatalities
30
25
20
15
10
5
0
2009
FIFR
Fatalities
FIFR
0.016
0.014
0.012
0.010
0.008
0.006
0.004
0.002
0
Lost-time injuries
2,500
2,000
1,500
1,000
500
0
LTIFR
1.2
1
0.8
0.6
0.4
0.2
0
2010
2011
2012
2013
2009
2010
2011
2012
2013
LTIFR
Lost-time injuries
Formal learning is delivered at both business unit and
Group level, with external training expenditure across
Anglo American amounting to $104 million, 2% of total
employee costs in 2013 (2012: $98 million, 3% of total
employee costs).
We focus on and continuously review high quality leadership
development and have a range of more than 200 external
and internal development programmes currently in use
across the Group. Our flagship development programmes,
the ‘Advanced Management Programme’ and ‘Leaders in
Anglo American’, were refreshed in 2013 to incorporate
latest leadership thinking. We have made significant
progress in providing basic literacy and numeracy to our
employees, contractors and community members through
adult basic education and training programmes. In addition,
we provide skills training that is transferable to industries
outside of mining.
A diverse workforce
By year end, 23% of managers were women
(2012: 23%), with 16% of our overall workforce being
female (2012: 15%). Across our businesses, targets
have been set to increase further female representation,
both within the management population and the
workforce as a whole.
In our South African operations we continued to promote
transformation in the workforce. By year end, 64%
of our management were ‘historically disadvantaged
South Africans’ (HDSAs) (2012: 62%).
Fostering sound industrial relations
Approximately 91% of our permanent workforce is
represented by work councils, trade unions or other similar
bodies and covered by collective bargaining agreements.
Building and maintaining sound relationships with our
employees and trade unions is fostered through:
• a culture of inclusivity and a genuine concern for the
well-being of our employees, partners and communities;
• ongoing, open and meaningful dialogue, ensuring that
relevant changes to the organisation or its practices are
tabled with trade unions for discussion prior to their
implementation and that, in turn, any employee concerns
are brought for discussion within the organisation before
they become the subject of disputes; and,
• our appreciation that many of the issues of concern to our
employees also affect the mining sector generally and,
sometimes, society as a whole.
Protecting labour rights
As signatories to the United Nations Global Compact,
we are committed to the labour rights principles provided
in the International Labour Organisation core conventions,
including the right to freedom of association and
collective bargaining, the eradication of child and forced
labour and non-discrimination. We do not tolerate any
form of unfair discrimination, inhumane treatment, forced
labour, child labour, harassment or intimidation in the
Anglo American workplace.
Full observance of these issues is also required of our
suppliers in tenders and compliance is audited. At our
operations, we have clear policies and processes in place
in order to ensure that we do not employ any under-age or
forced labour. No incidents of employing under-age or
forced labour were reported in 2013.
Health and safety
Managing mine safety risks has always been challenging.
Our main priority is to prevent loss of life and serious injuries
by creating safe and healthy work environments. Our safety
strategy and management approach focus on improving
our ability to anticipate and prevent harm to our people, and
reduce safety-related stoppages at operations.
29
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC ELEMENT: PEOPLE
In 2013, eight employees and six contractors lost their
lives while working for Anglo American. This includes two
employees and two contractors who lost their lives at the
Santana port of Amapá in Brazil following the destruction
of a seaborne iron ore loading platform as a result of a
geological incident.(1) The Group fatal-injury frequency
rate at the end of 2013 was 0.008, (2012: 0.007). Our
total recordable case frequency rate improved by 16%
year on year to 1.08 in 2013, and by 40% since 2009.
At 0.49, the Group’s annual lost-time injury frequency
rate is at its lowest since listing on the London Stock
Exchange, reflecting considerable progress at the
Platinum, Metallurgical Coal and De Beers businesses.
Our occupational health strategy and management
approach is governed through a series of standards,
guidelines and assurance processes aimed at preventing
harm to our workforce. Our principal health risks relate
to noise, inhalable hazards and fatigue. Our health and
wellness programmes include the provision of care and
treatment for HIV/AIDS and TB, as well as support against
obesity, substance abuse, and for general well-being.
Another strategic focus is strengthening healthcare systems
in under-serviced rural areas and building partnerships to
improve access to quality healthcare.
Most regrettably, during 2013, 63 employees died from
TB (2012: 59). We also diagnosed 734 new TB infections
(2012: 677 cases), giving an annual incidence rate of 1,066
per 100,000 population, though this rate is in line with the
national average and below the industry average. In
southern Africa, the percentage of estimated HIV-positive
employees enrolled on our treatment programme has
increased steadily from 61% in 2011 to 75% in 2013. Since
2011, the estimated prevalence of HIV infection in our
workforce in southern Africa has remained steady at around
17%, indicating that about 11,200 of our employees there
are HIV-positive. The annual voluntary counselling and
testing (VCT) rate dropped from 82% in 2012 to 75% in
2013, reflecting the impact of labour unrest in the year.
The reduction in the number of new cases of occupational
disease recorded over the past few years reversed in
2013, owing to an increase in cases of noise-induced
hearing loss (NIHL) reported at Platinum in South Africa
and Metallurgical Coal in Australia. The total of new cases
of occupational diseases in 2013 was 209 (2012: 174).
A major focus for the business continues to be the
elimination of exposure to noise.
In South Africa, we continue to work with the provincial
health departments in the Eastern Cape, Mpumalanga,
Northern Cape and North West provinces, which are
associated with our operations or are labour-sending
areas, in order to improve health services. In Brazil,
we have a highly effective partnership with the NGO
Reprolatina in providing sexual and reproductive health
counselling to several communities.
MANAGING SLOPE
STABILITY RISK
Effective management of slope stability related risks
is a fundamental part of a successful mining operation.
Predicting potential slope failure in open pit mines is
integral to maintaining safety and mine productivity.
Anglo American’s open pit mines implement best
practice slope monitoring programmes that are linked
to mine operational and emergency procedures.
In June 2012, a slope collapse at Debswana’s* Jwaneng
diamond mine in Botswana tragically claimed the life of
an employee. The company suspended mining activities
for seven weeks to ensure the safety of all employees
and to allow the Department of Mines to carry out an
investigation. All investigations were concluded in
2013, and subsequently, Jwaneng mine extensively
reviewed and strengthened its approach to managing
slope stability related risks.
The enhanced risk management approach ensured
that the mine picked up the first signs of slope
instability at the beginning of October 2013. Monitoring
systems accurately predicted the time of failure and
approximately 700,000 tonnes of waste came down.
The failure occurred without any safety incidents, with
all personnel and equipment safely evacuated four
hours earlier. In 2013, a Group open pit slope
monitoring strategy was developed and all our open
pit operations are reviewing their slope monitoring
programmes to ensure compliance.
* Debswana is a 50:50 joint operation between De Beers and the
Government of the Republic of Botswana.
Image
A ground stability radar unit deployed
at Jwaneng diamond mine in Botswana.
Pillars of value:
For more on Pillars of value and our KPIs
See pages 14–15 and 18–19
(1) An additional two employees involved in the incident remain unaccounted for and
have not, at this stage, been formally declared deceased by the local authorities.
30
Anglo American plc Annual Report 2013 STRATEGIC REPORT
WORKING WITH STAKEHOLDERS
Our ability to create a sustainable business is inextricably
linked to our stakeholders – most directly with our
employees and the communities around our operations,
but, equally, with the stakeholders who indirectly affect,
or are affected by, what we do, including governments and
shareholders, as well as partners and suppliers. To create
shared value for all our stakeholders, we must understand
their needs, concerns and aspirations, as well as the
sustainability risks affecting our business, and consider
them in our decision-making processes as we develop new
mines and continue to improve our existing operations.
Our overarching aim is to mitigate the negative impacts
of our activities and to take advantage of opportunities
that deliver long term benefits to our stakeholders.
Our thorough internal understanding of operational risks
has been strengthened by research into issues that are most
important to our stakeholders. This includes collating the
results of our regular engagements with stakeholders and
conducting selected surveys to establish the perspectives
of governments, communities and investors.
We are committed to working with government, business
and civil society to promote good governance and the
responsible use of mineral wealth, and to prevent corruption.
Finding solutions to increasingly complex societal
challenges requires meaningful collaboration between
business, government, civil society, labour and research
bodies. We place a strong emphasis, therefore, on
developing partnerships with a broad range of stakeholders.
Social investment output indicators
Total number of community development
projects delivering benefits to communities
in 2013
Total number of businesses supported
Jobs created/maintained through enterprise
development initiatives
Beneficiaries of education projects
Beneficiaries of sports, arts, culture and
heritage projects
Beneficiaries of community development
projects
Beneficiaries of disaster and emergency
relief projects
1,447
48,111
76,543
2,697,933
340,015
2,628,455
6,966
Beneficiaries with improved livelihood
259,050
INTEGRATING EMPLOYEE
HOUSING INTO THE
COMMUNITY
Kumba Iron Ore’s Kolomela mine at Postmasburg
in Northern Cape province, South Africa, was
completed at the end of 2011, reaching full capacity
in 2013, with 840 permanent employees. The
mine’s integration within the existing community
is fundamental in delivering a long term positive
impact and legacy after mine closure.
In designing the new mine, we took the opportunity
to lead by example with our housing programme for
employees. We engaged with the local authorities
and were allocated land for housing development in
three residential areas of Postmasburg. In return, the
company committed to investing in building much-
needed bulk infrastructure services to support the
upliftment of the impoverished community and boost
socio-economic development.
The housing project is designed to ensure that both
management and lower level employees have access
to similar housing and are not living in separate areas
of the new accommodation complex as often incurred
in older mines with segregated mining towns. By the
end of 2013, 718 homes for Kolomela employees had
been completed, with close to half of these employees
coming from the local area. The houses differ in size,
but are uniform in quality and finish. The average age
of the employees is 30 and most are first-time house
occupants. The houses remain assets of the mine, with
each employee receiving a housing benefit and paying
rates and taxes.
Image
Rebaone and Caroline Matloko live in one of the new houses
in Postmasburg built for Kolomela iron ore mine. Rebaone is
a haul truck operator at the mine.
Pillars of value:
For more on Pillars of value and our KPIs
See pages 14–15 and 18–19
31
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC ELEMENT: PEOPLE
Engaging with stakeholders
Continuously improving and maintaining positive
relationships with our stakeholders is one of our principal
priorities. We believe that establishing relationships built
on trust is fundamental to our ability to create value, but
recognise that many stakeholders currently have low levels
of trust in business generally.
We rely on various channels of engagement with each of
our main stakeholder groups, in order to facilitate open
dialogue and identify principal concerns and interests. Our
principal external stakeholder groups are governments,
shareholders, trade unions, suppliers, joint venture and
other strategic business partners, customers, investors,
and our host communities. Other important groups include
business partners, multilateral organisations, NGOs, our
business peers and academia.
Our engagement with governments include face-to-face
meetings with government representatives, open dialogue
and ongoing advocacy work through industry bodies,
as well as participation in inter-governmental and
multilateral processes.
With our host communities, our industry-leading Socio-
Economic Assessment Toolbox (SEAT) is our primary
means to improve operations’ understanding of their
socio-economic impacts (both positive and negative),
enhance stakeholder dialogue and the management of
social issues, build our ability to support local socio-
economic development, and foster greater transparency
and accountability. We update SEAT as our social
performance capability improves and stakeholder
expectations evolve.
While the specific interests and concerns of our
stakeholders typically vary by stakeholder group and
region, an issue that received particular attention during
the year concerned reinforcing our relationship with the
South African government following the industrial unrest
in 2012. In turn, we have enhanced our involvement with
communities around our Rustenburg mines as well as
those in Limpopo. We are also engaging more closely
with investors, under the leadership of chief executive
Mark Cutifani, on the progressive business turnaround.
Managing our social performance
Our most significant social risks and opportunities fall
into two categories: our impact on host communities and
society more broadly; and the risks to our business that
arise from wider societal expectations and social tension
in communities.
Our approach
Anglo American’s social performance strategy focuses
on observing human rights, proactive engagement with
our stakeholders and leveraging our core business to
support long term socio-economic development.
We place considerable emphasis on integrating social
considerations into each stage of the mining life cycle,
as well as on enhancing the expertise of our social and
community development specialists and the social
awareness of line managers. All operations are required
to develop Social Management Plans to manage risks and
impacts. Human rights requirements are integrated into
the Social Way and all other relevant policies, systems and
tools throughout the business. Our approach is aligned with
the ‘Protect, Respect and Remedy’ framework provided in
the UN Guiding Principles on Business and Human Rights.
Our businesses measure compliance against the
requirements of the Social Way through annual self-
assessment. Social incidents are reported centrally,
investigated, and corrective actions are completed where
appropriate. In 2013, 98% of sites complied with, or
exceeded, the requirements of Anglo American standards.
There were no serious non-compliances.
Complaints and grievances
Our mandatory Group-wide complaints and grievances
mechanism is designed to ensure openness, accountability
and respectfulness in our handling of any stakeholder
complaints. The facility is a confidential and secure means
for our local communities and other external stakeholders
to raise concerns. All submissions are reviewed and
responses provided and, where necessary, mitigating
actions are implemented.
In addition, at Group level we run an anonymous tip-off
procedure, called ‘Speak Up’. Speak Up allows communities,
employees, contractors, suppliers, business partners and
other stakeholders to report concerns about conduct that is
contrary to our Business Principles, corporate values and
Business Integrity standards. Disciplinary proceedings,
including termination, are instituted where employees are
found to have behaved contrary to our principles. In 2013,
there were no criminal cases regarding bribery brought
against Anglo American or any of its employees.
Responsible supply chain management
Our supplier sustainable development assurance
programme addresses adherence to local legislative
requirements and best practices in areas including safety,
the environment, business integrity, human rights and
HIV management. Since the scheme commenced in 2009,
we have conducted a series of audits on high risk suppliers
identified across the world. A risk based approach is
followed to identify suppliers to be audited, with a focus on
small and medium enterprises, and we conduct follow-up
audits to assess progress against improvement plans.
32
Anglo American plc Annual Report 2013 STRATEGIC REPORT
Community development
Our community development activities prioritise extending
benefits associated with our core activities to those
associated with our operations. This includes local
workforce development, local procurement and supplier
development, enterprise development, the beneficial use
of mine infrastructure and building the capacity of local
partners such as municipalities. Critical needs that are not
linked to core business activities and infrastructure, such as
health, education and community housing, are addressed
through our social investment programme.
Local procurement
Our local procurement initiatives are a principal value
driver for the business and for communities around our
operations. These initiatives aim to create opportunities
for local suppliers to provide high quality goods and services
to support our mining activities. The inclusion of small,
medium and micro enterprises in our value chain is a
critical priority as this serves to create thriving and fulfilled
communities. In 2013, expenditure with suppliers based in
the communities close to our operations was $1.63 billion
(2012: $1.54 billion). This represented 12.3% of total
supplier expenditure (2012: 11.3%), against a Group target
of 12.5%.
Economic transformation is a particular priority in our
South African operations, forming an important part of
our contribution to the country’s drive to promote black
economic empowerment (BEE). In 2013, Anglo American
managed businesses spent $3.9 billion (2012: $3.1 billion)
with HDSA businesses (excluding goods and services
procured from the public sector and public enterprises).
Enterprise development
Enterprise development is one of the most effective
means of ensuring that the benefits for host communities
arising out of mining activities will be sustainable. Our
enterprise development programmes are designed to
support communities in identifying business opportunities,
developing them, with the aim of their ultimately becoming
independent. They aim to create more stable host
communities and a more robust and competitive supply
chain. Over the past five years, our existing schemes in
South Africa and Chile have supported more than 75,000
jobs. In 2013, we launched new schemes in Botswana and
Brazil and early in 2014 we launched a scheme in Peru.
Infrastructure development
Working with partners to provide infrastructure that can be
put to use during and after mining activities are completed
is an important way in which we create sustainable value for
our host communities. Our mines are often situated in areas
that are underdeveloped and remote, where we can share
infrastructure – such as roads, health facilities and water –
with local communities.
In South Africa, where there is a shortage of affordable
housing and long waiting lists for units being built, we are
helping to alleviate this problem in partnership with local
and provincial government.
Community
development
$’000
47,719
Education and training 31,178
Health and welfare
13,773
Other
Sports, arts, culture
and heritage
Institutional
capacity development
Water and sanitation
Environment
Employee match giving
Disaster and
emergency relief
Energy and
climate change
11,936
6,596
6,268
5,708
3,378
735
166
17
%
37
24
11
9
5
5
4
3
1
0
0
Total
127,474
100
South Africa
Chile
Peru
Brazil
Canada
Rest of World
Nambia
Australia
Zimbabwe
United Kingdom
Botswana
Total
$’000
76,529
17,162
10,164
6,904
6,665
3,394
2,880
1,169
1,107
847
653
%
60
13
8
5
5
3
2
1
1
1
1
127,474
100
Building local capacity
Our capacity development activities focus on strengthening
the skills, competencies and abilities of employees and
community members to promote robust, self-sufficient
local economies long after our mines have closed. This
included spending $3.1 million towards institutional capacity
development in 2013 (2012: $1.9 million), often partnering
with local municipalities on projects. In South Africa, limited
or low capacity in municipalities potentially jeopardises our
ability to deliver on social and labour plan commitments and
promote broader social stability.
Corporate social investment
Anglo American’s corporate social investment (CSI)
expenditure in local communities totalled $127.5 million
(2012: $145.7 million). This figure represents 2.2% of
operating profit from subsidiaries and joint ventures,
before tax.
33
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC ELEMENT: PERFORMANCE
OPTIMISING EVERY
ASPECT OF OUR
PERFORMANCE
SHARING PERFORMANCE IMPROVEMENT
LESSONS AT METALLURGICAL COAL
Moranbah North, our metallurgical coal mine situated in
Australia’s Bowen Basin, is an early adopter of the business
process changes we are currently driving across the Group.
Following a period of underperformance at the mine,
management implemented a number of processes to
address the operational issues that were impacting
longwall cutting hours and, consequently, production.
Critical to turning around production was the careful
planning of work schedules, ensuring every mine employee
knew what work was required of them and that they were
accountable for delivering to plan. By continually monitoring
performance against plan and implementing incremental
operational improvements, the team at Moranbah North
have raised longwall cutting hours from 57 hours per week
in 2008 to an average of over 85 hours per week in 2013,
and it continues to improve in 2014.
Process improvements at Moranbah North are now
being replicated at Metallurgical Coal’s Grasstree mine.
Image
Operations scheduler
Larnie Mackay,
operations manager
Andy Morris and
engineering
maintenance manager
Paul Stephen monitor
longwall operations
on a ‘smart board’ at
Moranbah North.
Seamus French
CEO, Metallurgical Coal
“ The outstanding efforts of the Moranbah North
longwall team are a great indicator of the potential
to drive business value. The results speak for
themselves and are a demonstration of what can
be achieved when we understand what world
class performance looks like, and apply it to our
equipment. Our Grosvenor longwall mine is currently
under construction next to Moranbah North and
these improvements augur well for its capabilities.”
34
Anglo American plc Annual Report 2013
O
p
e
r
a
t
i
n
g
a
n
d
fi
n
a
n
c
a
i
l
r
e
v
e
w
i
OWNERSHIP (% ANGLO AMERICAN)
88%
MINE LIFE
19 years
REDUCTION IN LTIs IN 2013 VS 2012
61%
INCREASE IN SALEABLE
PRODUCTION IN 2013 VS 2012
39%
Longwall production tonnes (’000)
$/T (FOB)
1,000
800
600
400
200
0
Longwall
move
H2 2012 LTIs = 9 H1 2013 LTIs = 5
H2 2013 LTIs = 4
150
125
100
75
50
25
0
At Anglo American, we are resolute
in our belief that a safe operation
is a productive operation, as
demonstrated by the significant
safety, productivity and cost
improvements at Moranbah North.
Since 2010, lost-time injuries have
fallen by 86%, while FOB unit costs
decreased by 34%.
Pillars of value:
Environmental
Production
Cost
Financial
July 12
Jan 13
Dec 13
Total $/T FOB (excl. royalty)/Saleable production
Longwall production tonnes (1 LW)
For more on Pillars of value and our KPIs
See pages 14–15 and 18–19
Anglo American plc Annual Report 2013
35
Strategic report
STRATEGIC ELEMENT: PERFORMANCE
OPERATING SAFELY AND RESPONSIBLY
TO DELIVER SUSTAINABLE VALUE
Ultimately, it is our ability to deliver value at
every stage from discovery to market in a safe
and responsible way that will determine the
sustainability of our business.
Safety remains our first priority and we strive every day
to achieve zero harm in the workplace and beyond.
We recognise our responsibility to preserve and, where
possible, enhance, the natural resources we use at our
operations, such as land, water and energy.
We are disciplined in how we run our business, with a focus
on consistent delivery and strong financial returns. Starting
with clear and realistic expectations, we plan appropriately
and then rigorously put those plans into action, measuring
and analysing successes and failures to learn from both.
The Group’s technical mining expertise, allied to the
ability to tailor products to customers’ exacting
requirements, provides a foundation to deliver financially
stable business outcomes.
DELIVERING ON OUR POTENTIAL
At Anglo American, we have set ourselves a demanding
but achievable target of delivering at least a 15% attributable
return on capital employed (ROCE) by 2016. We have
initiated a change programme, Driving Value, across the
Group that will help us identify the opportunities to realise
significant further value from our assets.
Over the past nine months, we have conducted a thorough
and comprehensive review of each of our operating assets.
As a result, we now have a clear understanding of what
improvements need to be made to ensure we can deliver
a more stable operational performance and, hence, drive
improved margins and returns, across the portfolio.
The business improvement opportunities and individual
elements to Driving Value we have identified to support the
required EBIT uplift include:
• existing projects – the delivery of planned projects should
result in a $0.9 billion attributable EBIT improvement by
2016. The major projects underpinning this improvement
are the Minas-Rio iron ore project, the Boa Vista Fresh
Rock project at our Niobium business and the rebuilding
of the Barro Alto furnaces at our Nickel business;
• operations initiatives – through the asset review process,
we have identified a range of operational improvements
we believe can deliver $1.2 billion attributable EBIT
by 2016, after taking into account material risks and
negative operating conditions that may be experienced.
The improvements include: increasing extraction rates
and plant throughput at Los Bronces; redesigning the pit at
Sishen to optimise ore extraction; continuing the longwall
performance improvements at Moranbah North and
applying what we have learned there at other coal longwall
operations;
36
• commercial opportunities – the adoption of a more
commercial approach to marketing our products, while
reducing our delivery and associated operating costs, will
help improve our margins and should deliver $400 million
attributable EBIT improvements by 2016;
• supply chain opportunities – we continue to identify
benefits from our procurement function and estimate
we can reduce our costs by a further $100 million on an
attributable basis by 2016;
• overheads – we have reviewed our individual businesses
and corporate centres and have identified sustainable cost
reductions that would support $500 million attributable
EBIT improvement by 2016;
• project pipeline – we have refined our capital allocation
process and the way we manage early stage projects
through the pipeline. Consequently, we see an opportunity
to reduce costs by $300 million per year on an attributable
basis. Further details on our capital allocation and project
approval process can be found in the Portfolio section of
this annual report on pages 20–25.
FINANCIAL AND OPERATIONAL PERFORMANCE
IN THE YEAR
Group results
Anglo American reported underlying earnings of $2.7 billion
(2012: $2.9 billion), with underlying operating profit
increasing by 6% to $6.6 billion.
Underlying operating profit increased owing to De Beers
contributing for a full year as a subsidiary, improved sales
at both Copper and Platinum and the weakening of the
South African rand, partially offset by lower prices across
the majority of our commodities.
The Group’s results are affected by currency fluctuations
in the countries where the operations are based. The
strengthening of the US dollar against the rand and the
Australian dollar resulted in a $1,700 million positive
exchange variance in underlying operating profit compared
with 2012. CPI inflation had a negative $595 million impact
on underlying operating profit compared with the prior year.
Sales volumes were relatively flat compared with 2012,
with the exception of Copper, where sales increased by
124,600 tonnes to 768,200 tonnes.
Industry-wide, above-CPI cost pressures continued,
particularly in South Africa and Australia, although these
were mitigated by the continued positive performance of
our business improvement and procurement programmes.
Group underlying earnings were 7% lower at $2,673 million,
despite the increase in operating profit, owing to the
increased contribution from our non-100% owned
operations, i.e. De Beers, Kumba Iron Ore, AA Sur and
Anglo American Platinum.
Anglo American plc Annual Report 2013 STRATEGIC REPORT
Summary income statement
$ million
Year ended
31 Dec 2013
Year ended
31 Dec 2012
restated(1)
Operating profit from subsidiaries and joint operations before special items and remeasurements
6,168
5,493
Operating special items
Operating remeasurements
Operating profit/(loss) from subsidiaries and joint operations
Non-operating special items and remeasurements
Share of net income from associates and joint ventures (see reconciliation below)
Total profit from operations, associates and joint ventures
Net finance costs before remeasurements
Financing remeasurements
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the financial year
(Profit)/loss to non-controlling interests
Loss for the financial period attributable to equity shareholders of the Company
Basic earnings per share ($)
(3,211)
(6,977)
(550)
(116)
2,407
(1,600)
(469)
168
2,106
(276)
(130)
1,700
(1,274)
426
(1,387)
(961)
(0.75)
1,396
421
217
(299)
(89)
(171)
(393)
(564)
(906)
(1,470)
(1.17)
Group operating profit including associates and joint ventures before special items and
remeasurements(2)
6,620
6,253
Operating profit from associates and joint ventures before special items and remeasurements
Special items and remeasurements
Net finance costs (before special items and remeasurements)
Income tax expense (after special items and remeasurements)
Non-controlling interests (after special items and remeasurements)
Share of net income from associates and joint ventures
452
(80)
(36)
(155)
(13)
168
760
(57)
(75)
(200)
(7)
421
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Operating profit before special items and remeasurements from subsidiaries and joint operations was $6,168 million (2012: $5,493 million) and
attributable share from associates was $452 million (2012: $760 million). For special items and remeasurements, see note 6 to the financial statements.
Actual 2012
Price
Exchange
CPI
Volume
Cash cost
Other
Actual 2013
6,253
(1,657)
1,700
(595)
Reconciliation of loss for the year
to underlying earnings
$ m
Loss for the year (961)
Operating special items
3,291
Operating remeasurements
550
Non-operating special items
713
Financing remeasurements
285
(79)
6,620
Special items and remeasurements tax
Non-controlling interests on special items
(216)
Underlying earnings
2,673
469
130
(590)
37
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC ELEMENT: PERFORMANCE
Special items and remeasurements, after tax and
non-controlling interests, include: impairments relating
to Barro Alto ($0.7 billion), Michiquillay ($0.3 billion)
and Foxleigh ($0.2 billion); loss on disposal of Amapá
($0.1 billion) and exit from Pebble ($0.3 billion); and
increased onerous contract provisions at Callide
($0.3 billion). Full details of the special items and
remeasurements charges are in note 6 to the
financial statements.
Net finance costs, before remeasurements, and
excluding associates and joint ventures, were $276 million
(2012: $299 million), lower than 2012, owing to increased
capitalised interest and a gain on fair value hedges, partly
offset by increased net debt levels in the year.
The effective rate of tax, before special items and
remeasurements and including attributable share of
associates’ and joint ventures’ tax, increased from 29%
in 2012 to 32%. The increase is due to the impact of various
prior year adjustments and the remeasurement of certain
withholding tax provisions across the Group. In future
periods the effective tax rate is expected to remain above
the United Kingdom statutory tax rate.
Group underlying earnings per share were $2.09 compared
with $2.28 in 2012.
BUSINESS UNIT RESULTS
Iron Ore and Manganese generated an underlying
operating profit of $3,119 million, a 4% increase. Kumba Iron
Ore’s underlying operating profit of $3,047 million closely
matched the previous year’s owing to slightly higher average
prices and the impact of the weaker rand, partially offset
by a decrease in export sales volumes. Samancor reported
a more than doubling in underlying operating profit of
$210 million, driven by higher manganese ore prices.
Metallurgical Coal generated an underlying operating
profit of $46 million, an 89% decrease, primarily owing to
lower realised export selling prices, partly offset by
increased production and sales volumes, the weaker
Australian dollar, and cost-cutting initiatives.
Thermal Coal generated an underlying operating profit of
$541 million, a 32% decrease, mainly as a result of lower
average export thermal coal prices, partly offset by the
impact of the weaker rand. Business performance was also
affected by a 32 day strike at Cerrejón in the first quarter.
Copper delivered an underlying operating profit of
$1,739 million, in line with 2012, as a result of lower
realised sales prices, offset by increased production
and sales volumes.
Nickel reported an underlying operating loss of $44 million,
a $70 million decrease, owing to lower realised prices, a
reduction in sales volumes, as well as the non-recurrence
of the insurance receivable that benefited the business
in 2012.
Niobium and Phosphates delivered a combined
underlying operating profit of $150 million, a decrease
of 11%, mainly driven by lower phosphate prices.
Platinum generated an underlying operating profit
of $464 million (2012: loss of $120 million) as a result
of increased production and sales and a weaker rand,
partly offset by weaker prices.
Diamonds generated an underlying operating profit of
$1,003 million, a 112% increase, reflecting the Group’s
increased shareholding, together with improved prices,
largely owing to the product mix, and a weaker rand.
Other Mining and Industrial reported an underlying
operating loss of $13 million, a $181 million decrease,
owing to a nil contribution from Scaw South Africa (which
was divested in November 2012), a weaker market at the
Lafarge Tarmac joint venture, and the Amapá operation
not benefiting from the reversal of penalty provisions, as it
had in 2012.
Corporate costs considered to be value adding to the
business units are allocated to each business unit. Costs
reported externally as Group corporate costs only comprise
costs associated with parental or direct shareholder
related activities. Corporate costs decreased by 12%,
partly driven by the positive impact of the weaker rand.
Underlying operating profit
$ million
Year ended
31 Dec 2013
Year ended
31 Dec 2012(1)
Iron Ore and Manganese
3,119
3,011
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
Other Mining and Industrial
Exploration
Corporate activities and
unallocated costs
Operating profit including
associates and joint ventures
before special items and
remeasurements
46
541
405
793
1,739
1,736
(44)
150
464
1,003
(13)
(207)
(178)
26
169
(120)
474
168
(206)
(203)
6,620
6,253
(1) Certain balances related to 2012 have been restated to reflect the adoption of new
accounting pronouncements. See note 2 for details.
38
Anglo American plc Annual Report 2013
STRATEGIC REPORT
PRODUCTION
Metallurgical Coal, Copper, Platinum and Diamonds all
reported production increases for 2013.
Iron Ore and Manganese – production of iron ore
decreased by 2% to 42.4 million tonnes (Mt), with higher
production from Kolomela offset by a weaker performance
from Sishen as a result of Section 54 safety stoppages and
ongoing pit constraints. Manganese ore production was flat,
though alloy output increased.
Metallurgical Coal – production increased by 2% to
31.2 Mt, with record metallurgical coal production of 18.7 Mt,
benefiting from the longwall improvement programmes at
Moranbah North and Capcoal’s underground operation,
as well as operational improvements at Peace River Coal,
partly offset by the impact of flooding at Dawson.
Thermal Coal – production decreased by 2% to 67.6 Mt,
with improved machine rates and waste treatment at
Greenside offset by lower than expected production at
New Vaal and Cerrejón. The decrease at New Vaal was
attributable to wet weather interruptions and reduced
demand from Eskom, while Cerrejón was as a result of the
32 day strike in the first quarter of the year, which was partly
mitigated by an effective recovery plan.
Copper – production increased by 17% to 774,800 tonnes,
benefiting at Los Bronces from the fully ramped up
Confluencia plant and improved ore characteristics, and
from higher grades and recoveries at Collahuasi.
Nickel – production decreased by 12% to 34,400 tonnes
following the cessation of production at Loma de Níquel
from September 2012, partly offset by increased production
at Barro Alto.
Niobium – production increased by 2% to 4,500 tonnes, as
throughput and recovery improvements offset the decline
in ore quality.
Phosphates – fertiliser production increased by 6% to
1,199,000 tonnes owing to improved performance following
optimised maintenance scheduling, increased plant
availability and improved performance at the acidulation
and granulation plants.
Platinum – equivalent refined platinum production
increased by 5% to 2,320,400 ounces as the company
recovered from the impact of the strike in the fourth
quarter of 2012, partially offset by the production lost from
Khuseleka 2, Khomanani and Union North declines shaft
being put on to long term care and maintenance from
mid-August as a result of the business restructuring.
Diamonds – production increased by 12% to 31.2 million
carats, largely owing to the full restoration of operations at
Jwaneng in the third quarter following a slope failure incident
in June 2012. Production from Canada also increased
following further increases in mining volumes and improved
grades at Snap Lake.
(12%)
Kumba Iron Ore
Metallurgical Coal
2%
Thermal Coal
(2%)
(2%)
Copper
Nickel
Niobium
2%
Phosphates
6%
Platinum
5%
Diamonds
17%
12%
EXPLORATION
Global exploration activity for 2013 focused on greenfield
projects across a number of mature and frontier locations,
as well as on adding value through increasing resources
and reserves, to our operations and advanced projects.
Exploration expenditure for the year amounted to
$207 million (2012: $206 million) and covered 19 countries.
Iron ore exploration expenditure of $24 million was
concentrated around operations in South Africa and
greenfield projects in Australia, Brazil and Liberia. In
South Africa, exploration was undertaken to support
Kumba’s Sishen, Kolomela and Thabazimbi mines. The
high priority targets defined in 2012 were further drilled
in 2013, and the economic potential of these targets is
currently being investigated. Drilling will continue in 2014
to further investigate the potential.
Expenditure on metallurgical coal exploration was
$19 million and included drilling, seismic surveys and
coal-quality analysis. In Australia, the focus was on
opportunities near existing operations with the main
aim of improving the definition of additional coking coal
resources. In Canada, emphasis was placed on the
tenements surrounding the Peace River Coal Trend Mine
and Roman Project, in order to help define additional open
cut coking coal resources.
Expenditure on thermal coal exploration totalled $14 million.
This was incurred primarily on coal (82%) as well as on coal
bed methane (CBM) drilling and analysis (18%) in South
Africa and Botswana. Exploration drilling was undertaken
in 10 coal project areas, with the objectives of meeting both
statutory work programme requirements and providing
geological evaluation information to enable further project
advancement. In South Africa, CBM exploration was
conducted on the Waterberg CBM project.
Copper exploration expenditure of $31 million consisted
mainly of near-mine and greenfield exploration drilling in
Chile, where key activities included drilling and drilling logistics
at El Soldado and Los Bronces, respectively. Greenfield
exploration was also conducted in Argentina, Brazil, Chile,
Colombia, Greenland, Indonesia, Peru, the US and Zambia.
39
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC ELEMENT: PERFORMANCE
PROJECTS
The Group has a number of projects in the execution
phase, as summarised below, and is progressing with
the development of other growth projects, including the
greenfield Quellaveco copper project in Peru.
Minas-Rio
Minas-Rio is expected to produce 26.5 Mt (wet basis) of iron
ore per annum and to capture a significant part of the global
pellet feed market, with its premium product featuring high
iron content and low contaminants. Construction of the
project continues in line with the revised plan announced
in 2012. By the end of 2013, the project was 84% complete
overall and is on schedule to deliver first ore on ship at the
end of 2014.
Attributable capital expenditure at the Minas-Rio project
is on track at $8.8 billion, with cash unit costs in a
competitive position in the lower half of the global seaborne
iron ore cost curve.
The main schedule risks identified at the end of 2012
have been resolved, and over the past year, significant
construction and operational progress was made.
Grosvenor
The wholly owned greenfield Grosvenor metallurgical
coal project is situated immediately to the south of
our highly productive Moranbah North metallurgical coal
mine in the Bowen Basin of Queensland, Australia.
Grosvenor is expected to produce 5.0 Mtpa of high quality
metallurgical coal from its underground longwall operation
over a projected mine life of 31 years and to benefit from
operating costs in the lower half of the cost curve.
The project remains on target for first longwall production
in 2016. All key permits and licences are in place. Critical
engineering and procurement activities have been
completed and the majority of the project budget has been
contracted and committed. Surface construction is well
advanced; earthworks and concrete are essentially
complete; structural, mechanical and piping works are
advancing well; and electrical works have commenced.
The drift portal works are complete and underground
development has commenced with the commissioning
of a tunnel boring machine.
Iron ore
Metallurgical coal
Thermal coal
Copper
Nickel
Niobium and phosphates
Platinum
Diamonds
24
19
14
31
22
6
2
53
Central exploration activities 36
%
12
9
7
15
11
3
1
25
17
Total
207
100
Polymetallic (copper-nickel-platinum group elements)
exploration expenditure (included within the Nickel
commodity line as disclosed in note 4 to the financial
statements), amounted to $20 million and concentrated
on our Sakatti project in northern Finland. Exploration
at this advanced project aimed to define the limits of the
orebody and to test other surrounding targets. Greenfield
polymetallic exploration was also conducted in the
Musgraves region of Western Australia and the
Canadian Arctic.
Nickel exploration expenditure amounted to $2 million
and related mainly to nickel laterite exploration in the
Morro Sem Boné district in Brazil. Near-mine exploration
was undertaken at Niquelândia (Codemin), also in Brazil.
Niobium and Phosphates exploration expenditure totalled
$6 million and was directed towards greenfield projects
in central Brazil, near-mine exploration at Boa Vista
(niobium) and further definition drilling of the Morro Preto
phosphates prospect.
Platinum exploration accounted for $2 million and was
mainly incurred on investigating new opportunities within
South Africa’s Bushveld Complex and on fulfilling the
statutory work programme requirements to keep tenure
in good standing. This included a drilling programme to
examine the potential for shallow resources to be mined
using opencast methods. Prospecting for platinum
group metals continued around our Unki platinum mine
in Zimbabwe.
Diamond exploration spend was $53 million and related
to diamond exploration programmes in Angola, Botswana,
Canada, India, Namibia and South Africa. The exploration
team continued to provide technical services to the resource
extension programmes for Jwaneng and Orapa mines in
Botswana and Victor mine in Canada.
40
Anglo American plc Annual Report 2013 STRATEGIC REPORT
SELECTED MAJOR PROJECTS
Approved
Sector
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Project
Minas-Rio
Grosvenor
Cerrejón P40
Copper
Platinum
Diamonds
Collahuasi expansion Phase 2
Twickenham
Bathopele Phase 5
Jwaneng – Cut-8
Venetia U/G
Niobium and Phosphates
Boa Vista Fresh Rock
Country
Brazil
Australia
Colombia
Chile
South Africa
South Africa
Botswana
South Africa
Brazil
Greenfield (G)/
Brownfield (B)
First
production
date
Full
production
date
Capital
expenditure
$ bn(1)
Production volume(2)
G
G
B
B
G
B
B
B
B
2014
2014
2013
2013
2013
2013
2016
2021
2014
2016
2016
2015
2014
2024
2017
2018(5)
2024
2015
8.8(3)
26.5 Mtpa iron ore pellet feed(4)
2
<2
<1
<2
<1
3(6)
~2
<1(7)
5.0 Mtpa metallurgical
8.0 Mtpa thermal
20 ktpa copper
202 kozpa refined platinum
replace 128 kozpa refined
platinum
approx. 10 million carats pa
approx. 4 million carats pa
6.5 ktpa total niobium
production
(1) Capital expenditure shown on 100% basis in nominal terms.
(2) Represents 100% of average incremental or replacement production, at full production, unless otherwise stated.
(3) Capital expenditure, post-acquisition of Anglo American’s shareholding in Minas-Rio, includes 100% of the mine and pipeline, and an attributable share of the port.
(4)
Iron ore pellet feed on wet tonnes basis at 8% moisture.
(5) Waste stripping at Cut-8, an extension to Jwaneng mine, began in 2010. Carat recovery will commence in 2016, with Cut-8 becoming the main ore source for Jwaneng from 2018.
(6)
Infrastructure expenditure of approximately $450 million has already been spent. Project expenditure, including infrastructure expenditure, is likely to total approximately $3 billion
and is anticipated to create access to an estimated 113 million carats over the life of the mine.
(7) An extension to mine life by mining the unweathered ore after oxides have been depleted. New processing plant (from crushing to leaching) required.
Capital expenditure
$ million
Expansionary
Stay in business
Development and stripping
Total
Year ended
31 Dec 2013
Year ended
31 Dec 2012
3,258
2,242
761
6,261
2,956
2,290
784
6,030
Venetia
In South Africa, the first blast took place in September 2013
for the construction of an underground mine beneath the
open pit at Venetia. With capital investment of $2 billion,
the underground expansion represents De Beers’ largest
ever investment in South Africa. Production is expected to
commence from the underground mine in 2021 and will
extend the life of the mine to beyond 2040. The projected
life of mine plan will treat approximately 129 million tonnes
of ore, containing an estimated 94 million carats(1).
Boa Vista Fresh Rock
The Boa Vista Fresh Rock project in Brazil continued to
progress during 2013 and is expected to start production
later in 2014. The project includes the construction of a new
upstream plant that will enable continuity of the Catalão site
through processing the fresh rock orebody. Production
capacity will increase to approximately 6,500 tonnes of
niobium per year (2013: 4,500 tonnes), allowing use of the
full plant capacity.
Capital expenditure
Total capital spend increased from $6,030 million in 2012
to $6,261 million, predominantly as a result of the increased
expansionary expenditure at Minas-Rio and Grosvenor, as
well as the increased holding in De Beers.
(1) Scheduled Inferred Resources constitute 28% (26.3 Mct) of the
estimated carats.
41
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC ELEMENT: PERFORMANCE
CREATING VALUE THROUGH OUR
COMMERCIAL ACTIVITIES
As commodity markets have evolved over recent years,
becoming more dynamic and competitive, we have been
developing our strategy to take advantage of these changes
to improve returns from our commercial activities.
At Anglo American, ‘commercial’ refers to the whole value
chain from the mine gate to the end-customer. Since 2012,
we have been making significant changes across this area
to become more proactive, globally co-ordinated and
customer-centric in our approach, and to enable us to
realise the full value potential of our asset portfolio.
We have moved from a highly decentralised commercial
organisation built around nine export marketing offices
across the world, to a single global commercial function
with two hubs, in London and Singapore. This brings us
closer to our customers in the respective European and
Asia-Pacific markets and is facilitating knowledge sharing
and collaboration across our marketing and sales teams.
Combining our commercial activities under a single
leadership team is also enabling us to enhance commercial
capabilities across the organisation and better manage our
talent pool and pipeline, as well as ensuring an integrated
approach to value delivery across the commodity portfolio.
Further benefits are being realised through improved
efficiencies, including harmonised processes and systems
and the use of shared services in areas such as commercial
finance and information technology.
During 2012 and early 2013, we established centres
of excellence to drive best practice in key commercial
disciplines such as market intelligence and logistics.
We have also developed, and are in the process of
implementing, new commercial risk- and performance-
management systems to measure value creation and
manage risk exposure more effectively.
In addition, we have brought all our shipping activities
together within a single shipping division, and plan to
significantly increase the proportion of business we do
on a delivered basis over the coming years, with a target
freight book of 50 million tonnes by 2016. Consolidating
all our shipping into a single portfolio enables us to leverage
our global scale and fully optimise our freight network to
reduce costs and cargo turnaround times. It also gives us
more control and flexibility in this part of the commercial
value chain.
Overall, the changes we have been making across
commercial provide the platform to deliver a $400 million
a year improvement in EBIT from 2016.
This value will be created through more than 40 specific
commercial initiatives which have been fully scoped and
assessed. They include strategies to realise higher prices
by changing our product mix to respond to market
developments and customer needs, as well as improving
returns by diversifying our customer base, establishing
more direct customer relationships, and eliminating
discounts or fees previously given to fabricators and
other intermediaries.
Some 60% of the $400 million of value identified
will come from projects that are at an advanced stage
of implementation, with resources already committed
to delivery.
SUPPLY CHAIN
An important aspect of the Driving Value programme is
Supply Chain’s commitment to deliver $100 million of
sustainable savings to the Group by 2016 through the
focused implementation of a number of key initiatives.
Optimisation of contracted services
The initial focus is in Chile, where current contractor costs
at our operations account for 55% of total expenditure.
Contracted service costs have increased significantly owing
to escalating labour costs, a lack of skilled labour and a
strengthening Chilean peso. A comprehensive review of
these services has identified significant opportunities to
deliver savings. Lessons learned from this initiative will be
transferred to all business units once implemented.
Extending global tyre contracts and effective
tyre management
Anglo American currently spends $220 million on off-road
tyres. With competitive new long term contracts in place
to provide commercial benefit and ensure security of
supply, the focus is now on implementing multiple
initiatives, targeting a 30% improvement in tyre life.
This is expected to be achieved through tyre pressure
monitoring, driver awareness, road maintenance and
improved maintenance practices.
Implementing fuel management and efficiency
systems to reduce diesel consumption
Anglo American’s current annual fuel expenditure is in
excess of $1.1 billion. In addition to ensuring we have
attractive commercial agreements in place, we are also
reducing fuel consumption through a range of efficiency and
technology initiatives. Focal points include additional price
and volume discounts, better fuel management, including
the use of fuel-flow optimisation technology, and cleaner
performance-enhancing fuels.
42
Anglo American plc Annual Report 2013 STRATEGIC REPORT
Strategy and management approach
We seek to manage our environmental risks by minimising
our impacts and by taking advantage of opportunities that
deliver long term benefits to our stakeholders. We do this
by driving operational excellence, investing in technology,
and engaging and partnering with our stakeholders. The
Anglo American Environment Way, which includes
performance standards covering all our environmental
aspects, guides our approach to responsible environmental
management. In 2013, we placed particular emphasis on
water quality, legacy issues, and improving environmental
incident management and reporting.
Our internal Safety and Sustainable Development risk and
assurance function conducts reviews of our most material
sustainability and technical risks on a rotational basis. During
2013, 15 environmental reviews were conducted, focusing
on water quality, environmental legacy issues and tailings-
disposal facilities. The results of such reviews are discussed
and addressed on site and with business unit leadership
teams and reported to relevant oversight bodies, including
committees of the Board. We also received external
certification on our environmental management systems
via 53 external audits.
Anglo American reports environmental incidents according
to five levels of severity. In 2013, 30 level 3 (medium impact)
environmental incidents were reported. All incidents are
addressed on site and the root causes determined and
mitigated in order to prevent repeats. Remedial action
has been completed for half of these incidents and is in
progress at the rest. No level 4 or 5 (high impact) incidents
were reported.
Using Chinese suppliers to reduce
procurement costs
With the assistance of its China-based procurement office,
Anglo American has successfully used pre-qualified
Chinese suppliers to reduce total life cycle costs. Targeted
sourcing from China offers cost advantages and improved
lead times which have significant value impact potential
at our operations. The introduction of alternative supply
possibilities has the benefit of driving competitive pricing
in the market.
A further $47 million of ‘one-off’ savings has also been
identified. This will come from the implementation of a
common strategy across the business units for the disposal
of surplus mining equipment so that the value returned to
the business from the disposal of such assets is maximised,
along with greater control of the sale process.
MANAGING OUR IMPACT ON THE ENVIRONMENT
Growing regulatory and social pressure, increasing
demands for limited natural resources, and the rising
costs of energy and water, all highlight the business
imperative of responsible environmental management.
Within this context, the principal environmental risks
facing our business relate to water and climate change.
In our Sustainable Development Report we also report
on land management, biodiversity, waste and air
quality as other important issues that require specific
management attention.
We also see tremendous opportunity. The metals we
mine are increasingly applied in innovative environmental
technologies; communities without access to water and
sanitation can benefit from our mine infrastructure, and
some of the land under our management control has yet to
be used to its fullest potential. In some of our waste facilities
lies the opportunity to re-mine, while for others we research
and trial novel applications for by-products.
We continue to make progress towards our environmental
goals and internal targets, achieving tangible
improvements in resource efficiency and associated cost
savings and productivity.
43
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC ELEMENT: PERFORMANCE
Water re-used/recycled
Water used for
primary activities
Water used for
non-primary activities
Total
%
67
30
3
100
Our performance
Anglo American’s total water consumption increased from
156 million m3 of water in 2012, to 201 million m3 in 2013.
Of this total, De Beers accounted for 75 million m3. Nearly
40% of De Beers’ consumption is sea water abstracted by
Namdeb operations in Namibia. The increase was partially
offset by divestments and savings from the implementation
of our WETT programme. This once again had a material
impact on improving our water efficiency such that we have
already exceeded our 2020 water savings target of 14%.
Water saving projects implemented include more effective
dust suppression, dewatering of tailings and more efficient
ore separation. Water cost savings exceeded $85 million
in 2013.
Water re-use/recycling levels dropped from 70% in 2012
to 67% in 2013. Excluding De Beers, which does not yet
fully account for all water recycled, this figure would have
been 73%.
Where operations face high risks related to water,
we develop specific risk-management action plans.
These include plans to manage the tight water supply
balance at Los Bronces, the rain-immunisation
programme at Metallurgical Coal in Australia aimed
at protecting operations from extreme weather, and
Sishen iron ore mine’s surface flooding and water
management programme.
WATER
Water is fundamental to our business, particularly as more
than 70% of our mines are in water-stressed areas. To
maintain our licence to operate, we cannot degrade water
quality, or compromise the access rights of other users. We
also have an opportunity to play a leadership role in our
water catchments through partnerships and by increasing
the shared benefits of our water-related mining activities
and infrastructure development.
Strategy and management approach
Our 10 year water strategy, launched in 2010, reflects our
aspiration to demonstrate leadership in water stewardship.
Most of our operations now go beyond compliance, using
technology to reduce our dependence and impact on water
resources, and engagement that becomes part of broader,
catchment level water management solutions.
Our water management programme is supported by a
mandatory water standard and delivered via operational
water action plans. Every Anglo American operation works
towards a water reduction target that was determined in
2011, using our water efficiency target tool (WETT), which
forecasts the projected business as usual (BAU) demand
of individual operations and registers water saving projects.
Operational targets are aggregated at business unit level,
where they are included in business unit CEO performance
contracts. These make up our Group target of a 14%
reduction from our projected water consumption by 2020.
De Beers’ targets will be established and included in 2014.
Total water consumed against business
as usual (BAU) 2010–2013
million m3
250
200
150
100
50
0
{
WETT savings
2010
2011
2012
2013
Total new water consumed in ongoing business
De Beers
Divested businesses
BAU projection
44
Anglo American plc Annual Report 2013
STRATEGIC REPORT
CLIMATE CHANGE AND ENERGY
The key climate change risks we face are: increasing
energy and compliance costs associated with new policy
measures, including carbon pricing; changing demand
for our products; and increased risks associated with the
physical impacts of climate change on our operations and
neighbouring communities.
Governments in our countries of operation continue
to develop climate change policies. In South Africa, the
government’s proposed carbon tax, if implemented in 2015,
would introduce a higher carbon cost for our business. In
Chile, there is increased focus on climate risks, particularly
around potential impacts on glaciers, and Brazil is
investigating options for a cap-and-trade scheme. In
Australia, our Metallurgical Coal business expects to benefit
from the new government’s intention to replace the existing
carbon pricing scheme in July 2014 with a Direct Action
Plan, the details of which are still to be confirmed.
Strategy and management approach
Improving operational energy and carbon management
is driven through our industry-leading programme,
ECO2MAN. In 2011, energy- and carbon-reduction targets
were agreed for every Anglo American operation. These
are aggregated into business unit targets and form part
of business unit CEO performance contracts. Our overall
targets for greenhouse gas (GHG) emission and energy
consumption reductions are 19% and 7% respectively,
against the projected BAU levels in 2015.
Our performance
By year end, we had achieved reductions of 3.5 million
tonnes (Mt) of greenhouse gas (GHG) emissions and
4.3 million GJ in energy consumption against the 2015
BAU projections.
During 2013, Anglo American consumed 106 million GJ
of energy (2012: 113 million GJ). The 6% year-on-year
decrease, despite the inclusion of an additional 9 million GJ
of energy use at De Beers, was attributable to the
divestment of assets in our Other Mining and Industrial,
and Nickel businesses as well as the implementation
of energy- and carbon-saving projects as part of the
ECO2MAN programme, where we added 61 new projects.
The total of 260 completed projects accounted for a 5%
reduction against our BAU consumption target of 7% by
2015. The resultant avoided-energy cost is estimated at
$95.5 million.
The Group’s total Scope 1 and Scope 2 greenhouse gas
(GHG) emissions declined to 17 Mt of carbon dioxide
equivalent emissions (CO2e) (2012: 18 Mt CO2e). The
inclusion of De Beers’ relatively modest GHG emission
profile (2 Mt CO2e) was countered by the divestment
of the energy-intensive Scaw South Africa business at
the end of 2012, as well as the cessation of operations
at Loma de Níquel towards the end of that year. The sale
of Tarmac Quarry Materials, which now forms part of
the Lafarge Tarmac joint venture and is not included in
Anglo American figures, as well as the divestment of Amapá
at the end of 2013, have further contributed to the reduction.
Largely as a result of Metallurgical Coal’s management of
underground methane, Anglo American is on track towards
achieving its carbon-saving target level of 19% by 2015.
Within the current business, GHG emissions for 2013
increased by 14% at Kumba, mainly owing to increased
use of diesel for waste stripping, and at Iron Ore Brazil,
where emissions were 50% higher as a consequence of the
ramping up of construction at the Minas-Rio iron ore project.
25
20
15
10
5
0
140
120
100
80
60
40
20
0
2010
2011
2012
2013
Energy consumed by ongoing business
De Beers
Divested businesses
BAU projection for ongoing business
2010
2011
2012
2013
Energy consumed by ongoing business
De Beers
Divested businesses
BAU projection for ongoing business
45
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT RISK
EFFECTIVE RISK
MANAGEMENT
“ Understanding our key risks and developing
appropriate responses is critical to our future
success. We are committed to a robust system
of risk identification and an effective response
to such risks.”
David Challen
Chairman, Audit Committee
HOW WE MANAGE RISK
Management of risk is critical to the success of
Anglo American. Our Group is exposed to a variety
of risks that can have a financial, operational or
reputational impact. Effective management of risk
supports the delivery of our objectives and the
achievement of sustainable growth.
HOW DOES RISK RELATE TO
OUR STRATEGIC INTENTS?
Risks can arise from events outside of our control or from
operational matters. Each of the key risks described on the
following pages can have an impact on our ability to achieve
our strategic intents. This is illustrated by reference to each
of our strategic intents:
• Portfolio – investing in a portfolio of assets that deliver
superior margins and returns through the cycle.
• People – organising and developing our people to deliver
on our promises and build respectful and mutually
beneficial relationships with our stakeholders.
• Performance – operating safely and responsibly across
the mining value chain to deliver sustainable value to best
meet our customer and stakeholder needs.
As mining is a business that can span decades, many of its
attendant risks are long term in nature, and there may not
be any significant change year on year. The commentary
provided on each risk is intended to highlight significant
changes in the profile of individual risks or describe our
experience of the risk over the course of 2013.
For more information on the S&SD Committee
See page 103
For more information on the Audit Committee
See page 106
Anglo American assessment of strategic, operational, project and sustainable development related risks
1
Identifying
risks
2
Analysing
risks and controls
to manage
identified risks
4
Reporting
and monitoring
3
Determining
management
actions required
1. Identifying risks
A robust methodology is used to identify key risks across the Group;
at business units, operations and projects. This is being applied
consistently through the development and ongoing implementation
of a Group integrated risk management standard.
2. Analysing risks and controls to manage identified risks
Once identified, the process will evaluate identified risks to establish
root causes, financial and non-financial impacts and likelihood of
occurrence. Consideration of risk treatments is taken into account
to enable the creation of a prioritised register.
3. Determining management actions required
Effectiveness and adequacy of controls are assessed.
If additional controls are required, these will be identified and
responsibilities assigned.
4. Reporting and monitoring
Management is responsible for monitoring progress of actions to
treat key risks and is supported through the Group’s internal audit
programme, which evaluates the design and effectiveness of
controls. The risk management process is continuous; key risks
are reported to the Audit Committee, with sustainability risk also
being reported to the S&SD Committee.
46
Anglo American plc Annual Report 2013
KEY RISKS AT A GLANCE
EXTERNAL
Pages 48–49
OPERATIONAL
Pages 50–53
Increased risk
• Political, legal and regulatory
• Information and cyber security
• None
No change
in risk
• Commodity prices
• Currency risk
• Liquidity risk
• Community relations
• Employees
• Environmental
• Event risk
• Infrastructure
• Operational risk and
project delivery
• Safety and health
Decreased risk
• Inflation
• None
The risks defined in this report are those we believe are our
principal risks. In previous years we have reported risks
relating to climate change, counterparty, exploration, supply
chain, contractors, Ore Reserves and Mineral Resources,
bribery and corruption, joint ventures and acquisitions and
divestments, all of which we remain exposed to, though we
do not consider them to be our principal risks. Therefore,
such risks are not discussed in the report.
We also recognise that risks cannot be viewed in isolation.
Emergence of one risk may be caused by one or more other
risks, or may cause another risk to emerge. For example,
project delivery or production risk can be influenced by
risks relating to supply, inflation, political matters, legal and
regulatory requirements, infrastructure or community
relations. This interconnectivity, and the relationship of
risks to our above-mentioned strategic elements, requires
significant emphasis to be placed on the management
of risk and the effectiveness of our risk controls, with the
identification and understanding of our risks being the
first step in what is a continuous process.
47
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT RISK
EXTERNAL RISKS
POLITICAL, LEGAL AND REGULATORY
Pillars of value:
Wherever we operate, our businesses may be affected by
political or regulatory developments, including changes to
fiscal regimes or other regulatory regimes.
Impact: Potential impacts include restrictions on the export of
currency, expropriation of assets, imposition of royalties or other
taxes targeted at mining companies, and requirements for local
ownership or beneficiation. Political instability can also result in
civil unrest and nullification of existing agreements, mining permits
or leases. Any of these may adversely affect the Group’s operations
or results of those operations.
Root cause: The Group has no control over local political acts or
changes in local tax rates. It recognises that its licence to operate
through mining rights is dependent on a number of factors, including
compliance with regulations.
Mitigation: The Group actively monitors regulatory and political
developments on a continuous basis.
Increased risk
Commentary: During 2013, we announced the restructuring
of our Platinum business in South Africa and have worked closely
with government and the trade unions to minimise the potential
for damaging strike action or social unrest.
This matter, which is further explained on pages 80–85, is indicative
of the need to understand and manage an increasingly complex
global political, legal and regulatory environment.
INFORMATION AND CYBER SECURITY
Pillars of value:
The Group is exposed to risk of attack by third parties on our
information systems.
Impact: Attacks on our information systems may result in loss of
sensitive or proprietary information and fraud. Damage is possible to
equipment that is critical to mining or processing of ore, resulting in
interruption to production.
Root cause: Cyber risk arises from criminal activity to cause
disruption or attempts by third parties to access sensitive information.
The pace of technological development makes it challenging for any
organisation to prevent increasingly sophisticated methods of
attacking information technology systems.
Mitigation: Anti-virus software and general computer controls
provide a level of protection. In addition, monitoring of networks is
undertaken to identify suspicious activity in order that appropriate
action can be taken. We receive information on threats through
security consultants and agencies on an ongoing basis. The Group
also has an Information Security policy that introduces the measures
expected of employees in handling sensitive information.
Increased risk
Commentary: The risk is increased as we recognise the threat is
continually developing on a global basis.
CURRENCY RISK
Pillars of value:
The Group is exposed to currency risk when transactions are
not conducted in US dollars.
Root cause: The global nature of the Group’s businesses exposes
the Group to currency risk.
Impact: Fluctuations in the exchange rates of the most important
currencies influencing our own operating costs and asset valuations
(the South African rand, Chilean peso, Brazilian real, Australian
dollar, and pound sterling) may materially affect the Group’s
financial results.
Mitigation: Given our Group’s diversified nature, our policy
is generally not to hedge currency risk. Mitigation in the form
of foreign exchange hedging is limited to debt instruments and
capital expenditure on major projects.
No change in risk
Commentary: Further description of currency risk and analysis
of sensitivity to foreign exchange movement is provided on
pages 203–204.
48
Anglo American plc Annual Report 2013
COMMODITY PRICES
Pillars of value:
Commodity prices for all products that Anglo American
produces are subject to wide fluctuation.
Impact: Commodity price volatility can result in a material and
adverse movement in the Group’s operating results, asset values,
revenues and cash flows. Falling commodity prices could prevent
us from completing transactions that are important to the business
and which may have an adverse effect on Anglo American’s financial
position – e.g. the inability to sell assets at the values or within the
timelines expected.
If commodity prices remain weak for a sustained period, our ability
to deliver growth in future years may be compromised as growth
projects may not be viable at lower prices, and we may not be able
to compete for new, complex projects that require significant
capital investment.
Root cause: Commodity prices are determined primarily by
international markets and global supply and demand. Demand
for commodities will largely be determined by the strength of the
global economic environment.
Mitigation: The diversified nature of the commodities that
Anglo American produces provides some protection to this risk,
and our policy is not to engage in commodity price hedging. We
constantly monitor the markets in which we operate, reviewing
capital expenditure programmes accordingly, so as to ensure the
supply of our products reflects forecast market conditions.
No change in risk
Commentary: During 2013, prices in most of the commodities we
mine remained relatively weak as a result of lacklustre economic
conditions in many of our key markets. Further detail of price
movements is provided on page 7.
INFLATION
Pillars of value:
The Group is exposed to potentially high rates of inflation
in the countries in which it operates.
Impact: Higher rates of inflation may increase future operational
costs if there is no concurrent depreciation of the local currency
against the US dollar, or an increase in the dollar price of the
applicable commodity. This may have a negative impact on profit
margins and financial results.
Root cause: Cost inflation in the mining sector is more apparent
during periods of high commodity prices as demand for input goods
and services can exceed supply.
Mitigation: We closely manage costs through our business
improvement and supply chain initiatives and, where necessary,
through adjusting employee and contractor numbers.
Decrease in risk
Commentary: The Driving Value programme has identified
opportunities for cost reduction in operations and corporate costs.
External cost pressures will continue (e.g. labour costs) but are
expected to be managed through the initiatives announced.
LIQUIDITY RISK
Pillars of value:
Our Group is exposed to liquidity risk in terms of being able to
fund operations and growth.
Impact: If we are unable to obtain sufficient credit as a result of
prevailing capital market conditions, we may not be able to raise
sufficient funds to meet ongoing financing needs, develop projects,
compete for new projects requiring significant capital expenditure, or
fund acquisitions. As a result, our revenues, operating results, cash
flows or financial position may be adversely affected.
If commodity prices remain weak for a sustained period, our ability
to deliver growth in future years may be compromised as growth
projects may not be viable at lower prices, and we may not be able
to compete for new, complex projects that require significant
capital investment.
Root cause: Liquidity risk arises from uncertainty or volatility in
the capital or credit markets owing to perceived weaknesses in the
global economic environment, or possibly as a response to shock
events. Liquidity risk also arises when lenders are insecure about
our long term cash generative capacity.
Mitigation: We have an experienced Treasury team which is
responsible for ensuring that there are sufficient committed loan
facilities in place to meet short term business requirements after
taking into account cash flows from operations and holdings of cash,
as well as any Group distribution restrictions. We limit exposure on
liquid funds through a policy of minimum counterparty credit ratings,
daily counterparty settlement limits and exposure diversification.
No change in risk
Commentary: All financing needs have been met, though capital
availability for project development or acquisition is likely to be low
until existing commitments are fulfilled or a stronger pricing
environment exists.
49
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT RISK
OPERATIONAL RISKS
COMMUNITY RELATIONS
Pillars of value:
Disputes with communities may arise from time to time.
Impact: Failure to manage relationships with local communities,
government and NGOs may disrupt operations and negatively affect
Anglo American’s reputation as well as our ability to bring projects
into production.
Root cause: We operate in several countries where ownership
of rights in respect of land and resources is uncertain and where
disputes in relation to ownership or other community matters
may arise. The Group’s operations can have an impact on local
communities, including the need, from time to time, to relocate
communities or infrastructure networks such as railways and
utility services.
Mitigation: We have developed comprehensive processes to
enable our business units to effectively manage relationships with
communities and we actively seek to engage with all communities
affected by our operations.
No change in risk
Commentary: Further description of our work during 2013 to
maintain and improve relationships with our stakeholders is provided
on pages 31–33.
EMPLOYEES
Pillars of value:
The ability to recruit, develop and retain appropriate skills
for the Group. Strikes or other industrial relations disputes
may occur.
Impact: Failure to retain skilled employees or to recruit new staff
may lead to increased costs, interruptions to existing operations
and delay in new projects. Industrial disputes have an adverse effect
on production levels, costs and the results of operations.
Root cause: We are subject to global competition for skilled
labour. Our assets and development projects are often in remote
places or in countries where it is a challenge to recruit suitably skilled
employees. In the key countries where the Group operates, the
majority of employees are members of trade unions. Negotiations
over wage levels or working conditions can sometimes fail to result
in agreement.
Mitigation: One of Anglo American’s objectives is to be the
employer of choice in the mining sector. A comprehensive human
resources strategy has been devised to support that objective,
focused on the attraction, retention and development of talented
employees and the effective deployment of talent across the Group.
The Group seeks constructive relationships and dialogue with trade
unions and employees in all its businesses.
No change in risk
Commentary: During 2013, we began a review of our organisational
model and structures. The aim of the redesign is to increase the
effectiveness and efficiency of work performed by placing the right
employees in the right roles. This is expected to reduce pressure on
recruitment and retention of skills in the short term. Further details of
the changes is provided on pages 28–30.
50
Anglo American plc Annual Report 2013
ENVIRONMENT
Pillars of value:
Some of our operations create environmental risk in the
form of dust, noise or leakage of polluting substances as well
as uncontrolled breaches of tailings dam facilities. These
can generate harm to our employees, contractors and the
communities near our operations, leading to a deterioration
in air quality and water purity and contamination of land.
Root cause: The mining process, including blasting and processing
of orebodies, can generate dust and noise and requires the storage
of waste materials in liquid form.
Mitigation: The Group implements a number of initiatives to monitor
and limit the impact of its operations on the environment.
Impact: Potential impacts include fines and penalties for past,
current or future events, statutory liability for environmental
remediation and other financial consequences that may be
significant. Governments may force closure of mines on a temporary
or permanent basis or refuse future mining right applications.
No change in risk
Commentary: Our environmental performance during 2013 is
detailed on pages 43–45.
EVENT RISK
Pillars of value:
Damage to physical assets from fire, explosion, natural
catastrophe or breakdown of critical machinery.
Impact: The direct costs of repair or replacement combined
with business interruption losses can result in financial losses.
Root cause: Some of our operations are located in areas exposed
to natural catastrophes such as earthquake/extreme weather
conditions. The impact of climate change may intensify the severity
of weather events. The nature of our operations exposes us to
potential failure of mining pit slopes, underground shafts and tailings
dam walls, fire, explosion and breakdown of critical machinery, with
long lead times for replacement.
Mitigation: Specialist consultants are engaged to analyse such
event risks on a rotational basis and provide recommendations for
management action in order to prevent or limit the effects of such
a loss. Contingency plans are developed to respond to significant
events and restore normal levels of business activity. Anglo American
purchases insurance to protect itself against the financial
consequences of an event, subject to availability and cost.
No change in risk
Commentary: Unfortunately, we witnessed this risk materialise
at the Amapá iron ore system in Brazil during 2013, resulting in four
deaths, with a further two people still missing, and loss of the port
operation. The Amapá operation has since been sold and an
insurance claim is being pursued. Lessons from this event are being
shared with other port operations across the Group.
51
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT RISK
OPERATIONAL RISKS continued
INFRASTRUCTURE
Pillars of value:
Inability to obtain adequate supporting facilities, services
and installations (water, power, road, rail and port, etc.).
Impact: Failure to obtain supporting facilities may affect the
sustainability and growth of the business, leading to loss of
competitiveness, market share and reputation. Failure of rail or port
facilities may result in delays and increased costs, lost revenue, and
a worsening reputation with customers. Failure to procure shipping
costs at competitive market rates may reduce profit margins.
Root cause: The potential disruption of ongoing generation and
supply of power is a risk we face in a number of countries. Our
operations and projects can be located in areas where power and
water supplies are not certain and may be affected by population
growth, the effects of climate change or lack of investment by owners
of infrastructure. We rely upon effective rail and port facilities for
transporting our products and will be expected to provide shipment
of product in some circumstances to customers’ premises. We use
third parties to provide these services.
Mitigation: We seek to work closely with suppliers of infrastructure
to mitigate the risk of failure and have established contingency
arrangements. Long term agreements with suppliers are sought
where appropriate.
No change in risk
Commentary: Details of programmes to manage water
consumption and power usage are provided on pages 43–45.
OPERATIONAL RISK AND PROJECT DELIVERY
Pillars of value:
Failure to meet production targets or project delivery
timetables and budgets.
Impact: Increased unit costs may arise from failure to meet
production targets, thus affecting our operational and financial
performance. Failure to meet project delivery timetables and
budgets may delay cash inflows, increase capital costs, incur
contractual penalties, and reduce profitability, as well as have a
negative impact on the Group’s reputation.
Root cause: Increasing regulatory, environmental, access and
social approvals can increase construction costs and introduce
delays. Operational performance can be influenced by technical
and engineering factors as well as events or circumstances that
have an impact on other critical inputs to the mining and processing
of minerals.
Mitigation: Management oversight of operating performance
and project delivery through regular executive management
briefings, a continuous focus on improvement of operations
through our business improvement programme, and consistent
application of the company’s methodology for new projects,
are vital aspects in managing this risk.
No change in risk
Commentary: The Minas-Rio project in Brazil remains the key risk
from a project-delivery perspective. The risk has lessened during
2013, with most of the permit delays resolved and construction
progressing (refer to commentary on pages 58–59 ). Production
performance and status of key projects is provided on pages 39–41.
52
Anglo American plc Annual Report 2013
SAFETY AND HEALTH
Pillars of value:
Failure to maintain high levels of safety management can
result in harm to our employees, contractors, communities
near our operations and damage to the environment.
Occupational health risks to employees and contractors
include noise-induced hearing loss, occupational lung diseases
and tuberculosis (TB). In sub-Saharan Africa in particular,
HIV/AIDS is a threat to economic growth and development.
Impact: In addition to injury, health and environmental damage,
impacts could include fines and penalties for past, current or future
issues, liability to employees or third parties, impairment of
Anglo American’s reputation, industrial action or inability to attract
and retain skilled employees. Government authorities may force
closure of mines on a temporary or permanent basis or refuse mining
right applications. The recruitment and retention of skilled people
required to meet growth aspirations can be affected by high rates
of HIV/AIDS.
Root cause: Mining is a hazardous industry and working conditions
such as weather, altitude and temperature can add to the inherent
dangers of mining, whether underground or in open pit mines.
Mitigation: Anglo American sets a very high priority on safety and
health matters. A safety risk management process, global standards
and a safety and environment assurance programme form part of
a consistently applied robust approach to mitigating safety risk.
Anglo American provides free anti-retroviral therapy to employees
with HIV/AIDS and undertakes education and awareness
programmes to help prevent infection or spread of infection.
No change in risk
Commentary: Details of safety performance and our approach to
health management are provided on pages 29–30.
53
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT IRON ORE AND MANGANESE
IRON ORE AND MANGANESE
Norman Mbazima
CEO – Kumba
Key financial and non-financial performance indicators
Paulo Castellari-Porchia
CEO – Iron Ore Brazil
UNDERLYING OPERATING PROFIT
(2012: $3,011 m)
$3,119 m
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: 48%)
47%
UNDERLYING EBITDA
(2012: $3,262 m)
$3,390 m
$ million (unless otherwise stated)
Underlying operating profit
Kumba Iron Ore
Iron Ore Brazil
Samancor
Projects and Corporate
Underlying EBITDA
Capital expenditure
Share of Group underlying operating profit
Attributable return on capital employed
Non-financial indicators(2)
Number of fatal injuries
Kumba Iron Ore
Iron Ore Brazil
Lost-time injury frequency rate
Kumba Iron Ore
Iron Ore Brazil
Total energy consumed in 1,000 GJ
Kumba Iron Ore
Iron Ore Brazil
Total greenhouse gas emissions in 1,000 tonnes CO2e
Kumba Iron Ore
Iron Ore Brazil
Total water used consumed in 1,000 m3
Kumba Iron Ore
Iron Ore Brazil
2013
3,119
3,047
(31)
210
(107)
3,390
2,517
47%
19%
2013
0
0
0.18
0.005
9,340
1,062
1,084
78
2012(1)
3,011
3,042
(5)
103
(129)
3,262
2,139
48%
21%
2012
2
0
0.10
0.01
7,607
713
945
52
10,648
10,038
1,461
895
Image
Shovel operator
Petrus Skhungweni
scooping up overburden
at Kumba Iron Ore’s giant
Sishen open pit.
54
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
(2) Certain non-financial indicators relating to 2012 have been revised due to change requests made by the operations
subsequent to the publication of the 2012 annual report.
Anglo American plc Annual Report 2013
BUSINESS OVERVIEW
Our Iron Ore portfolio is based in South Africa and Brazil.
In South Africa, we have a 69.7% shareholding in Kumba
Iron Ore Limited, a leading supplier of seaborne iron ore.
China
Japan and Rest of Asia
Kumba, listed on the Johannesburg Stock Exchange,
produces a leading quality lump ore and also produces
premium fine ore, in a lump-to-fine ratio of 63:37. Kumba
holds a 73.9% interest in and manages Sishen Iron Ore
Company (Pty) Ltd (SIOC) which, in turn, has three mining
operations – Sishen mine in the Northern Cape Province,
which produced 30.9 million tonnes (Mt) of iron ore in 2013;
Kolomela mine, situated close to Sishen mine, which
produced 10.8 Mt; and Thabazimbi mine in Limpopo
province, with an output of 0.6 Mt.
Export ore is transported via the Sishen/Kolomela-Saldanha
iron ore export channel to the Port of Saldanha Bay. The rail
and port operations are owned and operated by the South
African parastatal, Transnet Freight Rail.
Kumba is well positioned to supply the growing Asia-Pacific
and European steel markets. In 2013, the company exported
89% of its total iron ore sales volumes of 43.7 Mt, with 68%
of these exports destined for China and the remainder for
Europe, Japan and South Korea.
In Brazil, we are developing the Minas-Rio project (composed
of Iron Ore Brazil’s 100% share in Anglo American Minerío
de Ferro Brasil, and its 49% holding in LLX Minas-Rio, which
owns the iron ore facility currently under construction at the
port of Açu. On 8 January 2014, an additional 1% of LLX
Minas-Rio was acquired, in line with contract rights resulting
from the partner’s change of control). The project is located
in the states of Minas Gerais and Rio de Janeiro and will
include an open pit mine and beneficiation plant in Minas
Gerais, producing high grade pellet feed. The ore will be
transported through a 525 kilometre slurry pipeline to the
port of Açu in Rio de Janeiro state. The current mine plan
is to produce 26.5 Mtpa (wet basis) of saleable product for
28 years, at an average quality of 67.5% Fe.
Our Manganese interests consist of a 40% shareholding in
Samancor Holdings, which owns Hotazel Manganese Mines
and Metalloys, both in South Africa, and a 40% shareholding
in each of the Australian-based operations; Groote Eylandt
Mining Company (GEMCO) and Tasmanian Electro
Metallurgical Company (TEMCO), with BHP Billiton owning
60% and having management control. Samancor is the
world’s largest producer of manganese ore and is among
the top global producers of manganese alloy. Its operations
produce a combination of ores and alloys from sites in
South Africa and Australia.
%
56
12
8
7
6
5
3
3
644
138
92
83
69
50
38
35
Europe
CIS
India
North America
South America
Rest of World
Total
1,149
100
Source: Anglo American Commodity Research
Australia
South America
China
CIS
India
North America
Rest of World
Europe
Total
%
31
24
13
10
7
6
5
4
357
278
153
114
77
63
59
48
1,149
100
Source: Anglo American Commodity Research
INDUSTRY OVERVIEW
Global demand for iron ore is linked primarily to the state of
the global steel industry and, more specifically, to the steel
manufacturing sector in China. The country is the largest
steel producer and consumer in the world and accounts for
more than two-thirds of global seaborne iron ore imports.
Manganese alloy is a key input into the steelmaking process.
Manganese high grade ore is particularly valuable to alloy
producers because it is proportionately more efficient than
low grade ore in the alloying process.
STRATEGY
Anglo American’s strategy is to supply premium iron ore
products against a background of declining quality global
iron ore supplies. We have a unique iron ore resource profile,
with extensive, high quality resource bases in South Africa
and Brazil.
Kumba seeks to maximise total shareholder value by
enhancing the value of its current operations through
the efficiency of its processes and business improvement
programmes. The company captures value across the value
chain through its commercial and logistics strategies and by
executing its growth projects efficiently, while continuing to
deliver on its organisational responsibilities, capabilities and
societal obligations.
55
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT IRON ORE AND MANGANESE
Platts 62% Fe CFR China
t
/
$
170
160
150
140
130
120
110
100
90
80
70
60
Jan 12
Quarterly CFR benchmark $/t
62% CFR spot $/t
Jan 13
Jan 14
Source: Anglo American Commodity Research
The company plans to grow its business organically in
the short to medium term within the present logistical
constraints and, in the longer term, evaluating the possibility
of establishing a second footprint in West and Central Africa.
170
160
150
Minas-Rio will capture a significant part of the pellet feed
market, with its premium product featuring high iron
content and low contaminants. It will produce 26.5 million
tonnes per annum (Mtpa), and is scheduled to begin
its ramp up at the end of 2014.
130
140
120
Attributable capital expenditure for the Minas-Rio project
is $8.8 billion, with cash unit costs in a competitive position
in the lower half of the global seaborne iron ore cost curve.
110
100
90
80
Operating safely, sustainably and responsibly
Kumba Iron Ore
The safety and well-being of everyone in its organisation
remains a priority and is a non-negotiable value at Kumba.
The company has placed renewed emphasis on its safety
improvement plans during the year, complemented by
a greater focus on mindsets and behaviours aimed at
enhancing a safety culture, and by management stressing
the primary duty of each employee to concentrate on his
or her safety in every task in the workplace.
60
70
The attraction, retention and development of skilled people
remains a critical priority. The company addresses these
issues through a considered and proactive approach to
talent management and retention, as well as to workplace
health and safety, responsible environmental management,
and the application of leading social performance standards
and management systems.
Iron Ore Brazil
Minas-Rio faces a number of issues that impact its ability
to obtain both the formal and the social licences to operate.
In this regard, Minas-Rio has intensified its efforts to
strengthen and structure its engagement and relationships
with governmental and environmental stakeholders.
The approach is based on a detailed understanding of
required permits and associated conditions, which is
overseen by a dedicated Environmental Licensing Office
(ELO). The ELO is backed-up by a structured approach
to engaging government, community and civil society
stakeholders that identifies expectations and concerns and
formulates appropriate responses. In 2013, Anglo American
also strengthened its government relations capability
in Brazil.
Kumba aims to maintain a healthy and productive
workforce through management of occupational health
and has succeeded in reducing noise and dust levels at
all its operations. It is continually improving its HIV/AIDS
management programmes, and addressing prevention
and treatment. Kumba has relatively low prevalence rates
and participation in its disease management programmes
reached 86% in 2013.
FINANCIAL AND OPERATIONAL OVERVIEW
Underlying operating profit increased by 4% from
$3,011 million to $3,119 million, principally as a result of
stronger average export iron ore prices at Kumba and higher
prices, reduced costs and improved volumes at Samancor.
This was partly offset by a decrease in export iron ore and
increased costs at Kumba.
Kumba faces a number of material issues in its current
operating environment. At the forefront is meeting rising
expectations and demands from stakeholders – principally,
shareholders, government, employees, communities and
NGOs – in a financially and resource-constrained economic
and social environment.
Safety and environment
Kumba Iron Ore
Kumba completed the year without loss of life. The overall
safety performance, however, suffered some setbacks,
which were reflected in a worsening lost-time injury
frequency rate (LTIFR) of 0.18 (2012: 0.10). Kumba has
56
Anglo American plc Annual Report 2013
Seaborne iron ore supplies increased by 10% to 1,324 Mt
(2012: 1,208 Mt), as the increase from Australia more than
compensated for lower supplies from India and flat exports
from Brazil.
Iron ore prices were strong and averaged 4% higher at
$135/tonne (Platts 62% Fe CFR China) (2012: $130/tonne).
Index prices reached a high of $160/tonne in February 2013,
but fell to a low of $110/tonne in May 2013, before stabilising
at around $135/tonne towards the end of the year. Kumba’s
pricing mechanism continued to evolve, with prices in China
now mostly based on index values around the discharge
date. In other markets, Kumba largely continues to use a
quarterly pricing mechanism.
Operating performance
Kumba Iron Ore
Underlying operating profit increased slightly from
$3,042 million to $3,047 million, principally as a result of
1% stronger average export iron ore prices and the impact
of the weaker South African rand, partly offset by a 1%
decrease in export sales volumes. Total operating costs
rose by 20% in local currency terms, driven primarily by
above-inflation cost increases and the mining of 47.5 Mt
of additional waste at Sishen and Kolomela mines.
Total iron ore output decreased by 2% to 42.4 Mt, mainly
owing to production losses at Sishen mine, partially offset
by the strong performance at Kolomela. Total tonnes mined
at Sishen rose by 22% to 208.8 Mt (2012: 171.6 Mt), of
which waste mined amounted to 167.8 Mt, an increase
of 26% (2012: 133.5 Mt) as the planned waste ramp up
continues to alleviate the current pit constraints. The mine’s
iron ore production, however, decreased by 8% to 30.9 Mt
(2012: 33.7 Mt). Production from the DMS plant was mainly
impacted by availability of material from the pit and resulted
in 12% lower output for the year. At the Jig plant, production
was in line with the prior year although still below design
capacity owing to feedstock quality constraints. The mine
was hampered further by several Section 54 safety
stoppages relating to the operation of trackless mobile
machinery in August 2013, and the subsequent gradual
ramp up of the mine. The Sishen mine pit is currently
constrained, resulting in insufficient exposed ore. A
production recovery plan to address the current pit
constraints and a longer term operational optimisation
strategy are being implemented.
Kolomela continued its strong performance in 2013,
increasing production by 26% to 10.8 Mt (2012: 8.5 Mt).
Production exceeded monthly design capacity for most
of the year, and reached a new record level of 1.04 Mt for
the month during October 2013. Kolomela’s total tonnage
mined increased by 38% to 59.9 Mt (2012: 43.5 Mt), of
which waste mined amounted to 46.7 Mt (2012: 33.5 Mt),
an increase of 39%.
Production at Thabazimbi mine was 24% lower at
0.6 Mt (2012: 0.8 Mt), mainly as a result of partial plant
shutdowns towards the end of 2013. An agreement
regulating the sale and purchase of iron ore between
SIOC and ArcelorMittal South Africa Limited (ArcelorMittal
S.A.), which became effective on 1 January 2014, may
enable Thabazimbi life of mine to be extended through
the introduction of low-grade beneficiation technologies.
57
Image
Construction work
at the mine site of
the Minas-Rio iron
ore project. By year
end, the project was
84% complete overall,
with the beneficiation
plant 83% complete
and the 525-kilometre
pipeline almost fully
assembled.
renewed its focus on entrenching individual responsibility
and behaviour, while various processes are under way to
improve employee engagement through regular and visible
interaction with leadership, as well as hazard identification.
Environmental compliance is important to Kumba. To that
extent, all environmental management plans were approved
by South Africa’s Department of Mineral Resources (DMR).
Kumba’s targeted savings for 2013 were 271,834 GJ of
energy and 39,549 tonnes of CO2e greenhouse gases.
Kumba continues to implement energy and water savings
projects, some of which have already delivered quantifiable
gains. Several savings projects are still at a conceptual stage,
but actual savings in 2013 are estimated to be 133,394 GJ of
energy and 30,574 tonnes CO2e greenhouse gases.
Iron Ore Brazil
The Minas-Rio project continues to be developed in a safe
and responsible way, with no loss of life recorded during the
year and more than 33 million man-hours worked without
any lost-time injuries.
Markets
The global steel and iron ore markets have generally been
stable in 2013, and better than anticipated. An increase in
global steel production of 3% to 1,582 Mt (2012: 1,529 Mt),
supported demand for iron ore. Sustained government
infrastructure expenditure in East Asia, as well as steel mill
restocking prior to the winter season, assisted this rise.
China, the main producer of steel worldwide, increased
its production by an unexpectedly strong 7% to 779 Mt
(2012: 731 Mt). Growth in Japan and South Korea was also
above expectations, and Europe stabilised during the year,
which supported global demand.
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT IRON ORE AND MANGANESE
Kumba’s total sales volumes were 1% lower at 43.7 Mt
(2012: 44.4 Mt) as both export and domestic sales volumes
decreased by 1% to 39.1 Mt (2012: 39.7 Mt) and 4.6 Mt
(2012: 4.7 Mt), respectively. The lower export sales volumes
were mainly the result of production losses at Sishen, which
reduced export stock levels across the value chain, but were
mostly offset by the performance from Kolomela. Export
sales volumes to China accounted for 68% of the company’s
total export volumes for the year, compared to 69% in 2012.
Sales volumes to Japan and South Korea rose by 13% to
8.3 Mt and represented 21% of total export sales, with the
remaining 11% going to Europe. In 2014, this mix is expected
to change slightly as more iron ore is shipped to China and
less to Europe.
Total finished product stockpiles amounted to 2.8 Mt at
the end of the year, compared to 3.7 Mt at the end of 2012.
Kumba spent $455 million on stay-in-business capital
(2012: $383 million), mainly on heavy mining equipment
such as haul trucks and shovels for Sishen and Kolomela
mines in support of the waste mining ramp-up.
Iron Ore Brazil
Iron Ore Brazil generated an underlying operating loss
of $31 million, reflecting the pre-operational state of the
Minas-Rio project.
Samancor
Underlying operating profit more than doubled to
$210 million (2012: $103 million), driven by higher prices
and focused cost control, supported by strong volumes.
Production of ore was flat at 3.3 Mt (attributable basis)
owing to a consistently strong operating performance and
improved plant productivity at both GEMCO in Australia
and Hotazel in South Africa. Alloy production increased by
27% to 251,100 tonnes (attributable basis) as production
was restored at TEMCO in Australia following a production
suspension in 2012.
Projects
Kumba Iron Ore
Kumba aims to capitalise on its current mining right
holdings and existing infrastructure to develop and sustain
a project pipeline that enables a return to optimal levels
of production, maintenance of these levels and growth
in accordance with the needs of the market.
Kumba is focused on restoring Sishen mine to its full
capacity but is also looking to facilitate the expansion of
Sishen mine to the west. A comprehensive feasibility study
has been completed for the relocation of the Dingleton
community and the company has engaged in an extensive
consultation process with interested and affected parties,
the community and the relevant government departments.
The plan to resettle the community in the town of Kathu in
the Northern Cape Province is expected to cost an
estimated $457 million (nominal) over a four to six
year period.
At Kolomela, technical studies have confirmed the
mine’s capacity at 10 Mtpa, 1 Mtpa above its original
design capacity. Kumba is currently studying
opportunities for further incremental expansion
of Kolomela’s production.
Significant progress has been made in the progression of
the Sishen Western Expansion Project (SWEP). Project
development remains within budget, and construction
activities have been completed. A major milestone in the
development of the project was the relocation of the
Transnet railway line from its previous position to the west
of the current Sishen pit, to the far western extent of the
SIOC property. The relocation of the railway line was
completed in May 2013.
As a consequence of Transnet having previously held
the surface rights over the SWEP rail properties, the rail
properties were excluded from the Sishen Mining Right area.
SIOC applied to the DMR to obtain the necessary rights in
relation to the rail properties, which were granted by the DMR
on 11 February 2014. The granting of the mining right gives
SIOC access to approximately 33% of the Sishen reserve
included in SIOC’s Life of Mine plan which is located on either
side of the affected area. This portion of the reserve, which
had been classified as probable, can now be reclassified
as proven. SIOC will accordingly proceed with the
implementation of its mining plan and will start waste
stripping in the affected area from the second half of 2014.
Iron Ore Brazil
Construction of the 26.5 Mtpa Minas-Rio iron ore project
continues in line with the revised plan announced in 2012. By
the end of 2013, the project was 84% complete overall and
is on schedule to deliver first ore on ship at the end of 2014.
The main schedule risks identified at the end of 2012
have been resolved and over the past year significant
construction and operational progress has been made.
Highlights during 2013 include:
• the mine’s cave suppression permit was granted in
March and mine access approved in May, allowing
stripping of surface overburden to be completed;
• land release for the 230 kV transmission line was
obtained, and the transmission line has been completed,
ahead of schedule;
• closure of the tailings dam was achieved in April,
as planned, and the dam is near completion;
• the pipeline and land-access permits were obtained on
schedule and 481 kilometres of pipe (representing 91%
of the total 525 kilometre length) had been installed by
the end of 2013;
• no outstanding permits or licences now impede the
construction process, while good progress is being made
in converting the installation permits to operating licences;
• the beneficiation plant is 83% complete. Civil engineering
work has finished on the first ball mill and primary crusher,
while the long-distance conveyor belt is almost assembled;
• assembly of the shiploader at Açu is 96% complete
and caissons are being placed in position for the
2,624 metre-long breakwater.
Potential risks for 2014 are being addressed and mainly
relate to manpower availability to complete construction
activities at the beneficiation plant and the completion of
the breakwater.
58
Anglo American plc Annual Report 2013 Capital expenditure remains in line with the previously
announced cost of $8.8 billion, including a centrally held
contingency of $600 million. To date, $5.6 billion has been
spent on the project and it is envisaged that $3.2 billion
(inclusive of the $600 million contingency) will need to be
spent in order to deliver the project.
Samancor
The $279 million GEEP2 project (Anglo American’s 40%
share: $112 million) was delivered, on schedule and budget,
in the third quarter of 2013. The project will increase
GEMCO’s beneficiated product capacity from 4.2 Mtpa
to 4.8 Mtpa through the introduction of a dense media
circuit by-pass facility. The expansion will also address
infrastructure constraints by increasing road and port
capacity to 5.9 Mtpa, creating 1.1 Mtpa of latent capacity
for future expansion.
The $91 million (100% basis) high carbon ferromanganese
furnace at the Metalloys smelter in South Africa was
delivered, on schedule and budget, in the first quarter of
2013. The project will add an additional 130,000 tonnes
of capacity per year.
Outlook
In 2014, it is anticipated that global crude steel demand will
grow by 3%, with China’s production rising to approximately
806 Mt, while growth in production in other developing
countries is expected to be countered by a reduction in
output in some of the developed markets. It is anticipated,
however, that the supply and demand balance will shift in
the second half of 2014, owing to more supply from Australia
and Brazil and as demand growth begins to slow. This is
expected to put some pressure on the iron ore price in the
second half of the year.
The Sishen mine recovery and optimisation plan expects
a phased production increase from 30.9 Mt in 2013, to
approximately 35 Mt in 2014. As the orebody dips and thins
out towards the west, waste stripping of up to 270 Mtpa
will be required for the production of 37 Mtpa at current
marketing specifications, planned for 2016.
Kumba anticipates total iron ore production, excluding
Thabazimbi, of between 44 and 46 Mt in 2014. Export sales
volumes are expected to be in line with 2013 levels.
The recovery in manganese ore pricing continued into 2013;
however, muted demand expectations are expected to limit
the rate and extent of the recovery in the near term.
Kumba Iron Ore update
21.4% undivided share of the Sishen mine
mineral rights
On 28 March 2013, the Supreme Court of Appeal (SCA)
dismissed the appeals of the DMR and Imperial Crown
Trading 289 (Pty) Ltd (ICT) against the decision of the
North Gauteng High Court, which, inter alia, confirmed that
Sishen Iron Ore Company (Pty) Ltd (SIOC) became the
exclusive holder of the mining rights at the Sishen mine in
2008 when the DMR converted SIOC’s old order rights,
and further set aside the grant of a prospecting right to ICT
by the DMR. The SCA held that as a matter of law and as at
midnight on 30 April 2009, SIOC became the sole holder of
the mining right to iron ore in respect of the Sishen mine,
after ArcelorMittal S.A. failed to convert its undivided share
of the old order mining right.
Both ICT and the DMR lodged applications for leave to
appeal against the SCA to the Constitutional Court. The
Constitutional Court hearing was held on 3 September 2013.
On 12 December 2013, the Constitutional Court granted
the DMR’s appeal in part against the SCA judgment. In a
detailed judgment, the Constitutional Court clarified that
SIOC, when it lodged its application for conversion of its old
order right, converted only the right it held at that time (being
a 78.6% undivided share in the Sishen mining right). The
Constitutional Court further held that ArcelorMittal S.A.
retained the right to lodge its old order right (21.4% undivided
share) for conversion before midnight on 30 April 2009,
but failed to do so. As a consequence of such failure by
ArcelorMittal S.A., the 21.4% undivided right remained
available for allocation by the DMR.
The Constitutional Court ruled further that, based on the
provisions of the Mineral and Petroleum Resources
Development Act (MPRDA), only SIOC can apply for the
residual 21.4% undivided share of the Sishen mining right.
The grant of the mining right may be made subject to such
conditions considered by the Minister to be appropriate,
provided that the proposed conditions are permissible under
the MPRDA. SIOC had previously applied for this 21.4%, and
continues to account for 100% of what is mined from the
reserves at Sishen mine. SIOC has however, in compliance
with the Constitutional Court order, submitted a further
application to be granted this right.
As a further consequence of this finding, the High Court’s
ruling setting aside the prospecting right granted by the DMR
to ICT also stands.
The findings made by the Constitutional Court are favourable
to both SIOC and the DMR. SIOC’s position as the only
competent applicant for the residual right protects SIOC’s
interests. The DMR’s position as custodian of the mineral
resources on behalf of the nation, and the authority of the
DMR to allocate rights, has also been ratified by the Court.
ArcelorMittal S.A. supply agreement
The dispute between SIOC and ArcelorMittal S.A. regarding
the contract mining agreement had been referred to
arbitration in 2010. In December 2011, the parties agreed
to delay the arbitration proceedings until the final resolution
of the mining rights dispute (see above). Interim Pricing
Agreements were implemented to 31 December 2013.
In November 2013, SIOC and ArcelorMittal S.A. entered into
a new Supply Agreement regulating the sale and purchase
of iron ore between the parties which became effective
from 1 January 2014. This agreement, subject to certain
express conditions, is contemplated to endure until the end
of Life of Mine for the Sishen mine.
