Annual Report 2014
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FOCUS:
OPERATING
SMARTER
FOCUS:
OPERATING
SMARTER
Our greatest challenge is to deliver the returns our
shareholders expect but to do so in a way that creates
shared value for all our partners and stakeholders.
To deliver on this commitment in a sustainable way,
we have set out a clear strategy that will transform
Anglo American. At the heart of this sit our new
Organisation and Operating Models. These two
clearly defined and focused approaches will see us
operating smarter in every area of our business,
across the value chain.
As we continue to embed these models, we are
starting to witness significant progress. Clear
authorities and accountabilities, operational
improvements and a more disciplined approach
to capital allocation are already helping us create
a more effective and efficient organisation, for the
benefit of all our stakeholders.
Other sources
of information
Sustainable Development Report 2014
FOCUS:
EFFECTIVE
PARTNERSHIPS
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/
reporting
PERFORMANCE HIGHLIGHTS
CONTENTS
FINANCIAL
PERFORMANCE
UNDERLYING EBIT
(2013: $6.6 bn)
$4.9 bn
UNDERLYING EARNINGS
(2013: $2.7 bn)
$2.2 bn
Dividends per share
Cents
2010
2011
2012
2013
2014
25
28
40
46
32
32
32
53
53
53
UNDERLYING EARNINGS
PER SHARE
(2013: $2.09)
Interim
Final
$1.73
LOSS ATTRIBUTABLE TO
EQUITY SHAREHOLDERS
(2013: $(1.0) bn)
$(2.5) bn
Capital expenditure
$ bn
2010
2011
2012
2013
2014
Net debt
$ bn
1.4
2010
2011
2012
2013
2014
4.9
5.7
5.9
6.1
6.0
7.4
8.5
10.7
12.9
Cover images
Operation geologist
Carlos Barros (left) and
geology assistant contractor
Oscar Ríos review the
positioning of a power shovel
at Los Bronces copper mine
in Chile.
Power shovel and haul trucks
in the open pit at Los Bronces,
which produced more than
400,000 tonnes of copper
in 2014.
Opposite
Geology assistant contractor
Oscar Ríos (left) and shift
supervisor Antonio Manriquez
examine the topography of
Los Bronces’ open pit prior
to relocating mobile mine
equipment.
Throughout the Strategic Report we use a number of financial and non-financial
measures to assess our performance. The measures are defined on page 202.
Attributable ROCE is based on underlying performance before the impact of
impairments reported since 10 December 2013 and reflects realised prices and
foreign exchange during the current period. For more detail on this calculation
and its methodology, please refer to page 203.
‘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.
Chairman’s statement
At a glance
Chief Executive’s statement
Our strategy
Our business model
Key performance indicators
Group financial review
Portfolio
Performance
People
Risk
Iron Ore and Manganese
Coal
Base Metals and Minerals
Strategic report
02
04
06 Marketplace
08
10
14
16
18
22
28
36
42
48
52
56
57
58
59
59
60
62
64
Copper
Nickel
Niobium
Phosphates
Platinum
De Beers
Corporate and other
Chairman’s introduction
Directors
Executive management
The Board in 2014
Sustainability Committee
Nomination Committee
Audit Committee
Audit Committee report
Remuneration Committee
Directors’ remuneration report
Policy on director remuneration
Director remuneration in 2014
Governance
65
66
69
71
76
77
78
80
82
83
84
93
101 Outstanding share interests
104 Remuneration in 2015
105 Committee members during 2014
106 Six-year remuneration and returns
108 Statement of directors’ responsibilities
108 Responsibility statement
Independent auditor’s report
Financial statements
110
112 Principal statements
116 Notes to the financial statements
Financial statements of the
163
parent company
166 Summary by business operation
167 Key financial data
168 Exchange rates and commodity prices
Introduction
Iron Ore
Ore Reserves and Mineral Resources
169
170
173 Manganese
174 Coal
182 Copper
187 Nickel
188 Niobium
190 Phosphates
191 Platinum Group Metals
194 Diamonds
Other information
202 Performance measures
204 Production statistics
208 Quarterly production statistics
209 Non-financial data
210 The business – an overview
212 Directors’ report
215 Shareholder information
216 Other Anglo American publications
011
Anglo American plc Annual Report 2014 STRATEGIC REPORT CHAIRMAN’S STATEMENT
CHAIRMAN’S
STATEMENT
Sir John Parker
2014 saw a notable divergence in performance
between the world’s major economies. In China,
growth dipped slightly below the government’s
7½% target. Other emerging economies, the
eurozone and Japan are in a fragile state, though
the US strengthened significantly during the year.
These macro-economic conditions and the over-supply
of certain mined commodities drove severe price decreases.
Such developments are posing considerable challenges
for the global mining industry. This is particularly the case
in bulk commodities such as iron ore, where industry
over-expansion created price levels that are more depressed
than they might have been. Given these developments,
Anglo American is taking further action to cushion the
impact of downward price pressures.
ANGLO AMERICAN’S ROAD TO RECOVERY
Results
These challenging conditions are demonstrating the
resilience of Anglo American’s strategy, based as it is on a
diversified range of products attuned to different stages of
the cycle. We delivered an underlying EBIT of $4.9 billion
in 2014 (2013: $6.6 billion). We have also recommended
a dividend of 53 cents per share at the final stage, giving
a maintained total dividend for the year of 85 cents
per share, and we expect the dividend to be funded
from free cash flow from 2016 onwards. The Board’s
commitment to providing a base dividend, which will be
maintained or increased through the cycle, is unchanged.
Performance
Under the leadership of Mark Cutifani, considerable
progress is being made, on this, the first year of our
three-year journey towards realising the potential set
out in our Driving Value strategic imperative.
In 2014, we passed a number of important milestones on
the road to our ambition. This included making significant
strides in our operational performance to meet our 2016
target of 15% ROCE at June 2013 prices and exchange
rates. At that time we plan to deliver an additional $4 billion
of incremental EBIT (compared to 2012), and are redoubling
our efforts to create further improvements, including scaling
down our capital expenditure for 2015 and 2016.
02
Notably, our production performance in all our key
businesses has been ahead of plan. During October 2014,
we were able to ship our first ore from Minas-Rio earlier
than expected and within the revised capital budget of
$8.8 billion. This is testimony to the unrelenting endeavours
of the team in Brazil. However, the dramatic drop in the iron
ore pricing environment, which has been particularly acute
in the near term and has also dragged down long term
price expectations, has resulted in a $3.5 billion non-cash
(post-tax) write down in the asset value of Minas-Rio.
Notwithstanding the tough pricing environment, there have
been several encouraging developments. Our platinum
operations in South Africa are recovering strongly from the
prolonged strike in the first half of 2014, and we are making
headway in restructuring the business, including the
divestment of operations we no longer consider to be
‘core’. The operational turnaround at our two major copper
interests in Chile, Los Bronces and Collahuasi, is well under
way despite the challenges, at Los Bronces, posed by
declining grades and ore hardness. At Sishen, our flagship
iron ore asset in South Africa, we are on track to restore
production to a 38 million tonnes per annum level in 2016.
In Australia, where deteriorating prices for metallurgical coal
are putting great pressure on our coal operations, we have
managed to dramatically improve productivity, bringing
down unit costs substantially at our key longwall operations.
SAFETY
I never fail to be impressed by the level of commitment
shown throughout our Group – from Board level to the
working face – in safety matters. That is why it is always sad
and disappointing to report on loss of life in our business.
In 2014, despite a steep reduction in fatal incidents (after
taking the platinum strike into account), and ongoing
declining trends in injuries, six people lost their lives – it is
incumbent on us all to do whatever it takes to get this figure
down to zero.
Under Tony O’Neill, our technical director, this is being given
renewed direction, particularly with the emphasis being
placed via our Operating Model on planned work, which is
improving performance not only in safety, but in practically
all areas of the business.
Allied to this, we are focusing on the deployment of
new technologies, and particularly those concerning
mechanisation and automation, in order to make mining less
physically arduous and to eliminate, as far as possible, the
potentially hazardous interface between employees and
machinery and the rock face. This has led to tightening
policy around transportation (along with falls of ground,
the main cause of injuries in our Group), including stricter
regulation around transport hire and the advance
monitoring of road conditions.
Anglo American plc Annual Report 2014 DEVELOPING AND DEPLOYING NEW TECHNOLOGIES
In the past, Anglo American, deservedly, had a reputation
for being a leader in mining technology, and the Board
is giving its full backing to the executive and the Technical
team as we endeavour to again lead the industry. Our
intense focus on operational fundamentals – doing the basic
things better – is already delivering substantial benefits.
Today, however, no mining company can be working wholly
within its own silo, and that is why Anglo American is working
with a range of global institutions and universities in the
Americas, Australia, South Africa and the UK to support
us in our drive to be at the forefront of mining technology.
We now want to move on to the next phase, with
developments such as rock cutting lasers, alongside the
deployment of digital engineering that can simulate mine
and infrastructure conditions prior to the first shovel being
put in the ground. In turn, the adoption of the latest
construction techniques will greatly reduce the labour
intensiveness and development risks of projects.
RESETTING THE SOUTH AFRICAN RELATIONSHIP
At Anglo American, we attach great importance to our
relationships with our host governments. None is more
important than South Africa, where we have substantial iron
ore, platinum, thermal coal and diamond interests. These
include projects such as the $2 billion extension into an
underground diamond mine at Venetia, already under way,
the potential New Largo coal mine development and the
possible expansion of Platinum’s open pit at Mogalakwena.
We are also changing the role and composition of the
Anglo American South Africa Board in order to: reinforce
our commitment to, and strengthen our engagement with
the country; and to co-ordinate our significant social and
community programmes there through an integrated
project management approach.
BOARD DEVELOPMENTS
During my time as your chairman, I have constantly
sought to recruit people with the relevant skills sets and
breadth of experience to make a real difference to the
Board’s deliberations. This has brought to the boardroom
not only mining knowledge, but also experience in
such areas as management of major projects, modern
engineering, construction, finance, investment expertise,
global business experience, corporate leadership and
healthcare. As a result, I believe that the Board is now not
only stronger and more dynamic, but that it has helped to
foster a relationship with the executive based on mutual
trust and respect. This has created a boardroom culture
where robust challenge is respected.
We are fortunate indeed to have Jack Thompson, who
brings experience gained at all levels of the mining industry,
as the chairman of the Sustainability Committee. I would
also like to thank Byron Grote for the important perspectives
he has brought to the Audit Committee in his first year as its
chairman, and Sir Philip Hampton who diligently chairs our
Remuneration Committee and serves as our senior
independent director.
I am pleased to report that at year end, we had three
female directors, constituting 25% of our Board, in line
with the Davies Report 2015 target. We have also
consciously built up our ethnic diversity.
OUR PEOPLE
I am encouraged by the extent to which we are being
supported by our employees as we strive to make
Anglo American a more efficient and effective organisation.
Change is never comfortable for employees – but, as
Mark Cutifani emphasised at our Investor Day in December,
we have to adapt urgently given the pricing pressure on
our business.
It is pleasing to note how far we have come already in
restructuring the organisation, not least in the alignment
of key people to key roles. Notably, in our all important
Technical and Sustainability area, which is leading the
way on our continuing journey to transform operational
performance, we have seen the emergence of a revitalised
organisation, with three-quarters of its top management
recruited from across the global mining industry.
I wish to express my sincere gratitude to everyone who
works for Anglo American for their hard work during a year
of great change both internally and externally, and for their
ongoing commitment to the Group in what undoubtedly will
be a very challenging year ahead.
OUTLOOK
Against a background of a world economy that is likely to
remain turbulent as the after-effects of the global financial
crisis continue to linger, Anglo American is determined to
be commercial in its approach, with a disciplined focus on
margins and aligning output to anticipated market demand.
Given this approach, our Group, with its differentiated range
of early-, mid-, and late-stage products such as platinum
and diamonds, is well placed to withstand both the vagaries
of the cycle and to take advantage of the eventual upturn.
Meanwhile, we are focused on delivering cost effective
operational performance.
OUR STRATEGIC REPORT
Our 2014 strategic report, from pages 2 to 64, was reviewed
and approved by the Board on 12 February 2015.
Sir John Parker
Chairman
03
Strategic reportAnglo American plc Annual Report 2014 STRATEGIC REPORT AT A GLANCE
OUR BUSINESS
AT A GLANCE
Anglo American is a global and
diversified mining business that
provides the raw materials essential
for economic development and modern
life. Our mining operations, growth
projects and exploration and marketing
activities extend across southern
Africa, South America, Australia,
North America, Asia and Europe.
Bulk
Base metals and minerals
IRON ORE AND
MANGANESE
COAL
COPPER
9,400 employees(1)
11,600 employees(1)
5,900 employees(1)
• Metallurgical coal is
• Copper’s unique
• Of all the metals that
make modern life
possible, steel is the
most widely used –
and iron ore is its main
ingredient. Steel is
needed in many types
of infrastructure and
is therefore in great
demand from emerging
economies such as
China and Brazil.
AR
component of stainless
steel and many
advanced alloys.
• Manganese is a vital
an essential ingredient
in blast furnace steel
production and
accounts for around
70% of global steel
output.
• Thermal coal is the
heat source for
around 40% of all
electricity generated
globally today and is
vital in supporting
the development of
emerging economies.
For more information
See page 52
For more information
See page 48
properties make it a
vital material for urban
and industrial growth.
• Around 60% of total
global copper demand
is for electrical wiring
and equipment.
Copper’s thermal
conductivity makes it
particularly suitable
for air conditioning
and refrigeration.