The conclusion of this agreement settled the arbitration
and the various other disputes between the companies.
Following the Constitutional Court ruling (see above), the
sale of iron ore from SIOC to ArcelorMittal S.A. will remain
regulated by the recently concluded Supply Agreement.
59
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT METALLURGICAL COAL
METALLURGICAL COAL
Seamus French
CEO
UNDERLYING OPERATING PROFIT
(2012: $405 m)
$46 m
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: 6%)
0.7%
UNDERLYING EBITDA
(2012: $877 m)
$612 m
Key financial and non-financial performance indicators
$ million (unless otherwise stated)
Underlying operating profit
Underlying EBITDA
Capital expenditure
Share of Group underlying operating profit
Attributable return on capital employed
Non-financial indicators
Number of fatal injuries
Lost-time injury frequency rate
Total energy consumed in 1,000 GJ
Total greenhouse gas emissions in 1,000 tonnes CO2e
Total water consumed in 1,000 m3
2013(1)
2012(2)
46
612
1,050
0.7%
1%
2013
0
1.00
14,706
3,770
14,306
405
877
1,028
6%
9%
2012
0
1.75
14,787
3,919
15,552
(1) Throughout the Metallurgical Coal commentary, all volumes are expressed on an attributable basis.
(2) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
60
Image
Joy Mining site manager
Manie Swanepoel and
Metallurgical Coal’s head
of operations Dieter
Haage underground at
the Moranbah North
longwall.
Anglo American plc Annual Report 2013 BUSINESS OVERVIEW
INDUSTRY OVERVIEW
Anglo American is Australia’s second largest metallurgical
coal producer and is the third largest global exporter of
metallurgical coal.
Our coal operations in Australia are based on the east coast,
from where the business serves a range of customers
throughout Asia and the Indian sub-continent, Europe and
South America. Metallurgical Coal operates six mines in
Australia, one wholly owned and five in which the company
has a majority interest. Five of the mines are located in
Queensland’s Bowen Basin: Moranbah North (metallurgical
coal), Capcoal (metallurgical and thermal coal), Foxleigh
(metallurgical coal), Dawson (metallurgical and thermal coal)
and Callide (thermal coal). Drayton mine (thermal coal) is
in the Hunter Valley, New South Wales. All of the mines are
in well-established locations and have direct access to rail
and port facilities at Dalrymple Bay and Gladstone in
Queensland, and at Newcastle in New South Wales.
Metallurgical coal, composed of coking coal and PCI
coal, is an essential raw material in blast-furnace steel
production, which represents approximately 70% of
global crude steel output.
Global metallurgical coal supply amounts to approximately
1.1 billion tonnes per year. China is the biggest consumer of
metallurgical coal, with total consumption of approximately
754 Mt in 2013. Owing to its large domestic metallurgical
coal production, China only needs to import about 10%,
or 74 Mt, of its total metallurgical coal requirement. This,
however, represents a significant proportion (26%) of the
total global seaborne metallurgical coal market.
In 2013, the international seaborne metallurgical coal
market totalled around 285 Mt, the major consuming
regions being China, Japan, Europe, India, South Korea,
Brazil and Taiwan. On average, Australia supplies roughly
60% of the seaborne metallurgical coal market.
Metallurgical coal contracts are predominantly priced on
a quarterly basis relative to the market benchmark price,
with a growing proportion being priced on a monthly or
index basis.
Image
Arrival of the new
tunnel-boring machine
(TBM) at the Grosvenor
project in October 2013 –
the first time a TBM has
been deployed at a coal
mine in Queensland.
China
Europe
CIS
Japan
India
Other Asia
North America
South America
Rest of World
Total
754
75
70
66
44
41
29
23
14
%
68
7
6
6
4
4
2
2
1
1,116
100
Source: CRU, Metallurgical Coal Market Outlook,
published in February 2014
China
Oceania
North America
CIS
Rest of the World
%
60
16
11
8
5
675
174
118
85
64
Total
1,116
100
Source: CRU, Metallurgical Coal Market Outlook,
published in February 2014
Moranbah North (88%) is an underground longwall mining
operation with a mining lease covering 100 km2. Coal is
mined from the Goonyella Middle Seam, approximately
200 metres below the surface. In 2013, with two planned
longwall moves, the mine produced 4.9 million tonnes (Mt)
of hard coking coal (HCC).
Capcoal (70%) operates an underground and an open cut
mine, with a second underground mine put into care and
maintenance in July 2013. Capcoal produced 6.1 Mt of hard
coking, pulverised coal injection (PCI) and thermal coals for
the year.
Dawson (51%) is an open cut operation, which produced
4.0 Mt of coking and thermal coals in 2013.
Foxleigh (70%) is an open cut operation, with 2013 output
of 2.0 Mt of high quality PCI coal.
Metallurgical Coal owns an effective 23% interest in the
Jellinbah and Lake Vermont mines in Queensland, with
combined (attributable) production of 2.5 Mt of coking,
PCI and thermal coals in 2013.
In Canada, Peace River Coal (100%) open cut metallurgical
coal mine in British Columbia mainly serves customers in
Europe, Japan and South America. In 2013, Peace River
Coal produced 1.7 Mt of metallurgical coal, an increase of
22% over the prior year.
61
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT METALLURGICAL COAL
STRATEGY
Emerging markets, particularly in the Asia-Pacific
region, are expected to remain the driving force behind
metallurgical coal demand owing to their continuing need
for steel for infrastructure, housing and consumer goods.
Metallurgical Coal’s strategy is to increase the value of the
business by optimising existing operations and investing in
growth projects in the supply regions best placed to produce
the high margin export metallurgical coals sought by its
customers. In order to implement this strategy:
• A structured programme of business improvement
has been designed to deliver industry-best operational
performance over the existing asset base, targeting
longwall performance at the underground operations
and key equipment at the open cut mines;
• Metallurgical Coal continues to progress its attractive
organic growth pipeline in Australia and Canada, which
has the potential to increase HCC production in line with
growing market demand.
Operating safely, sustainably and responsibly
Water management and mine rehabilitation remain
important areas of environmental focus for Metallurgical
Coal. Climate variability in the regions in which Metallurgical
Coal operates requires water management strategies that
are equally effective in periods of flood and drought.
Metallurgical Coal’s rehabilitation strategy requires
disciplined management of disturbed land and the
development of mine closure plans.
FINANCIAL AND OPERATIONAL OVERVIEW
Metallurgical Coal recorded an underlying operating
profit of $46 million, 89% lower than the 2012 figure of
$405 million. This was attributable to a 24% decrease in
the average quarterly HCC benchmark coal price, partially
offset by the implementation of significant cost reductions
initiated in 2012, a 9% increase in metallurgical coal sales
volumes, and favourable exchange rate movements in the
Australian dollar.
A focus on high margin products has resulted in a favourable
product mix towards higher quality coking coal, with the
proportion of sales of HCC to PCI increasing by 3% to 70%.
Metallurgical Coal continues to focus on cost reductions,
with Australian and Canadian export FOB cash unit costs
reducing by 8% and 15%, respectively.
Safety and environment
There were no fatal injuries at Metallurgical Coal’s
operations in 2013. The lost-time injury frequency and
total recordable frequency rates of 1.00 and 1.48 were the
lowest on record and represent a respective improvement
of 43% and 36% over 2012. These results were attributable
to visible and proactive leadership presence in the field,
increased accountability and specific monitoring of
supervisor safety performance. A reduction in the overall
high level risk profile was achieved through formal
contractor management improvements and increased
focus on the management of high level risks, such as
those associated with vehicles and machinery.
To assist in mitigating the emissions that may contribute
to climate change and to reduce exposure to the carbon
pricing mechanism, Metallurgical Coal has expanded the
German Creek Power Station by more than 12 MW per
annum and, in doing so, is reducing CO2e emissions by
capturing methane that would otherwise be vented,
and producing electricity. Metallurgical Coal has also
implemented a number of business improvement projects
that enhance heavy mining equipment efficiency in order
to reduce fuel usage.
Markets
Anglo American weighted average
achieved sales prices
($/tonne)
Export metallurgical coal (FOB)
Export thermal coal (FOB Australia)
Domestic thermal coal
Attributable sales volumes
(’000 tonnes)
Export metallurgical coal
Export thermal coal
Domestic thermal coal
2013
140
84
39
2013
19,045
6,372
6,125
2012
178
96
37
2012
17,413
6,043
6,921
Australian metallurgical coal production continued at
record levels in the second half of 2013, with seaborne
exports reaching an all-time high of 16.3 Mt in October 2013
(194 Mt annualised), and totalling 169.7 Mt for the year
(2012: 144.5 Mt). This increased production, combined
with sustained high export levels from the US and Canada,
created an oversupply of seaborne metallurgical coal for
the year.
Quarterly benchmark prices for seaborne metallurgical
coal dropped sharply in the latter half of the year, reaching a
four-year low of $145/tonne in the third quarter. The average
2013 HCC quarterly price fell by 24% to $159/tonne from
the 2012 average of $210/tonne.
Around 75% of Anglo American’s metallurgical coal
sales were placed against term contracts with quarterly
negotiated price settlements, while the balance of sales
comprised short term priced transactions. HCC accounted
for 70% of Metallurgical Coal’s export metallurgical coal
sales in 2013, an increase of 3%, as a result of the focus on
high margin production.
Operating performance
Attributable production
(’000 tonnes)
Export metallurgical coal
Export thermal coal
Domestic thermal coal
2013
18,656
6,264
6,239
2012
17,664
6,046
6,925
Export metallurgical coal production increased by 6% to
a record 18.7 Mt, while export thermal coal production
increased 4% to 6.3 Mt. Production improved by 30% at the
underground operations owing to a significant step-change
in performance over the past 18 months. Production at the
open cut operations decreased by 5%, mainly as a result of
excessive rainfall causing flooding and rail disruptions in the
first quarter, and planned capacity reductions. Metallurgical
Coal’s sustained focus on costs reduced FOB costs by 10%,
despite export volumes increasing by 5%.
62
Anglo American plc Annual Report 2013 Moranbah North’s underground operations delivered record
production. Output rose by 39% following best practice
longwall performance, driven in turn by a 45% year on year
improvement in cutting hours, an increase in automated
cutting, and a reduction in unplanned downtime.
ADAPTIVE WATER
MANAGEMENT
Performance improved by 16% year on year at Capcoal’s
underground operation, through increased reliability of the
longwall, with a 15% improvement in cutting hours and
improved coal clearance system uptime.
Record coal production was achieved at Foxleigh open
cut mine, with a 4% increase over the prior year, on the
back of productivity improvements arising from increased
equipment availability and optimal alignment of equipment
to pit conditions.
In Canada, Peace River Coal increased coal production by
22%, reflecting improvements in mining design, greater
productivity in mining operations as well as yield and
throughput enhancements in the coal preparation plant.
Export thermal coal production was 4% higher for the year
following productivity improvements.
Projects
The wholly owned Grosvenor project remains on target
for first longwall production in 2016. All key permits and
licences are in place. Critical engineering and procurement
activities have been completed and the majority of the
project budget has been contracted and committed.
Surface construction is well advanced; earthworks and
concrete are essentially complete; structural, mechanical
and piping works are advancing well; and electrical works
have commenced. The drift portal works are complete
and underground development has commenced with the
commissioning of a tunnel boring machine.
As announced in July 2013, the capital costs to develop
the Grosvenor project increased by $250 million to
$1.95 billion owing to scope changes resulting from an
investigation into the drift failure at Moranbah North in
2011 that led to a complete redesign of the Grosvenor
drift and its construction method. Costs have also been
impacted by adverse exchange rate movements during
the construction phase.
Outlook
An oversupply of metallurgical coal has been generated
by strong metallurgical production from Australia and high
US exports, with metallurgical coal prices expected to
remain subdued into 2014.
US exports are starting to reduce in response to lower
prices; however, record Australian production has more
than offset any reductions. Capacity increases from
Australian greenfield supply in the second half of 2014
will continue to limit any significant price improvement.
Seaborne metallurgical coal demand is expected to
increase to around 305 Mt in 2014, approximately 8%
higher than 2013.
Metallurgical Coal is positioned to take advantage of
any future coal price increases as a result of its focus
on delivering high margin, low cost capacity, and the
demonstrated benefits of business improvement initiatives.
A critical water-related challenge facing our
Metallurgical Coal operations in Australia is significant
variability in rainfall, with conditions often oscillating
between severe drought and flood. In response, over
the last two years, the business has proactively
improved its ability to manage the risks associated
with too much, or not enough water.
Our Capcoal, Dawson and Moranbah North mines in the
Bowen Basin, Queensland, have invested a combined
$110 million in better on-site water management,
including extensive pump and piping works, improved
flood protection infrastructure, road-sheeting works,
and upgrades to underground mines, drainage network,
storage and dewatering capacity.
The potential benefits include: reducing the risk of mine
pits being flooded; lessening the risk to staff, roads and
machinery from flood damage; and storing water for
future use on site, while providing storage capacity for
excess water when high rainfall events occur.
The environmental benefits include reducing the
volume of flood waters entering pits and ensuring that,
when water is released, there is sufficient dilution of
brackish mine water to reduce the risks to river animal
and plant life and downstream water users.
Image
Environmental graduate Jessie Penton checking dam pump valves
at Moranbah North.
Pillars of value:
For more on Pillars of value and our KPIs
See pages 14–15 and 18–19
63
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT THERMAL COAL
THERMAL COAL
Godfrey Gomwe
CEO
UNDERLYING OPERATING PROFIT
(2012: $793 m)
$541 m
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: 13%)
8%
UNDERLYING EBITDA
(2012: $972 m)
$735 m
64
Key financial and non-financial performance indicators
$ million (unless otherwise stated)
Underlying operating profit
South Africa
Colombia
Projects and Corporate
Underlying EBITDA
Capital expenditure
Share of Group underlying operating profit
Attributable return on capital employed
Non-financial indicators
Number of fatal injuries
Lost-time injury frequency rate
Total energy consumed in 1,000 GJ
Total greenhouse gas emissions in 1,000 tonnes CO2e
2013
541
356
228
(43)
735
217
8%
23%
2013
3
0.18
5,935
1,583
2012(1)
793
482
358
(47)
972
266
13%
35%
2012
2
0.20
5,742
1,620
Total water consumed in 1,000 m3
11,044
10,398
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
Image
Anglo American
Inyosi Coal (73% held
by Thermal Coal) has
a 50% interest in the
Phola washing plant.
Here, coal from Thermal
Coal’s new Zibulo
colliery is being washed
at the plant in preparation
for export.
Anglo American plc Annual Report 2013 BUSINESS OVERVIEW
Our Thermal Coal business operates in South Africa and
Colombia. In South Africa, Thermal Coal wholly owns
and operates seven mines. It also has a 73% stake in
Anglo American Inyosi Coal (AAIC), a broad-based black
economic empowerment entity. AAIC wholly owns two
mines, Kriel and Zibulo, and has a 50% interest in the Phola
washing plant, a joint operation with BHP Billiton. In addition,
Thermal Coal has a 50% interest in the Mafube colliery,
a joint operation with Exxaro.
The South African mines supply both the export and
domestic markets, delivering thermal coal domestically to
Eskom, the state-owned power utility and Sasol, a coal-to-
liquids producer. Exports are currently routed through the
Richards Bay Coal Terminal (RBCT), in which it has a 24.2%
shareholding, to customers throughout the Atlantic,
Mediterranean and Asia-Pacific regions.
In Colombia, Anglo American, BHP Billiton and
GlencoreXstrata each have a one-third shareholding
in Cerrejón, the country’s largest thermal coal exporter.
In 2011, an expansion (the P40 project) was approved
to increase this capacity by 8 Mtpa to 40 Mtpa by 2015
(13.3 Mtpa attributable). Cerrejón owns and operates its
own rail and deep water port facilities and sells into the
export thermal and pulverised coal injection markets.
INDUSTRY OVERVIEW
Coal is the world’s most abundant source of fossil fuel
energy. Exceeding known reserves of oil and gas, it
accounts for approximately 41% of global electricity
generation. Thermal coal is a significant component of
global energy consumption, accounting for an estimated
29% of primary energy demand in 2012.
The bulk of coal production is used in power generation;
decisions that affect the energy mix of power generation
therefore influence coal demand. These include long
term industry dynamics for nuclear, gas and renewable
power generation and policy decisions on climate and
environmental legislation.
In 2013, export seaborne thermal coal accounted for
approximately 950 Mt or 13% of global thermal coal
demand, with a large proportion of production coming
from four key basins: Indonesia, Australia, Colombia and
South Africa. Demand for seaborne traded thermal coal has
increased by 53% since 2008, and is expected to continue
to grow over the long term, driven by India and China’s
growing reliance on imported thermal coal. The IEA World
Energy Outlook 2013 forecasts coal consumption for
electricity generation to grow by 1.2% per year (cumulative
annual average growth rate) under its New Policies Scenario
from 2011 to 2035, with growth slowing after 2020 owing to
the effect of environmental regulation.
In developed economies, demand is expected to steadily
decline as environmental regulation hastens the retirement
of older coal-fired power stations and reduces the incentive
for new coal-fired capacity. The major risks to the medium
GENERATING POWER
FROM THE SUN
Mining is an energy-intensive business. However, we
are committed to developing and investing in projects
that optimise our energy use, benefit our operations
and reduce our environmental impact.
In South Africa, our Thermal Coal business is
capitalising on its abundance of sunshine to develop
solar energy farms that will generate electricity in the
eMalahleni (Witbank) region of Mpumalanga province.
Our Greenside colliery has commissioned a solar farm
that will meet 25% of the power requirements at its
main office complex. The plant cost $280,000 to build
and is expected to generate 166 MWh every year,
enough to power 23 average-sized households. The
anticipated annual emissions reduction is the equivalent
of planting 1,049 trees.
In the longer term, solar plants are expected to compare
favourably from a cost perspective with utility grid
power and, while they will only supplement some of
Thermal Coal’s energy needs, we expect to realise net
cost savings.
Image
As part of Anglo American’s ECO2MAN programme, Thermal Coal has
constructed this solar-energy farm which is designed to meet a quarter
of the power requirements of the mine’s main office complex.
Pillars of value:
For more on Pillars of value and our KPIs
See pages 14–15 and 18–19
term growth of export seaborne thermal coal revolve
around the ability of India and China to sustain their rates
of economic growth, as well as logistical constraints and
cost-inflation pressures.
US thermal coal continues to be exported into the seaborne
market; however the US domestic gas price (Henry Hub
spot prices) has increased, thereby improving the
competitiveness of coal within the domestic market and
reducing the overhang of US thermal coal that made its
way into thermal markets in 2012.
65
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT THERMAL COAL
Rest of World
China
Japan
India
South Korea
Europe
Taiwan
Total
%
24
24
14
14
10
8
6
235
226
133
131
102
78
56
961
100
Source: Wood Mackenzie, Thermal coal
supply and demand overview, January 2014
Indonesia
Australia
Russia
Rest of the World
Colombia
South Africa
United States
Total
%
41
20
10
8
8
8
5
390
194
98
82
79
74
44
961
100
Source: Wood Mackenzie, Thermal coal
supply and demand overview, January 2014
STRATEGY
Thermal Coal’s strategic vision is to be a safe, material, high
margin, thermal coal producer with a global footprint that
participates in the most attractive seaborne thermal coal
markets, while maintaining its domestic market commitments.
Thermal coal demand is being driven by Asia’s economic
growth and its reliance on low cost, readily available supply.
Although the export thermal coal market is currently in
oversupply, it is expected to recover in the medium term as
sustained lower pricing begins to erode high cost supply and
as demand recovers. In South Africa, demand for new coal
supply is increasing and is expected to continue to grow in
order to supply Eskom’s future coal requirements for its
existing and future power stations.
To maximise its asset value, Thermal Coal has implemented
various business improvement initiatives based on
understanding benchmark performance and aimed at
driving value within its portfolio of operating mines.
The business improvement initiatives collectively form
Project Khulisa, meaning to grow to full potential, and are
designed to realise Thermal Coal’s full production and profit
potential and implement cross-mine programmes to
achieve these targets. Project Khulisa continued in 2013,
and its targets are entrenched in Thermal Coal’s business
processes. Thermal Coal also realised significant value by
implementing an integrated mine planning process through
its Enterprise Value Optimisation project, ensuring the
highest possible margin is achieved given the available rail
capacity, based on recent and expected Transnet Freight
Rail (TFR) performance, market demand for varying coal
products and price.
OPERATING SAFELY, SUSTAINABLY
AND RESPONSIBLY
Thermal Coal faces risks from water management and
climate change. Coal mining has the potential to affect the
quality of water in catchments that are already under stress
– a risk that is mitigated by careful operational water
management and the business’s leading water treatment
facilities. Two carbon- and energy-related risks are the
South African government’s proposed energy price
increases, which could double Thermal Coal’s energy bill
in South Africa over the next few years, and the anticipated
introduction of a long term price on carbon. In South Africa,
we are participating in a fact-building exercise with the
government to help shape effective carbon policy that is
aligned with the country’s development objectives. Energy
security continues to be a risk for operations as Eskom
strives to meet current and future electricity demand and
keep its ageing power stations in good running condition.
FINANCIAL AND OPERATIONAL OVERVIEW
Thermal Coal generated an underlying operating profit
of $541 million, a 32% decrease over the prior year, primarily
driven by lower average export thermal coal prices, partly
offset by the impact of the weaker South African rand.
Business performance was also affected by a 32 day strike
at Cerrejón in the first quarter.
Safety and environment
Sadly, three colleagues lost their lives while working at
Thermal Coal operations in South Africa. One contractor
was also fatally injured at Cerrejón, in Colombia. Thorough
incident investigations were conducted to ensure that the
root causes of these incidents are understood, addressed
and shared across the Group.
Over the past five years, Thermal Coal has continued
to improve its performance in relation to injuries, which
is reflected in the 42% reduction in lost-time injury
frequency rate (LTIFR) from 0.31 in 2008 to the current
0.18. Cerrejón achieved an LTIFR of 0.16, the lowest in the
operation’s history.
Thermal Coal’s energy, greenhouse gas (GHG) and water
footprints are managed through the implementation of
Anglo American’s WETT and ECO2MAN programmes, and
energy and GHG levels are trending well below business as
usual projections.
66
Anglo American plc Annual Report 2013
South Africa
Underlying operating profit from South African operations
decreased by 26% to $356 million, driven by 16% lower
average export thermal coal prices, partially offset by the
impact of the weaker South African rand (2013: $/ZAR 9.65,
2012: $/ZAR 8.21). However, the continuation of cost
control measures has contained cost increases in line with
CPI in local currency terms, despite above-CPI increases for
several major cost components.
Export production at 17.0 Mt was in line with the prior year
with a 13% improvement in performance at Greenside
offset by lower production at Goedehoop, owing to
challenging mining conditions, and Landau following the
slower than anticipated plant ramp-up following maintenance.
Colombia
At Cerrejón, underlying operating profit of $228 million was
36% down on 2012, owing to the impact of lower thermal
coal prices, partly offset by significant cost efficiencies
(8% lower than 2012) and marginally higher sales volumes
of 11.2 Mt, as the operation recovered strongly from the
32-day strike in the first quarter.
Projects
In South Africa, the 11 Mtpa New Largo project is in
feasibility and engagement with Eskom to finalise the
coal supply agreement continues. The project is expected
to be presented for board approval once the necessary
permits have been obtained and the coal supply
agreement concluded.
The Cerrejón P40 expansion project, to increase the port
and logistics chain capacity to handle a total mine output of
40 Mtpa (an additional 8.0 Mtpa), is progressing on schedule
and budget.
Outlook
Demand for seaborne thermal coal is forecast to remain
strong, driven mainly by growth in Asia, with China and India
remaining the key markets. Atlantic demand is likely to be
steady in the short term as new coal-fired capacity is being
offset by the closure, in certain cases at the insistence of
regulators, of older power stations.
The significant tonnages of domestic coal produced
by China and India, the two largest thermal coal import
markets, will continue to act as a restraint on imported
coal prices, a situation likely to be exacerbated as domestic
producers adjust their prices to stay competitive against
imported coal.
Markets
Anglo American weighted average
achieved sales prices
($/tonne)
South Africa export thermal coal (FOB)
South Africa domestic thermal coal
Colombia export thermal coal (FOB)
Attributable sales volumes
(’000 tonnes)
South Africa export thermal coal
South Africa domestic thermal coal(1)
Colombia export thermal coal
2013
2012
77
19
73
92
21
89
2013
17,502
39,044
11,152
2012
17,151
40,110
10,926
(1)
Includes domestic metallurgical coal of 91,800 tonnes in 2012.
International seaborne demand continues to grow (7%
to 961 Mt); however the supply response to date has kept
pace with demand. In 2013, the international thermal coal
seaborne market remained in oversupply, despite supply
disruptions that included the effects of industrial action
in Colombia. This has kept prices suppressed and
discouraged investment.
Thermal coal prices generally continued their declining
trend over the year, although with some volatility. Delivered
prices into Europe (API2) fell below $75/tonne in June, their
lowest in three years, before regaining some lost ground
with a fourth quarter average price of $84.3/tonne. The
average API2 price index was $81.5/tonne for the year.
The average API4 (FOB, Richards Bay) index price also
fell below $75/tonne in June, while the average for the year
fell by approximately 14% to $80/tonne (2012: $93/tonne)
to close at $85/tonne (2012: $89/tonne).
Generally, the lower prices have forced producers to
seek productivity gains and ramp up volumes in order to
reduce unit costs. In conjunction with newly commissioned
infrastructure projects, this has resulted in strong supply-
side performance from various export countries.
Depreciation of the Australian dollar and South African
rand, which declined by 6% and 18% respectively against
the US dollar, provided some relief for producers.
Asia accounted for 75% of South African thermal coal
shipments, 3% lower than 2012. South African thermal coal
shipments out of RBCT reached a record high of 70.2 Mt, an
increase of 3% over the prior year (2012: 68.3 Mt), bolstered
by TFR’s improved performance. TFR also had a record
calendar year with 70.5 Mt railed to RBCT, a 3%
improvement over 2012 (68.5 Mt).
Operating performance
Attributable production
(’000 tonnes)
South Africa export thermal coal
Colombia export thermal coal
South Africa Eskom coal
South Africa domestic other(1)
2013
17,031
11,002
33,567
5,992
2012
17,132
11,549
33,706
6,293
(1)
Includes domestic metallurgical coal of 74,100 tonnes for 2012.
67
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT BASE METALS AND MINERALS – COPPER
BASE METALS AND MINERALS – COPPER
Duncan Wanblad
CEO: Base Metals and Minerals
Hennie Faul
CEO: Copper
UNDERLYING OPERATING PROFIT
(2012: $1,736 m)
$1,739 m
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: 28%)
26%
UNDERLYING EBITDA
(2012: $2,288 m)
$2,402 m
68
Key financial and non-financial performance indicators
$ million (unless otherwise stated)
Underlying operating profit
Underlying EBITDA
Capital expenditure
Share of Group underlying operating profit
Attributable return on capital employed(2)
Non-financial indicators(3)
Number of fatal injuries
Lost-time injury frequency rate
Total energy consumed in 1,000 GJ
Total greenhouse gas emissions in 1,000 tonnes CO2e
Total water consumed in 1,000 m3
2013
1,739
2,402
1,011
26%
25%
2013
1
0.20
16,070
1,694
38,525
2012(1)
1,736
2,288
1,214
28%
29%
2012
0
0.20
15,485
1,640
35,667
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
(2) Removing outstanding tax liability balances relating to the AA Sur divestment in 2012 and 2013, Copper attributable
ROCE would fall to 24% in 2012, and 24% in 2013.
(3) Certain non-financial indicators relating to 2012 have been revised due to change requests made by the operations
subsequent to the publication of the 2012 annual report.
Image
In the tankhouse at
the Chagres smelter,
molten copper is poured
into moulds to form
copper cathodes.
Anglo American plc Annual Report 2013
BUSINESS OVERVIEW
We have interests in six copper operations in Chile. The
Mantos Blancos and Mantoverde mines are wholly owned
and we hold a 50.1% interest in Anglo American Sur (AA Sur),
which includes the Los Bronces and El Soldado mines and
the Chagres smelter. We also hold a 44% shareholding in
the Collahuasi mine. The mines produce a combination of
copper in concentrate and copper cathodes together with
associated by-products such as molybdenum and silver.
In Peru, we have an 81.9% interest in the Quellaveco project
and we wholly own the Michiquillay project.
INDUSTRY OVERVIEW
Copper’s principal use is in the wire and cable markets
because of the metal’s electrical conductivity and corrosion
resistance. Applications that make use of copper’s electrical
conductivity, such as wire (including the wiring used in
buildings), cables and electrical connectors, make up
approximately 60% of total global demand. The metal’s
corrosion-resistant properties find numerous applications
in the construction industry, particularly plumbing pipe and
roof sheeting, which accounts for a further 20% of demand.
Copper’s thermal conductivity also makes it suitable for use
in heat-transfer applications such as air conditioning and
refrigeration, which constitute some 10% of total demand.
Other applications include structural and aesthetic uses.
Access to quality orebodies, located in regions providing
stable political, social and regulatory support for responsible
and sustainable mining, is likely to continue to be the key
factor distinguishing project returns and mine profitability.
Such orebodies are scarce, however, and it will be
increasingly necessary for mining companies to develop
assets in more challenging environments.
With no fundamental technological shifts expected in the
short to medium term, forecast long term demand is likely
to be underpinned by growth in copper’s electrical uses,
particularly wire and cable in construction, automobiles
and electricity infrastructure. The key growth area will
continue to be the developing world, led by China and, in
the longer term, other Asian economies including India,
where industrialisation and urbanisation on a large scale
continue to propel copper demand growth. The intensity
of copper consumption is still at a high level in the case of
China, while in India it is on an upward trajectory. This is in
contrast with the advanced economies and their much
lower levels of intensity.
In spite of near term supply growth that may well be higher
than that of the past six or seven years, constraints on the
supply side are likely to prove a structural feature of the
market. Such constraints will be driven by continuing
declines in ore grades at maturing existing operations, a
lack of capital investment and under-exploration in new
projects, as well as political and environmental challenges
in many current and prospective copper areas.
China
Europe
Rest of World
North America
Japan
South Korea
Russia
India
Brazil
Mt
9.2
3.4
2.4
2.3
1.0
0.7
0.7
0.5
0.5
Source: Wood Mackenzie – Global copper
short term outlook, January 2014
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 are developed in more
challenging locations. Combined with the need to develop
infrastructure in new geographies, greater economies of
scale will be required if mines are to be commercially viable.
Scarcity of water in some countries, such as Chile and Peru,
are also likely to necessitate the construction of capital- and
energy-intensive desalination plants.
During the period 2000-2012, China increased its share
of first-use refined metal consumption from 12% to an
estimated 41%. Demand growth there continued to
increase faster than in the rest of the world, so that in 2013,
China’s share of refined demand was estimated to have
reached 44%.
STRATEGY
Copper’s strategy is to generate industry-leading returns
by safely and sustainably creating value for all stakeholders
through operational excellence, disciplined growth and an
optimised portfolio. The business continues to explore for
low operating cost and long life development opportunities
and to evaluate the longer term project options in its
portfolio, including Quellaveco and the Los Bronces District.
In September 2013, Anglo American gave notice of its
decision to withdraw from the Pebble copper project in
Alaska. As a result, the investment in Pebble was written
off in full, resulting in a charge of $311 million, including
exit costs.
69
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT BASE METALS AND MINERALS – COPPER
Copper stocks and price
1,000
)
t
k
(
s
k
c
o
t
s
r
e
p
p
o
C
750
500
250
0
Jan 10
Shanghai Stocks
Comex Stocks
LME Stocks
Copper price (c/lb)
500
450
400
350
300
250
200
150
100
C
o
p
p
e
r
p
r
i
c
e
(
c
/
b
)
l
Jan 11
Jan 12
Jan 13
Source: Anglo American Commodity Research
Ongoing reviews by our operations have highlighted
challenges from an environmental standpoint where we
are evaluating potential environmental impacts generated
by our operations, or where we have not sufficiently
implemented compensatory measures. These are primarily
centred around mine-affected water quality and backlogs
in reforestation programmes as per original permit
conditions. These anomalies are being addressed in
conjunction with the environmental agencies.
Copper’s social development strategy aims to deliver a
lasting, net-positive benefit to its host communities, notably
in the fields of education and local economic development.
One notable programme is the Emerge enterprise
development programme, for which the government of
Chile awarded Copper the prestigious ‘More for Chile’
award. This initiative, begun in 2006, has supported more
than 40,000 entrepreneurs, of whom more than 80%
are women. In Peru, the business has made a substantial
contribution to early education through its programme
of working with children aged nought to three, as well as
with their mothers and fathers in order to improve
parenting skills.
FINANCIAL AND OPERATIONAL OVERVIEW
Copper generated an underlying operating profit of
$1,739 million, in line with the prior year. Higher sales
volumes from Los Bronces and Collahuasi, leading to
lower unit costs were offset by the decline in the average
realised copper price. Operating profit also benefited
from lower power prices, exploration and study costs.
Safety and environment
During the year, Copper recorded a single loss of life
arising from a height-related incident at its Mantos Blancos
operation. The lost-time injury frequency rate was unchanged
at 0.20. The business’s safety endeavours continue to
concentrate on risk and change management, learning
from incidents and contractor management processes.
Water supply is one of the major challenges for our
operations and process optimisation continues in order to
minimise water consumption. The recirculation system at
Los Bronces is now recycling 100% of processed water
and several new water supply projects at Los Bronces were
implemented during the year. Significant progress has also
been made on the Mantoverde desalination plant, which is
expected to start delivering water to the operation in the first
quarter of 2014. As a result of the initiatives, water savings of
44% have been delivered compared to business as usual.
70
Anglo American plc Annual Report 2013
Production at Mantoverde decreased by 9% owing to
lower grades, while output at Mantos Blancos was in line
with the prior year.
During 2013, Copper undertook a full review of its contracted
services processes, identifying a number of improvements
which are now being implemented. Cost savings have
already started to be realised and the benefits are expected
to increase.
Projects
In Peru, the Quellaveco copper project was evaluated as
part of the Group asset review, which resulted in a decision
to reconfigure the project so that its economic returns are
more robust. A final review of the project is expected during
2015. During the intervening period, work will continue on
the project site, aimed mainly at progressing the Asana river
diversion tunnel, along with various social and community
programmes, thereby solidifying the already high social
support for the project.
In the Los Bronces District, the conceptual study of the
Los Sulfatos deposit has commenced and the permits
required to start sub-surface hydrogeological drilling were
received in the final quarter of 2013.
Outlook
Production levels in 2014 are expected to be impacted
by lower ore grades at Los Bronces and Collahuasi. At
Los Bronces, costs are expected to rise as a result of
ongoing mine development, along with restoring mine
flexibility. At El Soldado, the lack of ore availability is
expected to result in a decrease in production over the
next two years, before recovering in 2016.
Challenges remain in managing continuing industry-wide
input cost pressures; however the contracted services
review conducted in 2013 is expected to alleviate some
of this pressure. Ongoing market concerns arising from
uncertainties over the near term outlook for the global
economy and new supply coming on line may lead to
short term volatility in the copper price. The long term
fundamentals for copper, however, remain strong,
predominantly driven by robust demand from the
emerging economies and supply constraints owing to
ageing mines and steadily declining average grades.
Markets
Average price
Average market prices (c/lb)
Average realised prices (c/lb)
2013
332
326
2012
361
364
The copper price rose at the start of 2013 to a high of
374 c/lb, buoyed by Chinese buying ahead of the Lunar
New Year and a temporary resolution to the fiscal stalemate
in the US. Underwhelming macro-economic data releases
and a sharp rise in LME inventories followed, which resulted
in prices retreating to 301 c/lb by the end of June. A hot
summer in China, increasing financial demand and tightness
in the scrap market then underpinned a modest recovery.
However, strong mine supply and surging concentrate
imports began to weigh on sentiment by November, with
prices falling back to 314 c/lb, before ending the year at
335 c/lb. For the full year, the realised price averaged
326 c/lb, a decrease of 10% compared with 2012. This
included a negative provisional price adjustment of
$92 million versus a positive adjustment of $47 million
for 2012.
Operating performance
Attributable production (tonnes)
Copper
2013
2012
774,800
659,700
Attributable copper production of 774,800 tonnes was
17% higher than in 2012, driven by improved operating
performance at Los Bronces and Collahuasi.
Production at Los Bronces was 14% higher at 416,300
tonnes, owing to continued strong throughput performance.
Reduced mine congestion and de-bottlenecking at the
primary crushers has improved continuity of ore supply
and throughput at both processing plants. Improvements
implemented in the Confluencia milling and flotation
processes have also resulted in higher recoveries. Mine
development continues, with the initial opening of the next
two phases of ore supply completed during the period.
Large scale mining equipment is now in place in these
phases, with development stripping accelerating in the
second half of 2013.
At Collahuasi, production increased by 58%, with
Anglo American’s attributable output climbing to
195,600 tonnes. Following the SAG 3 stator motor
replacement and repowering in the second quarter of
the year, plant stability and mill throughput performance
have improved significantly. Production also benefited
from higher than planned grades.
Production at El Soldado decreased by 4% to 51,500
tonnes, owing to lower grades. The development of the next
major phase of ore supply has slowed as mining activities
intersected a geological fault, impacting ore availability
in the last quarter of the year. The lack of ore has been
partially mitigated by the processing of slag from the nearby
Chagres smelter.
71
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT BASE METALS AND MINERALS – NICKEL
BASE METALS AND MINERALS – NICKEL
Duncan Wanblad
CEO: Base Metals and Minerals
Ruben Fernandes
CEO: Nickel, Niobium and Phosphates
UNDERLYING OPERATING
(LOSS)/PROFIT
(2012: $26 m)
$(44) m
Key financial and non-financial performance indicators
$ million (unless otherwise stated)
Underlying operating (loss)/profit
Underlying EBITDA
Capital expenditure(2)
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: 0.4%)
Share of Group underlying operating profit
Attributable return on capital employed
2013
(44)
(37)
(28)
(0.7)%
(2)%
2013
0
0.17
2012(1)
26
50
100
0.4%
1%
2012
1
0.11
15,577
19,154
884
4,175
1,423
7,262
Non-financial indicators
Number of fatal injuries
Lost-time injury frequency rate
Total energy consumed in 1,000 GJ
Total greenhouse gas emissions in 1,000 tonnes CO2e(3)
Total water used for primary activities in 1,000 m3
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
(2) Cash capital expenditure at Nickel of $76 million is offset by the capitalisation of $104 million of net operating
cash generated by Barro Alto which has not yet reached commercial production.
(3) Greenhouse gas emissions data for 2012 has been revised due to system corrections applied subsequent to
the publication of the 2012 annual report.
Image
Production operator
Edineia Liberato Pereira
takes notes during an
inspection of the crusher
at Barro Alto’s ore
preparation plant.
(0.7)%
UNDERLYING EBITDA
(2012: $50 m)
$(37) m
72
Anglo American plc Annual Report 2013
BUSINESS OVERVIEW
Our Nickel business unit comprises two Brazilian operating
assets: Barro Alto and Codemin, both ferronickel producers
in the state of Goiás. Within the portfolio there are also two
promising growth projects, Jacaré and Morro Sem Boné,
both of which are laterite deposits in Brazil.
Operations at Loma de Níquel in Venezuela ceased
permanently in November 2012.
INDUSTRY OVERVIEW
Nickel demand is closely linked to that of the stainless steel
industry, which consumes two-thirds of the metal and
virtually all ferronickel production. Nickel used in the
manufacture of alloy steel and other non-ferrous alloys
accounts for a further 23% of output.
China is the largest stainless steel producing country, with
close to 50% of world production in 2013. Nearly 80% of
China’s nickel requirements is produced domestically. Of
this, nickel pig iron (NPI) accounted for around 69% in 2013.
The next significant stainless steel producing regions are
Europe, with 19% of world output, India (9%), Japan (8%),
other Asia (8%) and the US accounting for 5%.
Nickel can be produced from two different ore types:
sulphides and laterites. This has resulted in a large number
of processing technologies that have made the industry a
very complex one, with high processing costs and capital
intensity. Production is concentrated among the biggest five
producers, which between them are responsible for almost
half of global output.
The nickel industry faced a variety of challenges in 2013.
Demand was negatively affected by macro-economic
uncertainty, including at various points through the year,
concerns surrounding the US Federal Reserve’s ‘tapering’
policies, the state of the euro zone economy, and a
slowdown in China.
Nickel producers are going through a challenging period
as the price of nickel remains depressed, largely owing
to increased NPI output from Chinese smelters, which
left the market in surplus in 2013. Chinese NPI production
depends on high grade, low iron content ore imported
from Indonesia; however, owing to shifts in Indonesian
government policy, there is uncertainty around the
sustainability of Indonesian ore supply.
China
Europe
Japan
North America
Rest of World
South Korea
India
Taiwan
Russia and Caspian
kt
890
336
177
150
84
78
56
49
32
Source: Wood Mackenzie – Global nickel short term outlook,
January 2014
STRATEGY
Nickel’s strategy is currently operationally focused,
concentrating on stabilising Barro Alto’s production while
the nickel price is low, so as to achieve nominal capacity
in time to benefit from the next cyclical price increase.
Management is currently implementing strategic short
term initiatives to deliver an optimised operation ahead
of the furnaces rebuild at Barro Alto. Delivery of efficient
production is supported by business improvement initiatives
which are driving improved output and reduced costs and
will extend the lives of both Barro Alto and Codemin. At full
production, both operations will be positioned in the first
half of the industry’s cash-cost curve.
Our Nickel business continues to assess its portfolio of
expansionary and exploration projects. In 2013, progress
was made on environmental licensing for both Jacaré and
Morro Sem Boné.
Nickel has identified that a key driver for operational
efficiency is to attract and retain a suitably qualified
workforce. The business has focused on recognising high
performance through competitive remuneration and
employee development programmes and, during 2013,
was recognised as one of Brazil’s “Top 35” companies to
start a career with, and as one of its 150 best companies
to work for.
73
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT BASE METALS AND MINERALS – NICKEL
Nickel stocks and price
)
t
k
(
s
k
c
o
t
s
l
e
k
c
N
i
300
250
200
175
150
125
100
75
50
25
0
Jan 10
LME Stocks
LME Price
i
N
c
k
e
l
p
r
i
c
e
(
c
/
b
)
l
2,500
2,250
2,000
1,750
1,500
1,250
1,000
750
500
250
0
Jan 11
Jan 12
Jan 13
Source: Anglo American Commodity Research
Operating safely, sustainably and responsibly
Safety and sustainable development are central to Nickel’s
strategy. The main focus of Nickel’s environmental strategy
is on water, energy and greenhouse gas emissions.
Opencast mining processes can have a notable impact
on the landscape, and full rehabilitation can be challenging.
In order to overcome this, Nickel has partnered with
biodiversity NGOs and universities to develop regional land
and biodiversity management plans that are aligned with
mine closure plans.
Recognising the importance of the role our Nickel business
plays in the local community, significant investment has
been made in long term programmes relating to female
empowerment, sexual and reproductive health, citizenship,
rural entrepreneurship and local government. In recognition
of this work, and for the sixth consecutive year, Exame
business magazine gave Nickel one of the most prestigious
sustainability awards in Brazil for being a role model
company in sustainable development.
FINANCIAL AND OPERATIONAL OVERVIEW
Nickel reported an underlying operating loss of $44 million.
The 2012 underlying operating profit of $26 million included
a self-insurance recovery of $57 million, in addition to which
underlying operating profit in 2013 was affected by a 14%
decline in the LME nickel price and increased discounts
arising from weaker market conditions, compensated in
part by reductions in corporate and project spend. The
underlying operating result for Barro Alto continues to
be capitalised.
A more challenging market outlook, the need for furnace
rebuilding and updated operational planning have led to a
reduced valuation for Barro Alto, for which an impairment,
post- tax, of $529 million (relating to a value-in-use carrying
value assessment) and a write-off of $195 million (relating
to existing furnace equipment which is to be rebuilt) were
recognised in 2013.
Safety and environment
Nickel operated without any loss of life in 2013, but
recorded a 55% deterioration in lost-time injury frequency
rate (LTIFR) to 0.17 (2012: 0.11). This prompted an increased
focus on risk and change management, on preventing
incidents during the upcoming furnaces rebuild, and on
maintenance stoppages.
There has been good progress towards the business’s
2015 environmental targets, with initiatives delivering water
savings of 2.6 million m3, energy savings of 3.3 million GJ
and CO2 savings of 37,000 tonnes since 2011.
74
Anglo American plc Annual Report 2013
Markets
Average nickel price (c/lb)
Average market price (c/lb)
Average realised price (c/lb)(1)
Operating performance
Attributable nickel production
(tonnes)
Nickel
2013
680
646
2012
794
771
2013
2012
34,400
39,300
(1) Realised prices are now reported inclusive of Barro Alto sales. This has led to the
restatement of the 2012 realised price from 765 c/lb to 771 c/lb.
After increasing moderately to 804 c/lb, LME nickel prices
fell to a low of 622 c/lb in July as a result of economic
concerns. These price declines led to a reduction in demand
owing to the way in which stainless steel producers pass
on raw material costs to their buyers with a one month lag.
Further pressure came from the impact of increasing new
nickel supply, most notably NPI in China.
The nickel market recorded a surplus of 102,000 tonnes for
the year compared with a surplus of 48,000 tonnes in 2012.
Nickel consumption increased by 9.1% to 1.9 million tonnes,
but supply also rose following the ramping up of a number
of new nickel plants. The growth in conventional supply was
lower than expected as a result of problems at a number of
new operations.
Image
Environmental
engineers Hamanda
Jansen (left) and
Anita Marques
take water-height
readings at the dam
at Barro Alto mine.
Nickel production decreased by 12% to 34,400 tonnes,
primarily as a consequence of the cessation of mining and
production activities at Loma de Níquel.
Barro Alto produced 25,100 tonnes of nickel in 2013,
16% higher than 2012. This increase reflects improved
operational stability in the second half of the year, following
the planned Line 2 sidewall rebuild and subsequent metal
run-out in the first half.
Despite this improvement, equipment sensitivities remain.
Barro Alto’s furnace rebuild was a focus in the second half
of the year, with evaluation of the optimal design and
construction scenario, as well as early engineering activities
now well progressed.
Codemin produced 9,300 tonnes of nickel in 2013, slightly
lower than 2012, as a result of a planned decline in grade.
Outlook
Production in 2014 is expected to be similar to 2013, as
close monitoring of Barro Alto facilitates greater operational
stability in advance of the furnace rebuilds. The first rebuild
is expected to commence in late 2014, and the second in
late 2015, with the rebuilds and associated ramp-ups fully
completed during 2016. We currently expect production at
Barro Alto and Codemin to be between 20,000 and 25,000
tonnes in 2015, and between 35,000 and 38,000 tonnes
in 2016, although this forecast may be revised as the
Barro Alto rebuild timetable is finalised.
Short term prices are expected to remain under pressure
owing to the prevailing macro-economic environment and
ramp up of new nickel supply. If the change in Indonesian
government policy (announced in early 2014) to ban nickel
ore exports is sustained, this will tighten the nickel market
and support strengthening prices. In any event, medium to
longer term nickel prices are expected to improve owing to
forecast demand growth outstripping that of supply.
75
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT BASE METALS AND MINERALS – NIOBIUM AND PHOSPHATES
BASE METALS AND MINERALS –
NIOBIUM AND PHOSPHATES
Duncan Wanblad
CEO: Base Metals and Minerals
Ruben Fernandes
CEO: Nickel, Niobium and Phosphates
UNDERLYING OPERATING PROFIT
(2012: $169 m)
$150 m
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: 3%)
2%
UNDERLYING EBITDA
(2012: $196 m)
$176 m
76
Key financial and non-financial performance indicators
$ million (unless otherwise stated)
Underlying operating profit
Niobium
Phosphates
Projects and Corporate
Underlying EBITDA
Capital expenditure
Share of Group underlying operating profit
Attributable return on capital employed
Non-financial indicators(2)
Number of fatal injuries
Lost-time injury frequency rate
Total energy consumed in 1,000 GJ
Total greenhouse gas emissions in 1,000 tonnes CO2e
Total water consumed in 1,000 m3
2013
150
89
79
(18)
176
237
2%
24%
2013
0
0.31
2,808
110
8,382
2012(1)
169
81
91
(3)
196
94
3%
32%
2012
0
0.39
2,711
94
8,498
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
(2) Certain non-financial indicators relating to 2012 have been revised due to change requests made by the operations
subsequent to the publication of the 2012 annual report.
Image
Construction at the
Boa Vista Fresh Rock
Project, which will
boost annual niobium
production capacity
from a current 4,500
tonnes to approximately
6,500 tonnes.
Anglo American plc Annual Report 2013
BUSINESS OVERVIEW
Niobium
Our Niobium business, located in the cities of Catalão and
Ouvidor, in Brazil’s Goiás state, accounts for about 10% of
the country’s production (and 8-9% of global production)
of the metal. In operation since 1973, the Boa Vista mine
produces and exports approximately 4,500 tonnes of
niobium per year. With the end of its weathered ore reserves
approaching, Niobium is investing in adapting the existing
plant to process fresh rock.
Phosphates
Our Phosphates business is the second largest phosphate
fertiliser producer in Brazil. Its operations are vertically
integrated, covering the mining of phosphate ore,
beneficiation of the ore to produce phosphorus pentoxide
(P2O5) concentrate, and further processing into
intermediate and final products.
The Phosphates business has approximately 15% of
Brazil’s known phosphate mineral resources. The Ouvidor
mine currently produces, on average, around 5.8 Mt of ore
per annum (on a dry basis). It is a prime deposit, containing
some of Brazil’s highest grades of phosphate ore
(approximately 13% P2O5), and has a remaining mine
life of 20 years at current production rates.
Phosphate ore is treated at a beneficiation facility on the
same site, with approximately 1.4 million tonnes per annum
(Mtpa) of phosphate concentrate being produced at an
average grade of around 35% P2O5. Phosphates operates
two chemical processing complexes: one in Catalão, the
other at Cubatão in the state of São Paulo. The company
produces a wide variety of products for the Brazilian
agriculture sector, including low analysis (approximately
20% P2O5 content) and high analysis (40%-55% P2O5
content) phosphate fertilisers, dicalcium phosphate (DCP)
for the animal feed industry, as well as phosphoric and
sulphuric acids for the food and animal feed industries.
INDUSTRY OVERVIEW
Niobium
As an alloying agent, niobium brings unique properties
to high strength steel alloys (HSSA), such as increased
formability, corrosion resistance, weldability and strength
under tough working environments, including extreme
high or low temperatures.
Around 90% of total global niobium consumption is used
as an alloying element, in the form of ferroniobium (FeNb)
in high strength steels, which are used in the manufacture of
automobiles, ships and high pressure pipelines, as well as in
the petroleum and construction industries. The product is
exported to major steel plants in Europe, the US and Asia
(principally China, South Korea and Japan).
Phosphates
Phosphate fertiliser demand is driven by strong
fundamental trends, including expanding food needs from
a growing global population, changing dietary habits in
major emerging economies such as China and India,
and increased demand for biofuels.
Brazil, a major agricultural nation, is the fourth largest
phosphate market globally and needs to import almost
50% of its phosphate fertilisers. Anglo American’s
phosphates’ assets are situated in the centre of Brazil’s
major agricultural region and thus benefit from lower inland
transportation costs and import taxes compared with
competitors, in addition to being well placed to respond
quickly to customer requirements.
8
7
6
5
4
3
2
1
0
Jan
Feb Mar Apr May
Jun
Jul
Aug Sep Oct Nov Dec
2012
2013
Source: Alice web/Statcan and Anglo American analysis
650
600
550
500
450
400
350
300
Jan 12
Jan 13
Dec 13
Source: Fertilizer Week/CRU; ANDA.
77
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT BASE METALS AND MINERALS – NIOBIUM AND PHOSPHATES
STRATEGY
Niobium and Phosphates’ core strategy is to expand
existing operations and mineral resources in both
commodities through a focus on operational excellence,
and the execution of selected low cost, high return projects.
At Niobium, the $325 million investment in the Boa Vista
Fresh Rock project is expected to consolidate the business
as the second largest producer of niobium worldwide. It will
do so by increasing production so that plant capacity is fully
utilised, as well as replacing existing production, allowing the
company to gain an increased market share in the HSSA
market. Commissioning will start in the second half of 2014.
At Phosphates, significant brownfield expansion
opportunities are currently being evaluated in order to
meet the expected growing demand needs of the Brazilian
agricultural market, which is strategically placed to benefit
from global shifts in dietary habits, and where the outlook
for the production of fertiliser products is very positive.
Operating safely, sustainably and responsibly
Niobium and Phosphates takes a risk-based approach
to achieving our vision of zero harm to people and
the environment. Focus areas for the business include
reducing water and energy consumption, as well as
greenhouse gas emissions. Health and wellness
programmes are in place to improve the well-being
of our workforce and increase productivity.
FINANCIAL AND OPERATIONAL OVERVIEW
Underlying operating profit decreased by 11% to $150 million,
with lower realised sales prices at both Niobium and
Phosphates and higher study costs in the year, partly offset
by lower cash costs and the positive impact of the weaker
Brazilian real on operating costs.
Safety and environment
During 2013, no fatal incidents were recorded in our
Niobium and Phosphates business, which also saw an
improvement in the lost time injury frequency rate to
0.31(2012: 0.39).
Detailed investigations of these incidents revealed that the
root causes related largely to inadequate risk assessment
and change management processes. The outcomes of
these investigations, coupled with those conducted for
medium- and high-potential incidents and existing safety
priorities, resulted in a renewed focus on risk management
training, a refinement of operational risk management
procedures, and specific initiatives to address transportation
risks, improve learning from incidents and increase safety
communications.
Greenhouse gas emissions and energy consumption
were higher in the year, mainly owing to changes in the
Brazilian energy matrix. Consumption volumes remained
approximately level with 2012, but the CO2 conversion
factor, as advised by the Ministry of Mines and Energy,
was increased in the year. Specific initiatives to reduce
natural gas consumption at Cubatão’s dicalcium phosphate
unit resulted in a 31,135 GJ saving, while the phosphoric
acid plants in Cubatão and Catalão achieved a combined
14,300 GJ reduction in electricity consumption.
Water consumption was marginally reduced owing to
increased recycling, from 8.30 Mm3 in 2012 to 8.27 Mm3
in 2013.
Markets
Niobium
In 2013, our Niobium business exported 4,675 tonnes of
niobium, representing an increase of 11% over the previous
year. However, the average realised price was $39 per kg of
niobium, a reduction of 5% compared with the $41 per kg
achieved in 2012.
Demand for niobium decreased by 5% owing to the
lacklustre pace of recovery in European markets and
tighter economic policies in China. In response to strong
competition from producers in Brazil and Canada, putting
downward pressure on prices, the Niobium business
developed a more diversified geographical sales portfolio
in order to capitalise on spot supply opportunities in other
countries such as South Korea, Turkey, India, the UAE
and Taiwan.
Phosphates
Global demand for phosphates decreased during 2013,
mainly as a result of high inventories, adverse weather
conditions in the US which affected the timing of crop
planting, exchange rate fluctuations, and a reduction in the
phosphates subsidy offered to farmers in India. Although
some major phosphate suppliers reduced their output in
response to the weaker demand environment, prices for
the year as a whole were subdued, with an average
monoammonium phosphate (MAP) price of $494/tonne,
a 16% reduction over 2012.
Demand for phosphate fertilisers in Brazil totalled
approximately 11.8 Mt in 2013, a 7% increase, mainly
owing to increased production of soybean and corn crops.
Domestic production of phosphate fertiliser products
was 1% lower at 7.3 Mt, resulting in the levels of imported
intermediate fertilisers reaching 5 Mt, an increase of
approximately 20%. Brazil is running a high inventory
position following a strong import programme in the first
half of 2013, with stocks at year end of 1.9 Mt estimated to
be approximately 27% higher than the prior year.
Operating performance
Niobium
Underlying operating profit of $89 million was 10% higher
than in 2012, with higher sales volumes, lower cash costs
and the positive impact of the weaker Brazilian currency on
operating costs, partly offset by lower realised sales prices
and increased study costs.
Production of 4,500 tonnes was 2% higher, as throughput
and recovery improvements offset the decline in ore quality.
Phosphates
Underlying operating profit decreased by 13% to
$79 million, with lower selling prices and higher study costs
only partly offset by lower labour and sulphur costs and the
positive impact of the weaker Brazilian real on operating costs.
Fertiliser production increased by 6% to 1,199,000 tonnes,
owing to improved performance following optimised
maintenance scheduling, increased plant availability
and enhanced performance at the acidulation and
granulation plants.
78
Anglo American plc Annual Report 2013 01 At this metallurgical
facility in Ouvidor,
leached concentrate
is reduced by an
aluminothermic
process to form
ferroniobium.
02 Phosphate and acid
plants and granulation
building at the Cubatão
fertiliser plant.
03 At Catalão, this
waste-management
plant controls the
amount of phosphate
allowed to be sent
to waste.
03
Projects
Niobium
The Boa Vista Fresh Rock project continued to progress
and is expected to start production later in 2014. The project
includes the construction of a new upstream plant that will
enable continuity of the Catalão site through processing
the Fresh Rock orebody. Production capacity will increase
to approximately 6,500 tonnes of niobium per year
(2013: 4,500 tonnes), allowing use of the full plant capacity.
Both Niobium and Phosphates have a series of smaller
optimisation projects to improve plant capacity and
productivity and to release the full potential of the reserve
base, including upstream and downstream de-bottlenecking
projects and tailings initiatives. The upstream project is
expected to contribute to production in 2014, while the
downstream projects will deliver additional volumes in 2016.
The tailings initiatives will increase niobium production
through the recovery of waste from Goiás II.
01
02
Phosphates
Goiás II is a brownfield project that aims to double the
production of phosphate concentrate at the same site
through the doubling of plant capacity and is expected to
increase the production of fertilisers by 725 ktpa by 2018.
Goiás II represents an opportunity to capture market share
that is currently supplied by imports. A conceptual study for
the project was developed towards the end of 2012, and is
expected to enter the feasibility stage in 2014.
Outlook
Niobium
The three main niobium producers have all announced
brownfield expansion plans, though none is expected to be
producing at full capacity in 2014. Demand for niobium is
expected to increase by around 5%, in line with the expected
increase in production of crude steel and niobium-bearing
alloys in the final product mix of steel.
The outlook for 2014 is expected to be more positive owing
to continued gradual recovery in the major economies,
with growth still driven by China and India and a moderate
recovery in the US and Japan.
Phosphates
The fertiliser market is expected to show some
improvement in both demand and prices in 2014, driven
by a return to more normal levels of demand following
adverse weather conditions in the US which affected the
timing of crop planting, and a reduction in the phosphates
subsidy offered to farmers in India in 2013.
79
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT PLATINUM
PLATINUM
Chris Griffith
CEO: Anglo American Platinum Limited
UNDERLYING OPERATING
PROFIT/(LOSS)
(2012: $(120) m)
$464 m
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: (2)%)
7%
UNDERLYING EBITDA
(2012: $580 m)
$1,048 m
Key financial and non-financial performance indicators
$ million (unless otherwise stated)
Underlying operating profit/(loss)
Underlying EBITDA
Capital expenditure
Share of Group underlying operating profit
Attributable return on capital employed
Non-financial indicators(2)
Number of fatal injuries
Lost-time injury frequency rate
Total energy consumed in 1,000 GJ
Total greenhouse gas emissions in 1,000 tonnes CO2e
Total water consumed in 1,000 m3
2013
464
1,048
608
7%
6%
2013
6
1.05
2012(1)
(120)
580
822
(2)%
(2)%
2012
7
1.15
24,942
5,936
33,412
24,393
5,743
34,911
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
(2) The energy consumed data from 2012 has been revised due to an error detected subsequent to the publication
of the 2012 annual report.
80
Image
New tankhouse
under construction
at the Rustenburg
Base Metals Refinery
Anglo American plc Annual Report 2013
BUSINESS OVERVIEW
INDUSTRY OVERVIEW
Anglo American Platinum Limited is the leading primary
producer of Platinum Group Metals (PGMs) and accounts
for approximately 40% of the world’s newly mined platinum.
It mines an area called the Bushveld Complex in South
Africa, which contains PGM-bearing Merensky, UG2 and
Platreef ores, and the Great Dyke in Zimbabwe. Access to
an extensive portfolio of ore reserves ensures Platinum
is well placed to be a major PGM producer for many years
to come.
Following Platinum’s announcement of its portfolio review
on 15 January 2013, and extensive engagement with the
South African government, unions and other stakeholders in
the subsequent months, the company began to implement
the restructuring of its operations. This led to the
consolidation and optimisation of five Rustenburg mines
into three. The consolidation of Rustenburg was completed
in the third quarter of 2013 through the integration of the
Khuseleka 2 shaft and Khomanani mine into surrounding
mines. The Khuseleka 1 shaft remains operational in the
medium term and has been integrated into Thembelani
mine. The ‘own mines’ division of Platinum consists of
operations based in the Rustenburg mining area, which has
been reduced to the Bathopele, Siphumelele and
Thembelani mines; two mines in the Amandelbult Section,
Tumela Mine and Dishaba Mine; as well as the open pit
Mogalakwena mine and Twickenham Platinum mine
project. Union mine is 85% held, with a black economic
empowerment (BEE) partner, the Bakgatla-Ba-Kgafela
traditional community, holding the remainder. During 2013,
Union North and Union South mines were consolidated as
part of the business review, the strategy being to prepare for
the entity’s sale in the medium term. Platinum also operates
the Unki mine in Zimbabwe, which is currently wholly owned.
Platinum also has two 50:50 joint operations: one with
a BEE consortium, led by African Rainbow Minerals, at
Modikwa Platinum mine; and another with the Glencore
Kagiso Tiso Platinum Partnership in respect of Mototolo
mine. In addition, Platinum has a 50:50 pooling and sharing
agreement with Aquarius Platinum covering the shallow
reserves of the Kroondal mine. The company also owns
49% of Bokoni mine and holds, through Rustenburg
Platinum Mines’ (RPM), 27% of Atlatsa Resources. Platinum
is in partnership with Royal Bafokeng Resources, and has a
33% shareholding in the combined Bafokeng-Rasimone
Platinum Mine and Styldrift properties. Through RPM,
Platinum holds 12.6% of RB Plats’ issued share capital.
In association with its mining operations, Platinum operates
a tailings re-treatment facility, three smelters, a base metals
refinery and a precious metals refinery.
PGMs have a wide range of industrial and high-technology
applications. Demand for platinum is dominated by its use in
autocatalysts to control emissions from both gasoline- and
diesel-engine vehicles, and in jewellery. These uses are
responsible for 66% of total gross annual platinum demand.
PGMs also have a wide range of other applications, in the
chemical, electronic, medical, glass and petroleum industries.
Our Platinum business is the major funder of Platinum
Guild International (PGI), which plays a key role in
encouraging demand for platinum jewellery and in
establishing new platinum jewellery markets. Since 2000,
China has been the leading platinum jewellery market,
followed by Europe, Japan and North America. Industrial
applications for platinum are driven by technology and,
especially in the case of autocatalysts, by legislation. The
increasing stringency of emissions legislation continues to
drive growth in PGM demand.
Palladium’s principal application, accounting for 72% of
total palladium demand, is in autocatalysts, particularly
in gasoline vehicles. The metal is also used in electronic
components, dental alloys and jewellery.
Rhodium is an important metal in autocatalytic activity,
which accounts for nearly 80% of total gross annual
rhodium demand.
STRATEGY
For Anglo American Platinum, the objective of the portfolio
review announced in January 2013 was to assess the options
available in order to create a sustainable, competitive and
profitable business for the long term benefit of all its
stakeholders. Platinum’s strategy is being built on five levers
of priority: projects; commercial; people; operational; and
sustainability excellence.
The result of the restructuring was to align baseline
production with long term demand expectations, focusing
on a high quality portfolio of operations to produce PGMs
on an economically sustainable basis.
Operationally, the company intends to change the
composition of its portfolio to concentrate on more opencast
and shallow, lower risk, lower cost, higher margin and more
mechanised mining, supporting a significant reduction in its
cost base and achieving a more efficient allocation of capital.
The major reconfiguration of Platinum is now under way
and significant progress has been made in implementing
the first stages of the review. Baseline production has been
maintained at 2.3-2.4 million ounces per annum, with
250,000 annualised low margin, high cost, and unprofitable
ounces no longer in production.
81
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT PLATINUM
Platinum price
1,800
1,600
1,400
)
z
o
(
$
1,200
1,000
H1 2012 realised Pt
price $1,547/oz
800
H2 2012 realised Pt
price $1,520/oz
H1 2013 realised Pt
price $1,549/oz
H2 2013 realised Pt
price $1,430
Jan 12
Jun 12
Jan 13
Jun 13
25,000
20,000
15,000
10,000
R
a
n
d
(
o
z
)
5,000
0
Dec 13
Rand Pt. basket
Platinum realised price ($)
Source: Anglo American Commodity Research
As a result of the consolidation of the Rustenburg mines
from five to three and the consolidation of Union mines,
7,450 roles were eliminated in 2013, though there were no
forced retrenchments. Of that total, some 5,100 employees
had left the organisation by year end, while 2,300 employees
had been redeployed to other parts of the business. In
addition, the decision was made to continue to operate the
reconfigured Khuseleka 1 shaft at Khuseleka mine, as it
makes a positive contribution to cash flow.
Following the substantial changes being made to the
business to ensure its sustainability, a number of social-
mitigation plans have been implemented, including the
company continuing to contribute to the welfare of
employees affected by the restructuring. The programme
includes employee assistance in the form of bursaries,
healthcare and retraining; support for local economic
development and a number of suppliers; and investment,
together with local government, in housing development
in the Rustenburg region.
A new organisational design and operating model has
been implemented to ensure that the operations are
appropriately supported by the various support service
functions. In addition, Platinum’s commercial strategy
aims to ensure value and stability for the company and its
customers, while promoting new applications for PGMs.
We continue to evaluate and develop a number of projects,
including the Twickenham platinum mine project and a
number of low capital intensity projects to increase
production potential at Mogalakwena. The flexibility for
long term growth options will therefore be retained,
ensuring Platinum is well positioned in future to make use of
opportunities arising from an increase in demand for PGMs.
Platinum continues to take its social responsibilities
seriously, particularly to its employees and surrounding
communities. The implementation of the strategy aims to
deliver a sustainable, competitive and profitable business
that will be best placed to sustain employment over the
long term.
Operating safely, sustainably and responsibly
Operating safely, sustainably and responsibly is a
fundamental part of Platinum’s business strategy. Specifically,
Platinum aims to improve and grow its relationships with all
its stakeholders, and to create a sustainable business and
sustainable communities and environments in and around
its operations to the benefit of all stakeholders. Critical areas
of performance are:
• Employee health and safety – doing everything possible
to ensure zero harm to employees at work, and supporting
employee and community health and well-being;
• Environmental management – complying with legislation
and permits, and having no significant environmental
incidents;
• Community development – making a positive contribution
to sustainable socio-economic development in the areas
in which we operate;
• Stakeholder engagement – ensuring regular and ongoing
engagement with a broad range of stakeholders who
affect, and are affected by, Platinum’s business, with the
appropriate relationships and mechanisms in place to
amicably resolve conflict.
82
Anglo American plc Annual Report 2013
FINANCIAL AND OPERATIONAL OVERVIEW
Platinum recorded an underlying operating profit of
$464 million in 2013, compared with an underlying
operating loss of $120 million in 2012. This was primarily
due to a weaker average South African rand against the
dollar and an increase in sales volumes, which were partly
offset by lower realised basket prices, and cost increases.
Cash operating costs per equivalent refined platinum
ounce increased by 4% to ZAR17,053 (2012: ZAR16,364),
primarily owing to increases in the costs of labour, electricity,
diesel and key inputs of processing operations, partly offset
by higher production and cost savings. Productivity,
however, increased by 9% to 6.57m2 (2012: 6.05m2).
Safety and environment
Platinum recorded its best ever safety performance;
however, six employees sadly lost their lives on company
operations during 2013. The company extends its sincere
condolences to their families, friends and colleagues. Four
fatal injuries were due to falls of ground and one involved
moving machinery. The final incident is still under
investigation to determine whether this was work-related
or not. The company’s safety performance has shown very
encouraging progress since 2007, with fatal injury and
lost-time injury frequency rates declining by 60% and
49%, respectively.
The proactive management of safety risks has resulted in
a continued fall in safety stoppages from the high in 2011,
though the number of Section 54 stoppages remained
level with 2012, at 72. In addition, 46,261 ounces of
production were lost as a result of safety stoppages
(2012: 17,000 ounces), though this was well below the
138,000 ounces lost in 2011.
Potable water used for primary and non-primary activities
decreased by 6% to 17.3 million m3 (2012: 18.4 million m3).
The decrease in potable water consumption was influenced
mainly by the consistent use of treated sewage water at
Rustenburg operations to offset the use of potable water.
Platinum remains committed to striving towards zero use
of potable water for industrial purposes.
There was one material environmental incident in 2013,
with the occurrence of a tailings spillage from the Blinkwater
tailings dam at Mogalakwena mine. The incident, which
is now contained and at an advanced stage of clean-up,
affected the Mohlosane river for 2.5 kilometres. The
incident was caused by void tunnelling in the tailings dam
starter wall, and solutions have been put in place to prevent
a recurrence.
Markets
In 2013, gross global platinum demand increased by
507,000 ounces, or 6.3%, as increases in industrial and
investment demand more than offset declines from the
autocatalyst and jewellery sectors. Primary platinum supply
grew by 60,000 ounces, or 1%, as increased supply from
South Africa and Zimbabwe exceeded declines in Russia
and North America. Secondary supplies from recycled
South Africa
Russia
Zimbabwe
North America
Other
Total primary supply
Autocat recycle
Jewellery recycle
Industrial recycle
Secondary supply
Gross supply
Autocatalyst – gross
Jewellery – gross
Industrial – gross
Investment
Gross demand
’000 oz
4,168
780
363
308
124
5,743
1,224
773
10
2,007
7,750
’000 oz
2,933
2,747
2,020
906
8,606
Source: Anglo American Platinum and Johnson Matthey
autocatalyst, jewellery and industrial scrap decreased by
29,000 ounces, or 1%, resulting in a 0.4% increase in gross
global platinum supply of 31,000 ounces. The resultant
platinum deficit of 856,000 ounces was satisfied by
cumulative above-ground stocks at market prices during
the course of the year.
Gross global palladium demand decreased by 437,000
ounces, or 4%, as reduced demand from the jewellery,
industrial and investment sectors far exceeded the increase
in autocatalyst demand. Primary palladium supply reduced
by 160,000 ounces, or 3%, as the reduction in supply from
Russia and the rest of world more than offset the increases
from South Africa, Zimbabwe and North America.
Secondary supplies from recycled autocatalyst, jewellery
and industrial scrap increased by 179,000 ounces, or 8%,
resulting in flat gross global palladium supply. The resultant
palladium deficit for the year of 621,000 ounces was also
satisfied by cumulative above-ground stocks at market
prices during the year.
In 2013, gross global rhodium demand increased by
19,000 ounces, or 2%. Although autocatalyst demand
remained flat, this was more than compensated by increases
in industrial and investment demand. Primary supply
decreased by 3% and secondary supply increased by 9%,
keeping gross supply flat and with a resultant market deficit
of 9,000 ounces.
83
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT PLATINUM
Autocatalysts
Global light vehicle sales grew by 3.8% in 2013, to
84.2 million units, driven by growth in China and North
America, offset by declines in India, Russia and Europe.
Gross demand for platinum in autocatalysis declined by
5%, owing largely to lower vehicle production in the
diesel-dominant Indian and European markets. Palladium
use in autocatalysis increased by 3%, in line with global
growth in gasoline vehicle production, with an increase in
palladium purchases for autocatalysis in China offsetting
weakness in other markets. Gross rhodium use in
autocatalysis was flat in 2013, as the increase in Chinese
demand was offset by weakness in other markets.
Jewellery
The Chinese platinum jewellery market accounted for 67%
of gross global jewellery demand in 2013, and is positioned
to grow as disposable income increases and the effective
market development by PGI continues. Platinum jewellery
sales in China continued to benefit from the narrow price
premium to gold; gross demand, however, decreased by
5%. The weak platinum price also reduced the volume of
jewellery recycled, resulting in flat net demand. The much
smaller markets of Europe, North America and India all
increased in 2013, and this, combined with lower Japanese
recycled volumes, saw net global platinum jewellery
demand increase by 86,000 ounces, or 5%.
Industrial
In 2013, platinum use in industrial applications increased
by 250,000 ounces, or 14%, owing to growth in electrical
and glass applications.
Palladium industrial use declined by 146,000 ounces
as increased substitution by base metals in electronic
capacitors and by ceramics in dentistry exceeded
palladium’s increased use in polyester manufacture.
In 2013, industrial use for rhodium increased by 9,000
ounces, or 6%, following inventory changes in glass
manufacture and capacity increases in oxo-alcohol and
acetic acid manufacture.
Investment
Platinum investment demand increased by 457,000 ounces,
or 102%, owing to the rand-denominated platinum ETF
launched in April 2013. Palladium investment demand
declined by 451,000 ounces, or 98%, as a result of ETF
disinvestment. Rhodium investment demand increased by
8,000 ounces, or 20%.
OPERATING PERFORMANCE
Production
Equivalent refined platinum production totalled 2.32 million
ounces, up 5% on 2012. Platinum’s own mines, including
Western Limb Tailings Retreatment, produced 1.5 million of
equivalent refined platinum ounces, which was 2% higher
year on year but in line with the company’s strategy.
Production at Khomanani mine, Khuseleka 2 shaft and
Union North decline was suspended in August 2013, in line
with the proposed restructuring plans. The resources from
these mines have now been integrated into the surrounding
operations. As a result of these initiatives, 250,000 ounces
of annualised unprofitable production have been removed.
The industrial action at Platinum’s mining operations from
27 September 2013 to 10 October 2013, resulted in a loss
of platinum production of 44,000 ounces. The company
quickly ramped up to full production following the strike,
with little further loss of production.
Production at the Western Limb operations (Rustenburg,
Union and Amandelbult mines) was affected by the
industrial action during the second half of 2013. In addition,
platinum production at Tumela and Dishaba mines
decreased by 2% year on year owing to shortages of
production crews and supervisors. The redeployment of
labour programme following the placement of mines on
care and maintenance was completed in the final quarter
of the year and benefits arising from the resulting
productivity improvements should be seen in 2014.
Production at the Rustenburg mines increased by 12,700
ounces, or 3%, while output from Union mines declined by
9%. At Mogalakwena mine, output increased by 12% to a
record 335,800 ounces(1) following higher throughput at the
concentrators and improved head grade. Equivalent refined
platinum production at Unki increased by 2% to 63,200
ounces as the mine bettered its ramp-up schedule, reaching
steady state production levels ahead of expectations.
Refined platinum production, at 2.4 million ounces,
remained constant year on year, primarily due to increased
feed from mining operations and improved performance at
the Anglo American Platinum Converting Process (ACP)
plant which has been operating at a steady state level since
production issues caused by a high-pressure leak were
resolved at the end of the second quarter of 2013. Refined
production of palladium was relatively flat year on year,
decreasing by 1%, while rhodium output decreased by 5%.
Palladium and rhodium variances are a result of a different
source mix from operations and different pipeline
processing times for each metal. Nickel production saw a
28% increase as technical challenges in the new nickel tank
house are being resolved and as ramp up continues.
84
(1)
Includes 16,000 ounces produced at the Messina Baobab plant as part of a one-off
toll concentrating agreement.
Anglo American plc Annual Report 2013 02
03
01 Survey assistant Lennox
Mxathule and surveyor
Zack Moatshe carry out
an underground survey
of Bathopele mine.
02 Metallurgist Sithi
Moribuko and supervisor
Deis Ngale discuss
density readings at
the ISA mills at
Mogalakwena North
Concentrators.
03 Human resources
development trainer
Lefa Sedumedi locking
out the centralised
blasting system
(‘Safeblast’) prior
to entry of a section
at Tumela mine.
Projects
In an environment of capital austerity, careful consideration
is taken to determine how projects are prioritised in line
with the company’s strategy to increase scrutiny over
capital allocation. Projects, including the development
of Twickenham and expansion of production capacity
at Mogalakwena mine, are in line with the longer term
strategy of increasing shallow, mechanised and lower cost
production and continue to be progressed.
Outlook
The global platinum market is expected to remain balanced
in the short term, with increasing deficits over the medium
term as steady demand growth in autocatalyst, jewellery
and industrial applications exceeds growth in supply from
secondary recycled sources and capital-constrained mining
supply. The platinum price remains below sustainable
incentive levels despite significant reductions in cumulative
above-ground stocks in 2012 and 2013. The record high in
platinum investment demand from ETFs, bars and coins in
2013 is unlikely to be repeated and some disinvestment
from the greater than 850,000 ounce holding in the
South Africa-based ETF should not be ruled out.
Continued deficits in the palladium market are likely in the
short and medium term owing to increased production
of gasoline vehicles and supply growth being limited by
platinum supply constraints. Above-ground stocks of
palladium are estimated to be far higher than those of
platinum; however, demand growth is expected to more
than offset the negative price sentiment associated with
elevated stock levels.
01
Following the implementation of the portfolio, Platinum is
expected to keep baseline production flat at 2.3 to 2.4 million
platinum ounces in 2014, with production lost from the
mines closed in 2013, offset by production from higher
margin operations through the implementation of various
operational improvement plans. Platinum continues to aim
to align output with expected demand, and to maintain
flexibility to meet potential improvements in demand.
Cost inflation will remain a challenge in 2014, as the
inflationary pressures from above-inflation wage increases
and electricity increases in particular, offset the cost
reductions realised following the Platinum restructuring.
As of 11 December 2013, Platinum settled on a two year
wage agreement with NUM and UASA at an average wage
increase of 8.1% for the period. Negotiations with AMCU
and NUMSA are continuing, with the related current strike
impacting production. Cash unit costs are estimated to
increase to around R18,000-R19,000 per equivalent refined
platinum ounce for 2014.
Platinum’s project portfolio has been aligned with the
proposals of the business restructuring, and capital
expenditure guidance will be ZAR6 billion to ZAR7.3 billion
for 2014, excluding pre-production costs, capitalised waste
stripping and interest.
85
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT DIAMONDS
DIAMONDS
Philippe Mellier
CEO – De Beers Group
UNDERLYING OPERATING PROFIT
(2012: $474 m)
$1,003 m
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: 8%)
15%
UNDERLYING EBITDA
(2012: $712 m)
$1,451 m
86
Key financial and non-financial performance indicators
$ million (unless otherwise stated)
Underlying operating profit
Underlying EBITDA
Capital expenditure
Share of Group underlying operating profit
Attributable return on capital employed(3)
Non-financial indicators(4)
Number of fatal injuries
Lost-time injury frequency rate
Total energy consumed in 1,000 GJ
Total greenhouse gas emissions in 1,000 tonnes CO2e
2013
1,003
1,451
551
15%
11%
2013
–
0.19
14,124
1,781
2012
(1)(2)
474
712
161
8%
10%
2012
–
0.32
4,658
564
Total water consumed in 1,000 m3
74,788
23,568
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
(2) Amounts based on the Group’s 45% shareholding to 16 August 2012 (except for capital expenditure as defined)
and a 100% basis thereafter.
(3) De Beers’ 2012 attributable ROCE contains eight months with De Beers as an associate at 45% shareholding,
and four months as a fully consolidated entity with shareholding at 85%.
(4) Historical non-financial data is reported from the date of acquisition.
Image
Safety representative
Richmond Lutendo
Tshimenze is working
in the mining section of
Venetia diamond mine.
He is pictured inside
the pit between shifts
inspecting a blast area.
Anglo American plc Annual Report 2013
BUSINESS OVERVIEW
De Beers is 85% owned by Anglo American, with the
remaining 15% interest held by the Government of the
Republic of Botswana (GRB).
De Beers is the world’s leading diamond company.
Together with its joint venture partners, De Beers produces
approximately one-third of the world’s rough diamonds, by
value, and employs more than 23,000 people (including
contractors) around the world.
De Beers operates across key parts of the diamond value
chain, including exploration, production, sorting, valuing
and selling of rough diamonds. It markets polished
diamonds through its proprietary diamond brand,
Forevermark. It also has a 50:50 retail joint operation with
LVMH Moët Hennessy-Louis Vuitton.
Mines
De Beers’ mines are located in four countries: Botswana,
Canada, Namibia and South Africa. All operations are open
pit with the exception of an underground mine in Canada,
and alluvial and marine mining operations in Namibia.
In Botswana, De Beers’ interests are held through
Debswana Diamond Company, a 50:50 joint operation
with the GRB. Debswana’s operations include Jwaneng,
one of the world’s richest diamond mines; Orapa,
among the largest open-pit diamond mines; Letlhakane;
and Damtshaa.
In South Africa, De Beers has a 74% interest in De Beers
Consolidated Mines (DBCM), with the remaining 26% held
by Ponahalo Holdings, a black economic empowerment
consortium. DBCM’s operations include Venetia, which
produces approximately 70% of De Beers’ South African
diamond production; Voorspoed, a source of large and
exotic coloured diamonds; and Kimberley Mines, a tailings
processing facility.
In Namibia, De Beers’ interests are held through Namdeb
Holdings (NH), a 50:50 joint operation with the Government
of the Republic of Namibia (GRN). Diamonds are mined on
land by Namdeb and at sea by Debmarine Namibia, both
wholly owned by NH. Marine mining is performed by a fleet
of five mining vessels.
In Canada, De Beers wholly owns its two mining operations:
Victor, located in Northern Ontario; and Snap Lake in the
Northwest Territories. De Beers also has a 51% interest in
the Gahcho Kué project near Snap Lake (with Mountain
Province Diamonds holding the other 49%). The project
is at an advanced permitting stage. With a mine life of
approximately 11 years, Gahcho Kué is expected to mine
around 31 million tonnes of ore containing an estimated
48 million carats.(1)
Rough diamond sales
De Beers sells rough diamonds through two distribution
channels: around 90% are sold via long term contract sales
to clients (known as Sightholders), with the remainder being
sold via regular auctions to the broader industry.
(1) For further details please see the Diamonds Reserves and Resources section
of the Annual Report, pages 244–249.
De Beers is also an equal joint operation partner in DTC
Botswana (a sorting and valuing business) and in Namibia
DTC (a sorting, valuing and sales business) with the GRB
and GRN, respectively. These companies facilitate local
sales and beneficiation, and are intermediaries in the global
selling function.
As part of its long term contract sales, De Beers sorts and
values production into around 12,000 different price points.
These diamonds are aggregated and sold at 10 Sights
(or selling events) each year.
De Beers is a global leader in the use of innovative online
systems to auction rough diamonds to small, mid-tier and
large manufacturing, retailing and trading businesses.
Brands
De Beers participates at the consumer end of the value
chain through its proprietary diamond brand, Forevermark,
and through De Beers Diamond Jewellers.
Diamonds inscribed as Forevermark diamonds provide
consumers with confidence that their diamonds are
beautiful, rare and responsibly sourced. They are available
in carefully selected, authorised jewellers in the major
consumer markets around the world, and are supported
by a marketing programme which reinforces the
‘diamond dream’.
De Beers Diamond Jewellers’ high-end retail stores are
located in key luxury shopping destinations around the
world, including New York, Beijing, Shanghai, Hong Kong,
London, Paris, Tokyo and Dubai.
Supermaterials
Element Six is the global leader in the design, development
and production of synthetic diamond supermaterials
for a range of industrial applications. It comprises two
businesses: Technologies, which is 100% owned by
De Beers; and Abrasives, in which De Beers has a 59.8%
interest (Umicore SA holds the remaining 40.2%).
INDUSTRY OVERVIEW
Around 60% of the world’s diamonds, by value, originate
from south and central Africa, with significant sources also
found in Russia, Australia and Canada.
Most diamonds come from the mining of kimberlite
deposits. Another important source of gem diamonds,
however, has been secondary alluvial and marine deposits
formed by the weathering of primary kimberlites and the
subsequent deposition of released diamonds in rivers and
beach gravels.
Rough diamonds are broadly classified either as gem
or industrial quality, with gem being overwhelmingly
(approximately 99%) the larger of the two markets, by
value. Retail jewellery accounts for the majority of the world
market for gem diamonds, where aspects such as size,
colour, shape and clarity have a large impact on valuation.
87
Strategic reportAnglo American plc Annual Report 2013 STRATEGIC REPORT DIAMONDS
STRATEGY
FINANCIAL AND OPERATIONAL OVERVIEW
De Beers’ strategic vision is to unlock the full economic
value of its leadership position across the diamond pipeline
in a safe and sustainable manner.
De Beers is a demand-driven business, with a clear
understanding that consumer desire is the primary source
of value for its diamonds. With growth in demand for
diamonds expected to outstrip production growth in the
medium to long term, the company aims to maximise the
value of every carat mined, sorted and sold. To achieve
this objective, De Beers focuses on optimising the value
of its mining assets, selling to selected leading Sightholders
and offering consumers the integrity and confidence of
its brands.
Safety and sustainable development strategy
Safety remains the top priority for De Beers, and the
company continues to strive for enhanced safety
performance through the roll-out of an integrated
improvement plan. Its emphasis is on leadership
and engagement, operational risk, and incident and
performance management.
De Beers’ sustainable development activities span the
diamond pipeline, and are an integral part of the company’s
business model. Upstream (exploration and mining), this
includes ensuring that it does no harm to either employees
or communities, minimising the impact on the environment,
and contributing to conservation.
De Beers also works in partnership with host governments
and other stakeholders to support long term and sustainable
economic development through local and indigenous
procurement, enterprise development, social investment
and beneficiation.
De Beers supports the development of value-adding
downstream activities in producer countries. In late 2013,
De Beers completed the migration of its London-based
sales operations to Gaborone, Botswana. Agreed in 2011,
it forms part of a 10 year sales agreement between
De Beers and the GRB for the sorting, valuing and sale of
Debswana’s diamond production. The relocation will bolster
De Beers’ long term beneficiation activities in southern
Africa, helping establish the region as a world-leading
midstream (rough diamond sorting, valuing and sales)
diamond centre.
De Beers also supports initiatives to drive best practice
throughout the diamond pipeline. These include the
Kimberley Process Certification Scheme, an inter-
governmental initiative that seeks to eliminate conflict
diamonds from the global supply chain. It also includes the
De Beers Best Practice Principles, a bespoke ethical,
environmental and social assurance programme that covers
more than 300,000 diamond sector workers across the
world. In addition, the Forevermark brand offers consumers
a clear, responsible sourcing promise.
De Beers’ operating profit totalled $1,003 million, an
increase of 112% compared with 2012, driven by the
Group’s increased shareholding and a greater than 35%
improvement in the underlying results of the business.
The improvement reflected higher sales revenues and tight
cost control, which benefited from favourable exchange
rate movements.
Safety, health and environment
De Beers operated without any loss of life in 2013 and
improved its lost-time injury frequency rate (LTIFR)
considerably from 0.32 in 2012, to 0.19. The company
continues to improve its monitoring of leading indicators to
ensure an increasingly proactive response to emerging risks.
In 2013, 14 new cases of occupational disease were
reported. The occupational disease incidence rate remains
well below the target of 1 per 200,000 man-hours worked,
with the biggest issue being noise-induced hearing loss.
The company continues to focus on occupational hygiene
management, as well as on efforts to ensure fitness to work,
occupational exposure control, incident reporting and
reducing absenteeism arising from illness.
Markets
Despite global macro-economic uncertainty, diamond
jewellery sales increased in local currency terms in all major
diamond markets, except India. In India, challenging
economic conditions and a devaluation of the rupee resulted
in a decline in demand. The US market posted positive
growth, with a generally strong holiday season in the fourth
quarter. China continued to show positive growth rates, but
at levels consistent with slower economic development.
Although the De Beers rough price index increased slightly
in the first half of the year, a combination of weaker polished
prices, high levels of stock in the cutting centres and
tightening liquidity resulted in some of this increase being
reversed in the second half. The price decrease, together
with an increase in polished sales, saw the rough market
stabilise and start to improve toward the end of the year.
Operating performance
Mining and manufacturing
De Beers’ full-year production increased by 12% to
31.2 million carats (2012: 27.9 million carats), with
improvements across all regions, particularly in Botswana
and Canada.
In Botswana, higher production was driven by Jwaneng’s
recovery from the slope failure in June 2012, which followed
completion of the remediation programme in the third
quarter. Production at Orapa was slightly higher than 2012,
despite unplanned maintenance on plant No. 1, which
returned to full operation in October.
In South Africa, full production was restored at Venetia
after the mine was impacted by very heavy flooding in the
Limpopo province at the start of the year. Shortfalls in ore
mined were mitigated by the processing of ore stockpiles.
Production improved steadily in the third quarter, with full
recovery by the fourth quarter.
88
Anglo American plc Annual Report 2013 US
Rest of the world
China/Hong Kong
Japan
Gulf
India
Total
Source: De Beers
US
Rest of the world
China/Hong Kong
India
Gulf
Japan
Total
Source: De Beers
%
39
21
15
9
8
8
100
%
37
19
19
11
7
7
100
In Canada, performance at Snap Lake improved
significantly, with carats recovered up approximately 50%
as a result of a focus on throughput and mining efficiency.
At Victor, carat recovery exceeded expectations and was
broadly in line with the prior year.
In Namibia, Debmarine Namibia performed strongly,
largely due to the contribution of the MV Mafuta following its
production upgrade in early 2013. Namdeb also performed
well, with carat recovery higher than in 2012.
While Element Six experienced a challenging start to the
year, performance improved in the second half, driven by
the introduction of new products and a continued focus
on cost control. In July, Element Six opened its Global
Innovation Centre in the UK. The centre is the world’s largest
and most sophisticated synthetic diamond research and
development facility, and will be a key enabler for growth in
2014 and beyond.
Sales
Sales increased slightly to $6.4 billion in 2013
(2012: $6.1 billion on a comparable basis). De Beers’ rough
diamond price index has increased 2% since the start of the
year, while average realised rough diamond prices were 5%
higher, driven by the product mix. Following the migration
of its sales activities from London to Botswana, De Beers
hosted international Sights in Gaborone in November and
December.
Brands
Forevermark saw strong growth in 2013, with door
numbers up by 39% on 2012. This growth was driven
primarily by the core markets of the US, China, Japan
and India. The brand is now available at more than
1,200 retail partners in 12 markets. Since the launch of
Forevermark, more than 870,000 diamonds have received
the Forevermark inscription and unique identification
number. The inscription is a promise that each diamond has
met the brand’s high standards of quality, ethical integrity
and provenance.
De Beers Diamond Jewellers opened new directly operated
stores in Shanghai and Hong Kong’s Times Square.
Through franchise partnerships, it also opened stores in
Kuala Lumpur, Baku, Vancouver and Kiev.
Projects
In Botswana, infrastructure construction at Debswana’s
Jwaneng Cut-8 project is complete. Cut-8 will provide
access to an estimated 96 million tonnes of ore to be
treated, containing approximately 113 million carats of
mainly high quality diamonds, and extend the life of one
of the world’s richest diamond mines to at least 2028.(2)
In South Africa, the first blast took place in September
2013 for the construction of an underground mine beneath
the open pit at Venetia. With capital investment of $2 billion,
this represents De Beers’ largest ever investment in
South Africa. Underground mine production is expected to
start in 2021 and will extend the life of the mine to beyond
2040. The life of mine plan will treat approximately
129 million tonnes of ore, containing an estimated
94 million carats.(3)
In Canada, the Mackenzie Valley Land and Water Board
approved a pioneer Land Use Permit for Gahcho Kué, which
allows land-based site works to commence in preparation
for deliveries planned for the 2014 winter road season.
Outlook
De Beers expects a slight strengthening in growth in
diamond jewellery demand in 2014, driven by continued
gradual improvements in the global economic outlook.
The US and China are expected to continue to be the main
engines of growth for polished diamonds, while most other
markets are expected to show positive growth in local
currency, with final dollar-denominated results being partly
dependent on currency fluctuations. Rough diamond
manufacturers, in India in particular, face continued
pressures regarding levels of bank financing. In India, further
volatility of the rupee may potentially affect rough diamond
sales. In the medium to long term, industry fundamentals are
expected to strengthen as diamond production plateaus and
demand continues to increase.
(2) Scheduled Inferred Resources (below 401 metres) included in the Cut-8 estimates constitute 77% (86.7 Mct) of the estimated carats. Not all Inferred Resources may be
upgraded to Ore Reserves, even after additional drilling. The numbers given are scheduled tonnes and carats as per the 2013 Life-of-Mine plan.
(3) The current mining rights expire in 2038; Venetia mine will apply to extend the mining rights at the appropriate time in the future. Scheduled Inferred Resources constitute 28%
(26.3 Mct) of the estimated carats. Not all Inferred Resources may be upgraded to Ore Reserves, even after additional drilling. The numbers given are scheduled tonnes and carats
as per the 2013 Life-of-Mine plan.
89
Strategic reportAnglo American plc Annual Report 2013
STRATEGIC REPORT OTHER MINING AND INDUSTRIAL
OTHER MINING AND INDUSTRIAL
Duncan Wanblad
CEO: Base Metals and Minerals
UNDERLYING OPERATING
(LOSS)/PROFIT
(2012: $168 m)
$(13) m
SHARE OF GROUP UNDERLYING
OPERATING PROFIT
(2012: 3%)
(0.2)%
UNDERLYING EBITDA
(2012: $289 m)
$81 m
Key financial and non-financial performance indicators
$ million (unless otherwise stated)
Underlying operating (loss)/profit
Underlying EBITDA
Capital expenditure
Share of Group underlying operating profit
Non-financial indicators (2)
Number of fatal injuries
Lost-time injury frequency rate
2013
(13)
81
53
(0.2)%
2013
4
0.23
2012(1)
168
289
171
3%
2012
1
0.25
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements.
See note 2 of the financial statements for details.
(2) Non-financial indicators are reported until point of divestment.
90
Image
A Tarmac national
contracting team during
a major night time road
resurfacing operation
in the UK.
Anglo American plc Annual Report 2013
AMAPÁ
Amapá recorded a nil underlying operating profit for the
10 months to the completion of the divestment of the
operation on 1 November 2013. All profits and losses
generated by Amapá from the signing of the sale agreement
at the end of 2012 to completion were for the account of the
purchaser and therefore the underlying operating loss of
$7 million incurred in the period has been excluded from the
Group results. The loss of $7 million (2012: $54 million profit)
was mainly due to the suspension of export shipments
following the event on 28 March 2013 (see below). The
reversal of penalty provisions, as a result of contract
renegotiations, which had a beneficial impact on 2012
underlying operating profit, was not repeated in 2013.