For more information
See page 57
The origins of modern life – find out why mining matters, visit
www.angloamerican.com/origins
1 2
LONDON
LUXEMBOURG
Underlying EBIT by business unit
$ m
Iron Ore and Manganese
Coal
Copper
458
1,193
1,957
Nickel
21
Niobium
67
Phosphates
57
Platinum
32
De Beers
Corporate and Other
(215)
Total: $4,933 m
1,363
Net segment assets by business unit
$ m
Iron Ore and Manganese
4,640
9,128
7,950
7,810
10,642
Coal
Copper
Nickel
1,653
Niobium
755
Phosphates
351
Platinum
De Beers
Corporate and Other
15
Total: $42,944 m
04
1
1
2
2
1
BELO HORIZONTE
OTHER
SOUTH AMERICA
Coal
1 mine
Employees
300
5
SANTIAGO
CHILE
Copper
5 mines
Employees
5,700
BRAZIL
Iron Ore and
Manganese
1 mine
Nickel
2 mines
Niobium
2 mines
Phosphates
1 mine
Employees
5,400
BEIJING
SINGAPORE
1 7
BRISBANE
4
2
JOHANNESBURG
1
5
810
3
Anglo American plc Annual Report 2014
NICKEL
NIOBIUM
PHOSPHATES
PLATINUM
DE BEERS
Precious metals and minerals
Corporate
and other
1,700 employees(1)
500 employees(1)
1,300 employees(1)
51,300 employees(1)
10,300 employees(1)
2,800 employees(1)
AR
• Around two-thirds of all
refined nickel produced
is used by the stainless
steel industry.
• Nickel is used to make
other alloys with special
properties. Corrosion
resistant alloys are
used in chemical plants,
while ‘super alloys’
withstand extreme
temperatures and are
used in aviation.
For more information
See page 58
• Around 90% of the
niobium we produce
is used as an alloying
agent, giving steel
many of the properties
on which we depend.
• Niobium is a
component of the
high strength steels
used for cars, ships,
high pressure pipelines
and infrastructure
across the petroleum
and construction
industries.
For more information
See page 59
KEY
2
Commodity mined/
produced and
number of mines
• Platinum’s diverse
• Diamonds are the
• Consists of Other
• Phosphorus is a basic
component of all living
things, and phosphates
are a vital ingredient
of fertilisers.
range of applications
make it one of the
most valued materials
in the world today.
• We produce a wide
• Platinum and other
variety of phosphate
based fertilisers for
the agricultural sector,
as well as dicalcium
phosphate for
animal feed.
For more information
See page 59
platinum group metals
(PGMs) are widely
used in autocatalytic
converters, in jewellery
and a wide number of
other industrial
applications.
For more information
See page 60
ultimate precious stone
for jewellery and this is
reflected in De Beers’
famous A Diamond is
Forever™ line.
• Retail jewellery
demand drives the
market for gem
diamonds. The largest
diamond jewellery
market is the US,
with China and India
growing strongly.
For more information
See page 62
Mining and Industrial,
Exploration, and
Corporate and
unallocated costs.
• Other Mining and
Industrial includes
Tarmac Middle East
businesses, and our
share in the Lafarge
Tarmac joint venture.
For more information
See page 64
1 2
LONDON
LUXEMBOURG
1
1
2
2
1
5
SANTIAGO
BELO HORIZONTE
BEIJING
SINGAPORE
1 7
BRISBANE
4
2
JOHANNESBURG
1
5
810
3
CANADA
Coal
1 mine (2)
De Beers
2 mines
Employees
1,700
EUROPE
SOUTH AFRICA
OTHER AFRICA
AUSTRALIA/ASIA
Corporate locations
2
Employees
2,000
Includes staff employed
at De Beers’ European
operations, principally
Element 6, and Other Mining
and Industrial.
Iron Ore and
Manganese
5 mines
Coal
10 mines
Platinum
8 mines (3)
De Beers
3 mines
Employees
72,000
Platinum
1 mine
De Beers
6 mines/mining
areas
Employees
4,100
Iron Ore and
Manganese
1 mine
Coal
7 mines
Employees
3,600
For information about our
material issues visit our
Sustainable Development
Report. This can be found
on our corporate website
www.angloamerican.
com/reporting
(1)
(2)
(3)
Average number of
employees, excluding
contractors and
associates’ and joint
ventures’ employees, and
including a proportionate
share of employees
within joint operations.
Peace River Coal’s
operations were placed
on care and maintenance
in December 2014.
Anglo American Platinum
managed operations.
05
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT MARKETPLACE
MARKETPLACE
REVIEW
THE ECONOMY
GROWTH STABILISATION
Global real gross domestic product (GDP) increased
by 3¼% in 2014, the same as in 2013, according to the
International Monetary Fund (IMF). There was a notable
divergence in performance, however, between the world’s
major economies. Early in the year, extremely cold weather
depressed activity in the United States (US), though the
economy recovered through the spring and summer. After
a recovery in the spring, the Chinese economy slowed in
the second half of the year. In Japan, activity was robust at
the start of 2014, but then slumped following an increase in
the consumption sales tax. Europe’s growth remained weak
in 2014, especially in the eurozone’s largest economies.
Activity remained fragile in emerging economies.
At the start of 2014, there was growing optimism about
prospects for the US economy, but the extreme winter
weather contributed to a contraction in real GDP in
the first quarter. The strong recovery in the spring and
summer led to annualised GDP growth of more than 4½%.
Improvements in the labour and housing markets and a
steep fall in oil prices later in the year supported significant
gains in consumer confidence. Business sentiment also
improved, encouraging increases in capital spending. After
a significant tightening in 2012–2013, the fiscal squeeze
moderated in 2014, imparting a smaller drag on growth.
The Federal Reserve gradually wound down its quantitative
easing programme, completing it in October.
In the first six months of 2014, China’s economy grew in
line with the government’s 7½% target, which was a little
below the rate in the second half of 2013. The People’s
Bank of China injected liquidity into distressed sectors
of the economy and the government accelerated some
infrastructure projects. In the second half of 2014, growth
dropped below the government’s target, mainly reflecting
the negative impact of a weakening property market and
slower industrial activity. In response, the Bank cut interest
rates and allowed the renminbi to drift lower, and the
government eased house purchase restrictions and
loosened mortgage terms.
The European economy remained fragile in 2014. Following
two years of output contraction, the eurozone registered
modest growth as the heavily indebted economies
stabilised, with Germany being the strongest of the larger
economies. But after robust gains early in 2014, the German
economy weakened appreciably later in the year, reflecting
the slowdown in its main export markets and the impact
of a stronger euro, especially against the Japanese yen.
The French economy stagnated and the Italian economy
contracted again in 2014, with fiscal austerity and impaired
banking systems compounding the effects of a stronger
euro. The European Central Bank announced significant
easing measures in the summer, but stopped short of
outright quantitative easing.
After strong growth in the first quarter, the Japanese
economy slumped in the subsequent six months. The
government’s decision to increase the consumption sales
tax in April had a bigger negative impact than expected and,
as a result, the Bank of Japan announced an aggressive
06
GDP per person
in PPP terms, as % of US
40
35
30
25
20
15
10
5
0
1985
1980
Brazil
China
India
South Africa
1990
1995
2000
2005
2010
2015
Source: IMF
scaling up of its quantitative and qualitative easing. The Abe
government subsequently decided to postpone the second
stage of the tax hike.
After the turmoil of 2013, many emerging economies
experienced greater stability in 2014. Financial market
sentiment improved significantly in India following the
election of Narendra Modi as prime minister. While
improvements in the real economy have been patchy,
confidence is improving regarding India’s medium to longer
term prospects. In Brazil and South Africa, growth finally
stabilised after significant slowdowns. Russia’s economy
weakened sharply in response to the escalating Ukrainian
crisis and a significant fall in oil prices.
PROSPECTS
The world economy should strengthen in 2015–2016, with
real GDP growth picking up to around 3½–3¾% per year,
close to its historical average. Sharply lower oil prices should
support activity in many oil consuming countries. The US is
expected to lead the recovery, with GDP growth of at least
3% a year. In Europe and Japan, growth should remain more
modest given continuing concerns around government
finances and the health of their banking systems and
corporate sectors.
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 has recently
revised down again its forecasts for growth over the
next three to five years. Lower commodity prices could
undermine activity in commodity producing economies.
Still, the powerful logic of convergence in living standards
suggests there is considerable growth potential, especially
in Asia and Africa. There is a great onus on domestic
policymakers to implement much needed reforms to
unlock this potential.
COMMODITY MARKETS
Throughout 2014, the prices of the commodities we
produce displayed marked trend differences, as well as
recording high volatility around those trends. Individual
price performance reflected changing expectations of
the macro-economic context, in particular global growth
and the relative strength of the US dollar, the outlook
for supply (which exceeded expectations in some key
commodities) and the underlying industry cost structure
of each commodity.
Anglo American plc Annual Report 2014 Indexed 2014 commodity prices – monthly average
.
0
1
=
3
1
0
2
r
e
b
m
e
c
e
D
,
x
e
d
n
I
e
c
i
r
P
1.5
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
Dec 2013
Feb 2014
Apr 2014
Jun 2014
Aug 2014
Oct 2014
Dec 2014
Iron ore (FOB Aus)
Metallurgical coal
Thermal coal
Copper
Nickel
Platinum
Palladium
Source: Anglo American Commodity Research
As expectations of growth in China were progressively
revised downward and confidence was eroded in the
outlook for the EU and Japan through the year, demand
forecasts were lowered, which impacted the price
performance of the bulk commodities in particular.
Iron ore experienced significant downward pressure in
2014, with the price dropping by almost 50% over the
course of the year. This reflected a fundamental oversupply
in the market as the industry expanded output rapidly, even
compared with guidance earlier in the year. Australia and
Brazil, for example, increased output by an estimated
140 Mt. This substantially exceeded incremental growth in
demand, which almost halved in 2014, primarily as a result
of a marked slowdown in key steel consuming sectors in
China, particularly construction.
In the metallurgical coal markets, prices declined, with
the hard coking coal spot price falling from an average
of $147/tonne in 2013 to $113/tonne in 2014. Despite
year-on-year growth in steel production in the key demand
regions of north-east Asia, India and Europe, import
demand from China stalled on the back of slowing steel
output growth and increased domestic production. At the
same time, a depreciating Australian dollar, the ramp up of
new projects and a productivity focus at existing operations
supported overall year-on-year hard coking coal supply
growth from Australia. These largely offset the impact
of announced capacity closures there and elsewhere.
Manganese, as a steelmaking raw material, also faced
challenging conditions. Infrastructure constraints in
South Africa were loosened, which eliminated a key
bottleneck from the market, and South African production
became the relevant price setting assets.
Thermal coal also had a difficult year, with prices moving
down from $84/tonne FOB Newcastle in 2013 to below
$65/tonne by year end, a new five-year low. Weak Chinese
buying continued to weigh on Asia-Pacific prices, with
flagging Chinese domestic coal demand growth offset only
partly by Indian demand growth. Weaker currencies in coal
producing countries helped support production levels
despite low prices, while there was no significant slowing
in project execution, notably in Indonesia, which put further
pressure on prices through the year.
Copper prices came under pressure from around mid-year.
Demand suffered from destocking in China, principally from
bonded warehouses as a result of the financing scandal
centred in the port of Qingdao. Concerns over potentially
strong supply growth weighed on sentiment, as did the
uncertain outlook for global growth and particularly that
of the Chinese construction sector. However, support for
prices was provided by strategic purchases made by the
Chinese State Reserve Bureau; significant destocking from
Chinese bonded warehouses reaching an end; exchange
stock levels remaining relatively low; and by expectations
that unfulfilled power infrastructure budget spending in
China might begin to accelerate. The copper price fell by
almost $700/tonne by mid-January 2015, with reports that
some large Chinese hedge funds had played a role in the
sudden weakness by selling large amounts of copper
futures, forcing the price much lower.
Nickel prices were strong through most of the first six
months on expectations that the ban on exports of nickel
ore from Indonesia would lead to the global market moving
into a deficit. They plummeted in the second half, however,
owing to unexpectedly high levels of ore exports from the
Philippines, lower than expected stainless demand and by
an increase in highly visible LME inventories. This essentially
delayed the still widely forecast tightness in the global
market for the metal.
Phosphate fertiliser prices in Brazil were broadly unchanged
year-on-year.
Niobium prices decreased slightly, due to production
capacity increases running ahead of relatively flat demand,
and the strength of the US dollar.
Platinum and palladium prices exhibited very different
trajectories in 2014; in the 12 months to December 2014,
platinum prices dropped 10% while palladium prices rose
by 12%.
With regard to platinum, while demand was higher in
aggregate for autocatalysts, industrial and jewellery
applications, it was more than offset by weaker investment
demand. On the supply side, the five-month South African
strike had a major impact and reduced global platinum
supply by 700,000 ounces. The positive price response
on account of the apparent deficit was more muted
than expected, partly owing to the existence of above
ground stocks.
The palladium price, supported by a tighter supply-demand
balance than platinum, as well as concerns over Russian
supply, hit a 13-year high of $911 per ounce in early
September, but thereafter followed platinum prices down.
End consumer demand for diamonds is estimated to have
grown globally in 2014, in dollar terms. Increased economic
activity and consumer confidence in the US reinforced
demand for diamonds there, while in China, the growing
middle class, and the ongoing penetration of diamonds in
the bridal segment, continued to drive Chinese demand
growth. De Beers’ own underlying rough price index was
on average 5% higher than in 2013.
07
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
FOCUS:
OPERATING
SMARTER
Mark Cutifani
TRANSFORMING THE BUSINESS
2014 was a year of significant operational
improvement against sharp commodity
price declines amid generally adverse
market conditions.