On 28 March 2013, a major geological event occurred
which resulted in the tragic loss of four lives, with a further
two people still missing, as well as the loss of the Santana
port operation of Amapá and the suspension of all export
shipments. A detailed and independent technical
investigation was conducted and a report was shared
with the authorities and the investigation commissions in
September 2013. The independent investigation report
indicates that the incident was not caused by operational
factors, but was a result of an unpredictable combination
of factors, including geotechnical factors.
On 4 January 2013, Anglo American announced that it
had reached an agreement to sell its 70% interest in Amapá
to Zamin Ferrous Ltd (Zamin). Following the 28 March
event, Anglo American entered into further discussions
with its partner Cliffs Natural Resources (Cliffs) and Zamin.
Anglo American subsequently entered into an agreement
with Cliffs to acquire its 30% interest in Amapá, subject
to certain conditions, and entered into an amended sale
agreement with Zamin to reflect Anglo American’s disposal
of a 100% interest in Amapá to Zamin.
On 1 November 2013, Anglo American completed the
acquisition from Cliffs and simultaneously completed the
sale of the 100% interest in Amapá to Zamin for an initial
total consideration of approximately $134 million, net of
certain completion adjustments. In addition, Zamin will pay
Anglo American conditional deferred consideration of up
to a maximum of $130 million in total, payable over a
five year period and calculated on the basis of the market
price for iron ore. As part of the transaction, Anglo American
has assumed responsibility for, and the risks and rewards
of, certain insurance claims including those relating to the
Santana port incident, through the purchase of the claims
from Amapá at the full claim value.
TARMAC
Tarmac reported an underlying operating loss of $6 million,
compared with a profit of $73 million in 2012. Tarmac’s
underlying EBITDA was $88 million, 41% lower than in 2012.
The results of 2012 included 100% of the contribution from
Tarmac Quarry Materials, which formed part of the Lafarge
Tarmac joint venture with effect from 7 January 2013.
Building products
A significant improvement in trading performance was
driven by higher sales volumes and continued focus on
managing the cost base in order to enhance margins and
reduce operating costs. Unlike in 2012, there was minimal
disruption from poor weather, which enabled building
activity to continue throughout the year. During 2013, the
market improved in certain sectors, particularly housing,
and forecasts indicate that this improvement will continue
in 2014.
Middle East
The Middle East business experienced a lull in activity
levels and profitability in 2013, following the completion
of three major projects in 2012 and early 2013. The road
building market remains extremely competitive due to
new entrants over the past two to three years, while some
customers are becoming competitors through developing
their own in-house asphalt and surfacing capability. The
outlook for 2014, however, is now more positive, as several
major schemes have been approved across the region and
the forward order book is strengthening. The business
has continued to focus on managing down key costs by
improved raw material procurement, productivity and
energy consumption initiatives and rationalisation of
the workforce.
Lafarge Tarmac joint venture
On 7 January 2013, following final clearance from the UK
Competition Commission, Anglo American and Lafarge
announced the completion of the transaction to create an
incorporated joint venture known as Lafarge Tarmac.
The Group’s share in the underlying operating profit for the
newly formed joint venture was $9 million, but cannot be
validly compared to 2012 due to the separations and
combinations of the merger. Despite weaker markets and
no surplus carbon credit sales, revenue from the continuing
operations contributing to the joint venture increased as a
result of higher year-on-year volumes across all key product
lines. Although cement prices declined during the year,
largely as a result of the entry of a new competitor, excellent
progress has been made with the integration process, with
synergy delivery of $38 million (100%), which was 23%
above original expectations. Although selected market
indicators are pointing towards an improvement in 2014,
Lafarge Tarmac remains cautious about the underlying
strength of recovery within the construction sector.
On 14 January 2014, the UK Competition Commission (CC)
published its final report relating to the investigation into the
aggregates, cement and ready mix concrete (RMX)
markets. In this report the CC concluded that there were
aspects of the cement markets that had adverse effects on
competition. Accordingly it has determined that, amongst
other remedies, Lafarge Tarmac is required to divest of a
cement plant (either the Cauldon or Tunstead cement
plants, plus relevant depots), and (if required by a
prospective purchaser) a number of RMX plants. The CC
has determined that the prospective purchaser cannot be
one of the existing cement producers in Great Britain.
Lafarge Tarmac disputes the conclusions of the CC and is
reviewing its options taking into account the best interests
of its employees, contractors, customers and shareholders.
91
Strategic reportAnglo American plc Annual Report 2013 GOVERNANCE CHAIRMAN’S INTRODUCTION
GOVERNANCE
“ My role is to ensure the Board has the breadth
of skills and experience to drive our strategy.”
Sir John Parker
Chairman
IN THIS SECTION
92 Chairman’s introduction
94 Leadership
94 The Board
97 Executive management
99 The role of the Board
100 Our governance structure
101 Key Board discussions 2013
101 Strategy
102 Board in action
103 Effectiveness
105 Engagement
107 Safety and Sustainable
Development Committee
108 Nomination Committee
109 Audit Committee
111 Audit Committee report
117 Remuneration Committee
118 Directors’ remuneration report
144 Directors’ report
150 Statement of directors’ responsibilities
150 Responsibility statement
92
CHAIRMAN’S INTRODUCTION
I am pleased to introduce our 2013 governance report
in which I will outline my approach to leadership of the
Board to ensure it performs effectively and is accountable
to shareholders.
During the year, the Board discussed a wide range of
topics and these are outlined in a new section on page 101.
We welcomed a number of new directors in 2013 and
made changes to our committee structure by expanding the
membership of the Group Management Committee (GMC),
disbanding the Executive Committee and introducing the
Corporate (CorpCo) and Operational (OpCo) Committees,
to facilitate more streamlined management of matters
delegated to them. For more information on our
committees, please refer to pages 97–117.
STRATEGY
With the arrival of Mark Cutifani as chief executive in April,
came an important change in our approach to management
of the Group and a comprehensive review of the Group’s
strategy – ‘Driving Value’, the aim of which is to spend within
our means and to deliver attractive capital returns. My role is
to ensure the Board has the breadth of skills and experience
to drive this and to encourage open and honest debate and
challenge. I believe that the foundation of good returns
is good governance.
As a board we are responsible for promoting the long term
success of the Company by focusing on returns, improving
productivity, exiting non-core assets that cannot deliver
satisfactory returns and ensuring discipline around capital
allocation. Our seven pillars of value: Safety and Health;
Environment; Socio-political; People; Production; Cost; and
Financial, will allow the Board to control and measure our
performance. To achieve this we must have the right people
and processes in place. For more information on our seven
pillars please see pages 14–15.
Examples of activities reviewed and actions implemented
by the Board as part of the revised strategy include the
ongoing organisational changes, focus on capital returns,
asset reviews leading to identification of opportunities
for optimisation and the recent withdrawal from the
Pebble project.
For more information on our seven pillars
see pages 14–15
For more information, visit
www.angloamerican.com/sustainabledevelopment
Anglo American plc Annual Report 2013 DIVERSITY
GOVERNANCE DEVELOPMENTS
Diversity is a core part of Anglo American’s values and
our business units around the Group regularly share best
practice in this area. We have set internal targets to support
gender diversity and seek to nurture the pipeline of women
throughout the organisation. We believe a more diverse
workforce is beneficial for any business.
In April, at the close of the AGM, 25% of the Board will be
women and we have also enhanced ethnic diversity.
Initiatives relating to other aspects of diversity are frequently
introduced. More information on diversity can be found
in the Strategic report on pages 18–19 and 29 and in the
S&SD report on our website.
BOARD REFRESHMENT
During 2013, we continued our process of board
refreshment. Mark Cutifani replaced Cynthia Carroll as CEO,
Byron Grote, Mphu Ramatlapeng and Jim Rutherford were
appointed as non-executive directors and Peter Woicke
retired from the Board. Judy Dlamini joined the Board on
1 January 2014. Sir CK Chow and David Challen will step
down at the close of the AGM. This means that since
becoming chairman in August 2009 there will be, following
the AGM, a 100% change in our non-executive directors.
The Company will still be able to benefit from David Challen’s
wisdom and experience as he has agreed to act as an
advisor to Anglo American for at least a further year. His
remuneration as an advisor will be the same as that for a
non-executive director. His role will be to provide advice to
the chairman and the executives on corporate activity and
major structural changes as well as maintaining a watching
brief over certain aspects of the Company’s Singapore-
based trading operation. Byron Grote will be appointed as
chairman of the Audit Committee upon David Challen’s
retirement as a non-executive director, and his extensive
financial experience, in particular as CFO of BP, will be
invaluable to the Company. In addition, Sir Philip Hampton
will become the senior independent non-executive director
upon David Challen’s retirement.
During 2013, the government introduced new requirements
for companies to produce a strategic report and remove
other less meaningful disclosures. This allows us to
communicate more concisely to our shareholders.
Reporting standards have recently placed emphasis on
human rights and gender representation. Anglo American
was an early adopter of the strategic report style and this
year’s can be found on pages 2–91.
We welcome the recently implemented binding vote on
remuneration and seek to maintain a fair and transparent
remuneration policy linked to company performance and
shareholder value. The Directors’ remuneration report can
be found on pages 118–143. There has been much recent
interest in improving stewardship of companies by investors
and we will embrace the opportunity for better engagement.
For more information on our approach, and our
comprehensive programme of meetings with investors
throughout the year, including the Annual General Meeting
and global road shows, please see the Engagement section
on pages 105–106.
UK CORPORATE GOVERNANCE CODE
I confirm that during the period, applying the relevant
transitional guidance regarding audit tendering, we have
complied with the UK Corporate Governance Code.
Recognising that it would not be practical to expect all
companies to adopt immediately the newly introduced
provisions on audit tendering, the FRC published transitional
guidance providing for a phased introduction of audit
tendering. In compliance with this guidance, and in light of
proposed UK legislation and ongoing discussions at the EU,
Anglo American proposes not to tender during the current
audit partner’s tenure. More detail on our approach to this
is set out in the report of the Audit Committee on page 112.
As in previous years, we have provided a checklist on our
website detailing how we have complied with the provisions
of the Code.
Details of site visits and directors’ training can be found on
pages 102–104 in the Board in action and Effectiveness
sections of this report.
Sir John Parker
Chairman
BOARD EVALUATION
As your chairman I am responsible for the leadership of
the Board and for its effectiveness. We undertake Board
evaluations annually, with an external evaluation every
three years. The Board is polled individually and
confidentially about issues such as strategy, risk
management, board management, agenda topics and
project management etc. The results of this exercise are
then translated into an action plan for debate with the Board,
and goals are set around those actions. The results of the
achievements against the action plan followed in 2013, are
detailed on page 104. Board evaluations encourage honesty
and openness and provide an opportunity for the Company
to improve the functioning and effectiveness of the Board by
empowering directors to question and comment on the
workings of the Group.
93
Anglo American plc Annual Report 2013Governance GOVERNANCE LEADERSHIP
LEADERSHIP
Sir John Parker
Mark Cutifani
THE BOARD
CHAIRMAN
René Médori
David Challen
FINANCE DIRECTOR
Sir John Parker
GBE, FREng, DSc (Eng), ScD (Hon), DSc (Hon), DUniv (Hon), FRINA
René Médori
Doctorate in Economics
71, joined the Board as a non-executive director on 9 July
2009 and became chairman on 1 August 2009. Sir John
is also chairman of the Nomination Committee and is a
member of the Safety and Sustainable Development
(S&SD) Committee. Sir John is recognised as a highly
experienced and independent chairman and brings a wealth
of leadership experience across a range of industries in
many countries, including in South Africa.
56, was appointed to the Board on 1 June 2005, becoming
finance director on 1 September 2005. René is a member
of the GMC and chairman of CorpCo and the Investment
Committee. René brings significant financial and
commercial expertise from capital intensive businesses,
supplying products to the oil refining, steel and mining
industries and experience in international finance in the
UK, Europe and the United States.
He is a non-executive director of Carnival Corporation
and Airbus Group as well as deputy chairman of DP World.
Sir John is also President of the Royal Academy of
Engineering and a Visiting Fellow of the University of Oxford.
Sir John was previously chairman of National Grid plc, senior
non-executive director and chair of the Court of the Bank of
England, joint chair of Mondi and chair of BVT and P&O plc.
CHIEF EXECUTIVE
Mark Cutifani
BE (Mining Engineering)
55, was appointed as a director and CEO with effect from
3 April 2013, and is chairman of the Group Management
Committee (GMC) and a member of the Corporate
Committee (CorpCo) and the S&SD Committee. Mark
has over 37 years’ experience of the mining industry across
a wide range of geographies and commodities.
He is a non-executive director of Anglo American Platinum
Limited and was previously CEO of AngloGold Ashanti
Limited. Before joining AngloGold Ashanti, Mark was COO
at Vale Inco, where he was responsible for Vale’s global
nickel business. Prior to this he held senior executive
positions with the Normandy Group, Sons of Gwalia,
Western Mining Corporation, Kalgoorlie Consolidated
Gold Mines and CRA (Rio Tinto).
He is a non-executive director of Anglo American Platinum
Limited and Petrofac Limited. René is a former finance
director of The BOC Group plc and was a non-executive
director of SSE plc (formerly Scottish and Southern
Energy plc).
SENIOR INDEPENDENT DIRECTOR
David Challen
MA, MBA
70, joined the Board on 9 September 2002 and was
appointed as the senior independent non-executive director
(SID) in April 2008. He is chairman of the Audit Committee
and a member of the Nomination and Remuneration
Committees. David brings an in-depth understanding
of capital markets and key insights on financial matters.
David is currently chairman of the EMEA governance
committee at Citigroup and senior non-executive director
of Smiths Group plc. He is currently a deputy chairman of
the UK’s Takeover Panel. Previously he was chairman of
J. Henry Schroder & Co. Limited, where he spent most
of his professional career.
David will step down from the Board at the forthcoming
AGM.
94
Anglo American plc Annual Report 2013 Sir CK Chow
Judy Dlamini
Byron Grote
Sir Philip Hampton
Phuthuma Nhleko
NON-EXECUTIVE DIRECTORS
Sir CK Chow
DEng (Hon), CEng, FREng, HonFHKIE, FIChemE
63, was appointed to the Board on 15 April 2008 and is a
member of the Nomination and Remuneration Committees.
He is currently chairman of Hong Kong Exchanges and
Clearing Limited and a non-executive director of AIA
Group Limited. Sir CK contributes broad business and
board experience.
Sir CK is a member of the Executive Council of the Hong
Kong Special Administrative Region, chairman of the Hong
Kong General Chamber of Commerce and chairman of the
Advisory Committee on Corruption for the Hong Kong SAR
Government. Between 2003 and 2011, he was CEO of the
MTR Corporation in Hong Kong. Former positions include
those of CEO of Brambles Industries, GKN PLC and
non-executive chairman of Standard Chartered Bank (Hong
Kong) Limited. Prior to joining GKN PLC he worked for The
BOC Group plc for 20 years, joining its board in 1993.
Sir CK will step down from the Board at the forthcoming
AGM.
Judy Dlamini
MBChB, DOH, MBA
54, was appointed to the Board on 1 January 2014 and is
a member of the Audit Committee. She will be appointed
as a member of the Remuneration Committee at the
conclusion of the AGM. Judy is a successful businesswoman
with longstanding public company board experience across
a range of geographies and sectors, including mining.
She is the chairman of Aspen Pharmacare and founder and
chairman of Mbekani Group, a South African healthcare
investment company. Judy served as a non-executive
director of Northam Platinum between 2004 and 2013,
and as a member of that company’s committees on: health;
safety and environmental; investment; and social, ethics
and human resources. She started her career as a medical
practitioner and after spending two years at HSBC, she
began to develop her entrepreneurial interests. Judy is
also a founder and trustee of Mkhiwa Trust, a family vehicle
for social responsibility initiatives, and has served as a
non-executive director on the boards of Discovery Holdings
and Woolworths Holdings.
Byron Grote
PhD Quantitative Analysis
65, was appointed to the Board on 19 April 2013 and is a
member of the Audit and Remuneration Committees. Byron
contributes broad business, financial and board experience
in numerous geographies.
He is a non-executive director of Unilever NV and Unilever
plc. Byron has extensive management experience across
the oil and gas industry. He served on the BP plc board from
2000 until 2013 and was BP’s chief financial officer during
much of that period.
Byron will succeed David Challen as chairman of the
Audit Committee.
Sir Philip Hampton
MA, ACA, MBA
60, joined the Board on 9 November 2009. He is chairman
of the Remuneration Committee and a member of the
Audit Committee. Sir Philip is chairman of The Royal Bank
of Scotland and brings to Anglo American significant
financial, strategic and boardroom experience across a
number of industries.
His previous appointments include chairman of J Sainsbury
plc; finance director of Lloyds TSB Group plc, BT Group plc,
BG Group plc, British Gas plc and British Steel plc, executive
director of Lazards, and non-executive director of RMC
Group plc and Belgacom SA.
Sir Philip will succeed David Challen as the senior
independent director at the conclusion of the AGM.
Phuthuma Nhleko
BSc (Eng), MBA
53, joined the Board on 9 March 2011 and is a member of
the Audit and Nomination Committees. Phuthuma is also
chairman of Pembani Group (Pty) Limited and Afrisam
South Africa (Pty) Limited and a non-executive director of
BP plc. He is chairman of MTN Group Ltd, having formerly
been the President and CEO from 2002 to 2011. He brings
broad business experience and previously served as a
director on a number of boards in South Africa: Nedbank
Group; Alexander Forbes; Bidvest; and Old Mutual (SA).
95
Anglo American plc Annual Report 2013Governance GOVERNANCE LEADERSHIP
Ray O’Rourke
Mphu Ramatlapeng
Jim Rutherford
Anne Stevens
Jack Thompson
Between 1997 and 2013, he was a Senior Vice President
of Capital International Investors, and had responsibility for
investments in the mining and metals industry with a broad
geographic focus that included Europe, Emerging Markets
and Australasia. Prior to joining Capital Group, Jim was an
investment analyst covering the South American mining and
metals industry for HSBC James Capel in New York.
Anne Stevens
BSc, PhD
65, joined the Board on 14 May 2012 and is a member
of the Audit and Nomination Committees. Anne brings a
wealth of experience and wide-ranging commercial acumen
from a number of global industries including engineering.
She has experience gained across North, Central and
South America.
Anne has served on the board of Lockheed Martin
Corporation as a non-executive director since 2002, and is
also the chairman of a privately held IT services business,
SA IT. Anne’s 16-year career with the Ford Motor Company
culminated in her appointment as chief operating officer
(COO) for the Americas, a position she held until 2006. Prior
to joining Ford in 1990, Anne spent 10 years in a number of
engineering, product development, and sales and marketing
roles at Exxon Chemical Co, and three years as chairman
and CEO of Carpenter Technology.
Jack Thompson
BSc, PhD
63, joined the Board on 16 November 2009, is chairman of
the S&SD Committee and a member of the Remuneration
Committee. Jack brings experience gained at all levels of
the mining industry and has received wide recognition as a
mining executive. He is currently a non-executive director
of Tidewater Inc.
Jack was previously chairman and CEO of Homestake
Mining Co., vice chairman of Barrick Gold Corp. and
has served on the boards of Centerra Gold Inc., Century
Aluminum Co., Molycorp Inc., Phelps Dodge Corp.,
Rinker Group Ltd. and Stillwater Mining.
Ray O’Rourke
KBE, HonFREng, CEng, FIEI, FICE
67, joined the Board on 11 December 2009. He is a member
of the Nomination, Remuneration and S&SD Committees.
Ray has a proven track record in delivering complex and
large-scale projects around the world, mobilising large
numbers of people with great success and applying leading
project management practices. As a member of the S&SD
Committee, he has a keen interest in safety.
Ray founded the O’Rourke Group in 1977, having begun his
career at Kier and J Murphy & Sons. In 2001, the O’Rourke
Group acquired John Laing to form Laing O’Rourke, now
Europe’s largest privately owned construction company,
of which Ray is chairman.
Mphu Ramatlapeng
MD, MHSc
61, was appointed to the Board on 8 July 2013 and is
a member of the S&SD Committee. Mphu is a highly
experienced leader who brings a broad range of South
African and international health expertise at board level
across both the public and private sectors. She has a clear
vision and deep understanding of the social benefits of
effective healthcare programmes and capacity building
through partnership.
Mphu is the Executive Vice President of HIV/AIDS and
Tuberculosis programmes for the Clinton Health Access
Initiative and also the Vice Chair of the Global Fund to Fight
AIDS, TB and Malaria. She served as Minister of Health and
Social Welfare of Lesotho between 2007 and 2012. In this
role, she championed Lesotho’s significant achievements
in reducing the transmission of HIV from mother to child.
Across her career, she has also been a leading advocate for
women in business, including serving as founding board
member of Women in Business in Lesotho.
Jim Rutherford
BSc (Econ), MA (Econ)
54, joined the Board on 4 November 2013. Jim is a member
of the S&SD Committee and will be appointed as a member
of the Audit Committee at the conclusion of the AGM. He
has extensive experience in investment management and
investment banking, both as an institutional investor and
analyst. He brings to the Board considerable financial insight
from the perspective of the capital markets and a deep
strategic understanding of the mining industry.
96
Anglo American plc Annual Report 2013 Mark Cutifani
René Médori
Khanyisile Kweyama
Tony O’Neill
Mervyn Walker
Peter Whitcutt
EXECUTIVE MANAGEMENT
Tony O’Neill
MBA, BASc (Eng)
55, is Group director, technical, and joined Anglo American
in 2013. He is a member of the S&SD and Investment
Committees. He is also a non-executive director of Kumba
Iron Ore and Anglo American Platinum Limited.
Tony joined AngloGold Ashanti in July 2008 as Executive
Vice President – Business and Technical Development and
served as Joint Acting CEO until July 2013. His 35-year
career in the mining industry has spanned iron ore, copper,
nickel and gold, and includes his roles as operations
executive at Newcrest Mining and as the head of the gold
business at Western Mining Corporation. Tony is a mining
engineer with an MBA from the University of Melbourne.
Mervyn Walker
MA (Oxon)
54, is Group director, HR and corporate affairs. He is a
solicitor by training and joined Anglo American in 2008
from Mondi, where he was group HR and legal director.
He is currently also non-executive chairman of pension
schemes for AMEC plc. Mervyn previously held a series of
senior roles at British Airways, including HR director, legal
director, director of purchasing and director of UK airports.
Peter Whitcutt
BCom (Hons), CA (SA), MBA
48, is Group director, strategy, business development and
commercial. He joined Anglo American in 1990 within the
corporate finance division. He worked on the merger of
Minorco with Anglo American, the listing of Anglo American
in 1999, and the subsequent unwinding of the cross-holding
with De Beers. Peter was appointed Group head of finance
in 2003, CFO of Base Metals in August 2008 and to his
present position in October 2009, which was expanded to
include Commercial in 2013.
The Company has one principal executive committee
– the Group Management Committee (GMC) (which
meets monthly) is responsible for formulating Group
strategy for consideration and approval by the Board,
setting budget and performance targets, talent
management and managing the Group’s portfolio. The
GMC is supported by a Corporate sub- committee
(CorpCo), an Operational sub-committee (OpCo) and
an Investment sub-committee (InvestCo). CorpCo
meets at least monthly and is principally responsible
for reviewing corporate policies and processes, as
well as reviewing financial performance and budgets
at a Business Unit level. OpCo meets quarterly. Its
responsibilities include driving operational best
practices across the Group and the setting of technical
standards. Investco meets at least monthly and is
principally responsible for making recommendations
to the GMC on capital investment proposals.
GMC AND CORPORATE COMMITTEE MEMBERS
Mark Cutifani
See page 94 for biographical details.
René Médori
See page 94 for biographical details.
Khanyisile Kweyama
BS Administration (USA), PDM (Wits), MM Human Resources (Wits)
48, is Executive director, Anglo American South Africa
Limited and a non-executive director of Anglo American
Platinum Limited. Khanyisile formerly served on the
executive committee of Anglo American Platinum Limited,
during which time she was successful in building a cohesive
management team, driving performance and improving
relationships with unions. She gained corporate experience
in a number of international companies, including BMW,
Altech and Barloworld Ltd, holding executive roles
incorporating human resources, industrial relations,
corporate affairs, stakeholder relations and transformation.
She has also been elected as the vice president of the South
African Chamber of Mines. She has served as a non-
executive director at various companies, including the
boards of Sovereign Foods Ltd, IAC and Key Mix
Investments, and currently serves on the boards of Business
Leadership South Africa (BLSA), Telkom, New Partnership
for Africa’s Development (NEPAD) business forum and the
International Geology Forum (IGF).
97
Anglo American plc Annual Report 2013Governance GOVERNANCE LEADERSHIP
Paulo Castellari-Porchia
Seamus French
Chris Griffith
Norman Mbazima
Philippe Mellier
Duncan Wanblad
GMC MEMBERS
Paulo Castellari-Porchia
Bcom, MBA
43, is CEO of Iron Ore Brazil. He was previously CEO of
Anglo American’s Phosphates and Niobium businesses in
Brazil and served in Anglo American’s former Base Metals
division. Paulo’s career with the Group started in 1993 and
has included positions at AngloGold Ashanti and Minorco in
a number of corporate finance and capital project roles.
Seamus French
B Eng (Chemical)
51, is CEO of Coal. He joined WMC Resources in Australia
in 1994, initially in a strategic planning and business
development role and progressed to various operational
management roles, gaining extensive experience in the
gold and nickel businesses before advancing to the position
of executive general manager, copper-uranium division.
Seamus joined BHP Billiton as global vice president,
business excellence, following its takeover of WMC in 2005.
He was appointed regional CEO of Anglo Coal Australia in
2007, bringing strong skills in operations, safety and
business improvement to the role. He was CEO of
Metallurgical Coal between 2009 and 2013.
Norman Mbazima
FCCA, FZICA
55, was appointed CEO of Kumba Iron Ore with effect from
1 September 2012. He joined Anglo American in 2001 at
Konkola Copper Mines plc. He was subsequently appointed
global CFO for Anglo Coal. He became executive director of
finance at Anglo American Platinum Limited in June 2006
and later stepped in as joint acting CEO. Prior to this,
Norman was CEO of Scaw Metals from May 2008 and later
CEO of Thermal Coal from October 2009, a position he held
until 2012.
Philippe Mellier
MSc (Mechanical Engineering), MBA
58, was appointed CEO of De Beers Group in July 2011.
He began his career in 1980 with the Ford Motor Company,
where he occupied various senior management positions
over 19 years. In 1999, Philippe joined Renault as a senior
vice president in charge of European sales, and was a
member of the management board. In 2001 he moved to
Volvo AB to become chairman and CEO of Renault Trucks,
and a member of the Volvo Group executive committee. In
2003, Philippe became president of Alstom Transport and
was appointed executive vice president of Alstom Group a
year later.
Chris Griffith
B Eng (Mining) Hons, Pr Eng
Duncan Wanblad
BSc (Eng) Mech, GDE (Eng Management)
48, was appointed CEO of Anglo American Platinum
Limited with effect from 1 September 2012. He was
previously CEO of Kumba Iron Ore from 2008. Prior to this
he was Anglo American Platinum’s head of operations for
joint ventures. Chris has been with Anglo American for more
than 24 years.
47, is CEO of Base Metals and Minerals. He began his
career at Johannesburg Consolidated Investment Company
Limited in 1990. Between 2009 and 2013, Duncan held
the position of group director, Other Mining and Industrial
businesses. He was appointed to the board of Anglo
American Platinum Limited in 2004 and was appointed joint
interim CEO of Anglo American Platinum in 2007, before
taking over as CEO of Anglo American’s copper operations
in 2008.
98
Anglo American plc Annual Report 2013 Role of the senior independent director
David Challen is the senior independent non-executive
director (SID). The SID is available to shareholders, acts
as a sounding board and confidant for the chairman and
is available as an intermediary for the other directors
if necessary. Sir Philip Hampton will assume the role
of SID upon Mr Challen’s retirement on 24 April 2014.
Company secretary
The company secretary works closely with the chairman
in providing guidance on governance issues. During our
recent board and committee evaluations, the company
secretary encouraged open feedback from directors
and follow up of actions resulting from these reviews as
part of the ongoing process of improvement. For more
information please see the Board evaluation action
plan on page 104.
THE ROLE OF THE BOARD
The Board of directors has a duty to promote the long
term success of the Company for its shareholders. 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.
Our Board Charter sets out, inter alia, the mandate of the
Board and those powers that it does not delegate to its
committees, such as approval of business plans, budgets
and material expenditure. It serves to ensure that board
members acting on behalf of Anglo American are aware
of their main roles, duties and responsibilities, and to ensure
that the highest principles of corporate governance are
applied in all their dealings in respect of, and on behalf of,
the Company. It also covers the appointment and removal
of directors, the establishment of Board committees,
Board procedures, director and Board evaluation and the
delegation of authority to the executive management.
Every year the Board holds a two-day strategy meeting at
which the non-executive directors (NEDs) contribute their
expertise and independent perspective in developing the
strategy of the Company.
Role of the chairman
The Board is chaired by Sir John Parker. The chairman is
responsible for leading the Board and for its effectiveness.
Role of the chief executive
The CEO is responsible for the execution of strategy
and the day-to-day management of the Group, supported
by GMC and CorpCo, which are currently chaired by
Mark Cutifani and René Médori respectively. The functions
and membership of GMC and CorpCo are set out on
pages 97–98.
The Company has adopted the Institute of Chartered
Secretaries and Administrators’ Statement of Division
of Responsibilities between the Chairman and the CEO.
99
Anglo American plc Annual Report 2013Governance GOVERNANCE LEADERSHIP
OUR GOVERNANCE STRUCTURE
Board and committee structure
Subject to those matters reserved for its decision, the
Board delegates certain responsibilities to a number
of standing committees – the Safety and Sustainable
Development (S&SD), Remuneration, Nomination and Audit
Committees. These committees are made up of a majority
of non-executive directors who contribute an independent,
external perspective and who make recommendations to
the wider Board on issues discussed. The minutes of these
committees are reviewed at each board meeting and the
chairmen of each committee reports, at each board
meeting, on the activities of the relevant committee. The
Company and directors expect high levels of attendance at
meetings and those for 2013 are shown in the table below.
Pages 107–110 and 117 set out the activities of these
committees throughout the year.
The Board also delegates certain responsibilities to the
Group Management Committee (GMC) which is made
up of executives. For more information on the executive
committees, please see pages 97–98.
In addition to the above committees, the Investment
Committee, Corporate Committee and Operational
Committee provide advice to, and have certain authorities
delegated to them, by the GMC.
The members of these committees are as follows:
• Corporate Committee – please see page 97
• Operational Committee – Tony O’Neill (chairman),
Mark Cutifani, Paulo Castellari-Porchia, Seamus French,
Chris Griffith, Norman Mbazima, Philippe Mellier and
Duncan Wanblad
Investment
Committee
Corporate
Committee
Operational
Committee
Group
Management
Committee
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Safety and
Sustainable
Development
Committee
Executive and Non-executive
Non-executive
Executive
Delegation
Recommendation
• Investment Committee – René Médori (chairman),
Tony O’Neill, Nimesh Patel and Peter Whitcutt.
The terms of reference for the principal committees and
a schedule of matters reserved for the Board’s decision are
published on the Company’s website.
Board and Committee meetings 2013 – frequency and attendance
Sir John Parker
Cynthia Carroll(1)
Mark Cutifani(2)
René Médori
David Challen
Sir CK Chow
Byron Grote(2)
Sir Philip Hampton
Phuthuma Nhleko
Ray O’Rourke
Mphu Ramatlapeng(2)
Jim Rutherford(2)
Anne Stevens(2)
Jack Thompson
Peter Woicke(1)
Independent
Board
(seven
meetings)
Audit
(four
meetings)
S&SD
(four
meetings)
Remuneration
(four
meetings)
Nomination
(four
meetings)
n/a
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
All
Two
All
All
All
Six(3)
All
Six(3)
Six
All
All
All
Six(3)
All
Two(3)
–
–
–
–
All
–
All
Three
All
All
–
–
Three
–
–
All
One
All
–
–
–
–
–
–
All
All
All
–
All
All
–
–
–
–
All
All
All
All
–
All
–
–
–
All
All
All
–
–
–
All
All
–
–
All
All
–
–
All
–
All
(1) Meetings attended prior to retirement.
(2) Meetings attended since appointment.
(3) Not able to attend unscheduled meeting held in January.
100
Anglo American plc Annual Report 2013 KEY BOARD DISCUSSIONS 2013
STRATEGY
In June, the Board spent two days challenging and
developing the Anglo American strategy with the new
CEO Mark Cutifani. The Board received presentations from
executives and agreed to focus on the key challenges as
detailed below. These were communicated in the Interim
Results presentation in July, namely: Anglo American
Platinum restructure; Kumba revitalisation; social
complexity and industrial threats in South Africa; Copper
production delivery – Collahuasi/Los Bronces recovery;
Barro Alto furnace recovery and rebuild programme;
Minas-Rio project; De Beers delivery; and Metallurgical Coal
cost management.
The strategy was further communicated at the Investor
Day in December which set out goals for the Group’s
performance and action plans to achieve them. This
included an improved target ROCE of at least 15%, focus
on capital allocation and optimisation of the portfolio. The
Board played a key part in strategic decisions such as the
exit from the Pebble Project after a thorough assessment
of the extensive pipeline of long-dated project options.
The Board agreed to prioritise capital to projects with the
highest value and lowest risks, and reduce the capital
required as part of a more effective, value-driven capital
allocation model.
For more information on the Group’s strategy see pages
14 and 15.
The standing agenda sets the framework for board
meetings throughout the year and includes items such as
safety and health, environment, people and organisation,
production, projects and exploration, finance and
commercial, strategy and business development, external
relations and progress on critical tasks. In addition, specific
items are dealt with as and when necessary.
Examples of these specific items are set out below.
January
The Board reviewed the proceedings of the Audit
Committee held immediately prior to the board meeting
and noted and agreed with its recommendations for the
Minas-Rio project concerning revised capital expenditure,
an accounting impairment and the related press release.
February
The Board discussed a recommendation for the 2012 final
dividend which the shareholders subsequently approved
at the AGM. The Board was updated on visits made by
Cynthia Carroll, Brian Beamish and René Médori to China
and India in mid-January. The Board also held a thorough
review of Anglo American Platinum.
April
Mark Cutifani was welcomed to his first meeting as CEO
and the Board discussed the new CEO’s agenda. It also
reviewed a Commercial Operating Model update.
June
The Board agreed certain changes to committee
compositions and received a detailed progress report on
Minas-Rio. The Board held a two-day strategy meeting as
detailed below.
July
The Board approved the 2013 interim dividend. Mr Cutifani
led a discussion on key challenges for the Group including
strategies to improve return on capital employed (ROCE)
and manage business execution, capital allocation and
stakeholder engagement. The Board also discussed the
Pebble Project in Alaska which the Group subsequently
exited later in the year.
October
The Board discussed proposed organisation changes and
the Kumba Iron Ore/Arcelor Mittal dispute.
December
Tony O’Neill presented a technical overview and report on
findings regarding Sishen, Los Bronces, Quellaveco and
Minas-Rio. The Board reviewed the presentation for the
Analyst and Investor Strategy event held in December and
the Thermal Coal Trading Pilot. The Board approved the
budget and plan for 2014–2016.
101
Anglo American plc Annual Report 2013Governance GOVERNANCE LEADERSHIP
BOARD IN ACTION
As part of directors’ induction and ongoing training
programme, as well as being an opportunity to review
independently the Company’s business, board members
made a number of visits to the Group’s operations
throughout the year. Site visits allow greater insight into
challenges faced in the field, and facilitate better decision
making by the Board.
NEDs’ fact finding trips
Jack Thompson, Ray O’Rourke and Jim Rutherford
made site visits and gave feedback on their findings as
summarised in the table below.
Board visit to South Africa
The Board travelled to South Africa for the October meeting.
Certain directors participated in a mining course and
others in a site visit to the De Beers Venetia mine. During
the mine visit, directors met management and employees,
toured the operation and received an overview of De Beers
and the diamond industry. Judy Dlamini, Byron Grote,
Phuthuma Nhleko, Mphu Ramatlapeng and Anne Stevens
attended the mining course covering items such as
geosciences, mining and processing. Those attending found
that the session was most valuable and recommended that
all future NEDs attend such a course to inform them further
on the complex nature of mining.
02
01
04
03
Board site visits
Location
Topics discussed
Key results/findings
Cerrejón – Thermal Coal, Colombia
P40 expansion and its implementation
including relocation of communities.
Familiarised with country and local
situation. High quality of the staff on
site. Cerrejón’s S&SD programmes
are commendable.
Peace River – Metallurgical Coal, Canada
Expansion of the operation to world class
status and review of environmental
management.
Confirmation of operation’s potential.
The ambitious strategy and vision for
the unit was very good.
Snap Lake – De Beers Diamonds, Canada Observation of joint AA and De Beers
internal S&SD audit. Water quality and
community engagement.
The mine and plant are first rate and
well run. Good work being carried out
by the community affairs group.
Dishaba – Platinum, South Africa
Review of working conditions for
narrow reef mining and potential for
mechanisation at the mine face.
Greater appreciation of the challenges
faced including migrant labour and
housing issues.
01 Mogalakwena mine
visit – from right to
left: Mark Cutifani,
Jim Rutherford,
Chris Griffith and
Mogalakwena mine
production manager
David Malunga
02 Mining course for
non-executive directors
– Phuthuma Nhleko
03 Mining course for
non-executive directors
– Judy Dlamini
04 Mining course for
non-executive directors
– from left to right:
Mphu Ramatlapeng
and Anne Stevens
“Site visits allow
greater insight
into challenges
faced in the
field, and
facilitate better
decision making
by the Board”
Jack Thompson
Non-executive
director
102
Anglo American plc Annual Report 2013 EFFECTIVENESS
“ The board’s role is to provide entrepreneurial
leadership of the company within a framework
of prudent and effective controls which enables
risk to be assessed and managed.”
The FRC’s Guidance on board effectiveness states that,
“the board’s role is to provide entrepreneurial leadership of
the company within a framework of prudent and effective
controls which enables risk to be assessed and managed.”
For a board to be effective it must be composed of the right
people, led by a strong (but not dominant) chairman and
maintain independence with a majority of the Board
composed of non-executive directors. The Board must
evaluate its performance and seek to continually improve its
approach to promoting the success of the company for the
benefit of its stakeholders. The directors must be sufficiently
educated in the operation of the company in order to make
informed decisions. The Board should delegate certain
matters to committees which afford specialist discussion
outside the board environment. We seek to do our utmost to
promote a high performing board and some of the ways we
do this are detailed below.
Independence of directors
The Board has a strong independent element and currently
comprises, in addition to the chairman, two executive
directors and eleven NEDs, all of whom are independent
according to the definition contained in the Code. Full
biographical details for each director are given on pages
94–96. The letters of appointment of the NEDs (as well as
the executive directors’ service contracts) are available for
inspection at the registered office of the Company.
None of the NEDs has served concurrently with an
executive director for more than nine years.
Sir Philip Hampton will assume the role of senior
independent director upon David Challen’s retirement
on 24 April 2014.
Director training
Anglo American’s directors have a wide range of expertise
as well as significant experience in strategic, financial,
commercial and mining activities.
Upon appointment, directors are provided with recent board
materials and a reference manual containing information on
legal obligations and other matters of which they should be
aware. Guidance is provided on Market Conduct under the
Financial Conduct Authority (FCA), the Company’s Articles,
the Code and the Model Code. The manual also includes
items such as board and committee terms of reference,
relevant company information and guidance on where to
obtain independent advice. The manual is updated
periodically when appropriate.
As part of the directors’ formal induction process, meetings
are arranged with senior executives in order to develop a
full understanding of the Anglo American Group. During
2013, Byron Grote, Mphu Ramatlapeng and Jim Rutherford
participated over a number of days in meetings with GMC
members, business unit (BU) heads and members of the
Board. Judy Dlamini attended briefings in early 2014.
Training and briefings are also available to directors
throughout their tenure, as necessary, taking into account
existing qualifications 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 the Company’s expense, although no
such advice was sought during 2013. Regular presentations
are made to the Board by BU management on the activities
of operations.
The company secretary facilitates board training and
during the year directors attended courses on, inter alia,
finance, corporate governance, strategy, compliance,
regulatory developments, audit committee issues and
general director duties and responsibilities. The
directors are given the opportunity to discuss their
development needs with the chairman during individual
feedback meetings.
Board evaluation
Please see the table overleaf for the results of our externally
facilitated evaluation which took place in 2012 and the
achievements against goals, set around it during 2013. In
our last annual report, we disclosed our intention to include
comments from the external board evaluation in the board
agendas for the proceeding 12-18 month period. The Board
was described as “balanced”, with a “wide range of depth
and breadth of skills and experience”. The induction
programme offered to new NEDs which included site visits
was received positively and “deepened the understanding of
the business”. The overall board dynamics were described
as “respectful challenge, without any cosiness”.
A further internal evaluation was conducted in late 2013 with
goals set for 2014 which will be reported against in next
year’s annual report.
103
Anglo American plc Annual Report 2013Governance GOVERNANCE EFFECTIVENESS
Board Evaluation Action Plan 2013
2012/2013 board action plan
Achievements against action plan
Strategy and strategy
process
More frequent strategy discussion required
with focus on growth in earnings strategy
Audit Committee
More stress testing (and fantail forecasting)
in key areas
Investments, acquisitions
and disposals
Project management
Executive remuneration
Allocate more time to discuss strategic
implications of acquisitions and
organisational changes
More assurance on key learnings from
challenging projects
Review of how we incentivise the right
behaviours in creating long term
shareholder value
Improving board meeting
effectiveness
Improve the structure of the board agenda
to facilitate informed debate and focus on
important issues.
Board and NED knowledge
development
NEDs requested more site visit
opportunities
Strategy included as regular item at board
meetings and June 2013 strategy meeting.
Focus on longer term including +10 years
outlook
Areas reviewed included: commodity pricing
volatility; cash flow; China economic impact;
inflation changes; impact on mining costs;
ROCE scenarios
More time allocated in board meetings
Presentations prepared accordingly
Review carried out, draft proposals drawn up
and discussed with major shareholders, after
which the Remuneration Committee agreed
the final changes
Priority decisions clearly flagged on the
agenda and priority topics scheduled at the
beginning of the agenda. Agenda colour
coded to differentiate between items for
noting, approval and for information
The Board holds one meeting a year
overseas to incorporate a mine visit. In
addition, arrangements were made for NEDs
to visit various operations during the year. See
‘Board in action’
104
Anglo American plc Annual Report 2013 Institutional investors
During the year there were regular presentations to, and
meetings with, institutional investors in the UK, South Africa,
continental Europe, the US and Asia Pacific to communicate
the strategy and performance of Anglo American. Executive
directors as well as key executives, including business unit
heads, host such presentations, which include seminars
for investors and analysts and one-on-one meetings.
Throughout the year, executive management also presents
at industry conferences that are mainly organised by
investment banks for their institutional investor base.
During 2013, the chairman attended investor roadshows
in Johannesburg and Cape Town. The senior independent
director (SID), works closely with the chairman to maintain
his understanding of the issues and concerns of major
shareholders. The chairman, SID and other NEDs are also
available to shareholders to discuss any matter they wish to
raise. The Company’s website provides the latest news and
historical financial information, details about forthcoming
events for shareholders and analysts, and other information
regarding Anglo American.
ENGAGEMENT
COMMUNICATING WITH OUR INVESTORS
The Company maintains an active engagement with its key
financial audiences, including institutional shareholders and
sell-side analysts, as well as potential shareholders. The
Investor Relations department manages the interaction with
these audiences and regular presentations take place at the
time of interim and final results as well as during the rest of
the year. An active programme of communication with
potential shareholders is also maintained. A schedule of
investor relations activities carried out during 2013 is shown
on the following page.
Board oversight
Any significant concerns raised by a shareholder in relation
to the Company and its affairs are communicated to the
Board. The Board is briefed on a regular basis by the
Investor Relations department and analysts’ reports are
circulated to the directors. Feedback from meetings held
between executive management, or the Investor Relations
department, and institutional shareholders is also
communicated to the Board.
Annual General Meeting
The AGM gives an opportunity to shareholders to pose
questions to the directors and senior executives of the
Company. Business to be discussed at the meeting is
notified in advance to shareholders in the Notice of Meeting
and covers matters such as the annual election of directors,
appointment of auditors and dividend declaration. The
financial statements and the report of the directors and
auditors are laid before the shareholders for approval. Due
to the enactment of the Enterprise and Regulatory Reform
Act 2013, changes have been made to the way shareholders
approve the Directors’ remuneration report. In 2014,
shareholders will be asked to vote on the remuneration
policy and implementation report and the vote on the
remuneration policy will be binding.
At the Company’s AGM in 2013, the chairman and CEO
answered questions on: the Company’s operations and the
communities impacted by them; dividends; governance;
silicosis; and the Pebble project.
A special resolution relating to the disapplication of
pre-emption rights, did not achieve the necessary 75%
majority and thus was not passed. Although this is a routine
resolution for public companies in the UK, South Africa
based shareholders oppose such resolutions by UK
companies listed on the Johannesburg Stock Exchange
as a matter of course.
105
Anglo American plc Annual Report 2013Governance GOVERNANCE ENGAGEMENT
Investor relations activities timeline 2013
January 2013
08 January
Call with Investors – Sir John Parker and Mark Cutifani regarding appointment
February 2013
15 February
Anglo American full year 2012 results
19 – 21 February
NY and Boston Roadshow – Cynthia Carroll and Paulo Castellari-Porchia
25 February
London Roadshow – René Médori
25 – 26 February
SA Roadshow – Peter Whitcutt
27 February – 01 March
SA Roadshow – René Médori
March 2013
04 – 05 March
London Roadshow – Peter Whitcutt
April 2013
May 2013
June 2013
07 March
21 March
03 April
04 – 05 April
12 April
19 April
01 May
14 – 16 May
05 June
11 June
18 June
19 June
Citi Global Resources Conference – Investor Relations
London Roadshow – René Médori
Investor Day meeting – Investor Relations
SA Roadshow – Sir John Parker
JP Morgan Cazenove Nordic Mining and Steel day Conference – Investor Relations
AGM
UBS London Mining trip – Investor Relations
Bank of America Merrill Lynch Global Mining Conference – Mark Cutifani
Investor group meeting – Investor Relations
Analyst and Investor Summer drinks hosted by Board, GMC and Exco
SRI Analyst presentation
RBC Conference Boston – René Médori
20 – 21 June
NY, New Jersey, Baltimore, Philadelphia Roadshow – René Médori
July 2013
26 July
Interim results presentation
31 July – 01 August
SA Roadshow – Mark Cutifani and René Médori
31 July
Sell-Side dinner – Mark Cutifani and René Médori
August 2013
September 2013
03 – 04 September
London Roadshow – Mark Cutifani and René Médori
05 September
Edinburgh Roadshow – Mark Cutifani and René Médori
09 – 10 September
London Roadshow – Mark Cutifani and René Médori
12 September
Macquarie’s Iron Ore Corporate Day – Investor Relations
16 – 20 September
Boston, New York, Baltimore Roadshows – Mark Cutifani and René Médori
October 2013
November 2013
December 2013
07 October
08 October
22 – 23 October
30 October
05 November
06 November
12 November
14 November
12 December
17 December
Investor Group meeting – Mark Cutifani
Investor Group meeting – Investor Relations
SA Roadshow – Paul Galloway (Head of Investor Relations)
London Roadshow – Paul Galloway
Deutsche Bank BRICS conference – Investor Relations
Goldman Sachs Natural resources conference – Mark Cutifani
London Roadshow – Paul Galloway
Chicago Roadshow – Mark Cutifani
Analyst and Investor Strategy Day
Edinburgh Roadshow – Paul Galloway
106
Anglo American plc Annual Report 2013 SAFETY AND SUSTAINABLE
DEVELOPMENT COMMITTEE
Jack Thompson
Chairman, Safety and Sustainable
Development Committee
Composition
• Jack Thompson – chairman
• Mark Cutifani
• Tony O’Neill
• Ray O’Rourke
• Sir John Parker
• Mphu Ramatlapeng
• Jim Rutherford
In addition to the members,
committee meetings are
attended by business unit
(BU) CEOs and Safety and
Sustainable Development
(S&SD) and corporate affairs
functional specialists from
across the Group, all of whom
participate actively in the
Committee’s discussions.
“At Anglo American, sustainability is part of our
everyday business. How we build relationships with
people inside and outside the business, keep our
workforce safe and healthy and take care of the
environment is at the core of our values and delivers
considerable benefits to the Company.”
Jack Thompson
Chairman, S&SD Committee
Role and responsibilities
• Reviewing the development of framework policies
and guidelines for the management of sustainable
development and socio-political risks, including safety,
health and environment.
• Reviewing the performance of the Company and the
progressive implementation of its S&SD and corporate
affairs policies.
• Receiving reports covering matters relating to material
sustainability risks and liabilities.
• Monitoring key indicators and learning from incidents
and, where appropriate, ensuring they are communicated
throughout the Group.
• Considering material, national and international,
regulatory and technical developments in the field
of S&SD management.
Committee discussions in 2013
At each meeting, the Committee reviewed and discussed a
quarterly report covering the Group’s performance across a
range of sustainability areas including: safety; occupational
health and wellness; community health; climate change;
energy and water usage; and social performance. Very
sadly, 14 colleagues lost their lives in work-related incidents
during the year. The Committee received a detailed account
of each fatal incident from the relevant BU CEO, together
with the related management response.
In February, the Committee:
• received a presentation from the CEO of Copper on the
sustainability strategy and performance of that business,
followed by the standing risk and assurance item, which
focused on resource nationalism. Further updates included
employee and community health and environmental targets
for the year. The Committee welcomed representatives
of the International Women’s Health Coalition for a
discussion on the role of mining in supporting local wellness
and healthcare programmes.
In April, the Committee:
• was joined by the CEO of Platinum for a presentation on its
sustainability strategy and performance. An overview of the
Group Sustainability Risk Register was presented, followed
by a discussion on water quality risk and the status of actions
identified during the 2012 audits on water quality. The
annual sustainable development regulatory review was
presented by the legal department, followed by updates
on responsible supply chain management and the Group’s
social performance.
In July, the Committee:
• received an overview of the operational performance in
relation to key sustainability risks and opportunities from the
CEO of Metallurgical Coal. This was followed by a review on
risks related to methane and explosive dust. The Committee
was presented with a plan to achieve a step change
throughout the business in sustainable development, as part
of the CEO’s ‘Driving Value’ programme. The meeting
concluded with presentations from PwC on the results of
their annual audit of the Group’s sustainable development
reporting and from the UK charity – Business in the
Community – on corporate responsibility.
In October, the Committee:
• received a presentation from De Beers on its sustainability
performance, after which the meeting focused on technical
risks and controls related to slope stability, tailings risk,
underground ground stability and shaft integrity. This was
followed by a comprehensive overview of sustainability
communications and engagement, and a discussion on
conflict management with peace-building NGO,
International Alert.
107
Anglo American plc Annual Report 2013Governance GOVERNANCE BOARD COMMITTEES
Diversity policy
To increase diversity, in particular the representation of
women and ethnicity on the Board. With the appointment
of Judy Dlamini and the retirement of David Challen and
Sir CK Chow, the percentage of women on the Board, will
revert to 25% in April 2014.
Committee discussions in 2013
In February, the Committee:
• discussed the appointment of Jack Thompson as chairman
of the S&SD Committee
• recommended the appointment of Byron Grote to the
Board and the Audit Committee
• discussed succession planning.
In April, the Committee:
• discussed the search for more female NEDs and those
with South African and/or sustainable and international
development experience.
In June, the Committee:
• agreed to recommend the appointment of
Mphu Ramatlapeng to the Board
• discussed changes to committee memberships
• discussed candidates for appointments as NEDs
with South African business experience.
In July, the Committee:
• recommended Judy Dlamini’s appointment as
a NED
• discussed the need for the Board to have investor/capital
markets experience.
In October 2013, the Committee members
recommended the appointment of Jim Rutherford
as a NED.
During the year Spencer Stuart and Buchanan Harvey
were used as external search consultants in the recruitment
of non-executive directors.
NOMINATION COMMITTEE
Sir John Parker
Chairman, Nomination Committee
Composition
Compliant with the Code:
• Sir John Parker – chairman
• David Challen
• Sir CK Chow
• Phuthuma Nhleko
• Ray O’Rourke
• Anne Stevens
“The Nomination Committee has enhanced the
current diversity of the Board by identifying and
nominating suitably qualified candidates.”
Sir John Parker
Chairman, Nomination Committee
Role and responsibilities
• Setting guidelines (with the approval of the Board) for
the types of skills, experience and diversity being sought
when making a search for new directors. With the assistance
of external consultants, identifying and reviewing in detail
each potential candidate available in the market and
agreeing a ‘long list’ of candidates for each directorship.
Following further discussion and research deciding upon
a shortlist of candidates for interview. Interviewing of
shortlisted candidates by the Committee members who
then convene to discuss their impressions and conclusions,
culminating in a recommendation to the Board
• Making recommendations as to the composition of
the Board and its committees and the balance between
executive directors and non-executive directors (NEDs),
with the aim of cultivating a board with the appropriate
mix of skills, experience, independence and knowledge
of the Company
• Ensuring that the HR function of the Group regularly
reviews and updates the succession plans of directors
and senior managers for subsequent debate with the NEDs
and chief executive.
108
Anglo American plc Annual Report 2013 AUDIT COMMITTEE
David Challen
Chairman, Audit Committee
Composition
Compliant with the Code:
• David Challen – chairman
• Judy Dlamini
• Byron Grote
• Sir Philip Hampton
• Phuthuma Nhleko
• Anne Stevens
“The Audit Committee plays a critical role in ensuring
high quality financial reporting and providing
assurance to the Board on the effectiveness of the
internal control environment.”
David Challen
Chairman, Audit Committee
Role and responsibilities
• Monitoring the integrity of the annual and interim financial
statements, the accompanying reports to shareholders and
corporate governance statements.
• Making recommendations to the Board concerning the
adoption of the annual and interim financial statements.
• Overseeing the Group’s relations with the external auditors
including assessment of independence and effectiveness of
the external auditor.
• Making recommendations to the Board on the appointment,
retention and removal of the external auditors and tendering
of external audit services.
• Reviewing and monitoring the effectiveness of the Group’s
internal control and risk-management systems, including
reviewing the process for identifying, assessing and
reporting all key risks.
• Approving the terms of reference and plans of the internal
audit function.
• Approving the internal audit plan and reviewing regular
reports from the head of internal audit on effectiveness
of the internal control system.
• Receiving reports from management on the key risks
of the Group and management of those risks. Further
details of such risks are provided on pages 46–53.
Fair, Balanced and Understandable
A key requirement of our financial statements is for
the report and accounts to be fair, balanced and
understandable. The Audit Committee and the Board are
satisfied that the Annual Report and Accounts meet this
requirement as appropriate weight has been given to both
positive and negative developments in the year.
In justifying this statement the Audit Committee has
considered the robust process which operates in creating
the report and accounts, including:
• clear guidance and instruction is given to all contributors
• revisions to regulatory requirements, including the UK
Corporate Governance Code, are monitored on an
ongoing basis
• early warning meetings are conducted between business
unit management and the auditors in advance of the year
end reporting process
• input is provided by senior management and corporate
functions
• a thorough process of review, evaluation and verification
of the inputs from business units is undertaken to ensure
accuracy and consistency
• further reviews are conducted by senior management
• a review is conducted by external advisors appointed to
advise management on best practice with regard to creation
of the report and accounts
• a meeting of the Audit Committee is held to review and
consider the draft annual report and accounts in advance
of the final sign-off
• final sign-off is provided by the Board of directors.
Committee discussions in 2013
The Audit Committee held four meetings in 2013.
In January, the Committee:
• received an update on the status of the Minas-Rio project
and discussed the impairment to be recommended to
the Board, together with the proposed disclosure in the
financial statements
• received a report from management on the Minas-Rio
project status, in addition to a report provided by consultants
appointed by the Board to give an independent assessment
of the project, including recommendations for expediting its
completion. Based on these presentations that included
robust challenges to management and detailed discussion of
project risks, the Audit Committee agreed to recommend to
the Board revised capital spend and the proposed impairment.
The Committee sought input from the external auditor over
the impairment number in reaching its conclusion.
In February, the Committee:
• reviewed in detail the significant accounting issues and the
press release for the 2012 year end results. A number of
proposed impairments were presented by management
and questioned by the Committee prior to reaching
agreement on the proposals. The Committee sought input
from the external auditor in reaching its position
• received a presentation from management on the internal
control environment within the newly established
commercial operating model. The Committee satisfied itself
that the internal control environment for the new Singapore
marketing and commercial function was designed
appropriately and operating effectively
109
Anglo American plc Annual Report 2013Governance GOVERNANCE BOARD COMMITTEES
• reviewed the Ore Reserve and Mineral Resource report,
focusing on the significant changes from the previous year’s
report and understanding the third party audit coverage plan
for the three year period between 2012 and 2015
• noted the status of actions in connection with control
improvements recommended by the external auditor from
the 2011 audit
• noted and approved the register of non-audit assignments
conducted by the external auditors in 2012
• reviewed a report on completion of the 2012 internal audit
plan and discussed the significant findings, while noting the
internal control environment was judged to be effective
based on an overall assessment of risk and assurance work,
and met with the internal and external auditors without the
presence of management.
In July, the Committee:
• received and discussed in detail an update of discussions
with the South African tax authorities over matters relating
to Anglo American Platinum. Following discussion the Audit
Committee approved the level of provisioning and proposed
disclosure, having sought assurance from the external
auditor that both were appropriate
• evaluated management’s proposed accounting treatment
and disclosure relating to various matters including: Amapá
mine, following the tragic incident at the port of Santana and
the proposed sale; creation of the Lafarge Tarmac joint
venture; and Anglo American Platinum restructuring. The
audit committee provided comments to management on
the draft interim results press release
• reviewed the assumptions underpinning the going concern
assessment including forecast solvency and liquidity to
enable it to approve the 2013 interim financial statements
on a going concern basis
• satisfied itself that the external auditor was in agreement
with the accounting treatment and judgement proposed by
management on the significant accounting items
• considered and approved the register of non-audit
assignments undertaken by the external auditor in the first
half of 2013
• received a report on the progress of the internal audit plan
for 2013 and discussed in detail the more significant items
identified for management attention and results of matters
that the internal audit team had been asked to investigate,
requesting an update at the next meeting
• reviewed the risk profile of Anglo American and each of its
business units based on a paper prepared by management.
The Committee challenged the relative priority of the risks
and evaluated the potential impact of the key risks, including
potentially catastrophic risks, noting the controls in place to
mitigate such risks and additional actions where required
• The Committee reviewed the process and results emerging
from the annual review performed to evaluate the
independence and objectivity of the external auditor. The
Committee agreed with the conclusion that the 2012 audit
had been conducted effectively.
In December, the Committee:
• received a presentation from management on a proposed
trading initiative for Thermal Coal. The Committee focused
on the risks, governance and controls associated with the
proposal and requested assurance that the controls
operate as intended at a future meeting
• received a presentation from management on the
De Beers business, its risks, internal control matters and
the enhancement to internal controls arising from its
integration into Anglo American. The Committee
questioned aspects of the business and its complexities to
ensure a deeper understanding of the key issues that
affect the risk profile and performance of the business
• reviewed the detailed analysis presented by management
on the significant accounting issues that would impact the
2013 financial results. The Committee probed
management on the assumptions made and conclusions
reached, requesting input from the external auditor.
Principal issues included the proposed impairments and
provisions for the Anglo American Platinum portfolio
review, Barro Alto, Foxleigh, Michiquillay, Platinum tax
matters, accounting for the disposal of Amapá, and
accounting for the exit from the Pebble project. The
Committee also received an update on the Minas-Rio
project, challenging the assumptions used in the latest
valuation. The Audit Committee approved the 2013 audit
fee, having reviewed the factors generating changes
from 2012
• discussed the UK Corporate Governance Code
requirement to put the audit contract out to tender at least
every 10 years, and the outcome of the UK Competition
Commission final report and likely changes in law
from October 2014. In the context of the current UK
regulatory guidance, the Committee agreed to make a
recommendation to the Board on the approach to audit
tendering, as explained in more detail on page 112
• approved the external audit plan for the 2013 audit and
external auditor’s view on the key audit risks. The
Committee discussed these risks and satisfied itself they
were aligned with management’s view on audit risks
• noted the status of recommendations provided by the
external auditor in respect of control matters highlighted in
the 2012 audit
• approved the proposed 2014 internal audit plan after
evaluation of the process by which the plan was generated
and satisfying itself that the key areas of risk were covered
by the plan
• received an update on the Anglo American risk profile,
focusing on changes in external conditions and progress
with mitigation. The Committee also received the updated
risk profiles for the business units and plans for risk
assessment work in 2014
• reviewed its Terms of Reference and concluded no
changes were necessary, and met the internal and external
auditors without the presence of management.
The Audit Committee report is set out on pages 111–116.
110
Anglo American plc Annual Report 2013 AUDIT COMMITTEE REPORT
ENSURING INDEPENDENCE OF THE
EXTERNAL AUDITORS
Anglo American’s policy on auditors’ independence is
consistent with the ethical standards published by the Audit
Practices Board.
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 that:
• results in the auditors acting as a manager or employee
of the Group
• puts the auditors in the role of advocate for the Group
• 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 – this includes the
undertaking of internal audit services
• prior approval by the Audit Committee chairman of
non-audit services where the cost of the proposed
assignment is likely to exceed $50,000.
Anglo American’s policy on the provision of non-audit
services is regularly reviewed. The definition of prohibited
non-audit services corresponds with the European
Commission’s recommendations on auditors’
independence and with the Ethical Standards issued
by the Audit Practices Board in the UK.
Other safeguards
• 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 five years and, for any key audit
partner, seven years. The audit engagement partner was
appointed in 2010 in accordance with this requirement.
• Any partner designated as a key audit partner 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 assess periodically,
whether in their professional judgement, they are
independent of the Group.
• The Audit Committee ensures that the scope of the
auditors’ work is sufficient and that the auditors are
fairly remunerated.
• The Audit Committee has primary responsibility for
making recommendations to the Board on the appointment,
re-appointment and removal of the external auditors
• The Audit Committee has the authority to engage
independent counsel and other advisers as they determine
necessary in order to resolve issues on auditors’
independence.
• An annual assessment is undertaken of the auditors’
effectiveness, independence and objectivity. The
effectiveness assessment involves a review, with the senior
finance managers in each of the business units and relevant
corporate functions, of the audit process, including the
planning, execution and reporting activities along with an
assessment of the quality, quantity and leadership of each
of the external audit teams involved in the audit. Any
improvement opportunities identified are discussed with
the external auditors. The independence and objectivity
assessment is conducted by a review of compliance with
the policies in place in the Group and within the external
auditors to maintain independence and objectivity. The
results of the review are shared with the Audit Committee.
111
Anglo American plc Annual Report 2013Governance GOVERNANCE AUDIT COMMITTEE REPORT
Audit Tender
Anglo American recognises the current requirements
of the UK Corporate Governance Code (the ‘Code’) and
transitional guidance in relation to audit tendering, and
also notes the proposed European Union text on Audit
Regulation and Directive and the UK Competition
Commission response to conduct further consultation
on auditor tendering.
In light of these ongoing discussions, the significant
organisational, systems and process change currently
being undertaken in the business and the critical priorities
for management in delivering a step change in operating
performance, the Committee has agreed to recommend
to the Board that we follow the current transitional guidance
of the Code and do not tender during the current audit
partner’s rotational period. The Audit Committee will
reconsider the timing of audit tendering once the broader
regulatory situation is confirmed.
Audit Committee actions in 2014
In addition to its role in monitoring the integrity of the
financial statements, the Committee will seek assurance
that the internal controls over trading activity are operating
as intended, the internal control environment remains
effective through the restructuring programme and that the
risks associated with the Minas-Rio project as it progresses
into its operational phase are understood and managed.
Byron Grote will be appointed as chairman of the Audit
Committee to replace David Challen who retires as a
non-executive director at the forthcoming AGM.
Conclusions of the Audit Committee for 2013
The Committee has satisfied itself that the UK professional
and regulatory requirements for audit partner rotation and
employment of former employees of the external auditors
have been complied with.
The Committee considered information pertaining to the
balance between fees for audit and non-audit work for the
Group in 2013 and concluded that the nature and extent of
the non-audit fees do not present a threat to the external
auditors’ independence. Details of fees paid are provided
on page 198.
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 a review conducted by management,
the Committee has concluded that the external auditors’
independence was not impaired.
The Committee held meetings with the external auditors
without the presence of management on two occasions and
the chairman of the Audit Committee held regular meetings
with the audit engagement partner during the year.
Consideration given to the appointment of the
external auditors
The appointment of Deloitte LLP as the Group’s external
auditors (incumbents since the listing of Anglo American
in 1999) is kept under annual review and, if satisfactory,
the Committee will recommend the re-appointment of the
audit firm.
The appointment of Deloitte LLP followed a detailed
evaluation, at the time of the listing of predecessor audit
firms. 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 LLP as auditors until the
conclusion of the AGM in 2014. Resolutions to authorise
the Board to re-appoint and determine the remuneration
of Deloitte LLP will be proposed at the AGM on
24 April 2014.
112
Anglo American plc Annual Report 2013 The role of internal audit
The Group has an internal audit department that reports
centrally 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
and following up on the findings of this internal audit work
with local management and the Audit Committee on a
regular basis.
Internal audit teams operated in all the Group’s principal
divisions in the period under review, reporting findings to
local senior management. The internal audit function’s
mandate and annual audit coverage plans have been
approved by the Audit Committee.
The internal audit activities are performed by teams of
appropriate, qualified and experienced employees,
supplemented if necessary through the engagement of
external practitioners upon specified and agreed terms.
A summary of audit results and risk management
information was presented to the Committee and Group
senior management 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 the agreed internal audit plan.
During 2013, 780 audit projects were completed covering
a variety of financial, operational, strategic and compliance-
related business processes across all business units and
functions. In addition, the internal audit department
responded to a number of management requests to
investigate alleged breaches of our business principles.
During 2013 the internal audit resources in De Beers
were integrated into the Anglo American team and have
adopted a consistent approach to internal audit work.
Obtaining assurance on the internal
control environment
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 defined 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 specific risks such as
safety and capital investment and provide assurance to the
Board. The chief financial officers of the Group’s business
units provide confirmation, on a six-monthly basis, that
financial 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 audit reports on risk and internal control
throughout the Group, and external audit reporting.
The Group’s internal audit function has a formal
collaboration process in place with the external auditors
to ensure efficient coverage of internal controls. The
Anglo American internal audit function is responsible for
providing independent assurance to executive management
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 significant risks
are being managed.
Assurance regarding the accuracy and reliability of Mineral
Resources and Ore Reserves disclosure is provided through
a combination of internal technically proficient staff and
independent third parties.
113
Anglo American plc Annual Report 2013Governance GOVERNANCE AUDIT COMMITTEE REPORT
Whistle-blowing programme
The Group has had a whistle-blowing programme in place
for a number of years in all its managed operations.
During 2013, 372 (2012: 332) reports were received via
the global ‘Speak Up’ facility, including De Beers, covering
a broad spectrum of concerns, including:
• ethical
• criminal
• supplier relationships
• health and safety
• HR issues.
Reports received were kept strictly confidential and were
referred to appropriate line managers within the Group for
resolution. Where appropriate, action was taken to address
the issues raised. The reports are analysed and monitored
to ensure the process is effective.
During 2014 Anglo American expects to consolidate all
whistle-blowing services with one service provider across
all business units and functions.
This facility operates in addition to a standardised Group-
wide stakeholder complaints and grievance procedure
that is operated at all managed operations (see the 2013
Sustainable Development Report for more details). The
whistle-blowing programme, which is monitored by the
Audit Committee, is designed to enable employees,
customers, suppliers, managers or other stakeholders, on a
confidential 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, financial 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 business principles or any similar policy
• any other legal or ethical concern
• concealment of any of the above.
The programme makes available a selection of telephonic,
email, 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.
114
Anglo American plc Annual Report 2013 Risk management at Anglo American
The Board’s policy on risk management encompasses
all significant business risks to the Group, including:
• financial risk
• operational, including safety, technical, fraud
and corruption risk
• compliance risk
that 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 specific
circumstances. This flexible 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 through 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. Support
through facilitated risk assessments is provided by a
central team responsible for ensuring a robust process is
implemented for risk-management. During 2013, more
than 160 separate risk assessment workshops were
conducted reviewing:
• risk in business unit strategies
• risks to achieving mine or business plans
• risks in capital projects
• risks to key change programmes.
The results of these risk assessments were reported to
senior management and the Audit Committee. The process
of risk management is designed to identify internal and
external threats to the business and to assist management
in prioritising their response to those risks. Continuous
monitoring of risk and control processes, across headline
risk areas and other business-specific risk areas, provides
the basis for regular and exception reporting to business
management, the Audit Committee and the Board.
Some of the headline risk areas, which have been
elaborated upon in the financial review set out on pages
46–53, are:
• commodity price risk
• political, legal and regulatory risk
• currency risk
• infrastructure and operational performance risks
• safety and health 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 Audit
Committee, 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. The Audit and Safety and Sustainable
Development committees will also receive reports on
those risks that are deemed to be potentially catastrophic
and will review mitigation and status of controls in relation
to those risks. Further discussion of such risks is provided
on pages 46–53.
For more information on risk
See page 46–53
115
Anglo American plc Annual Report 2013Governance GOVERNANCE AUDIT COMMITTEE REPORT
In conducting its annual review of the effectiveness of risk
management, the Board considers the key findings 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
profile 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 satisfied 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 significant 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 is included in the Company’s Sustainable
Development Report 2013.
Business integrity
During 2013 we continued to implement the necessary
procedures to ensure that our Business Integrity policy
operates effectively across the Group and minimises the
risk of bribery as far as possible. We have now trained more
than 7,000 managers through workshops in the business
units and developed supplementary online training. During
the year we developed enhanced guidelines regarding use
of intermediaries and sponsorship. We updated our
assessment of the risks of bribery and corruption in each
of our businesses, taking into consideration external and
internal factors and identified action plans for
implementation based on those risk assessments.
During 2014 we will continue to develop our procedures
and obtain assurance that they are being implemented,
as we expect, across the Group.
116
Anglo American plc Annual Report 2013 REMUNERATION COMMITTEE
Sir Philip Hampton
Chairman, Remuneration Committee
Composition
Compliant with the Code:
• Sir Philip Hampton – chairman
• David Challen
• Sir CK Chow
• Byron Grote
• Ray O’Rourke
• Jack Thompson
“The role of the Remuneration Committee remains
to ensure that the remuneration arrangements for
executive directors offer every encouragement to
enhance the Company’s performance and deliver
our strategy in a responsible manner.”
Sir Philip Hampton
Chairman, Remuneration Committee
Role and responsibilities
• Establishing and developing the Group’s
general policy on executive and senior management
remuneration.
• Determining specific remuneration packages
for the chairman and executive directors.
• Designing the Company’s share incentive schemes.
Committee discussions in 2013
In February, the Committee:
• reviewed executive director personal key performance
indicators for 2013 and Company financial and safety
targets to ensure alignment with Company strategy
• discussed the outgoing CEO’s and finance director’s
performance in 2012 to adjudicate on bonus outcomes
• reviewed executive directors’ shareholdings in the Company
prior to 2013 share awards being made
• reviewed the forecast vesting of 2010 Bonus Share Plan
(BSP) and Long Term Incentive Plan (LTIP) awards
• reviewed the 2012 Directors’ remuneration report ahead
of publication.
In April, the Committee:
• confirmed the vesting of 2010 BSP and LTIP awards
and the granting of 2013 BSP and LTIP awards
• confirmed the one-off share award to the incoming CEO
in respect of forgone incentives
• reviewed and approved the proposal for asset optimisation
and supply chain targets for the 2013 LTIP award
• discussed investor feedback on executive remuneration
prior to the vote on the Directors’ remuneration report
• discussed a number of proposals relating to a redesign
of executive incentive arrangements.
In July, the Committee:
• discussed the final proposed design of executive
incentive arrangements ahead of the shareholder
consultation process
• formally reviewed the incoming CEO’s personal key
performance indicators for 2013
• reviewed corporate governance issues in the previous
quarter and major issues arising from the main AGM
voting season
• reviewed the Company chairman’s fee.
In December, the Committee:
• reviewed directors’ salaries, taking into account the general
salary review for the broader employee population
• considered GMC remuneration elements and performance
contracts for 2014
• discussed the feedback received during the shareholder
consultation over changes to the structure of executive pay
• discussed a draft of the Directors’ remuneration report
for 2013
• reviewed and updated its terms of reference
• determined the correct treatment of the LTIP TSR
comparator group, following changes in the composition
of the group during the year
• reviewed corporate governance issues that had arisen since
the previous meeting.
The remuneration report of the directors is set out on
pages 118–143.
117
Anglo American plc Annual Report 2013Governance REMUNERATION REPORT
OF THE DIRECTORS
“ The role of the Company’s Remuneration
Committee remains to ensure that the
remuneration arrangements for executive
directors offer every encouragement to enhance
the Company’s performance and deliver our
strategy in a responsible manner.”
Sir Philip Hampton
Chairman of the
Remuneration Committee
IN THIS SECTION
118
Introductory letter
120 Policy on director remuneration
129 Director remuneration in 2013
137 Outstanding share interests
140 Remuneration in 2014
140 Termination arrangements
141 Remuneration Committee in 2013
142 Five-year remuneration and returns
1. INTRODUCTORY LETTER
Dear Shareholder,
It has been a year of change for Anglo American. We have
a new chief executive and an updated strategy and have
refined the remuneration arrangements for our executive
directors as a consequence. In this respect we are setting
out these policy decisions for you, our shareholders, who for
the first time have a binding vote on them.
The role of the Company’s Remuneration Committee
remains to ensure that the remuneration arrangements
for executive directors and other members of the Group
Management Committee offer them every encouragement
to enhance the Company’s performance and deliver our
strategy in a responsible manner. We also need to ensure
that the rewards received by the executive directors are
proportionate to the levels of performance achieved and the
returns received by you as shareholders. As a Committee,
we therefore have to give full consideration to the
Company’s strategy, its performance, your interests and the
interests of the wider communities we affect.
Following the appointment of Mark Cutifani as chief
executive, a comprehensive review of the Company’s
strategy was conducted, as explained in the opening pages
of this year’s annual report. The Committee has therefore
reviewed the incentive arrangements for our most senior
executives to ensure these remain aligned with the revised
strategy. In addition, the Committee has been mindful of
general investor calls for greater simplicity, higher
shareholding requirements and longer time-horizons for
incentive awards. The Committee therefore consulted
with leading investors over a number of proposed changes
to our remuneration arrangements. The Committee refined
these in response to investor feedback and believes that the
changes set out opposite are appropriate.
118
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 Key changes
Bonus Share Plan (BSP)
• Structure: the removal of the share matching aspect
(Enhancement Shares) from the BSP arrangements
and the introduction of a five year deferral period for a
portion of bonus.
• Maximum award: an increase in the maximum potential
award level for executive directors from 175% of salary to
210% to maintain the expected value of their BSP
arrangements following the removal of Enhancement
Shares.
• Effective date: as there will be no award of Enhancement
Awards in 2014 in respect of bonus deferred from 2013,
the Committee determined that the 2013 BSP maximum
for the current executive directors should be 210% of
salary with payment partially deferred for five years.
Long-Term Incentive Plan (LTIP)
• Performance measures: replacement of the Asset
Optimisation and Supply Chain measure (50% of award)
with an attributable Return on Capital Employed (ROCE)
measure to reflect the Board’s commitment to a rigorous
approach to capital allocation.
• Performance measures: replacement of the bespoke
mining peer group for the relative TSR sector measure
(25% of award) with the HSBC Global Mining Index to
overcome increasing difficulty in building a bespoke peer
group; a decrease in the threshold vesting level for both
the sector and FTSE 100 TSR measures from 30% to
25%; and a change in the TSR performance period for
each TSR measure to align with the Company’s financial
year rather than the announcement of results.
• Holding period: introduction of an additional two
year holding period for vested LTIP awards to
increase alignment.
• Effective date: to apply to 2014 LTIP awards onwards
(except for the change in the TSR performance period
which applies to 2013 LTIP awards onwards).
Clawback strengthening
• The circumstances under which the Committee could,
in future, reduce unvested awards, vested awards subject
to a deferral or holding period or future awards have been
strengthened to include misconduct and a material failing
in risk management processes that has given, or could
potentially give, rise to significant and lasting value
destruction for the Company.
Shareholding guideline increases
• Increased from 200% of salary to 300% for the chief
executive and from 150% of salary to 200% for the
finance director, with effect from the 2014 AGM.
In addition, an updated set of BSP rules will be presented to
shareholders for approval at the 2014 AGM, as the current
rules expire on 21 April 2014.
The fee levels for committee chairmen and the senior
independent director increased with effect from 1 January
2014, as explained in Section 5.
As the chief executive reported in his introduction to this
year’s Annual Report, although 2013 was another year of
difficult macro-economic conditions and challenges, the
Company has put in place steps to improve returns to
shareholders by increasing its focus on capital deployment
and operating performance, with some of the benefits
coming through in the second half of the year. These are
reflected in the remuneration received by executive
directors in 2013. Specifically:
• underlying earnings were ahead of the targets set at the
start of the year. However, the Committee, together
with the Chief Executive, felt that, in light of the fact that
meaningful impairments were being taken again this year,
it would be appropriate to make a reduction in the bonuses
of executives which would otherwise have been payable.
A reduction of 30% in the quantum of these bonuses has
thus been applied
• the relatively low level of earnings over the last three years
means that, of the Enhancement Shares initially awarded
in 2011, none vested at the end of 2013, as the required
three year earnings growth was not achieved
• the results of the Company’s longer-term efficiency
programmes mean that around a quarter of the LTIP
awards initially granted to executive directors in 2011
are likely to vest. The remainder will not vest as the full
value of these savings has yet to be returned to you, as
shareholders, in the form of superior TSR.
Finally, in last year’s report we set out the terms of
Mark Cutifani’s remuneration package as chief executive,
including compensation for the incentives he forfeited in
leaving his former role. The value of, and final details about,
this compensation are set out in Figure 12. Likewise in last
year’s report we set out the broad terms of Cynthia Carroll’s
termination arrangements. Further details are disclosed in
Figure 12 and in Section 6.
Sir Philip Hampton
Remuneration Committee Chairman
119
GovernanceAnglo American plc Annual Report 2013
2. POLICY ON DIRECTOR REMUNERATION
2.1 Remuneration policy
Figures 1 and 2 summarise key aspects of the Company’s
remuneration policy for executive and non-executive
directors. This policy and the policy on termination set out
in Figure 4 take effect for the purposes of S226D of the
Companies Act on approval by shareholders at the Annual
General Meeting to be held on 24 April 2014. The Company
has been operating these policies since 1 January 2014 and
intends that these policies should apply until the Company’s
2017 Annual General Meeting, subject to any unforeseen
developments. It is the Committee’s intention that
commitments entered into before these policies take formal
effect and which are inconsistent with them should be met,
as explained further below.
Figure 1 reflects the changes outlined in Sir Philip
Hampton’s introductory letter.
Figure 1: Key aspects of the remuneration policy for executive directors
Purpose
Maximum opportunity
Operation
Basic salary
To recruit and
retain high-calibre
executives
Standard maximum increase
5% of salary
(the Committee retains the discretion
to exceed this in certain situations as
explained under Operation)
Basic salary levels are reviewed annually by the Committee,
taking account of Company performance, individual
performance, levels of increase for the broader UK
population and inflation
Reference may also be made to median levels within
relevant FTSE 50 and global extractive companies
The Committee also considers the impact of any basic
salary increase on the total remuneration package
Annual increases are typically within the standard
maximum given
However, there may be occasions when the Committee
needs to recognise, for example, development in role,
change in responsibility and/or specific retention issues.
In these circumstances, the Committee may offer a higher
annual increase, the rationale for which will be explained
to shareholders in the relevant remuneration report
Maximum levels will be reviewed to take account of any
significant rise in inflation levels
Salary levels on recruitment and promotion to the Board are
covered below
Bonus Share
Plan (BSP)
To encourage and
reward delivery of
the Company’s
strategic priorities
To help ensure,
through the
share-based
elements, that
any resulting
performance is
sustained over the
longer-term in line
with shareholder
interests
120
Maximum (threshold)
210% of salary (0% of salary)
Each year executive directors participate in the BSP which
rewards EPS and individual performance
Performance measures
At least 50% – underlying earnings per
share (EPS)
Up to 50% – individual objectives linked
to the Company’s strategic priorities
A deduction to the above is applied if
safety targets are not met
Form and timing of payment
40%: cash award at end of year
40%: Bonus Shares vesting three years
after end of bonus year
20%: Bonus Shares as above but
subject to a further two year deferral
period
The EPS measure has been chosen as it is one of the
Company’s key measures of performance. As EPS
performance in our sector can be highly volatile owing to
external factors, the individual objectives measure was
chosen to provide a balance, reflecting management’s
underlying activity towards delivering the company’s
strategy regardless of volatility
The EPS targets are set each year to ensure they are
demanding yet realistic. They primarily reflect internal budgets
and price expectations for the year. Consideration is also given
to prior performance and external expectations. The individual
objectives are based on the Company’s strategic priorities for
the year
Dividends are payable on Bonus Shares during any
deferral period
The Committee is able to reduce any unvested Bonus Share
awards, vested awards subject to a deferral period or future
awards in the event of a material misstatement in the
Company’s results or, for 2014 awards onwards, misconduct
or a material failing in risk management processes that has
given, or is likely to give, rise to significant and lasting value
destruction for the Company
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 Figure 1: Key aspects of the remuneration policy for executive directors
Purpose
Maximum opportunity
Operation
Bonus Share
Plan (BSP)
continued
Long-Term
Incentive Plan
(LTIP)
To encourage
and reward
disciplined capital
allocation and the
generation of
long-term
sustainable
shareholder
returns
Maximum award
350% of salary
Performance measures
50%: Attributable Return on Capital
Employed (ROCE)
50%: Total shareholder returns (TSR)
relative to sector and leading UK
comparator companies
Performance period
Three years
Additional holding period
Two years
Vesting at threshold
ROCE: 25% of award portion
TSR: 25% of award portion
Discretions
Given the volatility mentioned above, the Committee does
not intend to make adjustments to BSP outcomes to reflect
either positive or negative short-term fluctuations in EPS
performance driven by external factors such as commodity
prices. It reserves the discretion to make adjustments to
outcomes in very exceptional circumstances whether
related to internal or external factors (for example, on a
sequestration of assets during the year). Shareholders
will be given details of any adjustments in the following
remuneration report
Under the BSP Rules, the Company also has the standard
discretion to take appropriate action in the event of
unforeseen events which affect the Bonus Shares (for
example, on a variation in share capital) and to settle the
Bonus Shares in cash (for example, on a termination)
The Committee makes an annual conditional award of
shares to each executive director
The ROCE measure has been selected to reflect the
strategic focus on disciplined capital allocation and the
TSR measures to reflect the extent to which value is being
delivered to shareholders
Each year, the Committee reviews the performance targets
prior to grant to ensure they remain sufficiently stretching.
The initial ROCE targets have been informed by the
Company’s stated 2016 attributable ROCE aspiration and
each year will be set with reference to current budgets. The
relative TSR targets are set such that only a quarter of the
award is payable for median performance whilst maximum
vesting requires exceptional relative performance
Dividend equivalents are paid on any shares that vest
The Committee is able to reduce any unvested awards,
vested awards subject to a holding period or future grants
in the event of a material misstatement in the Company’s
results or, for 2014 awards onwards, misconduct or a
material failing in risk management processes that has
given, or is likely to give, rise to significant and lasting value
destruction for the Company
Discretions
As is the case for the BSP, the Committee does not intend
to make adjustments to LTIP outcomes to reflect either
positive or negative short-term fluctuations in performance
driven by external factors such as commodity prices. It
reserves the discretion to make adjustments to outcomes
in very exceptional circumstances whether related to
internal or external factors (for example, on a sequestration
of assets). Shareholders will be given details of any
adjustments in the following remuneration report
Under the LTIP Rules, the Company also has the standard
discretion to take appropriate action in the event of
unforeseen events during an award cycle (for example,
on a variation in share capital)
121
GovernanceAnglo American plc Annual Report 2013 Figure 1: Key aspects of the remuneration policy for executive directors
Purpose
Maximum opportunity
Operation
Outstanding
BSP and LTIP
awards
To allow vesting
of awards made
under a previously
approved policy
Pension
To offer market-
competitive levels
of benefit
Other benefits
To provide
market-
competitive
benefits
2012 & 2013 BSP Enhancement
Share awards
It is the Committee’s intention that these outstanding awards
should be paid out according to the terms on grant
Maximum award:
65.6% of salary
Performance measure:
Real EPS growth
Performance period:
Three years
2012 & 2013 LTIP awards
Maximum award and
performance terms
As for LTIP above, except subject
to an Asset Optimisation Supply
Chain (AOSC) measure instead
of a ROCE measure
30% of basic salary
Ongoing benefit maximum
10% of salary
Further details are contained in the remuneration report for
the year of grant and will be contained in the remuneration
report for the final year of the performance period
Executive directors participate in defined contribution
pension arrangements
Prior to 6 April 2011, executive directors had the option of
all or part of their employer-funded defined contribution
arrangements to be paid into an unregistered retirement
benefits scheme (an EFRBS). Since 6 April 2011, executive
directors have the option for contributions which cannot be
paid to a UK registered pension scheme as a result of HMRC
limits (either annual allowance or lifetime allowance) to be
treated as if paid to an unregistered unfunded retirement
benefit scheme (an UURBS)
The Committee is prepared to consider requests from
executive directors for a pension allowance to be paid in
place of defined contribution arrangements
The Company provides the following ongoing benefits:
• 28 days’ leave and encashment of any accumulated leave
Exceptional situations
The Committee reserves the discretion
to exceed the ongoing maximum level
for certain situation-specific benefits,
such as relocation. Full details of the
exercise of any such discretion will be
provided to shareholders in the
following remuneration report
in excess of 20 days
• car-related benefits
• medical insurance
• death and disability insurance
• limited personal taxation and financial advice
• club membership
• other ancillary benefits, including attendance at
relevant public events.
In addition, the Company pays additional benefits
when specific business circumstances require it,
including costs and allowances related to relocation
and international assignments
UK-based executive directors, as UK employees, are eligible
to participate in the Company’s Save As You Earn (SAYE)
scheme and Share Incentive Plan (SIP). Under HMRC rules
these plans do not have performance conditions
The Company reimburses all reasonable and necessary
business expenses
122
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 Figure 1: Key aspects of the remuneration policy for executive directors
Purpose
Maximum opportunity
Operation
Recruitment
and promotion
arrangements
To secure the
appointment and
promotion of
high-calibre
executives
Maximum annual award
(for ongoing arrangements)
BSP: 210% of salary
LTIP: 350% of salary
The ongoing remuneration arrangements for a newly
recruited or promoted executive director will reflect the
remuneration policy in place for executive directors at the
time of the appointment. The ongoing components will
therefore comprise basic salary, BSP awards, LTIP awards,
benefits, pension and SAYE/SIP on the bases set out above
The initial basic salary level for a newly recruited or
promoted executive director will be set to reflect the
individual’s experience, salary levels within the Company
and market levels. Where base salary is set below the level
that might be expected, given the executive’s relative
inexperience, and the executive then develops successfully
into the role, the Committee has the discretion to give a
salary increase in the year(s) after appointment above the
standard maximum level of 5%
For external appointments, the Committee may also offer
additional cash and/or share-based elements to replace any
remuneration forfeited, when it considers these to be in the
best interests of the Company and its shareholders. The
terms of any share-based elements offered will reflect the
nature, time horizons and performance requirements of
remuneration forfeited and will have performance
conditions attached. Shareholders will be informed of any
such payments at the time of appointment. The Company
has retained its Discretionary Option Plan to use in such
circumstances, if appropriate. If necessary the Company
can go outside of existing plans as currently permitted under
the Listing Rules
It is the Committee’s intention that the restricted awards
granted to Mark Cutifani on appointment will be released
in accordance with the terms on grant. These awards were
made under the approved policy at the time, as disclosed
in the 2012 Report
For internal appointments, any commitments made before
appointment and not relating to appointment are allowed to
pay out according to their terms
For external and internal appointments, the Committee may
agree that the Company will meet certain relocation
expenses as appropriate
123
GovernanceAnglo American plc Annual Report 2013 Figure 2: Key aspects of the remuneration policy for non-executive directors
Purpose
Maximum opportunity
Operation
Chairman
– Fees
To attract and retain a
high-calibre chairman
by offering a market-
competitive fee level
Maximum increase
Equivalent to annual increase
of 5% of fee level
The Chairman is paid a single fee for all his responsibilities
The level of this fee is reviewed every two to three years by
the Committee and chief executive, with reference to UK
market levels (FTSE 30 companies), and a recommendation
is then made to the Board (in the absence of the Chairman)
Fees are paid in cash with the flexibility to forgo all or part of
the net fees to acquire shares in the Company
It is the Committee’s intention that the shares granted to the
Chairman in 2011, which he committed to match with his
personal funds, will be released in accordance with the
terms on grant
Chairman
– Benefits
To provide market-
competitive benefits
Maximum benefits
£30,000
Reasonable use of a car and driver
Medical insurance
Non-
executive
directors
– Fees
To attract and retain
high-calibre non-
executive directors by
offering market-
competitive fees
Reimbursement of reasonable and necessary expenses
Maximum increase
for each type of fee
Equivalent to annual increase
of 5% of fee level
The non-executives are paid a basic fee. The chairmen of
the main board committees and the senior independent
director are paid an additional fee to reflect their extra
responsibilities
These fee levels are reviewed every few years by the
Chairman and executive directors, with reference to UK
market levels, and a recommendation is then made to
the Board
Fees are paid in cash with the flexibility to forgo all or part
of the net fees to acquire shares in the Company
Reimbursement of reasonable and necessary expenses
The Company has the discretion to pay an additional fee,
up to the equivalent of the committee chairmanship fee
(currently £30,000), to a non-executive director should the
Company require significant additional time commitment
from the non-executive director in exceptional or
unforeseen circumstances
The Company has no current intention to use this discretion
Other fees/
payments
To have the flexibility to
provide additional fees/
benefits if required
Maximum additional fee
£30,000
124
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 Policy in rest of company
The remuneration arrangements for the executive
directors outlined in Figure 1 are consistent with those
for other executives serving on the Group Management
Committee, although opportunity levels vary. The majority
of our employees are located in South Africa and South
America, and the remuneration arrangements of these
employees are aligned to local market practices and levels.
Past directors
In addition to retirement benefits, the Company continues
to provide seven former executive directors with private
medical insurance arrangements. The annual cost to the
Company is minimal. The Committee continues to meet
these longstanding commitments but no new commitments
have been made recently or will be made in future.
£8.6 m
£6.2 m
2.2 Supplementary information
Shareholding targets
Within five years of appointment, executive directors are
expected to hold Company shares with a value of three
times basic salary for the chief executive and two times
basic salary for other executive directors. The Committee
takes into consideration achievement against these targets
when making grants under the Company’s various
long-term incentive plans.
External directorships
Executive directors are not permitted to hold external
directorships or offices without the prior approval of the
Board. If approved, they may each retain the fees payable
from only one such appointment.
Executive director contractual commitments
The remuneration provisions within the service contracts
for Mark Cutifani and René Médori are consistent with
the policies outlined in Figure 1 and in Figure 4
(termination provisions).
Figure 3: Executive director total remuneration at
different levels of performance
Chief Executive
Above
Target
Below
Finance Director
£1.7 m
Above
Target
Below
l
e
v
e
L
e
c
n
a
m
r
o
f
r
e
P
l
e
v
e
L
e
c
n
a
m
r
o
f
r
e
P
£5.1m
£3.7 m
£1.1m
Indicative total pay (£m)
0
2.0
4.0
6.0
8.0
10.0
Basic salary, benefits and pension
BSP (cash and deferred)
LTIP
Above
The Company’s three-year TSR would need to outperform sector peers
by 6% pa and be ranked 20th or higher in the FTSE 100.
Target
The Company’s three-year TSR would need to outperform sector peers
by 3.2% pa and be ranked 35th in the FTSE 100.
Below
Total pay for below threshold performance includes basic salary,
benefits and pension only.
(1) Estimates of £75,000 and £35,000 have been used for ongoing non-pension benefits for the chief executive and finance director respectively.
(2) Share price movement and dividend accrual have been excluded from all figures.
(3) Participation in the SAYE and SIP has been excluded given the relative size of the opportunity levels.
(4) Total pay for above target performance comprises basic salary, benefits, pension, 100% of maximum bonus opportunity (60% of which is deferred into Bonus Shares) and 100%
of maximum LTIP opportunity. For this level of pay, the Company’s attributable ROCE would need to be 16% and the Company’s three-year TSR would need to outperform sector
peers by 6% pa and be ranked 20th or higher against the FTSE 100.
(5) Total pay for target performance comprises basic salary, benefits, pension, 65% of maximum bonus opportunity (60% of which is deferred into Bonus Shares) and 65% of
maximum LTIP opportunity. For this level of pay, the Company’s attributable ROCE would need to be 14.1% and the Company’s three-year TSR would need to outperform sector
peers by 3.2% pa and be ranked 35th against the FTSE 100.
(6) Total pay for below threshold performance comprises basic salary, benefits and pension only.
(7) Charts have not been included for the non-executive directors as their fees are fixed and do not vary with performance.
125
GovernanceAnglo American plc Annual Report 2013
2.3 Indicative total remuneration levels
The Company’s policy for executive directors results
in a significant portion of the remuneration received
by executive directors being dependent on Company
performance. Figure 3 illustrates how the total pay
opportunities for the current chief executive and the finance
director vary under three different performance scenarios:
above, target and below. These charts are indicative as
share price movement and dividend accrual have been
excluded. All assumptions made are noted below the charts.