Our diversified product portfolio provided us with a
degree of insulation from the particularly sharp price falls
for the bulk commodities of iron ore and coal, albeit in an
environment where weaker commodity prices accounted
for $2.4 billion(1) of underlying EBIT reduction. The
operational turnaround of a number of our priority
operations and the continued weakening of many producer
country currencies ($1.3 billion positive impact to underlying
EBIT) also helped to mitigate the effects of the generally
adverse pricing environment. After adjusting for the
platinum strike, copper equivalent unit costs(2) in local
currency terms decreased by 3% (real) in 2014, and we
have delivered a $500 million sustainable reduction in
overhead and project study and evaluation costs compared
to our 2012 baseline. Underlying EBIT of $4.9 billion, a 25%
decrease, and underlying EBITDA of $7.8 billion, an 18%
decrease, reflect the substantial operational progress we
have made to restore the performance of our mines, though
further progress is necessary to meet our return targets
through the cycle. Underlying earnings reduced by 17%
to $2.2 billion.
Our safety and environmental performance is a leading
indicator of how we are running the business. The greater
the degree of planned work and stable operations, the safer
we will be. We have seen a very meaningful improvement
across our key safety and environmental performance
metrics, taking into account the five-month platinum strike,
reflecting our focus on high risk activities, standards and
controls. Despite the positive progress, I am saddened to
report that we still lost six colleagues during the year, so we
have a lot more work to do and our focus is unrelenting to
achieve zero harm.
We have shown in 2014 that we are adapting and delivering
and are on the right track to transform the performance
of Anglo American. Our mining operations are the engine
of our business and we have delivered higher and more
consistent volumes, with a clear focus on increased stability,
productivity, margins and returns. There is significantly more
improvement potential as we continue to build the capability
to achieve a step change in performance and returns from
our exceptional resource endowment.
(1) Excludes De Beers
volume/price and
impact of the strike
at Platinum.
(2) See page 202 for
the definition and
calculation of copper
equivalent unit costs.
08
DELIVERING ON COMMITMENTS
We have delivered on the major operational and portfolio
commitments for the year that we made to shareholders.
Most prominently, we shipped our first ore from the
Minas-Rio project in Brazil ahead of schedule in October,
and expect to bring the project in $400 million below the
revised budget. However, the steep drop in the iron ore
price has resulted in a $3.5 billion post-tax write down in
the carrying value of Minas-Rio. We are, though, clear
about the asset’s potential and the differentiated nature
of its high quality products in the market.
We have made substantial progress towards creating a
platinum business fit for the future. We have defined the
shape of our future platinum portfolio, taken the hard
decisions to close down a number of shafts, restructured the
assets that we plan to divest to demonstrate their long term
commercial viability, set disposal processes under way and,
most importantly, aligned our plans with government and
with our employees.
I have been clear that a platform of operational excellence is
fundamental to delivering the full potential of this business.
Our top 16 priority assets contribute the majority of value to
Anglo American and offer the scope for the greatest upside.
The majority of those assets are now performing above plan
(compared to only three in 2013) and the remainder are
improving in line with our expectations.
We have focused urgent attention on the performance of
our largest and most valuable mines, a number of which had
become severely constrained in recent years due to a lack of
mine development, with the positive results seen in our 2014
operational performance.
The redesign of the pit at the Sishen iron ore mine in
South Africa and the implementation of our new Operating
Model have successfully unlocked the challenge of excess
waste material that needs to be mined to access the orebody.
Sishen hit its target production level for 2014 of 35 million
tonnes (Mt) of iron ore and is now on track to recover its
production level to 38 Mt in 2016, in excess of our original
37 Mt target. At the same time, its sister mine at Kolomela
continues to outperform its nameplate capacity of 9 Mt per
annum, producing 11.6 Mt in 2014, due to plant throughput
optimisation, delivering ore feed at a lower unit cost and
complementing the improving Sishen performance.
Similarly, at our Los Bronces copper mine in Chile, the
waste backlogs and other pit constraints of previous years
have been cleared and the mine and plant have been
stabilised, enabling record material to be mined in the year
and continuous ore to be fed into the plant. At the Collahuasi
joint operation, also in Chile, the performance of the mining
operation has been stabilised and improved and attention
will move to the plant in 2015. As a result of these
interventions to turn around the operations, we have been
able to steadily increase production expectations for our
Copper business during the year, to achieve full year
production of 748 kt of copper, a 7% increase on the original
guidance for the year.
Anglo American plc Annual Report 2014 The performance of our diamond business – De Beers –
is a clear demonstration of the benefits and value of our
diversified business model. The integration of De Beers
into Anglo American is complete; De Beers contributed
$1.4 billion of underlying EBIT in 2014, 28% of – and the
second largest contributor to – the Group’s total, and
delivered a 15% return on capital employed (ROCE).
DISCIPLINED ALLOCATION OF CAPITAL
Consistent with our focus on returns, we must be disciplined
with our deployment of physical and financial resources to
those assets that will provide us with the greatest value for
capital employed and potential upside. Through our asset
review process, we identified a number of assets – principally
in our Platinum, Copper and Coal businesses – that are likely
to deliver greater value under different ownership, enabling us
to concentrate our resources on our most attractive priority
assets. A number of sales processes are under way; however,
our value hurdles will need to be met prior to divestment,
in what is a challenging environment for asset sales. The
proposed merger of Lafarge with Holcim, on which the sale
of our 50% shareholding in Lafarge Tarmac to Lafarge is
dependent, is progressing in line with the announced
completion timetable of the first half of 2015 following a
positive decision by the European Commission in December
2014, but remains subject to certain other conditions.
We are committed to maintaining a robust capital structure
which balances long term business value growth with
sustainable capital returns to shareholders. In 2014, net
debt increased to $12.9 billion and we expect to touch a
peak level of $13.5-$14 billion during 2015, after receipt
of Lafarge Tarmac sales proceeds. Anglo American is
fortunate to have a world class resource endowment,
including a number of attractive, predominantly brownfield
options, for organic growth. We will continue to allocate
capital to our most value accretive options and pursue a
syndication approach for major greenfield developments,
in line with managing individual risk exposures and
achieving our long term net debt target of $10-$12 billion,
assisted by our asset disposal programme.
Our revised Operating Model is delivering strong underlying
results and we are building on those foundations to
complete the next phase of the transformation process.
Our focus on ROCE drives the right behaviours within the
business and we are moving all the levers within our control
to deliver $4 billion(3) of additional EBIT in 2016 (compared
to 2012 EBIT), all of which has now been fully scoped. We
are intensifying our efforts to identify the additional EBIT
necessary to mitigate recent downward pressure on prices.
PARTNERS IN THE FUTURE
Society’s expectations of the mining industry have long
been in the spotlight, often for good reason, and our
reputations can be shaped by the actions of others. At a
global level, mining activity occupies a tiny fraction of the
earth’s surface yet, to a community neighbouring a mine,
it may feel somewhat different. The business imperative
is clear; that without securing and sustaining our social
licences to operate, more operations and developments will
face disruption, costs will escalate further and opportunities
will be lost on all fronts. We are working tirelessly through
partnerships with the likes of the Kellogg Innovation
Network and faith groups to change the status quo, to listen
to what our host communities need – not what we think they
need – and to uplift the industry to realise our vision of
becoming real partners in their future.
OUTLOOK
Despite the headlines of economic uncertainty and
geopolitical tensions, the underlying fundamentals of our
business – applying world class technical skills to world
class assets – remain attractive over the long term. Declining
ore grades, a very small number of new mineral discoveries
and project developments, ever rising government and
community expectations, and infrastructure and energy
challenges all point towards a constrained supply picture
for most of our products in a world where the major
consuming economies are still growing, albeit at a slower
pace of growth. China’s continuing growth slowdown
has significantly altered the demand profile for many
commodities, but successful reform and rebalancing should
make the economy more resilient in the medium to longer
term. While Europe and Japan are still struggling, we have
seen more encouraging news on economic developments
in the US and an apparent strengthening of India’s economy.
In the immediate term, I expect tough trading conditions
to prevail during 2015, but we are determined to continue
to build on our already very significant operational
improvements, drive towards an effective and efficient
organisation and culture, and to be unwavering in our
capital discipline.
THANKS
On behalf of my executive colleagues, I would like to thank
all our people – our employees and contractors – and the
extensive network of stakeholders in our business for their
continued dedication and support as we make the changes
necessary to create a more agile, robust and sustainable
Anglo American. We are transforming this business. We
have a clear direction and we are creating a different, better
future for Anglo American and for you all.
Lastly, I thank all the members of the Board, led by our
chairman Sir John Parker, for sharing their extensive
collective experience and providing the support for our
strategy to deliver our full potential.
Mark Cutifani
Chief Executive
09
(3) Attributable and
at 30 June 2013
exchange rates and
commodity prices.
Strategic reportAnglo American plc Annual Report 2014 STRATEGIC REPORT OUR STRATEGY
THE DIVERSIFIED
MINER
The mining industry continues to be at the heart
of the world’s economic engine and will remain
so for many decades to come. As the diversified
miner, Anglo American provides many of the
commodities and precious metals and minerals
that are essential for economic development
and modern life.
For almost a hundred years, we have been mining the
raw materials that society needs to develop and prosper.
We provide our investors with a balanced portfolio of
opportunities as we find, plan and build, mine, process, move
and market a diversified and high quality range of products,
spanning bulk commodities, base metals and minerals, and
precious metals and minerals.
Having a diversified portfolio gives us options in terms of
how and where we choose to allocate capital to grow the
business, improve margins, generate returns and ultimately
deliver value, and helps protect us through commodity and
economic cycles.
As a responsible
miner, we are the
custodians of some of the
world’s most precious
resources that enable
economic development
and modern
lifestyles
We must ensure the
most efficient and
effective use of capital to
unlock value for our
shareholders, who own
our business
OUR
WORLD
WE
ARE
ANGLO
AMERICAN
OUR
AMBITION
HOW
WE DELIVER
HOW WE WORK TOGETHER
Our ambition is to
double our 2014
operating profit by 2020,
consistent with our
15% ROCE target
by 2016(1)
(1) ROCE target is at 30 June 2013 exchange rates and commodity prices.
10
Anglo American plc Annual Report 2014
Our ability to manage this diversification for value provides
us with a competitive advantage. Knowing where along the
chain, from exploration to marketing, we can leverage value
from each of our different products is one of the many skills
required in managing a diversified portfolio.
While our aim as a business has always been to generate
returns for our shareholders, how we accomplish this – by
striving to make a real and lasting contribution to society – is
fundamental and defines us as a company. We believe this is
best done through forming mutually beneficial partnerships,
as reflected in our vision: ‘Partners in the future’.
We are clear that the delivery of consistent and superior cash
returns and capital appreciation to shareholders will only
endure if we deliver value to society, as seen through the
eyes of our key constituencies: employees, governments,
social stakeholders, customers and business partners.
Achieving this balance is fundamental to our effectiveness
as an organisation and our sustainability as a business.
For more on how we deliver our strategy
See pages 12–13
WE ARE
ANGLO AMERICAN
We are one of the industry leaders in resource
development, mining and operational
innovation to drive the delivery of exceptional
returns from our assets for our shareholders.
However, the delivery of returns to
shareholders will only endure if we deliver
value to society, as seen through the eyes of
our key stakeholders.
We believe this is best done through forming
mutually beneficial partnerships, as reflected
in our mission: Together, we create sustainable
value that makes a real difference. Working in
this way we strive towards our ultimate vision,
to be ‘Partners in the future’.
OUR
WORLD
OUR
AMBITION
HOW WE
DELIVER
Mining remains at the heart of the world
economy. Long term demand for products will
continue to grow but the mining ‘supercycle’ of
the past decade is over. Miners can no longer
rely on high commodity prices to mask
inefficiencies in their businesses.
The attractiveness of commodities, and
stakeholder demands, can shift over time
depending on business and social trends.
Our diversified portfolio of products spans
the economic development cycle and
presents us with many options to create value
and opportunities for all our stakeholders,
and to work more effectively and efficiently
as an organisation.
Through an ongoing focus on capital discipline
and costs, we aim to double our 2014 operating
profit by 2020, consistent with our 15% ROCE
target by 2016(1).
Our strategy to achieve this ambition is split into
three elements:
• Where we compete (Portfolio)
• How we win (Performance)
• Critical core skills (People)
The delivery of our strategy implies a major
transformation. We have identified four
immediate strategic imperatives to ensure
the delivery of our strategy.
1. Deliver Driving Value
2. Focus the portfolio
3. Develop core business processes
4. Create a high performance culture
We will measure results and ensure the
implementation of our strategy through an
holistic business scorecard that includes
seven pillars of value.
HOW WE WORK
TOGETHER
Our Organisation Model empowers our
people to realise their full potential and that
of our assets by ensuring that the right people
are in the right roles, doing the right work.
Our Operating Model provides a
structured approach to how we define,
organise and deliver that work to improve
our performance, enabling consistent
delivery against expectations.
11
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT OUR STRATEGY
HOW WE DELIVER
OUR STRATEGY
The delivery of our strategy implies a major
transformation of the business. It is an exciting
opportunity and challenge that will require an
integrated effort from all our people.
THE CHOICES THAT
DEFINE OUR FUTURE
WHAT WE MUST DELIVER
IN THE NEAR TERM
Our strategic elements
Our strategic imperatives
Where we compete:
optimising our
diverse portfolio
We will focus
management time and
prioritise capital on the
mining assets that offer
us the most attractive
long term value creation
potential.
How we win:
maximising our
performance
We will maintain a highly
competitive mindset,
with innovation and
outstanding delivery at
the forefront of how we
drive change.
Critical core skills:
creating a capable
organisation
We will ensure that our
people and organisation
have the critical core
skills, supported by key
people systems, to
ensure we improve
our returns.
1. Deliver Driving Value
The delivery of this strategic
imperative will help us rebuild our
market credibility. We have already
delivered a number of near term
critical tasks:
• Minas-Rio first ore on ship and
ramp up under way
• Restructure of Platinum business
2. Focus the portfolio
Our resource and asset participation
will focus on positions where we
believe we can deliver consistent
margins to support high returns
through the respective price cycles.
• Operational turnaround at Copper
• Sishen mine optimisation
• Finalising the organisation structure.
• Achieve full potential in
Priority 1 assets
• Prioritise high value projects
(e.g. Quellaveco)
• Exit select Priority 3 and
Priority 2 assets to simplify our
portfolio and reduce net debt
3. Develop core business processes
We aim to become industry leaders
in critical areas, helping us to
extract the maximum value from
our assets and products.
Operations
Embed Anglo American’s
Operating Model in our Priority 1
assets by the end of 2016.
Exploration
Embed a self-funding model
that positions us to compete
for the next major undeveloped
or potential resource in our
selected commodities.
Project delivery
Drive our project delivery skills
to the next level to reduce capital
expenditure and provide more
certainty around delivery of
project outcomes.
4. Create a high performance culture
Our people, across all facets of the
business, are integral to the delivery
of our strategy. We aim to provide the
right environment in which to create
a high performance culture. We are
creating an organisation where all
people are treated in such a way
that they willingly give the best they
have got.
Create a high performance
leadership team
A high performance culture starts
with developing a high performance
leadership team capable of
developing a broader plan for our
wider organisational culture.
OUR
AMBITION
To double our 2014
operating profit
by 2020, consistent
with our 15% ROCE
target by 2016(1).
To enable us to achieve
this target we have
continued to develop
a Group strategy with an
ongoing focus on capital
discipline and costs,
based on our industry
position as the
diversified miner.
(1) ROCE target is at 30 June 2013
exchange rates and commodity prices.
12
12
Ongoing tasks:
• Roll out Operating Model to
Priority 1 assets
• Deliver $500 million sustainable
cost reductions
• Implement business scorecard
• Reset our South African government
and community relationships.
• Rescale our overheads appropriately
• Re-assess our value chain
participation.
Marketing
Ensure maximum value creation
across the entire value chain – from
mine to customer.
Organisation redesign
We aim to retain and appoint the
right people in critical organisation
roles. We will continue to develop the
organisation in this way.
Focused on delivery
We will measure our progress
through an holistic business
scorecard comprising both financial
and non-financial indicators, including
our seven pillars of value.
Anglo American plc Annual Report 2014
• Operational turnaround at Copper
• Sishen mine optimisation
• Finalising the organisation structure.
WHAT WE MUST DELIVER
IN THE NEAR TERM
Our strategic imperatives
1. Deliver Driving Value
The delivery of this strategic
imperative will help us rebuild our
market credibility. We have already
delivered a number of near term
critical tasks:
• Minas-Rio first ore on ship and
ramp up under way
• Restructure of Platinum business
2. Focus the portfolio
will focus on positions where we
believe we can deliver consistent
margins to support high returns
through the respective price cycles.
Our resource and asset participation
• Achieve full potential in
Priority 1 assets
• Prioritise high value projects
(e.g. Quellaveco)
• Exit select Priority 3 and
Priority 2 assets to simplify our
portfolio and reduce net debt
3. Develop core business processes
We aim to become industry leaders
Operations
in critical areas, helping us to
extract the maximum value from
our assets and products.
Exploration
Embed a self-funding model
that positions us to compete
for the next major undeveloped
or potential resource in our
selected commodities.
Embed Anglo American’s
Operating Model in our Priority 1
assets by the end of 2016.
Project delivery
Drive our project delivery skills
to the next level to reduce capital
expenditure and provide more
certainty around delivery of
project outcomes.
4. Create a high performance culture
Our people, across all facets of the
business, are integral to the delivery
Create a high performance
leadership team
of our strategy. We aim to provide the
A high performance culture starts
right environment in which to create
with developing a high performance
a high performance culture. We are
leadership team capable of
creating an organisation where all
people are treated in such a way
that they willingly give the best they
have got.
developing a broader plan for our
wider organisational culture.
Ongoing tasks:
• Roll out Operating Model to
Priority 1 assets
• Deliver $500 million sustainable
cost reductions
• Implement business scorecard
• Reset our South African government
and community relationships.
• Rescale our overheads appropriately
• Re-assess our value chain
participation.
Marketing
Ensure maximum value creation
across the entire value chain – from
mine to customer.
Organisation redesign
We aim to retain and appoint the
right people in critical organisation
roles. We will continue to develop the
organisation in this way.
Focused on delivery
We will measure our progress
through an holistic business
scorecard comprising both financial
and non-financial indicators, including
our seven pillars of value.
HOW WE MEASURE
OURSELVES
STRUCTURED TO
REWARD SUCCESS
Our seven pillars of value
Remuneration
Safety and Health
To do no harm
to our workforce
Environment
To minimise 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
and productive
workforce
Production
To extract our
mineral resources
in a sustainable way
to create value
Cost
To be competitive
by operating as
efficiently as
possible
Financial
To deliver
sustainable returns
to our shareholders
Anglo American’s remuneration policy for executive directors is
designed to ensure that senior management is encouraged to
deliver the Group’s strategy in a responsible and sustainable manner.
In addition to the basic salary, the main elements of the remuneration
package are the annual bonus and long term incentive plan (LTIP).
Annual bonus
Annual bonus performance measures include:
• At least 50% on underlying earnings per share (EPS). EPS is one
of the Group’s key financial measures of performance and is set
on an annual basis to ensure targets are demanding yet realistic
• The remaining measures are non-financial and include project
delivery, capital allocation, business improvement, stakeholder
engagement and employee development
• A deduction to bonus outcomes is applied if safety targets are
not met.
To help ensure sustainable long term performance, 60% of any bonus
that is paid to executive directors is deferred into shares for a minimum
of three years. We are also able to reduce or claw back elements of the
bonus in the event of a material misstatement of the Group’s results,
misconduct or a material failing in risk management processes.
Safety and Health
Production
Environment
Socio-political
People
Costs
Financial
Long term incentive plan
The LTIP performance measures are aligned to our strategic
objectives over a three-year performance period. LTIP awards that
have vested must be held for an additional two years and there are
similar claw back provisions to the annual bonus awards, helping ensure
that executive interests are aligned with those of our shareholders.
The LTIP performance measures are:
• One quarter of LTIP awards is measured against the Group’s
TSR performance relative to the Euromoney Global Mining Index
and one quarter relative to the constituents of the FTSE 100 index
• The remaining half is based on attributable ROCE to reflect the
strategic focus on disciplined capital allocation. The initial ROCE
targets have been informed by the Group’s stated 2016 attributable
ROCE aspiration.
Financial
Production
Costs
13
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT OUR BUSINESS MODEL
OUR BUSINESS MODEL
TOGETHER,
WE CREATE
SUSTAINABLE
VALUE THAT
MAKES A REAL
DIFFERENCE
BUSINESS INPUT
CAPITALS
FINANCIAL
Our shareholders own
the business. They are
entitled to attractive,
sustainable returns, reflecting
the risk they take in funding
the business.
HUMAN
Our people are the business.
We aim to resource the
organisation with a capable,
engaged and productive
workforce. We are committed
to ensuring no harm comes
to any of our workforce.
INTELLECTUAL
We aim to drive aggressive
innovation to support
consistent over-delivery on
commitments. We link our
technical and marketing
knowledge to ensure we
invest our efforts in the key
leverage points in the ‘mine
to market’ value chain.
NATURAL
In order for us to mine, we first
need to find locations rich in
the minerals our customers
need. Once operational, we
require water, electricity and
fuel in order to run our mines,
process our products and
move them to our customers.
MANUFACTURED
Throughout our value
chain, we require a host
of specialised equipment.
The products we purchase,
through our optimised supply
chain, must deliver best value.
SOCIAL AND
RELATIONSHIPS
Open and honest
engagement with our
stakeholders is critical in
gaining and maintaining our
social and legal licence to
operate and, therefore, the
sustainability of our business.
DIVERSIFIED MINING
Our portfolio is diverse
in 3 ways...
1
The
commodities and
minerals we
mine…
2
…the range of
countries we
operate in…
3
…and that the
commodities and
minerals we mine cover
all stages of the
economic cycle
Having this level of
diversification helps
shield us through economic
downturns and industry
turbulence and means we have a more balanced
exposure to both political and currency risks.
Our value chain is also diverse…
As a company, we operate across the entire mining
value chain – from exploration through to marketing.
Although we are focused on resource development,
mining and operations, we are developing other areas
of the value chain, e.g. our marketing capabilities, when
we can see opportunities to deliver increased value.
Find: our exploration teams discover
mineral deposits in a safe and responsible
way to replenish the resources that underpin
our future success.
Plan and build: working with all our
stakeholders, we plan and build some of the
most effective, efficient and environmentally
sound mines in the world.
Mine: we operate open cut and deep
level mines. We apply almost a century of
experience and technical expertise to ensure
the safe and efficient extraction of minerals.
Process: we generate additional
value by processing and refining many
of our commodities.
Move and market: we provide products
to our customers around the world, meeting
their specific technical and logistical
requirements.
OUR
ORGANISATION
MODEL
How we work together to
deliver sustainable value
ORGANISATION
STRUCTURE
We design our structures
and roles to provide clear
accountability and appropriate
authority to get our work done.
PEOPLE SYSTEMS
We design merit based
systems where people can
work productively to their
potential.
RISK
14
TEAM EFFECTIVENESS
We build positive, capable
and effective teams.
For more information on our
Organisation Model See page 38
For more information on Risk
See page 42
Anglo American plc Annual Report 2014 DIVERSIFIED MINING
Capital allocation
Having both portfolio and value chain
diversification means we can focus our effort
and capital at the points in the value chain
that deliver most value, according to the
commodity we are mining and the current
and projected market conditions.
PLAN AND
BUILD
FIND
MOVE AND
MARKET
For more information on how we allocate capital See page 25
MINE
PROCESS
BUSINESS
OUTCOMES
FINANCIAL
Delivery of consistent and superior cash returns
and capital appreciation that reflects free cash flow
generated from operations and the recognition of a
strong platform for future growth.
For more information on our KPI table
See page 16
HUMAN
A healthy, motivated and fairly compensated
workforce that is provided with the necessary
training and development to achieve their personal
and professional objectives and potential.
For more information on our KPI table
See page 16
INTELLECTUAL
A high performance culture where we are leaders
from both a personnel and operational perspective.
The speed and application of leading resource
development and mining practices helps us create
a competitive and cost advantage.
For more information on our KPI table
See page 16
NATURAL
We effectively manage and mitigate environmental
risks by implementing robust policies and procedures,
and create related opportunities that deliver long term
benefits to our stakeholders.
For more information on our KPI table
See page 16
MANUFACTURED
Through the effective delivery of our commodities
and the collaborative business partnerships we build
with our stakeholders, we develop products that
benefit society at large.
For more information on our KPI table
See page 16
SOCIAL AND RELATIONSHIPS
We create mutually beneficial partnerships with all our
stakeholders. We are a development partner with the
reputation, the resources and the rigour to deliver on
our commitments to all parties.
For more information on our KPI table
See page 16
OUR OPERATING MODEL
A structured approach to
how we set targets, plan, execute
and improve our work.
SETTING OUT STRATEGIES
AND TARGETS TO DELIVER
PERFORMANCE
We have an operational planning
process to ensure we deliver the
business expectations.
DELIVERING THE RIGHT
WORK, AT THE RIGHT TIME,
IN THE RIGHT WAY
Through our work management
process we plan, schedule, and
resource work so we can do the
work efficiently.
MONITORING HOW WE ARE
DOING AGAINST THE PLAN
Our teams use analysis and
feedback processes to improve
and sustain our business.
For more information on our
Operating Model See page 30
15
RISK
Strategic reportAnglo American plc Annual Report 2014
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 workforce
For more information see
People on page 36
Work related fatal injury frequency rate (FIFR)
FIFR is the number of employee or contractor fatal
injuries due to all causes 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
Total recordable case frequency rate (TRCFR)
TRCFR is the number of fatal injuries, lost time
injuries and medical treatment cases for both
employees and contractors per 200,000 hours
worked
Environment
To minimise harm
to the environment
For more information see
Performance on page 28
Energy consumption
Measured in million gigajoules (GJ)
Greenhouse gas (GHG) emissions
Measured in million tonnes of CO2 equivalent
emissions
Total new water consumed
Total new 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 36
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 underlying EBIT,
less underlying EBIT of associates and joint ventures
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 and
productive workforce
For more information see
People on page 36
Production
To extract our mineral
resources in a sustainable
way to create value
For more information see
Group Financial Review on page 18
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 48–64). Quarterly
production figures are shown on page 208
Cost
To be competitive by
operating as efficiently
as possible
For more information see
Group Financial Review on page 18
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 48–64). Other factors that impact
costs across the Group are discussed in the Group
Financial Review (see page 18). See page 202 for the
definition of real cash costs
Financial
To deliver sustainable
returns for our shareholders
For more information see
Group Financial Review on page 18
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
EBIT 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.
(2) The results and targets in the KPI table above include wholly owned subsidiaries and joint operations over which Anglo American has management control.
16
Anglo American plc Annual Report 2014 RESULTS AND TARGETS(2)
FIFR(3)
Target: Zero fatal incidents
TRCFR
Target: 10% year-on-year reduction
The ultimate goal of zero harm remains
NCOD
Target: Zero (long term)
2014
2013(3)
6 fatalities, 0.003 FIFR
2014
2013
15 fatalities, 0.008 FIFR
0.81
1.08
2014
2013
175
209
Energy consumption
Million GJ total energy used
Target: 7% saving vs. 2015 projected business as usual (BAU)
Performance: 5% saving vs. 2014 BAU
GHG emissions
Mt CO2 equivalent
Target: 19% saving vs. 2015 projected BAU
Performance: 22% saving vs. 2014 BAU
Total new water use
Mm3 new water used
Target: 14% saving vs. 2020 projected BAU
Performance: 16% saving vs. 2014 BAU
2014
2013
108
106
2014
2013
17.4
17.1
2014
2013
195
201
Corporate social investment(4)
2014: 3.0% of underlying EBIT, less associates and joint ventures
2013: 2.2% of underlying EBIT, less associates and joint ventures
Enterprise development
Businesses supported
Enterprise development
Jobs sustained
2014
2013
$136 m
$127 m
2014
2013
58,257
48,111
2014
2013
96,873
76,543
Voluntary labour turnover
Gender diversity
Managers who are female
Gender diversity
Women as a percentage of total workforce
2014
2013
Production change
% change versus 2013
2.0%
2.0%
2014
2013
24%
23%
2014
2013
16%
15%
Iron ore
Coal
1%
15%
Copper (attributable)
(3%)
8%
Nickel
Niobium
4%
Phosphates (fertiliser)
(7%)
(21%)
Platinum (equivalent refined)
De Beers
5%
Group real cash cost movements 2010–2014
(1%)
(2%)
2014
2013
2012
2011
2010
2%
2%
8%
2014 cash cost movement is normalised
for the impact of the strike at Platinum.