2.4 Policy on termination and change in control
2.4.1 Executive directors
Figure 4 sets out the Company’s policy on termination. This
policy is consistent with provisions relating to termination of
employment in the executive directors’ service agreements
and with provisions in the incentive plan rules with one
exception. René Médori’s service agreement contains a
longstanding provision under which the Company may pay a
lump sum in lieu of any notice period, comprising salary,
bonus and pension contributions in respect of the unexpired
notice period, with the bonus element calculated based on
the average bonus percentage paid over the last three
years and prorated based on the time employed during the
bonus year. The Committee intends, if required, to meet this
obligation but does not intend to include such a clause in
any future service agreements.
Figure 5 sets out key provisions relating to change of control,
where there is no termination. There are no provisions for
enhanced payments in the event of a change of control of
the Company.
2.4.2 Non-executive directors
All non-executive directors have letters of appointment
with the Company for an initial period of three years, subject
to annual re-appointment at the AGM. The Chairman’s
appointment may be terminated by the Company with six
months’ notice. The appointment letters for the Chairman
and non-executive directors provide that no compensation
is payable on termination, other than any accrued fees
and expenses.
Figure 4: Principles of determining payments for loss of office
Notice periods
Notice periods do not exceed 12 months
Upon appointment the Committee can agree an extended Company notice period for the first year following appointment
‘Good Leaver’
Voluntary Resignation
Payments on
departure of
executive
directors
Typical reasons include retirement, redundancy, death,
ill-health, injury, disability or as defined by the Committee
Where departure is on mutually agreed terms, the
Committee may treat the departing executive as a Good
Leaver in terms of one or more elements of remuneration.
The Committee uses this discretion judiciously and
shareholders will be notified of any exercise as soon as
reasonable
Salary and
benefits for
notice period
Salary and benefits continue to be paid to the date of
termination of employment, including any notice period
and/or garden leave period
The Company may terminate employment with immediate
effect and, in lieu of the unexpired portion of any 12-month
notice period, make a series of monthly payments based on
salary and benefits (or make a lump sum payment based on
salary only). Any monthly payments will be reduced to take
account of any salary received from alternative employment
Bonus accrued
prior to
termination
A time pro-rated bonus award may be made by the
Company, with the Committee’s approval, and can be
paid wholly in cash
Salary and benefits continue to be
paid to the date of termination of
employment, including any notice
period and/or garden leave period
The Company may terminate
employment with immediate effect
and, in lieu of the unexpired portion of
any 12-month notice period, make a
series of monthly payments based on
salary and benefits (or make a lump
sum payment based on salary only).
Any monthly payments will be reduced
to take account of any amounts
received from alternative employment
No accrued bonus is payable
‘Bad Leaver’
Typically
termination
for cause
Immediate
termination with
no notice period
No accrued
bonus is payable
126
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 Figure 4: Principles of determining payments for loss of office
‘Good Leaver’
Unvested Bonus
Shares and
Enhancement
Shares
Normal circumstances
Bonus Shares are released in full on the normal
release date (ie awards will not be released early)
Enhancement Shares vest subject to the performance
condition at the end of the normal performance period
and any award is time pro-rated.
Exceptional circumstances
(eg death or other compassionate grounds)
Bonus Shares are released in full, and eligible for
immediate release.
Enhancement Shares vest subject to testing of the
performance condition at the date of departure and
any award is time pro-rated, except on death
Vested Bonus
Shares subject
to holding period
Normal circumstances
Released in full to the employee at the end of the
holding period.
Exceptional circumstances
(eg death or other compassionate grounds)
Bonus Shares are released in full, and eligible for
immediate release
Unvested LTIP
awards
Normal circumstances
LTIP awards will vest subject to the performance condition
at the end of the normal performance period and, if
applicable, released at the end of the holding period
All awards are time pro-rated
Exceptional circumstances
(eg death or other compassionate grounds)
LTIP awards may be released on departure, subject to
assessment of the performance conditions at that time.
All awards are time prorated
Voluntary Resignation
Forfeit
‘Bad Leaver’
Forfeit
Forfeit
If an employee resigns to join a
competitor (as defined by the
Committee) then even those vested
Bonus Shares that remain subject only
to the holding period will be forfeit
Outside of these circumstances, such
awards are released to the employee
at the end of the holding period
Forfeit
Forfeit
Vested LTIP
awards subject
to a holding
period
Normal circumstances
Vested LTIP awards that are subject only to a holding
period are released in full to the employee at the end
of the holding period
Exceptional circumstances
(eg death or other compassionate grounds)
Vested LTIP awards subject to a holding period may be
released on departure
Forfeit
If an employee resigns to join a
competitor (as defined by the
Committee) then even those vested
LTIP awards that remain subject only to
the holding period will be forfeit
Outside of these circumstances, such
awards are released to the employee
at the end of the holding period
127
GovernanceAnglo American plc Annual Report 2013 Figure 4: Principles of determining payments for loss of office
‘Good Leaver’
Unvested
Restricted
Shares
There is no standard policy in respect of the treatment of any
restricted share awards to executive directors. Terms are set
on a case by case basis
For the restricted shares currently held by the chief
executive, if he leaves as a ‘Good Leaver’ before the
designated release dates, any unvested shares would be
released on the earlier of the remaining release dates or one
year from the date of the chief executive ceasing to be the
Company’s chief executive
Voluntary Resignation
Generally Forfeit
‘Bad Leaver’
Forfeit
Other
Limited disbursements (for example, legal costs, relocation
costs, untaken holiday)
None
None
Figure 5: Policy on change in control
Incentive plan
provisions relating
to change of
control (without
termination)
Bonus Shares and Enhancement Shares
The Bonus Shares awarded under the BSP will be released
The Enhancement Shares awarded under the BSP will only vest to the extent that the performance condition has been
met at the time of the change of control
LTIP awards
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
Vested Bonus Shares and LTIP awards subject to holding period
The Bonus Shares and LTIP awards will be released
2.5 Development of director remuneration policy
In developing and reviewing the Company’s remuneration
policy for executive directors and other senior executives,
the Committee is receptive to the views of shareholders and
sensitive to the relationship between the arrangements for
executive directors and those for other employee groups.
Specifically:
• whenever any significant changes are made to
remuneration, the Committee seeks feedback from
investors. The Committee also listens to and takes into
consideration investor views throughout the year. For
example, the changes described in the Committee
Chairman’s introductory letter reflect, in part, recent
investor concerns and the Company consulted
with its leading investors on these changes before
finalising them
• the Committee considers the general basic salary
increase for the broader UK employee population when
determining the annual salary increases for the executive
directors. The rate of basic salary increase for the chief
executive and the finance director, at 0% of salary for 2013
and 3% for 2014, has been lower than (in 2013) and the
same as (in 2014) the general increase for the UK
employee population
• each year the Committee also reviews in detail how
the arrangements for the executive directors compare
to those for other members of the Group Management
Committee to ensure an appropriate relationship and to
support career development and succession.
Given the geographic spread of the Company’s workforce,
the Committee does not consider that consulting with
employees on the remuneration policy for directors is a
viable use of resources. Many of the Company’s UK-based
employees are shareholders, through the SAYE and SIP
schemes, and they, like other shareholders, are able to
express their views on director remuneration at each
general meeting.
2.6 Payments under previous policies
The Committee reserves the right to make any remuneration
payments and payments for loss of office, notwithstanding
that they are not in line with the policy set out above, where the
terms of the payment were agreed (i) before the policy or the
relevant legislation came into effect or (ii) at a time when the
relevant individual was not a director of the Company and,
in the opinion of the committee, the payment was not in
consideration for the individual becoming a director of the
Company. For these purposes ‘payments’ includes the
satisfaction of awards of variable remuneration and, in relation
to awards of shares, the terms of the payment which are
agreed at the time the award is granted.
128
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 3. DIRECTOR REMUNERATION IN 2013
The information set out in this section has been subject to
external audit.
3.1 Basic salary for 2013
Mark Cutifani was appointed chief executive with effect
from 3 April 2013. His annual salary level on appointment
was £1,200,000. Figure 6 sets out the amount actually
received in 2013.
René Médori received no salary increase in 2013.
3.2 Annual BSP outcomes for 2013
Figure 7 shows the BSP outcomes for 2013. Figures 8a and
8b summarise the annual financial and personal strategic
measures for the 2013 BSP for Mark Cutifani and René
Médori, along with the performance targets, where relevant,
the level of performance achieved and the resulting award
levels. Key details of the performance delivered over 2013
are set out under BSP Key Performance Aspects.
The EPS performance range for 2013 was relatively wide
(threshold $1.25, target $1.58 and maximum $2.05). This
range was informed by the Company’s commodity price
forecasts at the start of the year. At the time, the Committee
acknowledged that analysts’ EPS projections were towards
the higher end of the range but these projections were
lowered once analysts were in receipt of similar information
as the Committee were when setting the targets.
The individual objectives were set at the start of the year
and reflect the Company’s strategic priorities for the year.
Each category contained between one and five specific
objectives. Some of these are reflected under BSP Key
Performance Aspects. Given the non-financial nature of
these, specific quantitative targets were not set but, at the
end of the year, the Committee made a detailed assessment
of performance against each leading to the evaluations
shown in Figures 8a and 8b. The overall outcome for each
executive director was then adjusted by the safety deductor
(based on loss of life, Lost Time Injury Frequency Rate and
a risk and change management rating).
Figure 6: Basic salaries for 2013
(all amounts in ’000)
MARK CUTIFANI
(2012: not applicable)
£891
RENÉ MÉDORI
(2012: £765)
£765
Figure 7: BSP outcomes for 2013
(cash bonus and Bonus Shares)
(all amounts in ’000)
MARK CUTIFANI
(2012: not applicable)
£1,218
RENÉ MÉDORI
(2012: £469)
£979
129
GovernanceAnglo American plc Annual Report 2013 Figure 8a: BSP performance assessment for 2013 – Chief Executive
Mark Cutifani
Corporate Financial (50% of award)
Earnings per Share
Threshold
$1.25 = 0%
of award
Target
$1.58 = 20%
of award
Above
Maximum
$2.05 = 50%
of award
Below
Personal/Strategic (50% of award)
Below
Threshold
Target
Above
Maximum
Strategy (25%)
Stakeholder engagement (10%)
Business performance and project execution (15%)
Overall personal performance
Group safety performance (deductor)
Overall performance – before discretionary reduction
Overall performance – after discretionary reduction
Resulting BSP award
65.1% of maximum bonus award (137% of salary) (40% payable in cash, 60% as Bonus Shares)
BSP KEY PERFORMANCE ASPECTS
• Strong year on year production performance across
• Review and update of capital allocation process,
all businesses, except Sishen; notably Copper (+17%),
Metallurgical Coal (+6%) and Diamonds (+12%).
with consequent withdrawal from the Pebble project.
• Significant progress made with regard to
• Minas-Rio 84% complete, on track to ship first iron ore
organisational restructure.
by end of 2014.
• Real unit costs down across all businesses except
Sishen, with increased production, cost savings at
Metallurgical Coal and Platinum and decreasing
commodity input costs, partially offset by labour and
logistics costs increases, notably in South Africa.
• Engagement with South African stakeholders and
subsequent implementation of Platinum restructuring.
• Formation of Commercial business, merger of Nickel,
Niobium and Phosphates and creation of Base Metals
structure; merger of Thermal and Metallurgical Coal
into a single Coal business unit underway.
• Continued progress achieved in the drive for safety
improvement – reductions in lost-time and total
injury rates.
130
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013
Figure 8b: BSP performance assessment for 2013 – Finance Director
Threshold
$1.25 = 0%
of award
Target
$1.58 = 20%
of award
Above
Maximum
$2.05 = 50%
of award
Below
Below
Threshold
Target
Above
Maximum
René Médori
Corporate Financial (50% of award)
Earnings per Share
Personal/Strategic (50% of award)
Strategy and Portfolio Restructuring (13%)
Treasury (6%)
Tax (8%)
Procurement (6%)
Information Management (4%)
Finance Function operational targets (4%)
Teamwork and project support (9%)
Overall personal performance
Group safety performance (deductor)
Overall performance – before discretionary reduction
Overall performance – after discretionary reduction
Resulting BSP award
60.9% of maximum bonus award (128% of salary) (40% payable in cash, 60% as Bonus Shares)
BSP KEY PERFORMANCE ASPECTS
• Strong year on year production performance across
• Review and update of capital allocation process,
all businesses, except Sishen; notably Copper (+17%),
Metallurgical Coal (+6%) and Diamonds (+12%).
with consequent withdrawal from the Pebble project.
• Significant decrease in Study Costs driven by lower
• Minas-Rio 84% complete, on track to ship first iron ore
feasibility study expenses.
by end of 2014.
• Real unit costs down across all businesses except
Sishen, with increased production, cost savings at
Metallurgical Coal and Platinum and decreasing
commodity input costs, partially offset by labour and
logistics costs increases, notably in South Africa.
• Engagement with South African stakeholders and
subsequent implementation of Platinum restructuring.
• Strong progress made in the Supply Chain programme
which drives sustained business improvement.
• Issuance of corporate bonds with a US$ equivalent value
of $3.6 billion in the European and Australian markets
increasing debt headroom and extending maturity.
• Divestment of Amapá completed in November 2013.
• Formation of Lafarge/Tarmac joint venture and
successful completion of the De Beers integration.
• Continued progress achieved in the drive for safety
improvement – reductions in lost-time and total
injury rates.
131
GovernanceAnglo American plc Annual Report 2013
3.3 BSP Enhancement
Share outcomes for 2013
In 2011, René Médori was awarded 17,737 Enhancement
Shares under the BSP. Vesting was subject to the
Company’s real EPS growth over the three-year period
to 31 December 2013. The growth targets set on award
were RPI + 9% for threshold performance (resulting in
44% of the award vesting) and RPI +15% for maximum
performance (resulting in 100% of award vesting).
Threshold performance was not achieved over the
three-year period resulting in no vesting of the shares.
Figure 9: Enhancement Share vesting
outcomes for 2013
(all amounts in ’000)
Figure 10: LTIP assessment for 2013
For more details on the measures
Go to section 4.2
SECTOR INDEX COMPARISON
(25% OF TOTAL AWARD)
• The Sector Index measure compares the Company’s
three-year TSR performance with the weighted
median of six international mining companies.
• Vesting required the Company’s TSR performance
to be at least equal to the weighted median.
• As at 31 December 2013, the Company’s TSR
performance was below the weighted median; it is
therefore not expected that any shares will vest for
this part of the award.
RENÉ MÉDORI
(2012: £0)
£0
3.4 Long-Term Incentive
Plan outcomes for 2013
In 2011, René Médori received an LTIP grant of 69,021
conditional shares vesting subject to (a) the Company’s TSR
performance relative to (i) a weighted group of international
mining companies and (ii) FTSE 100 companies over the
three-year period to announcement of the 2013 results, and
(b) the level of savings delivered by the Asset Optimisation
and Supply Chain programmes to 31 December 2013.
Figure 10 sets out further details of the measures and the
Company’s expected performance against each. Figure 11
sets out the assumed outcome for René Médori, including
accrued dividend equivalents. As the performance period
for the TSR measures ends immediately after the date of
this report on the announcement of the 2013 results,
performance and vesting in respect of the TSR measures
is based on the latest available information as at
31 December 2013.
FTSE 100 COMPARISON
(25% OF TOTAL AWARD)
• The FTSE 100 measure compares the Company’s
three-year TSR performance with the constituents
of the FTSE 100.
• Vesting required the Company’s TSR performance
to be at least equal to the median TSR of the FTSE 100.
• As at 31 December 2013, the Company’s TSR
performance was ranked below the 50th percentile of
the FTSE 100; it is therefore expected that no shares
for this part of the award will vest.
AOSC (50% OF TOTAL AWARD)
• The AOSC measure rewards the delivery of additional
operating profit and capital expenditure savings
delivered through the Company’s Asset Optimisation
and Supply Chain programmes.
• Minimum vesting required cumulative savings to
31 December 2013 of just over $7.9bn and maximum
vesting required cumulative savings of $9.66bn.
• Actual performance was $8.9bn, leading to 56%
vesting of this part of the award (28% of the
overall award).
132
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 Figure 10: LTIP assessment for 2013
SECTOR INDEX COMPARISON
(25% OF TOTAL AWARD)
• The Sector Index measure compares the Company’s
three-year TSR performance with the weighted
median of six international mining companies.
• Vesting required the Company’s TSR performance
to be at least equal to the weighted median.
• As at 31 December 2013, the Company’s TSR
performance was below the weighted median; it is
therefore not expected that any shares will vest for
this part of the award.
FTSE 100 COMPARISON
(25% OF TOTAL AWARD)
• The FTSE 100 measure compares the Company’s
three-year TSR performance with the constituents
of the FTSE 100.
• Vesting required the Company’s TSR performance
to be at least equal to the median TSR of the FTSE 100.
• As at 31 December 2013, the Company’s TSR
performance was ranked below the 50th percentile of
the FTSE 100; it is therefore expected that no shares
for this part of the award will vest.
AOSC (50% OF TOTAL AWARD)
• The AOSC measure rewards the delivery of additional
operating profit and capital expenditure savings
delivered through the Company’s Asset Optimisation
and Supply Chain programmes.
• Minimum vesting required cumulative savings to
31 December 2013 of just over $7.9bn and maximum
vesting required cumulative savings of $9.66bn.
• Actual performance was $8.9bn, leading to 56%
vesting of this part of the award (28% of the
overall award).
3-year TSR performance
against Sector Index
% per annum
25%
7.5%
0%
)
d
r
a
w
a
P
T
L
I
l
a
t
o
t
f
o
%
(
g
n
i
t
s
e
V
Threshold: 0% pa
Max: 5% pa
Vesting schedule and actual performance to 31 December 2013
Arrow represents expected vesting
3-year TSR ranking vs FTSE 100 index
25%
7.5%
0%
)
d
r
a
w
a
P
T
L
I
l
a
t
o
t
f
o
%
(
g
n
i
t
s
e
V
Threshold: 50th
Max: 80th
Vesting schedule and actual performance to 31 December 2013
Arrow represents expected vesting
Anglo American’s AOSC efficiency
($ bn)
)
d
r
a
w
a
P
T
L
I
l
a
t
o
t
f
o
%
(
g
n
i
t
s
e
V
50%
28%
0%
Min: $7.9 bn
$8.9 bn
Max: $9.66 bn
Vesting schedule and actual performance
Arrow represents actual vesting
Figure 11: LTIP vesting outcomes for 2013
(all amounts in ‘000)
RENÉ MÉDORI
(2012: £510)
£301
LTIP KEY PERFORMANCE ASPECTS
• During 2013, the Company undertook an extensive
asset review process, focused on identifying potential
operational improvements, which will, among other
benefits, assist in delivering AOSC benefits across
all businesses.
• Specific AO highlights include improvements in
Longwall cutting hours at Moranbah and Grasstree
(Met Coal), increased average throughput at Los
Bronces SAG Mill (Copper), increased life of furnace
parts at Mogalakwena North (Platinum) and improved
carat recovery at Snap Lake (De Beers).
• Specific SC highlights include increased rail capacity
and reduced rail rates in Kumba and Met Coal,
more effective drill consumables at Kumba and
improvements in supplier maintenance processes
at Thermal Coal.
• Improved relationships with suppliers have reduced
both the lead time for major equipment delivery and
the supply risk to our business.
• Framework agreements are now in place with 44 of
our key suppliers, representing a formal alignment in
our commercial relationships.
• Should the 2011 LTIP awards vest at 28%, 19,325
shares are receivable by René Médori. At a share price
of £14.12 (the average for the last quarter of 2013), this
results in a value of £272,869. Dividend equivalents
over the vesting period will also be payable at vesting,
estimated to be £28,218.
133
GovernanceAnglo American plc Annual Report 2013
Figure 12: Total remuneration outcomes for 2013
Total basic
Benefits
Annual
performance
bonus – cash
and Bonus
salary(1)
£’000
in kind(2)
£’000
Pension(3)
£’000
Shares(4)
£’000
2011
Enhancement
Share Award(5)
£’000
2011
LTIP
Award(6)
£’000
Other(7)
£’000
Total
2013
£’000
Total
2012
£’000
Executive Directors
Section 3.1
Section 3.2
Section 3.3
Section 3.4
Mark Cutifani
René Médori
René Médori (2012)
Former Executive
Directors
Cynthia Carroll(8)
Cynthia Carroll (2012)
891
765
765
860
53
50
406
1,217
25
65
267
230
230
122
365
1,218
979
469
472
745
–
0
0
0
0
– 2,069 5,305
301
510
434
811
0 2,328
0
2,024
0 1,459
0
3,203
Non-Executive Directors
Sir John Parker(9)(10)
David Challen
Sir CK Chow
Byron Grote
Sir Philip Hampton
Phuthuma Nhleko
Ray O’Rourke(10)
Mphu Ramatlapeng
Jim Rutherford
Anne Stevens
Jack Thompson
Peter Woicke
Total fees
£’000
Benefits
in kind
£’000
Other
£’000
Total
2013
£’000
Total
2012
£’000
675
130
80
56
105
80
80
38
13
80
97
32
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
677
130
80
56
1,241
130
80
–
105
105
80
80
38
13
80
97
32
80
80
–
–
51
80
105
134
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 (1)
In addition to the basic salaries above, René Médori and Cynthia Carroll each retained fees amounting to £66,000 and £37,000 respectively in respect of external
directorships (see Section 2.2).
(2) Benefits for executive directors with a value over £5,000 are set out below. The executive directors also receive a limited amount of financial advice, club subscriptions,
death and disability benefits and medical insurance and other ancillary benefits. In addition, in 2013, Mark Cutifani received benefits relating to his relocation from South
Africa to London on appointment as chief executive. These included reimbursement of relocation agent costs, moving costs, temporary accommodation costs, indirect
costs of purchasing a home in London and a relocation allowance. As Mark Cutifani will be liable for tax on these benefits, the Company, in line with normal practice, will
reimburse Mark Cutifani for the tax paid except on the relocation allowance. The tax-related amounts involved will be disclosed in subsequent reports.
Mark Cutifani
René Médori
Cynthia Carroll
Car-related
benefits
Club
membership
Untaken holiday
reimbursement
20,788
27,310
9,330
–
–
7,673
–
19,136
–
Relocation
835,931
–
–
(3) The pension contribution amounts should be read in conjunction with the following information:
(a) The amount stated for Mark Cutifani for 2013 includes a cash allowance of £202,000.
(b) The total amount of pension contributions treated as having been paid into the UURBS for 2013 was £218,000 for Cynthia Carroll (2012: £677,000) and £221,000
for René Médori (2012: £190,000). This includes £96,000 (2012: £362,000) representing the contractual agreements made by Cynthia Carroll with the Company
that supplementary contributions be treated as having been paid into the UURBS in return for a reduction in her future basic salary and the cash element payable
under the BSP for performance in 2012 and 2011.
(c) Contributions treated as being paid into the UURBS earn a return equivalent to the Company’s pre-tax sterling nominal cost of debt. The total return earned in 2013
was £48,000 for Cynthia Carroll (2012: £32,000) and £45,000 for René Médori (2012: £33,000).
(d) As at 31 December 2013, the total balances due to the executive directors in relation to the UURBS were £644,000 for Cynthia Carroll (2012: £1,021,000) and
£1,034,000 for René Médori (2012: £768,000). Retirement benefits can only be drawn from the UURBS if a member has attained age 55 and has left Group service.
Cynthia Carroll’s 2012 amounts have been restated due to her US tax status.
(4) 60% of the amount shown for 2013 annual bonus will be paid in Bonus Shares with deferred receipt. For 40%, vesting will occur after a further three years, subject to
continued employment; for 20%, there is a further two year holding period in addition to the three year vesting period.
(5) The performance condition attached to the 2011 Enhancement Share award was not met and no shares will vest.
(6) As vesting of the LTIP awards granted in 2011 is due to take place after publication of this report, vesting levels are on an ‘expected’ basis and a share price of £14.12 has
been used to calculate the values shown. The values shown include dividend equivalent amounts of £40,705 for Cynthia Carroll and £28,218 for René Médori. The LTIP
amounts shown in last year’s report in respect of the LTIPs awarded in 2010 were also calculated on an ‘expected’ vesting levels basis with an assumed share price of
£18.32. The actual vesting levels were as expected but the actual share price at vesting was £18.52 leading to the following increases in value: Cynthia Carroll – estimated
value £802,000, actual value £811,000 (increase of £9,000); René Médori – estimated value £504,000, actual value £510,000 (increase of £6,000).
(7) The amount stated for Mark Cutifani relates to the value on grant of the restricted shares awarded to him as compensation for the incentives forfeited on leaving his
previous employer AngloGold Ashanti. On 1 May 2013 132,208 restricted shares in the Company were awarded to him with a share price on grant of £15.65. Although the
regulations require disclosure of the full value of grant in Figure 12, the shares will be released to him in the following tranches to reflect the vesting schedule of the
foregone incentives: February 2014 – 51, 680 shares; May 2014 – 9,983 shares; February 2015 – 67,475 shares and February 2016 – 3, 070 shares. The Committee has
the discretion to reduce the number of shares being released in the event of a material misstatement of results. The Committee determined that there should be no
performance conditions attaching to these awards, other than service, as the compensation amount calculated in respect of the forfeited awards had already been
discounted for performance.
(8) Cynthia Carroll ceased to be chief executive on 3 April 2013, stepped down as a director on 19 April 2013 and ceased to be employed by the Company on 30 April 2013.
The salary, benefits, pension, and bonus amounts shown for Cynthia Carroll relate to the period from 1 January 2013 to 30 April 2013. Amounts have been included for
the period for 19 April to 30 April 2013, although Cynthia Carroll was not a director at the time, as the amounts earned related to her completing activities linked to her time
as a director.
Cynthia Carroll’s maximum bonus opportunity for the period 1 January to 30 April 2013 was £710,000 (175% of her pro-rated salary), with 50% based on EPS
performance and 50% on individual objectives subject to a deductor for safety performance. The EPS performance targets are detailed under Section 3.3.
EPS performance was at maximum resulting in a provisional award of 50% of the total award. Cynthia Carroll’s personal objectives related to a smooth and effective
handover, responsible stewardship of the business and specific operational matters. The Committee assessed her performance against these to be above target,
resulting in a provisional award of 48% of the total award. A safety deductor of 3% was then applied to the combined EPS and personal outcomes, leading to a
provisional total award of 95%. The reduction by the Committee resulted in a final amount of 66.5% of the total award being payable (£472,000).
In 2011 Cynthia Carroll was awarded 28,816 Enhancement Shares, none of which vested, as set out in Section 3.3.
In 2011 Cynthia Carroll received an LTIP grant of 128,008 shares relating to performance primarily over the three-year period to 31 December 2013. Full details of the
performance measures and targets attaching to the grant are set out in Section 3.4, along with details of performance delivered and vesting levels. Ms Carroll’s award was
pro-rated to 99,561 shares as she did not serve the last eight months of the performance period. If the award vests at 28%, 27,877 shares are receivable by Ms Carroll.
(9) Following his appointment as chairman of the Company on 1 August 2009, Sir John Parker was awarded 31,000 shares which were released in full on 2 August 2012,
three years after appointment, with a share price of £19.00. The award was matched through share purchases by Sir John before the release date.
(10) Sir John Parker has waived his Nomination Committee Chairman fees. Ray O’Rourke has instructed the Company that his net fees be donated to charity.
(11) Other than in respect of Cynthia Carroll, no payment has been made to a past director of the Company.
135
GovernanceAnglo American plc Annual Report 2013
3.5 Change in the chief executive’s remuneration
in 2013 relative to London employees
Figure 13 sets out the chief executive’s base salary,
benefits and BSP amounts for 2013. As the chief executive
was appointed during the year, no year on year change can
be reported. We show the average change in each element
for London employees, the most relevant employee
comparator group.
3.6 Distribution statement for 2013
Figure 14 sets out the total spend on employee reward
over 2013, compared to profit generated by the Company
and the dividends received by investors.
Figure 13: Change in chief executive’s remuneration compared to UK employees
Chief Executive
London employees(1)
£’000
% change
Average
% change
(per capita)
Salary
891
–
2.8
Benefits
860
–
2.8
Bonus
1,218
–
28.3
(1) Benefits for London employees comprise pension and car allowances (where applicable), these being the most material.
Figure 14: Distribution statement for 2013
Distribution statement
Underlying Earnings
(Total Group)
Dividends payable for year (Total)
Payroll costs for all employees
Employee numbers
$m
% change
$m
% change
$m
% change
£’000
% change
2013
2,673
(6.5)%
1,084
0.1%
5,255
(2.2)%
98
(6.7)%
2012(1)
2,860
(54)%
1,083
20.6%
5,374
8.6%
105
6%
(1) Figures for 2012 have been restated to reflect the adoption of new accounting pronouncements. Please see note 2 of the consolidated financial statements for details.
136
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 4. OUTSTANDING SHARE INTERESTS
• The constituent companies of the Sector Index for the
The information in this section has been subject to
external audit.
4.1 Conditional share awards granted in 2013
Figure 15 summarises the longer-term, conditional share
awards granted to directors during 2013. Receipt of these
awards is dependent on the Company’s performance over
2013–15, as detailed below.
4.2 Further details of LTIP awards granted in 2013
4.2.1 TSR – Sector Index comparison
• One quarter of the LTIP awards granted in 2013 vests
according to the Company’s three-year TSR performance
relative to a weighted basket of international mining
companies (the Sector Index).
2013 awards are shown in Figure 16.
• 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 significant changes in the composition of the Group).
• The threshold for vesting is the Company’s three-year TSR
being equal to the weighted median TSR performance of
the Sector Index.
• Maximum vesting occurs when the Company’s TSR
outperforms the weighted median TSR of the Sector Index
by 5% pa.
• Between threshold and maximum, vesting is based on a
straight line.
Figure 15: Summary of conditional share awards granted in 2013
Type of award
BSP
Enhancement
Shares(1)
LTIP share
awards
Performance
measure
EPS growth
Vesting schedule
44% for RPI+9%
100% for RPI+15%
Performance
period end
Director
Basis of award
31/12/2015
René Médori
75% of 2012
Bonus Shares
Number of
shares awarded
Face value
at grant(2)
8,808
£175,807
31/12/2015
Mark Cutifani
350% of salary
244, 328
£4,199,998
René Médori
300% of salary
117,218
£2,296,300
TSR vs.
sector index
(25%)
Section 4.2.1
TSR vs.
FTSE 100
index (25%)
Section 4.2.2
AOSC (50%)
Section 4.2.3
30% for TSR
equal to median
100% for median
+5% pa or above
30% for TSR
equal to median
100% for 80th
percentile or above
0% for $5.853bn
100% for $7.153bn
(1) The BSP Enhancement Shares were awarded in March 2013. The number of shares granted was 75% of the number of deferred Bonus Shares awarded to René Médori in respect of 2012 annual
performance ( René Médori: 11,744 Bonus Shares). The value of the Bonus Share award was 50% of the total bonus earned for 2012.
(2) The face value of each award has been calculated using the share price at time of grant (£19.96 for the Enhancement Share awards and £19.59 for René Médori’s LTIP awards and £17.19 for Mark Cutifani’s
LTIP awards). As receipt of these awards is conditional on performance, the actual value of these awards may be £0. Vesting outcomes will be disclosed in the 2015 report.
Figure 16: 2013 TSR Sector Index
Comparator companies
Mining
BHP Billiton plc
Rio Tinto plc
Teck Resources Limited
Vale
Vedanta Resources plc
Xstrata/GlencoreXstrata(1)
(1) The Committee has determined that Xstrata’s performance will be measured to the date of merger and GlencoreXstrata’s performance from that date to the end of the
performance period. It noted that there was no bid premium to be taken into account.
137
GovernanceAnglo American plc Annual Report 2013 4.2.2 TSR – FTSE 100 comparison
• One quarter of the LTIP awards granted in 2013 vests
according to the Company’s three-year TSR performance
compared with the TSR performance of the constituents
of the FTSE 100 Index.
• Threshold vesting occurs when the Company’s three-year
TSR is equal to the median TSR of the FTSE 100
constituents.
• Maximum vesting occurs when the Company’s TSR is
equal to or exceeds the TSR of the FTSE 100 company
whose TSR performance is ranked at the 80th percentile.
• Between target and maximum, vesting is based on a
straight line basis.
The performance targets for both TSR measures were
calculated so that there is approximately a 15% chance of
achieving full vesting and a 25% chance of three-quarters
vesting. These probabilities were assessed by PwC using
a Monte Carlo model.
Total shareholder return for both the TSR measures is
calculated based on average returns over the three months
prior to the end of the financial year. It is assumed that all
dividends are reinvested.
4.2.3 Asset Optimisation and Supply Chain
• Vesting of one half of LTIP awards granted in 2013
depends on the performance of the Company’s
strategic Asset Optimisation and Supply Chain
(AOSC) programmes over the three-year period to
31 December 2015.
• These programmes strive to unlock value from the
Company’s assets in a sustainable way through
structured Group-wide programmes aimed at reducing
costs, increasing volumes and improving overall
operational efficiencies.
• The AOSC performance targets represent the operating
profit improvements, capital expenditure savings and
working capital savings that the programme is yielding,
compared with the savings made if the programme had
not been implemented. These savings are realised
cumulatively over the three-year performance period.
• For 2011 LTIP awards onwards, the effect of changes in
both commodity prices and exchange rates have been
stripped out of the AOSC targets and results so that only
directly attributable management actions are recognised.
4.3 Total interests in shares
Figure 17 summarises the total interests of the directors in
shares of Anglo American plc as at 13 February 2014 (and at
the end of the 2013 financial year). These include beneficial
and conditional interests. As already disclosed, from the
2014 AGM Mark Cutifani is required to hold interests in
shares to a value of three times basic salary (built up over
five years) and René Médori to a value of two times salary.
The vesting schedule of Mark Cutifani’s one-off share award
means that he is expected to have a net shareholding of
beneficial shares equal to one-third times basic salary by
mid-2014; this should rise to three-quarters’ times basic
salary by the 2015 AGM. Incentives awarded under the
Company’s share plans from 2013 will start to vest, subject
to the satisfaction of performance conditions, from 2016
onwards. The requirements for René Médori have been
exceeded.
138
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013
Figure 17: Shares in Anglo American plc
Directors
Mark Cutifani(1)
René Médori(2)
Sir John Parker(3)
David Challen
Sir CK Chow
Byron Grote(4) (5)
Sir Philip Hampton
Phuthuma Nhleko
Ray O’Rourke(5)
Mphu Ramatlapeng(4)
Jim Rutherford(4)
Anne Stevens
Jack Thompson(5)
Former directors(6)
Cynthia Carroll
Peter Woicke(5)
Beneficial
Conditional
(with performance conditions)
Conditional
(no performance conditions)
Total
BSP
Bonus Shares
BSP
Enhancement
Shares
LTIP
SAYE/SIP
Other
at 13 February 2014
(at 31 December 2013)
–
–
–
–
–
–
244,328
244,328
–
–
132,208
132,208
at 13 February 2014
117,547
57,445
43,083
271,287
(at 31 December 2013)
117,521
57,445
43,083
271,287
2,186
2,176
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
at 13 February 2014
(at 31 December 2013)
50,303
50,303
1,820
1,820
5,500
5,500
10,000
10,000
5,259
4,709
6,870
5,771
76,965
76,965
357
156
658
–
2,122
2,122
11,450
11,450
(at 19 April 2013)
298,365
(at 19 April 2013)
21,760
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
34,222
169,664
552
–
–
–
–
–
7,552
7,552
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
376,536
376,536
491,548
491,512
57,855
57,855
1,820
1,820
5,500
5,500
10,000
10,000
5,259
4,709
6,870
5,771
76,965
76,965
357
156
658
–
2,122
2,122
11,450
11,450
502,803
21,760
(1) Mark Cutifani was appointed to the Board as chief executive with effect from 3 April 2013. ‘Other’ interests above comprise 132,208 shares in the Company which will vest, subject to Mr Cutifani’s continued
appointment as chief executive, in four tranches, as follows: 51,680 shares in February 2014, 9,983 shares in May 2014, 67,475 shares in February 2015 and 3,070 shares in February 2016.
(2) René Médori’s beneficial interests in 116,215 shares held at the date of this report arise as a result of his wife’s interests in shares.
(3) As previously reported, Sir John Parker was awarded 7,552 shares in the Company on 28 February 2011, which will be released in full on the third anniversary of the award date, subject to his continued
chairmanship. The award has been matched by Sir John progressively over the three-year period.
(4) Byron Grote was appointed to the Board on 19 April 2013, Mphu Ramatlapeng on 8 July 2013 and Jim Rutherford on 4 November 2013.
(5)
Included in the interests of Messrs Grote, O’Rourke, Thompson and Woicke are unsponsored ADRs representing 0.5 ordinary shares of $0.54945 each.
Interests are shown as at date of resignation.
(6)
139
GovernanceAnglo American plc Annual Report 2013 5. REMUNERATION IN 2014
The changes to the Company’s policy on executive director
remuneration for 2014 are summarised in the Remuneration
Committee Chairman’s introductory letter and are reflected
in the policy statements in Figure 1. Figure 18 summarises
how that policy will be implemented in 2014. The EPS
performance range will be disclosed in the 2014
remuneration report.
In December 2013, the Board approved an increase in
the fee levels for committee chairmen and the senior
independent director with effect from 1 January 2014.
The previous increase was in January 2012. Details of
the new fee levels are set out in Figure 19.
6. TERMINATION ARRANGEMENTS
Figure 12 sets out the remuneration received by Cynthia
Carroll for the first four months of 2013 when she was still an
employee of the Company. For the remaining eight months
of 2013, and for January 2014, she received monthly
payments comprising basic salary and benefits,
representing her outstanding notice period, in line with
her contractual provisions (total: £1,207,373) and the
continuation of non-cash benefits (total: £15,249). Cynthia
Carroll also received £117,000 in respect of accrued but
untaken holiday. In accordance with the rules of the plan,
£643,000, representing a partial distribution of Cynthia
Carroll’s UURBS account balance, was paid out to her in
November 2013. The remaining balance, £654,000, is due
to be paid out in April 2014.
Figure 12 also sets out the value of the Enhancement
Shares and LTIP award made in 2011, which the Committee
has determined will vest on the normal vesting dates in
March 2014, pro-rated for the performance period served
(28 months out of the 36 months) and to the extent the
performance conditions have been satisfied.
With respect to the Enhancement Shares and LTIP award
made in 2012, the Committee has likewise determined
that these awards will vest on the normal vesting dates in
March 2015, subject to performance and pro-rating. The
provisional value of these awards on vesting will be
disclosed in the 2014 remuneration report.
The Bonus Shares already held by Cynthia Carroll were
released to her on termination.
Figure 18: Summary of key remuneration aspects in 2014
Element
Performance measure 1,
weighting and vesting
schedule
Performance measure 2,
weighting and vesting schedule
Base Salary
–
–
Director
Mark Cutifani
René Médori
BSP
EPS (50%)
Personal strategic measures (50%)
Mark Cutifani
Personal and strategic objectives
supporting the Company’s delivery on
projects, business improvement, capital
allocation, commercial activities,
employee development and stakeholder
engagement.
René Médori
Level
£1,236,000 (3% increase)
£788,000 (3% increase)
210% of salary
210% of salary
LTIP share
awards
ROCE (50%)
TSR vs HSBC Mining Index (25%)
Mark Cutifani
25% for 12%
25% for TSR equal to index
René Médori
350% of salary
300% of salary
100% for 16%
100% for index +6% pa or above
TSR vs FTSE 100 (25%)
25% for TSR equal to median
100% for 80th percentile or above
Figure 19: Summary of key non-executive director remuneration in 2014
Element
Basic Fee
Committee chairman fees:
Audit, Remuneration and S&SD Committees
Nomination Committee(1)
Additional fee for senior independent director
(1) The current chairman of this committee waives this fee.
140
2013
2014
£80,000
£80,000
£25,000
£30,000
£12,500
£15,000
£25,000
£30,000
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013 Sir Philip Hampton
David Challen
Sir CK Chow
Byron Grote (from 12 June 2013)
Ray O’Rourke (from 12 June 2013)
Jack Thompson
Peter Woicke (to 19 April 2013)
COMMITTEE MEMBERS
DURING 2013
7. REMUNERATION COMMITTEE IN 2013
Membership
The Committee comprised the non-executive directors
shown above during the year ended 31 December 2013.
Remuneration report voting results
The Committee considered the results of the shareholders’
vote on the 2012 remuneration report. As mentioned earlier
in this report, feedback from investors at the time of the
2013 AGM, and more generally, helped shape the changes
to the remuneration policy for 2014 onwards.
Figure 20: External advisers and fees
Advisers
Pricewaterhouse
Coopers
LLP (PwC)
Linklaters LLP
(Linklaters)
Towers Watson
(TW)
Appointed by the Company, with the agreement of the
Committee, to support and advise on the review of the
Company’s incentive arrangements, in addition to the
provision of specialist valuation services and market
remuneration data
Investment advisers, actuaries and
auditors for various pension schemes;
advisers on internal audit projects;
taxation, payroll and executive
compensation advice
Other services provided
to the Company
Fees for Committee
assistance
£113,800
Appointed by the Company, with the agreement of the
Committee, to provide legal advice on long-term incentives
and directors’ service contracts
The Human Resources function engaged Towers Watson to
assist with the preparation of the 2013 remuneration report
and to provide briefing sessions to Committee members on
the new reporting regulations
Legal advice on certain corporate
matters
£13,500
Human resources advisers on various
reward and other matters
£38,000
Deloitte LLP
(Deloitte)
In their capacity as Group auditors, Deloitte undertake an
audit of sections 3 and 4 of the remuneration report annually.
However, they provide no advice to the Committee
n/a
Note: Certain overseas operations within the Group are also provided with audit related services from Deloitte’s and PwC’s worldwide member firms and non-audit related services from TW.
141
GovernanceAnglo American plc Annual Report 2013 Figure 21: Response to 2013 AGM shareholder voting
For
Against
Abstain
Company response to issues raised
Number of votes
In response to investor concerns relating to Mark Cutifani’s
restricted share grant, the Company has changed its policy
for newly hired executive directors so that performance
conditions will attach to any share-based award made by
the Company relating to remuneration forfeited on leaving
the previous employer
In response to general investor calls for greater simplicity,
better alignment and longer-time horizons of incentive
plans, the Company has removed Enhancement Shares
in the BSP, replaced AOSC with ROCE as an LTIP measure
and introduced additional holding periods for both the BSP
and LTIP
Figure 22a: Five year TSR performance
t
n
e
m
t
s
e
v
n
i
0
0
1
$
l
a
c
i
t
e
h
t
o
p
y
h
a
f
o
e
u
a
V
l
240
220
200
180
140
120
110
100
2008
2009
2010
2011
2012
2013
Source: Datastream Return Index
629,554,600
(79%)
167,304,694
(21%)
74,048,974
8. FIVE-YEAR REMUNERATION AND RETURNS
Figure 22a shows the Company’s TSR performance
against the performance of the FTSE 100 Index from
1 January 2009 to 31 December 2013. The FTSE 100 Index
was chosen as being a broad equity market index which
includes companies of a comparable size and complexity to
Anglo American.
TSR is calculated in US dollars, and assumes all dividends
are reinvested. The TSR level shown as at 31 December
each year is the average of the closing daily TSR levels for
the five-day period up to and including that date.
Figure 22b shows the total remuneration earned by the
incumbent chief executive over the same five-year period,
along with the proportion of maximum opportunity earned
in relation to each type of incentive. The total amounts are
based on the same methodology as for Figure 12 (Total
Remuneration Outcomes for 2013).
For the period 2009–10, the TSR performance of the
Company, and the remuneration received by Cynthia Carroll
as chief executive, reflects that this was a period of strong
operational performance and high commodity prices.
These led to a doubling of profits and almost a doubling
of underlying EPS in 2010. Cynthia Carroll’s 2011
remuneration levels also reflect record profits and strong
EPS performance for the year as well as the increase in
value of the LTIP awards that vested at the end of 2011 –
when granted the Company’s share price was £12.61; the
share price at vesting was £26.00. Incentive outcomes have
been much lower in recent years reflecting, in part, the
impact of the fall in commodity prices on our earnings and
the returns being delivered to shareholders.
Vote
Advisory
vote on 2012
remuneration
report
142
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2013
Figure 22b: CEO remuneration
Financial year ending
Cynthia Carroll
31 December
2009
31 December
2010
31 December
2011
31 December
2012
31 December
2013
Total Remuneration (single figure, £’000)
4,379
4,235
BSP (% of maximum)
LTIP (% of maximum)
BSP Enhancement Shares (% of maximum)
Mark Cutifani
Total Remuneration (single figure, £’000)
BSP (% of maximum)
99%
61%
0%
–
–
88%
50%
0%
–
–
8,113
94%
96%
100%
–
–
3,203
1,459
35%
50%
0%
67%
28%
0%
–
–
5,305
65%
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 Philip Hampton
Chairman, Remuneration Committee
13 February 2014
143
GovernanceAnglo American plc Annual Report 2013 GOVERNANCE DIRECTORS’ REPORT
DIRECTORS’ REPORT
The directors have pleasure in submitting the
statutory financial statements of the Group for
the year ended 31 December 2013.
The Board considers that the Annual Report, taken as
a whole, is fair, balanced and understandable and that it
provides all information necessary for shareholders to
assess the Company’s strategy and performance.
PRINCIPAL ACTIVITIES
Anglo American is one of the world’s largest mining
companies, is headquartered in the UK and listed on the
London and Johannesburg stock exchanges. Our portfolio
of mining businesses meets our customers’ changing needs
and spans bulk commodities – iron ore and manganese,
metallurgical coal and thermal coal; base metals and
minerals – copper, nickel, niobium and phosphates; and
precious metals and minerals – in which we are a global
leader in both platinum and diamonds. At Anglo American,
we are committed to working together with our stakeholders
– our investors, our partners and our employees – to create
sustainable value that makes a real difference, while
upholding the highest standards of safety and responsibility
across all our businesses and geographies. The Company’s
mining operations, pipeline of growth projects and
exploration activities span southern Africa, South America,
Australia, North America, Asia and Europe.
More detailed information about the Group’s businesses,
activities and financial performance is incorporated in this
report by reference and can be found in the chairman’s and
CEO’s statements on pages 2–3 and 8–11 respectively.
The Strategic report and Corporate governance statement
are on pages 2–91 and 92–150 respectively and are
incorporated in this Directors’ report by reference. The
Strategic report includes, inter alia, disclosures on
greenhouse gas emissions, diversity and human rights.
144
GOING CONCERN
The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are set out in the Group
performance section on pages 34–45. In addition, detail is
given on the Group’s policy on managing credit and liquidity
risk in the Risk section on pages 46–53, with details of our
policy on capital risk management being set out in note
25 to the financial statements. The Group’s net debt at
31 December 2013 was $10.7 billion (2012: $8.5 billion),
representing a gearing level of 22.2% (2012: 16.3%). Details
of borrowings and facilities are set out in note 25 and net
debt is set out in note 24.
The directors have considered the Group’s cash flow
forecasts for the period to the end of March 2015. The
Board is satisfied that the Group’s forecasts and projections,
taking account of reasonably possible changes in trading
performance, show that the Group will be able to operate
within the level of its current facilities for the foreseeable
future. For this reason the Group continues to adopt the
going concern basis in preparing its financial statements.
DIVIDENDS
An interim dividend of 32 US cents per ordinary share
was paid on 12 September 2013. The directors are
recommending that a final dividend of 53 US cents per
ordinary share be paid on 29 April 2014 to ordinary
shareholders on the register at the close of business on
21 March 2014, subject to shareholder approval at the
AGM to be held on 24 April 2014. Due to a public holiday
in South Africa, the effective record date to qualify for the
dividend in South Africa is 20 March 2014. This would bring
the total dividend in respect of 2013 to 85 US cents per
ordinary share. In accordance with International Financial
Reporting Standards (IFRS), the final dividend will be
accounted for in the financial statements for the year
ended 31 December 2014.
SHARE CAPITAL
The Company’s issued share capital as at 31 December
2013, together with details of share allotments and issue
of treasury shares during the year, is set out in note 33
on pages 197–198.
The Company was authorised by shareholders at the
AGM held on 19 April 2013, to purchase its own shares in
the market up to a maximum of 14.99% of the issued share
capital. No shares were purchased under this authority
during 2013. This authority will expire at the 2014 AGM
and, in accordance with usual practice, a resolution to
renew it for another year will be proposed.
Anglo American plc Annual Report 2013 MATERIAL SHAREHOLDINGS
SUSTAINABLE DEVELOPMENT
The Sustainable Development Report 2013 will be available
in March 2014. This report focuses on the safety, sustainable
development, health and environmental performance of the
Group’s managed operations, its performance with regard
to the Company’s Good Citizenship Business Principles,
and the operational dimensions of its social programmes.
PAYMENT OF SUPPLIERS
Anglo American plc is a holding company and, as such,
has no material trade creditors. Businesses across the
Group are responsible for agreeing the terms under
which transactions with their suppliers are conducted,
reflecting local and industry norms and Group purchasing
arrangements that may have been made with a supplier.
The Group values its suppliers and recognises the benefits
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 financial 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 more, which will vary with
market conditions.
POST-BALANCE SHEET EVENTS
Post-balance sheet events are set out in note 37 to the
financial statements on page 200.
AUDIT INFORMATION
The directors confirm 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.
As at 31 December 2013, the Company was aware of the
following interests in 3% or more of the Company’s ordinary
share capital:
Company
Public Investment
Corporation (PIC)
Number
of shares
Percentage
of voting rights
116,355,956
8.35
Coronation Asset Management
(PTY) Ltd
Blackrock, Inc.
Genesis Asset Managers, LLP
75,411,187
63,318,019
55,426,734
Tarl Investment Holdings Limited(1)
47,275,613
Epoch Two Investment
Holdings Limited(1)
42,166,686
5.41
4.54
3.98
3.39
3.02
(1) Epoch Two Investment Holdings Ltd (Epoch 2) and Tarl Investment Holdings Limited
(Tarl) are two of the independent companies that have purchased shares as part of
Anglo American’s share buy-back programme. Epoch 2 and Tarl have waived their
right to vote all the shares they hold, or will hold, in Anglo American plc.
During the period between 31 December 2013 and
13 February 2014, no changes to the substantial
shareholdings were disclosed to the Company in
accordance with Disclosure and Transparency Rule 5.
DIRECTORS
Directors’ biographical details are given on pages 94–96.
Details of directors’ interests in shares and share options of
the Company can be found in the Directors’ remuneration
report on pages 118–143.
Mark Cutifani was appointed CEO and a director with effect
from 3 April 2013. Byron Grote joined the Board on 19 April
2013, Mphu Ramatlapeng was appointed on 8 July 2013 and
Jim Rutherford joined on 4 November 2013. Judy Dlamini
was appointed to the Board with effect from 1 January 2014.
Cynthia Carroll resigned as CEO of the Company with effect
from 3 April 2013, and as a director with effect from the
closing of the AGM held on 19 April 2013. Peter Woicke
also resigned from the Board on 19 April 2013.
David Challen and Sir CK Chow are due to step down at
the 2014 AGM, as mentioned on page 93. Byron Grote will
be appointed as the chairman of the Audit Committee to
replace David Challen. Byron’s financial experience is set
out in his biography on page 95. Sir Philip Hampton will
assume the role of senior independent director upon
the retirement of David Challen.
In accordance with the Code, Anglo American will continue
to propose the re-election of all directors on an annual basis.
145
Anglo American plc Annual Report 2013Governance GOVERNANCE DIRECTORS’ REPORT
EMPLOYMENT AND OTHER POLICIES
The Group’s key operating businesses are empowered to
manage within the context of 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 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
• in addition, adherence to the International Labour
Organisation’s core labour rights, including: prohibition
of child labour; prohibition of inhumane treatment of
employees and any form of forced labour, physical
punishment or other abuse; recognition of the right of our
employees to freedom of association and the promotion
of workplace equality; and the elimination of all forms of
unfair discrimination
• continual promotion of safe and healthy working practices
• provision of opportunities for employees to enhance their
work related skills and capabilities
• adoption of fair and appropriate procedures for determining
terms and conditions of employment.
It is our policy that people with disabilities should have full
and fair consideration for all vacancies. Employment of
disabled people is considered on merit and with regard
only to the ability of any applicant to carry out the role. We
endeavour to retain the employment of, and arrange suitable
retraining for, any employees in the workforce who become
disabled during their employment. Where possible we will
adjust a person’s working environment to enable them to
stay in our 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.
The Good Citizenship Business Principles are
supplemented by four Anglo American ‘Way’ documents,
covering the safety, environmental, occupational health
and social aspects of responsible operation and sustainable
development. These set out specific standards for each of
these subject areas, in line with international best practice.
Copies of the Good Citizenship Business Principles and the
Anglo American ‘Way’ documents may be accessed on the
Company’s website.
In addition, all Anglo American suppliers must commit to
adhering to the requirements set out in the ‘Sustainable
Development in Supply Chain Policy’, which is available on
the company’s website.
The Business Integrity Policy and its 11 Performance
Standards support our anti-corruption commitment by
making it clear that we will neither give, nor accept, bribes,
nor permit others to do so in our name, either in our dealings
with public officials or with our suppliers and customers. The
Policy sets out the standards of conduct required at every
level of Anglo American, including our subsidiaries, joint
ventures and associates, in combating corrupt behaviour
of all types. It also sets out the requirements of those with
whom we do business and those who work on our behalf.
The Business Integrity Policy and Performance Standards
have been translated into all the main languages that we
use at our operations. Two dedicated business integrity
managers, who operate within a broader risk management
and business assurance team, oversee implementation of
the policy by working with senior managers in our business
units and corporate functions and assisting them to put in
place adequate procedures for managing corruption risks
(including extensive face-to-face training of employees in
high-risk roles).
Our internal audit team provide assurance on anti-
corruption controls on an annual basis and all stakeholders
are able to confidentially report breaches, or potential
breaches, of the Business Integrity Policy through our
independently-managed Speak Up facility.
The Group has a new social intranet called Eureka! which
helps employees to connect, communicate and collaborate
more effectively. In addition, the Company regularly
publishes Optima (available on the Company’s website) and
Our World, which contain items of news, current affairs and
information relevant to Group employees.
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 $127.5 million (2.2% of profit before tax from
subsidiaries and joint operations, before special items and
remeasurements). Charitable donations of $0.8 million
were made in the UK, of which the main categories were:
education and training (47.7%) and health and welfare
(41.5%). These figures were compiled with reference to
the London Benchmarking Group model for defining and
measuring social investment spending. A fuller analysis of
the Group’s social investment activities can be found in the
Sustainable Development Report 2013.
POLITICAL DONATIONS
No political donations were made during 2013. Anglo
American has an established policy of not making donations
to, or incurring expenses for the benefit of, any political party
in any part of the world, including any political party or
political organisation as defined in the Political Parties,
Elections and Referendums Act 2000.
146
Anglo American plc Annual Report 2013 ANNUAL GENERAL MEETING
The AGM will be held on 24 April 2014, when shareholders
will have the opportunity to put questions to the Board,
including the chairmen of the various committees. A
separate booklet enclosed with this report contains the
notice convening the meeting together with a description
of the business to be conducted.
Facilities have been put in place to enable shareholders on
the UK register to receive 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.
In accordance with best practice, 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,
after the meeting.
ELECTRONIC COMMUNICATIONS
Since the implementation of the electronic communications
provisions in the Companies Act 2006, the Company has
substantially reduced the cost of annual report production
and distribution. Shareholders may elect to receive
notification by email of the availability of the annual report
on the Company’s website instead of receiving paper
copies. For more information, please see the Company’s
Notice of Annual General Meeting 2014.
ADDITIONAL INFORMATION
FOR SHAREHOLDERS
Set out below is a summary of certain provisions of the
Company’s current Articles and applicable English law
concerning companies (the Companies Act 2006 (the
Companies Act)) 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 Act should be consulted if further information
is required.
Dividends and distributions
Subject to the provisions of the Companies Act, 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 financial position of the Company, in the
opinion of the Board, justifies 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 defined 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 Act.
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 a special resolution passed by
the shareholders.
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 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 Act, 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 meeting as a corporate
representative. The debate around s323 of the Companies
Act has been resolved so that where a shareholder appoints
more than one corporate representative in respect of its
shareholding, but in respect of different shares, those
corporate representatives can act independently of each
other, and validly vote in different ways.
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 Act.
147
Anglo American plc Annual Report 2013Governance GOVERNANCE DIRECTORS’ REPORT
Issue of shares
Subject to the provisions of the Companies Act relating to
authority and pre-emption rights and of any resolution of
the Company in a UK 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.
Shares in uncertificated form
Directors may determine that any class of shares may be
held in uncertificated 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 so held and transferred.
Subject to the provisions of the Companies Act, 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 uncertificated form in accordance with any system
outside the UK that 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 that are in uncertificated
form to the extent that the Articles are inconsistent with the
holding of shares of that class in uncertificated 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 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 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.
Transfer of shares
All transfers of shares that are in certificated 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
of shareholders. All transfers of shares that are in
uncertificated form may be effected by means of the
CREST system.
The directors may decline to recognise any instrument of
transfer relating to shares in certificated form unless it:
(a) is in respect of only one class of share; and
(b) is lodged at the transfer office (duly stamped if required)
accompanied by the relevant share certificate(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 certificated form,
in their absolute discretion and without assigning any reason
therefore, refuse to register any transfer of shares (not being
fully paid shares) provided that, where any such shares are
admitted to the Official 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 the refusal to the allottee or the transferee
within two months after the date on which the letter of
allotment or transfer was lodged with the Company.
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.
Directors
Directors shall not be less than 10 nor more than 18 in
number. A director is not required to hold any shares of the
Company by way of qualification. The Company may by
ordinary resolution increase or reduce the maximum or
minimum number of directors.
148
Anglo American plc Annual Report 2013 Powers of directors
Subject to the Articles, the Companies Act 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.
Purchases of own shares
At the AGM held on 19 April 2013, authority was given for
the Company to purchase, in the market, up to 208.5 million
Ordinary Shares of 5486⁄91 US cents each. The Company
did not purchase any of its own shares during 2013.
Indemnities
To the extent permitted by law and the Articles, the
Company has made qualifying third party indemnity
provisions for the benefit of its directors during the year,
which remain in force at the date of this report. Copies
of these indemnities are open for inspection at the
Company’s registered office.
By order of the Board
Nicholas Jordan
Company Secretary
13 February 2014
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 and replacement 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 office
only until the next AGM and shall then be eligible for election.
The Articles provide that at each AGM all those directors
who have been in office for three years or more since their
election, or last re-election, shall retire from office. In
addition, a director may at any AGM retire from office
and stand for re-election. However, in accordance with the
Code, all directors will be subject to annual re-election.
Significant agreements:
Change of control
At 31 December 2013, Anglo American had committed
bilateral and syndicated borrowing facilities totalling
$12.3 billion with a number of relationship banks that contain
change of control clauses. $6.0 billion of the Group’s bond
issues also contain change of control provisions. In
aggregate, this financing is considered significant to the
Group and, in the event of a takeover (change of control) of
the Company, these contracts may be cancelled, become
immediately payable or be subject to acceleration.
149
Anglo American plc Annual Report 2013Governance GOVERNANCE STATEMENT OF DIRECTORS’ RESPONSIBILITIES
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
The directors are responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. The directors are
required to prepare the Group financial statements in
accordance with International Financial Reporting
Standards (IFRS), as adopted by the European Union and
Article 4 of the IAS regulation, and have elected to prepare
the parent company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable
law). The directors must not approve the accounts unless
they are satisfied that they give a true and fair view of the
state of affairs of the Company and of the profit or loss of
the Company for that period.
In preparing the parent company financial statements,
the directors are required to:
• select suitable accounting policies and then apply
them consistently
• make judgements and accounting estimates that are
reasonable and prudent
• state whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group financial statements, IAS 1
requires that directors:
• properly select and apply accounting policies
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information
• provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance
• make an assessment of the Company’s ability to continue
as a going concern.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions, disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. 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 the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
RESPONSIBILITY STATEMENT
for the year ended 31 December 2013
We confirm that to the best of our knowledge:
(a) the financial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and loss of Anglo American plc and the undertakings
included in the consolidation taken as a whole
(c) the annual report and financial statements, taken as
a whole, are fair, balanced and understandable and
provide the information necessary for shareholders
to assess the Company’s performance, business
model and strategy.
(b) the management report includes a fair review of
By order of the Board
the development and performance of the business
and the position of Anglo American plc and the
undertakings included in the consolidation taken as
a whole, together with a description of the principal
risks and uncertainties that they face
Mark Cutifani
Chief Executive
René Médori
Finance Director
150
Anglo American plc Annual Report 2013 FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
CONTENTS
Anglo American plc financial reporting is of the highest quality; to continue
to achieve this we have changed the format of our consolidated financial
statements in order to make them clearer and easier to follow.
We have changed the grouping and structure of the notes to the financial
statements to help the user to understand our business better. Individual
notes have been reorganised to highlight their most material items, certain
items that are no longer considered to be material have been removed and
accounting policy references have been included in the relevant note.
Unaudited financial information has been brought into the end of this
section to make it easier to navigate to all financial information.
Independent auditor’s report to the members of Anglo American plc
152
Principal statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement of changes in equity
Notes to the financial statements
1
Critical accounting judgements and key sources
of estimation uncertainty
Changes in accounting policies and disclosures
2
Notes to the Consolidated income statement
3
4
5
6
7
8
9
10 Dividends
Segmental information
Operating profit/(loss) from subsidiaries and joint operations
Operating profit and underlying earnings by segment
Special items and remeasurements
Net finance costs
Income tax expense
Earnings per share
Intangible assets
Investments in associates and joint ventures
Financial asset investments
Inventories
Trade and other receivables
Trade and other payables
Financial instruments
Notes to the Consolidated balance sheet
11
12 Property, plant and equipment
13
14
15
16
17
18
19 Derivatives
20 Provisions for liabilities and charges
21 Deferred tax
22 Assets and liabilities held for sale
Cash flow statement, net debt and related notes
23 Capital expenditure
24 Net debt
25 Borrowings
26 Commitments
Employee remuneration
27 Employee numbers and costs
28 Retirement benefits
29 Share-based payments
Group structure and transactions
30 Business combinations and formation of joint ventures
31 Disposals of subsidiaries
32 Non-controlling interests
Additional disclosures
33 Called-up share capital and consolidated equity analysis
34 Auditor’s remuneration
35 Contingent liabilities
36 Related party transactions
37
38 Group companies
39
40 Accounting policies
41
Accounting policy changes – restatements
Events occurring after end of year
Financial risk management
Financial statements of the parent company
Summary by business operation
Key financial data
Reconciliation of reported earnings
Exchange rates and commodity prices
154
154
155
156
157
158
159
161
165
166
166
169
169
171
172
172
173
174
175
175
175
176
176
178
179
180
181
182
182
184
186
187
188
191
193
195
196
197
198
199
200
200
201
203
205
210
212
215
216
217
218
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
Anglo American plc Annual Report 2013
151
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ANGLO AMERICAN PLC
Opinion on financial statements of Anglo American plc
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s
and of the parent company’s affairs as at 31 December 2013 and of the
Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the
European Union;
• the parent company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice;
and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
The financial statements comprise the Consolidated income statement, the
Consolidated statement of comprehensive income, the Consolidated balance
sheet, the Consolidated cash flow statement, the Consolidated statement of
changes in equity, the accounting policies, the related notes 1 to 41 and the
balance sheet of the Company and related information.
The financial reporting framework that has been applied in the preparation of
the Group financial statements is applicable law and IFRS as adopted by the
European Union. The financial reporting framework that has been applied in
the preparation of the parent company financial statements is applicable law
and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice).
Going concern
As required by the Listing Rules we have reviewed the directors’ statement
on page 150 that the Group is a going concern. We confirm that:
• we have not identified material uncertainties related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going
concern which we believe would need to be disclosed in accordance with
IFRS as adopted by the European Union; and
• we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the Group’s ability to continue as
a going concern.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team.
Risk
How the scope of our audit responded to the risk
Impairments
Assessment of the recoverable amount of operating
assets and development projects, including
specifically the Minas-Rio project within the Iron Ore
Brazil business unit and the Barro Alto project within
the Nickel business unit.
We challenged management’s assessment as to whether indicators of impairment exist for specific
assets, specifically, in relation to the Minas-Rio and Barro Alto projects. Where such indicators were
identified we obtained copies of the valuation models used to determine the value in use or fair value
less costs of disposal of the relevant asset. We challenged the assumptions made by management in
relation to these models, including the discount rate used, the commodity price, capital expenditure
and operating cost forecasts and the expected production profiles, by reference to third party
documentation where available and consultation with operational management. We ensured that
assumptions had been determined and applied on a consistent basis across the Group.
Platinum portfolio review
Assessment of the accounting impact arising from the
finalisation of the portfolio review carried out by Anglo
American Platinum and the related impairments and
provisions recorded within the financial statements.
We assessed the status and recoverability of all Anglo American Platinum operating assets and
projects in the context of the results of the portfolio review, and analysed management’s estimates
for restructuring costs, giving particular consideration to the timing of key decisions made by
management and hence the timing of the recognition of any provisions.
Amapá disposal
Assessment of the loss on disposal of Amapá, taking
into account the fair value of consideration received
and the insurance claims, including those relating to
the port incident in March 2013, which were acquired
by the Group as part of the sales agreement.
Taxation
Assessment of the Group’s taxation exposures in all
jurisdictions, including transfer pricing arrangements
and recognition of deferred taxation assets
and liabilities.
Special items and remeasurements
Assessment of the appropriateness of items
accounted for within ‘Special items and
remeasurements’.
We audited the disposal calculations in respect of the sale to Zamin Ferrous Limited with a particular
focus on challenging the fair value of the insurance claim asset acquired (through consultation with
the Group’s external legal advisors and review of the related agreements and expert insurance
reports), as well as the valuation of the deferred consideration receivable which is linked to future
iron ore prices.
We reviewed all significant potential taxation exposures within the Group and, through discussions
with the Group’s taxation department, the tax specialists within the audit team and review of relevant
documentation, we assessed the appropriateness of the provisions raised.
We considered, in the context of our tax specialists’ prior experience of similar issues, the Group’s
transfer pricing arrangements and deferred taxation assets and liabilities recognised, to confirm that
they were reasonable.
We considered each item accounted for within ‘Special items and remeasurements’ as defined in
note 6 to the financial statements. We determined, through examination of the audit evidence
obtained relating to the underlying transactions and discussion with management, whether such
categorisation is appropriate and consistent with the Group’s stated policy and past practice for
recognition of such items, and whether, taken as a whole, the income statement is fair and balanced
in its presentation.
Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to express an opinion
on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect to any of the risks described above, and we do not
express an opinion on these individual matters.
The Audit Committee’s consideration of these risks is set out on page 115.
152
Anglo American plc Annual Report 2013
Our application of materiality
We determined planning materiality for the Group to be $250 million,
which is approximately 4.1% of pre-tax profit before special items and
remeasurements, and below 1% of equity. Pre-tax profit is normalised for the
materiality calculation to exclude impairments, remeasurements and other
one off items that are audited separately and would, if included, significantly
distort the materiality calculation year on year.
We agreed with the Audit Committee that we would report to the Committee
all audit differences in excess of $10 million, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
All business units were subject to a full scope audit with the exception of
Manganese. The principal operation within Manganese, part of the Iron Ore
and Manganese segment, is Samancor Holdings Proprietary Limited
(Samancor), an associate of the Group, which is subject to a separate audit
engagement. We have received a reporting pack from the Samancor auditor
and have performed specific procedures on the remaining balances
within Manganese.
The Senior Statutory Auditor visits the principal location of each significant
business unit at least once every year and key operational assets on a
rotating basis.
Opinion on other matters prescribed by the Companies
Act 2006
In our opinion:
• the part of the Directors’ Remuneration Report to be audited has been
properly prepared in accordance with the Companies Act 2006; and
• the information given in the Strategic Report and the Directors’ Report
for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
• we have not received all the information and explanations we require for our
audit;
• adequate accounting records have not been kept by the parent company,
or returns adequate for our audit have not been received from branches not
visited by us; or
• the parent company financial statements are not in agreement with the
accounting records and returns.
We have nothing to report in respect of these matters.
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion
certain disclosures of directors’ remuneration have not been made or the part
of the Directors’ Remuneration Report to be audited is not in agreement with
the accounting records and returns. Under the Listing Rules we are required
to review certain elements of the Directors’ Remuneration Report. We have
nothing to report arising from these matters or our review.
Corporate Governance Statement
Under the Listing Rules we are also required to review the part of the
Corporate Governance Statement relating to the company’s compliance with
nine provisions of the UK Corporate Governance Code. We have nothing to
report arising from our review.
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland), we are required
to report to you if, in our opinion, information in the Annual Report is:
• materially inconsistent with the information in the audited financial
statements;
• apparently materially incorrect based on, or materially inconsistent with, our
knowledge of the Group acquired in the course of performing our audit; or
• otherwise misleading.
In particular, we are required to consider whether:
• we have identified any inconsistencies between our knowledge acquired
during the audit and the directors’ statement that they consider the Annual
Report is fair, balanced and understandable; and
• whether the Annual Report appropriately discloses those matters that we
communicated to the Audit Committee which we consider should have
been disclosed.
We confirm that we have not identified any such inconsistencies or
misleading statements.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is to
audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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 auditor’s 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.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of whether the accounting
policies are appropriate to the Group’s and the parent company’s
circumstances and have been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial statements. In addition,
we read all the financial and non-financial information in the Annual Report
to identify material inconsistencies with the audited financial statements and
to identify any information that is apparently materially incorrect based on,
or materially inconsistent with, the knowledge acquired by us in the course
of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
Carl D. Hughes MA, FCA (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
13 February 2014
Anglo American plc Annual Report 2013
153
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2013
US$ million
Group revenue
Operating costs
Operating profit/(loss) from subsidiaries and
joint operations
Non-operating special items and remeasurements
Share of net income from associates and
joint ventures
Profit from operations, associates and
joint ventures
Note
3
3, 4
6
3, 13
Investment income
Interest expense
Other financing (losses)/gains
Net finance costs
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the financial year
Attributable to:
Non-controlling interests
Equity shareholders of the Company
Earnings/(loss) per share (US$)
Basic
Diluted
7
8a
32
9
9
Before special
items and
remeasurements
29,342
(23,174)
Special items and
remeasurements
(note 6)
–
(3,761)
2013
Total
29,342
(26,935)
Before special
items and
remeasurements
28,680
(23,187)
Special items and
remeasurements
(note 6)
–
(7,093)
2012
restated(1)
Total
28,680
(30,280)
6,168
–
243
6,411
271
(584)
37
(276)
6,135
(1,861)
4,274
1,601
2,673
(3,761)
(469)
2,407
(469)
(75)
168
(4,305)
–
–
(130)
(130)
(4,435)
587
(3,848)
(214)
(3,634)
2,106
271
(584)
(93)
(406)
1,700
(1,274)
426
1,387
(961)
2.09
2.08
(2.84)
(2.83)
(0.75)
(0.75)
5,493
–
482
5,975
418
(630)
(87)
(299)
5,676
(1,506)
4,170
1,310
2,860
2.28
2.26
(7,093)
1,396
(1,600)
1,396
(61)
421
(5,758)
–
–
(89)
(89)
(5,847)
1,113
(4,734)
(404)
(4,330)
217
418
(630)
(176)
(388)
(171)
(393)
(564)
906
(1,470)
(3.45)
(3.43)
(1.17)
(1.17)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013
US$ million
Profit/(loss) for the financial year
Items that may subsequently be reclassified to the income statement
Net (loss)/gain on revaluation of available for sale investments
Net loss on cash flow hedges
Net exchange difference on translation of foreign operations (including associates and joint ventures)
Share of associates’ and joint ventures’ expense recognised directly in equity, net of tax
Tax on items recognised directly in equity that may be reclassified
Items that will not be reclassified to the income statement
Remeasurement of net retirement benefit obligation
Share of associates’ and joint ventures’ income recognised directly in equity, net of tax
Tax on items recognised directly in equity that will not be reclassified
Net expense recognised directly in equity
Transferred to the income statement
Disposal of available for sale investments
Impairment of available for sale investments
Net exchange difference on disposal of foreign operations
Cash flow hedges
Transferred to initial carrying amount of hedged items: cash flow hedges
Share of associates’ and joint ventures’ net expense transferred from equity
Tax on items transferred from equity
Total transferred from equity
Total comprehensive expense for the financial year
Attributable to:
Non-controlling interests
Equity shareholders of the Company
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Note
8c
8c
8c
2013
426
(69)
(16)
(4,872)
–
173
97
–
(37)
(4,724)
(89)
14
73
–
4
–
12
14
(4,284)
2012
restated(1)
(564)
173
–
(750)
(17)
(96)
190
14
(25)
(511)
(57)
84
24
4
5
(10)
29
79
(996)
769
(5,053)
867
(1,863)
154
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED BALANCE SHEET
US$ million
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Environmental rehabilitation trusts
Investments in associates and joint ventures
Financial asset investments
Trade and other receivables
Deferred tax assets
Derivative financial assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Financial asset investments
Trade and other receivables
Current tax assets
Derivative financial assets
Cash and cash equivalents
Total current assets
Assets classified as held for sale
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Short term borrowings
Provisions for liabilities and charges
Current tax liabilities
Derivative financial liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Medium and long term borrowings
Retirement benefit obligations
Deferred tax liabilities
Derivative financial liabilities
Provisions for liabilities and charges
Other non-current liabilities
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
Own shares
Other reserves
Retained earnings
Equity attributable to equity shareholders of the Company
Non-controlling interests
Total equity
31 December
2013
Note
31 December
2012
restated(1)
1 January
2012
restated(1)
11
12
20
13
14
16
21
19
15
14
16
19
24a
22
17
24a, 25
20
19
17
24a, 25
28
21
19
20
22
33
32
4,083
41,505
348
4,612
1,446
797
1,364
604
247
55,006
4,789
19
3,351
226
70
7,704
16,159
–
71,165
(4,369)
(2,108)
(768)
(734)
(372)
(8,351)
(22)
(15,740)
(1,204)
(4,657)
(1,139)
(2,688)
–
(25,450)
–
(33,801)
37,364
772
4,358
(6,463)
(5,372)
38,376
31,671
5,693
37,364
4,569
44,731
392
3,162
2,389
560
1,204
747
235
57,989
5,002
102
3,243
470
101
9,080
17,998
3,150
79,137
(4,494)
(2,485)
(560)
(819)
(280)
(8,638)
(18)
(15,150)
(1,409)
(6,051)
(801)
(2,384)
(29)
(25,842)
(919)
(35,399)
43,738
772
4,357
(6,659)
(1,202)
40,343
37,611
6,127
43,738
2,320
40,082
360
5,352
3,003
434
515
668
138
52,872
3,514
–
3,639
207
172
11,712
19,244
–
72,116
(5,047)
(902)
(369)
(1,528)
(162)
(8,008)
–
(11,855)
(639)
(5,693)
(950)
(1,829)
(71)
(21,037)
–
(29,045)
43,071
738
2,714
(6,985)
283
42,240
38,990
4,081
43,071
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The financial statements of Anglo American plc, registered number 03564138, were approved by the Board of directors on 13 February 2014 and signed on its
behalf by:
Mark Cutifani
Chief Executive
René Médori
Finance Director
Anglo American plc Annual Report 2013
155
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2013
US$ million
Cash flows from operating activities
Total profit/(loss) before tax
Net finance costs
Share of net income from associates and joint ventures
Non-operating special items and remeasurements
Total operating profit/(loss) from subsidiaries and joint operations
Depreciation and amortisation
Share-based payment charges
Operating remeasurements
Non-cash element of operating special items
Decrease in provisions
Increase in inventories
Increase in operating receivables
Decrease in operating payables
Other adjustments
Cash flows from operations
Dividends from associates and joint ventures
Dividends from financial asset investments
Income tax paid
Net cash inflows from operating activities
Cash flows from investing activities
Expenditure on property, plant and equipment
Cash flows from derivatives related to capital expenditure
Proceeds from disposal of property, plant and equipment
Investments in associates and joint ventures
Purchase of financial asset investments
Net repayment of loans granted
Interest received and other investment income
Acquisition of subsidiaries, net of cash and cash equivalents acquired
Disposal of subsidiaries, net of cash and cash equivalents disposed
Repayment of capitalised loans by associates
Net proceeds from disposal of interests in available for sale investments
Other investing activities
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Cash flows from derivatives related to financing activities
Dividends paid to Company shareholders
Dividends paid to non-controlling interests
Net repayment of short term borrowings
Net receipt of medium and long term borrowings
Movements in non-controlling interests
Tax on sale of non-controlling interest in Anglo American Sur
Sale of shares under employee share schemes
Purchase of shares by subsidiaries for employee share schemes (2)
Other financing activities
Net cash (used in)/inflows from financing activities
Net 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) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
Includes purchase of Kumba Iron Ore Limited and Anglo American Platinum Limited shares for their respective employee share schemes.
Note
2013
2012
restated(1)
1,700
406
(168)
469
2,407
2,638
201
550
3,065
(56)
(562)
(541)
(18)
45
7,729
246
18
(1,201)
6,792
(6,125)
(136)
140
(221)
–
301
193
–
13
108
99
3
(5,625)
(907)
181
(1,078)
(1,159)
(2,307)
3,279
71
(395)
14
(92)
(9)
(2,402)
(1,235)
9,298
(1,235)
(361)
7,702
(171)
388
(421)
(1,396)
(1,600)
2,374
233
116
6,913
(127)
(329)
(32)
(165)
(13)
7,370
294
54
(1,799)
5,919
(5,959)
(71)
66
(114)
(16)
81
278
(4,816)
100
36
273
(32)
(10,174)
(775)
149
(970)
(1,267)
(747)
5,633
1,220
(1,015)
24
(253)
(48)
1,951
(2,304)
11,712
(2,304)
(110)
9,298
6
4
3
6
13
23
23
13
14
31
13
14
24b
24b
24b
24b
24b
156
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2013
Total share
capital(1)
3,452
–
3,452
Own
shares(2)
(6,985)
–
(6,985)
–
–
–
1,677
–
–
–
–
–
–
–
–
–
–
Retained
earnings
42,342
(102)
42,240
(1,304)
(970)
–
185
(219)
–
–
–
–
5,129
326
–
(6,659)
(256)
667
40,343
96
–
549
–
–
–
–
–
–
–
–
–
–
(901)
(1,078)
–
38
–
–
–
–
–
–
Share-based
payment
reserve
453
–
453
Cumulative
translation
adjustment
reserve
(1,930)
–
(1,930)
Fair value and
other reserves(3)
1,760
–
1,760
Total equity
attributable
to equity
shareholders
of the
Company
39,092
(102)
38,990
(687)
128
(1,863)
–
(970)
Non-
controlling
interests
4,097
(16)
4,081
Total equity
43,189
(118)
43,071
867
–
(996)
(970)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,617)
–
(355)
–
1,507
(1,259)
–
(1,259)
1,507
–
–
–
(219)
970
751
–
–
1,423
1,423
17
17
–
(667)
866
166
–
37,611
28
–
6,127
194
–
43,738
(4,023)
(129)
(5,053)
769
(4,284)
–
–
–
–
–
–
–
–
(1,078)
–
(1,078)
–
(1,273)
(1,273)
38
–
(14)
47
24
47
US$ million
At 1 January 2012
Adoption of new standards(4)
At 1 January 2012 (restated)
Total comprehensive (expense)/
income
Dividends payable to Company
shareholders
Dividends payable to
non-controlling interests
Conversion of convertible bond
Changes in ownership interest
in subsidiaries
Acquired through business
combinations
Issue of shares to
non-controlling interests
Equity settled share-based
payment schemes
Other
At 31 December 2012 (restated)
Total comprehensive (expense)/
income
Dividends payable to Company
shareholders
Dividends payable to
non-controlling interests
Changes in ownership interest
in subsidiaries
Issue of shares to
non-controlling interests
Equity settled share-based
payment schemes
Other
At 31 December 2013
–
1
5,130
196
–
(6,463)
(43)
17
38,376
(1)
–
548
–
–
(6,640)
–
(17)
720
152
1
31,671
37
–
5,693
189
1
37,364
(1)
Includes share capital and share premium.
(2) Own shares comprise shares of Anglo American plc held by the Company (treasury shares), its subsidiaries and employee benefit trusts.
(3) See note 33 for breakdown of fair value and other reserves.
(4) Certain balances and changes in equity related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Dividends
Proposed ordinary dividend per share (US cents)
Proposed ordinary dividend (US$ million)
Ordinary dividends payable during the year per share (US cents)
Ordinary dividends payable during the year (US$ million)
Note
10
10
10
10
2013
53
678
85
1,078
2012
53
676
78
970
Anglo American plc Annual Report 2013
157
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
NOTES TO THE FINANCIAL STATEMENTS
1. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES
OF ESTIMATION UNCERTAINTY
In the course of preparing financial statements, management necessarily
makes judgements and estimates that can have a significant impact on the
financial statements. The most critical of these relate to estimation of Ore
Reserves, assessment of fair value, impairment of assets, restoration,
rehabilitation and environmental costs, deferred stripping, taxation,
retirement benefits, contingent liabilities and the classification of joint
arrangements. The use of inaccurate assumptions in assessments made for
any of these estimates could result in a significant impact on financial results.
Ore Reserve estimates
When determining Ore Reserves, which may be used to calculate
depreciation on the Group’s mining properties, 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 unit of production rate of amortisation could be
impacted to the extent that actual production in the future is different from
current forecast production based on Proved and Probable Ore Reserves.
Factors which could impact useful economic lives of assets and Ore Reserve
estimates include:
• Commodity and product prices
Commodity and product prices are based on latest internal forecasts,
benchmarked with external sources of information, to ensure they are within
the range of available analyst forecasts. Where existing sales contracts are
in place, the effects of such contracts are taken into account in determining
future cash flows.
• Operating costs, capital expenditure and other operating factors
Operating costs and capital expenditure are based on financial budgets
covering a three year period. Cash flow projections beyond three years are
based on mine life plans or non-mine production plans, as applicable, and
internal management forecasts. Cost assumptions incorporate
management experience and expectations, as well as the nature and
location of the operation and the risks associated therewith. Underlying
input cost assumptions are consistent with related output price
assumptions. Other operating factors, such as the timelines of granting
licences and permits are based on management’s best estimate of the
outcome of uncertain future events at the balance sheet date.
• Discount rates
Cash flow projections used in fair value less costs of disposal impairment
models are discounted based on a real post-tax discount rate of 6.5%
(2012: 6.5%). Adjustments to the rate are made for any risks that are not
reflected in the underlying cash flows.
• changes to Proved and Probable Ore Reserves
• Foreign exchange rates
Foreign exchange rates are based on latest internal forecasts for foreign
exchange, benchmarked with external sources of information for relevant
countries of operation. Foreign exchange rates are kept constant (on a real
basis) from 2017 onwards.
Impairment of assets
In making assessments for impairment, management necessarily applies its
judgement in allocating assets, including goodwill, that do not generate
independent cash flows to appropriate cash generating units (CGU), and also
in estimating the timing and value of underlying cash flows within the
calculation of recoverable amount.
The calculation of recoverable amount is based either on fair value less costs
of disposal or on value in use. The cash flow projections used in assessments
of fair value less costs of disposal or value in use are subject to the areas of
judgement outlined above.
Subsequent changes to the CGU allocation, to the timing of cash flows or to
the assumptions used to determine the cash flows could impact the carrying
value of the respective assets.
Restoration, rehabilitation and environmental costs
Costs for restoration of site damage, rehabilitation and 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.
Deferred stripping
The Group defers stripping costs onto the balance sheet where they are
considered to improve access to ore in future periods. Where the amount to
be capitalised cannot be specifically identified it is determined based on the
volume of waste extracted compared with expected volume for the identified
component of the orebody. This determination is dependent on an individual
mine’s pit design and Life of Mine Plan and therefore changes to the pit
design or Life of Mine Plan will result in changes to these estimates.
Identification of the components of a mine’s orebody is made by reference
to the Life of Mine Plan. The assessment depends on a range of factors
including each mine’s specific operational features and materiality.
• the grade of Ore Reserves varying significantly from time to time
• differences between actual commodity prices and commodity price
assumptions used in the estimation of Ore Reserves
• renewal of mining licences
• unforeseen operational issues at mine sites
• adverse changes in capital, operating, mining, processing and reclamation
costs, discount rates and foreign exchange rates used to determine
Ore Reserves.
For further information refer to the Ore Reserves and Mineral Resources
section of the Annual Report.
Assessment of fair value
The assessment of fair value is principally used in accounting for business
combinations, impairment testing, and the valuation of certain financial assets
and liabilities.
Fair value is determined based on observable market data (in the case of
listed subsidiaries, market share price at 31 December of the respective
entity) or discounted cash flow models (and other valuation techniques) using
assumptions considered to be reasonable and consistent with those that
would be applied by a market participant. The determination of assumptions
used in assessing the fair value of identifiable assets and liabilities is
subjective and the use of different valuation assumptions could have
a significant impact on financial results.
In particular, expected future cash flows, which are used in discounted cash
flow models, are inherently uncertain and could materially change over time.
They are significantly affected by a number of factors including Ore Reserves
and Resources, together with economic factors such as commodity prices,
discount rates, exchange rates, estimates of production costs and future
capital expenditure.
Cash flow projections
Cash flow projections are based on financial budgets and mine life plans or
non-mine production plans, incorporating key assumptions as detailed below:
• Reserves and resources
Ore Reserves and, where considered appropriate, Mineral Resources are
incorporated in projected cash flows, based on Ore Reserves and Mineral
Resource statements and exploration and evaluation work undertaken by
appropriately qualified persons. Mineral Resources are included where
management has a high degree of confidence in their economic extraction,
despite additional evaluation still being required prior to meeting the
requirements of reserve classification.
158
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
1. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES
OF ESTIMATION UNCERTAINTY continued
Taxation
The Group’s tax affairs are governed by complex domestic tax legislations
interlaced with the override of international tax treaties between countries
and the interpretation of both by tax authorities and courts. In addition, in
arriving at the tax charge in the financial statements a degree of judgement
is required by management about the future taxable profits and repatriation
of retained earnings. These judgements in turn are influenced, inter alia, by
factors such as estimates of future production, commodity lines, operating
costs, future capital expenditure, and dividend policies. Given the many
uncertainties that could arise from any or all of these factors and judgements,
future adjustments to the tax charge already recorded could occur. Where
management is aware of potential uncertainties around these factors and
judgements, provision is made and reviewed on a regular basis. These are
subject to risk and changes may be required to the amount provided in
respect of historic or future tax costs.
Retirement benefits
The expected costs of providing pensions and post employment benefits
under defined benefit arrangements relating to employee service during
the period are determined based on financial and actuarial assumptions.
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 Group’s
other comprehensive income.
Contingent liabilities
On an ongoing basis the Group is a party to various legal disputes, the
outcomes of which cannot be assessed with a high degree of certainty.
A liability is recognised where, based on the Group’s legal views and advice,
it is considered probable that an outflow of resources will be required to settle
a present obligation that can be measured reliably. Disclosure of other
contingent liabilities is made in note 35 unless the possibility of a loss arising
is considered remote.
Classification of joint arrangements
Joint arrangements are classified as joint operations or joint ventures
according to the rights and obligations of the parties, as described in note
40k. When a joint arrangement has been structured through a separate
vehicle, consideration has been given to the legal form of the separate vehicle,
the terms of the contractual arrangement and when relevant, other facts and
circumstances. When the activities of an arrangement are primarily designed
for the provision of output to the parties and the parties are substantially the
only source of cash flows contributing to the continuity of the operations of
the arrangement, this indicates that the parties to the arrangement have
rights to the assets and obligations for the liabilities. Certain joint
arrangements that are structured through separate vehicles including
Collahuasi, Debswana and Namdeb are accounted for as joint operations.
These arrangements are primarily designed for the provision of output to
the parties sharing joint control, indicating that the parties have rights to
substantially all the economic benefits of the assets. The liabilities of the
arrangements are in substance satisfied by cash flows received from the
parties; this dependence indicates that the parties effectively have obligations
for the liabilities. It is primarily these facts and circumstances that give rise to
the classification as joint operations.
Changes in estimates
Due to the nature of Platinum in-process inventories being contained in weirs,
pipes and other vessels, physical counts only take place annually, except in
the Precious Metal Refinery where counts take place once every three years
(the latest being in 2010, the planned stock count in 2013 having been
deferred until 2014 due to disruption caused by industrial action).
Consequently, the Platinum business runs a theoretical metal inventory
system based on inputs, the results of previous physical counts and outputs.
Once the results of the physical count are finalised, the variance between the
theoretical count and actual count is investigated and recorded as a change
in estimate. During the year ended 31 December 2013, the change in estimate
following the annual physical count has had the effect of increasing the value
of inventory by $38 million (2012: $172 million), resulting in the recognition of
a post-tax gain of $28 million (2012: $124 million) in the period.
2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The accounting policies applied are consistent with those adopted
and disclosed in the Group financial statements for the year ended
31 December 2012, except for changes arising from the adoption of new
accounting pronouncements detailed below.
The following accounting amendments, standard and interpretation became
effective in the current reporting period:
• Amendments to IAS 1 Presentation of Financial Statements: Presentation
of Items of Other Comprehensive Income
• IAS 19 Employee Benefits revised 2011
• IFRS 13 Fair Value Measurement
• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
In addition, the Group has early adopted the following standards and
amendments, which are endorsed by the EU but not effective until
1 January 2014:
• IFRS 10 Consolidated Financial Statements
• IAS 27 Separate Financial Statements
• IFRS 11 Joint Arrangements
• IAS 28 Investments in Associates and Joint Ventures
• IFRS 12 Disclosure of Interests in Other Entities
The Group has not early adopted any other amendment, standard or
interpretation that has been issued but is not yet effective. It is expected that
where applicable, these standards and amendments will be adopted on each
respective effective date.
The nature and impact of each of the new amendments, standards or
interpretations is described below:
Amendments to IAS 1 Presentation of Financial Statements:
Presentation of Items of Other Comprehensive Income
The amendments to IAS 1 introduced the grouping of items presented in
other comprehensive income. Items that may be reclassified (or recycled) to
the income statement at a future point in time are now presented separately
from items that will not be reclassified. The amendment affected presentation
only and had no impact on the Group’s financial position or performance.
IAS 19 Employee Benefits revised 2011 (IAS 19R)
IAS 19R includes a number of amendments to the accounting for defined
benefit plans. The principal impact for the Group arises from the requirement
to replace the interest cost on the defined benefit obligation and the expected
return on plan assets, with a net interest cost/income based on the net
defined benefit liability/asset, calculated using the discount rate used to
measure the defined benefit obligation. This has increased the income
statement charge as the discount rate now applied to the assets is lower than
the expected return on plan assets. There is no effect on total comprehensive
income as the increased charge in the income statement is offset by a credit
in other comprehensive income.
The Group has applied the standard retrospectively in accordance with the
transitional provisions, and the 2012 results have been restated accordingly.
Further detail of the impact on the Group financial statements for the year
ended 31 December 2012 is set out in note 41.
IAS 19R introduces more extensive disclosure requirements particularly
relating to the characteristics, risks and amounts in the financial statements
related to defined benefit plans. The additional disclosure requirements are
reflected in note 28 to the Group financial statements.
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single framework for measuring fair value when such
measurements are required or permitted by other standards. The application
of IFRS 13 has not materially affected the fair value measurements carried
out by the Group. IFRS 13 also requires specific disclosures on fair values,
some of which replace existing disclosure requirements in other standards,
including IFRS 7 Financial Instruments: Disclosures. The additional
disclosure requirements are reflected within the relevant notes to the
Group financial statements.
Anglo American plc Annual Report 2013
159
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 sets out the requirements for disclosures relating to an entity’s
interests in subsidiaries (including related non-controlling interests), joint
arrangements, associates and structured entities. These disclosures are
reflected within the relevant notes to the Group financial statements.
A number of other amendments to accounting standards issued by the
International Accounting Standards Board also apply for the first time in
2013. These do not have a significant impact on the accounting policies,
methods of computation or presentation applied by the Group.
New IFRS accounting standards, amendments and
interpretations not yet adopted
The following new IFRS accounting standard not yet adopted is expected
to have a significant impact on the Group:
• IFRS 9 Financial Instruments will replace IAS 39 Financial Instruments:
Recognition and Measurement. The first and third phases of the new
standard, Classification and Measurement and Hedge Accounting, have
been published. These relate to the classification and measurement of
financial assets and liabilities, and replace the rule-based hedge accounting
requirements in IAS 39 to align the accounting more closely with risk
management activities, respectively. The second phase of the standard,
covering impairment, is not yet published. The effective date of the new
standard has been removed pending the completion of all phases of IFRS 9
(previously 1 January 2015).
The following new or amended IFRS accounting standards, amendments and
interpretations not yet adopted are not expected to have a significant impact
on the Group:
• Amendments to IAS 36 Impairment of Assets: Recoverable Amount
Disclosures for Non-Financial Assets revise disclosure requirements
related to the measurement of the recoverable amount and are effective
for annual reporting periods beginning on or after 1 January 2014.
• Amendments to IAS 39 Financial Instruments: Recognition and
Measurement: Novation of Derivatives and Continuation of Hedge
Accounting are effective for annual reporting periods beginning on or after
1 January 2014.
• Amendments to IAS 32 Financial Instruments: Presentation: Offsetting
Financial Assets and Financial Liabilities are effective for annual reporting
periods beginning on or after 1 January 2014.
• Amendments to IFRS 10, IFRS 12 and IAS 27 Separate Financial
Statements: Investment Entities are effective for annual reporting periods
beginning on or after 1 January 2014.
• IFRIC 21 Levies provides guidance on when to recognise a liability for a levy
imposed by a government. The interpretation applies to annual periods
beginning on or after 1 January 2014.
• Amendments to IAS 19 Employee Benefits: Defined Benefit Plans –
Employee Contributions provides additional guidance on the accounting for
contributions from employees or third parties set out in the formal terms of
a defined benefit plan. The amendment is effective for annual periods
beginning on or after 1 July 2014.
2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
continued
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
IFRIC 20 specifies the accounting for costs associated with waste removal
(stripping) during the production phase of a surface mine. When the benefit
from the stripping activity is realised in the current period, the stripping costs
are accounted for as the cost of inventory. When the benefit is the improved
access to ore in future periods, the costs are recognised as a non-current
asset, if certain criteria are met. After initial recognition, the stripping activity
asset is depreciated on a systematic basis (unit of production method) over
the expected useful life of the identified component of the orebody that
becomes more accessible as a result of the stripping activity.