Data reported in 2012 includes results
from De Beers from the date of acquisition
Group attributable ROCE
Underlying EPS
2014
2013
8%
11%
2014
2013
$1.73
$2.09
(3) At the end of 2013 it was reported that two colleagues remained unaccounted for following the geotechnical event at the Port of Santana in which six people were
involved. A certificate of presumed death has subsequently been issued for one person and the number of loss of life incidents in 2013 has been restated to 15.
Included within the CSI expenditure figure for 2014 is expenditure relating to Zimele ($10.1 million) and social programmes delivered as part of Iron Ore Brazil’s
licensing conditions ($3.5 million). These items were not included in previous years.
(4)
17
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT GROUP FINANCIAL REVIEW
GROUP FINANCIAL
REVIEW
Anglo American reported underlying earnings
of $2.2 billion (2013: $2.7 billion), with underlying
EBIT decreasing by 25% to $4.9 billion.
Falling prices across most of our commodities ($2.4 billion
impact(1)), and the five-month strike at Platinum ($0.8 billion
impact) more than offset the increases in underlying EBIT,
most notably at De Beers.
The Group’s results also benefited from currency
fluctuations in the countries where the operations are based.
The strengthening of the US dollar against the South African
rand and the Australian dollar resulted in a $1.3 billion
favourable exchange variance in underlying EBIT compared
with 2013. CPI inflation had an adverse $0.8 billion impact
on underlying EBIT. Further gains were also made through
moderation of input costs and cost reduction initiatives.
Net debt increased by $2.2 billion to $12.9 billion
(2013: $10.7 billion) and total capital expenditure remained
broadly flat at $6.0 billion (2013: $6.1 billion).
OPERATIONAL PERFORMANCE –
PRODUCTION/COSTS
In contrast to the financial performance, operational
performance across the majority of our commodities
improved compared with the prior year. Production at
Kumba Iron Ore (Kumba) increased by 14%, with a
strong performance at both Kolomela and Sishen, and
metallurgical coal production at Coal – Australia and Canada
increased by 12% driven by improved operating equipment
efficiencies at Grasstree. In addition, Minas-Rio produced
0.7 Mt (wet basis) in 2014 after commencing operations
in the fourth quarter and reaching first ore on ship on
25 October. Platinum production (equivalent refined)
was down 21%, largely driven by the 532,000 ounces lost
as a result of the strike affecting three sites in South Africa.
Costs at Coal – Australia and Canada were down 8% largely
in relation to labour, contractors and maintenance, while at
Nickel lower electricity tariffs resulted in a 5% decrease in
production costs. Costs at our South African operations
increased as a result of inflationary pressures in the country,
although underlying cost reduction initiatives, specifically in
relation to corporate restructuring, have made progress.
Platinum unit costs increased by 20% from 2013, owing
to the continued incurrence of costs during the strike in
the first half of the year. However, during the strike, lower
variable costs as a result of the ‘no work, no pay policy’
resulted in cost savings of $300 million.
(1) Excludes De Beers
volume/price and
impact of the strike
at Platinum.
18
INCOME STATEMENT
Underlying EBIT
$ million
Iron Ore and Manganese
Coal(2)
Copper
Nickel
Niobium(2)
Phosphates(2)
Platinum
De Beers
Corporate and other(2)
Total
Year ended
31 Dec 2014
Year ended
31 Dec 2013
1,957
458
1,193
21
67
57
32
1,363
(215)
4,933
3,119
587
1,739
(44)
82
68
464
1,003
(398)
6,620
(2) Refer to note 3 in the financial statements for changes in reporting segments.
Comparatives have been reclassified to align with current year presentation.
Underlying earnings
Group underlying earnings were $2.2 billion, a 17%
decrease (2013: $2.7 billion).
Net finance costs
Net finance costs, before special items and
remeasurements, excluding associates and joint
ventures, were $256 million (2013: $276 million). The
decrease was due to lower average LIBOR rates on
borrowings and increased capitalised interest, offset
by lower interest income.
Tax
The effective rate of tax, before special items and
remeasurements, including attributable share of associates’
and joint ventures’ tax, decreased from 32.0% in 2013 to
29.8%. This lower rate was due to the impact of certain
prior year adjustments, the remeasurement of withholding
tax provisions across the Group, and the recognition of
previously unrecognised losses. In future periods, it is
expected that the effective tax rate will remain above the
United Kingdom statutory tax rate.
Special items and remeasurements
Special items and remeasurements, after tax and
non-controlling interests, primarily relate to impairments
in respect of the Minas-Rio iron ore project ($3.5 billion,
post-tax), Peace River Coal and other operations within
the Coal segment ($0.3 billion, post-tax), and costs in
respect of the closure of the Drayton coal mine in Australia
($0.2 billion, post-tax). Full details of the special items
and remeasurements charges are to be found in note 6
to the financial statements.
Anglo American plc Annual Report 2014
Underlying earnings
$ million
Iron Ore and Manganese
Coal(1)
Copper
Nickel
Niobium(1)
Phosphates(1)
Platinum
De Beers
Corporate and other(1)
Total
Year ended 31 Dec 2014
Net finance
costs and
income tax
expense
Non-
controlling
interests
Underlying
earnings
(583)
(154)
(482)
(15)
(37)
(22)
(14)
(264)
(111)
(657)
(8)
(218)
–
–
–
7
717
296
493
6
30
35
25
(176)
18
923
(308)
Underlying
EBIT
1,957
458
1,193
21
67
57
32
1,363
(215)
4,933
(1,682)
(1,034)
2,217
(1) Refer to note 3 in the financial statements for changes in reporting segments.
Reconciliation to loss for the period from underlying earnings
$ million
Underlying earnings
Operating special items
Operating remeasurements
Non-operating special items
Financing special items and remeasurements
Special items and remeasurements tax
Non-controlling interests on special items and remeasurements
Share of associates’ and joint ventures’ special items and remeasurements
Loss for the financial period attributable to equity shareholders of the Company
Underlying earnings per share (US$)
BALANCE SHEET
GROUP ROCE
Year ended
31 Dec 2014
Year ended
31 Dec 2013
2,217
2,673
(4,374)
(3,211)
(1)
(385)
36
2
38
(46)
(2,513)
1.73
(550)
(469)
(130)
587
214
(75)
(961)
2.09
Net assets of the Company totalled $32.2 billion at
31 December 2014 (31 December 2013: $37.4 billion).
This decrease resulted from impairments of $3.9 billion,
the impact of the weaker South African rand and Australian
dollar of $1.9 billion, depreciation of $2.8 billion and net
drawdown of additional debt of $1.8 billion. This was partially
offset by capital expenditure for the year of $6.0 billion, and
capitalised interest of $0.4 billion.
Attributable ROCE was 8% in 2014 (2013: 11%) as a
consequence of weaker commodity prices, alongside
ongoing capital expenditure, primarily at Minas-Rio and
Grosvenor, partially offset by depreciating foreign exchange
and a lower proportion of post-tax earnings attributable
to non-controlling interests. The 8% in 2014 would have
been 10% at 30 June 2013 exchange rates and commodity
prices. Average attributable capital employed increased
from $39.7 billion in 2013 to $40.4 billion in 2014. No
improvement to ROCE has been realised as a result of
the impairments at Minas-Rio and Coal, in line with the
ROCE methodology as described on page 203.
19
Strategic reportAnglo American plc Annual Report 2014 STRATEGIC REPORT GROUP FINANCIAL REVIEW
Net debt
$ million
Opening net debt
EBITDA(1)
Working capital movements
Other cash flows from operations
Cash flows from operations
Capital expenditure including related derivatives(1)
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
Disposals
Purchase of shares by subsidiaries for employee share schemes
Other net debt movements
Total movement in net debt
Closing net debt
(1) See page 202 for the definition of EBITDA and capital expenditure.
7,104
9
(164)
6,949
(6,018)
(1,298)
460
(473)
(823)
(1,203)
(1,099)
–
44
(111)
150
2014
(10,652)
2013
(8,510)
8,806
(1,121)
44
7,729
(6,075)
(1,201)
264
(533)
(1,159)
(975)
(1,078)
(395)
112
(92)
286
(2,219)
(12,871)
(2,142)
(10,652)
Liquidity and funding
At 31 December 2014, the Group had undrawn committed
bank facilities of $8.4 billion and cash of $6.7 billion.
The Group’s forecasts and projection, 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.
At 31 December 2014, Anglo American’s ratings were
Moody’s Baa2 (negative outlook) and Standard & Poor’s
BBB (negative outlook).
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).
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 $2.2 billion to $12.9 billion
(2013: $10.7 billion) and net debt to total capital at
31 December 2014 was 28.6%, compared with 22.2%
at 31 December 2013.
Cash flow from operations
In 2014, there was a cash reduction in working capital of
$9 million compared with 2013. This was mainly driven by a
$576 million decrease in debtors, reflecting the receipt of
high year end 2013 debtors at Copper and Kumba following
a production outperformance at the end of that year. There
was no similar build in debtors at the end of 2014. This
reduction has been offset by an increase in stock of
$129 million, primarily due to rail and port constraints at
Kumba, as well as stock increases at De Beers, partially
offset by reductions in high stock levels due to strike action
at Platinum. A decrease in creditors of $438 million, driven
by working capital requirements at Cerrejón, offset the
remaining year-on-year working capital movement.
20
Anglo American plc Annual Report 2014 Attributable free cash flow
Total capital expenditure remained broadly flat at
$6.0 billion (2013: $6.1 billion). Capital expenditure is
shown net of proceeds on the disposal of property, plant
and equipment (2014: $71 million, 2013: $140 million)
and is net of capital expenditure funded by the minority
partner at Quellaveco (2014: $42 million, 2013: $46 million).
Prior year comparatives have been re-presented to align
with current year presentation.
Net debt is expected to continue to rise in 2015, as
expenditure on the Group’s projects offsets cash generated
from operations.
The majority of dividends paid to non-controlling interests
of $823 million (2013: $1,159 million) were to minority
shareholders of Copper and Kumba, where external
dividends of $116 million and $674 million were paid
respectively (2013: $474 million and $663 million).
Disposals are mainly due to the receipt of deferred proceeds
related to the formation of the Lafarge Tarmac joint venture.
DIVIDENDS
Analysis of dividends
US cents per share
Interim dividend
Recommended final dividend
Total dividends
Year ended
31 Dec 2014
Year ended
31 Dec 2013
32
53
85
32
53
85
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 (2013: 85 US cents per share), subject to
shareholder approval at the Annual General Meeting to be
held on 23 April 2015.
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.
21
Strategic reportAnglo American plc Annual Report 2014 PORTFOLIO: WHERE WE COMPETE
FOCUS:
MINAS-RIO DELIVERS
The delivery of first ore on ship from the Minas-Rio iron
ore project in Brazil, $400 million below the revised
capital budget of $8.8 billion, represented one of our three
major commitments to shareholders in 2014. The first
cargo of more than 80,000 tonnes of iron ore for the blast
furnace pellet feed market was loaded on to a chartered
vessel at the dedicated export terminal at the port of Açu
in Rio de Janeiro state in October, arriving eight weeks later
at the port of Zhanjian in southern China.
What sets Minas-Rio apart is its rare magnitude and
quality. One of the world’s biggest undeveloped iron ore
resources, its Ore Reserves have more than doubled since
2013, and are currently 2.8 billion tonnes (at 34.4% Fe).
Minas-Rio produces high quality products, with a high
iron content of around 67.5%, and low impurity (alumina
and silica are below 3%), and is expected to capture
a significant portion of the pellet feed market. Real
long term cash costs are likely to be around the
$33–$35/tonne mark, placing it among the world’s
major low cost iron ore operations.
The focus now at Minas-Rio is on a safe ramp up to
between 24 and 26.5 million tonnes (wet basis) of
saleable products of iron ore pellet feed in 2016.
Minas-Rio is favourably placed on the global cost curve
and provides Anglo American with a major long life asset
with which to compete in the global seaborne iron ore
market. It also offers the optionality and the marketing
benefits of being able to supply iron ore from two
continents, providing Anglo American with clear
competitive advantage.
Images
At the beneficiation
plant at the Minas-Rio
mine site in Conceição
do Mato Dentro in
Brazil, processing
operator Aline de Oliveira
Rosa (left) and crushing
operator João Batista
Ferreira da Silva inspect
a conveyor.
In October 2014, the
first iron ore from the
Minas-Rio project was
loaded on to a vessel at
Açu, en route to China.
22
Anglo American plc Annual Report 2014
COMPETING
BETTER
RESERVE LIFE
45 years
RESERVES(1)
~2.8 Bnt
EXPECTED PRODUCTION IN 2016(2)
24–26.5 Mt
(1) At 34.4% Fe.
(2) Refers to saleable product tonnes (wet basis with
average moisture content of 8.0 wt% of the wet mass).
KEY
1 Minas-Rio operation
2 Ferroport – export terminal
Location
The Minas-Rio mine site is located in the
state of Minas Gerais and the port facility
is located in Rio de Janeiro state, both
in Brazil.
Minas-Rio
The Minas-Rio operation comprises
a series of open pit mines and a
beneficiation plant at the mine site,
a 529 kilometre pipeline to transport
iron ore in slurry form, a filtration/
dewatering plant at the port, and the
port itself – a dedicated deep water
iron ore export terminal.
1
12
Anglo American plc Annual Report 2014
23
Strategic report PORTFOLIO: WHERE WE COMPETE
OPTIMISING OUR
DIVERSE PORTFOLIO
At Anglo American, we believe that being a
global diversified mining company positions
us best for long term value creation.
Commodity diversification in 2014
and long term view(1)
EBIT (excluding Corporate and Exploration)
% of total
2014
Iron Ore and Manganese
Coal
Copper
Long term
Nickel
Niobium
Phosphates
Platinum
Diamonds
(1) Long term view is based on consensus prices and foreign exchange.
Cycle stage diversification in 2014
and long term view(1)
EBIT (excluding Corporate and Exploration)
% of total
2014
Long term
Consumables
Consumables (late)
Infrastructure
Energy
Food
Other
(1) Long term view is based on consensus prices and foreign exchange.
A DIVERSIFIED APPROACH
The primary source of competitive advantage in the mining
industry is to own high quality assets in the most attractive
commodities. Leadership can be achieved by operating
such assets to their full capability while optimising the
development of their resource potential to ensure strong
future asset positioning.
Given the dynamic industry landscape, the attractiveness of
commodities can shift over time depending on business and
social trends. The ability to anticipate trends and manage
our portfolio within this context is critical to delivering
sustainable business returns.
Understanding these industry ‘rules’, Anglo American has
made clear choices about where it will compete. This has led
to a diversified portfolio approach to position the company
well to take advantage of opportunities across commodities,
geographies and the mining value chain. This approach also
helps us cope with downturns and other industry turbulence.
Within our portfolio, we maintain a clear and disciplined
focus on our ‘Priority 1’ (P1) assets as these are our greatest
source of both short term returns and of potential long term
value creation.
A range of attractive commodities
across geographies
We participate in a range of commodities we believe
possess attractive medium to long term fundamentals
and which span all stages of the economic development
cycle. Our diversified portfolio offers exposure to bulk
commodities and base metals to precious metals and
diamonds (through De Beers). Our bulk commodities
include iron ore, manganese, metallurgical coal and thermal
coal, all of which benefit from the continued industrialisation
and urbanisation in emerging economies. Our base
metals and minerals include copper, nickel, niobium and
phosphates and offer mid-cycle exposure. In precious
metals and minerals, we are the global leader in both
platinum and diamonds. These areas are typically later
cycle, with strong demand coming from more developed,
higher GDP areas, such as the US, Japan and the major
cities in China.
While copper, diamonds and iron ore are our top priorities
and areas of investment, we are not limited by these
preferences. We continue to review opportunities across
our full range of preferred commodities.
Our portfolio is multi-regional, which further positions us
to access the best opportunities and helps ensure a balance
of political and currency risks. Our mining operations,
growth projects and exploration and marketing activities
extend across southern Africa, South America, Australia,
North America, Asia and Europe.
24
Anglo American plc Annual Report 2014
Geographic diversification in 2014
and long term view(1)
EBIT (excluding Corporate and Exploration)
% of total
2014
Long term
Brazil
Rest of the World
South Africa
Australia
Chile
(1) Long term view is based on consensus prices and foreign exchange.
A clear focus on the best assets
Within our diversified portfolio, we are increasingly focused
on higher quality resources and assets which can deliver
consistently high margins through commodity cycles. While
we manage all holdings in this portfolio to the best of our
ability, the clear focus is on P1 assets. P1 assets command
the most attention of the business unit and Group
management time and are prioritised for capital allocation
to ensure they reach their full potential.
We determine asset priority through a careful assessment
of strategic attractiveness and ultimate value creation
potential. We consider and analyse a number of factors,
including cost position, endowment and resource scale
and quality, life and specific risk, alongside relevant
qualitative factors. We then overlay our view of
commodity attractiveness.
Our 16 P1 assets contributed 90% of our underlying EBIT
in 2014. Furthermore, the majority of our capital expenditure
related to P1 assets.
‘Priority 2’ (P2) assets are those which we believe have
exciting cash generation potential, though not on the
same scale as P1 assets. We nurture these assets and
resource positions to deliver material contributions to
returns, or redeploy our efforts and capital where this is not
possible. We typically provide ‘lighter touch’ support to P2
assets which often act as a good training ground for talent
and innovation.
Lowest priority assets are those that would be better
managed by another operator because we choose not to
invest in them fully, given finite resources and management
time. Some are managed for value, while we look to exit
others where appropriate. We are continuing to define and
execute our asset divestment programme.
Selective value chain participation
Our portfolio and operational focus is predominantly
upstream, generally in resource and mine development
and operations. We invest in downstream activities and
facilities only if they help sustain or increase profits through
the value chain and have developed leading capabilities in
select areas.
OUR APPROACH TO CAPITAL ALLOCATION
Across the Group, we continue to apply our capital allocation
model in line with our portfolio strategy, while maintaining
the objective of optimising our investment in the business in
order to deliver superior returns.
The model is built on the principles of living within our
means and funding our growth from internal cash flow, a
rigorous approach to capital approval, and managing our
balance sheet to ensure appropriate levels of gearing and
financial risk.
Our investment decisions reflect the ongoing application
of our capital planning and review processes. Every year,
capital plans from across the Group undergo a detailed
prioritisation process that ensures our capital budget is
affordable under a range of commodity price scenarios,
is focused on the highest priority areas of our portfolio,
is technically sound, and is advancing projects which we
expect to deliver suitably attractive returns.
In addition to this, all material new investments (either in
existing or new operations) are evaluated to ensure an
appropriate balance between technical and financial risk
and supporting the businesses to develop their most
attractive new projects.
Study and evaluation expenditure
The Group continues to study a series of expansionary
projects, with a range of options, to deliver profitable
growth. Our focus is on ensuring we have a series of
low risk, high return brownfield expansion options,
targeted on our highest priority assets.
Studies in progress include examining the optimal
expansion path for Platinum’s Mogalakwena mine, the
potential to further optimise the Moranbah-Grosvenor
metallurgical coal hub, life extension possibilities in
South African thermal coal, and further optimisation of
Kumba’s Kolomela mine. The Group has reviewed its
approach to project development, with a new emphasis on
ensuring that extensive desktop studies of available options
are completed prior to moving projects through study
phases, so that the most attractive projects are identified
and then progressed in the most efficient manner through
to execution. These include the Quellaveco copper project,
where the feasibility study is expected to be completed in
2015. This revised approach has resulted in study and
evaluation costs falling to $218 million in 2014, compared
with $326 million in 2013.
25
Strategic reportAnglo American plc Annual Report 2014
PORTFOLIO: WHERE WE COMPETE
Exploration expenditure
by commodity in 2014
$ m
Iron ore
Coal
Copper
Nickel
Phosphates
Platinum group metals
Diamonds
25
17
37
16
4
8
37
Central exploration activities 37
%
15
10
20
9
2
4
20
20
Total
181
100
Platinum group metals exploration accounted for $8 million
and was mainly focused on reviewing and repositioning the
project portfolio within South Africa’s Bushveld Complex.
In addition, prospecting for platinum group metals was also
conducted around our Unki platinum mine in Zimbabwe.
Diamond exploration was $37 million and related to
work conducted in Angola, Botswana, Canada, India and
South Africa. The exploration team continued to provide
technical services to the resource extension programmes
for the Jwaneng and Orapa mines in Botswana.
Exploration
Exploration is a clear strategic choice for Anglo American
to deliver transformative value creation via discovery of
P1 assets, maximise value at key operations, and to position
us to compete for the next major undeveloped or potential
resource in our selected commodities. We continue to have
a diversified portfolio of exploration opportunities in highly
endowed brownfield environments as well as key land
positions and partnerships in frontier belts. Through an
emphasis on ‘Smart Discovery’, the team applies innovative
exploration concepts and techniques to both frontier and
established districts.
Global exploration activity for 2014 concentrated 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 across all our commodities. Exploration
expenditure for the year amounted to $181 million
(2013: $207 million) and spanned 19 countries.
Copper exploration expenditure of $37 million consisted
mainly of near-mine and greenfield exploration drilling in
Chile and assessing the potential in the Quellaveco district
in Peru. Greenfield exploration was conducted in Argentina,
Australia, Brazil, Chile, Colombia, Indonesia, Kalaallit Nunaat
(Greenland), Peru, the US and Zambia. 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 $15 million and was concentrated on the Sakatti project
in northern Finland. Greenfield polymetallic exploration
was also conducted in the Mosku region of Finland and the
Canadian Arctic. Nickel exploration expenditure amounted
to $1 million and targeted nickel sulphides in the Morro Sem
Boné district in Brazil. Phosphates exploration expenditure
totalled $4 million and was concentrated on assessment
of district-wide greenfield prospects and further definition
drilling at the advanced Morro Preto phosphates project in
central Brazil.
Expenditure on metallurgical coal exploration totalled
$8 million. This included drilling, seismic surveys in the
Middlemount region in Australia, and coal quality analysis
and resource assessment work on the tenements
surrounding the Peace River Coal Trend Mine and Roman
Project in Canada. Expenditure on thermal coal and coal
bed methane (CBM) exploration in Africa amounted
to $9 million. This was incurred primarily on coal drilling
and analysis in South Africa and Botswana, and on CBM
drilling and analysis in South Africa. Iron ore exploration
expenditure of $25 million was concentrated around
operations in South Africa and greenfield projects in Liberia.
26
Anglo American plc Annual Report 2014 Projects initiated in 2014
In line with its increased focus on capital discipline and
responding to market conditions, the Group approved
relatively few new projects in 2014.
At De Beers, the Gahcho Kué project commenced
construction following receipt of necessary permits and
licences and is expected to deliver an estimated 52 million
carats (100% basis) over its 13-year life from the second
half of 2016. De Beers’ 51% share of Gahcho Kué’s capital
expenditure is approximately $0.5 billion. The Group
also supported investment in a new treatment plant at
the Letlhakane diamond mine in Botswana, a low risk,
high return project designed to process the extensive
tailings mineral resource that has been deposited over
30 years. De Beers’ 19.2% share of capital expenditure
is less than $0.1 billion.
Acquisition and disposal activity
In July, Anglo American announced that it had reached
a binding agreement to sell its 50% holding in Lafarge
Tarmac to Lafarge SA (Lafarge) for a minimum value of
£885 million (approximately $1.35 billion at present) in
cash, on a debt- and cash-free basis, and subject to other
customary working capital adjustments. The sale is subject
to a number of conditions, including the completion of the
proposed merger of Lafarge and Holcim Limited.
In December, the Group also gave notice to the Peruvian
government to terminate the 2007 privatisation agreement,
which has resulted in Anglo American withdrawing from the
exploration phase Michiquillay copper project.
Capital expenditure(1)
$ million
Expansionary
Stay in business
Development and stripping
Proceeds from disposal of
property, plant and equipment
Year ended
31 Dec 2014
Year ended
31 Dec 2013
3,248
1,973
868
(71)
3,213
2,241
761
(140)
Total
6,018
6,075
(1) See page 202 for the definition of capital expenditure.
Projects and capital expenditure
In 2014, capital expenditure amounted to $6.0 billion,
of which $3.2 billion was committed to expansionary
projects and $2.0 billion to sustaining our existing business.
Expansionary capex remains concentrated on the delivery
of our portfolio of major projects (Minas-Rio, Barro Alto and
Grosvenor). As these projects transition into operational
production, expansionary capital will decrease, which
will enable the Group to further align its level of growth
investment with prevailing commodity market conditions.
Projects in ramp up in 2014
In addition to delivering first ore on ship at Minas-Rio in
October, the Group also completed the Boa Vista Fresh
Rock (BVFR) niobium and Cerrejón P40 thermal coal
projects in 2014.
The BVFR project delivered first production in November,
and is expected to reach full nameplate capacity in 2017.
When fully ramped up, production from existing operations
is expected to increase to 6,800 tonnes of niobium per
annum (2014: 4,700 tonnes).
The Cerrejón P40 project was also completed, increasing
infrastructure capacity for coal exports. Ramp up of
capacity at the shiploaders will continue in 2015, although
production capacity is expected to be constrained at
35 million tonnes per annum (Mtpa) owing to market
and operational constraints.
Projects advanced in 2014
The Grosvenor metallurgical coal project in Queensland
advanced towards its target of first longwall coal production
in late 2016. Once complete, the project is expected to
deliver 5 Mtpa of high quality metallurgical coal for the
seaborne market. The Group is also evaluating surface
infrastructure options to fully capture the value from the
Moranbah-Grosvenor complex.
At Venetia in South Africa, De Beers continues to advance
the development of the underground project, with the
expectation of first underground production in 2021.
In Nickel, the rebuild of the first of Barro Alto’s two
furnaces is under way, with the expectation that the plant
will reach nameplate capacity during 2016.
27
Strategic reportAnglo American plc Annual Report 2014 PERFORMANCE: HOW WE WIN
FOCUS:
FOCUSING ON OUR BEST ASSETS
Mogalakwena is a Priority 1 asset and the flagship
operation in our Platinum portfolio. Although the mine’s
operating costs are already among the lowest in the
industry, over the past two years the focus has been
on implementing a number of business improvement
initiatives to raise productivity and reduce costs further –
maximising the value delivered from the asset, with
minimal additional capital commitment.
The main initiatives include increasing the effectiveness
of the mine’s drills, explosives, diesel, shovels and mining
trucks. These are yielding significant improvements in
availability and utilisation. For example, since 2012, drill
penetration has improved by 36%, while mining truck
utilisation – which has increased by 15% over the same
period – is now considered to be world class.