There are two key changes to the Group’s previous accounting policy as
a result of the adoption of IFRIC 20. Firstly, the initial recognition of the
stripping asset and subsequent depreciation is determined by reference to
components of the orebody rather than by reference to the entire operation.
Secondly, the subsequent remeasurement of the asset is recognised as
depreciation on a unit of production basis, rather than as a charge to
operating costs based on the expected strip ratio.
The Group has applied IFRIC 20 retrospectively in accordance with the
transitional provisions, and the 2012 results have been restated accordingly.
Upon adoption of IFRIC 20, the stripping assets on the balance sheet at
1 January 2012 were assessed and it was determined that elements of the
assets did not relate to identifiable components of the orebodies. These
elements of the assets have been derecognised and recorded against
opening retained earnings at 1 January 2012.
The adoption of IFRIC 20 has resulted in increased capitalisation of waste
stripping costs and a reduction in cost of sales in 2012. Further detail of the
impact on the Group financial statements for the year ended 31 December
2012 is set out in note 41.
IFRS 10 Consolidated Financial Statements and IAS 27 Separate
Financial Statements
IFRS 10 replaces the parts of the previously existing IAS 27 that dealt with
consolidated financial statements. The new standard changes the definition
of control such that an investor controls an investee when it is exposed, or has
rights, to variable returns from its involvement with the investee and has the
ability to control those returns through its power over the investee. The
adoption of IFRS 10 has had no impact on the consolidation of investments
held by the Group.
IFRS 11 Joint Arrangements and IAS 28 Investments in Associates
and Joint Ventures
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-
controlled Entities – Non-monetary Contributions by Venturers. The new
standard changes the classifications for joint arrangements and removes the
option to account for joint ventures using proportionate consolidation. Under
IFRS 11, investments in joint arrangements are classified as either joint
ventures or joint operations based on the rights and obligations of the parties
to the arrangement. In a joint venture, the parties sharing joint control of the
arrangement have rights to the net assets and must account for their interests
in the arrangement using the equity method. In a joint operation, the parties
have rights to the assets and obligations for the liabilities and must account for
the assets and liabilities, revenues and expenses for which they have rights or
obligations including their share of such items held or incurred jointly.
The application of this standard has resulted in the newly formed joint
venture, Lafarge Tarmac Holdings Limited, and the existing joint venture in
Brazil, LLX Minas-Rio Logística Comercial Exportadora SA, being accounted
for under the equity method. No other material joint arrangements within the
Group were affected.
The Group has applied IFRS 11 retrospectively in accordance with the
transitional provisions, and the 2012 results have been restated accordingly.
There is no impact on the net assets or underlying earnings of the Group.
Further detail of the impact on the Group financial statements for the year
ended 31 December 2012 is set out in note 41.
160
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION
The Group’s segments are aligned to the structure of business units based around core commodities. Each business unit has a management team that is
accountable to the Chief Executive. In the instance of Copper, Nickel and Niobium and Phosphates, the same management team is responsible for the
management of all three business units.
The Kumba Iron Ore, Iron Ore Brazil and Samancor business units have been aggregated as the Iron Ore and Manganese segment on the basis of the ultimate
product produced (ferrous metals).
The Other Mining and Industrial segment includes the Lafarge Tarmac joint venture and other Tarmac businesses, and also included Amapá until it was
disposed of in November 2013. Until November 2012, this segment also included Scaw South Africa. Following a Group reorganisation in the second half of
2013, and to align to the way the businesses are now managed, the Niobium and Phosphates business is reported as a separate segment, having previously
been reported in the Other Mining and Industrial segment. Comparatives have been reclassified to align with current year presentation.
On 16 August 2012, the Group acquired a controlling interest in De Beers Société Anonyme (De Beers) (Diamonds segment). Until this date De Beers was
accounted for as an associate of the Group. From 16 August 2012, De Beers ceased to be an associate and has been accounted for as a subsidiary. For details
of this acquisition see note 30.
The Group Management Committee evaluates the financial performance of the Group and its segments principally with reference to underlying operating
profit. Underlying operating profit is operating profit before special items and remeasurements and includes the Group’s attributable share of associates’
and joint ventures’ operating profit before special items and remeasurements. Underlying EBITDA is underlying operating profit before depreciation and
amortisation in subsidiaries and joint operations and includes attributable share of underlying operating profit before depreciation and amortisation of
associates and joint ventures.
Segment revenue includes the Group’s attributable share of associates’ and joint ventures’ revenue. Segments predominantly derive revenue as follows –
Iron Ore and Manganese: iron ore, manganese ore and alloys; Metallurgical Coal: metallurgical coal; Thermal Coal: thermal coal; Copper and Nickel: base
metals; Niobium and Phosphates: niobium and phosphates; Platinum: platinum group metals; Diamonds: rough and polished diamonds; and Other Mining and
Industrial: heavy building materials, until November 2013, iron ore and until November 2012, steel products.
The Exploration segment includes the cost of the Group’s exploration activities across all segments.
The segment results are stated after elimination of inter-segment transactions and include an allocation of corporate costs.
Segment results
See note 40a for the Group’s accounting policy on revenue recognition.
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
Other Mining and Industrial
Exploration
Corporate Activities and Unallocated Costs
Segment measure
Reconciliation:
Less: associates and joint ventures
Include: operating special items and remeasurements
Statutory measure
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
Other Mining and Industrial
Exploration
Corporate Activities and Unallocated Costs
Less: associates and joint ventures
Revenue
2012
restated(1)
6,403
3,889
3,447
5,122
336
770
5,489
4,028
3,296
–
5
32,785
(4,105)
–
28,680
2013
6,517
3,396
3,004
5,392
136
726
5,688
6,404
1,795
–
5
33,063
(3,721)
–
29,342
Underlying operating
profit/(loss)
2013
3,119
46
541
1,739
(44)
150
464
1,003
(13)
(207)
(178)
6,620
(452)
(3,761)
2,407
2012
restated(1)
3,011
405
793
1,736
26
169
(120)
474
168
(206)
(203)
6,253
(760)
(7,093)
(1,600)
Depreciation and amortisation
Underlying EBITDA
2013
271
566
194
663
7
26
584
448
94
2
45
2,900(2)
(262)
2,638
2012
restated(1)
251
472
179
552
24
27
700
238
121
–
43
2,607(2)
(233)
2,374
2013
3,390
612
735
2,402
(37)
176
1,048
1,451
81
(205)
(133)
9,520
(714)
8,806
2012
restated(1)
3,262
877
972
2,288
50
196
580
712
289
(206)
(160)
8,860
(993)
7,867
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
In addition $131 million (2012: $41 million) of depreciation and amortisation charges arising due to the fair value uplift of the Group’s pre-existing 45% shareholding in De Beers and nil
(2012: $70 million) of accelerated depreciation arising from the cessation of Loma de Níquel have been recorded within operating special items and remeasurements (see note 6),
and $100 million (2012: $81 million) of pre-commercial production depreciation has been capitalised.
Anglo American plc Annual Report 2013
161
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION continued
Associates’ and joint ventures’ results by segment
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Platinum
Diamonds
Other Mining and Industrial
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Platinum
Diamonds
Other Mining and Industrial
Associates’ and joint ventures’
revenue
Associates’ and joint ventures’
underlying operating
profit/(loss)(1)
Share of net income/(loss)
2013
874
319
817
228
89
1,394
3,721
2012
restated(2)
831
315
970
231
1,675
83
4,105
2013
205
44
231
(19)
(21)
12
452
2012
restated(2)
103
111
355
(63)
249
5
760
2013
91
27
135
(30)
(35)
(20)
168
2012
restated(2)
20
80
248
(94)
163
4
421
Associates’ and joint ventures’
depreciation and amortisation
Associates’ and joint ventures’
underlying EBITDA
2013
48
15
71
35
5
88
262
2012
restated(2)
50
14
54
42
68
5
233
2013
253
59
302
16
(16)
100
714
2012
restated(2)
153
125
409
(21)
317
10
993
(1) Associates’ and joint ventures’ underlying operating profit/(loss) is the Group’s attributable share of associates’ and joint ventures’ revenue less operating costs before special items
and remeasurements.
(2) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The reconciliation of associates’ and joint ventures’ underlying operating profit to ‘Share of net income from associates and joint ventures’ is as follows:
US$ million
Associates’ and joint ventures’ underlying operating profit
Net finance costs
Income tax expense
Non-controlling interests
Share of net income from associates and joint ventures (before special items and remeasurements)
Special items and remeasurements
Special items and remeasurements tax
Non-controlling interests on special items and remeasurements
Share of net income from associates and joint ventures
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Underlying EBITDA is reconciled to underlying operating profit and to ‘Profit from operations, associates and joint ventures’ as follows:
US$ million
Underlying EBITDA
Depreciation and amortisation: subsidiaries and joint operations
Depreciation and amortisation: associates and joint ventures
Underlying operating profit
Operating special items and remeasurements
Non-operating special items and remeasurements
Associates’ and joint ventures’ net special items and remeasurements
Share of associates’ and joint ventures’ net finance costs, tax and non-controlling interests
Profit from operations, associates and joint ventures
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
2013
452
(36)
(158)
(15)
243
(80)
3
2
168
2013
9,520
(2,638)
(262)
6,620
(3,761)
(469)
(75)
(209)
2,106
2012
restated(1)
760
(75)
(197)
(6)
482
(57)
(3)
(1)
421
2012
restated(1)
8,860
(2,374)
(233)
6,253
(7,093)
1,396
(61)
(278)
217
162
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION continued
Other non-cash expenses
In addition to depreciation and amortisation, other non-cash expenses include equity settled share-based payment charges and amounts in respect of
provisions, excluding amounts recorded within special items. Significant other non-cash expenses included within underlying operating profit are as follows:
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
Other Mining and Industrial
Exploration
Corporate Activities and Unallocated Costs
Segment assets and liabilities
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
Other Mining and Industrial
Exploration
Corporate Activities and Unallocated Costs
Other assets and liabilities
Investments in associates and joint ventures
Financial asset investments
Deferred tax assets/(liabilities)
Derivative financial assets/(liabilities)
Cash and cash equivalents
Other non-operating assets/(liabilities)
Borrowings
Other provisions for liabilities and charges
Assets/(liabilities) classified as held for sale
2013
73
149
65
142
16
6
56
42
5
1
70
625
2012
31
140
30
98
25
(3)
81
52
(56)
3
70
471
Segment assets(1)
Segment liabilities(2) Net segment assets/(liabilities)
2013
11,502
5,335
2,148
9,549
1,695
955
9,579
12,688
86
8
492
54,037
4,612
1,465
1,364
674
7,704
1,309
–
–
–
71,165
2012
restated(3)
9,603
6,078
2,726
9,557
2,613
806
11,490
14,392
105
8
424
57,802
3,162
2,491
1,204
848
9,080
1,400
–
–
3,150(4)
79,137
2013
(468)
(705)
(726)
(1,169)
(98)
(101)
(957)
(1,337)
(61)
(5)
(612)
(6,239)
–
–
(4,657)
(1,511)
–
(1,733)
(17,848)
(1,813)
–
(33,801)
2012
restated(3)
(465)
(859)
(761)
(1,126)
(104)
(115)
(1,071)
(1,468)
(40)
(4)
(709)
(6,722)
–
–
(6,051)
(1,081)
–
(1,651)
(17,635)
(1,340)
(919)(4)
(35,399)
2013
11,034
4,630
1,422
8,380
1,597
854
8,622
11,351
25
3
(120)
47,798
4,612
1,465
(3,293)
(837)
7,704
(424)
(17,848)
(1,813)
–
37,364
2012
restated(3)
9,138
5,219
1,965
8,431
2,509
691
10,419
12,924
65
4
(285)
51,080
3,162
2,491
(4,847)
(233)
9,080
(251)
(17,635)
(1,340)
2,231(4)
43,738
(1) Segment assets are operating assets and consist of intangible assets of $4,083 million (2012: $4,569 million), property, plant and equipment of $41,505 million (2012: $44,731 million),
biological assets of $16 million (2012: $19 million), environmental rehabilitation trusts of $348 million (2012: $392 million), retirement benefit assets of $191 million (2012: $176 million),
inventories of $4,789 million (2012: $5,002 million) and operating receivables of $3,105 million (2012: $2,913 million).
(2) Segment liabilities are operating liabilities and consist of non-interest bearing current liabilities of $3,392 million (2012: $3,709 million), environmental restoration and decommissioning
provisions of $1,643 million (2012: $1,604 million) and retirement benefit obligations of $1,204 million (2012: $1,409 million).
(3) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(4) Balances for 2012 relate to Amapá and Tarmac Quarry Materials.
Product analysis
Revenue by product
US$ million
Iron ore
Manganese ore and alloys
Metallurgical coal
Thermal coal
Copper
Nickel
Niobium
Phosphates
Platinum
Palladium
Rhodium
Diamonds
Heavy building materials
Steel products
Other
2013
5,365
874
2,610
3,802
5,253
461
182
544
3,586
1,052
316
6,391
1,695
–
932
33,063
2012
5,508
831
3,048
4,287
5,038
678
173
597
3,441
906
389
4,027
2,171
798
893
32,785
Anglo American plc Annual Report 2013
163
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION continued
Geographical analysis
Revenue by destination
The Group’s geographical analysis of segment revenue allocated based on the country in which the customer is located is as follows:
US$ million
South Africa
Other Africa
Brazil
Chile
Other South America
North America
Australia
China
India
Japan
Other Asia
United Kingdom (Anglo American plc’s country of domicile)
Other Europe
Revenue and underlying operating profit by origin
The origin of the revenue and underlying operating profit is the location of the operation generating the revenue and operating profit.
2013
2,474
1,201
1,019
1,692
32
1,084
277
6,469
2,505
3,769
3,252
3,697
5,592
33,063
2012
3,115
715
1,093
1,241
46
1,274
340
5,927
2,544
4,049
3,595
3,781
5,065
32,785
US$ million
South Africa
Other Africa
Brazil
Chile
Other South America
North America
Australia and Asia
Europe
Revenue
2012
14,592
3,256
1,274
5,122
1,131
559
4,616
2,235
32,785
2013
14,132
4,544
965
5,392
817
882
4,255
2,076
33,063
Underlying operating
profit/(loss)
2013
4,189
532
75
1,849
185
(129)
238
(319)
6,620
2012
restated(1)
3,374
437
200
1,913
304
(138)
465
(302)
6,253
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Segment assets and liabilities by location
Segment assets
Segment liabilities
Net segment assets
US$ million
South Africa
Other Africa
Brazil
Chile
Other South America
North America
Australia and Asia
Europe
2013
17,092
7,783
9,964
8,847
653
1,954
5,534
2,210
54,037
2012
restated(1)
20,194
8,313
8,833
8,589
717
2,500
5,850
2,806
57,802
2013
(2,654)
(221)
(216)
(1,131)
(55)
(262)
(724)
(976)
(6,239)
2012
restated(1)
(2,922)
(202)
(228)
(1,094)
(55)
(298)
(819)
(1,104)
(6,722)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Non-current segment assets by location
Non-current segment assets are non-current operating assets and consist of intangible assets and property, plant and equipment.
US$ million
South Africa
Other Africa
Brazil
Chile
Other South America
North America
Australia and Asia
United Kingdom (Anglo American plc’s country of domicile)
Other Europe
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
2013
14,438
7,562
9,748
7,716
598
1,692
4,810
1,234
47,798
2013
13,542
6,945
9,650
7,472
556
1,764
4,260
1,257
142
45,588
2012
restated(1)
17,272
8,111
8,605
7,495
662
2,202
5,031
1,702
51,080
2012
restated(1)
16,492
8,029
8,424
7,364
623
2,205
4,687
1,325
151
49,300
164
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
4. OPERATING PROFIT/(LOSS) FROM SUBSIDIARIES AND JOINT OPERATIONS
US$ million
Group revenue
Cost of sales
Gross profit
Selling and distribution costs
Administrative expenses
Other gains and losses (see below)
Exploration expenditure
Operating profit/(loss) from subsidiaries and joint operations
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
US$ million
Operating profit/(loss) is stated after charging/(crediting):
Depreciation of property, plant and equipment (note 12)(2)
Amortisation of intangible assets (note 11)(3)
Rentals under operating leases
Exploration expenditure
Evaluation expenditure
Research and development expenditure
Operating special items (note 6)
Employee costs (note 27)
Adjustment due to provisional pricing(4)
Royalties(5)
Other gains and losses comprise:
Operating remeasurements (note 6)
Other fair value (losses)/gains on derivatives – realised
Foreign exchange gains on other monetary items
Other
Total other gains and losses
2013
29,342
(22,336)
7,006
(1,780)
(2,214)
(398)
(207)
2,407
2013
2,579
59
142
207
326
103
3,211
4,834
88
629
(550)
(21)
182
(9)
(398)
2012
restated(1)
28,680
(25,835)
2,845
(2,023)
(2,124)
(92)
(206)
(1,600)
2012
restated(1)
2,343
31
181
206
525
80
6,977
5,021
(14)
554
(116)
9
12
3
(92)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
In addition $111 million (2012: $35 million) of depreciation arising due to the fair value uplift of the Group’s pre-existing 45% shareholding in De Beers and nil (2012: $70 million) of accelerated
depreciation have been recorded within operating special items and remeasurements (see note 6) and $100 million (2012: $81 million) of pre-commercial production depreciation has
been capitalised.
In addition $20 million (2012: $6 million) of amortisation arising due to the fair value uplift of the Group’s pre-existing 45% shareholding in De Beers has been included within operating
remeasurements.
(3)
(4) Provisionally priced contracts resulted in a total (realised and unrealised) loss in revenue of $76 million (2012: gain $37 million) and total (realised and unrealised) loss in operating costs
of $12 million (2012: $23 million).
(5) Excludes those royalties which meet the definition of income tax on profit and accordingly have been accounted for as taxes.
Exploration and evaluation expenditure
See note 40j for the Group’s accounting policy on exploration and evaluation expenditure.
US$ million
By commodity
Iron ore
Metallurgical coal
Thermal coal
Copper
Nickel
Niobium and phosphates
Platinum group metals
Diamonds
Central exploration activities
Exploration expenditure(1)
Evaluation expenditure(2)
2013
2012
24
19
14
31
22
6
2
53
36
207
23
18
14
39
32
2
4
23
51
206
2013
69
39
21
112
8
16
15
46
–
326
2012
89
68
33
263
32
1
24
15
–
525
(1) Exploration for mineral resources other than that occurring at existing operations and projects.
(2) Evaluation of mineral resources relating to projects in the conceptual or pre-feasibility stage or further evaluation of mineral resources at existing operations.
Anglo American plc Annual Report 2013
165
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
5. OPERATING PROFIT AND UNDERLYING EARNINGS BY SEGMENT
The following table analyses operating profit (including attributable share of associates’ and joint ventures’ operating profit) by segment and reconciles it to
underlying earnings by segment.
Following a Group reorganisation in the second half of 2013, and to align to the way the businesses are now managed, the Niobium and Phosphates business is
reported as a separate segment, having previously been reported in the Other Mining and Industrial segment. Comparatives have been reclassified to align
with current year presentation.
Operating profit/(loss) before special items and remeasurements includes attributable share of associates’ and joint ventures’ operating profit before special
items and remeasurements which is reconciled to ‘Share of net income from associates and joint ventures’ in note 3.
Underlying earnings is an alternative earnings measure, which the directors consider to be a useful additional measure of the Group’s performance.
Underlying earnings is profit for the financial year attributable to equity shareholders of the Company before special items and remeasurements and is
therefore presented after net finance costs, income tax expense and non-controlling interests. For a reconciliation from ‘Loss for the financial year attributable
to equity shareholders of the Company’ to ‘Underlying earnings for the financial year’, see note 9.
Operating
profit/(loss)
before special
items and
remeasure-
ments
Operating
special
items and
remeasure-
ments
(note 6)
Operating
profit/(loss)
after special
items and
remeasure-
ments
Net finance
costs, income
tax expense
and non-
controlling
interests
3,119
46
541
1,739
(44)
150
464
1,003
(13)
(207)
435
771
244
337
1,028
6
522
330
162
–
2,684
(725)
297
1,402
(1,072)
144
(58)
673
(175)
(207)
(1,994)
14
(144)
(936)
(10)
(58)
(177)
(471)
11
17
2013
Underlying
earnings
1,125
60
397
803
(54)
92
287
532
(2)
(190)
(178)
6,620
6
3,841
(184)
2,779
(199)
(3,947)
(377)
2,673
US$ million
Iron Ore and
Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and
Phosphates
Platinum
Diamonds
Other Mining and
Industrial
Exploration
Corporate Activities
and Unallocated Costs
Operating
profit/(loss)
before special
items and
remeasure-
ments
Operating
special
items and
remeasure-
ments
(note 6)
Operating
profit/(loss)
after special
items and
remeasure-
ments
Net finance
costs, income
tax expense
and non-
controlling
interests
3,011
405
793
1,736
26
169
(120)
474
168
(206)
(203)
6,253
5,139
365
(1)
(9)
184
4
921
456
24
–
68
7,151
(2,128)
40
794
1,745
(158)
165
(1,041)
18
144
(206)
(271)
(898)
(1,965)
(130)
(270)
(795)
(16)
(62)
(105)
(185)
(47)
11
171
(3,393)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
2012
restated(1)
Underlying
earnings
1,046
275
523
941
10
107
(225)
289
121
(195)
(32)
2,860
6. SPECIAL ITEMS AND REMEASUREMENTS
Special items are those items of financial performance that the Group believes should be separately disclosed on the face of the income statement to assist
in the understanding of the underlying financial performance achieved by the Group. Such items are material by nature or amount to the year’s results and
require separate disclosure in accordance with IAS 1 paragraph 97. Special items that relate to the operating performance of the Group are classified as
operating special items and principally comprise impairment charges. Non-operating special items include profits and losses on disposals of investments and
businesses as well as certain adjustments relating to business combinations.
Remeasurements comprise other items which the Group believes should be reported separately to aid an understanding of the underlying financial
performance of the Group. This category includes:
• Unrealised gains and losses on ‘non-hedge’ derivative instruments open at the year end (in respect of future transactions) and the reversal of the historical
marked to market value of such instruments settled in the year. Where the underlying transaction is recorded in the income statement, the realised gains or
losses are recorded in underlying earnings in the same year as the underlying transaction for which such instruments provide an economic, but not formally
designated, hedge. If the underlying transaction is recorded in the balance sheet, for example capital expenditure, the realised amount remains in
remeasurements on settlement of the derivative. Such amounts are classified in the income statement as operating when the underlying exposure is in
respect of the operating performance of the Group and otherwise as financing.
• Foreign exchange impacts arising in US dollar functional currency entities where tax calculations are generated based on local currency financial information
and hence deferred tax is susceptible to currency fluctuations. Such amounts are included within income tax expense.
• The remeasurement and subsequent depreciation of a previously held equity interest as a result of a business combination.
166
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
6. SPECIAL ITEMS AND REMEASUREMENTS continued
US$ million
Impairment of Minas-Rio
Impairment of Barro Alto
Platinum operations
Impairment of Foxleigh
Impairment of Michiquillay
Impairment of Thermal Coal operations
Cessation of Loma de Níquel
Other impairments and related charges
Onerous contract provisions
Reversal of De Beers inventory uplift
Restructuring costs
Operating special items
Operating remeasurements
Operating special items and remeasurements
Disposal of Amapá
Exit from Pebble
Loss on formation of Lafarge Tarmac joint venture
Atlatsa refinancing (note 36)
Kumba Envision Trust
Other
Non-operating special items
Non-operating remeasurement – net gain on acquisition of De Beers
Non-operating special items and remeasurements
Financing remeasurements
Total special items and remeasurements before tax and
non-controlling interests
Special items and remeasurements tax
Non-controlling interests on special items and remeasurements
Net total special items and remeasurements attributable to equity
shareholders of the Company
Subsidiaries
and joint
operations
–
(1,012)
(379)
(331)
(337)
(243)
–
(172)
(434)
(126)
(177)
(3,211)
(550)
(3,761)
(175)
(311)
(55)
(37)
(54)
163
(469)
–
(469)
(130)
(4,360)
587
214
Associates
and joint
ventures(2)
–
–
–
–
–
–
–
–
–
–
(80)
(80)
–
(80)
–
–
–
–
–
–
–
–
–
–
(80)
3
2
2013
Total
–
(1,012)
(379)
(331)
(337)
(243)
–
(172)
(434)
(126)
(257)
(3,291)
(550)
(3,841)
(175)
(311)
(55)
(37)
(54)
163
(469)
–
(469)
(130)
(4,440)
590
216
Subsidiaries
and joint
operations
(4,960)
–
(860)
–
–
–
(159)
(168)
(386)
(421)
(23)
(6,977)
(116)
(7,093)
(404)
–
(135)
–
(77)
22
(594)
1,990
1,396
(89)
(5,786)
1,113
404
(3,559)
(75)
(3,634)
(4,269)
Associates
and joint
ventures(2)
–
–
–
–
–
–
–
(62)
–
–
–
(62)
4
(58)
–
–
–
–
–
–
–
–
–
1
(57)
(3)
(1)
(61)
2012
restated(1)
Total
(4,960)
–
(860)
–
–
–
(159)
(230)
(386)
(421)
(23)
(7,039)
(112)
(7,151)
(404)
–
(135)
–
(77)
22
(594)
1,990
1,396
(88)
(5,843)
1,110
403
(4,330)
(1) The non-operating remeasurement related to the net gain on acquisition of De Beers has been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Relates to the Diamonds, Other Mining and Industrial and Thermal Coal segments (2012: Iron Ore and Manganese, Platinum and, until 16 August, Diamonds).
Operating special items
Barro Alto
The Barro Alto nickel project produced first metal in 2011 but its ramp-up has been significantly affected by issues in the kilns and furnaces. In order to
eliminate uncertainties, most notably as a result of furnace design flaws, and enable attainment of the nominal capacity of the operation, a redesign and rebuild
of the furnaces is planned to take place. The cost of the existing furnaces of $211 million has been written-off and the impact of lost production during the
rebuild process (together with the associated capital expenditure) as well as a decline in nickel prices and updated operational planning has resulted in a
further impairment of $801 million to the asset’s carrying value. Consequently a total impairment charge of $1,012 million has been recorded. The post-tax
impairment charge is $724 million.
Platinum portfolio review
Platinum announced in August 2013 that it had completed the section 189 consultations on its proposals to create a sustainable, competitive and profitable
platinum business for the long term benefit of all its stakeholders. Following the conclusion of these consultations, the proposals became effective. As a result,
Khuseleka 2 shaft and Khomanani 1 and 2 shafts have been placed on long term care and maintenance as part of the consolidation of the Rustenburg
operations into three operating mines, and the Union Mine North declines have been closed. As the Group no longer expects to receive future economic
benefits from these operations they have been fully impaired, resulting in a charge of $379 million. The charge after tax and non-controlling interests is
$232 million. In 2012 an impairment charge of $860 million was recognised in relation to certain Platinum projects and other assets not in use, that were not
considered economically viable.
Foxleigh
An impairment charge of $331 million has been recorded in relation to Foxleigh (Metallurgical Coal), principally driven by a decline in metallurgical coal prices.
The post-tax impairment charge is $232 million.
Michiquillay
The Group acquired the Michiquillay copper project in northern Peru in 2007. To date, $337 million in costs have been capitalised, primarily representing the
costs of acquisition. In 2013, following a review of the concept level study, the Group decided not to progress the study to the pre-feasibility stage in its existing
form, and engaged with the Peruvian government to agree a temporary suspension of acquisition payments to allow for a full review of the conceptual study.
In view of the uncertainty in relation to the implementation of the project and its outcome, costs capitalised to date are no longer considered recoverable and
have been fully impaired, resulting in a charge of $337 million. No tax arises on the impairment.
Thermal Coal
This relates to an impairment of $143 million in relation to the Isibonelo operation, reflecting management’s revised expectation of the operation’s future
profitability under a long term coal supply contract, and an impairment of $100 million at the Kleinkopje operation, driven primarily by a decline in export
thermal coal prices. The total post-tax impairment charge is $177 million.
Anglo American plc Annual Report 2013
167
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
6. SPECIAL ITEMS AND REMEASUREMENTS continued
Onerous contract provisions
The charge of $434 million in relation to onerous contracts principally reflects a provision increase of $393 million for coal supply agreements inherited on
acquisition of Callide in 2000. The pricing in the agreements, which extend to 2031, is significantly below market rates resulting in the unavoidable costs of
meeting the obligations exceeding the economic benefit expected to be received from the contract. The increased provision reflects higher forecast
operating expenditure. The post-tax charge in relation to onerous contract provisions is $341 million.
Reversal of De Beers inventory uplift
Inventory held by De Beers at the date of acquisition (16 August 2012) was required to be recognised at fair value under IFRS. This resulted in negligible
margins being realised upon the subsequent sale of inventory held at the acquisition date. The reversal of fair value uplifts on the remaining inventory sold in
2013 of $126 million (2012: $421 million) has been excluded from the Group’s underlying earnings so as not to distort the operating margins of De Beers and
to provide more useful information about the performance of the Group.
Restructuring costs
Restructuring costs principally comprise charges of $146 million relating to the implementation of the Platinum portfolio review and $64 million related to
integration costs incurred by the Lafarge Tarmac joint venture following its formation. Restructuring costs after tax and non-controlling interests is
$167 million.
2012
In 2012, significant operating special items included the impairment of the Minas-Rio iron ore project (Iron Ore Brazil), impairments of certain Platinum
projects and other Platinum assets not in use, a charge arising at Loma de Níquel due to the cancellation of its mining concessions in November 2012, charges
relating to onerous contract provisions, principally in relation to Callide, and the reversal of fair value uplifts on inventory sold by De Beers.
Operating remeasurements
Operating remeasurements reflect a net loss of $550 million (2012: $112 million) principally in respect of derivatives related to capital expenditure in Iron Ore
Brazil. Derivatives which have been realised during the period had a cumulative net operating remeasurement loss since their inception of $137 million
(2012: loss of $71 million).
In addition, operating remeasurements includes a $131 million depreciation and amortisation charge (2012: $41 million) arising due to the fair value uplift on
the pre-existing 45% shareholding of De Beers, which was required on acquisition of a controlling stake.
Non-operating special items
A loss of $175 million ($124 million after non-controlling interests) has been recognised in the year relating to the sale of Amapá in November 2013 (Other
Mining and Industrial). In December 2012, Amapá was reclassified to held for sale and recognised at fair value less costs to sell, resulting in a loss of
$404 million being recognised. For further details see note 31.
In December 2013, the Group withdrew from the Pebble copper project in Alaska. The Group’s 50% interest in the project was written-off in full, resulting in
a charge of $311 million, including exit costs. No tax arises on the exit from Pebble.
A loss of $55 million has been recognised on the formation of the Lafarge Tarmac joint venture in January 2013 (Other Mining and Industrial)
(2012: $135 million). The loss in the current year primarily relates to the transfer to the income statement of $62 million cumulative exchange losses previously
recognised in equity, partially offset by a net gain of $7 million arising on the formation of the joint venture and the associated sale of certain of Tarmac Quarry
Materials’ operations. For further details see note 30.
The Kumba Envision Trust charge of $54 million (2012: $77 million) relates to Kumba’s broad based employee share scheme provided solely for the benefit
of non-managerial Historically Disadvantaged South African employees who do not participate in other Kumba share schemes.
Other non-operating special items principally comprise a gain of $44 million on deferred proceeds following payment received in the year in respect of
undeveloped coal assets in Australia (Metallurgical Coal) which the Group disposed of in 2010, and a gain on disposal of the Group’s 16.79% effective interest
in Palabora Mining Company Limited, a company listed on the Johannesburg Stock Exchange (JSE), in July 2013. Other non-operating special items, after tax
and non-controlling interests, are a gain of $154 million.
Financing remeasurements
Financing remeasurements reflect a net loss of $130 million (2012: net loss of $88 million) and relate to an embedded interest rate derivative, derivatives
relating to debt and other financing remeasurements.
Special items and remeasurements tax
Special items and remeasurements tax amounted to a credit of $590 million (2012: credit of $1,110 million). This includes a one-off tax charge of $188 million
offset by a tax credit on special items and remeasurements of $923 million (2012: credit of $377 million) and a tax remeasurement charge of $145 million
(2012: charge of $189 million). The tax charge of $188 million relates principally to a settlement reached in the current year between the South African
Revenue Service and Rustenburg Platinum Mines Limited in respect of certain previously unresolved historical tax matters. The total amount payable in terms
of the settlement agreement is $324 million and has been fully provided for.
The total tax credit relating to subsidiaries and joint operations of $587 million (2012: credit of $1,113 million) comprises a current tax charge of $159 million
(2012: charge of $8 million) offset by a deferred tax credit of $746 million (2012: credit of $1,121 million).
168
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
7. NET FINANCE COSTS
See note 40b for the Group’s accounting policy on borrowing costs.
Net finance costs are presented net of hedges for respective interest bearing and foreign currency borrowings.
The weighted average capitalisation rate applied to qualifying capital expenditure was 4.79% (2012: 4.10%).
US$ million
Investment income
Interest income from cash and cash equivalents
Other interest income
Net interest income on defined benefit arrangements
Dividend income from financial asset investments
Less: interest income capitalised
Total investment income
Interest expense
Interest and other finance expense
Interest payable on convertible bond
Unwinding of discount on convertible bond
Net interest cost on defined benefit arrangements
Unwinding of discount relating to provisions and other liabilities
Less: interest expense capitalised
Total interest expense
Other financing gains/(losses)
Net foreign exchange losses
Net fair value gains/(losses) on fair value hedges
Other net fair value (losses)/gains
Total other financing gains/(losses)
Net finance costs before remeasurements
Remeasurements (note 6)
Net finance costs after remeasurements
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
8. INCOME TAX EXPENSE
See note 40c for the Group’s accounting policy on tax.
a) Analysis of charge for the year
US$ million
United Kingdom corporation tax credit
South Africa tax
Other overseas tax
Prior year adjustments
Current tax(2)
Deferred tax
Income tax expense before special items and remeasurements
Special items and remeasurements tax (note 6)
Income tax expense
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
Includes royalties which meet the definition of income tax and are in addition to royalties recorded in operating costs.
2013
113
134
13
18
278
(7)
271
(731)
–
–
(74)
(106)
(911)
327
(584)
(21)
81
(23)
37
(276)
(130)
(406)
2012
restated(1)
153
208
9
54
424
(6)
418
(675)
(25)
(25)
(63)
(114)
(902)
272
(630)
(90)
(24)
27
(87)
(299)
(89)
(388)
2013
(1)
863
692
32
1,586
275
1,861
(587)
1,274
2012
restated(1)
(12)
802
605
61
1,456
50
1,506
(1,113)
393
Anglo American plc Annual Report 2013
169
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
8. INCOME TAX EXPENSE continued
b) Factors affecting tax charge for the year
The effective tax rate for the year of 74.9% (2012: (229.8)%) is higher (2012: lower) than the applicable weighted average statutory rate of corporation tax in
the United Kingdom of 23.25% (2012: 24.5%). The reconciling items, excluding the impact of associates and joint ventures, are:
US$ million
Profit/(loss) before tax
Less: share of net income from associates and joint ventures
Profit/(loss) before tax (excluding associates and joint ventures)
Tax on profit/(loss) (excluding associates and joint ventures) calculated at United Kingdom corporation tax rate of 23.25%
(2012: 24.5%)
Tax effects of:
Items non-taxable/deductible for tax purposes
Exploration expenditure
Non-taxable/deductible net foreign exchange (gains)/losses
Non-taxable net interest income
Other non-deductible expenses
Other non-taxable income
Temporary difference adjustments
Current year losses not recognised
Recognition of losses not previously recognised
Utilisation of losses not previously recognised
Write-off of losses previously recognised
Adjustment in deferred tax due to change in tax rate
Other temporary differences
Special items and remeasurements
Other adjustments
Secondary tax on companies and dividend withholding taxes
Effect of differences between local and United Kingdom tax rates
Prior year adjustments to current tax
Other adjustments
Income tax expense
2013
1,700
(168)
1,532
356
2012
restated(1)
(171)
(421)
(592)
(145)
22
(16)
(9)
110
(105)
25
(6)
(8)
29
14
(28)
427
242
173
31
17
1,274
43
7
(26)
53
(61)
86
(69)
–
–
37
(77)
305
23
70
61
86
393
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
IAS 1 requires income from associates and joint ventures to be presented net of tax on the face of the income statement. Associates’ and joint ventures’ tax
is therefore not included within the Group’s income tax expense. Associates’ and joint ventures’ tax included within ‘Share of net income from associates
and joint ventures’ for the year ended 31 December 2013 is $155 million (2012: $200 million). Excluding special items and remeasurements this becomes
$158 million (2012: $197 million).
The effective tax rate before special items and remeasurements including attributable share of associates’ and joint ventures’ tax for the year ended
31 December 2013 was 32.0%. This is higher than the equivalent effective tax rate of 29.0% for the year ended 31 December 2012 due to the impact of
various prior year adjustments and the remeasurement of certain withholding tax provisions across the Group. In future periods it is expected that the effective
tax rate will remain above the United Kingdom statutory tax rate.
c) Tax amounts included in total comprehensive income
An analysis of tax by individual item presented in the Consolidated statement of comprehensive income is presented below:
US$ million
Tax credit/(charge) on items recognised directly in equity that may subsequently be reclassified to the income statement
Net loss/(gain) on revaluation of available for sale investments
Net loss/(gain) on cash flow hedges
Net exchange differences on translation of foreign operations
Tax charge on items recognised directly in equity that will not be reclassified to the income statement
Remeasurement of net retirement benefit obligation
Tax credit/(charge) on items transferred from equity
Transferred to income statement: disposal of available for sale investments
Transferred to initial carrying amount of hedged items: cash flow hedges
2013
13
4
156
(37)
136
12
–
12
2012
restated(1)
(79)
(1)
(16)
(25)
(121)
30
(1)
29
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
d) Tax amounts recognised directly in equity
A deferred tax credit of $106 million and current tax charge of $106 million have been recognised directly in equity in relation to the disposal of a 24.5%
interest in Anglo American Sur SA in 2011 (2012: no material current tax amounts, deferred tax charge of $110 million), see note 21. No capital gains tax has
been charged directly to equity (2012: charge of $290 million relating to the profit on sale of a 25.4% share in Anglo American Sur SA).
170
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
9. EARNINGS PER SHARE
US$
Loss for the financial year attributable to equity shareholders of the Company
Basic loss per share(2)
Diluted loss per share(2)
Headline earnings for the financial year (3)
Basic earnings per share
Diluted earnings per share
Underlying earnings for the financial year (3)
Basic earnings per share
Diluted earnings per share
2013
(0.75)
(0.75)
1.02
1.02
2.09
2.08
2012
restated(1)
(1.17)
(1.17)
0.97
0.97
2.28
2.26
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Basic loss per share equals diluted loss per share as all potential ordinary shares are anti-dilutive.
(3) Basic and diluted earnings per share are shown based on headline earnings, a Johannesburg Stock Exchange (JSE) defined performance measure, and underlying earnings, which the directors
consider to be a useful additional measure of the Group’s performance. Both earnings measures are further explained below.
The calculation of basic and diluted earnings per share is based on the following data:
Earnings (US$ million)
Basic (loss)/earnings
Effect of dilutive potential ordinary shares
Interest payable on convertible bond (net of tax)(2)
Unwinding of discount on convertible bond (net of tax)(2)
Diluted earnings (US$ million)
Number of shares (million)
Basic number of ordinary shares outstanding
Effect of dilutive potential ordinary shares
Share options and awards
Convertible bond(2)
Diluted number of ordinary shares outstanding (million)
Loss attributable to equity
shareholders of the Company
Headline earnings
Underlying earnings
2013
2012
restated(1)
2013
2012
restated(1)
(961)
(1,470)
1,312
–
–
(961)
–
–
(1,470)
1,281
–
–
1,281
1,254
–
–
1,254
–
–
1,312
1,281
4
–
1,285
1,218
–
–
1,218
1,254
5
–
1,259
2013
2,673
–
–
2,673
1,281
4
–
1,285
2012
restated(1)
2,860
19
19
2,898
1,254
5
23
1,282
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) All outstanding convertible bonds were converted or redeemed in 2012.
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. Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would decrease
earnings per share or increase loss per share from continuing operations.
Basic loss per share is equal to diluted loss per share as all 16,688,080 (2012: 16,325,905) potential ordinary shares are anti-dilutive and 134,679
(2012: 10,339,454) have been excluded from the calculation of diluted headline earnings per share and diluted underlying earnings per share as they are
anti-dilutive.
Basic and diluted number of ordinary shares outstanding represent the weighted average for the year. The average number of ordinary shares in issue
excludes shares held by employee benefit trusts and Anglo American plc shares held by Group companies.
Underlying earnings is presented after non-controlling interests and excludes special items and remeasurements, see note 5. Underlying earnings is distinct
from ‘Headline earnings’, which is a JSE defined performance measure.
The calculation of basic and diluted earnings per share, based on headline and underlying earnings, uses the following earnings data:
US$ million
Loss for the financial year attributable to equity shareholders of the Company
Operating special items
Operating special items – tax
Operating special items – non-controlling interests
Non-operating special items and remeasurements
Non-operating special items – tax
Non-operating special items – non-controlling interests
Headline earnings for the financial year
Operating special items(2)
Operating remeasurements
Non-operating special items(3)
Financing remeasurements
Tax special item
Special items and remeasurements tax
Non-controlling interests on special items and remeasurements
Underlying earnings for the financial year
2013
(961)
2,491
(569)
(53)
456
10
(62)
1,312
800
550
13
130
188
(219)
(101)
2,673
2012
restated(1)
(1,470)
6,050
(1,600)
(123)
(1,494)
35
(180)
1,218
989
112
98
88
–
455
(100)
2,860
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
Includes onerous contract provisions, restructuring costs and the reversal of the inventory uplift on De Beers.
(3) Principally relates to the Kumba Envision Trust and elements of the Atlatsa refinancing (2012: Kumba Envision Trust and transaction costs related to the De Beers acquisition).
Anglo American plc Annual Report 2013
171
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
10. DIVIDENDS
Dividends payable during the year are as follows:
US$ million
Final ordinary dividend for 2012 – 53 US cents per ordinary share (2011: 46 US cents per ordinary share)
Interim ordinary dividend for 2013 – 32 US cents per ordinary share (2012: 32 US cents per ordinary share)
2013
672
406
1,078(1)
2012
559
411
970(1)
(1) Of this, $618 million (2012: $599 million) was recognised in the parent company.
Total dividends paid during the year were $1,078 million (2012: $970 million).
The directors are proposing a final dividend in respect of the financial year ended 31 December 2013 of 53 US cents per share. Based on shares eligible for
dividends at 31 December 2013, this will result in an estimated distribution of $678 million of shareholders’ funds, of which $374 million will be distributed by
the parent company. These financial statements do not reflect this dividend payable as it is still subject to shareholder approval.
As stated in note 33, the employee benefit trust has waived the right to receive dividends on the shares it holds.
11. INTANGIBLE ASSETS
See notes 40d, 40e and 40i for the Group’s accounting policy on intangible assets.
US$ million
Net book value
At 1 January
Adoption of new standards(1)
At 1 January (restated)
Acquired through business combinations
Additions
Amortisation charge for the year(4)
Impairments and losses on assets transferred to held for sale
Disposals and transfer to assets held for sale
Remeasurements
Currency movements
At 31 December
Cost
Accumulated amortisation
2013
2012
restated(1)
Brands,
contracts
and other
intangibles(2)
1,615
–
1,615
–
15
(79)
(2)
–
–
(134)
1,415
1,599
(184)
Goodwill(3)
Total
2,954
–
2,954
–
–
–
–
–
(18)
(268)
2,668
2,668
–
4,569
–
4,569
–
15
(79)
(2)
–
(18)
(402)
4,083
4,267
(184)
Brands,
contracts
and other
intangibles(2)
83
(2)
81
1,588
34
(37)
(30)
(7)
–
(14)
1,615
1,722
(107)
Goodwill(3)
Total
2,239
–
2,239
2,355
–
–
(1,169)
(441)
–
(30)
2,954
2,954
–
2,322
(2)
2,320
3,943
34
(37)
(1,199)
(448)
–
(44)
4,569
4,676
(107)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
Includes $517 million (2012: $517 million) of assets with indefinite lives. Brands, contracts and other intangible assets are provided net of cumulative impairment charges of $31 million
(2012: $29 million).
(3) The goodwill balances provided are net of cumulative impairment charges of $1,105 million (2012: $1,105 million).
(4)
Includes $20 million (2012: $6 million) of amortisation arising due to the fair value uplift of the Group’s pre-existing 45% shareholding in De Beers. This has been included within operating
remeasurements.
In December 2012 an impairment of $1,105 million was recorded against goodwill related to Minas-Rio. The valuation of Minas-Rio was determined on a value
in use basis using a real pre-tax discount rate of 8.5%. The total impairment charge of $4,960 million (before tax) was recorded against the carrying value of
goodwill and mining properties, with an associated deferred tax credit of $960 million.
Impairment tests for goodwill
See note 40f for the Group’s accounting policy on impairment of goodwill.
Goodwill is allocated for impairment testing purposes to cash generating units (CGUs) or groups of CGUs which reflect how it is monitored for internal
management purposes. This allocation largely represents the Group’s segments. Any goodwill associated with CGUs included within these segments is not
significant when compared to the goodwill of the Group. The allocation of goodwill to CGUs or groups of CGUs is as follows:
US$ million
Thermal Coal
Copper
Nickel
Platinum
Diamonds
Other
2013
88
124
10
230
2,056
160
2,668
2012
88
124
10
230
2,324
178
2,954
For the purposes of goodwill impairment testing, the recoverable amount of a CGU is determined based on a fair value less costs of disposal basis. The key
assumptions used in determining fair value less costs of disposal are set out in note 1. Management believes that any reasonably possible change in a key
assumption on which the recoverable amounts are based would not cause the carrying amounts to exceed their recoverable amounts.
172
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
12. PROPERTY, PLANT AND EQUIPMENT
See notes 40g to 40j for the Group’s accounting policies on property, plant and equipment.
Mining
properties
and leases(2)
Land and
buildings
Plant and
equipment
Capital works
in progress
2013
Total
Mining
properties
and leases(2)
2012
restated(1)
Land and
buildings
Plant and
equipment
Capital works
in progress(3)
Total
17,301
2,996
14,268
10,166
44,731
14,643
2,620
14,822
8,464
40,549
–
17,301
–
2,996
–
14,268
–
10,166
–
44,731
–
827
–
43
–
209
–
5,818
–
6,897
(155)
14,488
7,307
519
–
2,620
420
44
(20)
14,802
395
179
(292)
8,172
790
5,384
(467)
40,082
8,912
6,126
(1,125)
(135)
(1,530)
–
(2,790)
(648)
(200)
(1,637)
(44)
(2,529)
(959)
(286)
–
1,432
(2,194)
14,996
24,334
(147)
(10)
–
599
(316)
3,030
4,191
(817)
(52)
(401)
(106)
(2,324)
(454)
–
780
(1,328)
11,530
21,263
–
(2,811)
(717)
11,949
12,279
–
–
(4,555)
41,505
62,067
(4,009)
(5)
(644)
558
(265)
17,301
25,047
(35)
(4)
(148)
346
(47)
2,996
4,001
(352)
(45)
(1,007)
2,149
(216)
14,268
23,312
(794)
(12)
(155)
(3,053)
(122)
10,166
10,348
(5,190)
(66)
(1,954)
–
(650)
44,731
62,708
(9,338)
(1,161)
(9,733)
(330)
(20,562)
(7,746)
(1,005)
(9,044)
(182)
(17,977)
US$ million
Net book value
At 1 January
Adoption of new
standards(1)
At 1 January (restated)
Acquired through
business combinations
Additions
Depreciation charge
for the year(4)
Impairments
and losses on transfer
to assets held for sale
Disposal of assets
Disposal and transfer
to assets held for sale
Reclassifications(5)
Currency movements
At 31 December
Cost
Accumulated
depreciation
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details. The adoption of IFRIC 20 has resulted in the write-off of
previously capitalised deferred stripping costs of $155 million to retained earnings as they were not associated with an existing component of an operating mine. The adoption of IFRS 11 has
resulted in $312 million of property, plant and equipment being reclassified to investments in equity accounted joint ventures.
(2) Additions to mining properties and leases include amounts of $382 million in relation to deferred stripping production stage Ore Reserves development. Before the adoption of IFRIC 20, a net
deferral of production stage stripping costs of $147 million in 2012 was included in additions to mining properties and leases. The treatment of production stage Ore Reserves development has
not changed.
(3) 2012 includes $196 million of other assets, all of which have been disposed of or transferred into other categories in 2013.
(4)
Includes $2,579 million (2012: $2,343 million) of depreciation within operating profit, $111 million (2012: $35 million) of depreciation arising due to the fair value uplift on the pre-existing 45%
shareholding of De Beers and nil (2012: $70 million) of accelerated depreciation, both of which have been recorded within operating special items and remeasurements (see note 6), and
$100 million (2012: $81 million) of pre-commercial production depreciation which has been capitalised. See note 3 for a split of depreciation and amortisation by segment.
(5) Relates mainly to amounts transferred from capital works in progress.
The impairments recorded in the year are detailed in note 6. Fair value less costs of disposal has been used as the basis for determining the recoverable
amount. The fair value depends principally on unobservable inputs and is classified as level 3 in the fair value hierarchy. Where the recoverable amount is
estimated to be less than the carrying amount an impairment has been recorded.
Included in the additions is $320 million (2012: $266 million) of net interest expense incurred on borrowings funding the construction of qualifying assets
which has been capitalised during the year.
Assets held under finance leases relate to plant and equipment with a net book value of $50 million (2012: $27 million), depreciation charges in the year
amounted to $13 million (2012: $7 million).
The net book value of land and buildings comprises:
US$ million
Freehold
Leasehold – long
Leasehold – short (less than 50 years)
2013
2,966
62
2
3,030
2012
2,952
41
3
2,996
Anglo American plc Annual Report 2013
173
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
See note 40k for the Group’s accounting policy on associates and joint arrangements, which includes joint ventures. Prior to the adoption of IFRS 11 joint
ventures were accounted for using proportionate consolidation. These arrangements are now accounted for using the equity method.
Details of principal associates and joint ventures are set out in note 38.
US$ million
At 1 January
Adoption of new standards(1)
At 1 January (restated)
Share of net income/(loss) from associates and joint ventures
Dividends received
Interest on capitalised loans
Share of expense recognised directly in equity, net of tax
Other equity movements
Investment in equity and capitalised loans
Repayment of capitalised loans
Acquired through formation of joint ventures (note 30)
Disposals
Impairment
Other movements
Currency movements
At 31 December(4)
Associates
3,063
–
3,063
238
(242)
–
–
–
175
(108)
–
–
–
–
(190)
2,936
Joint
ventures
99
–
99
(70)
(4)
–
–
–
46
–
1,658
–
(98)
–
45
1,676
2013
Total
3,162
–
3,162
168
(246)
–
–
–
221
(108)
1,658
–
(98)
–
(145)
4,612
Associates
5,240
(1)
5,239
428
(286)
9
(3)
(4)
114
(36)
12
(2,370)(3)
–
1
(41)
3,063
Joint
ventures
n/a(2)
113
113
(7)
(8)
–
–
–
–
–
–
–
–
–
1
99
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Prior to the adoption of IFRS 11, equity accounted balances comprised only associates.
(3) Represents the carrying value of the Group’s pre-existing 45% shareholding in De Beers prior to the acquisition of a controlling interest on 16 August 2012, see note 30.
(4) The fair value of the Group’s investment in its associate Atlatsa Resources Corporation at 31 December 2013 was $64 million (2012: $18 million).
The Group’s total investments in associates and joint ventures comprise:
US$ million
Equity
Loans(2)
Associates
2,553
383
2,936
Joint
ventures
1,676
–
1,676
2013
Total
4,229
383
4,612
Associates
2,359
704
3,063
Joint
ventures
99
–
99
2012
restated(1)
Total
5,240
112
5,352
421
(294)
9
(3)
(4)
114
(36)
12
(2,370)
–
1
(40)
3,162
2012
restated(1)
Total
2,458
704
3,162
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) The Group’s total investments in associates include long term loans which in substance form part of the Group’s net investment. These loans are not repayable in the foreseeable future.
Associates and joint ventures
None of the Group’s associates or joint ventures are considered to be individually material to the Group, and therefore the financial information of associates
and joint ventures is provided on an aggregated basis.
US$ million
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Revenue
Share of net income/(loss) from associates and joint ventures
Other comprehensive expense
Total comprehensive income/(expense)
Associates
2,900
1,234
(451)
(747)
2,936
2,238
238
–
238
Joint
ventures
2,049
725
(785)
(313)
1,676
1,483
(70)
–
(70)
2013
Total
4,949
1,959
(1,236)
(1,060)
4,612
3,721
168
–
168
Associates
2,521
1,494
(379)
(573)
3,063
4,024
428
(25)
403
Joint
ventures
320
61
(170)
(112)
99
81
(7)
–
(7)
2012
restated(1)
Total
2,841
1,555
(549)
(685)
3,162
4,105
421
(25)
396
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Segmental information is provided in aggregate for associates and joint ventures as follows:
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Platinum
Diamonds
Other Mining and Industrial
Aggregate investment
2013
907
235
1,182
648
29
1,611
4,612
2012
restated(1)
965
277
1,085
786
13
36
3,162
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The Group’s share of joint ventures’ capital commitments relating to its interests in joint ventures, including its share of commitments made jointly with other
investors, is $364 million (2012: $462 million).
174
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
14. FINANCIAL ASSET INVESTMENTS
See notes 40l and 40m for the Group’s accounting policy on financial asset investments.
US$ million
At 1 January
Adoption of new standards(1)
At 1 January (restated)
Additions
Acquired through business combinations
Interest receivable
Net repayments
Transfer to assets held for sale
Disposals
Movements in fair value
Currency movements
At 31 December
Loans and
receivables
1,427
–
1,427
–
–
37
(424)(2)
–
(9)
(37)
(235)
759
Available
for sale
investments
1,064
–
1,064
–
–
–
–
–
(99)
(69)
(190)
706
2013
Total
2,491
–
2,491
–
–
37
(424)
–
(108)
(106)
(425)
1,465
Loans and
receivables
1,690
107
1,797
8
41
27
(79)
(16)
(314)
26
(63)
1,427
Available
for sale
investments
1,206
–
1,206
8
19
–
–
–
(273)
173
(69)
1,064
2012
restated(1)
Total
2,896
107
3,003
16
60
27
(79)
(16)
(587)
199
(132)
2,491
(1) Certain balances related to 2012 have been restated to reflect the adoption of the new accounting pronouncements. See note 2 for details.
(2)
Includes non-cash settlements relating to the refinancing of Atlatsa Resources Corporation. See note 6.
No provision for impairment is recorded against financial assets classified as ‘Loans and receivables’ (2012: nil).
Maturity analysis of financial asset investments is as follows:
US$ million
Current
Non-current
(1) Certain balances related to 2012 have been restated to reflect the adoption of the new accounting pronouncements. See note 2 for details.
15. INVENTORIES
See note 40q for the Group’s accounting policy on inventories.
US$ million
Raw materials and consumables
Work in progress
Finished products
2013
19
1,446
1,465
2012
restated(1)
102
2,389
2,491
2013
915
1,496
2,378
4,789
2012
restated(1)
934
1,500
2,568
5,002
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The cost of inventories recognised as an expense and included in cost of sales amounted to $17,929 million (2012: $15,709 million). An additional $126 million
was recognised as an expense within operating special items (2012: $421 million) relating to the reversal of fair value uplifts on De Beers inventory, see note 6.
Inventories held at net realisable value amounted to $308 million (2012: $352 million).
Write-down of inventories (net of revaluation of provisionally priced purchases) amounted to $58 million (2012: $145 million).
The value of inventory write-downs reversed and recognised as a reduction in the inventory expense for the year was $4 million (2012: nil).
16. TRADE AND OTHER RECEIVABLES
Trade receivables do not incur any interest, are principally short term in nature and are measured at their nominal value (with the exception of receivables
relating to provisionally priced sales, as set out in the revenue recognition accounting policy, see note 40a), net of appropriate provision for estimated
irrecoverable amounts. Such provisions are raised based on an assessment of debtor ageing, past experience or known customer circumstances.
US$ million
Trade receivables
Other receivables
Prepayments and accrued income
Due within
one year
2,596
541
214
3,351
Due after
one year
235
502
60
797
2013
Total
2,831
1,043
274
4,148
Due within
one year
2,491
572
180
3,243
Due after
one year
193
318
49
560
2012
restated(1)
Total
2,684
890
229
3,803
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The historical level of customer default is minimal and as a result the credit quality of year end trade receivables is considered to be high. Of the year end
trade receivables balance, $65 million (2012: $36 million) were past due at 31 December, stated after an associated impairment provision of $19 million
(2012: $11 million). The overdue debtor ageing profile is typical of the industry in which certain of the Group’s businesses operate. Given this, the existing
insurance cover (including letters of credit from financial institutions) and the nature of the related counterparties, these amounts are considered recoverable.
Anglo American plc Annual Report 2013
175
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
17. TRADE AND OTHER PAYABLES
Trade payables are not interest bearing and are measured at their nominal value with the exception of amounts relating to purchases of provisionally priced
concentrate which are marked to market (using the appropriate forward price) until settled.
US$ million
Trade payables
Tax and social security
Other payables
Accruals and deferred income(2)
2013
2,364
100
903
1,024
4,391
2012
restated(1)
2,683
103
700
1,026
4,512
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
Includes $22 million (2012: $18 million) of deferred income recorded within non-current liabilities.
18. FINANCIAL INSTRUMENTS
See notes 40m and 40n for the Group’s accounting policies on impairment of financial assets, derivative financial instruments and hedge accounting.
The carrying amounts of financial assets and financial liabilities are as shown below. Where the carrying amount of a financial asset or liability does not
approximate its fair value, this is also disclosed.
For financial assets and liabilities which are traded on an active market, such as listed investments or listed debt instruments, fair value is determined by
reference to market value. For non-traded financial assets and liabilities, fair value is calculated using discounted cash flows, considered to be reasonable and
consistent with those that would be used by a market participant, and based on observable market data where available, unless carrying value is considered to
approximate fair value.
US$ million
Financial assets
At fair value through profit and loss
Trade and other receivables(2)
Derivative financial assets(3)
Loans and receivables
Cash and cash equivalents
Trade and other receivables(2)
Financial asset investments(4)
Available for sale investments
Financial asset investments
Financial liabilities
At fair value through profit and loss
Trade and other payables(2)
Derivative financial liabilities(3)
Designated into fair value hedges
Borrowings(5)
Financial liabilities at amortised cost
Trade and other payables(2)
Borrowings(6)
Other non-current liabilities
Net financial liabilities
2013
2012
restated(1)
1,652
674
7,704
2,222
759
581
848
9,080
2,993
1,427
706
13,717
1,064
15,993
(279)
(1,511)
(296)
(1,081)
(14,619)
(13,425)
(3,923)
(3,229)
–
(23,561)
(9,844)
(4,075)
(4,210)
(29)
(23,116)
(7,123)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Trade and other receivables exclude prepayments and accrued income. Trade and other payables exclude tax and social security and deferred income.
(3) Derivative instruments are analysed between those which are ‘Held for trading’ and those designated into hedge relationships in note 19.
(4) The carrying value of financial asset investments within loans and receivables is considered to approximate fair value (2012: fair value of $1,397 million including investments categorised as
level 3 in the fair value hierarchy).
(5) Borrowings designated in fair value hedges represent listed debt. The fair value of these borrowings is $14,907 million (2012: $13,735 million), which is based on the quoted market price and
consequently categorised as level 1 in the fair value hierarchy.
(6) For the majority of borrowings at amortised cost the carrying value is considered to approximate the fair value. In certain circumstances the fair value of borrowings is based on management’s
estimates of future cash flows and consequently the valuation is categorised as level 3 in the fair value hierarchy. The total fair value of borrowings at amortised cost is $3,269 million
(2012: $4,062 million).
176
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
18. FINANCIAL INSTRUMENTS continued
Fair value hierarchy
An analysis of financial assets and liabilities carried at fair value is set out below:
US$ million
Financial assets
At fair value through profit and loss
Provisionally priced trade receivables
Other receivables
Derivatives hedging net debt
Other derivatives
Available for sale investments
Financial asset investments
Financial liabilities
At fair value through profit and loss
Provisionally priced trade payables
Derivatives hedging net debt
Other derivatives
Net assets/(liabilities) carried at fair value
Level 1(1)
Level 2(2)
Level 3(3)
–
–
–
–
647
647
–
–
(3)
(3)
644
1,510
–
628
22
–
2,160
(279)
(714)
(338)
(1,331)
829
–
142
24
–
59
225
–
(446)
(10)
(456)
(231)
2013
Total
1,510
142
652
22
706
3,032
(279)
(1,160)
(351)
(1,790)
1,242
Level 1(1)
Level 2(2)
Level 3(3)
–
–
–
1
980
981
–
–
–
–
981
581
–
777
36
11
1,405
(296)
(784)
(81)
(1,161)
244
–
–
34
–
73
107
–
(195)
(21)
(216)
(109)
2012
Total
581
–
811
37
1,064
2,493
(296)
(979)
(102)
(1,377)
1,116
(1) Valued using unadjusted quoted prices in active markets for identical financial instruments. This category includes listed equity shares.
(2) Valued using techniques based significantly on observable market data. Instruments in this category are valued using valuation techniques where all of the inputs that have a significant effect
(3)
on the valuation are directly or indirectly based on observable market data.
Instruments in this category have been valued using a valuation technique where at least one input (which could have a significant effect on the instrument’s valuation) is not based on
observable market data. Where inputs can be observed from market data without undue cost and effort, the observed input is used. Otherwise, management determines a reasonable estimate
for the input.
Financial assets and liabilities included within level 3 primarily consist of contingent proceeds and related receivables relating to disposals, embedded
derivatives, unlisted equity investments, certain cross currency swaps of Brazilian real denominated borrowings (whose valuation depends upon unobservable
inputs) and commodity sales contracts which do not meet the conditions for the ‘own use’ exemption under IAS 39.
The movements in the fair value of the level 3 financial assets and liabilities are shown as follows:
US$ million
At 1 January
Net gain/(loss) recorded in the income statement(1)
Net gain recorded in the statement of comprehensive income
Reclassification from/to level 3 financial liabilities
Currency movements
At 31 December
(1) The majority of this is recorded in remeasurements.
2013
107
134
2
–
(18)
225
Assets
2012
217
(141)
19
14
(2)
107
2013
(216)
(195)
–
–
(45)
(456)
Liabilities
2012
(188)
(14)
–
(14)
–
(216)
For the level 3 financial assets and liabilities, changing certain inputs to reasonably possible alternative assumptions does not change the fair value
significantly.
The net gains and losses recorded in the Consolidated income statement in respect of financial instruments were as follows:
US$ million
At fair value through profit and loss
Cash flow hedge derivatives transferred from equity
Fair value hedge: hedged items
Fair value hedge: hedging instruments
Foreign exchange gains
Other fair value movements(2)
Loans and receivables
Foreign exchange gains
Interest income at amortised cost(3)
Available for sale
Net gain transferred on sale from equity
Dividend income
Impairment of available for sale investments
Foreign exchange losses
Other financial liabilities
Foreign exchange gains/(losses)
Interest expense at amortised cost(3)
2013
–
555
(474)
4
(643)
141
172
89
18
(14)
–
16
(324)
2012
restated(1)
(4)
(193)
169
12
(144)
17
321
67
54
(84)
(30)
(106)
(404)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
Includes the impact of provisional pricing, see note 4, and certain operating and financing remeasurements, see note 6.
Interest income and expense at amortised cost are shown net of amounts capitalised.
(3)
Anglo American plc Annual Report 2013
177
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
19. DERIVATIVES
See note 40n for the Group’s accounting policy on derivatives.
The fair values of derivatives are separately recorded on the Consolidated balance sheet within ‘Derivative financial assets’ and ‘Derivative financial liabilities’.
Derivatives are classified as current or non-current depending on the date of expected settlement of the derivative.
The Group utilises derivative instruments to manage certain market risk exposures. The Group does not use derivative financial instruments for speculative
purposes, however it may choose not to designate certain derivatives as hedges for accounting purposes. Such derivatives are classified as ‘non-hedges’ and
fair value movements are recorded in the Consolidated income statement.
The use of derivative instruments is subject to limits and the positions are regularly monitored and reported to senior management.
Cash flow hedges
In certain cases the Group classifies its forward foreign currency contracts, which hedge highly probable forecast transactions, as cash flow hedges. Where
this designation is documented, 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 Consolidated income statement (or hedged balance sheet item).
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 Group’s policy) have been
designated as fair value hedges. The carrying value of the hedged debt is adjusted at each balance sheet date to reflect the impact on its fair value of changes
in market interest rates. Changes in the fair value of the hedged debt are offset against fair value changes in the interest rate swap and classified within net
finance costs in the Consolidated income statement.
Held for trading
The Group may choose not to designate certain derivatives as hedges. This may occur where the Group is economically hedged but IAS 39 hedge accounting
cannot be achieved or where gains and losses on both the derivative and hedged item naturally offset in the Consolidated income statement, as is the case for
certain cross currency swaps of non-US dollar debt. Where these derivatives have not been designated as hedges, fair value changes are recognised in the
Consolidated income statement as remeasurements and are classified as financing or operating depending on the nature of the associated hedged risk.
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.
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
‘Derivative financial assets’ and ‘Derivative financial liabilities’ is as follows:
US$ million
Derivatives hedging net debt
Fair value hedge
Interest rate swaps
Held for trading
Forward foreign currency contracts
Cross currency swaps
Interest rate swaps
Other derivatives
Cash flow hedge
Forward foreign currency contracts
Fair value hedge
Forward commodity contracts
Held for trading
Forward foreign currency contracts
Other
Total derivatives
Asset
2013
Liability
8
18
24
–
50
–
–
20
–
20
70
–
(86)
(15)
–
(101)
(6)
(3)
(249)
(13)
(271)
(372)
Current
2012
Liability
–
(54)
(125)
–
(179)
–
(2)
(70)
(29)
(101)
(280)
Asset
30
2
32
–
64
3
1
33
–
37
101
Asset
354
–
248
–
602
–
–
2
–
2
604
2013
Liability
(138)
–
(919)
(2)
(1,059)
(3)
–
(73)
(4)
(80)
(1,139)
Non-current
2012
Liability
Asset
687
–
60
–
747
–
–
–
–
–
747
(6)
–
(781)
(13)
(800)
–
–
(1)
–
(1)
(801)
These marked to market valuations are not 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 closing all hedge contracts at year end, at market prices and rates available at the time.
The Group is exposed in varying degrees to a variety of financial instrument related risks. For more information about these risks and the ways in which the
Group manages them see notes 25 and 39.
178
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
20. PROVISIONS FOR LIABILITIES AND CHARGES
See note 40r for the Group’s accounting policy on environmental restoration and decommissioning obligations.
US$ million
At 1 January 2013
Adoption of new standards(1)
At 1 January 2013 (restated)
Charged to the income statement
Capitalised
Unwinding of discount
Amounts applied
Unused amounts reversed
Currency movements
At 31 December 2013
Environmental
restoration Decommissioning
517
–
517
–
24
30
(1)
(14)
(68)
488
1,089
(2)
1,087
177
51
60
(33)
(26)
(161)
1,155
Employee
benefits
439
(2)
437
214
–
1
(175)
(21)
(38)
418
Onerous
contracts
350
–
350
439
–
20
(32)
–
(75)
702
Other
553
–
553
322
6
10
(164)
(7)
(27)
693
Total
2,948
(4)
2,944
1,152
81
121
(405)
(68)
(369)
3,456
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Maturity analysis of total provisions:
US$ million
Current
Non-current
2013
768
2,688
3,456
2012
restated(1)
560
2,384
2,944
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Environmental restoration
The Group has an obligation to undertake restoration, rehabilitation and environmental work 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. Contributions to controlled funds are made to meet the cost of some of the Group’s environmental restoration and
decommissioning liabilities, see environmental rehabilitation trusts below.
Decommissioning
Provision is made for the present value of costs relating to the decommissioning of plant or other site restoration work. It is anticipated that these costs will be
incurred over a period in excess of 20 years.
Employee benefits
Provision is made for statutory or contractual employee entitlements including long service leave, annual leave, sickness pay obligations and cash settled
share-based payment obligations. It is anticipated that these costs will be incurred when employees choose to take their benefits.
Onerous contracts
Provision is made for the present value of certain long term contracts where the unavoidable cost of meeting the Group’s obligations is expected to exceed the
benefits to be received. It is anticipated these costs will be incurred over a period of up to 17 years.
Other
Other provisions primarily relate to indemnities, warranties and legal claims. It is anticipated that these costs will be incurred over a five year period.
Environmental rehabilitation trusts
The Group makes contributions to controlled funds that were established to meet the cost of some of its restoration and environmental rehabilitation liabilities,
primarily in South Africa. The funds comprise the following investments:
US$ million
Equity
Bonds
Cash
2013
149
134
65
348
2012
restated(1)
150
151
91
392
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
These assets are primarily denominated in South African rand. Cash is held in short term fixed deposits or earns interest at floating inter-bank rates. Bonds
earn interest at a weighted average fixed rate of 8.2% (2012: 8.4%) for an average period of five years (2012: five years). Equity investments are recorded at
fair value through profit and loss and bonds are recorded at amortised cost.
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 provisions stated above.
Anglo American plc Annual Report 2013
179
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
21. DEFERRED TAX
See note 40c for the Group’s accounting policy on tax.
The movement in net deferred tax liabilities during the year is as follows:
US$ million
At 1 January
Adoption of new standards(1)
At 1 January (restated)
Credited to the income statement
Credited/(charged) to the statement of comprehensive income
Credited/(charged) directly to equity
Acquired through business combinations
Transfer to assets held for sale
Currency movements
At 31 December
Comprising:
Deferred tax assets
Deferred tax liabilities
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The amount of deferred tax recognised in the Consolidated balance sheet is as follows:
US$ million
Deferred tax assets
Tax losses
Post employment benefits
Share-based payments
Enhanced tax depreciation
Other temporary differences
Deferred tax liabilities
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses
Derivatives
Provisions
Chilean withholding tax
Other temporary differences
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The amount of deferred tax credited/(charged) to the Consolidated income statement is as follows:
US$ million
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses
Derivatives
Provisions
Chilean withholding tax
Other temporary differences
2013
(4,847)
–
(4,847)
471
148
106
–
–
829
(3,293)
1,364
(4,657)
2013
593
71
5
414
281
1,364
(2,871)
(1,476)
29
4
436
(570)
(209)
(4,657)
2013
(238)
73
187
220
134
(3)
98
471
2012
restated(1)
(5,200)
22
(5,178)
1,071
(92)
(110)
(850)
118
194
(4,847)
1,204
(6,051)
2012
restated(1)
358
118
9
560
159
1,204
(3,321)
(2,582)
29
15
416
(567)
(41)
(6,051)
2012
restated(1)
(34)
(133)
7
99
41
89
1,002
1,071
(2)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
In 2012 this principally related to Minas-Rio ($960 million credit). This is made up of a deferred tax credit of $1,360 million in relation to the impairment of Minas-Rio and a deferred tax charge of
$400 million in relation to the partial derecognition of a deferred tax asset for enhanced tax depreciation in Minas-Rio.
The current expectation regarding the maturity of deferred tax balances is as follows:
US$ million
Deferred tax assets
Recoverable within one year
Recoverable after one year
Deferred tax liabilities
Payable within one year
Payable after one year
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
2013
123
1,241
1,364
(315)
(4,342)
(4,657)
2012
restated(1)
131
1,073
1,204
(340)
(5,711)
(6,051)
180
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
21. DEFERRED TAX continued
The Group has the following balances in respect of which no deferred tax asset has been recognised:
US$ million
Expiry date
Within one year
Greater than one year, less than five years
Greater than five years
No expiry date
Tax
losses –
revenue
16
294
3
4,858
5,171
Tax
losses –
capital
Other
temporary
differences
–
–
–
753
753
–
–
4,370
2,077
6,447
2013
Total
16
294
4,373
7,688
12,371
Tax
losses –
revenue
Tax
losses –
capital
Other
temporary
differences
17
286
3
4,467
4,773
–
–
–
1,097
1,097
–
–
2,997
1,953
4,950
2012
Total
17
286
3,000
7,517
10,820
The Group also has unused tax credits of $17 million (2012: $16 million) for which no deferred tax asset is recognised in the Consolidated balance sheet. All of
these credits expire within three years.
No deferred tax has been recognised in respect of temporary differences associated with investments in subsidiaries, branches, associates and interests in
joint arrangements 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 such investments in subsidiaries, branches,
associates and interests in joint arrangements is represented by the contribution of those investments to the Group’s retained earnings and amounted to
$19,117 million (2012: $21,846 million).
22. ASSETS AND LIABILITIES HELD FOR SALE
See note 40s for the Group’s accounting policy on non-current assets and disposal groups held for sale.
There are no assets and liabilities classified as held for sale at 31 December 2013.
US$ million
Intangible assets
Property, plant and equipment
Other non-current assets
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets classified as held for sale
Trade and other payables
Short term borrowings
Provisions for liabilities and charges
Total current liabilities
Deferred tax liabilities
Provisions for liabilities and charges
Other non-current liabilities
Total non-current liabilities
Total liabilities directly associated with assets classified as held for sale
Net assets
(1) The Group’s investments in Amapá and Tarmac Quarry Materials were included in the Other Mining and Industrial segment.
Tarmac
Quarry
Materials
418
1,655
11
2,084
111
292
201
604
2,688
(406)
(3)
(24)
(433)
(150)
(97)
(17)
(264)
(697)
1,991
Amapá
1
171
4
176
103
157
26
286
462
(149)
(11)
(3)
(163)
–
(59)
–
(59)
(222)
240
2012
Total(1)
419
1,826
15
2,260
214
449
227
890
3,150
(555)
(14)
(27)
(596)
(150)
(156)
(17)
(323)
(919)
2,231
Anglo American plc Annual Report 2013
181
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
23. CAPITAL EXPENDITURE
Expenditure on property, plant and equipment
Capital expenditure is segmented on a cash basis and includes cash flows on related derivatives.
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
Other Mining and Industrial
Exploration
Corporate Activities and Unallocated Costs
Less: cash outflows from derivatives relating to capital expenditure
Expenditure on property, plant and equipment
2013
2,517
1,050
217
1,011
(28)(2)
237
608
551
53
1
44
6,261
(136)
6,125
2012
restated(1)
2,139
1,028
266
1,214
100
94
822
161
171
6
29
6,030
(71)
5,959
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Cash capital expenditure for Nickel of $76 million is offset by the capitalisation of $104 million of net operating cash inflows generated by Barro Alto which has not yet reached commercial
production.
Capital expenditure by category including associated derivatives
US$ million
Expansionary(2)
Stay-in-business
Stripping and development
Expenditure on property, plant and equipment
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Cash flows from derivatives relating to capital expenditure relate to expansionary capital expenditure.
2013
3,258
2,242
761
6,261
2012
restated(1)
2,956
2,290
784
6,030
24. NET DEBT
See note 40o for the Group’s accounting policy on cash and debt.
Net debt is a measure of the Group’s financial position. The Group uses net debt to monitor the sources and uses of financial resources, the availability of
capital to invest or return to shareholders, and the resilience of the balance sheet. Net debt is calculated as total borrowings less cash and cash equivalents
(including derivatives which provide an economic hedge of debt and the net debt of disposal groups).
a) Reconciliation to the balance sheet
US$ million
Balance sheet
Balance sheet – disposal groups(2)
Bank overdrafts
Net debt classifications
Cash and cash equivalents
Short term borrowings
2013
7,704
–
(2)
7,702
2012
restated(1)
9,080
227
(9)
9,298
2013
(2,108)
–
2
(2,106)
2012
restated(1)
(2,485)
(14)
9
(2,490)
Medium and
long term borrowings
2013
(15,740)
–
–
(15,740)
2012
(15,150)
–
–
(15,150)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Disposal group balances are shown within ‘Assets classified as held for sale’ and ‘Liabilities directly associated with assets classified as held for sale’ on the balance sheet.
182
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
24. NET DEBT continued
b) Movement in net debt
US$ million
At 1 January 2012
Adoption of new standards(1)
At 1 January 2012 (restated)
Cash flow
Unwinding of discount on convertible bond
Conversion of convertible bond
Acquired through business combinations
Disposal of businesses
Reclassifications
Movement in fair value
Other non-cash movements
Currency movements
At 31 December 2012 (restated)
Cash flow
Disposal of businesses
Reclassifications
Movement in fair value
Other non-cash movements
Currency movements
At 31 December 2013
Cash
and cash
equivalents
11,732
(20)
11,712
(2,304)
–
–
–
–
–
–
–
(110)
9,298
(1,235)
–
–
–
–
(361)
7,702
Short term
borrowings
(1,018)
116
(902)
747
–
–
(3)
53
(2,396)
2
–
9
(2,490)
2,307
69
(2,084)
24
(5)
73
(2,106)
Medium and
long term
borrowings
(11,855)
–
(11,855)
(5,633)
(25)
1,507
(1,578)
228
2,396
(198)
(21)
29
(15,150)
(3,279)
–
2,084
521
(39)
123
(15,740)
Net debt
excluding
derivatives
(1,141)
96
(1,045)
(7,190)
(25)
1,507
(1,581)
281
–
(196)
(21)
(72)
(8,342)
(2,207)
69
–
545
(44)
(165)
(10,144)
Derivatives
hedging
net debt
(233)
–
(233)
(149)
–
–
(15)
–
–
229
–
–
(168)
(181)
–
–
(155)
–
(4)
(508)
Net debt
including
derivatives
(1,374)
96
(1,278)
(7,339)
(25)
1,507
(1,596)
281
–
33
(21)
(72)
(8,510)
(2,388)
69
–
390
(44)
(169)
(10,652)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
c) Net debt by segment
The Group’s policy is to hold the majority of its cash and borrowings at the corporate centre. Business units may from time to time raise borrowings in
connection with specific capital projects, and subsidiaries with non-controlling interests have borrowings which are without recourse to the Group. Other than
the impact of South African exchange controls (see note 24d below), there are no significant restrictions over the Group’s ability to access these cash balances
or repay these borrowings. Net debt by segment is stated after elimination of inter-segment balances and includes related hedges. Net debt in disposal groups
is part of total net debt but not allocated to segments.
US$ million
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
Other Mining and Industrial
Exploration
Corporate Activities and Unallocated Costs
Net cash in disposal groups
2013
(1,413)
218
(49)
531
(398)
68
(50)
(311)
33
4
(9,285)
(10,652)
–
(10,652)
2012
restated(1)
(996)
510
(32)
775
(477)
18
(98)
(839)
16
8
(7,608)
(8,723)
213
(8,510)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
d) South Africa net debt
The Group operates in South Africa where the existence of exchange controls may restrict the use of certain cash balances. The Group therefore monitors the
cash and debt associated with these operations separately. These restrictions are not expected to have a material effect on the Group’s ability to meet its
ongoing obligations. Below is a breakdown of net debt in South Africa.
US$ million
Cash and cash equivalents
Short term borrowings
Medium and long term borrowings
Net cash/(debt) excluding derivatives
Derivatives hedging net debt
Net cash/(debt) including derivatives
2013
2,247
(512)
(1,000)
735
4
739
2012
1,893
(373)
(1,754)
(234)
31
(203)
Anglo American plc Annual Report 2013
183
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
25. BORROWINGS
See note 40o for the Group’s accounting policy on convertible debt and bank borrowings.
The Group accesses borrowings mostly in capital markets through bonds issued under the Euro Medium Term Note (EMTN) programme, the South African
Domestic Medium Term Note (DMTN) programme, through accessing the United States (US) bond markets, and this year through bonds issued under the
Australian Medium Term Note (AMTN) programme. The Group uses interest rate and cross currency swaps to ensure that the majority of the Group’s
borrowings are floating rate US dollar denominated.
During 2013, the Group issued corporate bonds with a US$ equivalent value of $3.5 billion. These included €750 million 2.5% guaranteed notes due 2021,
€900 million 1.75% guaranteed notes due 2017, and €600 million 2.875% guaranteed notes due 2020 issued under the EMTN programme, and
AUD500 million 5.75% guaranteed notes due 2018 issued under the AMTN programme.
An analysis of borrowings, as presented on the Consolidated balance sheet, is set out below:
Short term
borrowings
Medium and
long term
borrowings
Total
borrowings
2013
Contractual
repayment at
hedged rates
Short term
borrowings
Medium and
long term
borrowings
Total
borrowings
Contractual
repayment at
hedged rates
2012
restated(1)
US$ million
Secured
Bank loans and overdrafts(2)
Obligations under finance leases(3)
Unsecured
Bank loans and overdrafts
Bonds issued under EMTN programme
4.25% €750m bond due September 2013
5.875% €1,000m bond due April 2015
4.375% €750m bond due December 2016
1.75% €900m bond due November 2017
6.875% £400m bond due May 2018
2.5% €750m bond due September 2018
1.028% JPY10,000m bond due December 2018
2.75% €750m bond due June 2019
2.875% €600m bond due November 2020
2.5% €750m bond due April 2021
3.5% €750m bond due March 2022
US bonds
2.15% $750m bond due September 2013
9.375% $1,250m bond due April 2014
2.625% $600m bond due April 2017
2.625% $750m bond due September 2017
9.375% $750m bond due April 2019
4.45% $500m bond due September 2020
4.125% $600m bond due September 2022
Bonds issued under AMTN programme
5.75% AUD500m bond due November 2018
Bonds issued under DMTN programme
9.77% R1,000m bond due May 2015
JIBAR +0.5% R200m bond due March 2016
JIBAR +1.38% R600m bond due March 2017
9.27% R1,400m bond due March 2019
Other loans
Total borrowings
–
–
–
–
–
–
–
–
–
–
–
–
1,256
–
–
–
–
–
–
–
–
–
–
403
2,092
2,108
9
7
16
32
49
81
41
56
97
41
56
97
433
2,003
2,436
2,467
–
1,445
1,098
1,206
747
1,029
95
1,039
787
987
1,065
–
–
605
733
807
509
540
440
–
1,445
1,098
1,206
747
1,029
95
1,039
787
987
1,065
–
1,256
605
733
807
509
540
–
1,577
1,122
1,211
793
959
97
941
807
977
992
–
1,250
600
750
750
500
600
440
470
5
3
8
251
994
–
–
–
–
–
–
–
–
–
–
767
–
–
–
–
–
–
–
21
19
40
2,871
–
1,432
1,080
–
785
1,002
–
1,018
–
–
1,065
–
1,279
614
739
853
547
596
–
26
22
48
3,122
994
1,432
1,080
–
785
1,002
–
1,018
–
–
1,065
767
1,279
614
739
853
547
596
–
26
22
48
3,141
1,109
1,577
1,122
–
793
959
–
941
–
–
992
750
1,250
600
750
750
500
600
–
98
19
57
133
217
15,659
15,740
98
19
57
133
620
17,751
17,848
95
19
57
133
621
17,788
17,885
–
–
–
–
465
2,477
2,485
126
24
71
177
831
15,110
15,150
126
24
71
177
1,296
17,587
17,635
118
24
71
165
1,282
17,494
17,542
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Assets with a book value of $56 million (2012: $49 million) have been pledged as security, of which $30 million (2012: $35 million) are property, plant and equipment, $22 million
(2012: $10 million) are financial assets and $4 million (2012: $4 million) are inventories. Related to these assets are borrowings of $41 million (2012: $26 million).
(3) Details of assets held under finance leases are provided in note 12.
184
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
25. BORROWINGS continued
Liquidity risk
The Group ensures that there are sufficient committed loan facilities (including refinancing, where necessary) in order to meet short term business
requirements, after taking into account cash flows from operations and its holding of cash and cash equivalents, as well as any Group distribution restrictions
that exist. In addition, certain projects are financed by means of limited recourse project finance, if appropriate.
The expected undiscounted cash flows of the Group’s net debt related and other financial liabilities, by remaining contractual maturity, based on conditions
existing at the balance sheet date are as follows:
US$ million
Amount due for repayment within one year
Greater than one year, less than two years
Greater than two years, less than three years
Greater than three years, less than four years
Greater than four years, less than five years
Greater than five years
Total due for repayment after more than one year
Total
US$ million
Amount due for repayment within one year
Greater than one year, less than two years
Greater than two years, less than three years
Greater than three years, less than four years
Greater than four years, less than five years
Greater than five years
Total due for repayment after more than one year
Total
Net debt related financial liabilities
Expected
future interest
payments
(762)
(720)
(540)
(470)
(417)
(581)
(2,728)
(3,490)
Derivatives
hedging
net debt
245
19
67
165
58
476
785
1,030
Borrowings
(2,098)
(1,903)
(1,532)
(2,872)
(2,642)
(6,580)
(15,529)
(17,627)
Net debt related financial liabilities
Expected
future interest
payments
(807)
(656)
(540)
(406)
(336)
(686)
(2,624)
(3,431)
Derivatives
hedging
net debt
103
205
(66)
–
109
182
430
533
Borrowings
(2,467)
(2,336)
(2,798)
(1,376)
(1,572)
(7,695)
(15,777)
(18,244)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The Group had the following undrawn committed borrowing facilities at 31 December:
US$ million
Expiry date
Within one year(1)
Greater than one year, less than two years
Greater than two years, less than three years
Greater than three years, less than four years
Greater than four years, less than five years
Greater than five years
2013
Total
(6,819)
(2,604)
(2,005)
(3,177)
(3,001)
(6,685)
(17,472)
(24,291)
2012
restated(1)
Total
(7,581)
(2,787)
(3,404)
(1,782)
(1,799)
(8,199)
(17,971)
(25,552)
Other
financial
liabilities
(4,204)
–
–
–
–
–
–
(4,204)
Other
financial
liabilities
(4,410)
–
–
–
–
–
–
(4,410)
2013
2012
1,318
637
1,449
–
5,847
–
9,251
2,923
569
3,612
2,153
–
–
9,257
(1) Includes undrawn rand facilities equivalent to $1.2 billion (2012: $1.5 billion) in respect of facilities with 364 day maturity which roll automatically on a daily basis, unless notice is served.
In March 2013 the Group replaced a $3.5 billion credit facility maturing in July 2015 with a $5 billion credit facility maturing in March 2018. At the same time the
$2 billion multi-currency credit facility within the Diamond segment was repaid and cancelled.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders
and benefits for other stakeholders and, with cognisance of forecast future market conditions and structuring, to maintain an optimal capital structure to
reduce the cost of capital.
In order to manage the short and long term capital structure, the Group adjusts the amount of ordinary dividends paid to shareholders, returns capital to
shareholders (via, for example, share buybacks and special dividends), arranges debt to fund new acquisitions and may also sell non-core assets to reduce debt.
The Group monitors capital on the basis of the ratio of net debt to total capital (gearing). Net debt is calculated as total borrowings less cash and cash
equivalents (including derivatives which provide an economic hedge of debt and the net debt of disposal groups). Total capital is calculated as ‘Net assets’
(as shown in the Consolidated balance sheet) excluding net debt. Total capital and gearing are as follows:
US$ million
Net assets
Net debt including related derivatives (note 24)
Total capital
Gearing
2013
37,364
10,652
48,016
22.2%
2012
restated(1)
43,738
8,510
52,248
16.3%
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
The increase in gearing since 31 December 2012 reflects the $2.1 billion increase in net debt in the year. Net assets at 31 December 2013 were $6.4 billion
lower than at 31 December 2012 due to net movements in equity including currency translation adjustments, dividends and retained earnings in the year.
Management believes that gearing levels remain at a sustainable level given the Group’s strong level of operating cash flows.
Anglo American plc Annual Report 2013
185
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
25. BORROWINGS continued
Market risk
Market risk is the risk that financial instrument fair values will fluctuate due to changes in market prices. The Group uses net debt to manage the Group’s
interest rate risks and foreign exchange risks on borrowings and cash. In relation to net debt, the Group manages its exposure with the use of cross currency
swaps and interest rate swaps in order to ensure that the majority of borrowings are floating rate US dollar denominated. The Group does not hedge foreign
exchange exposures on rand denominated borrowings in South Africa. For more information regarding the Group’s financial risk management see note 39.
The Group’s exposure to foreign exchange and interest rate risks has been re-presented to match more closely the way in which the Group manages its
exposure to these risks. Comparatives have been reclassified to align with current year presentation.
The table below reflects the exposure of the Group’s net debt to currency and interest rate risk.
US$ million
US dollar
Euro
Rand
Brazilian real
Australian dollar
Sterling
Other
Impact of interest derivatives
Total
US$ million
US dollar
Euro
Rand
Brazilian real
Australian dollar
Sterling
Other
Impact of interest derivatives
Total
Cash
and cash
equivalents
5,460
22
1,225
716
103
41
135
–
7,702
Floating
rate
borrowings
Fixed
rate
borrowings
(942)
–
(890)
(1,319)
–
–
(25)
(14,468)
(17,644)
(4,477)
(8,656)
(231)
(2)
(440)
(747)
(106)
14,468
(191)
Non-interest
bearing
borrowings
–
–
(7)
–
–
–
(4)
–
(11)
Derivatives
hedging
net debt
(510)
–
2
–
–
–
–
–
(508)
Net debt
in disposal
groups
–
–
–
–
–
–
–
–
–
Impact of
currency
derivatives
(11,257)
8,656
–
1,319
440
747
95
–
–
Cash
and cash
equivalents
7,588
27
942
108
220
18
168
–
9,071
Floating
rate
borrowings
(1,910)
–
(1,096)
(1,072)
–
–
(94)
(13,135)
(17,307)
Fixed
rate
borrowings
(5,412)
(6,591)
(654)
(2)
–
(785)
–
13,135
(309)
Non-interest
bearing
borrowings
–
–
(10)
–
–
–
–
–
(10)
Derivatives
hedging
net debt
(191)
–
23
–
–
–
–
–
(168)
Net debt
in disposal
groups
4
–
–
11
–
198
–
–
213
Impact of
currency
derivatives
(8,448)
6,591
–
1,072
–
785
–
–
–
2013
Total
(11,726)
22
99
714
103
41
95
–
(10,652)
2012
restated(1)
Total
(8,369)
27
(795)
117
220
216
74
–
(8,510)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
26. COMMITMENTS
See note 40x for the Group’s accounting policy on leases.
At 31 December the Group had the following outstanding capital commitments:
US$ million
Contracted but not provided(1)
(1) Excludes commitments relating to joint ventures. See note 13 for details.
2013
3,391
2012
2,330
In addition, the Group had outstanding commitments under contracts relating to shipping services of $1,168 million (2012: $1,033 million).
At 31 December the Group had the following commitments under non-cancellable operating leases:
US$ million
Expiry date
Within one year
Greater than one year, less than two years
Greater than two years, less than five years
Greater than five years
Operating leases relate principally to land and buildings, vehicles and shipping vessels.
2013
104
83
145
145
477
2012
154
122
200
277
753
186
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
27. EMPLOYEE NUMBERS AND COSTS
The average number of employees, excluding contractors and associates’ and joint ventures’ employees, and including a proportionate share of employees
within joint operations, was:
Thousand
By segment
Iron Ore and Manganese
Metallurgical Coal
Thermal Coal
Copper
Nickel
Niobium and Phosphates
Platinum
Diamonds
Other Mining and Industrial
Corporate Activities and Unallocated Costs
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) The average number of employees in Diamonds reflects the acquisition of De Beers from 16 August 2012.
The average number of employees by principal location of employment was:
Thousand
South Africa
Other Africa
South America
North America
Australia and Asia
Europe
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
Payroll costs in respect of the employees included in the tables above were:
US$ million
Wages and salaries
Social security costs
Post employment benefits(2)
Share-based payments (note 29)
Total payroll costs
Reconciliation:
Less: employee costs capitalised
Less: employee costs included within special items
Employee costs included in operating costs
2013
2012
restated(1)
8
3
8
6
2
2
55
10
2
2
98
2013
75
4
11
2
4
2
98
2013
4,439
160
395
261
5,255
(265)
(156)
4,834
8
4
9
5
2
2
57
3(2)
13
2
105
2012
restated(1)
82
2
11
1
3
6
105
2012
restated(1)
4,511
165
377
321
5,374
(246)
(107)
5,021
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
Includes contributions to defined contribution pension and medical plans, current and past service costs related to defined benefit pension and medical plans and other benefits provided
to certain employees during retirement, see note 28.
In accordance with IAS 24 Related Party Disclosures (Amended), key management personnel are those persons having authority and responsibility for
planning, directing and controlling the activities of the Group, directly or indirectly, including any director (executive and non-executive) of the Group.
Compensation for key management was as follows:
US$ million
Salaries and short term employee benefits
Social security costs
Termination benefits
Post employment benefits
Share-based payments
2013
30
5
11
4
21
71
2012
24
3
2
3
25
57
Key management comprises members of the Board and the Group Management Committee.
Disclosure of directors’ emoluments, pension entitlements, share options and long term incentive plan awards required by the Companies Act 2006 and those
specified for audit by Regulation 11 and Schedule 8 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 are
included in the Remuneration report.
Anglo American plc Annual Report 2013
187
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
28. RETIREMENT BENEFITS
See note 40t for the Group’s accounting policy on retirement benefits.
The Group operates a number of defined contribution and defined benefit pension plans. It also operates post employment medical plans, principally
in South Africa.
Defined contribution plans
The defined contribution pension and medical cost represents the actual contributions payable by the Group to the various plans. At 31 December 2013 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 defined contribution pension plans (net of amounts capitalised)
was $261 million (2012: $262 million) and for defined contribution medical plans (net of amounts capitalised) was $88 million (2012: $69 million).
Defined benefit pension plans and post employment medical plans
The Group operates defined benefit pension and medical plans across a number of segments. The most significant plans are in South Africa and the
United Kingdom.
A summary of the movements in the net pension plan assets and retirement benefit obligations on the Consolidated balance sheet is as follows:
US$ million
Net liability recognised at 1 January
Acquired through business combinations
Net income statement charge
Remeasurement of net defined benefit obligation
Employer contributions
Other
Currency movements
Net liability recognised at 31 December
Amounts recognised as:
Defined benefit pension plans in surplus(2)
Retirement benefit obligation – pension plans
Retirement benefit obligation – medical plans
2013
(1,233)
–
(88)
97
151
(10)
70
(1,013)
191
(727)
(477)
(1,013)
2012
restated(1)
(569)
(889)
(80)
190
90
39
(14)
(1,233)
176
(828)
(581)
(1,233)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Amounts included in ‘Other non-current assets’ on the Consolidated balance sheet.
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 in the relevant jurisdiction. The unfunded liabilities are principally in relation
to termination indemnity plans in Chile.
The post employment medical plans provide health benefits to retired employees and certain dependants. Eligibility for cover is dependent upon certain
criteria. The majority of these plans are unfunded, and are principally in South Africa.
Independent qualified actuaries carry out full valuations at least every three years using the projected unit credit method. The actuaries have updated the
valuations to 31 December 2013. Assumptions are set after consultation with the qualified actuaries. While management believe the assumptions used are
appropriate, a change in the assumptions used would impact the Group’s other comprehensive income.
Characteristics and risks of plans
The defined benefit plans expose the Group to actuarial risks such as longevity, investment risk, inflation risk, interest rate risk as well as foreign exchange risk.
The maturity profile of each plan will vary. The weighted average duration of the South African plans is 12 years (2012: 12 years), United Kingdom plans is
19 years (2012: 19 years) and plans in other regions is 14 years (2012: 14 years). This represents the average period over which future benefit payments are
expected to be made.
Employer contributions are made in accordance with the terms of each plan and vary each year. Employer contributions made in the year were $151 million
to pension plans and in addition $28 million of benefits were paid in relation to post employment medical plans. The Group expects to contribute $152 million
to its pension plans and $28 million to its post employment medical plans in 2014.
South Africa
The pension plans in South Africa are in surplus, with the asset recognised on the balance sheet restricted to the amount in the Employer Surplus Account,
being plan assets less plan liabilities less any contingency reserves as recommended by the funds’ actuaries.
The Employer Surplus Account is the amount that the Group is entitled to by way of refund. All pension plans in South Africa are now closed to new members
and the majority of plans are closed to future benefit accrual. As the plans are in surplus no employer contributions are currently being made.
The Group’s provision of anti-retroviral therapy to HIV positive staff has not significantly impacted the post employment medical plan liability.
United Kingdom
The Group operates funded pension plans in the United Kingdom. These plans are now closed to new members and the majority of plans are closed to future
benefit accrual.
Certain assets held by the main plans in the United Kingdom are structured to closely match the characteristics of the liabilities through a variety of
investment strategies, including the use of interest rate swaps and inflation swaps to hedge exposure to interest rate risk and inflation rate risk respectively.
The Group is committed to make payments to certain United Kingdom pension plans under deficit funding plans agreed with the respective Trustees. Where
the present value of the agreed funding payments exceeds the liability in respect of the plans as measured under IFRS, and would therefore, when paid, give
rise to a surplus as measured under IFRS, a provision is recognised for any part of that surplus that would not be recoverable. Any resulting surplus has been
assessed to be fully recoverable and as such no provision has been recognised.
188
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
28. RETIREMENT BENEFITS continued
Other
Other pension and post employment medical plans primarily comprise obligations in Chile where legislation requires employers to provide for a termination
indemnity, entitling employees to a cash payment made on the termination of an employment contract. The features of this provision meet the definition of a
defined benefit pension obligation under IAS 19R and consequently an unfunded liability is recognised on the Consolidated balance sheet. Other plans are in
Brazil, Canada and mainland Europe and consist of funded and unfunded pension plans and unfunded medical aid plans. These plans are not considered to be
significant to the Group.
Actuarial assumptions
The principal assumptions used to determine the actuarial present value of benefit obligations and pension charges and credits under IAS 19R are detailed
below (shown as weighted averages):
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
Post employment medical plans
Average discount rate for plan liabilities
Average rate of inflation
Expected average increase in healthcare costs
South
Africa
United
Kingdom
8.8%
6.4%
8.3%(1)
6.4%
8.8%
6.4%
8.2%
4.4%
3.4%
3.4%(2)
3.3%
4.3%
3.4%
8.1%
2013
Other
7.3%
3.5%
6.6%
3.4%
8.1%
5.7%
8.1%
South
Africa
United
Kingdom
8.1%
6.3%
8.3%
6.3%
(1)
8.0%
6.4%
7.7%
4.3%
2.8%
2.8%(2)
3.0%
4.5%
2.7%
7.5%
2012
Other
6.8%
1.9%
3.9%
0.4%
5.7%
3.9%
7.6%
(1) With the exception of De Beers, plans in South Africa have ceased future accrual of benefits.
(2) With the exception of De Beers, plans in the United Kingdom have ceased future accrual of benefits but some benefits remain linked to salary increases.
Mortality assumptions are determined based on standard mortality tables with adjustments, as appropriate, to reflect experience of conditions locally. In
South Africa, the PA90 tables (2012: PA90 tables) are used. The main plans in the United Kingdom use either SAPS tables or Club Vita models with plan
specific adjustments based on mortality investigations (2012: SAPS tables and Club Vita models). The mortality tables used imply that a male or female aged
60 at the balance sheet date has the following future life expectancy:
Years
South Africa
United Kingdom
Other
2013
19.8
28.7
22.7
Male
2012
20.1
28.5
23.4
2013
24.6
30.2
27.0
Female
2012
24.9
30.1
27.4
Sensitivity analysis
Significant actuarial assumptions for the determination of pension and medical plan liabilities are the discount rate, inflation rate and mortality. The sensitivity
analysis below has been provided by local actuaries on an approximate basis based on changes in the assumptions occurring at the end of the year assuming
that all other assumptions are held constant and the effect of interrelationships is excluded. The effect on plan liabilities is as follows:
US$ million
Discount rate – 0.5% decrease
Inflation rate(1) – 0.5% increase
Life expectancy – increase by 1 year
(1) Salary, pension and expected increases in healthcare costs are all functions of inflation.
Income statement
The amounts recognised in the Consolidated income statement are as follows:
South
Africa
United
Kingdom
(84)
(81)
(67)
(392)
(199)
(121)
Other
(20)
(13)
(6)
US$ million
Amount charged within operating costs
Net charge to net finance costs
Total charge to the income statement
Post
employment
medical
plans
4
36
40
Pension
plans
23
25
48
2013
Total
27
61
88
Post
employment
medical
plans
4
33
37
Pension
plans
27
21
48
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
2013
Total
(496)
(293)
(194)
2012
restated(1)
Total
31
54
85
Anglo American plc Annual Report 2013
189
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
28. RETIREMENT BENEFITS continued
Comprehensive income
The amounts recognised in the Consolidated statement of comprehensive income are as follows:
US$ million
Return on plan assets, excluding interest income
Actuarial gains/(losses) on plan liabilities(2)
Movement in surplus restriction
Remeasurement of net defined benefit obligation
Post
employment
medical
plans
–
17
–
17
Pension
plans
146
8
(74)
80
2013
Total
146
25
(74)
97
Post
employment
medical
plans
–
(35)
–
(35)
Pension
plans
176
66
(17)
225
2012
restated(1)
Total
176
31
(17)
190
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Actuarial gains/(losses) on plan liabilities comprise gains/(losses) from changes in financial and demographic assumptions as well as experience on plan liabilities, none of which are
individually material.
Pension plan assets and liabilities by geography
The split of the present value of funded and unfunded obligations in defined benefit pension plans and the fair value of pension assets at 31 December is
as follows:
US$ million
Equity
Corporate bonds
Government bonds
Cash
Other
Fair value of pension plan assets(2)
Active members
Deferred members
Pensioners
Present value of funded obligations
Present value of unfunded obligations(3)
Net surplus/(deficit) in pension plans
Surplus restriction
Recognised retirement benefit
assets/(liabilities)
Amounts in the Consolidated balance sheet
Defined benefit pension plans in surplus
Retirement benefit obligation – pension plans
South
Africa
515
–
936
74
41
1,566
(11)
(36)
(1,183)
(1,230)
–
336
(177)
159
159
–
159
United
Kingdom
1,232
817
1,189
211
166
3,615
(252)
(1,494)
(2,334)
(4,080)
–
(465)
–
2013
Total
1,761
868
2,187
286
213
5,315
(301)
(1,546)
(3,610)
(5,457)
(217)
(359)
(177)
Other
14
51
62
1
6
134
(38)
(16)
(93)
(147)
(217)
(230)
–
(465)
(230)
(536)
32
(497)
(465)
–
(230)
(230)
191
(727)
(536)
South
Africa
652
262
815
66
50
1,845
(14)
(53)
(1,522)
(1,589)
–
256
(80)
176
176
–
176
United
Kingdom
1,150
616
989
385
194
3,334
(226)
(1,395)
(2,273)
(3,894)
–
(560)
(37)
(597)
–
(597)
(597)
Other
11
34
99
1
3
148
(45)
(7)
(112)
(164)
(215)
(231)
–
(231)
–
(231)
(231)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) The fair value of assets is used to determine the funding level of the plans. The fair value of the assets of the funded plans was sufficient to cover 97% (2012: 94%) of the benefits that
had accrued to members after allowing for expected increases in future earnings and pensions.
Includes $200 million (2012: $196 million) relating to active members.
(3)
All investments have been fair valued based on quoted market prices.
Movement analysis
The changes in the fair value of plan assets are as follows:
US$ million
At 1 January
Acquired through business combinations(2)
Effects of settlements
Interest income
Return on plan assets, excluding interest income
Contributions paid by employer
Benefits paid
Contributions paid by plan participants
Refund of surplus(5)
Currency movements
At 31 December
Post
employment
medical
plans
21
–
–
1
–
–
(1)
–
–
(4)
17
Pension
plans
5,327
–
(3)
269(3)
146(3)
151
(4)
(253)
2
(26)
(298)
5,315
2013
Total
5,348
–
(3)
270
146
151
(254)
2
(26)
(302)
5,332
Post
employment
medical
plans
22
–
–
1
–
–
(1)
–
–
(1)
21
Pension
plans
2,583
2,417
(50)
175(3)
176(3)
90
(151)
1
–
86
5,327
2012
restated(1)
Total
1,813
912
1,903
452
247
5,327
(285)
(1,455)
(3,907)
(5,647)
(215)
(535)
(117)
(652)
176
(828)
(652)
2012
restated(1)
Total
2,605
2,417
(50)
176
176
90
(152)
1
–
85
5,348
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Following the Group’s acquisition of De Beers on 16 August 2012, the Group consolidated the defined benefit pension and post employment medical plans of De Beers.
(3) The actual return on assets in respect of pension plans was $415 million (2012: $351 million).
(4)
Includes $11 million of benefits paid to defined contribution plans.
(5) The refund of $26 million represents a refund of surplus plan assets as agreed with the pension plan Trustees. These funds relate to plans in South Africa and will be used to make future
contributions to post employment medical plans. The refund is included within ‘Other non-current assets’ on the Consolidated balance sheet.
190
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
28. RETIREMENT BENEFITS continued
The changes in the present value of defined benefit obligations are as follows:
US$ million
At 1 January
Acquired through business combinations(2)
Current service costs
Effects of settlements
Interest cost
Actuarial gains/(losses)
Benefits paid
Contributions paid by plan participants
Transfer to liabilities directly associated with assets held for sale
Currency movements
At 31 December
Post
employment
medical
plans
(602)
–
(4)
–
(37)
17
28
–
–
104
(494)
Pension
plans
(5,862)
–
(23)
3
(294)
8
242
(2)
–
254
(5,674)
2013
Total
(6,464)
–
(27)
3
(331)
25
270
(2)
–
358
(6,168)
Pension
plans
(2,792)
(2,974)
(18)
41
(196)
66
151
(1)
–
(139)
(5,862)
Post
employment
medical
plans
(309)
(302)
(3)
–
(30)
(35)
(3)
24
–
39
14
(602)
(3)
(3)
(3)
2012
restated(1)
Total
(3,101)
(3,276)
(21)
41
(226)
31
175
(1)
39
(125)
(6,464)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Following the Group’s acquisition of De Beers on 16 August 2012, the Group consolidated the defined benefit pension and post employment medical plans of De Beers.
(3) Movements in post employment medical plans exclude movements within the obligations transferred to held for sale.
29. SHARE-BASED PAYMENTS
See note 40u for the Group’s accounting policies on share-based payments.
During the year ended 31 December 2013 the Group had share-based payment arrangements with employees relating to shares of the Company, the details
of which are described in the Remuneration report. All of these Company schemes are equity settled, either by award of ordinary shares (BSP, LTIP and SIP)
or award of options to acquire ordinary shares (ESOS, DOP and SAYE). The ESOS is now closed to new participants, having been replaced with the BSP. No
options have been granted under the DOP.
The total share-based payment charge relating to Anglo American plc shares for the year is split as follows:
US$ million
BSP
LTIP
Other schemes
Share-based payment charge relating to Anglo American plc shares(1)
2013
82
52
10
144
2012
103
46
8
157
(1)
In addition, there are equity settled share-based payment charges of $65 million (2012: $89 million) relating to Kumba Iron Ore Limited shares and $52 million (2012: $72 million)
relating to Anglo American Platinum Limited shares. Certain business units also operate cash settled employee share-based payment schemes. These schemes had a net charge of nil
(2012: charge of $3 million).
Schemes settled by award of ordinary shares
The fair value of ordinary shares awarded under the BSP, LTIP and LTIP – AOSC, 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 are set out below:
Arrangement(1)
Date of grant
Number of instruments
Share price at the date of grant (£)
Contractual life (years)
Vesting conditions
Expected volatility
Risk free interest rate
Expected departures
Expected outcome of meeting performance
criteria (at date of grant)
Fair value at date of grant (weighted
average) (£)
BSP
01/03/13
4,830,179
19.00
3
(2)
LTIP LTIP – AOSC
01/03/13
470,561
19.00
3
(4)
01/03/13
1,285,634
19.00
3
(3)
35%
0.3%
5% pa
35%
0.3%
5% pa
35%
0.3%
5% pa
2013
LTIP – TSR
01/03/13
470,561
19.00
3
(5)
35%
0.3%
5% pa
BSP
02/03/12
4,579,741
26.41
3
(2)
40%
0.5%
5% pa
LTIP
02/03/12
1,044,808
26.41
3
(3)
LTIP – AOSC
02/03/12
329,665
26.41
3
(4)
40%
0.5%
5% pa
40%
0.5%
5% pa
2012
LTIP – TSR
02/03/12
329,665
26.41
3
(5)
40%
0.5%
5% pa
100%
100%
100%
n/a
100%
100%
100%
n/a
18.55
19.00
19.00
9.31
25.78
26.41
26.41
15.24
(1) The number of instruments used in the fair value models may differ from the total number of instruments awarded in the year due to awards made subsequent to the fair value calculations.
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) Three years of continuous employment with enhancement shares having variable vesting based on non-market based performance conditions.
(3) Three years of continuous employment.
(4) Variable vesting dependent on three years of continuous employment and Group AOSC target being achieved.
(5) Variable vesting dependent on three years of continuous employment and market based performance conditions being achieved.
The expected volatility is based on historic volatility over the last five years. The risk free interest rate is the yield on zero-coupon UK government bonds with
a term similar to the expected life of the award.
The charges arising in respect of the other Anglo American plc employee share schemes that the Group operated during the year are not considered material.
Anglo American plc Annual Report 2013
191
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
29. SHARE-BASED PAYMENTS continued
The movements in the number of shares for the more significant share-based payment arrangements are as follows:
Bonus Share Plan(1)
Ordinary shares of 5486/91 US cents may be awarded under the terms of this scheme for no consideration.
Number of awards
Outstanding at 1 January
Conditionally awarded in year
Vested in year
Forfeited in year
Outstanding at 31 December
2013
2012
9,656,833 10,106,373
4,579,239
4,830,179
(2,234,189) (4,264,598)
(764,181)
(1,381,353)
9,656,833
10,871,470
(1) The BSP was approved by shareholders in 2004 as a replacement for the ESOS. Further information in respect of the BSP, including performance conditions, is shown in the Remuneration report.
Long Term Incentive Plan(1)(2)
Ordinary shares of 5486/91 US cents may be awarded under the terms of this scheme for no consideration.
Number of awards
Outstanding at 1 January
Conditionally awarded in year
Vested in year
Forfeited in year
Outstanding at 31 December
2013
3,985,771
2,226,755
2012
3,720,535
1,704,138
(901,610) (1,060,822)
(378,080)
(548,705)
3,985,771
4,762,211
(1) The early vesting of share awards is permitted at the discretion of the Company upon, inter alia, termination of employment, ill health or death.
(2) The LTIP awards are contingent on pre-established performance criteria being met. Further information in respect of this scheme is shown in the Remuneration report.
Schemes settled by award of options
The fair value of options granted under the SAYE scheme, being the only material option scheme, was calculated using a Black Scholes model. The
assumptions used in these calculations for the current and prior year are set out in the table below:
Arrangement(1)
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 (weighted average)
Expected departures
Fair value per option granted (weighted average) (£)
2013 SAYE
19/04/13
87,224
13.84
15.97
3.5-5.5
3-5
35%
3.5-5.5
0.5%
5% pa
4.53
2012 SAYE
20/04/12
245,790
19.68
23.49
3.5-7.5
3-7
40%
3.5-7.5
0.9%
5% pa
6.14
(1) The number of instruments used in the fair value models may differ from the total number of instruments awarded in the year due to awards made subsequent to the fair value calculations.
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 of continuous employment.
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 interest
rate is the yield on zero-coupon UK government bonds with a term similar to the expected life of the option.
A reconciliation of option movements for the more significant share-based payment arrangements over the year to 31 December 2013 and the prior year
is shown below. All options outstanding at 31 December 2013 with an exercise date on or prior to 31 December 2013 are deemed exercisable. Options were
exercised regularly during the year and the weighted average share price for the year ended 31 December 2013 was £15.79 (2012: £21.43).
SAYE Share Option Scheme(1)
Options to acquire ordinary shares of 5486/91 US cents were outstanding under the terms of this scheme as follows:
Outstanding at 1 January
Granted in year
Exercised in year
Forfeited in year
Outstanding at 31 December
2013
Weighted
average
exercise
price £
16.26
13.84
9.88
20.76
14.36
Number
of options
1,048,504
87,224
(366,319)
(560,693)
208,716
Number
of options
1,520,677
245,790
(589,299)
(128,664)
1,048,504
2012
Weighted
average
exercise
price £
12.91
24.60
10.11
20.86
16.26
(1) The early exercise of share options is permitted at the discretion of the Company upon, inter alia, termination of employment, ill health or death.
Options outstanding at 31 December 2013 have a weighted average remaining contractual life of 1.9 years (2012: 1.8 years) and an exercise price range
of £9.56 – £25.47 (2012: £9.56 – £25.47).
192
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
GROUP STRUCTURE AND TRANSACTIONS
29. SHARE-BASED PAYMENTS continued
Executive Share Option Scheme(1)
Options to acquire ordinary shares of 5486/91 US cents were outstanding under the terms of this scheme as follows:
Outstanding at 1 January
Exercised in year
Forfeited in year
Outstanding at 31 December
2013
Weighted
average
exercise
price £
11.64
9.72
11.07
13.39
Number
of options
2,500,107
(809,259)
(56,051)
1,634,797
2012
Weighted
average
exercise
price £
11.42
10.83
13.42
11.64
Number
of options
1,634,797
(760,114)
(29,000)
845,683
(1) Closed to new participants. The early exercise of share options is permitted at the discretion of the Company upon, inter alia, termination of employment, ill health or death.
Options outstanding at 31 December 2013 have a weighted average remaining contractual life of 0.2 years (2012: 0.7 years) and an exercise price range
of £11.52 – £13.43 (2012: £9.28 – £13.43).
30. BUSINESS COMBINATIONS AND FORMATION OF JOINT VENTURES
See note 40d for the Group’s accounting policy on business combinations and goodwill arising thereon.
2013
Lafarge Tarmac transaction
On 18 February 2011 the Group announced an agreement with Lafarge SA (Lafarge) to combine their cement, aggregates, ready-mix concrete, asphalt
and asphalt surfacing, maintenance services and waste services businesses in the United Kingdom, forming a 50:50 joint venture.
In May 2012 the Competition Commission approved the formation of the joint venture subject to a number of conditions being met. In July 2012 the Group
accepted the conditions of the Competition Commission and consequently the associated Tarmac Quarry Materials assets were classified as held for sale
and measured at fair value less costs to sell.
On 7 January 2013 the Group announced the completion of the 50:50 joint venture. At the same time, and pursuant to the Competition Commission’s
conditions precedent to the formation of the joint venture, the Group completed the sale of certain of Tarmac Quarry Materials’ operations for consideration
of $196 million to Mittal Investments. The agreed sale of Tarmac Quarry Materials’ 50% ownership interest in Midland Quarry Products was subject to a right
of pre-emption in favour of Hanson Quarry Products Europe Limited (Hanson), who exercised their right in April 2013.
The main accounting effects of the transaction are set out below:
• At 31 December 2012 the assets and liabilities of Tarmac Quarry Materials were presented separately in the Consolidated balance sheet, within ‘Assets held
for sale’ and ‘Liabilities directly associated with assets held for sale’.
• During the first half of 2013 the Group disposed of its interests in Tarmac Quarry Materials in exchange for a 50% interest in the newly formed joint venture,
plus cash, deferred consideration and contingent consideration receivable for the operations that were sold to Mittal Investments and Hanson.
This resulted in derecognition of all assets and liabilities relating to the Tarmac Quarry Materials operations and recognition of an investment in the Lafarge
Tarmac joint venture (included in ‘Investments in associates and joint ventures’ on the Consolidated balance sheet). The Group’s retained interest in the assets
and liabilities of Tarmac Quarry Materials was included at the pre-transaction carrying amount. The Group’s share of the Lafarge business, acquired through its
new interest in the Lafarge Tarmac joint venture, was accounted for at fair value. The difference between the fair value of the acquired share of the Lafarge
business and the fair value of the acquired share of its identifiable net assets was recognised as goodwill.
The fair values of the Lafarge identifiable net assets acquired and of the Lafarge Tarmac joint venture as a whole, were determined primarily by reference to
the present value of future income streams expected to be generated by the assets, and to market prices achieved for comparable assets. Where appropriate,
certain assets were valued using a depreciated replacement cost approach. Fair values recognised on acquisition were provisional at 30 June 2013 and are
final at 31 December 2013.
The net assets derecognised, the proceeds and the resulting loss on disposal were as follows:
US$ million
Intangible assets
Property, plant and equipment
Other non-current assets
Current assets excluding cash
Total assets classified as held for sale
Current liabilities
Non-current liabilities
Total liabilities directly associated with assets classified as held for sale
Net assets derecognised
Exchanged for:
50% interest in Lafarge Tarmac joint venture
Cash (net of cash derecognised(1))
Deferred and contingent consideration
Net gain arising
Less: cumulative translation loss recycled from reserves
Net loss on disposal
2013
417
1,642
11
400
2,470
(400)
(262)
(662)
1,808
1,658
70
87
1,815
7
(62)
(55)
(1) Cash derecognised in the transaction was $39 million. In addition, transaction costs of $22 million, accrued in 2012, were paid in the year, resulting in a net cash inflow of $48 million.
Anglo American plc Annual Report 2013
193
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
GROUP STRUCTURE AND TRANSACTIONS
30. BUSINESS COMBINATIONS AND FORMATION OF JOINT VENTURES continued
The Group’s share of the net assets of the joint venture (included in ‘Investments in associates and joint ventures’ on the Consolidated balance sheet), based
on final fair values at the date of acquisition, was as follows:
US$ million
Property, plant and equipment
Other non-current assets
Current assets
Net assets classified as held for sale
Current liabilities
Non-current liabilities
Net identifiable assets
Goodwill
Investment in joint venture(1)
(1)
Included within the Other Mining and Industrial segment.
Retained
share in
Tarmac
Quarry
Materials
Book values
721
6
247
28
(266)
(120)
616
202
818
Acquired
share of
Lafarge
business
Fair values
560
8
246
–
(239)
(81)
494
346
840
2013
Joint venture
net assets
Total
1,281
14
493
28
(505)
(201)
1,110
548
1,658
Goodwill of $548 million within the investment comprised $202 million of pre-existing goodwill relating to the retained interest in the Tarmac Quarry Materials
business, and $346 million of goodwill relating to the formation of the new joint venture. The latter portion relates in part to synergies expected to be realised
through the combination of the two businesses, and also includes $26 million associated with the requirement to recognise a deferred tax liability based on
the difference between the fair value of the assets acquired and their tax bases.
2012
De Beers
On 16 August 2012 Anglo American acquired an additional 40% of the share capital of De Beers Société Anonyme (De Beers) to bring its total shareholding
to 85%. De Beers is a leading diamond company with expertise in the exploration, mining and marketing of diamonds.
The Group funded the acquisition by way of cash consideration of $5.2 billion, less cash acquired of $0.4 billion. The acquisition has been accounted for as
a business combination using the acquisition method of accounting with an effective date of 16 August 2012, being the date the Group gained control of
De Beers.
Goodwill recognised on acquisition, of $2,355 million, arose principally from the significant synergies associated with the Group having control of De Beers,
the value associated with the De Beers workforce and the requirement to recognise a deferred tax liability calculated as the difference between the tax effect
of the fair value of the assets acquired and their tax bases. No goodwill is expected to be deductible for tax purposes.
194
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
GROUP STRUCTURE AND TRANSACTIONS
31. DISPOSALS OF SUBSIDIARIES
US$ million
Net assets disposed
Property, plant and equipment
Other non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets prior to completion(1)
Fair value of indemnities provided and risks retained by Anglo American on sale
Non-controlling interests
Net assets disposed
Cumulative translation loss/(gain) recycled from reserves
Other (credits)/charges
Net loss on disposal(2)
Net consideration for equity interest
Less:
Net cash and cash equivalents disposed
Purchase of insurance claims for cash
Deferred contingent consideration at fair value
Accrued transaction fees and similar items
Net cash (outflow)/inflow from disposals
2013
2012
214
5
323
(296)
(61)
185
100
–
285
11
(3)
(129)
164
(11)
(168)
(30)
–
(45)
208
65
347
(187)
(273)
160
–
(5)
155
(6)
2
(21)
130
(38)
–
–
8
100
(1) These net assets were included within ‘Assets classified as held for sale’ and ‘Liabilities directly associated with assets classified as held for sale’. In 2013 current liabilities included intercompany
(2)
debt due to Anglo American. The net assets do not include the insurance claims which were purchased by the Group for cash consideration of $168 million.
Included in non-operating special items, see note 6. The total net loss on disposal of Amapá of $175 million also includes a $46 million impairment recognised in the six months ending
30 June 2013.
Disposal of Amapá
On 28 December 2012 Anglo American and Cliffs Natural Resources (Cliffs) agreed to sell their respective 70% and 30% interests in the Amapá iron ore
system, including the mine, the rail infrastructure and the port of Santana, to Zamin Ferrous Limited (Zamin). Amapá was classified as held for sale as at
31 December 2012.
On 28 March 2013 an incident occurred which resulted in the tragic loss of four lives with a further two people still missing, as well as the total loss of the port
operation. A detailed investigation into the causes of the incident has been undertaken and the results have been passed on to Amapá’s insurers.
In light of the incident at the port, Anglo American entered into further discussions with Cliffs and Zamin. On 25 September 2013 the Group announced that it
had entered into an agreement with Cliffs to acquire its 30% interest in Amapá and had agreed to amend its sale agreement with Zamin to reflect, inter alia,
Anglo American’s disposal of a 100% interest in Amapá to Zamin. These transactions completed on 1 November 2013.
Consideration of $164 million from Zamin comprised:
• $134 million in cash (net of certain adjustments at completion). A potential adjustment of up to an additional $25 million is subject to the outcome of certain
rulings in respect of the port reconstruction; and
• conditional deferred consideration of up to a maximum of $130 million in total, payable over a five year period and calculated on the basis of the market price
for iron ore. The estimated fair value of this consideration was $30 million.
Anglo American assumed responsibility for, and the risks and rewards of, certain insurance claims including those relating to the port incident, through the
purchase of the claims from Amapá at the full claim value of $168 million.
After the transaction the Group continued to recognise a deferred consideration asset, an insurance receivable and certain retained liabilities.
The valuation of the amounts receivable and the retained liabilities incorporates estimates, particularly in relation to the likely value of conditional deferred
consideration receivable and the fair value of the insurance claims acquired from Amapá. These estimates are based on assumptions about future events and
conditions which are considered appropriate based on the information available. Reasonable changes in these assumptions would not result in a material
change in the loss on disposal.
Disposal proceeds in 2013
In addition to the net cash outflow of $45 million on disposal of Amapá, there was a net cash inflow of $48 million in respect of the formation of the Lafarge
Tarmac joint venture (Other Mining and Industrial segment, see note 30), a cash inflow of $44 million relating to deferred proceeds in respect of undeveloped
coal assets in Australia which the Group disposed of in 2010 (Metallurgical Coal segment), a further $30 million cash payment in respect of liabilities assumed
as part of the Amapá disposal and payments of $4 million in respect of transaction fees accrued in prior years. This resulted in a net cash inflow on disposal of
subsidiaries, net of cash disposed, of $13 million for the year ended 31 December 2013.
Disposals in 2012
Disposals during 2012 relate to the disposal of Scaw South Africa and related companies in the Other Mining and Industrial segment.
Anglo American plc Annual Report 2013
195
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
GROUP STRUCTURE AND TRANSACTIONS
32. NON-CONTROLLING INTERESTS
Non-controlling interests that are material to the Group relate to the following subsidiaries:
• Kumba Iron Ore Limited (Kumba Iron Ore), which is a company incorporated in South Africa and listed on the JSE. Its principal mining operations are the
Sishen, Kolomela and Thabazimbi iron ore mines which are located in South Africa. Non-controlling interests hold an effective 46.3% interest in the
operations of Kumba Iron Ore, comprising the 30.3% interest held by other shareholders in Kumba Iron Ore and the 23% of Kumba Iron Ore’s principal
operating subsidiary, Sishen Iron Ore Company Proprietary Limited that is held by shareholders outside the Group.
• Anglo American Sur SA (Anglo American Sur), which is a company incorporated in Chile. Its principal operations are the Los Bronces and El Soldado copper
mines and the Chagres smelting plant, which are located in Chile. Non-controlling interests hold a 49.9% interest in Anglo American Sur.
US$ million
Profit attributable to non-controlling interests
Equity attributable to non-controlling interests
Dividends paid to non-controlling interests
Kumba
Iron Ore
991
1,185
(663)
Anglo
American Sur
439
2,060
(474)
Other(1)
(43)
2,448
(22)
2013
Total
1,387
5,693
(1,159)
Kumba
Iron Ore
975
1,049
(1,120)
Anglo
American Sur(2)
317
2,194
(100)
Other(1)
(386)
2,884
(47)
2012
Total
906
6,127
(1,267)
(1) Other consists of remaining individually immaterial non-controlling interests.
(2) At 1 January 2012 the Group held 75.5% of Anglo American Sur. In August 2012 the Group sold a further 24.5% of its interest in this company.
Summarised financial information on a 100% basis and before inter-company eliminations for Kumba Iron Ore and Anglo American Sur is as follows:
US$ million
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Revenue
Profit for the financial year
Total comprehensive income
Net cash inflow from operating activities
2013
2012
Kumba
Iron Ore
3,200
1,233
(516)
(1,190)
2,727
Anglo
American Sur
4,854
1,111
(1,004)
(832)
4,129
5,643
2,103
1,626
2,501
3,296
880
880
1,306
Kumba
Iron Ore
3,419
1,204
(698)
(1,423)
2,502
Anglo
American Sur
4,962
1,552
(832)
(1,285)
4,397
5,571
2,017
2,028
2,421
3,186
957
957
1,442
Changes in ownership interests in subsidiaries
The effect of changes in ownership interests on equity attributable to shareholders of the Company that did not result in a change in control is as follows:
US$ million
Sale of non-controlling interest in Anglo American Sur
Purchase of additional shares in Kumba Iron Ore
Other
Total
Equity
attributable
to
shareholders
of the
Company
–
–
38
38
Non-
controlling
interests
–
–
(14)
(14)
2013
Total
–
–
24
24
Equity
attributable
to
shareholders
of the
Company
420
(631)
(8)
(219)
Non-
controlling
interests
1,034
(59)
(5)
970
2012
Total
1,454
(690)
(13)
751
196
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
33. CALLED-UP SHARE CAPITAL AND CONSOLIDATED EQUITY ANALYSIS
Called-up share capital
Called-up, allotted and fully paid:
5% cumulative preference shares of £1 each
Ordinary shares of 5486/91 US cents each:
At 1 January
Allotted during the year
At 31 December
Number of shares
US$ million
Number of shares
US$ million
2013
2012
50,000
–
50,000
–
1,405,459,753
5,579
1,405,465,332
772
–
772
1,342,967,458
62,492,295
1,405,459,753
738
34
772
During 2013, 5,579 ordinary shares of 5486/91 US cents each were allotted to certain non-executive directors by subscription of their post-tax directors’ fees
(2012: 8,354 ordinary shares). In 2012, 62,483,941 ordinary shares of 5486/91 US cents each were allotted upon the conversion of Anglo American plc
convertible bonds.
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 and carrying value of called-up, allotted and fully paid ordinary shares as at 31 December 2013 was 1,394,149,340 and $766 million
(2012: 1,390,954,633 and $764 million).
At general meetings, every member who is present in person has one vote on a show of hands and, on a poll, every member who is present in person or by
proxy has one vote for every ordinary share held.
In the event of winding up, the holders of the cumulative preference shares will be entitled to the repayment of a sum equal to the nominal capital paid up, or
credited as paid up, on the cumulative preference shares held by them and any accrued dividend, whether such dividend has been earned or declared or not,
calculated up to the date of the winding up.
No ordinary shares were allotted on exercise of employee share option plans (2012: nil).
Own shares
Own shares
Treasury shares
Own shares held by subsidiaries and employee benefit trusts
Total
The movement in treasury shares during the year is as follows:
Treasury shares
At 1 January
Transferred to employees in settlement of share awards
At 31 December
Number of shares
US$ million
Number of shares
US$ million
2013
2012
11,315,992
115,691,282
127,007,274
599
5,864
6,463
14,505,120
115,970,790
130,475,910
2013
801
5,858
6,659
2012
Number of shares
US$ million
Number of shares
US$ million
14,505,120
(3,189,128)
11,315,992
801
(202)
599
19,538,911
(5,033,791)
14,505,120
1,126
(325)
801
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 Investment 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, provided all the funding
required to acquire the Anglo American plc shares through the market. These payments by Tenon were 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 $5.16 per share to Epoch, $8.03 per
share to Epoch Two and $6.66 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 Consolidated 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 on 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 2013 the Investment Companies together held 112,300,129 (2012: 112,300,129) Anglo American plc shares, which represented 8.1%
(2012: 8.1%) of the ordinary shares in issue (excluding treasury shares) with a market value of $2,451 million (2012: $3,455 million). 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.
The Investment Companies are considered to be structured entities. Although the Group has no voting rights in the Investment Companies and cannot appoint
or remove trustees of the charitable trusts, the Investment Companies continue to meet the accounting definition of a subsidiary in accordance with IFRS 10,
and as a result are consolidated by the Group.
Anglo American plc Annual Report 2013
197
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
33. CALLED-UP SHARE CAPITAL AND CONSOLIDATED EQUITY ANALYSIS continued
Employee benefit trust
The provision of shares to certain of the Company’s share option and share incentive schemes may be facilitated by an employee benefit trust or settled by
the issue of treasury shares. Shares held by the trust are recorded as own shares, and the carrying value is shown as a reduction within shareholders’ equity.
During 2013 no shares (2012: nil) from the trust were transferred to employees in settlement of share awards. The employee benefit trust has waived the right
to receive dividends on these shares.
The market value of the 985 shares (2012: 985 shares) held by the trust at 31 December 2013 was $21,000 (2012: $30,000).
The costs of operating the trust are borne by the Group but are not material.
Consolidated equity analysis
Fair value and other reserves comprise:
US$ million
At 1 January 2012
Total comprehensive income
Conversion of convertible bond
Other
At 1 January 2013
Total comprehensive expense
Other
At 31 December 2013
Convertible
debt
reserve
355
–
(355)
–
–
–
–
–
Available
for sale
reserve
576
118
–
–
694
(123)
–
571
Cash
flow hedge
reserve
5
10
–
–
15
(6)
–
9
Other
reserves(1)
824
–
–
(667)
157
–
(17)
140
Total
fair value
and other
reserves
1,760
128
(355)
(667)
866
(129)
(17)
720
(1)
In 2012, following a capital reduction in the Corporate segment, $667 million was transferred from the legal reserve to retained earnings, reducing the legal reserve from $675 million to
$8 million. Other reserves comprise a capital redemption reserve of $115 million (2012: $115 million), a revaluation reserve of $17 million (2012: $34 million) and a legal reserve of $8 million
(2012: $8 million).
34. AUDITOR’S REMUNERATION
US$ million
Paid to the Company’s auditor for audit
of the Anglo American plc Annual Report
Paid to the Company’s auditor for other
services to the Group
Audit of the Company’s subsidiaries
Total audit fees
Audit related assurance services(1)
Taxation compliance services
Taxation advisory services
Other assurance services(2)
Other non-audit services
Total non-audit fees
Paid/payable to Deloitte
2013
Paid/payable
to auditor (if
not Deloitte)
Paid/payable to Deloitte
2012
Paid/payable
to auditor (if
not Deloitte)
United
Kingdom
Overseas
Total
Overseas
United
Kingdom
Overseas
Total
Overseas
1.4
3.1
4.5
–
0.9
2.3
0.5
–
0.1
0.5
–
1.1
6.3
9.4
1.4
0.4
1.2
0.8
1.6
5.4
7.2
11.7
1.9
0.4
1.3
1.3
1.6
6.5
0.1
0.1
–
–
–
–
–
–
2.2
1.1
3.3
0.8
–
0.2
0.4
–
1.4
4.8
7.0
4.8
9.6
1.0
0.2
0.2
1.3
–
2.7
5.9
12.9
1.8
0.2
0.4
1.7
–
4.1
0.1
1.1
1.2
–
0.3
0.1
0.6
–
1.0
(1)
(2)
Includes $1.5 million (2012: $1.3 million) for the interim review.
Includes $0.1 million (2012: $0.1 million) for the audit of Group pension plans.
198
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
35. CONTINGENT LIABILITIES
The Group is subject to various claims which arise in the ordinary course of business. Additionally, and as set out in the 2007 demerger agreement, Anglo
American and the Mondi Group have agreed to indemnify each other, subject to certain limitations, against certain liabilities. Anglo American has also provided
Mitsubishi Corporation LLC with indemnities against certain liabilities as part of the sale to Mitsubishi of a 24.5% interest in Anglo American Sur SA in 2011.
Having taken appropriate legal advice, the Group believes that a material liability arising from the indemnities provided is unlikely.
The Group is required to provide guarantees in several jurisdictions in respect of environmental restoration and decommissioning obligations. The Group has
provided for the estimated cost of these activities.
No contingent liabilities were secured on the assets of the Group at 31 December 2013 or 31 December 2012.
Other
Kumba Iron Ore (Kumba)
21.4% undivided share of the Sishen mine mineral rights
On 28 March 2013 the Supreme Court of Appeal (SCA) dismissed the appeals of the Department of Mineral Resources (DMR) and Imperial Crown Trading
289 (Pty) Ltd (ICT) against the decision of the North Gauteng High Court, which, inter alia, confirmed that Sishen Iron Ore Company (Pty) Ltd (SIOC) became
the exclusive holder of the mining rights at the Sishen mine in 2008 when the DMR converted SIOC’s old order rights, and further set aside the grant of a
prospecting right to ICT by the DMR. The SCA held that as a matter of law and as at midnight on 30 April 2009, SIOC became the sole holder of the mining right
to iron ore in respect of the Sishen mine, after ArcelorMittal South Africa Limited (ArcelorMittal S.A.) failed to convert its undivided share of the old order
mining right.
Both ICT and the DMR lodged applications for leave to appeal against the SCA to the Constitutional Court. The Constitutional Court hearing was held on
3 September 2013.
On 12 December 2013 the Constitutional Court granted the DMR’s appeal in part against the SCA judgment. In a detailed judgment, the Constitutional Court
clarified that SIOC, when it lodged its application for conversion of its old order right, converted only the right it held at that time (being a 78.6% undivided
share in the Sishen mining right). The Constitutional Court further held that ArcelorMittal S.A. retained the right to lodge its old order right (21.4% undivided
share) for conversion before midnight on 30 April 2009, but failed to do so. As a consequence of such failure by ArcelorMittal S.A., the 21.4% undivided right
remained available for allocation by the DMR.
The Constitutional Court ruled further that, based on the provisions of the Mineral and Petroleum Resources Development Act (MPRDA), only SIOC can apply
for the residual 21.4% undivided share of the Sishen mining right. The grant of the mining right may be made subject to such conditions considered by the
Minister to be appropriate, provided that the proposed conditions are permissible under the MPRDA. SIOC had previously applied for this 21.4%, and
continues to account for 100% of what is mined from the reserves at Sishen mine. SIOC has however, in compliance with the Constitutional Court order,
submitted a further application to be granted this right.
As a further consequence of this finding, the High Court’s ruling setting aside the prospecting right granted by the DMR to ICT also stands.
The findings made by the Constitutional Court are favourable to both SIOC and the DMR. SIOC’s position as the only competent applicant for the residual right
protects SIOC’s interests. The DMR’s position as custodian of the mineral resources on behalf of the nation, and the authority of the DMR to allocate rights, has
also been ratified by the Court.
ArcelorMittal S.A. supply agreement
The dispute between SIOC and ArcelorMittal S.A. regarding the contract mining agreement had been referred to arbitration in 2010. In December 2011 the
parties agreed to delay the arbitration proceedings until the final resolution of the mining rights dispute (see above).
Interim Pricing Agreements were implemented to 31 December 2013.
In November 2013 SIOC and ArcelorMittal S.A. entered into a new Supply Agreement regulating the sale and purchase of iron ore between the parties which
became effective from 1 January 2014. This agreement, subject to certain express conditions, is contemplated to endure until the end of Life of Mine for the
Sishen mine.
The conclusion of this agreement settled the arbitration and the various other disputes between the companies.
Following the Constitutional Court ruling (see above), the sale of iron ore from SIOC to ArcelorMittal S.A. will remain regulated by the recently concluded
Supply Agreement.
Anglo American South Africa Limited (AASA)
AASA, a wholly owned subsidiary of the Company, is a defendant in a number of lawsuits filed in England and South Africa on behalf of former mineworkers
(or their dependants or survivors) who allegedly contracted silicosis working for gold mining companies in which AASA was a shareholder and to which AASA
provided various technical and administrative services.
In England: AASA is a defendant in five lawsuits filed in the High Court in London on behalf of approximately 6,000 named former mineworkers or their
dependants. One of the lawsuits is also a “representative claim” on behalf of all black underground miners in “Anglo gold mines” who have been certified as
suffering from silicosis and related diseases.
In South Africa: (i) AASA is a defendant in approximately 100 separate lawsuits filed in the North Gauteng High Court (Pretoria) which have been referred to
arbitration. (ii) AASA is named as one of 32 defendants in a consolidated class certification application filed in South Africa. (iii) On 19 September 2013 AASA
concluded a settlement agreement in terms of which 23 claims (filed in South Africa between 2004 and 2009) were settled, without admission of liability by
AASA. The terms of the agreement and the settlement amount (which is not material to AASA) are confidential.
The aggregate amount of the individual South African claims is less than $15 million (excluding claims for interests and costs). No specific amount of damages
has been specified in the claims filed in England or in the consolidated class certification application filed in South Africa.
AASA successfully contested the jurisdiction of the English courts to hear the claims filed against it in that jurisdiction. That ruling has been appealed. AASA is
defending the separate lawsuits filed in South Africa and will oppose the application for consolidated class certification in South Africa.
Anglo American plc Annual Report 2013
199
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
36. RELATED PARTY TRANSACTIONS
The Group has a related party relationship with its subsidiaries, joint operations, associates and joint ventures, see note 38. Members of the Board and
the Group Management Committee are considered to be related parties.
The Company and its subsidiaries, in the ordinary course of business, enter into various sales, purchase and service transactions with joint operations,
associates and joint ventures and others in which the Group has a material interest. These transactions are under terms that are no less favourable to the
Group than those arranged with third parties. These transactions are not considered to be significant, other than purchases by De Beers from its joint
operations in excess of its attributable share of their production, which amounted to $3,064 million (2012: $1,049 million, representing purchases from
16 August 2012, the date the Group obtained control of De Beers).
US$ million
Loans receivable(2)
Associates
Joint ventures
2013
164
265
429
2012
restated(1)
305
242
547
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) These loans are included in ‘Financial asset investments’.
At 31 December 2013 the directors of the Company and their immediate relatives controlled 0.1% (2012: 0.1%) of the voting shares of the Company.
Remuneration and benefits received by directors are disclosed in the Remuneration report. Remuneration and benefits of key management personnel,
including directors, are disclosed in note 27.
Information relating to pension fund arrangements is disclosed in note 28.
Refinancing of Atlatsa
In 2009, Platinum sold a 51% interest in Bokoni Platinum Mines Proprietary Limited (Bokoni) and a 1% interest in certain undeveloped projects to Atlatsa
Resources Corporation (Atlatsa) in a BEE transaction. Platinum retained 49% of Bokoni, and in addition acquired an effective 27% interest in Atlatsa as part
of the sale consideration. Both Atlatsa and Bokoni are associates of the Group.
Between 2009 and December 2013 Platinum has provided Atlatsa and its subsidiaries, including Bokoni, with additional debt and equity funding and in
2012, Platinum and Atlatsa agreed to restructure, recapitalise and refinance both Atlatsa and Bokoni. The first phase of the refinancing transaction
completed in December 2013, whereby Platinum acquired certain properties from Bokoni and in return the level of debt outstanding from Atlatsa was
reduced. A charge of $37 million has been recorded within non-operating special items relating to this transaction, see note 6.
Related party transaction with Mitsubishi
During the year the Group entered into a transaction with a related party of the Company for the purposes of the United Kingdom Listing Authority Listing Rules.
An Anglo American subsidiary entered into a Shareholder Agreement (SHA) with a subsidiary of Mitsubishi Corporation (Mitsubishi) in relation to Anglo
American Quellaveco SA, which owns Anglo American’s Quellaveco copper project. Mitsubishi is a related party to Anglo American because its wholly owned
subsidiary is a substantial shareholder in Anglo American Sur SA, a significant subsidiary of the Company. Anglo American Sur SA owns and operates copper
mines and metallurgical plants in Chile and has no ownership interest in Quellaveco.
Anglo American has a controlling 81.9% interest in Anglo American Quellaveco SA. Mitsubishi purchased its 18.1% shareholding in this company in 2011 from
an unrelated third party. The entry into the SHA provides a formal contractual relationship with a minority shareholder to give more certainty to the way in
which the shareholding relationship in Anglo American Quellaveco SA is managed. It is primarily focused on the governance aspects of the relationship,
information rights, the transferability of shares, arrangements for future funding and entitlement to production from the Quellaveco project. The entry into the
SHA did not involve a purchase or sale of an asset and no value is ascribed to this transaction.
37. EVENTS OCCURRING AFTER END OF YEAR
With the exception of the proposed final dividend for 2013, see note 10, there have been no reportable events since 31 December 2013.
200
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
38. GROUP COMPANIES
The Group consists of the parent company, Anglo American plc, incorporated in the United Kingdom and its subsidiaries, joint operations, joint ventures and
associates. For information on the Group’s policies and the nature of any significant judgements in relation to the basis of accounting for interests in other
entities, see note 1. Further information on interests in associates and joint ventures is provided in note 13.
The Group holds certain interests in both consolidated and unconsolidated structured entities. Further details on consolidated structured entities can be found
in note 33. Unconsolidated structured entities consist of employee benefit trusts and community investment vehicles, principally in South Africa. Financial
support provided to these entities by the Group is not material.
The principal subsidiaries, joint operations, joint ventures and associates of the Group and the Group percentage of equity capital and joint arrangements
are set out below. All these interests are held indirectly by the parent company and are consolidated within these financial statements. As permitted by
section 410 of the Companies Act 2006, the Group has restricted the information provided to its principal subsidiaries in order to avoid a statement of
excessive length.
Subsidiary undertakings
Iron Ore and Manganese
Kumba Iron Ore Limited
Sishen Iron Ore Company(3)
Anglo Ferrous Brazil SA
Anglo American Minério de Ferro Brasil SA
Metallurgical Coal
Anglo American Metallurgical Coal Holdings Limited
Peace River Coal Inc.
Thermal Coal
Anglo Coal(4)
Copper
Anglo American Sur SA
Anglo American Norte SA(5)
Anglo American Quellaveco SA
Nickel
Anglo American Níquel Brasil Limitada (Barro Alto)
Anglo American Níquel Brasil Limitada (Codemin)
Niobium and Phosphates
Anglo American Nióbio Brasil Limitada
Anglo American Fosfatos Brasil Limitada
Platinum
Anglo American Platinum Limited(6)
Diamonds
De Beers Société Anonyme
De Beers Consolidated Mines(7)
Other Mining and Industrial
Anglo Ferrous Amapá Mineração Limitada(8)
Tarmac Building Products Limited
See page 202 for footnotes.
Country of incorporation(1)
Business
South Africa
South Africa
Brazil
Brazil
Australia
Canada
South Africa
Chile
Chile
Peru
Brazil
Brazil
Brazil
Brazil
Iron ore
Iron ore
Iron ore
Iron ore project
Coal
Coal
Coal
Copper
Copper
Copper project
Nickel project
Nickel
Niobium
Phosphates
Percentage of equity owned(2)
2013
2012
69.7%
73.9%
100%
100%
69.7%
73.9%
100%
100%
100%
100%
100%
100%
100%
100%
50.1%
100%
81.9%
100%
100%
100%
100%
50.1%
100%
81.9%
100%
100%
100%
100%
South Africa
Platinum
78%
78%
Luxembourg
South Africa
Diamonds
Diamonds
85%
74%
85%
74%
Brazil
United Kingdom
Iron ore system
Heavy building materials
–
100%
70%
100%
Anglo American plc Annual Report 2013
201
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
38. GROUP COMPANIES continued
Proportionately consolidated joint operations
Compañía Minera Doña Inés de Collahuasi SCM
Debswana Diamond Company (Proprietary) Limited(9)
Namdeb Holdings (Proprietary) Limited(10)
Capcoal(11)
Dawson(11)
Drayton(11)
Foxleigh(11)
Moranbah North(11)
Country of incorporation(1)
Chile
Botswana
Namibia
Australia
Australia
Australia
Australia
Australia
Business
Copper
Diamonds
Diamonds
Coal
Coal
Coal
Coal
Coal
Joint ventures
LLX Minas-Rio Logística Comercial Exportadora SA
Lafarge Tarmac Holdings Limited(12)
AI Futtain Tarmac Quarry Products Limited
Tarmac Oman Limited
Midmac Tarmac Qatar LLC
Country of incorporation(1)
Brazil
United Kingdom
Dubai
Hong Kong
Qatar
Business
Port
Heavy building materials
Heavy building materials
Heavy building materials
Heavy building materials
Associates
Samancor Holdings Proprietary Limited(14)
Groote Eylandt Mining Company Pty Limited (GEMCO)(14)
Tasmanian Electro Metallurgical Company Pty Limited (TEMCO)(14)
Jellinbah Group Pty Limited(15)
Cerrejón Zona Norte SA
Carbones del Cerrejón LLC
Country of incorporation(1)
South Africa
Australia
Australia
Australia
Colombia
Anguilla
Business
Manganese
Manganese
Manganese
Coal
Coal
Coal
Percentage of equity owned(13)
2013
44%
50%
50%
70%
51%
88.2%
70%
88%
2012
44%
50%
50%
70%
51%
88.2%
70%
88%
Percentage of equity owned(13)
2013
49%
50%
49%
50%
50%
2012
49%
–
49%
50%
50%
Percentage of equity owned(13)
2013
40%
40%
40%
33.3%
33.3%
33.3%
2012
40%
40%
40%
33.3%
33.3%
33.3%
(1) The principal country of operation is the same as the country of incorporation for all entities with the exception of De Beers Société Anonyme (De Beers), which has worldwide operations.
(2) The proportion of voting rights of subsidiaries held by the Group is the same as the proportion of equity owned.
(3) The 73.9% interest in Sishen Iron Ore Company (SIOC) is held indirectly through Kumba Iron Ore, in which the Group has a 69.7% interest. A further 3.1% interest in SIOC is held by the Kumba
Envision Trust for the benefit of participants in Kumba’s broad based employee share scheme for non-managerial Historically Disadvantaged South African employees. The Trust meets the
definition of a subsidiary under IFRS, and is therefore consolidated by Kumba Iron Ore. Consequently the effective interest in SIOC included in the Group’s results is 53.7%.
(4) A division of Anglo Operations Proprietary Limited, a wholly owned subsidiary.
(5) Non-controlling interest of 0.018%.
(6) The Group’s effective interest in Anglo American Platinum Limited is 79.9%, which includes shares issued as part of a community empowerment deal.
(7) The 74% interest in De Beers Consolidated Mines (DBCM) is held indirectly through De Beers. The 74% interest represents De Beers’ legal ownership share in DBCM. For accounting purposes
De Beers consolidates 100% of DBCM as it is deemed to control the BEE entity which holds the remaining 26% after providing certain financial guarantees on its behalf in 2010. The Group’s
effective interest in DBCM is 85%.
(8) On 4 January 2013, Anglo American announced that it had reached an agreement to sell its 70% interest in Anglo Ferrous Amapá Mineração Limitada (Amapá) to Zamin Ferrous Ltd (Zamin).
Subsequently Anglo American entered into an agreement with Cliffs Natural Resources to acquire its 30% interest in Amapá and entered into an amended sale agreement with Zamin to reflect
Anglo American’s disposal of a 100% interest in Amapá to Zamin. On 1 November 2013 these transactions completed. See note 31.
(9) The 50% interest in Debswana is held indirectly through De Beers and is consolidated on a 19.2% proportionate basis, reflecting economic interest. The Group’s effective interest in Debswana
is 16.3%.
(10) The 50% interest in Namdeb Holdings is held indirectly through De Beers. The Group’s effective interest in Namdeb Holdings is 42.5%.
(11) The wholly owned subsidiary Anglo American Metallurgical Coal Holdings Limited holds the proportionately consolidated joint operations, these operations are unincorporated and
jointly controlled.
(12) Lafarge Tarmac Holdings Limited was formed during 2013. See note 30.
(13) All equity interests shown are ordinary shares.
(14) These entities have a 30 June year end.
(15) The Group’s effective interest in the Jellinbah operation is 23.3%. The entity has a 30 June year end.
202
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39. FINANCIAL RISK MANAGEMENT
The Board approves and monitors the risk management processes, including 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 Consolidated balance sheet at
31 December is provided as follows (subcategorised into credit risk, commodity price risk, foreign exchange risk and interest rate risk). See note 25 for
liquidity risk.
Market risks
a) Credit risk
Credit risk is the risk that a counterparty to a financial instrument will cause a loss to Anglo American by failing to pay for its obligation. The Group’s principal
financial assets, including amounts in assets held for sale that are susceptible to credit risks, are cash, trade and other receivables, investments and derivative
financial instruments. The Group’s maximum exposure to credit risk primarily arises from these financial assets and is as follows:
US$ million
Cash and cash equivalents
Trade and other receivables(2)
Financial asset investments(3)
Derivative financial assets
Financial guarantees(4)
2013
7,702
3,874
759
674
12
13,021
2012
restated(1)
9,298
3,966
1,441
848
33
15,586
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2) Trade and other receivables exclude prepayments and accrued income.
(3) Financial asset investments exclude available for sale investments.
(4) Financial guarantees issued by the Group in respect of third party liabilities represent an exposure to credit risk in excess of the Group’s financial assets.
The Group limits credit risk on liquid funds and derivative financial instruments through diversification of exposures with a range of approved financial
institutions. Counterparty limits are set for each financial institution with reference to credit ratings assigned by Standard & Poor’s, Moody’s and Fitch Ratings.
Given the diverse nature of the Group’s operations (both in relation to commodity markets and geographically), together with insurance cover (including
letters of credit from financial institutions), it does not have significant concentration of credit risk in respect of trade receivables, with exposure spread over
a large number of customers.
A provision for impairment of 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. Details of the credit quality of trade receivables and the associated provision for impairment are disclosed
in note 16.
b) Commodity price risk
The Group’s earnings are exposed to movements in the prices of the commodities it produces.
The Group’s policy is to sell its products at prevailing market prices and is generally not to hedge commodity price risk, although some hedging may be
undertaken for strategic reasons. In such cases, the Group generally uses forward and deferred contracts to hedge the price risk.
Certain of the Group’s sales and purchases are provisionally priced, meaning that the selling price is determined normally 30 to 180 days after delivery
to the customer, based on quoted market prices stipulated in the contract, and as a result are susceptible to future price movements. The exposure of the
Group’s financial assets and liabilities to commodity price risk is as follows:
US$ million
Total net financial instruments
(excluding derivatives)
Commodity derivatives (net)
Non-commodity derivatives (net)
Total financial instrument exposure to
commodity risk
Commodity price linked
Commodity price linked
2013
Subject to
price
movements(2)
1,261
(3)
–
Fixed
price(3)
678
–
–
Not
linked to
commodity
price
Subject to
price
Total
movements(2)
(10,946)
–
(834)
(9,007)
(3)
(834)
304
(1)
–
303
Not
linked to
commodity
price
(8,281)
–
(232)
Fixed
price(3)
1,087
–
–
1,258
678
(11,780)
(9,844)
1,087
(8,513)
(7,123)
2012
restated(1)
Total
(6,890)
(1)
(232)
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 for details.
(2)
Includes provisionally priced trade receivables and trade payables.
Includes receivables and payables for commodity sales and purchases not subject to price adjustment at the balance sheet date.
(3)
Commodity based contracts that are settled through physical delivery of the Group’s production or are used within the production process, are classified as
normal purchase or sale contracts and are not marked to market.
c) Foreign exchange risk
As a global business, the Group is exposed to many currencies principally as a result of non-US dollar operating costs and, to a lesser extent, from non-US
dollar revenue. The Brazilian real and South African rand are the most significant non-US dollar currencies influencing costs. A strengthening of the US dollar
against the currencies to which the Group is exposed has a positive effect on Anglo American’s underlying earnings. 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 Group
Management Committee.
In addition, currency exposures exist in respect of non-US dollar approved capital expenditure projects and non-US dollar borrowings in US dollar functional
currency entities. The Group’s policy is that such exposures should be hedged subject to a review of the specific circumstances of the exposure.
Analysis of foreign exchange risk associated with net debt balances and the impact of derivatives to hedge against this risk is included within note 25. Of net
other financial assets (excluding net debt related balances) of $811 million, $278 million are denominated in US dollar and $443 million in South African rand.
Anglo American plc Annual Report 2013
203
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39. FINANCIAL RISK MANAGEMENT continued
d) Interest rate risk
Interest rate risk arises due to fluctuations in interest rates which impact on the value of short term investments and financing activities. The Group’s exposure
to interest rate risk is particularly with reference to changes in US and South African interest rates.
The Group’s policy is to borrow funds at floating rates of interest as, over the longer term, this is considered by management to give somewhat of a natural
hedge against commodity price movements, given the correlation with 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 contracts to manage its exposure to interest rate movements on a
portion of its existing debt. Strategic hedging using fixed rate debt may also be undertaken from time to time if approved by the Group Management Committee.
In respect of financial assets, the Group’s policy is to invest cash at floating rates of interest and to maintain cash reserves in short term investments (less than
one year) in order to maintain liquidity, while achieving a satisfactory return for shareholders.
Analysis of interest rate risk associated with net debt balances and the impact of derivatives to hedge against this risk is included within note 25. Of net other
financial assets (excluding net debt related balances) of $811 million, the majority are non-interest bearing.
e) Financial instrument sensitivities
Financial instruments affected by market risk include borrowings, deposits, derivative financial instruments, trade receivables and trade payables. The
following analysis is intended to illustrate the sensitivity of the Group’s financial instruments (at 31 December) to changes in commodity prices, interest rates
and foreign currencies.
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 related trade receivables and trade payables at 31 December. As a
consequence, this sensitivity analysis relates to the position at 31 December.
The following assumptions were made in calculating the sensitivity analysis:
• all income statement sensitivities also impact equity
• for debt and other deposits carried at amortised cost, carrying value does not change as interest rates move
• no sensitivity is provided for interest accruals as these are based on pre-agreed interest rates and therefore are not susceptible to further rate changes
• 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
materially to offset one another
• all hedge relationships are assumed to be fully effective on the grounds of materiality
• debt with a maturity of less than 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 has been excluded from the sensitivity.
Using the above assumptions, the following table shows the illustrative effect on the income statement and equity that would result from reasonably possible
changes in the relevant commodity price. The Group has determined that at 31 December 2013 and 31 December 2012, based on the above assumptions,
there is no significant sensitivity to changes in market interest rates.
US$ million
Foreign currency sensitivities(1)
+10% US dollar to rand
–10% US dollar to rand
+10% US dollar to Brazilian real(2)
–10% US dollar to Brazilian real(2)
+10% US dollar to Australian dollar
–10% US dollar to Australian dollar
+10% US dollar to Chilean peso
–10% US dollar to Chilean peso
Commodity price sensitivities
10% increase in the copper price
10% decrease in the copper price
10% increase in the platinum price
10% decrease in the platinum price
Income
16
(16)
87
(99)
37
(37)
30
(32)
109
(109)
(15)
15
2013
Equity
16
(16)
87
(99)
37
(37)
30
(32)
109
(109)
(15)
15
Income
(74)
74
190
(194)
41
(41)
29
(36)
63
(63)
(17)
17
2012
Equity
(73)
73
190
(194)
41
(41)
29
(36)
63
(63)
(17)
17
(1) + represents strengthening of US dollar against the respective currency.
(2)
Includes sensitivities for non-hedge derivatives related to capital expenditure.
The above sensitivities are calculated with reference to a single moment in time and are subject to 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.
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. In addition, each of the sensitivities is calculated in isolation whilst, in reality, commodity prices,
interest rates and foreign currencies do not move independently.
204
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
40. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and IFRS Interpretations Committee
(IFRIC) interpretations as adopted for use by the European Union, with those
parts of the Companies Act 2006 applicable to companies reporting under
IFRS and with the requirements of the Disclosure and Transparency rules
of the Financial Conduct Authority in the United Kingdom as applicable to
periodic financial reporting. The financial statements have been prepared
under the historical cost convention as modified by the revaluation of pension
assets and liabilities and certain financial instruments. A summary of the
principal Group accounting policies is set out below.
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.
As permitted by UK company law, the Group’s results are presented in
US dollars, the currency in which its business is primarily conducted.
Going concern
The directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future.
Thus the going concern basis of accounting in preparing the financial
statements continues to be adopted. Further details are contained in the
Directors’ report on page 144.
Basis of consolidation
The financial statements incorporate a consolidation of the financial
statements of the Company and entities controlled by the Company (its
subsidiaries). Control is achieved where the Company is exposed, or has
rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee.
The results of subsidiaries acquired or disposed of during the year are
included in the 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
arrangements 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, non-controlling interests are presented
in equity separately from the equity attributable to shareholders of the
Company. Profit or loss and other comprehensive income are attributed to the
shareholders of the Company and to the non-controlling interest even if this
results in the non-controlling interests having a deficit balance.
Changes in ownership interest in subsidiaries that do not result in a change
in control are accounted for in equity. The carrying amounts of the controlling
and non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiary. Any difference between the amount by
which the non-controlling interest is adjusted and the fair value of the
consideration paid or received is recorded directly in equity and attributed
to the shareholders of the Company.
40a. 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
recognised 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.
40b. 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. All other borrowing costs are recognised in
the income statement in the period in which they are incurred.
40c. Tax
The tax expense includes the current tax and deferred tax charge recognised
in the income statement.
Current tax 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 reporting date.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. 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 of an asset or liability in a transaction (other
than in a business combination) that affects neither taxable profit nor
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, joint arrangements 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 reporting 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, based on the laws
that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited to 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 in that taxation authority.
Anglo American plc Annual Report 2013
205
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
40. ACCOUNTING POLICIES continued
40d. Business combinations and goodwill arising thereon
The identifiable assets, liabilities and contingent liabilities of a subsidiary,
a joint arrangement or an associate, which can be measured reliably, are
recorded at their provisional fair values at the date of acquisition. Goodwill
is the fair value of the consideration transferred (including contingent
consideration and previously held non-controlling interests) less the fair
value of the Group’s share of identifiable net assets on acquisition.
Where a business combination is achieved in stages, the Group’s previously
held interests in the acquiree are remeasured to fair value at the acquisition
date and the resulting gain or loss is recognised in the income statement.
Amounts arising from interests in the acquiree prior to the acquisition date
that have previously been recognised in other comprehensive income are
reclassified to the income statement, where such treatment would be
appropriate if that interest were disposed of.
Transaction costs incurred in connection with the business combination
are expensed. Provisional fair values are finalised within 12 months of the
acquisition date.
Goodwill in respect of subsidiaries and joint operations is included within
intangible assets. Goodwill relating to associates and joint ventures is
included within the carrying value of the investment.
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 recognised directly in the income statement in the period
of acquisition.
For non-wholly owned subsidiaries, non-controlling interests are initially
recorded at the non-controlling interest’s proportion of the fair values of
net assets recognised at acquisition.
40e. Non-mining licences and other intangibles
Non-mining licences and other intangibles are measured at cost less
accumulated amortisation and accumulated impairment losses. Intangible
assets acquired as part of an acquisition of a business are capitalised
separately from goodwill if the asset is separable or arises from contractual or
legal rights and the fair value can be measured reliably on initial recognition.
Intangible assets are amortised over their estimated useful lives, usually
between 3 and 20 years, except goodwill and those intangible assets that
are considered to have indefinite lives. For intangible assets with a finite life,
the amortisation period is determined as the period over which the Group
expects to obtain benefits from the asset, taking account of all relevant facts
and circumstances including contractual lives and expectations about the
renewal of contractual arrangements without significant incremental costs.
An intangible asset is deemed to have an indefinite life when, based on an
analysis of all of the relevant factors, there is no foreseeable limit to the period
over which the asset is expected to generate cash flows for the Group.
Amortisation methods, residual values and estimated useful lives are
reviewed at least annually.
40f. Impairment of goodwill
Goodwill arising on business combinations is allocated to the group of cash
generating units (CGUs) that is expected to benefit from 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. The
recoverable amount of the CGU or group of CGUs to which goodwill has been
allocated, is tested for impairment annually, or when events or changes in
circumstances indicate that it may be impaired.
Any impairment loss is recognised immediately in the income statement
as a special item. Impairment of goodwill is not subsequently reversed.
40g. Property, plant and equipment
Mining properties and leases include the cost of acquiring and developing
mining properties and mineral rights.
Mining properties are depreciated to their residual values using the unit
of production method based on Proved and Probable Ore Reserves and,
in certain limited circumstances, other Mineral Resources. Mineral Resources
are included in depreciation calculations where there is a high degree of
confidence that they will be extracted in an economic manner. For diamond
operations, depreciation calculations are based on Diamond Reserves and
Resources included in the Life of Mine Plan. 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, an impairment loss is recognised in the income statement.
Capital works in progress are measured at cost less any recognised
impairment. Depreciation commences when the assets are ready for their
intended use. Buildings and plant and equipment are depreciated to their
residual values at varying rates on a straight line basis over their estimated
useful lives or the Mine Life, 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. Land is not depreciated.
When parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components).
Depreciation methods, residual values and estimated useful lives are
reviewed at least annually.
Assets held under finance leases are depreciated over the shorter of the lease
term and the estimated useful lives of the assets.
Gains or losses on disposal of property, plant and equipment are determined
by comparing the proceeds from disposal with the carrying amount. The gain
or loss is recognised in the income statement.
40h. Deferred stripping
The removal of overburden and other mine waste materials is often necessary
during the initial development of a mine site, in order to access the mineral ore
deposit. The directly attributable cost of this activity is capitalised in full within
mining properties and leases, until the point at which the mine is considered
to be capable of commercial production. This is classified as expansionary
capital expenditure, within investing cash flows.
The removal of waste material after the point at which a mine is capable of
commercial production is referred to as production stripping.
When the waste removal activity improves access to ore extracted in the
current period, the costs of production stripping are charged to the income
statement as operating costs in accordance with the principles of IAS 2
Inventories.
Where production stripping activity both produces inventory and improves
access to ore in future periods the associated costs of waste removal are
allocated between the two elements. The portion which benefits future ore
extraction is capitalised within stripping and development capital expenditure.
If the amount to be capitalised cannot be specifically identified it is determined
based on the volume of waste extracted compared with expected volume for
the identified component of the orebody. Components are specific volumes
of a mine’s orebody that are determined by reference to the Life of Mine Plan.
In certain instances significant levels of waste removal may occur during the
production phase with little or no associated production. This may occur at
both open pit and underground mines, for example longwall development.
The cost of this waste removal is capitalised in full.
All amounts capitalised in respect of waste removal are depreciated using the
unit of production method based on Proved and Probable Ore Reserves of
the component of the orebody to which they relate.
The effects of changes to the Life of Mine Plan on the expected cost of waste
removal or remaining reserves for a component are accounted for
prospectively as a change in estimate.
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Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
40. ACCOUNTING POLICIES continued
40i. Impairment of property, plant and equipment and
intangible assets excluding goodwill
At each reporting date, the Group reviews the carrying amounts of its
property, plant and equipment and intangible assets to determine whether
there is any indication that those assets are impaired. If such an indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of any impairment. Where the asset does not generate cash flows
that are independent from other assets, the Group estimates the recoverable
amount of the 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 of disposal) 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 loss is recognised in the income
statement as a special item.
Where an impairment loss 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. A reversal of an impairment loss
is recognised in the income statement as a special item.
40j. Exploration, evaluation and development expenditure
Exploration and evaluation expenditure is expensed in the year in which it
is incurred. When a decision is taken that a mining property is economically
feasible, all subsequent evaluation expenditure is capitalised within property,
plant and equipment including, where applicable, directly attributable
pre-production development expenditure. Capitalisation of such expenditure
ceases when the mining property is capable of commercial production.
Exploration properties acquired are recognised in the balance sheet at cost
less any accumulated impairment losses. Such properties and capitalised
evaluation and pre-production development expenditure prior to commercial
production are assessed for impairment in accordance with the Group’s
accounting policy stated above.
40k. Associates and joint arrangements
Associates are investments over which the Group has significant influence,
which is the power to participate in the financial and operating policy
decisions of the investee, but without the ability to exercise control or joint
control. Typically the Group owns between 20% and 50% of the voting equity
of its associates.
Joint arrangements are arrangements in which the Group shares joint control
with one or more parties. Joint control is the contractually agreed sharing of
control of an arrangement, and exists only when decisions about the activities
that significantly affect the arrangements returns require the unanimous
consent of the parties sharing control.
Joint arrangements are classified as either joint operations or joint ventures
based on the rights and obligations of the parties to the arrangement. In joint
operations, the parties have rights to the assets and obligations for the
liabilities relating to the arrangement, whereas in joint ventures, the parties
have rights to the net assets of the arrangement.
Joint arrangements that are not structured through a separate vehicle are
always joint operations. Joint arrangements that are structured through a
separate vehicle may be either joint operations or joint ventures depending on
the substance of the arrangement. In these cases, consideration is given to
the legal form of the separate vehicle, the terms of the contractual
arrangement and, when relevant, other facts and circumstances. When the
activities of an arrangement are primarily designed for the provision of output
to the parties and the parties are substantially the only source of cash flows
contributing to the continuity of the operations of the arrangement, this
indicates the parties to the arrangements have rights to the assets and
obligations for the liabilities.
The Group accounts for joint operations by recognising the assets, liabilities,
revenue and expenses for which it has rights or obligations, including its share
of such items held or incurred jointly.
Investments in associates and joint ventures are accounted for using the
equity method of accounting except when classified as held for sale. The
Group’s share of associates’ and joint ventures’ 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 total carrying values of investments in associates and joint ventures
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
and joint ventures are reviewed on a regular basis and if there is objective
evidence that an impairment in value has occurred as a result of one or more
events during the period, the investment is impaired.
The Group’s share of an associate’s or joint venture’s losses in excess of its
interest in that associate or joint venture is not recognised unless the Group
has an obligation to fund such losses. Unrealised gains arising from
transactions with associates and joint ventures are eliminated against the
investment to the extent of the Group’s interest in the investee. Unrealised
losses are eliminated in the same way, but only to the extent that there is no
evidence of impairment.
40l. Financial asset investments
Investments, other than investments in subsidiaries, joint arrangements and
associates, are financial asset investments and are initially recognised 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
losses. 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 financial assets.
Both categories are subsequently measured 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 of or impaired, at which time the
cumulative gain or loss previously recognised in equity is recycled to the
income statement.
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 measured at amortised cost, using the effective interest
method. Debt securities that are not intended to be held to maturity are
recorded at the lower of cost and market value.
40m. Impairment of financial assets (including receivables)
A financial asset not measured at fair value through profit or loss is assessed
at each reporting date to determine whether there is any objective evidence
that it is impaired. A financial asset is impaired if objective evidence indicates
that a loss event has occurred after the initial recognition of the asset.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between its carrying amount and the present
value of the estimated cash flows discounted at the asset’s original effective
interest rate. Losses are recognised in the income statement. When a
subsequent event causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through the income statement.
Impairment losses relating to available for sale investments are recognised
when the decline in fair value is considered significant or prolonged.
These impairment losses are recognised by transferring the cumulative
loss that has been recognised in the statement of comprehensive income
to the income statement. The loss recognised in the income statement is
the difference between the acquisition cost and the current fair value.
Anglo American plc Annual Report 2013
207
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
40. ACCOUNTING POLICIES continued
40n. 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 (own use) contracts that meet
the scope exemption in IAS 39 Financial Instruments: Recognition and
Measurement are recognised in earnings when they are settled by
physical delivery.
All derivatives are held at fair value in the balance sheet within ‘Derivative
financial assets’ or ‘Derivative financial liabilities’ except if they are linked
to settlement and delivery of an unquoted equity instrument and the fair
value cannot be measured reliably, in which case they are carried at cost.
A derivative cannot be measured reliably where the range of reasonable
fair value estimates is significant and the probabilities of various estimates
cannot be reasonably assessed.
Changes in the fair value of derivative financial instruments that are
designated and effective as hedges of future cash flows (cash flow hedges)
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 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
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.
The corresponding entry, along with gains or losses from remeasuring the
associated derivative, are recognised in the income statement.
The gain or loss on hedging instruments relating to the effective portion
of a net investment hedge is recognised in equity (within the cumulative
translation adjustment reserve). The ineffective portion is recognised
immediately in the income statement. Gains or losses accumulated in the
cumulative translation adjustment reserve are recycled to the income
statement on disposal of the foreign operations to which they relate.
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 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 recycled to the
income statement for the period.
Changes in the fair value of any derivative instruments that are not designated
in a hedge relationship are recognised immediately in the income statement
and are classified within other gains and losses (operating costs) or net
finance costs depending on the type of risk to which the derivative relates.
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.
40o. Cash and debt
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 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. Cash and cash equivalents are
measured at amortised cost.
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.
Convertible debt
Convertible bonds are classified 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 recognised within borrowings and carried
at amortised cost. 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.
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 liability.
Bank borrowings
Interest bearing bank loans and overdrafts are initially recognised at fair
value, net of directly attributable transaction costs. Finance charges,
including premiums payable on settlement or redemption and direct issue
costs are recognised in 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.
40p. Derecognition of financial assets and financial liabilities
Financial assets are derecognised when the right to receive cash flows from
the asset has 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.
40q. Inventories
Inventory and work in progress are measured 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 basis:
• Raw materials and consumables are measured at cost on a first in, first
out (FIFO) basis or a weighted average cost basis.
• Finished products are measured at raw material cost, labour cost
and a proportion of manufacturing overhead expenses.
• Metal and coal stocks are included within finished products and are
measured at average cost.
At precious metals operations that produce ‘joint products’, cost is
allocated amongst products according to the ratio of contribution of these
metals to gross sales revenues.
40r. Environmental restoration and decommissioning
obligations
An obligation to incur environmental restoration, rehabilitation and
decommissioning costs arises when 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 recognised in the income statement 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 recognised in the income statement as
extraction progresses.
208
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
40. ACCOUNTING POLICIES continued
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 set out 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 disclosed separately on the balance sheet as non-
current assets. The trusts’ assets are measured based on the nature of the
underlying assets in accordance with accounting policies for similar assets.
40u. Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payment.
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.
The Group makes equity settled share-based payments to certain employees,
which are measured at fair value at the date of grant and expensed on a
straight line basis over the vesting period, based on the Group’s estimate of
shares that will eventually vest. For those share schemes with market related
vesting conditions, the fair value is determined using the Monte Carlo method
at the grant date. 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 shares at the grant date. For all share schemes with non-market
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.
40s. Non-current assets and disposal groups held for sale
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 a sale is
highly probable within one year from the date of classification, management
is committed to the sale and the asset or disposal group is available for
immediate sale in its present condition.
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 loss
is recognised in the income statement as a special item. On classification as
held for sale the assets are no longer depreciated. Comparative amounts
are not adjusted.
40t. Retirement benefits
The Group operates both defined benefit and defined contribution pension
plans for its employees as well as post employment medical plans. For
defined contribution plans the amount recognised in the income statement
is the contributions paid or payable during the year.
For defined benefit pension and post employment medical plans, full actuarial
valuations are carried out at least 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, is based on government bonds. Pension plan assets are
measured using year end market values.
Remeasurements comprising actuarial gains and losses, movements in asset
surplus restrictions and the return on scheme assets (excluding interest
income) are recognised immediately in the statement of comprehensive
income and are not recycled to the income statement. Any increase in the
present value of plan liabilities expected to arise from employee service during
the year is charged to operating profit. The net interest income or cost on the
net defined benefit asset or liability is included in investment income and
interest expense respectively.
Past service cost is recognised immediately to the extent that the benefits are
already vested and otherwise amortised on a straight line basis over the
average period until the benefits vest.
The retirement benefit obligation recognised on the balance sheet represents
the present value of the deficit or surplus of the defined benefit plans. Any
recognised surplus is limited to the present value of available refunds or
reductions in future contributions to the plan.
40v. 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.
40w. Foreign currency transactions and translation
Foreign currency transactions by Group companies are recognised in the
functional currencies of the companies at the exchange rate ruling on the date
of the transaction. At each reporting date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates prevailing
on the reporting date. Gains and losses arising on retranslation are included in
the income statement for the period and are classified as either operating or
financing depending on the nature of the monetary item giving rise to them.
Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate at the date
of the transaction.
On consolidation, the assets and liabilities of the Group’s foreign operations
are translated into the presentation currency of the Group at exchange rates
prevailing on the reporting date. Income and expense items are translated
at the average exchange rates for the period where these approximate the
rates at the dates of the transactions. Any exchange differences arising are
classified within the statement of comprehensive income and transferred to
the Group’s cumulative translation adjustment reserve. Exchange differences
on foreign currency balances with foreign operations for which settlement is
neither planned nor likely to occur in the foreseeable future, 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 recycled from equity and recognised
as income or expense on disposal of the operation to which they relate.
Goodwill and fair value adjustments arising on the acquisition of foreign entities
are treated as assets of the foreign entity and translated at the closing rate.
40x. 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 the right to use that asset is conveyed through the contract.
Rental costs under operating leases are recognised in the income statement
in equal annual amounts over the lease term.
Anglo American plc Annual Report 2013
209
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
41. ACCOUNTING POLICY CHANGES – RESTATEMENTS
As discussed in note 2, the Group has restated the financial performance and position of the Group for the year ended 31 December 2012 to reflect the
adoption of IFRS 11, IFRIC 20 and IAS 19R. The quantitative impact of adopting these standards on the prior year consolidated financial statements is set out in
the tables below.
Adjustments to the Consolidated income statement
US$ million
Group revenue
Total operating costs(1)
Share of net income from associates and joint ventures
Non-operating special items and remeasurements
Net finance (costs)/income
Income tax expense
Non-controlling interests
Loss for the financial year attributable to equity shareholders of the Company
Year ended
31.12.12
as previously
stated
28,761
(30,449)
432
1,394
(377)
(375)
(879)
(1,493)
IFRS 11
(81)
78
(7)
–
14
(4)
–
–
IFRIC 20
–
91
(1)
2
–
(20)
(27)
45
Year ended
31.12.12
restated
28,680
(30,280)
421
1,396
(388)
(393)
(906)
(1,470)
IAS 19R
–
–
(3)
–
(25)
6
–
(22)
(1) Restatements to operating costs include a decrease in depreciation of $5 million due to IFRS 11 and an increase in depreciation of $90 million due to IFRIC 20.
Adjustments to the Consolidated statement of comprehensive income
US$ million
Loss for the financial year
Items that may subsequently be reclassified to the income statement
Net exchange difference on translation of foreign operations (including associates
and joint ventures)
Other comprehensive income that may be reclassified
Items that will not be reclassified to the income statement
Remeasurement of net retirement benefit obligation
Share of associates’ and joint ventures’ income recognised directly in equity, net of tax
Tax on items recognised directly in equity that will not be reclassified
Items transferred from equity
Total comprehensive expense for the financial year
Adjustments to the Consolidated balance sheet
At 31 December 2012
US$ million
Property, plant and equipment(1)
Investments in associates and joint ventures
Financial asset investments (non-current)
Short term borrowings
Deferred tax liabilities
Retained earnings
Non-controlling interests
Other assets, liabilities and equity(2)
Year ended
31.12.12
as previously
stated
(614)
(747)
60
165
11
(19)
79
(1,065)
31.12.12
as previously
stated
45,089
3,063
2,278
(2,604)
(6,069)
(40,388)
(6,130)
4,761
IFRS 11
–
IFRIC 20
72
IAS 19R
(22)
–
–
–
–
–
–
–
(3)
–
–
–
–
–
69
–
–
25
3
(6)
–
–
Year ended
31.12.12
restated
(564)
(750)
60
190
14
(25)
79
(996)
IFRS 11
(292)
99
111
119
–
–
–
(37)
IFRIC 20
(66)
–
–
–
18
45
3
–
IAS 19R
–
–
–
–
–
–
–
–
31.12.12
restated
44,731
3,162
2,389
(2,485)
(6,051)
(40,343)
(6,127)
4,724
(1) The adjustment to property, plant and equipment in relation to IFRIC 20 includes the $155 million write-off of opening stripping assets which do not relate to identifiable components of
orebodies and depreciation of $34 million in excess of amounts previously charged to operating costs, offset by $123 million of net additional capitalisation.
(2) Restatements of the balance sheet at 31 December 2012 also had an immaterial impact on intangible assets, environmental rehabilitation trusts, trade and other receivables (non-current),
deferred tax assets, other non-current assets, inventories, trade and other receivables (current), cash and cash equivalents, trade and other payables (current), provisions for liabilities and
charges (current) and other reserves.
At 1 January 2012
US$ million
Property, plant and equipment
Investments in associates and joint ventures
Financial asset investments (non-current)
Short term borrowings
Deferred tax liabilities
Retained earnings
Non-controlling interests
Other assets, liabilities and equity(1)
01.01.12
as previously
stated
40,549
5,240
2,896
(1,018)
(5,730)
(42,342)
(4,097)
4,502
IFRS 11
(312)
113
107
116
–
–
–
(24)
IFRIC 20
(155)
(1)
–
–
37
102
16
1
IAS 19R
–
–
–
–
–
–
–
–
01.01.12
restated
40,082
5,352
3,003
(902)
(5,693)
(42,240)
(4,081)
4,479
(1) Restatements of the balance sheet at 1 January 2012 also had an immaterial impact on intangible assets, environmental rehabilitation trusts, trade and other receivables (non-current), deferred
tax assets, other non-current assets, inventories, trade and other receivables (current), cash and cash equivalents, trade and other payables (current), provisions for liabilities and charges
(current) and other reserves.
210
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
41. ACCOUNTING POLICY CHANGES – RESTATEMENTS continued
Adjustments to the Consolidated cash flow statement
US$ million
Cash flows from operations
Dividends from associates and joint ventures
Expenditure on property, plant and equipment
Other investing and financing cash flows
Net (decrease)/increase in cash and cash equivalents
Year ended
31.12.12
as previously
stated
7,021
286
(5,607)
(4,009)
(2,309)
IFRS 11
(7)
8
4
–
5
IFRIC 20(1)
356
–
(356)
–
–
Year ended
31.12.12
restated
7,370
294
(5,959)
(4,009)
(2,304)
IAS 19R
–
–
–
–
–
(1) The adjustment is due to a re-presentation of cash flows to better reflect internal management reporting following the adoption of IFRIC 20.
Non-GAAP data
US$ million
Underlying EBITDA
Depreciation and amortisation(1)
Underlying operating profit
Underlying earnings
Net debt
Year ended
31.12.12
as previously
stated
8,686
2,522
6,164
2,839
(8,615)
IFRS 11
–
–
–
–
105
IFRIC 20
174
85
89
43
–
Year ended
31.12.12
restated
8,860
2,607
6,253
2,860
(8,510)
IAS 19R
–
–
–
(22)
–
(1)
Includes attributable share of depreciation and amortisation in associates and joint ventures. Depreciation and amortisation excluding associates and joint ventures increased by $90 million in
2012 due to the adoption of IFRIC 20.
Anglo American plc Annual Report 2013
211
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
FINANCIAL STATEMENTS OF THE PARENT COMPANY
Balance sheet of the Company, Anglo American plc, as at 31 December 2013
US$ 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
Amounts owed to group undertakings
Other creditors
Net current assets
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)
Note
2013
2012
1
13,278
12,361
14,238
6
33
14,277
(408)
(5)
(413)
13,864
27,142
27,142
772
4,358
115
1,955
1
19,941
27,142
14,950
4
41
14,995
(448)
(4)
(452)
14,543
26,904
26,904
772
4,357
115
1,955
1
19,704
26,904
2
2
2
2
2
2
The financial statements of Anglo American plc, registered number 03564138, were approved by the Board of directors on 13 February 2014 and signed on its
behalf by:
Mark Cutifani
Chief Executive
René Médori
Finance Director
212
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION FINANCIAL STATEMENTS OF THE PARENT COMPANY
1) Fixed asset investments
US$ million
Cost
At 1 January
Capital contributions(1)
Additions
Capital reduction
Transfer to subsidiary
At 31 December
Provisions for impairment
At 1 January
Impairment charge
Transfer to subsidiary
At 31 December
Net book value
Investment in subsidiaries
2013
2012
12,378
110
807
–
–
13,295
(17)
–
–
(17)
13,278
13,374
147
2,776
(823)
(3,096)
12,378
(328)
(9)
320
(17)
12,361
(1) This amount is net of $30 million (2012: $14 million) of intra-group recharges.
During 2013 Anglo American plc (the Company) increased its investment in Anglo American Services (UK) Limited by $807 million in return for 4,935
additional shares.
2) Reconciliation of movements in equity shareholders’ funds
US$ million
Balance at 1 January 2012
Profit for the financial year
Dividends payable to Company shareholders(3)
Issue of treasury shares under employee share
schemes
Share-based payments
Capital contribution to Group undertakings
Shares issued on conversion of bond
Transfer between share-based payment reserve
and profit and loss account
Balance at 1 January 2013
Profit for the financial year
Dividends payable to Company shareholders(3)
Issue of treasury shares under employee share
schemes
Capital contribution to Group undertakings
Other
Balance at 31 December 2013
Called-up
share capital
738
–
–
Share
premium
account
2,714
–
–
Capital
redemption
reserve
115
–
–
Other
reserves(1)
1,955
–
–
Share-based
payment
reserve
1
–
–
Convertible
debt reserve
355
–
–
–
–
–
34
–
772
–
–
–
–
–
772
–
–
–
1,643
–
4,357
–
–
–
–
1
4,358
–
–
–
–
–
115
–
–
–
–
–
115
–
–
–
–
–
1,955
–
–
–
–
–
1,955
–
1
–
–
(1)
1
–
–
–
–
–
1
–
–
–
(355)
–
–
–
–
–
–
–
–
Profit
and loss
account(2)
18,780
1,152
(599)
24
–
161
185
1
19,704
700
(618)
15
140
–
19,941
Total
24,658
1,152
(599)
24
1
161
1,507
–
26,904
700
(618)
15
140
1
27,142
(1) At 31 December 2013 other reserves of $1,955 million (2012: $1,955 million) were not distributable under the Companies Act 2006.
(2) At 31 December 2013 $2,685 million (2012: $2,685 million) of the Company profit and loss account of $19,941 million (2012: $19,704 million) was not distributable under the Companies Act 2006.
(3) Dividends payable 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 directors are proposing a final dividend in respect of the
year ended 31 December 2013 of 53 US cents per share, see note 10 of the Consolidated financial statements.
The audit fee in respect of the Company was $8,133 (2012: $7,792). Fees payable to Deloitte for non-audit services to the Company are not required
to be disclosed because they are included within the consolidated disclosure in note 34.
Anglo American plc Annual Report 2013
213
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION FINANCIAL STATEMENTS OF THE PARENT COMPANY
3) Accounting policies: Anglo American plc, the Company
The Company balance sheet and related notes have been prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice (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.
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. Actual results may differ
from those estimated.
As permitted by section 408 of the Companies Act 2006, 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 $700 million (2012: $1,152 million).
Significant accounting policies
Investments
Investments represent equity holdings in subsidiaries and are held at cost less provision for impairment.
Share-based payments
The Company has applied the requirements of FRS 20 Share-based Payment.
The Company makes equity settled share-based payments to the directors, which are measured at fair value at the date of grant and expensed on a straight
line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. For those share schemes with market vesting
conditions, the fair value is determined using a Monte Carlo model at the grant date. The fair value of share options issued with non-market vesting conditions
has been calculated using a Black Scholes model. For all other share awards, the fair value is determined by reference to the market value of the share at the
grant date. For all share schemes with non-market 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 2013.
214
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
SUMMARY BY BUSINESS OPERATION
US$ million
Iron Ore and Manganese
Kumba Iron Ore
Iron Ore Brazil
Samancor
Projects and corporate
Metallurgical Coal
Australia
Canada
Projects and corporate
Thermal Coal
South Africa
Colombia
Projects and corporate
Copper
Anglo American Sur
Anglo American Norte
Collahuasi
Projects and corporate
Nickel
Codemin
Loma de Níquel
Barro Alto
Projects and corporate
Niobium and Phosphates
Niobium
Phosphates
Projects and corporate
Platinum
Operations
Projects and corporate
Diamonds (6)
Operations
Projects and corporate
Other Mining and Industrial
Amapá(7)
Tarmac
Scaw Metals(8)
Projects and corporate
Revenue(1)
Underlying EBITDA(2)
Underlying operating
profit/(loss)(3)
Underlying earnings
2013
6,517
5,643
–
874
–
3,396
3,138
258
–
3,004
2,187
817
–
5,392
3,300
778
1,314
–
136
136
–
–
–
726
182
544
–
5,688
5,688
–
6,404
6,404
–
1,795
100
1,695
–
–
2012
6,403
5,572
–
831
–
3,889
3,657
232
–
3,447
2,477
970
–
5,122
3,186
934
1,002
–
336
176
160
–
–
770
173
597
–
5,489
5,489
–
4,028
4,028
–
3,296
327
2,171
798
–
2013
3,390
3,266
(27)
258
(107)
612
665
7
(60)
735
479
299
(43)
2,402
1,642
191
718
(149)
(37)
23
(5)
(38)
(17)
176
94
100
(18)
1,048
1,121
(73)
1,451
1,516
(65)
81
–
88
–
(7)
2012
restated(4)
3,262
3,239
(1)
153
(129)
877
940
13
(76)
972
607
412
(47)
2,288
1,762
336
484
(294)
50
53
46
(7)
(42)
196
85
114
(3)
580
656
(76)
712
734
(22)
289
89
148
60
(8)
2013
3,119
3,047
(31)
210
(107)
46
176
(70)
(60)
541
356
228
(43)
1,739
1,220
135
533
(149)
(44)
17
(5)
(39)
(17)
150
89
79
(18)
464
537
(73)
1,003
1,068
(65)
(13)
–
(6)
–
(7)
2012
restated(4)
3,011
3,042
(5)
103
(129)
2013
1,125
1,171(5)
(51)
92
(87)(5)
2012
restated(4)
1,046
1,107
(43)
83
(101)
405
519
(38)
(76)
793
482
358
(47)
1,736
1,402
288
340
(294)
26
47
29
(8)
(42)
169
81
91
(3)
(120)
(44)
(76)
474
496
(22)
168
54
73
49
(8)
60
132
(21)
(51)
397
283
151
(37)
803
464
85
386
(132)
(54)
5
(7)
(38)
(14)
92
48
57
(13)
287
356
(69)
532
591
(59)
(2)
–
5
–
(7)
275
365
(27)
(63)
523
312
251
(40)
941
695
237
243
(234)
10
31
17
(5)
(33)
107
47
63
(3)
(225)
(155)
(70)
289
309
(20)
121
27
65
37
(8)
Exploration
–
–
(205)
(206)
(207)
(206)
(190)
(195)
Corporate Activities and Unallocated Costs
5
33,063
5
32,785
(133)
9,520
(160)
8,860
(178)
6,620
(203)
6,253
(377)
2,673
(32)
2,860
(1) Revenue includes the Group’s attributable share of revenue of associates and joint ventures. Revenue for copper is shown after deduction of treatment and refining charges (TC/RCs).
(2) Underlying EBITDA is underlying operating profit before depreciation and amortisation in subsidiaries and joint operations and includes attributable share of underlying operating profit before
depreciation and amortisation of associates and joint ventures.
(3) Underlying operating profit/(loss) is operating profit/(loss) before special items and remeasurements, and includes the Group’s attributable share of associates’ and joint ventures’ operating
profit/(loss) before special items and remeasurements.
(4) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 of the Consolidated financial statements for details.
(5) Of the projects and corporate expense, which includes a corporate cost allocation, $63 million (2012: $67 million) relates to Kumba Iron Ore. The total contribution from Kumba Iron Ore
to the Group’s underlying earnings is $1,108 million (2012: $1,040 million) as reported in the external earnings reconciliation, see page 217.
(6) On 16 August 2012 the Group acquired a controlling interest in De Beers (Diamonds segment). De Beers ceased to be an associate of the Group and has been accounted for as a subsidiary
since this date.
(7) The Group disposed of its interest in Amapá in November 2013.
(8) The Group disposed of its interest in Scaw Metals in November 2012.
Marketing activities are allocated to the underlying operation to which they relate.