In 2014, Mogalakwena delivered more than 350,000
ounces of platinum, an increase of 50,000 ounces over
2012. Collectively, the business improvement initiatives
have resulted in a 33% increase in total tonnes mined
over the past two years. In 2015, we will be implementing
Anglo American’s Operating Model at the mine and expect
to increase production to 360,000 ounces while incurring
limited capital spend.
As well as improving operational performance in the short
term, the team at Mogalakwena plans to maximise returns
over the longer term. The strategic mining plan has been
scrutinised and revised accordingly, with the resultant aim
of reducing total tonnage mined by more than 85 million
tonnes per annum (Mtpa), against the previous plan of in
excess of 200 Mtpa. The consequent fall in the stripping
ratio is estimated to save the company close to $3 billion
in avoided cost increases over the next 20 years.
Images
HR development
trainers Stephan Voges
(left) and Lebogang
Langa with the new
rope-shovel simulator
at Mogalakwena,
Anglo American’s
flagship platinum mine.
At a drilling site in
Mogalakwena’s huge
open pit, haul trucks
await their turn to take
away overburden
covering the rich
deposits of platinum
group metals.
28
Anglo American plc Annual Report 2014
IMPROVING
PERFORMANCE
RESERVE LIFE
>26 years
RESERVES (4E)
~135 Moz
MINING RATE POTENTIAL IN 2015
360 koz/pa
Location
Mogalakwena is situated 30 kilometres
north-west of the town of Mokopane
in South Africa’s Limpopo province and
is the only operational platinum mine on
the Bushveld Complex’s 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 to
245 metres. The ore is milled at the new,
fully operational North Concentrator and
the older South Concentrator.
Anglo American plc Annual Report 2014
29
Strategic report PERFORMANCE: HOW WE WIN
IMPROVING FUNDAMENTAL
OPERATING PERFORMANCE
Over the past year, we have continued to review
our organisation and implement vital changes to
ensure the sustainability of our business.
The changes implemented in 2014 have been far reaching.
We are rebuilding our operational and technical capability
to drive improved performance. As part of this focus, our
new Operating Model is bringing a consistent and stable
approach to how we do all our work – this includes the way
we mitigate our environmental impact. By ensuring more
predictable performance at our operations we are able to
optimise the mine-to-market value chain, and ultimately
respond better to customer demands.
REBUILDING TECHNICAL EXCELLENCE
Our business turnaround is dependent on rebuilding our
operational and technical capability. To do this, our Technical
and Sustainability function’s strategy has three pillars:
technical leverage, technical innovation and Anglo American’s
Operating Model. We have established a new leadership team
whose focus is to deliver on all three pillars.
Technical leverage will come from having highly capable
and knowledgeable people in the right roles. We have been
able to demonstrate how technical leverage works in practice
through an integrated approach to technical initiatives piloted
at Minas-Rio in 2014. Teams from both Minas-Rio and
elsewhere in Anglo American worked seamlessly, based on
clear roles, responsibilities and accountabilities. In 2015, the
same disciplined approach is being used to structure a jointly
managed programme of improvement initiatives across our
Los Bronces, Sishen, Mogalakwena and Kolomela
operations. Across the Group our focus will be on raising
operations to a consistent level of best practice, improving
fundamental operating performance against a detailed
framework of ‘what good looks like’.
safer, more efficient, environmentally friendly and sustainable
ways to unlock mineral value.
The third pillar is Anglo American’s Operating Model,
which forms a strong foundation from which we can build
and transform the business.
OPERATING MODEL FOCUS
Doing the fundamentals better is key to ensuring reliable and
predictable performance. Using a single operating model for
how we set targets, plan, manage, execute and improve our
work brings a consistency of approach, a common language
and way of working across the business, irrespective of
history or culture. By getting the basics right, and operating
our assets to their full potential, we will enhance our long term
operational capability.
Key principles
There are three basic principles underpinning the
Operating Model:
Produce stability: Stable operations deliver
predictable outcomes.
• Instability comes from unanticipated conditions or actions
that destroy our ability to make reliable predictions.
• Stable and capable operations experience lower operating
costs and fewer capital expenditure requirements.
Reduce variation: Lower variation in operational
performance increases capability and efficiency.
• All processes have variation: the key is to reduce variation
either at the input stage or within the process.
Through FutureSmart™, Anglo American’s approach to
innovation, we will accelerate our ability to use innovation
and technology to address our critical challenges and to find
Provide clarity: Team members who have a clear
understanding of their own work, and how their team works,
produce consistent and repeatable outcomes.
The Operating Model journey
RIGHT WORK, RIGHT TIME, RIGHT WAY
01
02
03
04
05
06
07
08
09
10
Project set up
Detailed
training
Configuration
workshop
Gap analysis
Critical issue
resolution
Site readiness
Role holder
training
GO LIVE
Stabilisation
Close out
Sponsors agree
project scope.
Project set up
ensures it is
adequately
planned,
resourced and
scheduled.
Dedicated site
based project
team trained
in Operating
Model and
roll out
process.
Roles and
account-
abilities are
assigned in
detail against
the project
scope and
Operating
Model design.
In-depth
analysis to
identify issues
affecting
success. Focus
on social,
technical,
resourcing
and KPIs.
Addressing all
critical issues
that will affect
successful
implementation.
Systems,
processes, new
management
routines tested
and fine tuned.
Transition plans
prepared.
Training for
employees
whose work
procedures
have changed.
Working in the
new way begins
in daily
operation.
Compliance
to the plan is
measured.
Critical issues
are resolved
and transition
coaching is
provided to
embed new
ways of
working.
Lessons
learned during
implementation
are captured
and shared
across the
organisation.
30
Anglo American plc Annual Report 2014 2014
2015
2016
2017
2018
Operating Model – roll out schedule
Mine
Sishen – North mine
Sishen – Rest of mine
Kolomela
Minas-Rio
Mogalakwena
Tumela
De Beers
Los Bronces
Moranbah North
Australia Coal – Other
Coal South Africa
Phosphates
Barro Alto
Corporate – Various
Outcomes
Central to the Operating Model is the discipline of planned
work, which has been proven across many industries to
deliver substantial benefits:
Productivity
• Planned work is 30% more productive than
unplanned work.
Costs
• An unplanned breakdown of in-service equipment
can cost 10 times more than a planned shutdown.
• Stable and capable operations experience lower operating
costs, and have fewer capital expenditure requirements.
Safety
• Planned work is 70% safer than unplanned work.
Environment
• Most environmental discharges result from unplanned
stoppages of in-service equipment.
The Operating Model pilot implementation took place at
Kumba’s Sishen North mine during 2014. The main benefit
identified has been the detailed integrated work schedule,
designed to deliver safe production, in line with the
forecast in the short to medium term mine plan. Through
implementing the Operating Model in ore and internal
waste operations, with a clear focus on how work is
managed and executed, the mine is consistently delivering
significantly higher average daily volumes. This has been
achieved through:
• Improving scheduled work from 20% to around 70%
• A 23% efficiency improvement in total tonnes handled
• A 50% reduction in waiting time on shovels.
We expect this improvement to continue and stabilise as the
programme embeds into working practices. Stabilisation is
the period of greatest adjustment for most people. There are
new role holders in place, existing role holders performing
new tasks, new management routines, and additional
training in new systems and processes. It represents a
transition phase stretching over many months. The Sishen
North mine implementation is guiding the roll out to the rest
of the mine, focused initially on waste mining, and at the
Kolomela plant. Lessons from the pilot have been integrated
into the overall implementation approach across the Group.
The Operating Model journey
Successful implementation of the Operating Model is
reliant on all of our people being clear about the work to be
undertaken, and also on their being inspired to work together.
Following nine months of preparation, we have now derived
a comprehensive system for intervening in matters of
operational performance. It is based on our two business
models coming together. The Operating Model defines the
work: right work, right time, right way; the Organisation Model
defines accountability for its delivery: right people, right roles.
Roll out programme
Building capability internally is crucial to the programme’s
success and its sustainability over the long term. Our Centre
for Experiential Learning, a dedicated internal training facility,
will support Operating Model skills development. Targeted at
managerial and supervisory levels, and run on the lines of a
professional adult learning institute, teams will learn to apply
the Operating Model tools through a mix of virtual reality,
modelling and real-time scenarios. This innovative and
industry leading facility is planned to be fully operational
from mid-2015.
Roll out of the programme has been carefully prioritised in
terms of impact, readiness and resources. The initial focus is
on the most important value creating assets and those with
the greatest long term potential. Businesses not included
in the early programme will receive training on some of the
Operating Model’s key elements, in particular the analysis of
data and business improvement.
31
Strategic reportAnglo American plc Annual Report 2014
PERFORMANCE: HOW WE WIN
MARKETING PRODUCTS FOR FULL VALUE
As commodity markets and the business models of miners
and traders evolve, we are changing our marketing approach
and strategy to ensure maximum value creation across the
entire value chain – from mine to customer.
The establishment, on 1 January 2014, of the Marketing
business unit (‘Marketing’) forms an important step to enable
us to improve customer focus and, in turn, refine our approach
to our various markets. Marketing is now responsible for all
sales and marketing activities for iron ore, metallurgical
coal, thermal coal, platinum group metals (PGMs), copper,
nickel, and niobium. Marketing is also responsible for the
management of all associated risk. The management and
improvement of risk systems, processes and standards
was a major focus during 2014, as we bedded down the
new business unit and initiated trading activities.
Through our dedicated sales and marketing hubs in
Singapore, London and Luxembourg, we are now closer
to our customers both geographically and commercially.
Internally, collaboration and knowledge sharing are achieved
through co-location of marketing teams and specialist
resources, including shipping, market intelligence, trading,
and risk and performance management.
Our aim is to generate additional profit through four
principal levers:
Marketing excellence: getting the basics right.
Product optimisation: working with the mines to optimise
product offering – for example, blending products to create
the precise quality desired by individual customers.
Value chain optimisation: creating an efficient flow from
mine to market so that customers get the right products,
at the right time, and leveraging shipping services.
Trading: buying and selling third party material to
complement the physical portfolio.
The target, which forms part of the Driving Value initiative, is
an additional $400 million in EBIT by the end of 2016, with the
majority of this generated through additional income. A large
proportion of this additional value is currently being generated
through the marketing excellence activities, with other levers
becoming increasingly important over time.
In 2014, we completed a review of the ‘route to market’
for a number of commodities. This has resulted in several
initiatives, including increasing direct sales to end customers
rather than through sales agents.
During the year, we experienced significant uplift from
direct PGM sales to new customers through concentrating
on the Asian market. In addition, we adopted a more proactive
approach to ruthenium and iridium marketing, thereby
significantly increasing the revenue and profit contribution
from these lesser known PGMs.
During 2014, a new copper concentrates sales book was
created to improve commercial value, implement alternative
approaches to pricing, and ultimately create long term
strategic partnerships with customers.
Product optimisation continues to be an area of focus. During
the year, Marketing worked closely with Kumba to generate a
higher value product mix based on market demand. Such
value creation is expected to increase in 2015 and 2016, as
lump ore volumes continue to grow.
Various value chain optimisation activities in the year created
additional earnings. These included the optimisation of the
growing shipping portfolio by linking freight trades and
optimising freight contracts and efficiencies. During 2014, the
link was made with iron ore freight trades from South Africa to
China and thermal coal freight trades from Indonesia to India,
thereby realising cost benefits relative to stand-alone routes.
With the addition of Minas-Rio volumes, there are now further
opportunities to capture value through greater synergies
across the Marketing portfolio.
Good progress has been made with the move into trading.
This is a new activity for Anglo American and has been
approached with a pilot in thermal coal. The initial focus has
been primarily on asset backed trading (buying and selling
physical materials, using associated financial trading tools to
manage the price and delivery risks). Our trading strategy is
designed to take advantage of the maturity of the thermal
coal market by benefiting from opportunities to improve
profitability and increase returns, and to build capabilities
which will allow us to create additional future value. This
includes improving capabilities in areas such as supporting
processes, systems, position management, and active
price management.
32
Anglo American plc Annual Report 2014 Environmental incidents
The reporting and understanding of significant environmental
incidents is aligned with Anglo American’s learning from
incidents process which ensures optimum learning from our
mistakes. Anglo American reports environmental incidents in
terms of five levels of severity according to their consequence
and impact.
In 2014, 14 Level 3 (medium impact) environmental incidents
were reported, and one Level 4 (high impact), which resulted
in an acidic water discharge at Coal South Africa’s Landau
mine polluting a stream causing some discolouration and
metal precipitation for several kilometres. Systems at Landau
have been improved and the stream remediation is complete.
No Level 5 (major impact) incidents occurred during the
year. All incidents are addressed on site and the root causes
determined and mitigated in order to prevent repeats.
Remedial action has been completed for three of the Level 3
incidents and is in progress at the rest. Where appropriate,
learning points are shared with operational managers across
the Group.
Environmental legislation is tightening and regulatory
developments remain uncertain in a number of countries
where we operate. Chile is enforcing legislation more
rigorously, as part of the country’s environmental regulation
reform process. Our Los Bronces operation is addressing
a non-compliance relating to afforestation plans and waste
dump acid drainage generation. A fine of $3.4 million
was imposed for regulatory breaches associated with
afforestation and water quality at El Soldado. Remediation
plans are being implemented at both operations.
MANAGING OUR IMPACT ON THE ENVIRONMENT
The benefit that mining delivers to society also comes
with an impact on the environment; this can be
disproportionately borne by the communities adjacent to
the mines, many of which rely on the land and ecosystem
services. Anglo American believes that it has a responsibility
to manage its impact on the environment in such a way
that, on balance, host communities can benefit from the
mining activities. This implies striking the optimal balance
between environmental and other impacts with the societal
benefits of mining. Achieving an acceptable balance for our
stakeholders influences our acceptance by society, and can
influence our future access to mining opportunities and
long term business success and viability.
Growing regulatory and social pressure, increasing
demands for limited natural resources, the rising costs
of and demand for energy and water, and mine closure
and future land use issues, all support the business
imperative for responsible environmental management.