Anglo American plc Annual Report 2013
215
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
KEY FINANCIAL DATA
US$ million (unless otherwise stated)
Group revenue including associates and joint ventures
Less: share of associates’ and joint ventures’ revenue
Group revenue
Underlying operating profit including associates and joint
ventures before special items and remeasurements
Special items and remeasurements (excluding financing and tax
special items and remeasurements)
Net finance costs (including financing special items and
remeasurements), tax and non-controlling interests of associates
and joint ventures
Total profit from operations, associates and joint ventures
Net finance (costs)/income (including financing special items
and remeasurements)
Profit/(loss) before tax
Income tax expense (including special items and remeasurements)
Profit/(loss) for the financial year – continuing operations
Profit for the financial year – discontinued operations
Profit/(loss) for the financial year – total Group
Non-controlling interests
(Loss)/profit attributable to equity shareholders of
the Company
Underlying earnings(3) – continuing operations
Underlying earnings(3) – discontinued operations
Underlying earnings(3) – total Group
(Loss)/earnings per share (US$) – continuing operations
Earnings per share (US$) – discontinued operations
(Loss)/earnings per share (US$) – total Group
Underlying earnings per share (US$) – continuing operations
Underlying earnings per share (US$) – discontinued operations
Underlying earnings per share (US$) – total Group
Ordinary dividend per share (US cents)
Special dividend per share (US cents)
Weighted average basic number of shares outstanding (million)
Underlying EBITDA(4) – continuing operations
Underlying EBITDA(4) – discontinued operations
Underlying EBITDA(4) – total Group
Underlying EBITDA interest cover(5) – 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 assets and property, plant and equipment
Other non-current assets and investments(6)
Working capital
Other net current liabilities(6)
Other non-current liabilities and obligations(6)
Cash and cash equivalents and borrowings(7)
Net assets classified as held for sale
Net assets
Non-controlling interests
Equity attributable to equity shareholders of the Company
Total capital(8)
Cash flows from operations – continuing operations
Cash flows from operations – discontinued operations
Cash flows from operations – total Group
Dividends received from associates, joint ventures and financial
asset investments – continuing operations
Dividends received from associates, joint ventures and financial
asset investments – discontinued operations
Dividends received from associates, joint ventures and financial
asset investments – total Group
EBITDA/average total capital(8) – total Group
Net debt to total capital (gearing)(9)
2012
restated(1)
2013
2011
2010
2009
2008
2007
2006(2)
2005(2)
2004(2)
33,063 32,785 36,548 32,929 24,637 32,964 30,559 29,404 24,872 22,610
(5,429)
(3,721) (4,105)
29,342 28,680 30,580 27,960 20,858 26,311 25,470 24,991 20,132 17,181
(4,969)
(5,968)
(3,779)
(6,653)
(5,089)
(4,413)
(4,740)
6,620
6,253 11,095
9,763
4,957 10,085
9,590
8,888
5,549
3,832
(4,310) (5,755)
(44)
1,727
(208)
(330)
(227)
24
16
556
(204)
2,106
(281)
(423)
(452)
217 10,599 11,067
(313)
4,436
(783)
8,972
(434)
8,929
(398)
8,514
(315)
5,250
(391)
3,997
(406)
1,700
(1,274)
426
–
426
(1,387)
(388)
(139)
183
(171) 10,782 10,928
(2,809)
(2,860)
(393)
8,119
7,922
(564)
–
–
–
8,119
7,922
(564)
(1,575)
(1,753)
(906)
(407)
4,029
(1,117)
2,912
–
2,912
(487)
(401)
8,571
(2,451)
6,120
–
6,120
(905)
(108)
8,821
(2,693)
6,128
2,044
8,172
(868)
(71)
8,443
(2,518)
5,925
997
6,922
(736)
(220)
5,030
(1,208)
3,822
111
3,933
(412)
(385)
3,612
(765)
2,847
1,094
3,941
(440)
6,544
6,169
(961) (1,470)
4,976
6,120
2,860
–
–
–
4,976
6,120
2,860
5.43
5.10
(1.17)
–
–
–
5.43
5.10
(1.17)
4.13
5.06
2.28
–
–
–
4.13
5.06
2.28
65.0
74.0
85.0
–
–
–
1,254
1,206
1,210
8,860 13,348 11,983
–
8,860 13,348 11,983
42.0
n/a
2,673
–
2,673
(0.75)
–
(0.75)
2.09
–
2.09
85.0
–
1,281
9,520
–
9,520
51.5
52.1
–
–
7,304
5,477
284
5,761
4.04
1.54
5.58
4.18
0.22
4.40
124.0
–
1,309
5,215
5,237
–
5,237
4.34
–
4.34
4.36
–
4.36
44.0
–
1,202
6,186
2,425
5,019
2,569
452
–
5,471
2,569
3.51
2.02
0.70
–
4.21
2.02
3.42
2.14
0.31
–
3.73
2.14
108.0
–
67.0
–
1,202
1,468
6,930 11,847 11,171 10,431
1,766
6,930 11,847 12,132 12,197
45.5
27.4
28.3
42.0
961
–
–
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
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
20.0% 19.1% 30.4% 29.6% 20.1% 30.6% 28.4% 25.4% 18.5% 14.7%
2.5
2.7
6.8
6.4
–
9.9
3.5
3.5
2.9
2.7
–
7,607
7,303
9,852
861
2,168
2,385
(840)
(272)
(785)
(8,757)
(7,567)
(8,487)
(7,038) (11,046) (11,051)
195
429
8,689 10,269
9,418
2,093
3,751
3,771
(1,683)
(986)
(1,559)
(9,220)
(9,710) (10,692)
(1,141)
(10,144) (8,555)
–
2,231
45,588 49,300 42,871 42,126 37,974 32,551 25,090 25,632 33,368 35,816
5,547
3,543
(611)
(8,339)
(8,243)
–
37,364 43,738 43,189 37,971 28,069 21,756 24,330 27,127 27,578 27,713
(4,588)
(1,948) (1,535)
(5,693) (6,127)
31,671 37,611 39,092 34,239 26,121 20,221 22,461 24,271 23,621 23,125
48,016 52,248 44,563 45,355 39,349 33,096 29,181 30,258 32,558 35,806
3,857
1,434
5,291
9,271
1,966
(911)
(6,387)
(5,170)
471
8,258
3,096
(1,430)
(5,826)
(3,244)
641
5,585
3,538
(1,429)
(8,491)
(4,993)
–
7,370 11,498
–
7,370 11,498
9,012
1,045
9,845 10,057
7,729
–
7,729
4,904
–
4,904
9,579
–
9,579
9,924
–
9,924
5,963
1,302
7,265
9,375
470
(3,732)
(2,856)
(4,097)
(1,869)
(3,957)
188
–
264
348
403
285
639
659
311
251
468
380
–
–
–
–
–
–
52
37
2
16
348
264
396
19.0% 18.3% 29.7% 28.3% 19.1% 38.0% 40.8% 38.8% 26.2% 21.3%
22.2% 16.3% 3.1% 16.3% 28.7% 34.3% 16.6% 10.3% 15.3% 22.6%
403
285
639
659
363
288
470
(1) Certain balances related to 2012 have been restated to reflect the adoption of new accounting pronouncements. See note 2 of the Consolidated financial statements for details.
(2) Comparatives for 2006, 2005 and 2004 were adjusted in the 2007 Annual Report to reclassify amounts relating to discontinued operations where applicable.
(3) Underlying earnings is profit attributable to equity shareholders of the Company before special items and remeasurements, and is therefore presented after net finance costs, income tax and
non-controlling interests.
(4) Underlying EBITDA is operating profit before special items and remeasurements, depreciation and amortisation in subsidiaries and joint operations and includes attributable share of EBITDA
of associates and joint ventures.
(5) Underlying EBITDA interest cover is underlying EBITDA divided by net finance costs, excluding other net financial income, exchange gains and losses on monetary assets and liabilities,
unwinding of discount relating to provisions and other liabilities, financing special items and remeasurements, and including attributable share of associates’ and joint ventures’ net interest
expense, which in 2011 resulted in a net finance income and therefore the ratio is not applicable.
(6) Comparatives for 2008, 2007, 2006 and 2005 were adjusted in the 2009 Annual Report in accordance with IAS 1 Presentation of Financial Statements – Improvements to reclassify non-hedge
derivatives whose expected settlement date was more than one year from the period end from current to non-current.
(7) This differs from the Group’s measure of ‘Net debt’ as it excludes the net cash/(debt) of disposal groups (2013: nil; 2012: $213 million; 2011: nil; 2010: $59 million; 2009: $48 million; 2008:
$8 million; 2007: $(69) million; 2006: $(80) million; 2005: nil; 2004: nil) and excludes related hedges (2013: net liabilities of $508 million; 2012: net liabilities of $168 million; 2011: net liabilities
of $233 million; 2010: net liabilities of $405 million; 2009: net liabilities of $285 million; 2008: net liabilities of $297 million; 2007: net assets of $388 million; 2006: net assets of $193 million;
2005: nil; 2004: nil). See note 24 of the Consolidated financial statements for further details.
(8) Total capital is net assets excluding net debt.
(9) Net debt to total capital is calculated as net debt (including related hedges and net debt in disposal groups) divided by total capital. Comparatives are presented on a consistent basis.
216
Anglo American plc Annual Report 2013
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
RECONCILIATION OF SUBSIDIARIES’ REPORTED EARNINGS TO
THE UNDERLYING EARNINGS INCLUDED IN THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2013
Note only key reported lines are reconciled.
Kumba Iron Ore Limited
US$ million
IFRS headline earnings
Exploration
Kumba Envision Trust(2)
Other adjustments
Non-controlling interests
Elimination of intercompany interest
Depreciation on assets fair valued on acquisition (net of tax)
Corporate cost allocation
Contribution to Anglo American underlying earnings
(1) Headline and underlying earnings have been restated to reflect the adoption of new accounting pronouncements.
(2) The Kumba Envision Trust charge is included in IFRS headline earnings but is a non-operating special item so is excluded from underlying earnings.
Anglo American Platinum Limited
US$ million
IFRS headline earnings/(loss)
Exploration
Operating and financing remeasurements (net of tax)
Restructuring costs included in headline earnings (net of tax)
BEE transactions and related charges
Tax special item included in headline earnings
Other adjustments
Non-controlling interests
Elimination of intercompany interest
Depreciation on assets fair valued on acquisition (net of tax)
Corporate cost allocation
Contribution to Anglo American underlying earnings/(loss)
2013
1,604
14
33
2
1,653
(501)
12
(6)
(50)
1,108
2012
restated(1)
1,534
16
53
3
1,606
(513)
4
(8)
(49)
1,040
2013
152
2
(8)
105
(44)
188
5
400
(80)
67
(36)
(64)
287
2012
(170)
4
2
–
–
–
–
(164)
33
10
(41)
(63)
(225)
Anglo American plc Annual Report 2013
217
Financial statements
2013
10.51
2.36
0.60
1.12
0.73
526
8.76
9.65
2.16
0.64
1.03
0.75
495
8.39
2013
123
85
85
132
335
663
1,357
716
975
127
80
84
159
332
680
1,485
725
1,066
2012
8.47
2.05
0.62
0.96
0.76
479
7.79
8.21
1.95
0.63
0.97
0.78
486
7.61
2012
138
89
91
170
359
771
1,523
699
1,080
122
93
94
210
361
794
1,551
644
1,275
US$/tonne
US$/tonne
US$/tonne
US$/tonne
US cents/lb
US cents/lb
US$/oz
US$/oz
US$/oz
US$/tonne
US$/tonne
US$/tonne
US$/tonne
US cents/lb
US cents/lb
US$/oz
US$/oz
US$/oz
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
EXCHANGE RATES AND COMMODITY PRICES
US$ exchange rates
Year end spot rates
Rand
Brazilian real
Sterling
Australian dollar
Euro
Chilean peso
Botswana pula
Average rates for the year
Rand
Brazilian real
Sterling
Australian dollar
Euro
Chilean peso
Botswana pula
Commodity prices
Year end spot prices
Iron ore (FOB Australia)(1)
Thermal coal (FOB South Africa)(2)
Thermal coal (FOB Australia)(2)
Hard coking coal (FOB Australia)(3)
Copper(4)
Nickel(4)
Platinum(5)
Palladium(5)
Rhodium(5)
Average market prices for the year
Iron ore (FOB Australia)(1)
Thermal coal (FOB South Africa)(2)
Thermal coal (FOB Australia)(2)
Hard coking coal (FOB Australia)(6)
Copper(4)
Nickel(4)
Platinum(5)
Palladium(5)
Rhodium(5)
(1) Source: Platts.
(2) Source: McCloskey.
(3) Source: Represents the quarter four benchmark.
(4) Source: London Metal Exchange (LME) daily prices.
(5) Source: London Platinum and Palladium Market (LPPM).
(6) Source: Represents the average quarterly benchmark.
218
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
INTRODUCTION
The Ore Reserve and Mineral Resource estimates presented in this
Annual Report are prepared in accordance with the Anglo American plc
(AA plc) Reporting of Exploration Results, Mineral Resources and Ore
Reserves standard. This standard requires that the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves
2012 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 Exploration Results, 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 definitions in both the JORC (2012) and SAMREC
(2007 Edition as amended July 2009) Codes.
The information on Ore Reserves and Mineral Resources was prepared
by or under the supervision of Competent Persons as defined in the
JORC or SAMREC Codes. All Competent Persons have sufficient
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
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 qualified Competent Persons from within the Anglo American
Group, or by independent consultants. The frequency and depth of the
reviews is a function of the perceived 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 Reserves are
dynamic and are more likely to be affected by fluctuations in the prices
of commodities, uncertainties in production costs, processing costs and
other mining, legal, environmental, social and governmental factors which
may impact the financial condition and prospects of the Group. Mineral
Resource estimates also change and tend to be influenced mostly by new
information pertaining to the understanding of the deposit and secondly
by the conversion to Ore Reserves.
The appropriate Mineral Resource classification is determined by the
appointed Competent (or Qualified) Persons. The choice of appropriate
category of Mineral Resource depends upon the quantity, distribution and
quality of geoscientific information available and the level of confidence in
these data.
To accommodate the various factors that are important in the development
of a classified Mineral Resource estimate, a scorecard approach can be
used. Mineral Resource classification defines the confidence associated
with different parts of the Mineral Resource. The confidence that is
assigned refers collectively to the reliability of the Grade and Tonnage
estimates. This reliability includes consideration for the fidelity of the base
data, the geological continuity predicated by the level of understanding
of the geology, the likely precision of the estimated grades and
understanding of grade variability, as well as various other factors that
may influence the confidence that can be placed on the Mineral Resource.
Most business units have developed commodity-specific scorecard-based
approaches to the classification of their Mineral Resources.
The summary of Estimated Ore Reserves and Mineral Resources,
Reserve and Resource Reconciliation Overview, Definitions and Glossary
are contained in the separate Ore Reserve and Mineral Resource Report 2013
which is available in the Reporting Centre on the Anglo American website.
The estimates of Ore Reserves and Mineral Resources are stated as
at 31 December 2013. Unless otherwise stated, Mineral Resources are
additional to (exclusive of) those resources converted to Ore Reserves
and are reported on a dry tonnes basis. The figures in the tables have
been rounded and, if used to derive totals and averages, minor differences
with stated results could occur. Ore Reserves in the context of this Annual
Report have the same meaning as ‘Mineral Reserves’ as defined by the
SAMREC Code and the CIM (Canadian Institute of Mining and Metallurgy)
Definition Standards on Mineral Resources and Mineral Reserves.
This section of the Annual Report presenting the Ore Reserve and
Mineral Resource estimates, should be considered the only valid source
of Ore Reserve and Mineral Resource information for the Anglo American
group exclusive of Kumba Iron Ore and Anglo American Platinum which
publish their own independent annual reports.
It is accepted that mine design and planning may include some Inferred
Mineral Resources. Inferred Mineral Resources in the Life of Mine Plan
(LOM Plan) are described as ‘Inferred (in LOM Plan)’ separately from the
remaining Inferred Mineral Resources described as ‘Inferred (ex. LOM
Plan)’, as required. These resources are declared without application of
any modifying factors.
The direct legal ownership that Anglo American holds in each operation
and project is presented as the Attributable Percentage beside the name
of each entity. Operations and projects which fall below the internal
threshold for reporting (25% attributable interest) are excluded from the
Ore Reserves and Mineral Resources estimates. Operations and projects
which were disposed of or for which mining concessions expired during
2013 and hence not reported are: Amapá and Pebble.
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.
A Prospecting Right is a new order right issued in terms of the MPRDA
that is valid for up to five years, with the possibility of a further extension
of three years, that can be obtained either by the conversion of existing
Old Order Prospecting Rights or through new applications. An Exploration
Right is identical to a Prospecting Right, but is commodity specific 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 issued in terms of the MPRDA valid for
up to 30 years obtained either by the conversion of an existing Old Order
Mining Right, 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 specific 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:
• Where applications for new order Mining Rights and Prospecting Rights
have been submitted and these are still being processed by the relevant
regulatory authorities, the relevant Ore Reserves and Mineral Resources
have been included in the statement.
• Where applications for new order Prospecting Rights have been
initially refused by the regulatory authorities, but are the subject of
ongoing 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 Mineral
Resources have been included in the statement (any associated
comments appear in the footnotes).
O
r
e
R
e
s
e
r
v
e
s
a
n
d
M
n
e
r
a
i
l
R
e
s
o
u
r
c
e
s
Anglo American plc Annual Report 2013
219
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
IRON ORE
estimates as at 31 December 2013
KUMBA IRON ORE
The Ore Reserve and Mineral Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral
Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). The figures reported represent 100% of the Ore Reserves and
Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Anglo American plc’s interest in Kumba Iron Ore Limited is 69.7%.
Detailed information appears in the Kumba Iron Ore Limited Annual Report. Rounding of figures may cause computational discrepancies.
Kumba Iron Ore – Operations
ORE RESERVES
Kolomela (OP)(1)
Attributable %
51.5
Mine
Life
20
Hematite
Sishen (OP)(2)
Hematite
Thabazimbi (OP)(3)
Hematite
40.5
19
51.5
9
Kumba Iron Ore – Operations
MINERAL RESOURCES
Kolomela (OP)(4)
Attributable %
51.5
Hematite
Sishen (OP)(5)
Hematite
40.5
Stockpile
Thabazimbi (OP)(6)
Hematite
51.5
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Kumba Iron Ore – Projects
MINERAL RESOURCES
Zandrivierspoort(7)
Magnetite and Hematite
Attributable %
25.8
Classification
Measured
Indicated
Measured and Indicated
Inferred
ROM Tonnes
2012
Mt
107.6
102.0
209.5
642.9
276.0
918.9
0.4
9.0
9.5
Tonnes
2012
Mt
43.3
17.0
60.3
50.5
55.7
106.2
315.1
137.3
452.4
24.7
67.7
92.5
52.2
11.9
64.2
3.2
0.2
10.4
10.7
2.8
8.2
11.1
Tonnes
2012
Mt
132.9
177.9
310.8
64.5
2013
Mt
101.3
98.7
200.0
428.9
435.1
864.1
0.5
10.8
11.3
2013
Mt
21.9
42.0
64.0
50.1
45.0
95.2
295.2
143.7
438.9
21.6
51.8
73.5
7.3
22.8
30.1
–
0.3
9.8
10.1
1.6
4.6
6.2
2013
Mt
107.0
206.4
313.4
162.7
2013
%Fe
64.4
64.5
64.4
%Fe
59.2
59.1
59.1
%Fe
62.2
60.4
60.5
2013
%Fe
64.9
63.4
63.9
64.2
63.3
63.8
%Fe
62.1
58.1
60.8
53.1
55.7
54.9
53.1
50.8
51.4
–
%Fe
64.0
62.8
62.8
59.7
62.9
62.1
2013
%Fe
34.7
34.4
34.5
34.5
Grade
2012
%Fe
64.8
64.0
64.4
%Fe
59.4
58.8
59.2
%Fe
61.1
60.6
60.6
Grade
2012
%Fe
64.9
65.2
65.0
64.2
62.8
63.5
%Fe
61.0
58.4
60.2
56.0
55.0
55.3
58.1
57.7
58.0
56.7
%Fe
62.5
62.5
62.5
60.7
62.8
62.3
Grade
2012
%Fe
35.0
34.5
34.7
34.2
Saleable Product
2012
2013
Mt %Fe
101 64.4
99 64.5
Mt %Fe
107 64.8
102 64.0
200 64.4 209 64.4
485 65.3
311 65.4
311 65.1
201 65.0
622 65.3 686 65.2
0 64.4
8 62.9
9 63.0
0 62.9
7 62.9
7 62.9
2013
%Fe3O4
41.5
42.5
42.2
38.1
Grade
2012
%Fe3O4
31.9
27.5
29.4
23.6
Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
The tonnage is quoted as dry metric tonnes and abbreviated as Mt for million tonnes.
The Mineral Resources are constrained by a resource pit shell, which defines the spatial limits of eventual economic extraction.
Stockpile material is required to be blended to achieve suitable product specifications.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2013 at Sishen and Zandrivierspoort.
220
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
IRON ORE
estimates as at 31 December 2013
(1) Kolomela – Ore Reserves: Ore Reserves are reported above a cut-off of 42.0 %Fe inclusive of dilution. The decrease is primarily due to production. The Mine
Life decreases due to a higher planned annual production rate.
(2) Sishen – Ore Reserves: Ore Reserves are reported above a cut-off of 40.0 %Fe inclusive of dilution. The decrease is primarily due to production as well as
a decrease in the JIG reserve (ferruginised Shale material occurring in the hanging wall of the main Hematite ore zone) due to revised resource estimation
methods. The decrease in JIG reserves is offset by geological model updates following additional infill drilling. Re-classification of Proved to Probable Ore
Reserves took place pending grant of the Mining Right (applied for in 2013) beneath the Railway Properties potentially impacting Ore Reserves underneath
and West of the Railway Properties.
(3) Thabazimbi – Ore Reserves: Ore Reserves are reported above a cut-off of 54.3 %Fe inclusive of dilution. The increase is due to the conversion of additional
Measured and Indicated Mineral Resources to Ore Reserves as a result of additional drilling information which offsets production. The Mine Life increases due
to a lower planned annual production rate as well as the increase in Ore Reserves.
(4) Kolomela – Mineral Resources: Mineral Resources are reported above a cut-off of 50.0 %Fe. The decrease is due to additional drilling which was used to refine
the geological model of the Ploegfontein orebody. The re-classification of Measured to Indicated Resources is the result of a refined classification methodology
which places more weight on sample representivity.
(5) Sishen – Mineral Resources: Mineral Resources are reported above a cut-off of 40.0 %Fe. The decrease is mainly due to a revision of the Shale and Flagstone
Mineral Resource estimation and classification.
Stockpile material is considered as eventually economically extractable as local grade variations not identified by the grade estimation may result in this material
becoming part of the run-of-mine blend to be converted into Saleable Product. The Stockpile Resource estimates decrease due to a portion of this material now
included in the Life of Mine Plan.
(6) Thabazimbi – Mineral Resources: Mineral Resources are reported above a cut-off of 55.0 %Fe. The decrease can primarily be attributed to the revision of
estimation methods applied at Donkerpoort Nek, where excessive extrapolation beyond borehole data has been addressed.
(7) Zandrivierspoort: The Zandrivierspoort Project Mineral Resources are reported above a cut-off of 21.7 %Fe. The increase is due to updated long-term forward
looking price assumptions which aligns the Zandrivierspoort Project with the Kumba mining operations.
Assumption with respect to Mineral Tenure
Sishen: On 21 December 2011, the South African High Court ruled that Sishen Iron Ore Company (SIOC), the operating company of Kumba Iron Ore, was the
exclusive holder of mineral rights for iron ore and quartzite on the mining rights area where the Sishen Mine is situated. The High Court accordingly set aside the
grant of the prospecting right granted by the Department of Mineral Rights (DMR) to Imperial Crown Trading 289 (Pty) Ltd (ICT). Both the DMR and ICT lodged
an appeal to the Supreme Court of Appeal (SCA) against the ruling by the High Court, which appeal was heard by the SCA on 19 February 2013.
On 28 March 2013 the SCA dismissed the appeals as lodged by the DMR and ICT. The SCA held that, as a matter of law and as at midnight on 30 April 2009, SIOC
became the sole holder of the mining right to iron ore in respect of the Sishen Mine, after AMSA failed to convert its undivided share of the old order mining right.
On 23 April 2013, both ICT and the DMR had lodged applications for leave to appeal against the SCA judgment to the Constitutional Court (CC). The CC hearing
was held on 3 September 2013.
On 12 December 2013, the CC granted the DMR’s appeal in part against the SCA judgment. In a detailed judgment, the CC clarified that SIOC, when it lodged its
application for conversion of its old order right, converted only the right it held at that time (being a 78.6% undivided share in the Sishen mining right). The CC further
held that AMSA retained the right to lodge its old order right (21.4% undivided share) for conversion before midnight on 30 April 2009, but failed to do so. As a
consequence of such failure by AMSA, the 21.4% undivided right remained available for allocation by the DMR.
The Constitutional Court ruled further that, based on the provisions of the Mineral and Petroleum Resources Development Act (the MPRDA), SIOC is the only party
competent to apply for and be granted the residual (21.4%) mining right. SIOC therefore has a legitimate expectation for the grant of the 21.4% mining right, based
on the finding by the Constitutional Court that SIOC is the only entity capable of applying for, and being granted, the residual right, however, at the time of reporting
the right has not yet been granted and therefore the reduction in SIOC’s attributable shareholding from 100% to 78.6% thus reducing the AA plc attributable interest
to 40.5%.
Anglo American plc Annual Report 2013
221
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
IRON ORE
estimates as at 31 December 2013
IRON ORE BRAZIL
The Ore Reserves and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, 2012) as a minimum standard. The figures reported represent 100% of the Ore Reserves and Mineral
Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of figures may cause computational discrepancies.
The Minas-Rio project is located in the state of Minas Gerais, Brazil and will include open pit mines and a beneficiation plant producing high-grade pellet feed
which will be transported, through a slurry pipeline to the Port of Açu in the state of Rio de Janeiro. The project will largely be based on the two main deposits of
Serra do Sapo and Itapanhoacanga. Two ore types, Friable and Compact Itabirite, have been identified at Serra do Sapo and Itapanhoacanga. Only the Friable
material at Serra do Sapo is being considered for Phase 1 of the Minas-Rio project. The planned annual capacity of Phase 1 is 26.5 Mtpa of iron ore pellet feed
(wet tonnes). Execution of this project remains subject to the normal regulatory processes of the Brazilian authorities.
Iron Ore Brazil – Projects
ORE RESERVES
Serra do Sapo (OP)(1)(2)
Attributable %
100
Mine
Life
28
Friable Itabirite and Hematite
Iron Ore Brazil – Projects
MINERAL RESOURCES
Itapanhoacanga(1)(3)
Attributable %
100
Friable Itabirite and Hematite
Compact Itabirite
Serra do Sapo (OP)(1)(4)
100
Friable Itabirite and Hematite
Compact Itabirite
Serro(5)
100
Friable Itabirite and Hematite
Compact Itabirite
Classification
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Saleable Product
2012
2013
Mt %Fe
Mt %Fe
–
–
–
–
686 67.5
685 67.5
686 67.5 685 67.5
2013
Mt
–
1,385.3
1,385.3
ROM Tonnes
2012
Mt
–
1,452.8
1,452.8
2013
Mt
31.0
117.5
148.6
114.5
23.2
73.4
96.6
57.0
187.7
229.4
417.1
50.4
21.8
72.1
737.7
2,092.9
2,830.5
201.1
4.7
87.3
92.0
32.8
7.3
274.4
281.7
111.1
Tonnes
2012
Mt
32.3
122.3
154.5
119.1
23.2
73.6
96.8
57.2
148.7
236.7
385.4
108.5
58.7
167.1
559.9
2,251.3
2,811.2
476.8
–
9.5
9.5
74.2
–
–
–
308.2
2013
%Fe
–
38.8
38.8
2013
%Fe
40.6
41.3
41.1
40.4
33.6
34.5
34.3
34.5
%Fe
31.8
33.3
32.6
38.4
32.3
36.5
30.5
31.2
31.0
31.2
%Fe
44.7
41.0
41.2
41.0
33.0
32.1
32.1
34.6
Grade
2012
%Fe
–
38.8
38.8
Grade
2012
%Fe
40.6
41.3
41.1
40.9
33.6
34.5
34.3
34.5
%Fe
31.6
33.7
32.9
38.3
32.9
36.4
31.0
31.1
31.1
31.1
%Fe
–
63.6
63.6
35.3
–
–
–
31.6
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
(1) Minas-Rio Project: The Minas-Rio Project comprises the following sub-areas: Itapanhoacanga and Serra do Sapo. The cut-off grade is 25.0 %Fe.
At Itapanhoacanga, Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite, Soft Hematite and Hard Hematite.
At Serra do Sapo Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite, High Alumina Friable Itabirite, Soft Hematite and Canga.
Metallurgical test work indicates that the Compact Itabirite at Serra do Sapo is softer than Compact Itabirite mined in the Carajás and Iron Quadrangle areas.
From 2014 onwards at Serra do Sapo, Compact Itabirite will be referred to as Itabirite and Semi-Compact Itabirite as Semi-Friable Itabirite.
(2) Serra do Sapo – Ore Reserves: ROM Tonnes and grades are on a dry basis. In 2012 tonnages were reported on a wet basis with an average moisture content of
4.2 wt% for Friable ore. Saleable Product tonnes are on a wet basis (average moisture content is 8.0 wt% of the wet mass) with quality stated on a dry basis. The
decrease is primarily due to a change in reporting basis from wet to dry tonnage, with updated pit slope angles and increased costs also contributing to the
decrease. This is partially offset by an update of the block model as a result of additional drilling and new pit optimisation undertaken.
The Ore Reserves include 2.5Mt (at 48.8 %Fe) of material stockpiled during pre-stripping operations.
(3) Itapanhoacanga – Mineral Resources: In-situ tonnes and grade are on a dry basis. In 2012 in-situ tonnes were reported with a moisture content 3.9 wt% for the
friable material and 0.2 wt% for the compact material. The decrease in Mineral Resources is as a result of a change in reporting basis from wet to dry tonnage.
(4) Serra do Sapo – Mineral Resources: In-situ tonnes and grade are on a dry basis. In 2012 in-situ tonnes were reported with a moisture content 4.2 wt% for the
friable material and 0.1 wt% for the compact material. The decrease in Friable and Compact Itabirite Mineral Resources is primarily due to updated reasonable
prospects for eventual economic extraction assumptions for the resource shell, the application of updated geotechnical parameters and a change in reporting
basis from wet to dry tonnage also contributing to the decrease. Additional infill drilling partially offset the decrease.
(5) Serro: In-situ tonnes and grade are on a dry basis. In 2012 the in-situ tonnes were reported with an average moisture content of 4.7 wt%.
Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite and Hard Hematite (15.4 Mt at 64.6 %Fe). The cut-off grade is 25.0 %Fe.
The increase in Mineral Resources is due to an update of the block model as a result of additional drilling which is partially offset by a change in reporting basis
from wet to dry tonnage.
222
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
MANGANESE
estimates as at 31 December 2013
SAMANCOR MANGANESE
The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (The JORC Code, 2012) and The South African Code for the Reporting of Exploration Results, Mineral Resources
and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009) as applicable. The figures reported represent 100% of the Ore Reserves
and Mineral Resources (source: BHP Billiton), the percentage attributable to Anglo American plc is stated separately. Rounding of figures may cause
computational discrepancies.
Samancor Manganese – Operations
ORE RESERVES
GEMCO (OP)(1)
Attributable %
40.0
Mine
Life
12
Hotazel Manganese Mines
29.6
Mamatwan (OP)(2)
Wessels (UG)(3)
20
46
Samancor Manganese – Operations
MINERAL RESOURCES
GEMCO (OP)(4)
Attributable %
40.0
Hotazel Manganese Mines
29.6
Mamatwan (OP)(5)
Wessels (UG)(6)
MINERAL RESOURCES INCLUDE ORE RESERVES.
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Classification
2013
%
59.1
58.7
59.0
2013
%
48.2
46.8
47.6
48.6
Yield
2012
%
55.1
55.1
55.1
Yield
2012
%
47.5
47.4
47.5
47.8
2013
Mt
68.9
27.6
96.5
38.3
30.5
68.8
4.2
63.9
68.1
2013
Mt
79.8
55.4
135.2
35.4
58.6
54.5
113.1
4.3
16.4
125.1
141.5
–
Tonnes
2012
Mt
72.5
24.9
97.4
41.4
31.4
72.8
3.9
64.9
68.8
Tonnes
2012
Mt
78.9
28.2
107.1
49.4
62.0
54.7
116.7
4.3
11.4
126.4
137.8
–
2013
%Mn
44.4
44.7
44.5
%Mn
37.1
36.9
37.0
44.5
42.3
42.4
2013
%Mn
46.3
44.5
45.6
43.2
%Mn
35.5
34.5
35.0
34.5
44.2
42.1
42.4
–
Grade
2012
%Mn
45.0
45.0
45.0
%Mn
37.2
37.1
37.1
44.8
42.9
43.0
Grade
2012
%Mn
46.9
46.0
46.7
43.9
%Mn
35.5
34.5
35.0
34.5
45.7
43.6
43.8
–
Mining method: OP = Open Pit, UG = Underground. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
Mamatwan tonnages stated as wet metric tonnes. Wessels and GEMCO tonnages stated as dry metric tonnes.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
During 2013 Samancor withdrew from the Franceville project in Gabon following the completion of the feasibility study and is therefore not reported.
Divestment of Beniomi and Bordeaux was completed in April 2013.
(1) GEMCO – Ore Reserves: Manganese grades are given as per washed ore samples and should be read together with their respective yields. Production
depletion is partially offset by increased density values based on reconciliations supported by grade control diamond drilling results.
(2) Mamatwan – Ore Reserves: The change is due to depletion from mining and re-running of the model using the FY13 LOA optimised Mine Plan.
(3) Wessels – Ore Reserves: The change is due to depletion from mining which is offset by the use of the new 2012 geological block model being used for the
2013 declaration.
(4) GEMCO – Mineral Resources: The adjustment of density values on the basis of grade control diamond drilling and additional drillhole information incorporated
into the resource model in both the mining and exploration areas resulted in increased tonnages and resource confidence. The areas of key change are the
exploration leases which are now predominantly Indicated Resource (previously Inferred).
The Premium Sands (PC-02) Project Mineral Resource estimates above a zero cut-off grade (Indicated: 12.8 Mt at 20.8 %Mn, Inferred: 2.3 Mt at 20.0 %Mn) are
excluded from the table.
(5) Mamatwan – Mineral Resources: A cut-off grade of 35.0 %Mn is used to declare Mineral Resources within the M, C and N Zones as well as within the X Zone.
The Top Cut Resources are declared above a cut-off of 28.0 %Mn. The change, after depletion from mining, is due to re-running the 2010 geological model using
Micromine software.
(6) Wessels – Mineral Resources: A cut-off grade of 45.0 %Mn is used to declare Mineral Resources within the Lower Body-HG ore type and 37.5 %Mn in the
Lower Body-LG and Upper Body ore types. The increase, after depletion from mining, is mainly due to the new 2012 geological block model being used for the
2013 declaration.
Anglo American plc Annual Report 2013
223
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COAL
estimates as at 31 December 2013
METALLURGICAL COAL
The Coal Reserve and Coal Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (The JORC Code, 2012) as a minimum standard. The figures reported represent 100% of the Coal Reserves and
Coal Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of figures may cause computational discrepancies.
Anglo American Metallurgical Coal comprises export metallurgical and thermal coal operations located in Australia and Canada.
Metallurgical Coal – Australia Operations
COAL RESERVES(1)
Attributable %
100
Callide (OC)
Mine
Life Classification
23
Thermal – Domestic
Capcoal (OC)
Metallurgical – Coking
77.5
23
Metallurgical – Other
Thermal – Export
Capcoal (UG)
Metallurgical – Coking
70.0
11
Dawson (OC)
Metallurgical – Coking
51.0
26
Thermal – Export
Drayton (OC)
Thermal – Export
Foxleigh (OC)
Metallurgical – Other
88.2
70.0
2
6
Moranbah North (UG)
Metallurgical – Coking
88.0
19
Australia Metallurgical – Coking 71.6
Australia Metallurgical – Other
75.6
Australia Thermal – Export
52.7
Australia Thermal – Domestic
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
Proved
Probable
Total
ROM Tonnes(2)
Yield(3)
Saleable Tonnes(2)
Saleable Quality
(4)
2013
Mt
185.5
52.0
237.5
73.4
69.5
142.9
2012
Mt
192.2
52.0
244.2
69.9
72.5
142.4
43.4
6.8
50.2
171.9
225.9
397.8
4.6
2.2
6.8
0.7
23.4
24.1
114.8
20.4
135.2
Mt
594.3
400.3
994.6
36.0
14.7
50.7
180.7
227.2
407.9
7.9
4.2
12.0
1.9
12.6
14.5
109.5
11.3
120.8
Mt
598.0
394.4
992.5
2013
ROM %
97.9
98.0
97.9
2012
ROM %
97.9
98.0
97.9
2013
Mt
181.6
51.0
232.6
2012
Mt
188.2
51.0
239.2
27.5
27.4
27.5
36.2
36.0
36.1
5.0
4.5
4.8
72.5
75.0
72.8
24.0
20.9
22.2
51.7
53.7
52.8
74.3
73.8
74.1
79.9
70.6
70.9
73.5
67.3
72.6
Plant %
56.8
33.3
49.2
37.1
49.9
44.9
50.7
52.7
51.8
97.9
98.0
97.9
19.8
16.4
18.0
46.3
46.5
46.4
2.7
2.3
2.5
75.1
72.0
74.2
24.0
21.0
22.4
51.6
53.6
52.7
76.0
76.0
76.0
83.0
77.7
78.4
76.6
72.7
76.2
Plant %
58.4
32.9
50.3
48.1
53.7
51.2
52.0
53.5
52.9
97.9
98.0
97.9
21.0
19.8
40.8
27.6
26.0
53.6
3.8
3.2
7.1
32.9
5.3
38.2
42.4
48.5
90.9
91.3
124.8
216.1
3.4
1.7
5.1
0.6
17.4
18.0
89.1
14.5
103.6
Mt
185.4
88.2
273.5
28.2
43.4
71.6
98.6
129.7
228.3
181.6
51.0
232.6
14.4
12.3
26.7
33.6
35.0
68.7
2.0
1.7
3.7
28.5
11.2
39.7
44.7
49.1
93.8
95.8
125.3
221.1
6.0
3.2
9.2
1.7
10.4
12.1
88.5
8.7
97.2
Mt
176.0
81.3
257.3
35.3
45.5
80.8
103.8
130.2
233.9
188.2
51.0
239.2
2013
kcal/kg
4,380
4,250
4,350
CSN
6.0
5.5
6.0
kcal/kg
6,850
6,850
6,850
kcal/kg
6,160
6,290
6,220
CSN
9.0
8.5
9.0
CSN
7.0
7.0
7.0
kcal/kg
5,170
5,100
5,130
kcal/kg
6,600
6,540
6,580
kcal/kg
7,190
7,050
7,050
CSN
8.0
8.0
8.0
CSN
7.5
7.0
7.5
kcal/kg
6,860
6,930
6,900
kcal/kg
5,260
5,150
5,200
kcal/kg
4,380
4,250
4,350
2012
kcal/kg
4,380
4,250
4,350
CSN
7.0
6.5
7.0
kcal/kg
6,970
6,990
6,980
kcal/kg
7,070
7,030
7,050
CSN
9.0
9.0
9.0
CSN
7.5
7.5
7.5
kcal/kg
5,440
5,340
5,380
kcal/kg
6,650
6,600
6,630
kcal/kg
6,870
6,800
6,810
CSN
8.0
8.0
8.0
CSN
8.0
7.5
8.0
kcal/kg
6,970
6,940
6,950
kcal/kg
5,540
5,390
5,460
kcal/kg
4,380
4,250
4,350
Metallurgical Coal – Canada Operations
COAL RESERVES(1)
Attributable %
100
Trend (OC)
Mine
Life Classification
7
Metallurgical – Coking
Thermal – Export
Proved
Probable
Total
Proved
Probable
Total
ROM Tonnes(2)
Yield(3)
Saleable Tonnes(2)
Saleable Quality
(4)
2013
Mt
10.5
2.3
12.8
2012
Mt
17.9
2.3
20.2
2013
ROM %
75.1
76.8
75.4
–
–
–
2012
ROM %
66.3
61.7
65.8
0.7
0.8
0.7
2013
Mt
8.1
1.9
10.0
–
–
–
2012
Mt
12.4
1.5
14.0
0.1
0.0
0.2
2013
CSN
7.0
7.0
7.0
kcal/kg
–
–
–
2012
CSN
7.0
7.0
7.0
kcal/kg
5,070
5,070
5,070
Mining method: OC = Open Cast/Cut, UG = Underground. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
For the multi-product operations, the ROM tonnes apply to each product.
The Saleable tonnes cannot be calculated directly from the ROM reserve tonnes using the air dried yields as presented since the difference in moisture content is not taken into account.
Attributable percentages for country totals are weighted by Saleable tonnes and should not be directly applied to the ROM tonnes.
Footnotes appear at the end of the section.
Metallurgical – Coking refers to a high-, medium- or low-volatile semi-soft, soft or hard coking coal primarily for blending and use in the steel industry; quality measured as Crucible Swell Number (CSN).
Metallurgical – Other refers to semi-soft, soft, hard, semi-hard or anthracite coal, other than Coking Coal, such as pulverized coal injection (PCI) or other general metallurgical coal for the export or
domestic market with a wider range of properties than Coking Coal; quality measured by calorific value (CV).
Thermal – Export refers to low- to high-volatile thermal coal primarily for export in the use of power generation; quality measured by calorific value (CV).
Thermal – Domestic refers to low- to high-volatile thermal coal primarily for domestic consumption for power generation; quality measured by calorific value (CV).
224
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES COAL
estimates as at 31 December 2013
Metallurgical Coal – Operations
TOTAL COAL RESERVES(1) Attributable %
72.6
Metallurgical – Coking
Metallurgical – Other
75.6
Thermal – Export
52.7
Thermal – Domestic
100
Metallurgical Coal – Australia Operations
COAL RESOURCES(5)
Attributable %
100
Callide (OC)
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Capcoal (OC)
77.5
Capcoal (UG)
70.0
Dawson (OC)
51.0
Drayton (OC)
88.2
Foxleigh (OC)
70.0
Moranbah North (UG)
88.0
Australia – Mine Leases
75.4
ROM Tonnes(2)
Yield(3)
Saleable Tonnes(2)
Saleable Quality
(4)
2013
Mt
604.8
402.6
1,007.4
2012
Mt
615.9
396.8
1,012.7
2013
Plant %
57.6
34.2
50.1
37.1
49.9
44.9
50.7
52.7
51.8
97.9
98.0
97.9
2012
Plant %
58.9
33.4
51.1
48.1
53.7
51.2
52.0
53.5
52.8
97.9
98.0
97.9
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
2013
Mt
193.5
90.0
283.5
28.2
43.4
71.6
98.6
129.7
228.3
181.6
51.0
232.6
(5)
2013
MTIS
260.7
265.1
525.7
15.3
64.0
79.3
29.4
42.6
72.0
53.5
91.7
145.2
51.5
23.5
75.0
–
10.1
10.1
134.2
177.0
311.1
97.1
228.5
325.5
1.5
2.4
3.8
0.0
0.0
0.0
1.2
5.6
6.7
19.2
15.9
35.1
45.9
16.9
62.8
0.3
1.5
1.8
524.2
532.9
1,057.1
185.4
411.6
597.0
2012
Mt
188.5
82.8
271.3
35.3
45.5
80.8
103.9
130.2
234.1
188.2
51.0
239.2
Tonnes
2012
(5)
MTIS
260.7
265.1
525.7
15.3
64.0
79.3
13.8
27.9
41.7
36.6
60.7
97.4
76.3
68.0
144.3
0.3
13.6
13.9
134.2
177.0
311.1
97.1
228.5
325.5
3.7
8.0
11.8
0.0
0.8
0.8
17.3
16.1
33.3
7.0
32.1
39.1
55.7
21.3
76.9
0.1
1.8
1.9
561.6
583.3
1,144.9
156.4
401.5
557.9
2013
CSN
7.5
7.0
7.5
kcal/kg
6,860
6,930
6,900
kcal/kg
5,260
5,150
5,200
kcal/kg
4,380
4,250
4,350
(6)
2013
kcal/kg
4,940
4,810
4,870
4,240
4,540
4,480
6,890
6,900
6,900
6,630
6,930
6,820
6,820
6,640
6,760
–
6,340
6,340
6,630
6,680
6,660
6,750
6,770
6,760
6,950
6,970
6,960
5,600
7,160
6,050
7,330
7,200
7,220
7,100
7,180
7,140
6,660
6,630
6,650
6,620
6,650
6,650
5,830
5,770
5,800
6,540
6,460
6,490
2012
CSN
8.0
7.5
8.0
kcal/kg
6,970
6,940
6,950
kcal/kg
5,540
5,390
5,460
kcal/kg
4,380
4,250
4,350
Coal Quality
2012
(6)
kcal/kg
4,940
4,810
4,870
4,240
4,540
4,480
7,080
7,080
7,080
6,710
7,120
6,970
6,730
6,620
6,680
6,630
6,340
6,350
6,630
6,680
6,660
6,750
6,770
6,760
6,490
6,580
6,550
5,820
7,110
7,090
7,130
7,090
7,110
6,830
7,100
7,050
6,670
6,570
6,640
6,980
6,760
6,770
5,890
5,850
5,870
6,500
6,480
6,490
(5)
2013
MTIS
21.0
6.7
27.7
0.0
2.7
2.7
Tonnes
2012
(5)
MTIS
15.9
5.3
21.2
1.4
0.4
1.7
Coal Quality
2012
(6)
kcal/kg
6,500
6,500
6,500
6,500
6,500
6,500
(6)
2013
kcal/kg
7,030
6,910
7,000
7,320
6,390
6,390
Metallurgical Coal – Canada Operations
COAL RESOURCES(5)
Attributable %
100
Trend (OC)
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.
Anglo American plc Annual Report 2013
225
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COAL
estimates as at 31 December 2013
Metallurgical Coal – Operations
COAL RESOURCES(5)
TOTAL
Attributable %
75.8
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.
(5)
2013
MTIS
545.2
539.6
1,084.8
185.4
414.3
599.7
Tonnes
2012
(5)
MTIS
577.5
588.6
1,166.1
157.8
401.8
559.6
Coal Quality
2012
(6)
kcal/kg
5,910
5,850
5,880
6,500
6,480
6,490
(6)
2013
kcal/kg
5,870
5,780
5,830
6,540
6,460
6,490
Metallurgical Coal – Australia Projects
COAL RESERVES(1)
Attributable %
70.0
Capcoal (UG) – Aquila
Metallurgical – Coking
Mine
Life Classification
13
Grosvenor
Metallurgical – Coking
100
31
Australia – Projects
Metallurgical – Coking
94.0
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Metallurgical Coal – Canada Projects
COAL RESERVES(1)
Roman Mountain
Attributable %
100
Mine
Life Classification
14
Metallurgical – Coking
Proved
Probable
Total
Metallurgical Coal – Australia Projects
COAL RESOURCES(5)
Capcoal (UG) – Aquila
Attributable %
70.0
Dartbrook
Drayton South
Grosvenor
Moranbah South
Teviot Brook
Theodore
83.3
88.2
100
50.0
100
51.0
Australia – Projects
73.5
COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.
Attributable percentages for country totals are weighted by Total MTIS.
2013
Mt
26.3
19.2
45.5
115.0
78.7
193.7
Mt
141.3
97.9
239.2
2013
Mt
32.6
2.9
35.5
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2012
Mt
–
–
–
76.1
62.6
138.7
Mt
76.1
62.6
138.7
2013
ROM %
69.2
66.4
68.0
65.5
61.9
64.0
Plant %
66.2
62.8
64.8
2012
ROM %
–
–
–
66.2
65.2
65.7
Plant %
66.2
65.2
65.7
2013
Mt
19.2
13.5
32.7
79.6
51.4
130.9
Mt
98.8
64.9
163.6
2012
Mt
–
–
–
53.2
43.1
96.3
Mt
53.2
43.1
96.3
2013
CSN
9.0
9.0
9.0
CSN
8.5
8.0
8.5
CSN
8.5
8.0
8.5
2012
CSN
–
–
–
CSN
8.5
8.0
8.5
CSN
8.5
8.0
8.5
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2012
Mt
–
–
–
2013
ROM %
71.2
73.3
71.4
2012
ROM %
–
–
–
2013
Mt
24.3
2.3
26.6
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
(7)
(8)
(7)
(8)
(5)
2013
MTIS
13.5
19.3
32.8
0.0
6.7
6.8
386.1
24.8
410.9
1.3
492.1
189.0
681.1
90.7
110.8
62.0
172.9
10.4
18.9
29.3
487.1
208.1
695.2
30.3
3.2
138.4
141.6
34.1
–
258.5
258.5
106.0
1,492.8
900.2
2,393.0
10.4
288.1
298.5
2012
Mt
–
–
–
Tonnes
2012
(5)
MTIS
–
–
–
–
–
–
386.1
24.8
410.9
1.3
492.1
189.0
681.1
90.7
145.1
72.5
217.6
9.5
21.2
30.7
349.6
302.3
651.8
50.8
–
–
–
–
–
258.5
258.5
106.0
1,372.9
847.0
2,219.9
9.5
269.9
279.5
2013
CSN
7.0
7.0
7.0
2012
CSN
–
–
–
Coal Quality
2012
(6)
kcal/kg
–
–
–
–
–
–
5,720
5,460
5,700
5,080
6,240
6,260
6,250
5,950
6,420
6,550
6,460
6,330
6,770
6,630
6,180
6,410
6,290
6,540
–
–
–
–
–
6,260
6,260
6,160
6,100
6,310
6,180
6,330
6,200
6,210
(6)
2013
kcal/kg
6,750
6,390
6,540
6,570
6,190
6,190
5,720
5,460
5,700
5,080
6,240
6,260
6,250
5,950
6,510
6,600
6,540
6,330
6,740
6,600
6,300
6,470
6,350
6,800
6,760
6,610
6,610
6,540
–
6,260
6,260
6,160
6,150
6,370
6,230
6,330
6,240
6,240
Due to the uncertainty that may be attached to some Inferred Coal Resources, it cannot be assumed that all or part of an Inferred Coal Resource will necessarily be upgraded to an Indicated or Measured
Resource after continued exploration.
226
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
COAL
estimates as at 31 December 2013
Metallurgical Coal – Canada Projects
COAL RESOURCES(5)
Belcourt Saxon
Attributable %
50.0
Roman Mountain
100
Canada – Projects
51.5
Classification
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
(7)
(8)
(5)
2013
MTIS
166.7
4.3
171.0
0.2
1.6
2.7
4.2
0.3
0.7
1.0
168.3
7.0
175.2
0.3
0.9
1.2
Tonnes
2012
(5)
MTIS
166.7
4.3
171.0
0.2
30.6
6.4
37.0
–
0.4
0.4
197.3
10.7
208.0
–
0.6
0.6
Coal Quality
2012
(6)
kcal/kg
6,500
6,500
6,500
6,500
6,290
6,300
6,290
–
6,260
6,260
6,470
6,380
6,460
–
6,340
6,340
(6)
2013
kcal/kg
6,500
6,500
6,500
6,500
7,930
7,960
7,950
7,960
7,960
7,960
6,510
7,060
6,540
7,960
7,640
7,710
(1) Coal Reserves are quoted on a Run Of Mine (ROM) reserve tonnes basis, which represents the tonnes delivered to the plant. Saleable reserve tonnes represents the estimated product tonnes.
Coal Reserves (ROM and Saleable) are on the applicable moisture basis.
(2) ROM tonnes quoted on an As Delivered moisture basis, and Saleable tonnes on a Product moisture basis.
(3) Yield – ROM % 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 whereas Plant % is based on the
‘Feed to Plant’ tonnes. The product yields (ROM %) for Proved, Probable and Total are calculated by dividing the individual Saleable reserves by the total ROM reserves per classification.
(4) The coal quality for Coal Reserves is quoted as either kilo-calories per kilogram (kcal/kg) or Crucible Swell Number (CSN). Kilo-calories per kilogram represent Calorific Value (CV) on a Gross As
Received (GAR) basis. Coal quality parameters for the Coal Reserves for Coking, Other Metallurgical and Export Thermal collieries meet the contractual specifications for coking coal, PCI,
metallurgical coal, steam coal and domestic coal. Coal quality parameters for the Coal Reserves for Domestic Power and Domestic Synfuels collieries meet the specifications of the individual supply
contracts. CV is rounded to the nearest 10 kcal/kg and CSN to the nearest 0.5 index.
(5) Coal Resources are quoted on a Mineable Tonnes In-Situ (MTIS) basis in million tonnes, which are in addition to those resources that have been modified to produce the reported Coal Reserves. Coal
Resources are on an in-situ moisture basis.
(6) The coal quality for Coal Resources is quoted on an in-situ heat content as kilo-calories per kilogram (kcal/kg), representing Calorific Value (CV) on a Gross As Received (GAR) basis.
CV is rounded to the nearest 10 kcal/kg.
Inferred (in LOM Plan) refers to Inferred Coal Resources that are included in the life of mine extraction schedule of the respective collieries and are not reported as Coal Reserves.
(7)
(8) Inferred (ex. LOM Plan) refers to Inferred Coal Resources outside the Life of Mine Plan but within the mine lease area.
Capcoal mine comprises open cast operations at Lake Lindsay and Oak Park and an underground longwall operation at Grasstree.
Trend mine and the Belcourt Saxon and Roman Mountain projects are part of Peace River Coal.
Jellinbah is not reported as Anglo American’s shareholding is below the internal threshold for reporting.
Aquila was put on care and maintenance in July 2013 pending introduction of a longwall mine plan.
Estimates for the following operations were updated by depletion: Callide and Dawson.
Summary of material changes (±10%) in estimates – Operations
Capcoal (OC): Coal Resources increase due to reduced geological losses and updated economic assumptions.
Capcoal (UG): Coal Resources decrease due to transfer of Aquila Seam resources as a separate project which are offset by gains from exploration drilling and
reduced geological losses.
Dawson: In 2012 the reported Mine Life considered reserves plus Inferred (in LOM Plan), however for 2013, correctly considers only the scheduled Coal Reserves.
Drayton: Coal Reserves decrease due to production and updated economic assumptions. Coal Resources decrease due to updated economic assumptions.
Foxleigh: Coal Reserves increase due to updated economic assumptions, exploration drilling and subsequent revision of geological models.
Coal Resources decrease due to refinement of the geological model and updated economic assumptions partially offset by exploration drilling.
Moranbah North: Coal Reserves increase due to an increase in cut height and extension of the mine design to accommodate Teviot Brook. Coal Resources
decrease due to conversion of Coal Resources to Coal Reserves.
Trend: Export – Thermal Coal Reserves are no longer reported, due to current economic conditions. Coal Resources increase is due to reallocation of the Gething
Formation from Coal Reserves to Coal Resources .
Summary of material changes (±10%) in estimates – Projects
Capcoal (UG) – Aquila Seam: Coal Reserves are reported for the first time as a discrete entity. Coal Resources show a net decrease is due to exploration drilling,
reduced geological losses and conversion of Coal Resources to Coal Reserves.
Grosvenor: Coal Reserves increase due to additional longwall panels in the mine design. Coal Resources increase is due to exploration drilling.
Roman Mountain: Coal Reserves are reported for the first time following conversion from Coal Resources to Coal Reserves, and represent the life extension for the
Trend operation. Coal Resources decrease due to conversion of Coal Resources to Coal Reserves and the upgrading of Inferred Resources to Measured Resources
as a result of exploration drilling.
Assumption with respect to Mineral Tenure
Callide: Mining Leases ML80121 and ML80186, and Mining Development Leases MDL 203 and 241 are currently pending grant and Anglo American has
reasonable expectation that such rights will not be withheld.
Dawson: Exploration Permits for Coal EPC989 and EPC1068 will expire in 2014, and Anglo American Metallurgical Coal will apply for renewal
timeously, and has reasonable expectation that such rights will not be withheld.
Drayton: Authority A173 has been recommended for renewal. Anglo American has reasonable expectation that this renewal will be shortly granted by the NSW
Minister for Resources and Energy.
Drayton South: The New South Wales Planning Assessment Commission’s (PAC) report into the Drayton South project recommended significant
changes to the mine plan, and Anglo American will now work through the PAC’s recommendations to better understand their implications
and consider the options moving forward.
Foxleigh: Grant of Mining Leases ML70310, ML70429, ML70430 and ML70431 are currently pending and Anglo American has reasonable expectation that such
rights will not be withheld.
Teviot Brook: Future additional reserves identified for extraction by Moranbah North starting approximately 2020 are contained in the adjacent Teviot Brook
(EPC 706), which is actively under exploration, contains sufficient identified resources for the purposes of the current Moranbah North mine plan and will be
reported once a Mining Lease Application has been submitted.
Audits related to the generation of the Coal Reserve and/or Coal Resource estimates were carried out by independent consultants during 2013 at the following operations and projects:
Callide (Trap Gully), Capcoal OC, Capcoal UG (Grasstree & Aquila), Dawson (Pits 3-8,13-19, 20-24), Foxleigh, Roman Mountain and Trend.
Anglo American plc Annual Report 2013
227
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COAL
estimates as at 31 December 2013
THERMAL COAL
The Coal Reserve and Coal Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources
and Mineral Reserves, (The SAMREC Code, 2007 Edition as amended July 2009) and the Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves (The JORC Code, 2012) as applicable. The figures reported represent 100% of the Coal Reserves and Coal Resources, the percentage attributable
to Anglo American plc is stated separately. Rounding of figures may cause computational discrepancies. Anglo American Thermal Coal comprises the dominantly
export and domestic thermal coal operations, located in Colombia and South Africa.
Thermal Coal – Colombia Operations
COAL RESERVES(1)
Cerrejón (OC)
Attributable %
33.3
Mine
Life
18
Thermal – Export
Thermal Coal – South Africa Operations Mine
COAL RESERVES(1)
Life
7
Goedehoop (UG&OC)
Thermal – Export
Attributable %
100
Greenside (UG)
Thermal – Export
100
14
Isibonelo (OC)
Synfuel
100
14
Kleinkopje (OC)
Thermal – Export
100
12
Thermal – Domestic
Kriel (UG&OC)
Thermal – Domestic
73.0
12
Landau (OC)
Thermal – Export
100
6
Thermal – Domestic
Mafube (OC)
Thermal – Export
50.0
18
Thermal – Domestic
New Denmark (UG)
Thermal – Domestic
100
25
New Vaal (OC)
Thermal – Domestic
100
17
Zibulo (UG&OC)
Thermal – Export
73.0
19
Thermal – Domestic
Classification
Proved
Probable
Total
Classification
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
Proved
Probable
Total
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2013
Mt
645.1
96.2
741.3
2012
Mt
675.0
93.2
768.2
2013
ROM %
96.0
95.7
96.0
2012
ROM %
96.7
97.0
96.7
2013
Mt
626.6
93.9
720.4
2012
Mt
652.7
90.4
743.1
2013
kcal/kg
6,150
6,130
6,150
2012
kcal/kg
6,180
6,110
6,170
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2013
Mt
29.5
29.9
59.4
23.0
36.8
59.8
65.2
–
65.2
38.9
–
38.9
36.1
10.0
46.1
22.0
12.2
34.2
2012
Mt
30.0
40.9
70.9
21.3
26.4
47.7
70.5
–
70.5
50.8
–
50.8
40.3
63.8
104.1
29.6
12.1
41.7
10.2
113.0
123.2
12.1
70.7
82.8
25.8
82.7
108.6
296.3
–
296.3
84.1
34.2
118.2
30.8
81.2
112.0
348.1
–
348.1
91.3
23.5
114.9
2013
ROM %
52.5
58.5
55.5
2012
ROM %
54.9
51.6
53.0
68.4
68.6
68.5
100
–
100
38.2
–
38.2
30.7
–
30.7
100
100
100
47.8
46.6
47.4
15.6
21.1
17.6
51.2
42.8
43.5
24.5
18.4
18.9
100
100
100
93.4
–
93.4
58.0
46.8
54.8
14.6
20.7
16.4
57.4
54.0
55.5
100
–
100
33.2
–
33.2
38.5
–
38.5
100
100
100
48.4
46.0
47.7
12.3
18.5
14.1
47.5
33.9
35.9
19.7
29.1
27.7
100
100
100
89.6
–
89.6
49.4
43.9
48.3
26.6
30.4
27.4
2013
Mt
15.8
17.8
33.6
16.2
26.2
42.5
65.2
–
65.2
15.4
–
15.4
11.9
–
11.9
36.1
10.0
46.1
10.7
5.8
16.5
3.5
2.6
6.1
5.3
48.4
53.7
2.6
21.1
23.7
25.8
82.7
108.6
286.6
–
286.6
49.0
16.1
65.1
12.2
7.1
19.3
2012
Mt
16.8
21.5
38.3
12.7
14.8
27.5
70.5
–
70.5
17.4
–
17.4
19.6
–
19.6
40.3
63.8
104.1
14.5
5.7
20.2
3.7
2.3
5.9
5.8
24.2
30.0
2.4
21.2
23.6
30.8
81.2
112.0
323.8
–
323.8
45.6
10.4
56.0
25.1
7.3
32.4
2013
kcal/kg
6,200
5,930
6,060
kcal/kg
6,080
5,840
5,930
kcal/kg
4,690
–
4,690
kcal/kg
6,190
–
6,190
kcal/kg
4,580
–
4,580
kcal/kg
4,860
4,280
4,730
kcal/kg
6,230
6,250
6,240
kcal/kg
4,390
4,530
4,450
kcal/kg
6,260
6,040
6,060
kcal/kg
5,240
5,050
5,070
kcal/kg
5,040
5,150
5,120
kcal/kg
3,510
–
3,510
kcal/kg
6,110
6,110
6,110
kcal/kg
4,840
4,830
4,840
2012
kcal/kg
6,190
6,200
6,200
kcal/kg
6,200
6,190
6,190
kcal/kg
4,520
–
4,520
kcal/kg
6,190
–
6,190
kcal/kg
4,580
–
4,580
kcal/kg
4,830
4,430
4,580
kcal/kg
6,210
6,210
6,210
kcal/kg
4,040
4,370
4,170
kcal/kg
6,270
6,260
6,260
kcal/kg
5,360
4,970
5,010
kcal/kg
4,950
5,020
5,000
kcal/kg
3,560
–
3,560
kcal/kg
6,100
6,110
6,100
kcal/kg
4,930
4,780
4,900
Mining method: OC = Open Cast/Cut, UG = Underground. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
For the multi-product operations, the ROM tonnage figures apply to each product.
The Saleable tonnes cannot be calculated directly from the ROM reserve tonnes using the air dried yields as presented since the difference in moisture content is not taken into account.
Attributable percentages for country totals are weighted by Saleable tonnes and should not be directly applied to the ROM tonnes.
Footnotes appear at the end of the section.
Thermal – Export refers to low- to high-volatile thermal coal primarily for export in the use of power generation; quality measured by calorific value (CV).
Thermal – Domestic refers to low- to high-volatile thermal coal primarily for domestic consumption for power generation; quality measured by calorific value (CV).
Synfuel refers to a coal specifically for the domestic production of synthetic fuel and chemicals; quality measured by calorific value (CV).
228
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES COAL
estimates as at 31 December 2013
Thermal Coal – South Africa Operations
COAL RESERVES(1)
Attributable %
80.4
South Africa Thermal – Export
South Africa Thermal – Domestic 94.1
South Africa Synfuel
100
Thermal Coal – Operations
TOTAL COAL RESERVES(1) Attributable %
44.6
Thermal – Export
Thermal – Domestic
94.1
Synfuel
100
Thermal Coal – Colombia Operations
COAL RESOURCES(5)
Cerrejón (OC)
Attributable %
33.3
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
ROM Tonnes
(2)
2013
Mt
631.1
318.8
949.9
2012
Mt
724.9
318.7
1,043.6
2013
Plant %
57.8
53.3
55.5
91.3
81.5
88.9
100
–
100
Yield
(3)
2012
Plant %
52.9
45.6
49.9
87.7
88.2
87.8
100
–
100
Saleable Tonnes
(2)
Saleable Quality
(4)
2013
Mt
112.5
114.3
226.8
378.7
123.6
502.3
65.2
–
65.2
2012
Mt
112.8
76.5
189.3
445.7
175.7
621.4
70.5
–
70.5
2013
kcal/kg
6,150
6,000
6,070
kcal/kg
3,840
5,030
4,130
kcal/kg
4,690
–
4,690
2012
kcal/kg
6,160
6,210
6,180
kcal/kg
3,910
4,780
4,150
kcal/kg
4,520
–
4,520
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2013
Mt
1,276.2
415.0
1,691.2
2012
Mt
1,399.9
411.9
1,811.8
2013
Plant %
90.2
72.4
86.3
91.3
81.5
88.9
100
–
100
2012
Plant %
90.2
73.4
87.2
87.7
88.2
87.8
100
–
100
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
2013
Mt
739.0
208.2
947.2
378.7
123.6
502.3
65.2
–
65.2
2012
Mt
765.5
166.9
932.4
445.7
175.7
621.4
70.5
–
70.5
2013
kcal/kg
6,150
6,060
6,130
kcal/kg
3,840
5,030
4,130
kcal/kg
4,690
–
4,690
2012
kcal/kg
6,180
6,160
6,170
kcal/kg
3,910
4,780
4,150
kcal/kg
4,520
–
4,520
(5)
2013
MTIS
911.3
162.9
1,074.2
68.0
29.5
97.5
Tonnes
2012
(5)
MTIS
903.6
160.0
1,063.6
73.8
25.1
98.8
Coal Quality
(6)
2013
kcal/kg
6,410
6,340
6,400
6,770
6,580
6,710
2012
(6)
kcal/kg
6,450
6,360
6,440
6,720
6,460
6,650
Anglo American plc Annual Report 2013
229
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COAL
estimates as at 31 December 2013
Thermal Coal – South Africa Operations
COAL RESOURCES(5)
Goedehoop (UG&OC)
Attributable %
100
Classification
Greenside (UG)
Isibonelo (OC)
Kleinkopje (OC)
100
100
100
Kriel (UG&OC)
73.0
Landau (OC)
Mafube (OC)
100
50.0
New Denmark (UG)
100
Zibulo (UG&OC)
73.0
South Africa – Mine Leases
83.2
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
(7)
(8)
Thermal Coal – Operations
COAL RESOURCES(5)
Total
Attributable %
58.5
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
(5)
2013
MTIS
205.6
29.0
234.6
1.6
11.2
12.8
18.4
1.7
20.1
1.9
0.8
2.8
–
16.3
16.3
–
–
–
28.0
–
28.0
–
–
–
73.4
10.2
83.5
–
18.8
18.8
50.1
34.4
84.5
–
18.1
18.1
53.9
4.3
58.2
0.9
1.2
2.1
65.8
2.9
68.7
14.4
1.2
15.6
173.9
201.0
375.0
20.8
132.8
153.6
669.1
299.8
968.9
39.7
184.1
223.8
Tonnes
2012
(5)
MTIS
83.1
75.7
158.8
1.6
5.8
7.4
18.2
1.4
19.6
8.3
–
8.3
–
16.3
16.3
–
–
–
30.4
–
30.4
–
–
–
8.7
10.2
18.8
–
18.8
18.8
52.0
42.8
94.8
–
13.8
13.8
56.5
13.2
69.7
7.3
30.2
37.5
–
–
–
16.2
–
16.2
147.3
201.7
349.0
20.4
157.8
178.2
396.2
361.2
757.4
53.9
226.5
280.3
Coal Quality
2012
(6)
kcal/kg
5,510
5,470
5,490
5,740
5,250
5,360
5,590
5,610
5,590
5,790
–
5,790
–
5,250
5,250
–
–
–
5,040
–
5,040
–
–
–
5,290
4,860
5,060
–
4,950
4,950
5,190
4,680
4,960
–
5,760
5,760
5,300
4,530
5,150
5,150
3.890
4,130
–
–
–
5,270
–
5,270
4,960
4,900
4,920
5,460
4,780
4,860
5,200
5,000
5,100
5,420
4,750
4,880
(6)
2013
kcal/kg
5,260
4,910
5,210
5,300
4,810
4,870
5,680
5,140
5,630
5,730
6,050
5,830
–
5,390
5,390
–
–
–
5,020
–
5,020
–
–
–
4,870
4,860
4,870
–
4,950
4,950
5,230
5,250
5,240
–
5,500
5,500
5,300
4,370
5,230
4,040
5,360
4,770
5,800
5,850
5,800
5,270
5,390
5,280
4,900
4,870
4,890
5,320
4,820
4,890
5,180
4,950
5,110
5,290
4,910
4,980
(5)
2013
MTIS
1,580.4
462.6
2,043.0
107.7
213.6
321.3
Tonnes
2012
(5)
MTIS
1,299.7
521.2
1,821.0
127.7
251.5
379.2
Coal Quality
2012
(6)
kcal/kg
6,070
5,410
5,880
6,170
4,920
5,340
(6)
2013
kcal/kg
5,890
5,440
5,790
6,230
5,140
5,510
COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.
Due to the uncertainty that may be attached to some Inferred Coal Resources, it cannot be assumed that all or part of an Inferred Coal Resource will necessarily be upgraded to an Indicated or Measured
Resource after continued exploration.
230
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
COAL
estimates as at 31 December 2013
Thermal Coal – South Africa Projects
COAL RESOURCES(5)
Elders
Attributable %
73.0
Elders UG Extension
Kriel Block F
Kriel East
New Largo
Nooitgedacht
South Rand
Vaal Basin
South Africa – Projects
73.0
100
73.0
73.0
100
73.0
100
82.2
Classification
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
(5)
2013
MTIS
176.4
9.6
186.0
22.4
66.2
85.3
151.5
90.0
49.0
13.8
62.8
–
114.6
18.1
132.7
6.6
412.1
161.8
573.9
13.4
34.5
10.2
44.7
10.8
78.6
168.1
246.7
157.2
378.8
223.6
602.4
92.0
1,310.2
690.6
2,000.8
392.4
Tonnes
2012
(5)
MTIS
224.3
107.6
331.8
109.1
–
–
–
–
36.1
27.3
63.4
–
100.1
31.4
131.5
8.0
429.5
178.5
608.0
13.9
36.4
10.6
46.9
10.8
78.6
168.1
246.7
157.2
375.2
220.4
595.6
88.9
1,280.2
743.8
2,024.0
388.0
Coal Quality
2012
(6)
kcal/kg
5,140
5,410
5,230
5,320
–
–
–
–
5,270
5,410
5,330
–
4,940
4,890
4,930
4,840
4,290
3,970
4,190
5,270
5,360
5,450
5,380
5,300
4,850
4,770
4,790
4,780
4,330
4,210
4,290
4,210
4,590
4,540
4,570
4,830
(6)
2013
kcal/kg
4,970
4,700
4,950
4,750
5,520
5,550
5,540
5,460
5,310
5,360
5,320
–
4,950
4,990
4,960
4,880
4,410
4,270
4,370
5,300
5,330
5,410
5,350
5,280
4,850
4,770
4,790
4,780
4,330
4,220
4,290
4,250
4,650
4,600
4,630
4,840
Attributable percentages for country totals are weighted by Total MTIS.
(1)
Coal Reserves are quoted on a Run Of Mine (ROM) reserve tonnes basis, which represents the tonnes delivered to the plant. Saleable reserve tonnes represents the estimated product tonnes.
Coal Reserves (ROM and Saleable) are on the applicable moisture basis.
(2) ROM tonnes quoted on an As Delivered moisture basis, and Saleable tonnes on a Product moisture basis.
(3)
Yield – ROM % 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 whereas Plant % is based on
the ‘Feed to Plant’ tonnes. The product yields (ROM %) for Proved, Probable and Total are calculated by dividing the individual Saleable reserves by the total ROM reserves per classification.
The coal quality for Coal Reserves is quoted as either kilo-calories per kilogram (kcal/kg) or Crucible Swell Number (CSN). Kilo-calories per kilogram represent Calorific Value (CV) on a Gross As
Received (GAR) basis. Coal quality parameters for the Coal Reserves for Coking, Other Metallurgical and Export Thermal collieries meet the contractual specifications for coking coal, PCI,
metallurgical coal, steam coal and domestic coal. Coal quality parameters for the Coal Reserves for Domestic Power and Domestic Synfuels collieries meet the specifications of the individual supply
contracts in the short-term and studies are underway to ensure long-term compliance. CV is rounded to the nearest 10 kcal/kg.
Coal Resources are quoted on a Mineable Tonnes In-Situ (MTIS) basis in million tonnes, which are in addition to those resources that have been modified to produce the reported Coal Reserves.
Coal Resources are on an in-situ moisture basis.
The coal quality for Coal Resources is quoted on an in-situ heat content as kilo-calories per kilogram (kcal/kg), representing Calorific Value (CV) on a Gross As Received (GAR) basis.
CV is rounded to the nearest 10 kcal/kg.
Inferred (in LOM Plan) refers to Inferred Coal Resources that are included in the life of mine extraction schedule of the respective collieries and are not reported as Coal Reserves.
(4)
(5)
(6)
(7)
(8) Inferred (ex. LOM Plan) refers to Inferred Coal Resources outside the Life of Mine Plan but within the mine lease area.
Summary of material changes (±10%) in estimates – Operations
Goedehoop: In 2012 only the Seam 2 Select and Seam 4 Select sub-seams (in the Anglo Operations Limited portion of the Elders project area) were reported as
resources. In 2013 all sub-seams are reported as Coal Resources due to the maturity of the Elders project study.
Greenside: Coal Reserves and Mine Life increase due to the re-evaluation and conversion of the southern portion of the Clydesdale Pan from Inferred in LOM Plan
to Probable Reserves, the conversion of the Greenside East block transferred from Kleinkopje and adjustments to the mining height to include roof coal when
producing higher yielding products (5850 and 5500 kcal/kg).
Kriel: Coal Reserves decrease due to the reallocation of Block F, Block Z, Pit 11, Pit 13 and Mini-pit 3 to resources as a result of delays in the Pre-Feasibility studies.
Mafube: Coal Reserves and Mine Life increase due to the inclusion of Seam 4 into the LOM Plan following feasibility studies which also optimised the mine plan,
increasing the mining footprint of Seam 1 and Seam 2.
New Denmark: Coal Resources increase due to refinement of resource polygons around mine layouts to include resources previously not considered.
Summary of material changes (±10%) in estimates – Projects
Elders: In 2013 the previously reported Elders projects has been split into Elders and Elders Underground Extension due to the progress in the project studies.
Nooitgedacht: Coal Resources decrease due to the closure of the Seam 5 operation.
Assumption with respect to Mineral Tenure
Cerrejón: Coal Reserves are estimated for the area defined by the current approved Mining Right which expires in 2033. In order to exploit the Coal Resources,
a renewal will be applied for at the appropriate time. There is a reasonable expectation that such renewal will not be withheld.
Mafube: Application for conversion to a Mining Right has been granted and executed in 2013.
New Largo: The New Largo Mining Right Application has been granted in August 2013; Anglo American awaits execution of the Mining Right.
Audits related to the generation of the Coal Reserve and/or Coal Resource estimates were carried out by independent consultants during 2013 at the following operations and projects:
Isibonelo, Kleinkopje, Kriel, Kriel East, Landau and Zibulo.
Anglo American plc Annual Report 2013
231
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COPPER
estimates as at 31 December 2013
COPPER
The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, 2012) as a minimum standard. The figures reported represent 100% of the Ore Reserves and Mineral
Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of figures may cause computational discrepancies.
Copper – Operations
ORE RESERVES(1)
Collahuasi (OP)
Oxide and Mixed(2)
Heap Leach
Attributable %
44.0
Mine
Life
70
Classification
Sulphide
Flotation – direct feed
Copper
Molybdenum
Low Grade Sulphide(3)
Flotation – stockpile
Copper
Molybdenum
50.1
23
El Soldado (OP)
Sulphide
Flotation(4)
Oxide
Heap Leach
Los Bronces (OP)
50.1
36
Sulphide
Flotation
Sulphide
Dump Leach
Copper
Molybdenum
Mantos Blancos (OP)
100
8
Sulphide
Flotation(5)
Oxide
Vat and Heap Leach(6)
Oxide
Dump Leach
Mantoverde (OP)
Oxide
Heap Leach(7)
Oxide
Dump Leach(8)
100
5
2013
Mt
–
7.0
7.0
Tonnes
2012
Mt
31.0
13.0
44.1
422.4
1,683.0
2,105.4
419.1
1,655.1
2,074.2
28.2
1,137.8
1,166.0
–
1,069.2
1,069.2
48.1
39.1
87.2
–
2.3
2.3
125.7
44.6
170.3
–
3.0
3.0
721.4
724.1
1,445.4
729.9
779.4
1,509.3
439.1
158.5
597.6
428.6
179.0
607.6
19.2
29.3
48.5
3.7
12.0
15.7
–
36.2
36.2
38.9
9.3
48.1
20.1
13.4
33.4
14.1
21.6
35.6
2.7
12.7
15.4
–
36.8
36.8
22.2
20.2
42.3
18.4
25.7
44.2
2013
%TCu
–
0.57
0.57
%TCu
1.03
0.98
0.99
%Mo
0.023
0.023
0.023
%TCu
0.53
0.48
0.48
%Mo
0.013
0.010
0.010
%TCu
0.94
0.82
0.89
–
0.33
0.33
%TCu
0.69
0.53
0.61
%Mo
0.015
0.013
0.014
%TCu
0.32
0.29
0.31
%ICu
0.86
0.72
0.78
%ASCu
0.48
0.44
0.45
%ASCu
–
0.23
0.23
%ASCu
0.53
0.52
0.53
%ASCu
0.22
0.23
0.22
Grade
2012
%TCu
0.58
0.71
0.62
%TCu
1.00
0.98
0.98
%Mo
0.024
0.024
0.024
%TCu
–
0.49
0.49
%Mo
–
0.010
0.010
%TCu
0.81
0.79
0.80
–
0.45
0.45
%TCu
0.70
0.53
0.61
%Mo
0.016
0.013
0.014
%TCu
0.32
0.29
0.31
%ICu
0.82
0.79
0.80
%ASCu
0.55
0.38
0.41
%ASCu
–
0.23
0.23
%ASCu
0.56
0.52
0.54
%ASCu
0.23
0.27
0.25
Contained Metal
2013
kt
–
40
40
2012
kt
181
93
274
4,351
16,494
20,845
4,200
16,202
20,402
97
387
484
150
5,427
5,576
4
109
113
452
321
773
–
8
8
4,977
3,838
8,815
108
94
202
1,405
460
1,865
165
211
376
18
53
71
–
83
83
206
48
254
44
31
75
98
398
496
–
5,219
5,219
–
105
105
1,018
352
1,371
–
14
14
5,109
4,131
9,240
117
101
218
1,371
519
1,891
115
170
286
15
47
62
–
84
84
124
105
229
42
70
112
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
Proved
Probable
Total
Proved
Probable
Total
Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
TCu = total copper, ICu = insoluble copper (total copper less acid soluble copper), ASCu = acid soluble copper.
El Soldado and Los Bronces are part of Anglo American Sur.
Mantos Blancos and Mantoverde are part of Anglo American Norte.
232
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
COPPER
estimates as at 31 December 2013
(1) Copper Reserves: A minimum cut-off of 0.20% (TCu, ICu or ASCu) is applied to determine Ore Reserves on operations.
(2)
Collahuasi – Oxide and Mixed: The decrease is due to reallocated of Ore Reserves to Mineral Resources due to changes in economic assumptions.
Collahuasi – Low Grade Sulphide: The increase is primarily due to new information and changes in the economic assumptions.
(3)
(4) El Soldado – Sulphide (Flotation): In addition to production, the decrease in Ore Reserves is due to a change in economic assumptions (increase in operational
costs) and a refinement of the grade calculation methodology in the block model.
(5) Mantos Blancos – Sulphide (Flotation): The increase in Ore Reserves is primarily due to conversion of Mineral Resources to Ore Reserves within the updated
mine plan which now includes Phase 20 (Argentina) and uses a modified cut-off grade strategy.
(6) Mantos Blancos – Oxide (Vat and Heap Leach): The increase in Ore Reserves is primarily due to the inclusion of Phase 21 in the mine plan and conversion of
additional ore from Phases 13,14 and 17.
(7) Mantoverde – Oxide (Heap Leach): The increase in Ore Reserves is due to the inclusion in the mine plan of Phase 4 of Mantoverde North and South pits, a new
pit design at Franko North and the transfer of high-carbonate Dump Leach ore to the Heap Leach process.
(8) Mantoverde – Oxide (Dump Leach): The decrease in Ore Reserves is primarily due to production and the transfer of high-carbonate Dump Leach ore to the
Heap Leach process which is offset by the inclusion in the mine plan of Phase 4 of Mantoverde North and South pits and a new pit design at Franko North.
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2013 at the following operations:
Collahuasi, El Soldado, Los Bronces and Mantos Blancos.
Anglo American plc Annual Report 2013
233
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COPPER
estimates as at 31 December 2013
Copper – Operations
MINERAL RESOURCES (1)
Collahuasi (OP)
Oxide and Mixed(2)
Heap Leach
Attributable %
44.0
Sulphide(2)
Flotation – direct feed
Copper
Molybdenum
Low Grade Sulphide(2)
Flotation – stockpile
Copper
Molybdenum
50.1
50.1
Copper
Molybdenum
El Soldado (OP)
Sulphide
Flotation(3)
Los Bronces (OP)
Sulphide
Flotation(4)
Sulphide
Dump Leach
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
2013
Mt
25.6
17.5
43.0
17.0
17.5
34.5
9.0
1,162.6
1,171.6
460.4
3,017.5
3,477.8
Tonnes
2012
Mt
–
0.5
0.5
2.8
8.5
11.3
4.6
1,148.9
1,153.6
486.1
2,654.9
3,141.0
11.2
295.1
306.4
399.2
1,065.0
1,464.2
6.2
265.9
272.1
361.6
945.4
1,307.0
71.7
26.0
97.8
7.4
20.5
27.9
156.4
1,054.7
1,211.1
187.0
3,389.9
3,576.9
24.7
7.7
32.4
7.7
6.4
14.1
84.8
897.6
982.4
212.0
3,311.1
3,523.1
–
–
–
175.0
–
175.0
–
–
–
173.2
–
173.2
2013
%TCu
0.64
0.67
0.65
0.57
0.72
0.65
%TCu
0.76
0.96
0.96
1.05
0.95
0.96
%Mo
0.005
0.052
0.052
0.011
0.023
0.021
%TCu
0.47
0.46
0.46
0.45
0.46
0.46
%Mo
0.014
0.023
0.023
0.003
0.005
0.004
%TCu
0.72
0.66
0.70
0.68
0.54
0.58
%TCu
0.41
0.40
0.40
0.48
0.36
0.37
%Mo
0.005
0.008
0.008
0.011
0.010
0.010
%TCu
–
–
–
0.28
–
0.28
Grade
2012
%TCu
–
0.70
0.70
0.37
0.62
0.56
%TCu
0.75
0.94
0.94
1.03
0.92
0.94
%Mo
0.005
0.047
0.047
0.016
0.022
0.021
%TCu
0.48
0.46
0.46
0.45
0.47
0.46
%Mo
0.012
0.021
0.021
0.004
0.005
0.005
%TCu
0.78
0.72
0.77
0.58
0.53
0.56
%TCu
0.45
0.40
0.40
0.48
0.36
0.37
%Mo
0.005
0.009
0.009
0.013
0.008
0.008
%TCu
–
–
–
0.28
–
0.28
Contained Metal
2013
kt
164
117
281
97
126
223
68
11,161
11,229
4,834
28,666
33,500
0
605
605
51
694
745
53
1,358
1,410
1,796
4,899
6,695
2
68
69
12
53
65
516
173
689
50
111
161
2012
kt
–
3
3
11
53
63
35
10,821
10,856
5,017
24,441
29,458
0
368
368
76
584
660
30
1,233
1,263
1,616
4,419
6,036
1
25
26
14
44
58
193
55
248
45
34
79
641
4,219
4,860
898
12,204
13,101
382
3,590
3,972
1,018
11,920
12,938
8
84
92
21
339
360
–
–
–
490
–
490
4
81
85
28
265
293
–
–
–
485
–
485
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration
234
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
COPPER
estimates as at 31 December 2013
Copper – Operations continued
MINERAL RESOURCES (1)
Mantos Blancos (OP)
Attributable %
100
Sulphide
Flotation(5)
Oxide
Vat and Heap Leach(6)
Oxide
Dump Leach(7)
Mantoverde (OP)
Oxide
Heap Leach(8)
100
Oxide
Dump Leach
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
2013
Mt
28.0
58.8
86.8
4.3
29.2
33.5
4.6
13.6
18.2
18.2
12.5
30.7
1.3
10.9
12.2
123.1
16.2
139.3
27.0
13.5
40.5
0.8
1.8
2.6
–
–
–
0.9
–
0.9
Tonnes
2012
Mt
30.2
64.8
95.0
9.4
23.8
33.2
3.5
11.1
14.6
17.6
7.4
25.0
0.4
8.4
8.8
91.4
4.3
95.7
5.1
6.7
11.8
3.3
0.1
3.4
–
–
–
0.6
–
0.6
2013
%ICu
0.75
0.61
0.66
0.52
0.54
0.54
%ASCu
0.46
0.40
0.42
0.25
0.40
0.31
%ASCu
0.18
0.17
0.17
0.21
0.16
0.20
%ASCu
0.39
0.40
0.39
0.53
0.33
0.39
%ASCu
–
–
–
0.22
–
0.22
Grade
2012
%ICu
0.95
0.69
0.77
0.46
0.66
0.60
%ASCu
0.50
0.45
0.46
0.26
0.46
0.32
%ASCu
0.18
0.17
0.17
0.23
0.17
0.23
%ASCu
0.42
0.53
0.48
0.69
0.30
0.68
%ASCu
–
–
–
0.24
–
0.24
Contained Metal
2013
kt
210
359
569
22
158
180
21
55
76
45
50
95
2
19
21
259
26
284
105
54
159
4
6
10
–
–
–
2
–
2
2012
kt
286
447
734
43
157
201
17
50
67
46
34
80
1
14
15
210
7
218
22
35
57
23
0
23
–
–
–
1
–
1
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Mining method: OP = Open Pit
TCu = total copper, ICu = insoluble copper (total copper less acid soluble copper), ASCu = acid soluble copper.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
El Soldado and Los Bronces are part of Anglo American Sur.
Mantos Blancos and Mantoverde are part of Anglo American Norte.
(1) Copper Resources: A test of reasonable eventual economic extraction is applied through consideration of an optimised pit shell. Materials outside the optimised
shell that have potential of eventual economic extraction via underground means are not included in the Mineral Resource statement. Mineral Resources are
quoted above a 0.2% TCu cut-off.
(2) Collahuasi – Oxide and Mixed, Sulphide and Low Grade Sulphide: The increase in Mineral Resources is primarily due to new drilling information which
identified and delineated new resources.
(3) El Soldado – Sulphide (Flotation): The increase in Mineral Resources is primarily due to reallocation from Ore Reserves as a result of a change in economic
assumptions (increase in operational costs) as well as a refinement of the grade calculation methodology in the block model.
(4) Los Bronces – Sulphide (Flotation): The increase in Mineral Resources is primarily due to a change in economic assumptions (increase in long-term metal
price).
(5) Mantos Blancos – Sulphide (Flotation): The decrease in Mineral Resources is due to a conversion to Ore Reserves in Phase 20 (Argentina) following a change
in economic assumptions and adoption of a revised open pit mine plan.
(6) Mantos Blancos – Oxide (Vat and Heap Leach): The increase in Mineral Resources is due to new drilling information and a change in economic assumptions
(increase in long-term metal price).
(7) Mantos Blancos – Oxide (Dump Leach): The Mineral Resources increase due to the inclusion of additional secondary leaching material from Dump Este, Old
Concentrator Course Tailings and the Mercedes stockpile.
(8) Mantoverde – Oxide (Heap Leach): The increase in Mineral Resources at Mantoverde North and South pits (Phase 4 mine plan) is a result of updated
economic assumptions and new drilling information.
Anglo American plc Annual Report 2013
235
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COPPER
estimates as at 31 December 2013
Copper – Projects
ORE RESERVES
Quellaveco (OP)(1)
Sulphide
Flotation
Mine
Life
28
Attributable %
81.9
Copper
Molybdenum
Copper – Projects
MINERAL RESOURCES
Quellaveco (OP)(1)
Attributable %
81.9
Sulphide
Flotation
Copper
Molybdenum
Mantoverde Development Project(2) 100
Sulphide
Flotation
Los Sulfatos(3)
Sulphide
San Enrique Monolito(4)
Sulphide
West Wall (OP)(5)
Sulphide
50.1
50.1
50.0
Classification
Proved
Probable
Total
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred
2013
Mt
701.8
214.6
916.4
Tonnes
2012
Mt
701.8
214.6
916.4
2013
Mt
285.1
807.5
1,092.7
6.9
858.0
864.9
Tonnes
2012
Mt
284.2
807.9
1,092.0
6.9
877.9
884.8
118.2
54.6
172.8
147.9
106.6
41.5
148.1
78.0
Inferred
1,200.0
1,200.0
Inferred
Measured
Indicated
Measured and Indicated
Inferred
900.0
–
495.0
495.0
970.0
900.0
–
–
–
750.0
2013
%TCu
0.65
0.63
0.65
%Mo
0.019
0.021
0.019
2013
%TCu
0.35
0.41
0.39
0.79
0.33
0.33
%Mo
0.010
0.015
0.014
0.010
0.011
0.011
%TCu
0.71
0.64
0.69
0.61
%TCu
1.46
%TCu
0.81
%TCu
–
0.55
0.55
0.48
Grade
2012
%TCu
0.65
0.63
0.65
%Mo
0.019
0.021
0.019
Grade
2012
%TCu
0.35
0.41
0.39
0.79
0.33
0.33
%Mo
0.015
0.015
0.015
–
0.015
0.015
%TCu
0.68
0.66
0.67
0.68
%TCu
1.46
%TCu
0.81
%TCu
–
–
–
0.54
Contained Metal
2013
kt
4,562
1,352
5,914
133
45
178
2012
kt
4,562
1,352
5,914
133
45
178
Contained Metal
2013
kt
998
3,311
4,309
54
2,831
2,886
29
121
150
1
93
93
839
349
1,189
902
2012
kt
990
3,290
4,280
54
2,893
2,947
43
121
164
–
132
132
725
274
999
530
17,520
17,520
7,290
–
2,723
2,723
4,656
7,290
–
–
–
4,050
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
Los Sulfatos and San Enrique Monolito are part of Anglo American Sur.
Mantoverde Development Project is part of Anglo American Norte.
West Wall is a Joint Venture with GlencoreXstrata.
The Pebble project is not reported in 2013 as Anglo American has elected to withdraw from the project.
(1) Quellaveco: Mineral Resources are quoted above a 0.2 %TCu cut-off within an optimised pit shell. The slight change is due to updated economic assumptions
used to define the resource shell.
(2) Mantoverde Development Project: Mineral Resources are quoted above a 0.35 %TCu cut-off. The increase in Mineral Resources is due to a change in
economic assumptions (increase in long-term metal price) and pit optimisation parameters. Reported as Mantoverde Sulphide Project in 2012.
Mineral Resource estimates for oxide material planned to be exposed during pre-stripping operations for the sulphides are as follows:
Measured 48.0 Mt at 0.40 %ASCu; Indicated 5.7 Mt at 0.34 %ASCu; Inferred 3.4 Mt at 0.32 %ASCu.
(3) Los Sulfatos: The reported resources include mineralisation inside a 1% nominal copper grade cut-off envelope down to the current drillhole
depths of 1,000 metres below surface. The test for reasonable prospects of eventual economic extraction is based on an underground operation.
(4) San Enrique Monolito: The test for reasonable prospects of eventual economic extraction is based on an underground operation.
(5) West Wall: Mineral Resources are quoted above a 0.3 %TCu cut-off within an optimised pit shell. The increase in Mineral Resources is due to new drilling
information leading to an update of the geological model.
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2013 at the following projects:
Los Sulfatos.
236
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
NICKEL
estimates as at 31 December 2013
NICKEL
The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The figures reported represent 100% of the Ore Reserves and Mineral
Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of figures may cause computational discrepancies.
Nickel – Operations
ORE RESERVES
Barro Alto (OP)(1)
Saprolite
Niquelândia (OP)(2)
Saprolite
Attributable %
100
Mine
Life
17
100
23
Nickel – Operations
MINERAL RESOURCES
Barro Alto (OP)
Saprolite
Direct Feed(3)
Attributable %
100
Ferruginous Laterite
Stockpile(4)
Niquelândia (OP)(5)
Saprolite
100
Classification
Proved
Probable
Total
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Nickel – Projects
MINERAL RESOURCES
Jacaré(6)
Ferruginous Laterite
Attributable %
100
Saprolite
Classification
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
2013
Mt
20.0
25.2
45.3
4.5
1.1
5.6
2013
Mt
8.5
7.7
16.3
32.5
14.7
47.2
2.4
5.6
7.9
1.2
0.0
1.2
2.5
2.4
4.9
–
–
–
2013
Mt
6.3
53.8
60.1
125.0
–
39.6
39.6
81.9
Tonnes
2012
Mt
23.4
23.4
46.8
3.9
1.0
4.9
Tonnes
2012
Mt
9.0
5.0
14.0
36.6
13.1
49.7
3.3
3.8
7.1
1.5
0.0
1.6
2.8
2.9
5.7
–
–
–
Tonnes
2012
Mt
6.3
53.8
60.1
125.0
–
39.6
39.6
81.9
2013
%Ni
1.71
1.42
1.55
%Ni
1.31
1.25
1.30
2013
%Ni
1.34
1.31
1.32
1.51
1.22
1.42
1.25
1.17
1.19
1.08
1.06
1.08
%Ni
1.21
1.20
1.21
–
–
–
2013
%Ni
1.15
1.21
1.21
1.17
–
1.49
1.49
1.39
Grade
2012
%Ni
1.71
1.51
1.61
%Ni
1.35
1.32
1.34
Grade
2012
%Ni
1.43
1.30
1.38
1.52
1.18
1.43
1.28
1.10
1.19
1.07
1.00
1.07
%Ni
1.25
1.23
1.24
–
–
–
Grade
2012
%Ni
1.15
1.21
1.21
1.17
–
1.49
1.49
1.39
Contained Metal
2013
kt
342
358
700
59
14
73
2012
kt
401
353
754
52
14
66
Contained Metal
2013
kt
114
101
215
491
179
670
30
65
95
13
0
13
31
28
59
–
–
–
2012
kt
129
65
193
556
155
710
42
42
85
16
0
17
35
35
70
–
–
–
Contained Metal
2013
kt
72
653
726
1,468
–
589
589
1,138
2012
kt
72
653
726
1,468
–
589
589
1,138
Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
(1) Barro Alto – Ore Reserves: The decrease is primarily due to production along with reallocation of Ore Reserves to Mineral Resources. The decrease is partially
offset by increases due to updated economic assumptions and refinement of the geological model to take into account additional drilling and more detailed
ore-waste contacts captured from pit mapping.
(2) Niquelândia – Ore Reserves: The increase is due to updated economic assumptions which are partially offset by reallocation of Ore Reserves to Mineral
Resources. Niquelândia Mine is adjacent to the Codemin Ferro-Nickel smelter which is fed with ore from Barro Alto which is blended with Niquelândia ore to
achieve an appropriate smelter feed chemistry.
(3) Barro Alto – Direct Feed: Mineral Resources are quoted above a 0.9 %Ni cut-off, below an iron content of 30 %Fe and a SiO2/MgO ratio of less than or equal to
1.80. A surface stockpile of 5.4 Mt at 1.31 %Ni is included in the Saprolite Mineral Resources.
(4) Barro Alto – Stockpile: Material that is scheduled for stockpiling or has already been mined and stockpiled. A surface stockpile of 0.7 Mt at 1.19 %Ni is included
in the Ferruginous Laterite Mineral Resources.
(5) Niquelândia – Mineral Resources: Mineral Resources are quoted above a 0.9 %Ni cut-off, below an Iron content of 30% Fe and a SiO2/MgO ratio of less than or
equal to 1.75. The decrease is due to updated economic assumptions which are partially offset by reallocation of Ore Reserves to Mineral Resources.
(6) Jacaré: The Mineral Resources are reported within a pit shell developed for the Concept Study with a cut-off of 1.3 %Ni. A minimum mineralised width of 1m must
be present to allow material to be categorised as higher-grade Saprolite Mineral Resource. The Saprolite Resources are a combination of higher-grade resources
(>1.3 %Ni) that are expected to feed a pyrometallurgical treatment facility and lower-grade resources (1.3 – 0.9 %Ni) that could be used to neutralise the acid in
the proposed hydrometallurgical treatment of the Ferruginous Laterite material while still recovering Nickel in the process. The Plano de Aproveitamento
Economico (PAE) is under consideration by Brazil’s Departamento Nacional de Produção Mineral (DNPM).
Anglo American plc Annual Report 2013
237
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
NIOBIUM
estimates as at 31 December 2013
ANGLO AMERICAN NIÓBIO BRASIL LIMITADA
The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, 2012) as a minimum standard. The figures reported represent 100% of the Ore Reserves and Mineral
Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of figures may cause computational discrepancies.
Niobium – Operations
ORE RESERVES
Boa Vista (OP)
Attributable %
100
Mine
Life
1
Catalão II Carbonatite Complex
Oxide(1)
Mina II (OP)
100
1
Catalão I Carbonatite Complex
Oxide
Tailings
100
18
Catalão I Carbonatite Complex
Phosphate Tailings(2)
Niobium – Operations
MINERAL RESOURCES
Boa Vista (OP)
Attributable %
100
Catalão II Carbonatite Complex
Oxide(3)
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Niobium – Projects
ORE RESERVES
Boa Vista
Attributable %
100
Mine
Life
18
Catalão II Carbonatite Complex
Fresh Rock (OP)(4)
Niobium – Projects
MINERAL RESOURCES
Area Leste
Attributable %
100
Catalão I Carbonatite Complex
Oxide (OP)(5)
Catalão I Carbonatite Complex
Fresh Rock (UG)(6)
Boa Vista
100
Catalão II Carbonatite Complex
Fresh Rock (OP)(7)
Catalão II Carbonatite Complex
Fresh Rock (UG)(8)
Mina I
Catalão I Carbonatite Complex
Oxide (OP)(9)
Mina II
Catalão I Carbonatite Complex
Fresh Rock (OP)(10)
100
100
Catalão I Carbonatite Complex
Fresh Rock (UG)(11)
Morro do Padre
100
Catalão II Carbonatite Complex
Fresh Rock (UG)(12)
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Classification
Classification
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
2013
Mt
0.8
0.4
1.3
0.4
–
0.4
–
14.5
14.5
2013
Mt
0.2
0.4
0.6
0.2
0.5
0.7
2013
Mt
0.2
23.8
24.0
2013
Mt
–
–
–
2.9
–
–
–
11.8
–
4.8
4.8
1.3
9.2
10.5
–
–
–
10.7
–
–
–
1.7
–
–
–
5.1
–
–
–
1.4
–
–
–
8.3
Tonnes
2012
Mt
0.8
0.3
1.0
0.4
–
0.4
–
2.0
2.0
Tonnes
2012
Mt
0.8
0.3
1.0
0.2
0.7
0.8
Tonnes
2012
Mt
–
–
–
Tonnes
2012
Mt
1.8
0.5
2.3
0.0
8.2
4.7
12.9
1.3
0.6
28.6
29.2
–
9.2
9.2
–
–
–
–
–
–
–
–
–
–
–
–
5.5
0.9
6.4
0.8
–
2.6
2.6
8.9
2013
%Nb2O5
1.21
1.03
1.15
%Nb2O5
1.16
–
1.16
%Nb2O5
–
0.69
0.69
2013
%Nb2O5
1.56
1.18
1.30
0.91
0.79
0.83
2013
%Nb2O5
1.24
0.95
0.95
2013
%Nb2O5
–
–
–
1.25
–
–
–
1.17
%Nb2O5
–
0.98
0.98
0.86
1.11
1.08
–
–
–
0.99
%Nb2O5
–
–
–
0.79
%Nb2O5
–
–
–
1.17
–
–
–
1.08
%Nb2O5
–
–
–
1.26
Grade
2012
%Nb2O5
1.31
1.01
1.24
%Nb2O5
1.13
–
1.13
%Nb2O5
–
0.73
0.73
Grade
2012
%Nb2O5
1.21
0.86
1.11
0.91
0.82
0.84
Grade
2012
%Nb2O5
–
–
–
Grade
2012
%Nb2O5
1.32
1.13
1.28
0.74
1.24
1.20
1.23
1.12
%Nb2O5
0.97
0.95
0.95
–
1.03
1.03
–
–
–
–
%Nb2O5
–
–
–
–
%Nb2O5
–
–
–
–
1.24
1.17
1.23
1.19
%Nb2O5
–
1.27
1.27
1.54
Contained Product
2013
kt
10
5
14
4
–
4
–
100
100
2012
kt
10
3
13
4
–
4
–
14
14
Contained Product
2013
kt
3
5
8
2
4
6
2012
kt
9
3
12
1
5
7
Contained Product
2013
kt
3
226
229
2012
kt
–
–
–
Contained Product
2013
kt
–
–
–
37
–
–
–
138
–
47
47
11
102
113
–
–
–
106
–
–
–
13
–
–
–
60
–
–
–
15
–
–
–
104
2012
kt
24
6
30
0
101
57
158
14
5
273
278
–
94
94
–
–
–
–
–
–
–
–
–
–
–
–
69
11
79
10
–
33
33
138
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Mining method: OP = Open Pit. Mine Life = the extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
238
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
NIOBIUM
estimates as at 31 December 2013
(1) Boa Vista – Oxide Ore Reserves (OP): The increase is primarily due to ongoing grade control and a new drilling campaign identifying additional ore.
(2) Phosphate Tailings Ore Reserves: The fines portion of the Phosphate tailings from Chapadão are processed in the Niobium Tailings Plant to recover Niobium.
The increase is a result of the approval of the Boa Vista Fresh Rock project enabling the tailings plant to continue operating once the Oxide Reserves are depleted.
(3) Boa Vista – Oxide Mineral Resources (OP): The Oxide Resources are reported above a 0.5% Nb2O5 cut-off. The decrease is due to the introduction of a new
mine plan which allows additional Mineral Resources to be converted to Ore Reserves.
(4) Boa Vista – Fresh Rock Ore Reserves (OP): Approval of the Boa Vista Fresh Rock project permits the declaration of Ore Reserves.
(5) Area Leste – Oxide Mineral Resources (OP): The Oxide Resources are reported above a 0.5% Nb2O5 cut-off. The increase is due to reallocation of Ore
Reserves to Mineral Resource following a reclassification of historical estimates to the Inferred category.
(6) Area Leste – Fresh Rock Mineral Resources (UG): The Fresh Rock Resources are reported above a 0.7 %Nb2O5 cut-off. The difference is attributable to the
application of underground mining as the basis for reasonable prospects for eventual economic extraction.
(7) Boa Vista – Fresh Rock Mineral Resources (OP): The Fresh Rock Resources are reported above a 0.5 %Nb2O5 cut-off. The decrease is the result of Mineral
Resources conversion to Ore Reserves which is partially offset by a change in the slope angle of the pit allowing more Mineral Resources to be declared.
(8) Boa Vista – Fresh Rock Mineral Resources (UG): The Fresh Rock Resources are reported above a 0.5 %Nb2O5 cut-off. The application of underground
mining as the basis for reasonable prospects for eventual economic extraction allows for declaration of this resource for the first time.
(9) Mina I – Oxide Mineral Resources (OP): The Oxide Resources are reported above a 0.5% Nb2O5 cut-off. The Mina I Ore Reserves (previously declared as part
of Boa Vista – Oxides) were reallocated to Mineral Resource following re-classification of historical estimates to Inferred.
(10) Mina II – Fresh Rock Mineral Resources (OP): The Fresh Rock Resources are reported above a 0.7 %Nb2O5 cut-off. The application of an open pit mining
method is the basis for reasonable prospect for eventual economic extraction of this material, formerly considered for underground extraction and
reclassification of historical estimates to the Inferred category has also been applied.
(11) Mina II – Fresh Rock Mineral Resources (UG): The Fresh Rock Resources are reported above a 0.7 %Nb2O5 cut-off. Application of underground mining
method is the basis for defining reasonable prospects for eventual economic extraction for this material and the declaration of a Mineral Resource.
(12) Morro do Padre – Fresh Rock Mineral Resources (UG): The Fresh Rock Resources are reported above a 0.7 %Nb2O5 cut-off. Application of underground
mining method is the basis for defining reasonable prospects for eventual economic extraction of this material and reclassification of historical estimates to the
Inferred category has also been applied.
Following the reclassification of historical estimates to the Inferred category in order to ensure compliance with Anglo American standards, a systematic
programme of re-analysis of historical samples and additional drilling is underway to upgrade the confidence in the project resources.
Anglo American plc Annual Report 2013
239
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
PHOSPHATES
estimates as at 31 December 2013
ANGLO AMERICAN FOSFATOS BRASIL LIMITADA
The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, 2012) as a minimum standard. The figures reported represent 100% of the Ore Reserves and Mineral
Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of figures may cause computational discrepancies.
Phosphates – Operations
ORE RESERVES
Chapadão (OP)(1)
Carbonatite Complex
Oxide
Attributable %
100
Mine
Life
20
Phosphates – Operations
MINERAL RESOURCES
Chapadão (OP)(2)
Carbonatite Complex
Oxide
Attributable %
100
Attributable %
100
Phosphates – Projects
MINERAL RESOURCES
Coqueiros (OP)(3)
Carbonatite Complex
Oxide
Carbonatite Complex
Fresh Rock
Classification
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Classification
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
2013
Mt
41.0
77.0
118.1
2013
Mt
–
0.1
0.1
19.5
165.7
185.2
2013
Mt
1.8
16.5
18.3
26.2
1.2
34.0
35.2
16.2
Tonnes
2012
Mt
83.1
151.0
234.0
Tonnes
2012
Mt
3.9
60.2
64.1
7.5
50.4
57.9
Tonnes
2012
Mt
1.8
16.5
18.3
26.2
1.2
34.0
35.2
16.2
2013
%P2O5
12.5
13.0
12.8
2013
%P2O5
–
13.2
13.2
13.6
12.1
12.3
2013
%P2O5
10.5
12.9
12.6
11.2
7.3
8.5
8.5
7.6
Grade
2012
%P2O5
14.1
13.0
13.4
Grade
2012
%P2O5
13.4
11.8
11.9
13.2
10.9
11.2
Grade
2012
%P2O5
10.5
12.9
12.6
11.2
7.3
8.5
8.5
7.6
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Mining method: OP = Open Pit. Mine Life = the extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
Chapadão Mine is the formal name of the Anglo American Fosfatos Brasil Limitada Phosphate mining operation near Ouvidor (reported as Ouvidor in 2012).
(1) Chapadão – Oxide Ore Reserves: The decrease is primarily due to reallocation of Ore Reserves to Mineral Resources which occurred when the new resource
classification methodology (balanced scorecard) was applied resulting in the downgrade of confidence of portions of the reserve. The Mine Life is also reduced
as a result. The decrease is offset by the inclusion of new drilling information in the updated geological model and a re-assay and drilling program is planned to
upgrade confidence in future model updates.
(2) Chapadão – Oxide Mineral Resources: Mineral Resources are quoted above a 6 %P2O5 cut-off and a CaO/P2O5 ratio between 1 and 1.5. The increase and
downgrading of the Mineral Resources is as a result of the application of the new resource classification methodology (balanced scorecard) which resulted in
reallocation of Ore Reserves to Mineral Resources.
(3) Coqueiros: The Oxide mineralisation is defined by a cut-off grade of 7 %P2O5 and a CaO/ P2O5 ratio between 1 and 1.4. The Fresh Rock resources are
defined by a cut-off grade of 5% P2O5. The exploration drilling report submitted to Brazil’s Departamento Nacional de Produção Mineral (DNPM) was approved
late in 2013 and the updated estimates will be published in 2015.
240
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
PLATINUM GROUP METALS
estimates as at 31 December 2013
ANGLO AMERICAN PLATINUM LIMITED
The Ore Reserve and Mineral Resource estimates were compiled in compliance with The South African Code for the Reporting of Exploration Results,
Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). Operations and Projects outside South Africa were
compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012) as a
minimum standard. Details of the individual operations appear in Anglo American Platinum’s Annual Report. Merensky Reef and UG2 Reef Mineral Resources
are reported over an economic and mineable cut appropriate to the specific reef. The figures reported represent 100% of the Mineral Resources and Ore
Reserves attributable to Anglo American Platinum Limited unless otherwise noted. Rounding of figures may cause computational discrepancies.
Anglo American plc’s interest in Anglo American Platinum Limited is 78.0%.
Platinum – South Africa Operations
ORE RESERVES
Merensky Reef(1)(2)
Classification
UG2 Reef(1)(3)
Platreef(4)
Proved
Probable
Total
Proved
Probable
Total
Proved
Proved primary ore stockpile(5)
All Reefs
Merensky, UG2 & Platreef
Tailings(7)
Platinum – Zimbabwe Operations
ORE RESERVES
Main Sulphide Zone(8)
Probable
Total
Proved
Probable
Total(6)
Proved
Probable
Total
Classification
Proved
Probable
Total(9)
2013
Mt
55.0
17.3
72.3
316.2
91.0
407.2
705.8
28.7
901.4
1,635.9
1,105.7
1,009.6
2,115.3
–
23.7
23.7
2013
Mt
14.1
36.6
50.7
Tonnes
2012
Mt
59.8
22.5
82.3
389.8
128.6
518.4
587.5
26.7
394.6
1,008.9
1,063.9
545.7
1,609.6
–
15.9
15.9
Tonnes
2012
Mt
13.9
39.8
53.7
2013
4E PGE
4.79
4.52
4.72
4.13
4.20
4.15
2.73
1.59
2.70
2.69
3.20
2.87
3.04
–
1.08
1.08
2013
4E PGE
3.72
3.68
3.69
Grade
2012
4E PGE
4.79
4.49
4.71
4.05
4.46
4.15
2.75
1.72
2.81
2.75
3.32
3.27
3.30
–
1.02
1.02
Grade
2012
4E PGE
3.85
3.73
3.76
Contained Metal
Contained Metal
2013
4E tonnes
263.3
78.2
341.5
1,306.8
381.7
1,688.5
1,925.2
45.7
2,433.7
4,404.6
3,541.0
2,893.6
6,434.6
–
25.5
25.5
2012
4E tonnes
286.5
100.9
387.4
1,578.7
573.6
2,152.3
1,617.3
46.0
1,108.2
2,771.5
3,528.5
1,782.7
5,311.2
–
16.1
16.1
2013
4E Moz
8.5
2.5
11.0
42.0
12.3
54.3
61.9
1.5
78.2
141.6
113.8
93.0
206.9
–
0.8
0.8
2012
4E Moz
9.2
3.2
12.5
50.8
18.4
69.2
52.0
1.5
35.6
89.1
113.4
57.3
170.8
–
0.5
0.5
Contained Metal
Contained Metal
2013
4E tonnes
52.3
134.6
186.9
2012
4E tonnes
53.4
148.5
201.9
2013
4E Moz
1.7
4.3
6.0
2012
4E Moz
1.7
4.8
6.5
Tonnes are quoted as dry metric tonnes.
4E PGE is the sum of Platinum, Palladium, Rhodium and Gold grades in grammes per tonne (g/t).
Contained Metal is presented in metric tonnes and million troy ounces (Moz).
Concentrator recoveries for Merensky Reef range from 86% to 89%, UG2 Reef from 82% to 87%, Platreef from 70% to 80% and Main Sulphide Zone from 70% to 78%.
Tailings reprocessing recoveries range from 30 to 40%.
(1) Merensky Reef and UG2 Reef: The pay limits built into the basic mining equation are directly linked to the 2014 Business plan. The pay limit is based on Cost 4
which consists of ‘Direct Cash Cost’ (on and off mine), ‘Other Indirect Costs’ and ‘Stay in Business Capital’ (on and off mine). The reserve pay-limit varies across
all operations between 2.5g/t and 4.8g/t (4E PGE). The range is a function of various factors including depth of the orebody, geological complexity, infrastructure
and economic parameters. Changes associated with the strategic review resulted in a reallocation of reported Ore Reserves to Mineral Resources mainly in the
Rustenburg area and the impact thereof are reflected in the 2013 figures.
(2) Merensky Reef: The Ore Reserve tonnage and 4E ounce content decreased, mainly in response to economic assumptions resulting in reallocation of Ore
Reserves to Mineral Resources at Rustenburg’s Khomanani, Khuseleka and Thembelani mines. These decreases were partially offset by the increase in Ore
Reserves mainly from Dishaba, Union and Bokoni mines where additional Mineral Resources have been converted to Ore Reserves.
(3) UG2 Reef: The Ore Reserve tonnage and 4E ounce content decreased largely due to economic assumptions and the resulting reallocation of Ore Reserves to
Mineral Resources at the Rustenburg mines (Khuseleka, Thembelani, Khomanani, Siphumelele 1 and Siphumelele 2 – School of Mines) as well as at Tumela and
Union mines. These decreases were partially offset by the increase in Ore Reserves mainly from Siphumelele 3, Dishaba and Bathopele mines where Mineral
Resources have been converted to Ore Reserves.
(4) Platreef: For Mogalakwena North, Central and South the 4E pay limit is 1.0 g/t. For Zwartfontein South the pay limit is 1.7 g/t.
The Ore Reserves tonnage and 4E ounce content increased materially due to new drilling information allowing an upgrade in the resource confidence and hence
conversion of more Mineral Resources to Ore Reserves as well as changes to the structural interpretation in the updated geological model. A revised pit design
was also introduced (due to the Atlatsa refinancing transaction) which now incorporates the southern portion of the Boikgantsho project and allows deeper
Mogalakwena resources to be extracted with two additional benches.
(5) Platreef stockpiles: Mined ore retained for future treatment and reported separately as Proved Ore Reserves but included in the Total Platreef Ore Reserves.
(6) Alternative units – All Reefs Total: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2013 is:
Total – 2,331.7 Mton (2012: 1,774.3 Mton)
Total – 0.089 oz/ton (2012: 0.096 oz/ton)
(7) Tailings: Operating tailings dams are not evaluated and therefore not reported as part of the Ore Reserves. At Rustenburg mine and at Union mines, dormant
tailings dams have been evaluated and are separately reported as tailings Ore Reserves.
(8) Main Sulphide Zone: The Ore Reserve tonnage and 4E ounce content decreased mainly due to production. Anglo American Platinum Limited currently has an
effective 100% interest in Unki Mine, subject to the finalisation of the indigenisation agreement.
(9) Alternative units – Main Sulphide Zone: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2013 is:
Total – 55.8 Mton (2012: 59.2 Mton)
Total – 0.108 oz/ton (2012: 0.110 oz/ton)
Anglo American plc Annual Report 2013
241
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
PLATINUM GROUP METALS
estimates as at 31 December 2013
Platinum – South Africa Operations
MINERAL RESOURCES
Merensky Reef(1)(2)
Classification
2013
Mt
238.5
326.4
564.9
6.6
564.1
570.7
656.5
681.4
1,338.0
4.3
596.4
600.6
155.1
740.9
896.0
72.9
1,101.9
1,174.8
1,050.1
1,748.8
2,798.9
83.8
2,262.3
2,346.2
137.5
22.8
160.3
–
1.2
1.2
UG2 Reef(1)(3)
Platreef(4)
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
All Reefs
Merensky, UG2 & Platreef
Tailings(6)
Measured and Indicated(5)
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Platinum – Zimbabwe Operations
MINERAL RESOURCES
Main Sulphide Zone(7)
Classification
Measured
Indicated
Measured and Indicated(8)
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
2013
Mt
23.4
114.6
138.1
0.0
45.1
45.1
Tonnes
2012
Mt
189.3
290.6
479.9
9.8
563.8
573.6
475.2
656.4
1,131.6
7.3
604.8
612.1
151.2
740.7
891.8
25.8
1,560.5
1,586.3
815.7
1,687.7
2,503.4
43.0
2,729.1
2,772.1
87.6
15.1
102.7
–
–
–
Tonnes
2012
Mt
9.5
104.1
113.6
0.3
72.3
72.6
2013
4E PGE
5.47
5.41
5.44
6.47
5.06
5.08
5.19
5.16
5.18
4.79
5.35
5.34
2.62
2.17
2.24
2.61
1.81
1.86
4.88
3.94
4.29
3.02
3.55
3.54
0.95
1.02
0.96
–
0.90
0.90
2013
4E PGE
3.83
4.35
4.26
3.48
4.64
4.64
Grade
2012
4E PGE
5.63
5.51
5.55
6.33
5.11
5.13
5.14
5.13
5.13
5.23
5.36
5.35
2.59
2.11
2.19
4.05
2.10
2.14
4.78
3.87
4.16
4.77
3.45
3.47
1.08
1.13
1.08
–
–
–
Grade
2012
4E PGE
4.04
4.23
4.21
3.32
4.58
4.57
Contained Metal
Contained Metal
2013
4E tonnes
1,305.2
1,766.2
3,071.4
43.0
2,853.9
2,896.9
3,409.5
3,516.4
6,925.9
20.4
3,189.4
3,209.8
406.1
1,605.0
2,011.1
190.2
1,997.5
2,187.7
5,120.8
6,887.6
12,008.4
253.6
8,040.8
8,294.4
130.1
23.4
153.5
–
1.1
1.1
2012
4E tonnes
1,065.1
1,600.1
2,665.2
62.1
2,879.5
2,941.6
2,441.0
3,367.8
5,808.8
38.3
3,239.5
3,277.8
391.3
1,560.9
1,952.2
104.5
3,284.1
3,388.6
3,897.4
6,528.8
10,426.2
204.9
9,403.1
9,608.0
94.3
17.0
111.3
–
–
–
2013
4E Moz
42.0
56.8
98.8
1.4
91.8
93.1
109.6
113.1
222.7
0.7
102.5
103.2
13.1
51.6
64.7
6.1
64.2
70.3
164.6
221.4
386.1
8.2
258.5
266.7
4.2
0.8
4.9
–
0.0
0.0
2012
4E Moz
34.2
51.4
85.7
2.0
92.6
94.6
78.5
108.3
186.8
1.2
104.2
105.4
12.6
50.2
62.8
3.4
105.6
108.9
125.3
209.9
335.2
6.6
302.3
308.9
3.0
0.5
3.6
–
–
–
Contained Metal
Contained Metal
2013
4E tonnes
89.6
498.2
587.8
0.1
208.9
209.0
2012
4E tonnes
38.5
439.7
478.2
1.0
330.8
331.8
2013
4E Moz
2.9
16.0
18.9
0.0
6.7
6.7
2012
4E Moz
1.2
14.1
15.4
0.0
10.6
10.7
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Tonnes are quoted as dry metric tonnes.
4E PGE is the sum of Platinum, Palladium, Rhodium and Gold grades in grammes per tonne (g/t).
Contained Metal is presented in metric tonnes and million troy ounces (Moz).
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
(1) Merensky Reef and UG2 Reef: The Mineral Resources are estimated over a practical minimum mining width suitable for the deposit known as the ‘Resource
Cut’. The ‘Resource Cut’ width takes cognisance of the mining method and geotechnical aspects in the hanging wall or footwall of the reef.
The Mineral Resource tonnage and 4E ounce content increased due to the incorporation of the eastern part of the Ga-Phasha project (100% attributable to
AAPL for 2013) into Twickenham Mine as a result of the execution of the Atlatsa refinancing transaction.
A decrease of Mineral Resources occurred at Magazynskraal due to disposal of this project.
(2) Merensky Reef: Additionally at Twickenham an advanced ‘Resource Cut’ evaluation strategy has been applied, together with new drilling information resulted in
an increase in Mineral Resources. Due to economic assumptions previously reported Ore Reserves at some Rustenburg mines (Khuseleka, Thembelani,
Khomanani) have been reallocated back to Mineral Resources.
(3) UG2 Reef: Due to economic assumptions previously reported Ore Reserves at the Rustenburg mines (Khuseleka, Thembelani, Khomanani, Siphumelele 1 and
Siphumelele 2 – School of Mines) as well as at Tumela and Union mines have been reallocated back to Mineral Resources.
(4) Platreef: A 1.0g/t (4E PGE) cut-off is used to define Platreef Mineral Resources. As a result of conversion of Mineral Resources to Ore Reserves, the Platreef
Resources decreased. No Mineral Resources applicable to underground mining have been included. However, stockpile material is included which comprises
calc-silicate and oxidised material with a cut-off grade of greater than 3g/t (5.9 Mt / 0.6 Moz). Due to the successful execution of the Atlatsa refinancing
transaction, 100% of Boikgantsho is now attributable to Anglo American Platinum Limited (AAPL) and the southern portion of the Boikgantsho project has now
been incorporated into the latest Mogalakwena pit design.
Remaining Boikgantsho Mineral Resources are separately tabulated and reported under Platinum – Other 3E Projects.
(5) Alternative units – All Reefs Measured and Indicated: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2013 is:
Measured and Indicated – 3,085.2 Mton (2012: 2,759.5 Mton)
Measured and Indicated – 0.125 oz/ton (2012: 0.121 oz/ton)
(6) Tailings: Operating tailings dams are not evaluated and therefore not reported as part of the Mineral Resources. At Rustenburg, Amandelbult and Union mines,
(7)
dormant dams have been evaluated and the tailing forms part of the Mineral Resource statement.
Main Sulphide Zone: The Mineral Resources tonnage and 4E ounce content decreases slightly due to new information. Oxidised material is not considered.
Anglo American Platinum currently has an effective 100% interest in Southridge Limited, subject to the finalisation of the indigenisation agreement.
(8) Alternative units – Main Sulphide Zone Measured and Indicated: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton
(oz/ton) for 2013 is:
Measured and Indicated – 152.2 Mton (2012: 125.2 Mton)
Measured and Indicated – 0.124 oz/ton (2012: 0.123 oz/ton)
242
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES PLATINUM GROUP METALS
estimates as at 31 December 2013
Platinum – Other 3E Projects
MINERAL RESOURCES
South Africa
Classification
Boikgantsho(1)
Platreef
Sheba’s Ridge(2)
Brazil
Pedra Branca(3)
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Inferred
2013
Mt
–
45.5
45.5
3.3
28.0
34.0
62.0
149.9
6.6
Tonnes
2012
Mt
–
37.0
37.0
1.8
28.0
34.0
62.0
149.9
6.6
2013
3E PGE
–
1.22
1.22
1.14
3E PGE
0.88
0.85
0.87
0.96
3E PGE
2.27
Grade
2012
3E PGE
–
1.30
1.30
1.14
3E PGE
0.88
0.85
0.87
0.96
3E PGE
2.27
Contained Metal
Contained Metal
2013
3E tonnes
–
55.4
55.4
3.8
24.6
29.1
53.6
144.5
15.0
2012
3E tonnes
–
47.9
47.9
2.1
24.6
29.1
53.6
144.5
15.0
2013
3E Moz
–
1.8
1.8
0.1
0.8
0.9
1.7
4.6
0.5
2012
3E Moz
–
1.5
1.5
0.1
0.8
0.9
1.7
4.6
0.5
Tonnes are quoted as dry metric tonnes.
3E PGE is the sum of Platinum, Palladium and Gold grades in grammes per tonne (g/t).
Contained Metal is presented in metric tonnes and million troy ounces (Moz).
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or
Measured Resource after continued exploration.
(1) Boikgantsho: Anglo American Platinum Limited now holds an attributable interest of 100% of the Boikgantsho project. The increase in Mineral Resources is
therefore due to the acquisition of Atlatsa’s attributable interest in the project.
A cut-off grade of 1g/t (3E PGE) is applied for resource definition.
(2) Sheba’s Ridge: Anglo American Platinum Limited holds an attributable interest of 35% of the Joint Venture between Anglo American Platinum Limited, Aquarius
Platinum and the South African Industrial Development Corporation (IDC). A cut-off grade of 0.5g/t (3E PGE) is applied for resource definition.
(3) Pedra Branca: Anglo American Platinum Limited holds an attributable interest of 51% of the Joint Venture with Solitario Resources & Royalty.
A cut-off of 0.7g/t (3E PGE) is applied for resource definition.
The following operations and projects contributed to the combined 2013 Ore Reserve and Mineral Resource estimates stated per reef (excluding Other 3E Projects):
Operations:
Bafokeng Rasimone Platinum Mine (BRPM)
Bathopele Mine•
Bokoni Platinum Mine
Dishaba Mine
Khuseleka Mine•
Kroondal and Marikana Platinum Mine
Modikwa Platinum Mine
Mogalakwena Mine
Mototolo Platinum Mine
Pandora
Siphumelele 1, 2 (School of Mines) and 3 Mines•
Thembelani Mine•
Tumela Mine
Twickenham Platinum Mine
Union North Mine
Union South Mine
Unki Mine
Reef Types
MR/UG2
UG2
MR/UG2
MR/UG2
MR/UG2
UG2
MR/UG2
PR
UG2
UG2
MR/UG2
MR/UG2
MR/UG2
MR/UG2
MR/UG2
MR/UG2
MSZ
Mining Method
UG
UG
UG
UG
UG
UG & OC
UG
OP
UG
UG
UG
UG
UG
UG
UG
UG
UG
Projects:
Der Brochen Project
MR/UG2
Other Exploration Projects (portions of Driekop and at Rustenburg) MR/UG2
MR/UG2
Rustenburg – Non-Mine Projects
AAPL %
33%
100%
49%
100%
100%
50%
50%
100%
50%
42.5%
100%
100%
100%
100%
85%
85%
100%
%
100%
37.5% to 100%
100%
+
+
+
Mine Life
27
14
26
27
4
9
21
27
5*
26
28
16
15
20
18
26
30
+
Total Ore Reserves (4E Moz)
5.2
3.8
5.7
16.3
0.8
3.5
4.4
141.6
0.9
1.0
2.9
2.7
6.2
4.9
2.5
4.4
6.0
Reef Types: MR = Merensky Reef, UG2 = UG2 Reef, PR = Platreef, MSZ = Main Sulphide Zone
Mining method: OC = Open Cut, OP = Open Pit, UG = Underground
AAPL % = Anglo American Platinum Limited attributable interest
Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only, considering the combined MR and UG2 production where applicable within the
current Mining Right plus any anticipated extension to the Mining Right for which an application has been submitted and where there is reasonable expectation that this extension to be granted.
+Mine Life truncated to the last year of current Mining Right
* Only five years of Ore Reserves are declared as per Glencore-Xstrata policy
• Rustenburg Mines
Ga-Phasha project previously reported has now been split and incorporated into Bokoni and Twickenham mines.
Khomanani excluded from Operations table as no Ore Reserves are reported for 2013.
Anglo American Platinum Limited attributable portion of Magazynskraal project has been fully disposed of during 2013.
Changes in the Mine Life are due to AAPL conforming to the AA plc Mine Life calculation methodology, changes in economic assumptions and AAPL strategic review.
Information was provided by the Joint Venture partners for the following operations and projects:
Operations – BRPM, Bokoni, Kroondal, Marikana, Modikwa, Mototolo, Pandora (only Ore Reserve information for BRPM and Modikwa)
3E Projects – Boikgantsho, Pedra Branca, Sheba’s Ridge
4E Projects – Der Brochen, Other Exploration Projects, Rustenburg – Non-Mine Projects
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2013 at the following operations:
Bathopele, Dishaba, Mogalakwena, Siphumelele 1, Thembelani, Twickenham and Unki mines.
Anglo American plc Annual Report 2013
243
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
DIAMONDS
estimates as at 31 December 2013
DE BEERS CANADA
The Diamond Reserve and Diamond Resource estimates were compiled in accordance with the CIM Definition Standards on Mineral Resources and Mineral
Reserves. The figures reported represent 100% of the Diamond Reserves and Diamond Resources. Diamond Resources are quoted as inclusive of those used
to calculate Diamond Reserves and must not be added to the Diamond Reserves. Rounding of figures may cause computational discrepancies. The mines,
located in Canada, are operated under De Beers Canada Incorporated.
De Beers Canada – Operations
DIAMOND RESERVES
Snap Lake (UG)(1)
Kimberlite
Attributable %
85.0
LOM
15
BCO
(mm)
1.14
Classification
Victor (OP)(2)
Kimberlite
85.0
5
1.50
De Beers Canada
TOTAL Kimerberlite
85.0
multiple
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
De Beers Canada – Operations
DIAMOND RESOURCES
Snap Lake (UG)(1)
Attributable %
85.0
Kimberlite
BCO
(mm)
1.14
Classification
Measured
Indicated
Measured and Indicated
Inferred
Victor (OP)(2)
Kimberlite
De Beers Canada
TOTAL Kimerberlite
85.0
1.50
Measured
Indicated
Measured and Indicated
Inferred
85.0
multiple
Measured
Indicated
Measured and Indicated
Inferred
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES
De Beers Canada – Projects
DIAMOND RESERVES
Gahcho Kué (OP)(3)
Kimberlite
Attributable %
43.4
LOM
11
BCO
(mm)
1.00
BCO
(mm)
1.00
Classification
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred
De Beers Canada – Projects
DIAMOND RESOURCES
Gahcho Kué (OP)(3)
Attributable %
43.4
Kimberlite
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
Treated Tonnes
Recovered Grade
Saleable Carats
2012
Mt
–
1.6
1.6
–
12.1
12.1
–
13.7
13.7
Tonnes
2012
Mt
–
2.5
2.5
23.1
–
12.9
12.9
17.9
–
15.4
15.4
41.1
2013
cpht
–
119.8
119.8
cpht
–
18.3
18.3
cpht
–
56.4
56.4
2013
cpht
–
178.9
178.9
173.3
cpht
–
18.7
18.7
22.6
cpht
–
96.1
96.1
94.5
2012
cpht
–
123.1
123.1
cpht
–
19.4
19.4
cpht
–
31.7
31.7
Grade
2012
cpht
–
189.3
189.3
176.5
cpht
–
19.3
19.3
22.2
cpht
–
46.9
46.9
109.2
2013
M¢
–
6.7
6.7
–
1.7
1.7
–
8.4
8.4
2013
M¢
–
16.1
16.1
27.3
–
1.8
1.8
3.9
–
17.9
17.9
31.2
2012
M¢
–
2.0
2.0
–
2.3
2.3
–
4.3
4.3
Carats
2012
M¢
–
4.7
4.7
40.9
–
2.5
2.5
4.0
–
7.2
7.2
44.8
Treated Tonnes
Recovered Grade
Saleable Carats
2012
Mt
–
31.0
31.0
Tonnes
2012
Mt
–
30.2
30.2
6.0
2013
cpht
–
153.7
153.7
2013
cpht
–
162.3
162.3
142.5
2012
cpht
–
153.7
153.7
Grade
2012
cpht
–
163.9
163.9
168.9
2013
M¢
–
47.6
47.6
2013
M¢
–
55.6
55.6
16.3
2012
M¢
–
47.6
47.6
Carats
2012
M¢
–
49.6
49.6
10.1
2013
Mt
–
5.6
5.6
–
9.3
9.3
–
14.9
14.9
2013
Mt
–
9.0
9.0
15.8
–
9.7
9.7
17.3
–
18.7
18.7
33.0
2013
Mt
–
31.0
31.0
2013
Mt
–
34.2
34.2
11.5
Mining method: OP = Open Pit, UG = Underground.
LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.
Reported Diamond Reserves/Resources are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh).
Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes reflect the tonnage to be treated.
Recovered Grade is quoted as carats per hundred metric tonnes (cpht).
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
(1) Snap Lake: The increase in reserves is due to reclassification of a portion of Inferred Resources to Indicated Resources based on additional information from
mining and underground drilling. The decrease in LOM is due to the mining rate increasing and a re-assessment of the economic outline of the ore body that
resulted in the exclusion of blocks which are no longer economic. Indicated Resources are continuously developed from information gained from underground
footwall drilling ahead of the mining face, resulting in an at least 18-month rolling Probable Reserve. Reserve development beyond 18 months is considered
impractical due to technical and cost considerations.
(2) Victor: The decrease is primarily due to production as well as refinement of the geological model.
The Stockpile Resource estimates at a 1.50 mm BCO of 25 k¢ (0.2 Mt at 13.2 cpht) Indicated Resource are excluded from the table.
Tango Extension Pipe is reported as part of the Victor Resource and comprises 3.0M¢ in 13.4 Mt at a grade of 22.9 cpht (BCO is 1.50mm).
(3) Gahcho Kué: The increase in resources is due to completion of a deep drilling campaign at the Tuzo pipe.
The project approval is subject to the successful conclusion of permitting and regulatory approvals.
Gahcho Kué is a 51:49% Joint Venture between De Beers Canada Inc. and Mountain Province Diamonds Inc.
244
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
DIAMONDS
estimates as at 31 December 2013
DE BEERS CONSOLIDATED MINES
The Diamond Reserve and Diamond Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results,
Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). The figures reported represent 100% of the Diamond
Reserves and Diamond Resources. Diamond Resources are quoted as inclusive of those used to calculate Diamond Reserves and must not be added to the
Diamond Reserves. Rounding of figures may cause computational discrepancies. The mines, located in South Africa, are operated under De Beers
Consolidated Mines Proprietary Limited (DBCM). DBCM is indirectly owned, through DBCM Holdings, by De Beers Société Anonyme (74%) and its broad
based black economic empowerment partner Ponahalo Investments Proprietary Limited (26%).
De Beers Consolidated Mines – Operations
DIAMOND RESERVES
Attributable %
Venetia(1)
62.9
LOM
31
BCO
(mm)
1.00
Classification
Kimberlite (OP)(2)
Kimberlite (UG)(3)
Life Extension Project
De Beers Consolidated Mines
62.9
1.00
TOTAL Kimerberlite
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
De Beers Consolidated Mines – Operations
DIAMOND RESOURCES
Attributable %
Namaqualand (OC)(4)
62.9
Beach and Fluvial Placers
BCO
(mm)
multiple(3)
Classification
Measured
Indicated
Measured and Indicated
Inferred
Venetia
Kimberlite (OP)(2)
Kimberlite (UG)
Life Extension Project
Voorspoed (OP)(5)
Kimberlite
62.9
1.00
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
62.9
1.47
Measured
Indicated
Measured and Indicated
Inferred
multiple
Measured
Indicated
Measured and Indicated
Inferred
De Beers Consolidated Mines
62.9
TOTAL Kimerberlite, Beach and Placer
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
De Beers Consolidated Mines – Tailings Operations
DIAMOND RESOURCES
Kimberley Mines(6)
Attributable %
62.9
BCO
(mm)
1.15
Classification
Tailings Mineral Resource
Measured
Indicated
Measured and Indicated
Inferred
Treated Tonnes
Recovered Grade
Saleable Carats
2013
Mt
–
31.3
31.3
–
91.3
91.3
–
122.6
122.6
2013
Mt
–
19.3
19.3
70.8
–
32.3
32.3
27.9
–
108.0
108.0
69.9
–
–
–
33.0
–
159.5
159.5
201.6
2013
Mt
–
–
–
32.1
2012
Mt
–
33.6
33.6
–
91.4
91.4
–
125.0
125.0
Tonnes
2012
Mt
–
19.3
19.3
70.8
–
34.2
34.2
29.6
–
109.9
109.9
70.1
–
–
–
37.9
–
163.3
163.3
208.4
Tonnes
2012
Mt
–
–
–
38.2
2013
cpht
–
96.3
96.3
–
74.2
74.2
cpht
–
79.8
79.8
2013
cpht
–
10.9
10.9
4.8
cpht
–
103.4
103.4
17.5
–
87.8
87.8
85.5
cpht
–
–
–
21.9
cpht
–
81.7
81.7
37.3
2013
cpht
–
–
–
12.1
2012
cpht
–
97.5
97.5
–
76.5
76.5
cpht
–
82.2
82.2
Grade
2012
cpht
–
10.9
10.9
4.8
cpht
–
103.5
103.5
18.1
–
86.9
86.9
88.1
cpht
–
–
–
21.6
cpht
–
81.4
81.4
37.8
Grade
2012
cpht
–
–
–
12.2
2013
M¢
–
30.1
30.1
–
67.7
67.7
–
97.9
97.9
2013
M¢
–
2.1
2.1
3.4
–
33.4
33.4
4.9
–
94.8
94.8
59.8
–
–
–
7.2
–
130.3
130.3
75.3
2013
M¢
–
–
–
3.9
2012
M¢
–
32.8
32.8
–
70.0
70.0
–
102.7
102.7
Carats
2012
M¢
–
2.1
2.1
3.4
–
35.4
35.4
5.4
–
95.5
95.5
61.8
–
–
–
8.2
–
133.0
133.0
78.7
Carats
2012
M¢
–
–
–
4.7
Mining method: OP = Open Pit, UG = Underground.
LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.
Reported Diamond Reserves/Resources are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh).
Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes reflect the tonnage to be treated.
Recovered Grade is quoted as carats per hundred metric tonnes (cpht).
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
(1) Venetia: The LOM is stated as 31 years which reflects the full duration of the current Venetia consolidated OP and UG Life of Mine Plan.
(2) Venetia (OP): The Life of Mine plan includes the K01, K02 and K03 pipes. The 2014 mine plan includes a significant portion of Inferred Resources.
The Old Recovery Tailings Resource estimate at a 1.00 mm BCO of 2.5 M¢ (0.1 Mt at 3844.6 cpht) Inferred Resource is excluded from the table.
(3) Venetia (UG): The reserves decrease due to a change in the mine design for the K02 pipe which transfers material to the open pit portion of the mine.
(4) Namaqualand: Bottom screen cut off details for Indicated and Inferred Resource estimates are as follows:
1.00 mm BCO: Indicated – 1.1 M¢ (5.3 Mt at 20.9 cpht); Inferred – 2.2 M¢ (28.7 Mt at 7.6 cpht)
1.15 mm BCO: Indicated – 1.0 M¢ (13.9 Mt at 7.0 cpht); Inferred – 0.9 M¢ (41.6 Mt at 2.3 cpht)
1.47 mm BCO: Indicated – 20 k¢ (0.2 Mt at 13.0 cpht); Inferred – 0.3 M¢ (0.5 Mt at 60.2 cpht)
The sale of the Namaqualand Mines to the Trans Hex Group is in progress and expected to conclude in 2014.
(5) Voorspoed: The change is due to production. The Mining License was approved on 10 October 2006 and construction commenced in the same month after the
mine being dormant for nine decades. Mining is entirely based on Inferred Resources due to the uncertainty associated with current geoscientific knowledge.
Some studies to improve resource confidence were completed late in 2013.
(6) Kimberley Mines: Kimberley Mines Central Treatment Plant (CTP) was initially established to treat ore from both tailings resources and underground mines.
Subsequent to the conclusion of the sale of the underground operations to Petra Diamonds in May 2010, only tailings resources are being treated.
The Stockpile estimates at a 1.15mm BCO of 37 k¢ (299 kt at 12.4 cpht) Inferred Resource are excluded from the table.
Anglo American plc Annual Report 2013
245
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
DIAMONDS
estimates as at 31 December 2013
DEBSWANA DIAMOND COMPANY
The Diamond Reserve and Diamond Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results,
Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). The figures reported represent 100% of the Diamond
Reserves and Diamond Resources. Diamond Resources are quoted as inclusive of those used to calculate Diamond Reserves and must not be added to the
Diamond Reserves. Rounding of figures may cause computational discrepancies. In Botswana the mines are owned in equal share by De Beers Société
Anonyme and the Government of the Republic of Botswana through the Debswana Diamond Company joint venture.
Debswana – Operations
DIAMOND RESERVES
Damtshaa (OP)(1)
Kimberlite
Jwaneng (OP)(2)
Kimberlite
Letlhakane (OP)(3)
Kimberlite
Orapa (OP)(4)
Kimberlite
Attributable %
42.5
LOM
19
BCO
(mm)
1.65
Classification
42.5
18
1.47
42.5
4
1.65
42.5
16
1.65
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Debswana Diamond Company
42.5
multiple
TOTAL Kimberlite
Debswana – Operations
DIAMOND RESOURCES
Damtshaa (OP)(1)
Kimberlite
Attributable %
42.5
BCO
(mm)
1.65
Classification
Measured
Indicated
Measured and Indicated
Inferred
Jwaneng (OP)(2)
Kimberlite
Letlhakane (OP)(3)
Kimberlite
Orapa (OP)(4)
Kimberlite
42.5
1.47
Measured
Indicated
Measured and Indicated
Inferred
42.5
1.65
Measured
Indicated
Measured and Indicated
Inferred
42.5
1.65
Measured
Indicated
Measured and Indicated
Inferred
Debswana Diamond Company
42.5
multiple
TOTAL Kimberlite
Measured
Indicated
Measured and Indicated
Inferred
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
Treated Tonnes
Recovered Grade
Saleable Carats
2013
Mt
–
25.0
25.0
–
61.8
61.8
–
3.2
3.2
–
140.3
140.3
–
230.3
230.3
2013
Mt
–
29.3
29.3
20.2
–
61.8
61.8
258.6
–
15.3
15.3
3.2
–
155.5
155.5
349.7
–
261.9
261.9
631.7
2012
Mt
–
25.0
25.0
–
70.1
70.1
–
4.7
4.7
–
146.1
146.1
–
245.8
245.8
Tonnes
2012
Mt
–
29.3
29.3
20.5
–
70.1
70.1
259.9
–
27.4
27.4
8.3
–
167.3
167.3
349.8
–
294.1
294.1
638.5
2013
cpht
–
16.6
16.6
cpht
–
125.2
125.2
cpht
–
19.9
19.9
cpht
–
63.8
63.8
cpht
–
74.6
74.6
2013
cpht
–
21.5
21.5
24.3
cpht
–
119.5
119.5
104.1
cpht
–
28.4
28.4
17.0
cpht
–
70.9
70.9
72.5
cpht
–
74.4
74.4
83.6
2012
cpht
–
16.6
16.6
cpht
–
126.0
126.0
cpht
–
16.9
16.9
cpht
–
58.7
58.7
cpht
–
72.8
72.8
Grade
2012
cpht
–
21.5
21.5
23.6
cpht
–
120.4
120.4
103.5
cpht
–
28.6
28.6
27.2
cpht
–
71.2
71.2
72.5
cpht
–
74.0
74.0
83.0
2013
M¢
–
4.1
4.1
–
77.3
77.3
–
0.6
0.6
–
89.6
89.6
–
171.7
171.7
2013
M¢
–
6.3
6.3
4.9
–
73.8
73.8
269.3
–
4.3
4.3
0.6
–
110.3
110.3
253.4
–
194.8
194.8
528.2
2012
M¢
–
4.1
4.1
–
88.3
88.3
–
0.8
0.8
–
85.7
85.7
–
179.0
179.0
Carats
2012
M¢
–
6.3
6.3
4.8
–
84.3
84.3
269.1
–
7.8
7.8
2.2
–
119.1
119.1
253.5
–
217.6
217.6
529.7
Mining method: OP = Open Pit, UG = Underground.
LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.
Reported Diamond Reserves/Resources are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh).
Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes reflect the tonnage to be treated.
Recovered Grade is quoted as carats per hundred metric tonnes (cpht).
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
(1) Damtshaa: The increase in the Life of Mine is due to the inclusion of additional Inferred Resources in the mine plan. Higher grade Inferred Resources from the
BK/12 Kimberlite are mined for the first five years before including Probable Reserves from BK/9. The BK/9 and BK/12 Stockpile Inferred Resource estimates
at a 1.65mm BCO of 0.3 M¢ (1.9 Mt at13.4 cpht) are excluded from the table.
(2) Jwaneng: The decrease is primarily due to production. The 2013 Life of Mine Plan includes the Cut 8 estimates of 96 Mt of ore to be treated containing an
estimated 113 M¢ (North, Centre and South pipes excluding the 4th pipe which is mined as part of waste stripping and stockpiled). Scheduled Inferred Resources
(below 401m) included in the Cut 8 estimates constitute 77% (86.7 M¢) of the estimated carats. The Jwaneng Resource Extension Project (JREP) is expected to
increase the resource confidence at depth and upgrade a significant portion of Inferred Resources to Indicated. The DK/2 Stockpile estimates at a 1.47mm BCO,
consisting of 1.1 M¢ (0.8 Mt at 138.6 cpht) Indicated Resources and 4.4 M¢ (10.0 Mt at 43.7 cpht) Inferred Resources are excluded from the table.
(3) Letlhakane: The decrease in the Kimberlite resources is due to depletion. Higher anticipated plant recoveries result in the slightly higher TMR reserve grade than
resource grade. DK/1 and DK/2 Stockpile estimates at a 1.65mm BCO of 0.6 M¢ (3.5 Mt at 16.9 cpht) Inferred Resource are excluded from the table.
(4) Orapa: The decrease in treated tonnes is due to production. The decrease in LOM tonnes reflects the temporary exclusion of Cut 3 pending further studies
incorporating additional information from the Orapa Resource Extension Program (OREP) which is expected to increase resource confidence at depth resulting
in an upgrade of a large portion of Inferred Resources to Indicated. The increase in saleable carats is due to reduced plant losses (improved plant factors) and
mine design changes. The AK/1 Stockpile estimates at a1.65mm BCO of 6.2 M¢ (13.6 Mt at 45.7 cpht) Inferred Resource are excluded from the table.
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2013 at the following operations: Orapa.
246
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES
DIAMONDS
estimates as at 31 December 2013
Debswana – Operations
DIAMOND RESOURCES
Jwaneng
Tailings Mineral Resource
Attributable %
42.5
BCO
(mm)
1.47
Classification
Measured
Indicated
Measured and Indicated
Inferred
Orapa
Tailings Mineral Resource
42.5
1.65
Measured
Indicated
Measured and Indicated
Inferred
Debswana Diamond Company
42.5
multiple
TOTAL Tailings Mineral Resource
Measured
Indicated
Measured and Indicated
Inferred
Debswana – Projects
DIAMOND RESERVES
Letlhakane(3)
Tailings Mineral Resources
Attributable %
42.5
LOM
27
BCO
(mm)
1.15
BCO
(mm)
1.15
Classification
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred
Debswana – Projects
DIAMOND RESOURCES
Letlhakane(3)
Tailings Mineral Resources
Attributable %
42.5
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
Tonnes
2012
Mt
–
–
–
–
–
–
–
–
–
–
–
–
2013
cpht
–
–
–
45.9
cpht
–
–
–
58.2
cpht
–
–
–
55.8
Grade
2012
cpht
–
–
–
–
cpht
–
–
–
–
cpht
–
–
–
–
2013
M¢
–
–
–
17.0
–
–
–
86.1
–
–
–
103.1
Carats
2012
M¢
–
–
–
–
–
–
–
–
–
–
–
–
Treated Tonnes
Recovered Grade
Saleable Carats
2012
Mt
–
–
–
Tonnes
2012
Mt
–
–
–
–
2013
cpht
–
25.4
25.4
2013
cpht
–
24.8
24.8
27.1
2012
cpht
–
–
–
Grade
2012
cpht
–
–
–
–
2013
M¢
–
8.9
8.9
2013
M¢
–
8.6
8.6
13.4
2012
M¢
–
–
–
Carats
2012
M¢
–
–
–
–
2013
Mt
–
–
–
37.0
–
–
–
147.8
–
–
–
184.9
2013
Mt
–
34.9
34.9
2013
Mt
–
34.9
34.9
49.6
LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.
Reported Diamond Reserves/Resources are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh).
Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes reflect the tonnage to be treated.
Recovered Grade is quoted as carats per hundred metric tonnes (cpht).
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
Anglo American plc Annual Report 2013
247
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
DIAMONDS
estimates as at 31 December 2013
NAMDEB HOLDINGS
The Diamond Reserve and Diamond Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results,
Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). The figures reported represent 100% of the Diamond
Reserves and Diamond Resources. Diamond Resources are quoted as inclusive of those used to calculate Diamond Reserves and must not be added to the
Diamond Reserves. Rounding of figures may cause computational discrepancies. As of 1 October 2011 Namdeb Holdings (Pty) Ltd (NDBH), a 50/50 joint
venture between De Beers Société Anonyme and the Government of the Republic of Namibia, holds the licences for both the land and sea operations. In
addition, NDBH holds 100% ownership of the operating companies, Namdeb Diamond Corporation (Pty) Ltd and De Beers Marine Namibia (Pty) Ltd.
Treated Tonnes
Recovered Grade
Saleable Carats
2013
kt
–
1,076
1,076
–
3,124
3,124
–
36,711
36,711
–
40,911
40,911
2013
k m²
–
69,642
69,642
2013
kt
–
–
–
10,955
–
2,269
2,269
127
–
2,491
2,491
29,032
2012
kt
–
1,808
1,808
–
1,023
1,023
–
34,994
34,994
–
37,825
37,825
Area
2012
k m²
–
57,033
57,033
Tonnes
2012
kt
–
–
–
10,955
–
1,502
1,502
1,959
–
4,718
4,718
54,034
–
21,270
21,270
283,369
–
93,347
93,347
45,658
–
119,377
119,377
369,141
–
17,597
17,597
281,564
–
109,725
109,725
44,997
–
133,542
133,542
393,509
2013
cpht
–
13.01
13.01
cpht
–
0.51
0.51
cpht
–
0.95
0.95
cpht
–
1.23
1.23
2012
cpht
–
12.78
12.78
cpht
–
7.26
7.26
cpht
–
1.03
1.03
cpht
–
1.76
1.76
2013
k¢
–
140
140
–
16
16
–
349
349
–
505
505
2012
k¢
–
231
231
–
74
74
–
359
359
–
664
664
Recovered Grade
Saleable Carats
2013
cpm²
–
0.08
0.08
2013
cpht
–
–
–
6.75
cpht
–
7.05
7.05
0.79
cpht
–
11.20
11.20
7.88
cpht
–
0.81
0.81
1.18
cpht
–
0.54
0.54
0.35
cpht
–
0.93
0.93
1.77
2012
cpm²
–
0.09
0.09
Grade
2012
cpht
–
–
–
6.75
cpht
–
7.39
7.39
2.40
cpht
–
11.62
11.62
4.12
cpht
–
1.01
1.01
1.09
cpht
–
0.50
0.50
0.35
cpht
–
1.03
1.03
1.59
2013
k¢
–
5,504
5,504
2013
k¢
–
–
–
740
–
160
160
1
–
279
279
2,289
–
172
172
3,344
–
503
503
162
–
1,114
1,114
6,536
2012
k¢
–
4,935
4,935
Carats
2012
k¢
–
–
–
740
–
111
111
47
–
548
548
2,224
–
178
178
3,082
–
544
544
157
–
1,381
1,381
6,250
Namdeb Holdings – Terrestrial Operations
DIAMOND RESERVES
Elizabeth Bay (OC)(1)
Aeolian and Marine
Attributable %
42.5
LOM
5
BCO
(mm)
1.40
Classification
Mining Area 1 (OC)(2)
Beaches
Orange River (OC)(3)
Fluvial Placers
Namdeb Holdings
TOTAL Terrestrial
42.5
10
2.00
42.5
10
3.00
42.5
multiple
Namdeb Holdings – Offshore Operations
DIAMOND RESERVES
Attributable %
Atlantic 1 (MM)(4)
42.5
Marine Placer
LOM
15
BCO
(mm)
1.47
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Classification
Proved
Probable
Total
Namdeb Holdings – Terrestrial Operations
DIAMOND RESOURCES
Attributable %
Bogenfels (OC)(5)
42.5
Pocket Beach and Deflation
BCO
(mm)
multiple( 2)
Classification
Measured
Indicated
Measured and Indicated
Inferred
Douglas Bay (OC)
Aeolian and Deflation
Elizabeth Bay (OC)
Aeolian, Marine and Deflation
Mining Area 1 (OC)(2)
Beaches
Orange River (OC)
Fluvial Placers
Namdeb Holdings
TOTAL Terrestrial
42.5
1.40
Measured
Indicated
Measured and Indicated
Inferred
42.5
1.40
Measured
Indicated
Measured and Indicated
Inferred
42.5
2.00
Measured
Indicated
Measured and Indicated
Inferred
42.5
3.00
Measured
Indicated
Measured and Indicated
Inferred
42.5
multiple
Measured
Indicated
Measured and Indicated
Inferred
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
248
Anglo American plc Annual Report 2013
ORE RESERVES AND MINERAL RESOURCES DIAMONDS
estimates as at 31 December 2013
Namdeb Holdings – Offshore Operations
DIAMOND RESOURCES
Attributable %
Atlantic 1 (MM)(4)
42.5
Marine
BCO
(mm)
1.47
Classification
Measured
Indicated
Measured and Indicated
Inferred
Midwater (MM)(6)
Aeolian, Fluvial and Marine
Namdeb Holdings
TOTAL Offshore
42.5
2.00
Measured
Indicated
Measured and Indicated
Inferred
42.5
multiple
2013
k m²
–
126,801
126,801
1,042,516
–
2,533
2,533
12,720
Area
2012
k m²
–
114,190
114,190
1,028,119
–
1,339
1,339
11,336
Measured
Indicated
Measured and Indicated
Inferred
–
129,334
129,334
1,055,236
–
115,529
115,529
1,039,455
2013
cpm²
–
0.09
0.09
0.09
cpm²
–
0.19
0.19
0.07
cpm²
–
0.09
0.09
0.09
Grade
2012
cpm²
–
0.09
0.09
0.09
cpm²
–
0.25
0.25
0.09
cpm²
–
0.10
0.10
0.09
2013
k¢
–
11,349
11,349
90,044
–
492
492
930
–
11,841
11,841
90,974
Carats
2012
k¢
–
10,773
10,773
89,637
–
330
330
1,031
–
11,103
11,103
90,668
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
Mining method: OC = Open Cast, MM = Marine Mining.
LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.
Reported Diamond Reserves/Resources are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh).
Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes reflect the tonnage to be treated.
Recovered Grade is quoted as carats per hundred metric tonnes (cpht) or as carats per square meter (cpm²). k m² = thousand square metres.
Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
(1) Elizabeth Bay: The decrease is primarily due to production.
(2) Mining Area 1: The increase in treated tonnes is due to inclusion of lower grade material included in the 2013 Life of Mine Plan as a result of geological contact
changes and a resource model update. The decrease in grade (and carats) is due to depletion of high grade material, the inclusion of the lower grade material and
the exclusion of high grade material currently situated under mine infrastructure.
Incremental Inferred Resource development is dependent on beach accretion for drilling and sampling. Beach accretion is a process through which an existing
beach is built seaward to extend into areas previously submerged by sea water. The accretion is accomplished by sand build-up derived from current mining and
dredging activities. The Overburden Stockpile estimates at a 2.00mm BCO of 33 k¢ (9,227 kt at 0.36 cpht) Inferred Resource, the DMS and Recovery Tailings
Resource estimates at a 2.00mm BCO of 751 k¢ (64,427 kt at 1.17 cpht) Inferred Resource are excluded from the table.
(3) Orange River: The mining transition from Daberas to Sendelingsdrif will be completed within the next three years.
(4) Atlantic 1: The increase in reserve carats is due to new information allowing conversion of additional resources to reserves and a faster mining rate which allows
a lowering of the cut-off grade. Due to the high costs associated with resource development, Indicated Resources are developed on an annual basis, resulting in a
24 month rolling reserve.
(5) Bogenfels: Bottom screen cut off details for Inferred Resource estimates are as follows:
1.40 mm BCO: 510 k¢ (7,910 kt at 6.47 cpht);
2.00 mm BCO: 230 k¢ (3,040 kt at 7.50 cpht).
(6) Midwater: That part of the offshore component of the Diamond Area No. 1 (DA1) mining license covered by water depths of 30m and more below mean
sea-level.
Operations
DBCi – Snap Lake
DBCi – Victor
DBCM – Venetia
DBCM – Voorspoed
DBCM – Kimberly Mines
Debswana – Damtshaa
Debswana – Jwaneng
Debswana – Letlhakane (Kimberlite)
Debswana – Orapa
Namdeb Terrestrial – Elizabeth Bay
Namdeb Terrestrial – Mining Area 1
Namdeb Terrestrial – Orange River
Namdeb Offshore – Atlantic 1
LOM Plan
(years)
15
5
31
8
5
19
18
4
16
5
10
10
15
LOM Plan
Final Year
2028
2018
2044
2021
2018
2032
2031
2017
2029
2018
2023
2023
2028
Mining Licence
Last Year
2021 / 2023
2024
2038
2023
2040
2029
2029
2029
2029
2020
2020
2020
2020
% Inferred carats
in LOM Plan
66%
31%
22%
100%
100%
43%
64%
59%
49%
50%*
50%*
50%*
87%**
* Elizabeth Bay, Mining Area 1 and Orange River are integrated into a single mine plan.
** Assumes that pre-production sampling will upgrade Inferred Resources to Indicated Resources prior to mining.
Anglo American plc Annual Report 2013
249
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
OTHER INFORMATION
ATTRIBUTABLE RETURN ON CAPITAL EMPLOYED (ROCE) DEFINITION
Attributable ROCE Definitions:
• Return on capital employed is a ratio that measures the efficiency and profitability of a company’s capital investments. It displays how effectively assets are
generating profit for the size of invested capital.
• ROCE is calculated as underlying operating profit divided by capital employed.
• Adjusted ROCE calculation is underlying operating profit divided by adjusted capital employed. Adjusted capital employed is net assets excluding net debt
and financial asset investments, adjusted for remeasurements of a previously held equity interest as a result of business combinations and impairments
incurred in the current year and reported since 10 December 2013.
• Attributable ROCE is the return on the adjusted capital employed attributable to equity shareholders of Anglo American, and therefore excludes the portion
of underlying operating profit and capital employed attributable to non-controlling interests in operations where Anglo American has control but does not
hold 100% of the equity. Joint ventures, joint operations and associates are included in their proportionate interest and in line with appropriate accounting
treatment.
Adjustments
• Structural adjustments for the De Beers acquisition assuming ownership of 85% of De Beers for 1 January 2012 and disposals from Anglo American Sur
assuming ownership of 50.1% from the start of 2012 will be included;
• The De Beers fair value uplift which resulted from the revaluing upward of Anglo American plc’s existing 45% share of De Beers will be removed from
opening 2012 capital employed onwards;
• Impairments announced after 10 December 2013 are not removed from total capital employed;
• The impairments and disposals which will be removed from opening capital employed from 2012 and onwards, on a post-tax basis, are:
– Pebble loss on exit
– Michiquillay impairment
– Barro Alto furnace write-down consequent on the rebuild of both furnaces (not the impairment)
– Khomanani, Khuseleka 2 and Union Mine North declines, plus 2012 Platinum project asset scrappings
– Isibonelo and Kleinkopje impairments.
In 2012, Anglo American took an impairment on Minas-Rio and asset scrappings in Platinum. These have been removed from the 2012 opening capital
employed balance, on a post-tax basis, for consistency.
Attributable ROCE is based on realised prices and foreign exchange rates, and includes the above adjustments to capital employed.
The 2013 attributable operating profit of $4,369 million is the underlying operating profit attributable to equity shareholders of Anglo American plc.
Reconciliation of total capital employed to Average Attributable Capital Employed
US$ billion
Net assets
Less: financial asset investments
Add: net debt
Less: De Beers fair value adjustment on 45% pre-existing stake(1)
Total capital employed
Less:
Impairments taken in 2012(2)
Impairments taken in 2013 that had been announced before 10 December 2013(3)
Add:
2013 impairment where no benefit taken for attributable ROCE purposes(4)
Structural assumptions – De Beers increase holding to a subsidiary(5)
Total capital employed
Less: non-controlling interest capital employed
Structural assumptions – Remove non-controlling interest relating to De Beers consolidation(5)
Structural assumptions – Remove non-controlling interest relating to Anglo American Sur disposal(6)
Closing attributable non-controlling interest adjustment
Closing attributable capital employed
Average attributable capital employed
31 December
2013
37
(2)
11
(1)
45
31 December
2012
44
(2)
9
(2)
48
1 January
2012
43
(3)
1
–
41
–
–
1
–
46
(7)
–
–
(7)
39
39
–
(1)
–
–
46
(7)
–
–
(7)
40
38
(5)
(1)
–
8
43
(4)
(1)
(1)
(6)
37
–
(1) Removal of the accounting fair value uplift adjustment on the Group’s existing 45% holding following acquisition of control on 16 August 2012.
(2) 2012 impairments (post-tax): Minas-Rio ($4.0 billion) and Platinum operations impairment ($0.6 billion).
(3) 2013 impairments and disposals (post-tax) reducing capital employed: Barro Alto furnace ($0.2 billion), Platinum portfolio review ($0.3 billion), Michiquillay ($0.3 billion), Isibonelo and
Kleinkopje ($0.2 billion), disposal of Amapá ($0.2 billion) and Pebble ($0.3 billion).
(4) 2013 impairments (post-tax) not removed from capital employed: Barro Alto impairment ($0.5 billion) and Foxleigh ($0.2 billion).
(5) De Beers has been consolidated into the Group’s results since its acquisition on 16 August 2012. An adjustment has been made to the 2012 capital employed total to increase to 100% of
De Beers for the full year (net of fair value uplift) and the non-controlling interest of 15% stripped out within NCI capital employed, so that 2012 and 2013 ROCE figures are comparable.
(6) The disposal of 25.4% of Anglo American Sur in 2012. An adjustment has been made to the 2012 non-controlling interest capital employed to reduce the holding in Anglo American Sur to 50.1%
for the full year, so that 2012 and 2013 ROCE figures are comparable.
250
Anglo American plc Annual Report 2013
OTHER INFORMATION
PRODUCTION STATISTICS
The figures below include the entire output of consolidated entities and the Group’s attributable share of joint arrangements and associates where applicable,
except for Collahuasi in the Copper segment and De Beers which are quoted on a 100% basis.
Iron Ore and Manganese segment (tonnes)
Kumba Iron Ore
Lump
Fines
Total Kumba production
Sishen
Kolomela
Thabazimbi
Total Kumba production
Kumba sales volume
RSA export iron ore
RSA domestic iron ore
Samancor
Manganese ore(1)
Manganese alloys(1)(2)
Samancor sales volume
Manganese ore
Manganese alloys
Coal (tonnes)
Metallurgical Coal segment
Australia
Metallurgical – Export Coking
Metallurgical – Export PCI
Thermal – Export
Thermal – Domestic
Total Australian Metallurgical Coal segment coal production
Canada
Metallurgical – Export Coking
Metallurgical – Export PCI
Total Metallurgical Coal segment coal production
Australia
Callide
Capcoal
Dawson
Drayton
Foxleigh
Jellinbah
Moranbah North
Total Australian Metallurgical Coal segment coal production
Canada
Peace River Coal
Total Metallurgical Coal segment coal production
Weighted average achieved FOB prices
Metallurgical – Export(3) US$/tonne
Thermal – Export US$/tonne
Thermal – Domestic US$/tonne
Sales volumes
Metallurgical – Export(4)
Thermal – Export
Thermal – Domestic
Thermal Coal segment
South Africa
Thermal – Export
Thermal – Domestic (Eskom)
Thermal – Domestic (Other)
Metallurgical – Domestic
Total South African Thermal Coal production
Colombia
Thermal – Export
Total Thermal Coal segment coal production
2013
2012
25,496,000
16,877,100
42,373,100
30,938,500
10,808,700
625,900
42,373,100
26,580,500
16,484,600
43,065,100
33,696,700
8,544,900
823,500
43,065,100
39,076,000
4,631,400
39,657,000
4,683,000
3,301,700
251,100
3,347,800
198,400
3,262,100
248,700
3,212,400
236,000
11,711,600
5,260,200
6,264,000
6,239,400
29,475,200
10,484,700
5,802,700
6,045,900
6,924,600
29,257,900
1,663,800
20,000
31,159,000
1,376,900
–
30,634,800
6,317,800
6,061,400
3,985,700
3,710,700
1,966,600
2,516,500
4,916,500
29,475,200
7,464,000
6,022,400
4,593,500
3,663,300
1,896,000
2,073,200
3,545,500
29,257,900
1,683,800
31,159,000
1,376,900
30,634,800
140
84
39
178
96
37
19,044,500
6,371,600
6,125,400
17,413,000
6,042,600
6,920,900
17,031,300
33,567,400
5,992,000
–
56,590,700
17,132,100
33,706,400
6,219,100
74,100
57,131,700
11,001,500
67,592,200
11,548,800
68,680,500
(1) Saleable production.
(2) Production includes medium carbon ferro-manganese.
(3) Within export coking and export PCI coals there are different grades of coal with different weighted average prices compared to benchmark.
(4)
Includes both hard coking coal and PCI sales volumes.
Anglo American plc Annual Report 2013
251
Other information
OTHER INFORMATION PRODUCTION STATISTICS
Coal (tonnes) (continued)
Thermal Coal segment (continued)
South Africa
Goedehoop
Greenside
Isibonelo
Kleinkopje
Kriel
Landau
Mafube
New Denmark
New Vaal
Zibulo
Total South African Thermal Coal production
Colombia
Carbones del Cerrejón
Total Thermal Coal segment coal production
Weighted average achieved FOB prices
South Africa
Thermal – Export US$/tonne
Thermal – Domestic US$/tonne
Colombia
Thermal – Export US$/tonne
Sales volumes
South Africa
Thermal – Export
Thermal – Domestic
Colombia
Thermal – Export
Total Thermal Coal sales
Copper segment(1)
Collahuasi
100% basis (Anglo American share 44%)
Ore mined
Ore processed
Ore grade processed
Production
Total copper production for Collahuasi
Anglo American’s share of copper production for Collahuasi(4)
Anglo American Sur
Los Bronces mine(5)
Ore mined
Marginal ore mined
Ore processed
Ore grade processed
Production
Production total
El Soldado mine(5)
Ore mined
Ore processed
Ore grade processed
Production
Production total
Chagres smelter(5)
Ore smelted
Production
Total copper production for Anglo American Sur
Oxide
Sulphide
Oxide
Sulphide
Copper cathode
Copper in concentrate
Sulphide
Sulphide
Copper cathode
Copper in sulphate
Copper in concentrate
Sulphide
Sulphide
Copper cathode
Copper in concentrate
tonnes
tonnes
tonnes
% ASCu(2)
% TCu(3)
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% TCu
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% TCu
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
2013
2012
4,680,800
3,269,500
5,066,800
3,997,200
8,102,700
4,084,000
1,825,400
3,586,900
17,105,700
4,871,700
56,590,700
4,859,900
2,883,200
5,399,200
3,765,500
8,096,900
4,272,300
1,804,100
3,401,200
17,623,300
5,026,100
57,131,700
11,001,500
67,592,200
11,548,800
68,680,500
77
19
73
92
21
89
17,501,800
39,044,100
17,150,600
40,018,000
11,152,500
67,698,400
10,925,600
68,094,200
80,955,500
7,028,900
47,559,000
0.81
1.07
28,400
416,100
444,500
195,600
56,938,200
17,221,300
51,960,500
0.83
37,700
600
378,000
416,300
8,576,700
7,312,500
0.88
1,100
50,400
51,500
149,800
145,200
467,800
74,647,600
8,081,400
43,618,600
0.88
0.76
36,800
245,300
282,100
124,100
49,766,500
17,854,200
45,854,800
0.84
40,800
2,500
322,000
365,300
8,544,500
7,782,300
0.83
2,000
51,800
53,800
142,900
138,700
419,100
(1) Excludes Anglo American Platinum’s copper production.
(2) ASCu = acid soluble copper.
(3) TCu = total copper.
(4) Anglo American’s share of Collahuasi production is 44%.
(5) Anglo American previously held 74.5% of Anglo American Sur; as from 24 August 2012, it held 50.1%. Production is stated at 100% as Anglo American continues to consolidate Anglo American Sur.
252
Anglo American plc Annual Report 2013
OTHER INFORMATION PRODUCTION STATISTICS
Copper segment (continued)
Anglo American Norte
Mantos Blancos mine
Ore processed
Ore grade processed
Production
Production total
Mantoverde mine
Ore processed
Ore grade processed
Production
Total copper production for Anglo American Norte
Total Copper segment copper production
Total attributable copper production(3)
Attributable sales volumes
Sulphide
Sulphide
Copper cathode
Copper in concentrate
Oxide
Marginal ore
Oxide
Marginal ore
Copper cathode
Nickel segment
Barro Alto
Ore mined
Ore processed
Ore grade processed
Production
Codemin
Ore mined
Ore processed
Ore grade processed
Production
Loma de Níquel
Ore mined
Ore processed
Ore grade processed
Production
Total Nickel segment nickel production(4)
Sales volumes
Niobium and Phosphates segment
Niobium
Ore mined
Ore processed
Ore grade processed
Production
Phosphates
Concentrate
Phosphoric acid
Fertiliser(5)
Dicalcium phosphate (DCP)
Platinum segment
Refined production
Platinum
Palladium
Rhodium
Copper refined(6)
Copper matte(6)
Nickel refined(6)
Nickel matte(6)
Gold
Equivalent refined
Platinum
4E Built-up head grade(7)
Diamonds segment (De Beers)
Carats recovered 100% basis
Debswana
Namdeb Holdings
De Beers Consolidated Mines
De Beers Canada
Total carats recovered
2013
2012
4,329,600
0.65
29,500
25,100
54,600
10,385,200
8,280,400
0.57
0.25
56,800
111,400
1,023,700
774,800
768,200
4,393,200
0.64
29,200
25,000
54,200
10,460,400
8,671,700
0.63
0.25
62,300
116,500
817,700
659,700
643,600
1,999,000
1,616,300
1.82
25,100
6,800
602,400
1.71
9,300
–
–
–
–
34,400
33,800
1,844,400
1,422,100
1.94
21,600
–
581,100
1.81
9,600
432,900
767,400
1.40
8,100
39,300
40,000
1,228,809
963,118
1.16
4,500
933,203
973,484
1.21
4,400
1,406,300
317,100
1,199,000
159,600
1,357,100
299,800
1,127,600
150,000
2,379,500
1,380,800
294,700
8,300
5,800
16,800
5,800
100,000
2,378,600
1,395,900
310,700
11,400
–
17,700
–
105,200
tonnes
% ICu(1)
tonnes
tonnes
tonnes
tonnes
tonnes
% ASCu(2)
% ASCu(2)
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% Ni
tonnes
tonnes
tonnes
% Ni
tonnes
tonnes
tonnes
% Ni
tonnes
tonnes
tonnes
tonnes
tonnes
% Nb
tonnes
tonnes
tonnes
tonnes
tonnes
troy ounces
troy ounces
troy ounces
tonnes
tonnes
tonnes
tonnes
troy ounces
troy ounces
gram/tonne milled
2,320,400
3.26
2,219,100
3.20
22,707,000
1,762,000
4,724,000
1,966,000
31,159,000
20,216,000
1,667,000
4,432,000
1,560,000
27,875,000
(1)
ICu = insoluble copper (total copper less acid soluble copper).
(2) ASCu = acid soluble copper.
(3) Difference between total copper production and attributable copper production arises from Anglo American’s 44% interest in Collahuasi.
(4) Excludes Anglo American Platinum’s nickel production.
(5) 2012 fertiliser production restated to reflect the change in production quantification methodology in the acidulation plant at Cubatão.
(6) Nickel and copper refined through third parties is now shown as production of nickel matte and copper matte. Nickel and copper matte, per the table, reflect matte sold to a third party in Q4 2013
from 2012 and 2013 production stockpiles.
(7) 4E: the grade measured as the combined content of the four most valuable precious metals: platinum, palladium, rhodium and gold.
Anglo American plc Annual Report 2013
253
Other information
QUARTERLY PRODUCTION STATISTICS
31 December
2013
30 September
2013
30 June
2013
31 March
2013
31 December
2012
31 December 2013 v
30 September 2013
31 December 2013 v
31 December 2012
Quarter ended
% Change (Quarter ended)
19%
7%
21%
–
(13)%
(5)%
(4)%
2%
(16)%
(26)%
3%
4%
7%
9%
(8)%
4%
16%
(2)%
(31)%
367%
6%
(67)%
(21)%
(16)%
25%
–
8%
3%
6%
(6)%
(17)%
(1)%
(11)%
(23)%
24%
24%
38%
20%
2%
(2)%
4%
(8)%
(28)%
–
33%
–
44%
25%
Iron Ore and Manganese segment
(tonnes)
Iron ore
Manganese ore(1)
Manganese alloys(1)(2)
Metallurgical Coal segment (tonnes)
Metallurgical – Export coking coal
Metallurgical – Export PCI
Thermal – Export
Thermal – Domestic
Thermal Coal segment (tonnes)
Thermal – Export (RSA)
Thermal – Domestic Eskom
Thermal – Domestic other
Thermal – Export (Colombia)
11,285,700
846,000
66,200
9,474,600
788,100
54,800
11,277,800
864,200
72,800
10,335,000
803,400
57,300
9,012,500
846,800
61,200
3,473,200
1,260,200
1,584,700
1,688,800
3,465,500
1,446,400
1,672,400
1,752,300
3,111,900
1,283,800
1,513,100
1,725,300
3,324,800
1,289,800
1,493,800
1,073,000
4,602,000
7,617,800
1,234,100
3,290,300
4,504,900
9,053,200
1,665,300
3,184,900
4,015,200
8,766,600
1,573,800
3,014,300
3,909,200
8,129,800
1,518,800
1,512,000
3,387,000
1,193,000
1,689,400
2,025,300
4,659,100
8,560,600
1,594,500
2,661,700
Copper segment (tonnes)(3)(4)
214,400
207,100
182,900
170,400
172,900
Nickel segment (tonnes)(5)
10,200
9,500
8,500
6,200
7,400
Niobium and Phosphates segment
(tonnes)
Niobium
Phosphates (fertiliser)(6)
Platinum segment
Platinum (troy ounces)
Palladium (troy ounces)
Rhodium (troy ounces)
Copper refined (tonnes)
Copper matte (tonnes)
Nickel refined (tonnes)
Nickel matte (tonnes)
Gold (troy ounces)
Equivalent refined platinum (troy ounces)
Diamonds segment (De Beers)
(diamonds recovered – carats)
100% basis
Diamonds
1,200
299,000
1,100
326,300
1,100
300,500
1,100
273,200
1,000
294,200
692,100
428,200
83,500
1,800
1,400
5,200
100
26,700
520,300
666,400
369,300
84,900
2,600
300
4,900
300
33,700
622,600
581,800
319,700
69,800
1,900
4,100
3,400
5,400
16,300
594,500
439,200
263,600
56,500
2,000
–
3,300
–
23,300
583,000
703,800
413,300
91,200
2,500
–
3,900
–
18,600
416,000
(1) Saleable production.
(2) Production includes medium carbon ferro-manganese.
(3) Excludes Platinum copper production.
(4) Copper segment attributable production.
(5) Excludes Platinum nickel production.
(6) 2012 fertiliser production restated to reflect the change in production quantification methodology in the acidulation plant at Cubatão.
254
Anglo American plc Annual Report 2013
9,132,000
7,732,000
7,931,000
6,364,000
8,051,000
18%
13%
OTHER INFORMATION NON-FINANCIAL DATA
Safety(1)
Work-related fatalities
Fatal-injury frequency rate (FIFR)(2)
Total recordable case frequency rate (TRCFR)(3)
Lost time injury frequency rate (LTIFR)(4)
Lost time injury severity rate (LTISR)(5)
Occupational health(1)
New cases of occupational disease (NCOD)(6)
Occupational disease incidence rate (per 200,000 hours) (ODIR)
Environment(1)
Total CO2 emissions (Mt CO2e)(7)
Total energy consumed (million GJ)(8)
Total water consumed (million m3)(9)
Human Resources(1)(10)
Women in management (%)(11)
Historically Disadvantaged South Africans in management (%)(12)
Resignations (%)(13)
Redundancies (%)(14)
Dismissals (%)(15)
Other reasons for leaving (%)(16)
Social(1)
CSI spend (total in US$ million)(17)
CSI spend (% of pre-tax profit)
Procurement: BEE spend (rand billion)
Businesses supported through enterprise development initiatives
Jobs created/maintained through enterprise development programmes
2013
2012
2011
2010
2009
14
0.008
1.08
0.49
177
209
0.217
17
106
201
23
64
2.0
4.1
1.5
2.7
13
0.007
1.29
0.58
214
174
0.171
18
113
156
23
62
2.4
0.6
1.4
2.4
17
0.009
2.01
0.64
220
197
0.205
19
102
124
22
51
2.7
1.4
1.1
0.3
15
0.008
1.44
0.64
229
268
0.284
20
100
125
21
46
2.4
2.1
1.3
2.8
20
0.010
1.81
0.76
226
489
0.483
19
106
137
19
46
2.4
3.8
2.0
4.9
127
2
37.6
48,111
76,543
146
3
25.8
40,217
64,927
129
1
23.3
38,681
47,070
112
1
20.9
9,392
17,200
83
2
23.5
3,720
12,982
(1) The data include wholly owned subsidiaries and joint ventures over which Anglo American has management control, and does not include independently managed operations such as
Collahuasi, Carbones del Cerrejón and Samancor. De Beers data are included from September 2012. Divested businesses are included up until the point of divestment.
(2) FIFR is calculated as the number of fatal injuries to employees or contractors per 200,000 hours worked.
(3) TRCFR is the number of fatal injuries, lost time injuries and medical treatment cases for employees or contractors per 200,000 hours.
(4) LTIFR is 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 the routine functions of his/her job,
on the next calendar day after the day of the injury, whether a scheduled workday or not.
(5) LTISR is the number of days lost due to lost-time injuries per 200,000 hours worked.
(6) NCOD is the sum of occupational diseases due to asbestosis, NIHL, silicosis, coal-workers’ pneumoconiosis, chronic obstructive airways disease, occupational tuberculosis, occupational
asthma, HAVs, musculoskeletal disorders, dermatitis, occupational cancers, platinosis, malaria, venous thrombo-embolism and other occupational diseases.
(7) CO2e emissions data published in 2012 has been revised due to change requests made by Kumba Iron Ore, Copper, and Niobium and Phosphates subsequent to publication of the
2012 annual report.
(8) Total amount of energy consumed is the sum of total energy from electricity purchased, total energy from fossil fuels and total energy from renewable fuels. 2012 data revised due to change
requests made by Kumba Iron Ore, Copper, and Niobium and Phosphates subsequent to publication of the 2012 annual report.
(9) Total amount of water used for primary activities is the total new or make-up water entering the operation and used for the operation’s primary operational activities. 2012 data revised due to
change requests made by Kumba Iron Ore and Niobium and Phosphates subsequent to publication of the 2012 annual report.
(10) Excludes Other Mining and Industrial.
(11) Women in management is the percentage of female managers as a percentage of all managers in the workforce excluding contractors.
(12) Historically Disadvantaged South Africans in management is the percentage of managers at Anglo American in South Africa who are ‘Historically Disadvantaged South Africans’.
(13) The number of people who resigned as a percentage of the total workforce excluding contractors.
(14) The number of people who have been retrenched as a percentage of total workforce excluding contractors.
(15) The number of people who have been dismissed or have resigned to avoid dismissal, as a percentage of total workforce excluding contractors.
(16) The number of people who left for reasons other than those shown above, for example retirement, ill health and death, as a percentage of total workforce excluding contractors.
(17) CSI spend is the sum of donations for charitable purposes and community investment (which includes cash and in-kind donations and staff time) as well as investments in commercial initiatives
with public benefit (such as enterprise development).
Anglo American plc Annual Report 2013
255
Other informationOTHER INFORMATION
THE BUSINESS – AN OVERVIEW
as at 31 December 2013
Iron Ore and Manganese
Kumba Iron Ore (South Africa)
Sishen Iron Ore Company(1)
Minas-Rio (Brazil)
LLX Minas-Rio (Brazil)(2)
Samancor (South Africa and Australia)
Metallurgical Coal
100% owned
Australia
Callide
Canada
Peace River Coal
Thermal Coal
100% owned
South Africa
Goedehoop
Greenside
Isibonelo
Kleinkopje
Landau
New Denmark
New Vaal
Copper
100% owned
Peru
Michiquillay
Chile
Mantos Blancos(4)
Mantoverde(4)
Nickel
100% owned
Brazil
Codemin
Barro Alto
Niobium and Phosphates
100% owned
Niobium
Anglo American Nióbio Brasil Limitada
Phosphates
Anglo American Fosfatos Brasil Limitada
Other interests
Australia
Capcoal
Dartbrook
Dawson
Drayton
Foxleigh
Moranbah North
Jellinbah
Australia – other
Dalrymple Bay Coal Terminal Pty Ltd
Newcastle Coal Shippers Pty Ltd
MBD Energy Ltd
Other interests
South Africa
Mafube
Phola plant
Kriel(3)
Zibulo(3)
South Africa – other
Richards Bay Coal Terminal
Colombia
Carbones del Cerrejón
Other interests
Chile
Chagres
El Soldado
Los Bronces
Collahuasi
Peru
Quellaveco
69.7%
73.9%
100%
49%
40%
Overall ownership:
100%
70%
83.3%
51%
88.2%
70%
88%
23.3%
25.4%
17.6%
19.2%
Overall ownership:
100%
50%
50%
73%
73%
24.2%
33.3%
Overall ownership:
100%
50.1%
50.1%
50.1%
44%
81.9%
Overall ownership:
100%
Overall ownership:
100%
(1) The 73.9% interest in Sishen Iron Ore Company (SIOC) is held indirectly through Kumba Iron Ore, in which the Group has a 69.7% interest. A further 3.1% interest in SIOC is held by the Kumba
Envision Trust for the benefit of participants in Kumba’s broad based employee share scheme for non-managerial Historically Disadvantaged South African employees. The Trust meets the
definition of a subsidiary under IFRS, and is therefore consolidated by Kumba Iron Ore. Consequently the effective interest in SIOC included in the Group’s results is 53.7%.
(2) Owns the port of Açu currently under construction.
(3) Kriel and Zibulo form part of the Anglo American Inyosi Coal Black Economic Empowerment (BEE) company of which Anglo American owns 73%.
(4) Non-controlling interest of 0.018%.
256
Anglo American plc Annual Report 2013
OTHER INFORMATION OTHER INFORMATION THE BUSINESS – AN OVERVIEW
Platinum
100% owned
South Africa
Bathopele Mine
Khomanani Mine
Thembelani Mine
Khuseleka Mine
Siphumelele Mine
Tumela Mine
Dishaba Mine
Mogalakwena Mine
Western Limb Tailings Retreatment
Waterval Smelter (including converting process)
Mortimer Smelter
Polokwane Smelter
Rustenburg Base Metals Refinery
Precious Metals Refinery
Twickenham Mine
Zimbabwe
Unki Mine
Diamonds
100% owned
South Africa
De Beers Group Services
(Exploration and Services)
De Beers Marine
Canada
De Beers Canada
Snap Lake
Victor
Synthetic Diamond Supermaterials
Element Six Technologies
Sales
Global Sightholder Sales
Auction Sales
Brands
Forevermark
Other Mining and Industrial
100% owned
Building materials
Tarmac Building Products
Other(7)
100% owned
Vergelegen (South Africa)
Other interests
South Africa
Union Section
Masa Chrome Company
Joint operations or sharing agreements
Modikwa Platinum Joint Operation
Kroondal Pooling and Sharing Agreement
Marikana Pooling and Sharing Agreement
Mototolo Joint Operation
Associates
Bokoni
Pandora
Bafokeng-Rasimone
Atlatsa Resources Corporation
Johnson Matthey Fuel Cells
South Africa – other
Wesizwe Platinum Limited
Royal Bafokeng Platinum Limited
Overall ownership:
78%(1)
85%
50.1%
50%
50%
50%
50%
49%
42.5%
33%
27%
17.5%
13%
12.6%
Other interests
South Africa
De Beers Consolidated
Mines
Venetia
Voorspoed
Namaqualand Mines(4)
Kimberley Mines
Botswana
Debswana(5)
Damtshaa
Jwaneng
Orapa
Letlhakane
Overall ownership:
85%
Namibia
Namdeb Holdings(3)
50%
74%(2)
Namdeb Diamond Corporation
Mining Area 1
Orange River
Elizabeth Bay
Alluvial Contractors
Debmarine Namibia
Atlantic 1
50%
Sales
DTC Botswana
Namibia DTC
50%
50%
Synthetic Diamond Supermaterials
60%
Element Six Abrasives
Brands
De Beers Diamond Jewellers
50%
Other interests
Aggregates and building materials
Lafarge Tarmac Holdings Limited(6)
Tarmac Middle East
Other interests
Exxaro Resources (southern Africa and Australia)
50%
50%
9.8%
(1) The Group’s effective interest in Anglo American Platinum is 79.9%, which includes shares issued as part of a community empowerment deal.
(2) The 74% interest in De Beers Consolidated Mines (DBCM) is held indirectly through De Beers Société Anonyme (De Beers). The 74% interest represents De Beers’ legal ownership share in
DBCM. For accounting purposes De Beers consolidates 100% of DBCM as it is deemed to control the BEE entity which holds the remaining 26% after providing certain financial guarantees on
its behalf during 2010. The Group’s effective interest in DBCM is 85%.
(3) The 50% interest in Namdeb Holdings is held indirectly through De Beers. In November 2011 the Government of the Republic of Namibia and De Beers restructured their mining partnership,
creating a 50:50 holding company, Namdeb Holdings (Pty) Limited, with full ownership of Namdeb Diamond Corporation (Pty) Limited and De Beers Marine Namibia (Pty) Limited (now trading
as Debmarine Namibia). All mining licences were transferred to the newly formed company. The Group’s effective interest in Namdeb Holdings is 42.5%.
In May 2011 De Beers announced that it had entered into an agreement to sell Namaqualand Mines.
(4)
(5) The 50% interest in Debswana is held indirectly through De Beers. The Group’s effective interest in Debswana is 16.3%.
(6) Lafarge Tarmac Holdings Limited was formed during 2013. See note 30 of the Consolidated financial statements.
(7)
Included within the Corporate segment.
Anglo American plc Annual Report 2013
257
Other information
SHAREHOLDER INFORMATION
Annual General Meeting
Will be held at 14:30 on Thursday 24 April 2014, at The Queen Elizabeth II
Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE.
Shareholders’ diary 2014–15
Interim results announcement
Annual results announcement
Annual Report
Annual General Meeting
July 2014
February 2015
March 2015
April 2015
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) Limited, at the relevant address below:
UK Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
England
Telephone:
In the UK: 0871 384 2026*
From outside the UK: +44 121 415 7558
Transfer Secretaries in South Africa
Link Market Services South Africa (Pty) Limited
13th Floor, Rennie House
19 Ameshoff Street
Braamfontein 2001, South Africa
(PO Box 4844, Johannesburg, 2000)
Telephone: +27 (0) 11 713 0800
Enquiries on other matters should be addressed to the Company Secretary
at the following address:
Registered and Head Office
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
www.angloamerican.com
Additional information on a wide range of shareholder services can be found
in the Shareholder Information section of the Notice of AGM and on the
Group’s website.
* Calls to all 0871 numbers stated in this notice are charged at 8p per minute plus network
extras. Lines are open 08:30 to 17:30 Monday to Friday.
258
Anglo American plc Annual Report 2013
OTHER INFORMATION OTHER INFORMATION
OTHER ANGLO AMERICAN PUBLICATIONS
• 2013/14 Fact Book
• Notice of 2014 AGM and Shareholder Information Booklet
• Sustainable Development Report 2013
• Business Unit Sustainable Development Reports (2013)
• Optima – Anglo American’s current affairs journal
• Good Citizenship: Business Principles
• The Environment Way
• The Occupational Health Way
• The Projects Way
• The Safety Way
• The Social Way
• The People Development Way
• www.facebook.com/angloamerican
• www.twitter.com/angloamerican
• www.linkedin.com/company/anglo-american
• www.youtube.com/angloamerican
• www.flickr.com/angloamerican
• www.slideshare.com/angloamerican
The Company implemented electronic communications in 2008 in order to
reduce the financial and environmental costs of producing the Annual Report.
More information about this can be found in the attached Notice of AGM.
In this regard we would encourage downloading of reports from our website.
Financial and sustainable development reports may be found at:
www.angloamerican.com/reportingcentre
However, the 2013 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 the South African Transfer Secretaries.
If you would like to receive paper copies of Anglo American’s publications,
please write to:
Investor Relations
Anglo American plc
20 Carlton House Terrace
London SW1Y 5AN
England
Alternatively, publications can be ordered online at:
www.angloamerican.com/siteservices/requestreport
Charitable partners
This is just a selection of the charities which Anglo American, Anglo American
Chairman’s Fund and the Anglo American Group Foundation have worked
with in 2013:
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Anglo American plc
20 Carlton House Terrace
London
SW1Y 5AN
England
Tel +44 (0)20 7968 8888
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