Within this context, the principal environmental risks
facing our business are associated with 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 continue to make progress towards achieving our
long term environmental goals and internal targets. Tangible
improvements in reducing our impact include improved
efficiencies, which achieve associated cost savings and
productivity benefits.
Strategy and management approach
We seek to manage our environmental risks by
understanding and evaluating both our impacts and benefits
and by taking advantage of opportunities that deliver
long term value to our stakeholders. Our environmental
strategies have three main focus areas: driving operational
excellence; investing in technology; and engaging and
partnering with our stakeholders.
Anglo American’s Environment Way, which includes
performance standards covering all our environmental
impacts, guides our approach to robust and responsible
environmental management. Our mine closure
performance requirements and toolbox offer specific
guidance on mine closure planning and we now have a
dedicated team to provide expert input into mine closure
planning and management.
33
Strategic reportAnglo American plc Annual Report 2014 PERFORMANCE: HOW WE WIN
WATER
Like most of the mining industry, our business is highly
reliant on water; this is of increasing significance given that
more than 70% of our mines are in water stressed areas.
For our operations to be sustained in the long term, we aim
to protect water quality and support the access rights of
other users. We also endeavour to play a leadership role in
our water catchments through engagement, partnerships
and innovation.
Strategy and management approach
Our 10-year water strategy, launched in 2010, guides our
approach to demonstrating leadership in water stewardship.
All our operations have water programmes in place and
employ the ‘avoid, minimise, mitigate’ hierarchy of controls
to reduce our water consumption, moderate the potential
impact we have on water quality and eliminate water related
environmental incidents. Those operations in water stressed
locations seek to go beyond our minimum requirements,
using a risk based approach that aims to demonstrate
leadership by working with partners and through
implementing good practice technologies.
Total water required by use in 2014
Water re-used/recycled
New water used for
primary activities
New water used for
non-primary activities
Total
%
69
28
3
100
Total water consumed against business
as usual 2010–2014
million m3
250
200
150
100
50
0
2011
2010
2012
Water consumed in ongoing business
Water consumed by acquisitions, projects and corporate functions(1)
Water consumed by divested businesses
Water savings
2013
2014
(1) Recent acquisitions, projects and corporate functions have not been included
in the energy, GHG and water reduction target setting process.
34
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 using our water efficiency target tool
(WETT), which forecasts the projected business as usual
demand of individual operations and tracks 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.
Our performance
Anglo American’s total consumption of new water (not
re-used) decreased from 201 million m3 in 2013 to
195 million m3 in 2014. The reduction was primarily
attributable to the limited production at Platinum’s strike
affected operations, as well as water savings achieved
through the implementation of the WETT programme. By
the end of 2014 we had achieved an estimated 16% water
saving against our projected water usage, exceeding our
2020 target. Water saving projects, which include more
effective dust suppression, dewatering of tailings and more
efficient ore separation, saved the Group approximately
36 million m3 of water. Water re-use/recycling levels remained
at 69%, in line with 2013 levels.
Where operations and projects face high risks related to
water, we have developed specific risk management action
plans and guidance. Operations most exposed to water
security risks and extreme weather risks include Los Bronces
and Collahuasi in Chile, Catalão in Brazil, Venetia in
South Africa and Moranbah North in Australia. Our principal
water quality related risks are associated with high salinity and
acid rock drainage at some of our coal operations in Australia
and South Africa, tailings dam seepage at our Los Bronces
and El Soldado operations in Chile, acid rock drainage from
the Donoso waste rock dump at Los Bronces, and high
salinity at De Beers’ Snap Lake mine in Canada. We continue
to mitigate the risk of acid rock drainage through effective
mine design and management procedures such as the
concurrent rehabilitation of open cut operations and waste
facilities, as well as water treatment solutions, including the
use of mobile water treatment plants.
CLIMATE CHANGE AND ENERGY
Climate change has potentially significant implications for
our activities, resulting from government policies, changing
demand for our products, and physical impacts such as
water scarcity and flooding at our operations and
neighbouring communities.
Our host governments continue to develop climate change
policies. In South Africa, the planned implementation of a
carbon tax in 2016 would introduce a higher carbon cost for
our business. In Chile, the government plans to introduce a
carbon tax, in 2018, of $5 per metric ton of carbon dioxide
emitted. In Australia, our Coal business will identify
opportunities to participate in the new direct emissions
reduction scheme.
Anglo American plc Annual Report 2014
Strategy and management approach
We aim to reduce exposure to emerging carbon
regulations and increases in energy costs, improve
our ability to influence the development of effective
government policy, increase commercial opportunities,
and build greater resilience to the physical impacts of
climate change.
Anglo American believes that there will be a transition
over the long term towards a low carbon future that will
encompass a progressively more diverse energy mix.
Coal has played a vital role in supporting poverty alleviation
and sustaining prosperity. Independent forecasters
foresee a significant continuing role for coal in the energy
mix, up to 2040, including under policy scenarios that
successfully limit global warming to two degrees Celsius.
We believe that the roadmap to reduced CO2 emissions
from coal fired power generation involves two steps: firstly
more efficient combustion and secondly, in the longer
term, the deployment of carbon capture and storage
technologies. Replacing the world’s inefficient coal plants
(those with efficiencies of less than 27%) with existing
ultra-supercritical combustion technology, with efficiencies
of more than 45%, could cut carbon emissions from coal
fired power generation by 40%. In addition to coal, our
portfolio also includes metals that are likely to see a major
increase in demand as low carbon energy generation
expands, most notably platinum and copper.
The demand for coal is forecast to continue to grow –
a demand which has to be met – and we believe that
responsible mining companies, such as Anglo American,
need to be part of the solution.
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. We have set
greenhouse gas (GHG) and energy consumption reduction
targets against the projected business as usual levels in
2015, and are now defining our longer term performance
objectives and targets for energy and carbon.
Our performance
By year end, we had achieved reductions of 4.2 million
tonnes (Mt) of GHG emissions and 4.3 million GJ in
energy consumption against the 2015 business as
usual projections.
During 2014, Anglo American consumed 108 million GJ
of energy (2013: 106 million GJ). The implementation of a
total of 325 energy- and carbon-saving projects as part of
the ECO2MAN programme accounted for a 5% reduction
against our business as usual consumption target of 7%
by 2015. The resultant avoided energy cost is estimated
at $105 million.
(1) Scope 1 emissions
are direct emissions
from owned or
controlled sources.
Scope 2 emissions
are indirect emissions
from the generation
of purchased energy.
Total energy consumed against business
as usual 2010–2014
Million GJ
140
120
100
80
60
40
20
0
2011
2010
2012
Energy consumed in ongoing business
Energy consumed by acquisitions, projects and corporate functions(1)
Energy consumed by divested businesses
Energy savings
2013
2014
(1) Recent acquisitions, projects and corporate functions have not been included
in the energy, GHG and water reduction target setting process.
Total GHG emissions against business
as usual 2010–2014
Million tonnes CO2e
25
20
15
10
5
0
2010
2011
2012
2013
2014
GHGs emitted in ongoing business
Energy consumed by acquisitions, projects and corporate functions(1)
GHGs emitted by divested businesses
GHG savings
(1) Recent acquisitions, projects and corporate functions have not been included
in the energy, GHG and water reduction target setting process.
The Group’s total Scope 1 and Scope 2(1) GHG emissions
increased marginally to 17.4 Mt of carbon dioxide equivalent
emissions (CO2e) (2013: 17.1 Mt CO2e). Most business units
are on track towards achieving their carbon saving targets
which contribute to the Anglo American target of 19%
against the projected business as usual levels by 2015.
The carbon savings will be achieved largely through
Coal Australia’s management of underground methane.
35
Strategic reportAnglo American plc Annual Report 2014
PEOPLE: CRITICAL CORE SKILLS
FOCUS:
IMPROVING PUBLIC ROAD SAFETY
Driving is a high risk activity in many of the countries in
which we operate. Large numbers of vehicles enter and
leave our sites every day and, as a result, the volume of
traffic in these areas often increases. To mitigate our
own impact and support community needs, we have
implemented a Group-wide initiative to improve the
public road transportation of employees and contractors,
with the aim of making each journey as safe as possible.
At our Niobium and Phosphates businesses in Goiás state,
Brazil, a SEAT(1) assessment highlighted road safety to be a
major concern for communities in the region, particularly
the highway BR050 that links our operations with the city
of Catalão. Between 2007 and 2012, 122 people lost their
lives and nearly 750 people suffered significant or minor
injuries in accidents on this stretch of road.
To lead an effective, co-ordinated campaign to improve
road safety, we partnered with local police, NGOs,
government and other key stakeholders. Over a 12-month
period, Anglo American focused on improving road
infrastructure and raising awareness of safe driving
practices through road safety lectures, meetings and
workshops. Our efforts culminated in an intensive road
safety week involving employees across the business units.
The project, together with other initiatives implemented
locally, contributed to enhanced road safety in the area,
with a 70% reduction in the number of lives lost over
the campaign period. Also in 2014, we implemented an
internal road safety campaign and launched a second
external campaign, to broaden the scope of work along
highway BR050 and widen the area of influence. The
principles developed in this project are being transferred
to operations in other high risk environments.
Images
Safe Roads and
Streets team nurse
Ludmila Fonseca (left)
and nurse assistant
Marliza Santos in the
medical clinic at Ouvidor.
The road safety
partnership involving our
Niobium and Phosphates
businesses, the local
police, municipal
government, NGOs and
other stakeholders has
already had a dramatic
impact in improving road
safety in and around the
city of Catalão.
(1) Anglo American’s
Socio-Economic
Assessment Toolbox.
36
Anglo American plc Annual Report 2014
S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
IMPLEMENTING
SAFER ROADS
REDUCTION IN LIVES LOST
OVER LENGTH OF CAMPAIGN
70%
NUMBER OF FAMILIES
ESTIMATED TO HAVE BEEN
REACHED VIA CHILDREN’S
ROAD SAFETY WORKSHOPS
4,500
Location
Catalão is a city in the south of the state
of Goiás, Brazil, close to the border with
Minas Gerais, and is the centre of our
Niobium and Phosphates business.
Niobium and Phosphates
Our Niobium business unit owns two
niobium mines, while Phosphates
comprises a mine and two chemical
processing facilities.
Niobium’s main application is as an
alloying agent in high strength steel
alloys; phosphates are a principal
ingredient of fertilisers.
Anglo American plc Annual Report 2014
37
Strategic report
PEOPLE: CRITICAL CORE SKILLS
WORKING
TOGETHER
Our people are as vital to our success as our
mining assets – they are the business. 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 and innovation – our people
apply their skills, knowledge and expertise to ensure we
operate successfully and responsibly. It is our people
who 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
In 2013, Anglo American initiated a process of
restructuring the organisation, with the aim of ensuring
that we have the right people in the right roles to deliver
effectively and efficiently on our strategic objectives.
The roll out of our new Organisation Model is creating
a leaner organisation, with greater clarity on roles and
accountabilities, and improved lines of communication
between levels of the organisation, while also removing
unnecessary work and duplication.
The restructuring of the Group Functions and business unit
corporate centres was completed in 2014. The Organisation
Model implementation programme is under way at Kumba
and will progress during 2015 to other operational areas of
the business that support our most important value
creating assets.
Talent management and skills development
We seek to offer safe, worthwhile and stimulating work,
provide opportunities for personal development, pay
competitively, recognise and reward excellence, encourage
diversity and protect employee rights. Our approach
is underpinned by our human resources standards,
management systems and processes. Providing high quality
training is a key attraction and retention tool. During the year
we supported 3,602 graduates, bursars, apprentices and
other trainees (2013: 2,974).
Formal learning is delivered at both business unit and
Group level, with external training expenditure across
Anglo American amounting to $106 million, 2.3% of total
employee costs in 2014 (2013: $104 million, 2.0% of total
employee costs).
Over the year, the number of permanent employee
resignations as a percentage of total permanent employees
was 2.0%, the same as in 2013.
We continue to provide basic literacy and numeracy to
our employees, contractors and community members,
through adult basic education and training and transferable
skills programmes.
38
A diverse workforce
By year end, 24% of managers were women
(2013: 23%), with 16% of our overall workforce being
female (2013: 15%). Across our businesses, targets have
been set to further increase female representation.
In our South African operations we continued to promote
transformation. By year end, 60% of our management
comprised ‘historically disadvantaged South Africans’
(HDSAs) (2013: 64%).
Fostering sound industrial relations
Approximately 76% of our permanent workforce is
represented by work councils, trade unions or other similar
bodies and covered by collective bargaining agreements.
In South Africa, the labour relations climate remains
a particular challenge and concern. Labour instability
has been exacerbated by inter-union conflict, and is
underpinned by ongoing systemic societal challenges
that are deeply rooted in the country’s history and in the
legacy of the migrant labour system. The five-month strike
at Platinum by the majority union AMCU highlighted the
adversarial nature of the situation. The strike was eventually
concluded through mutual dialogue and collaboration, with
a three-year agreement signed on 24 June. The process
nonetheless exacted a significant toll and reflected the need
for us to improve relations with our employees and their
representative bodies.
A number of long term interventions are being
implemented, aimed at developing a more democratic
and transparent industrial relations climate, where
employees are recognised and respected as equals, based
on a culture of trust and respect. Our approach focuses
on building relationships with union leadership and jointly
driving visible felt leadership programmes, implementing
a proactive employee relations programme that engages
employees directly, and rolling out a values and culture
change programme.
Protecting labour rights
As signatories to the United Nations Global Compact, we
are committed to the labour rights principles provided in
the International Labour Organization 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 labour
rights abuse and full observance of these issues is also
required of our suppliers in tenders. Compliance is audited.
Ensuring a safe working environment
Effectively managing safety and health in the workplace
is a direct investment in our business and our employees.
Our main priority is to prevent loss of life and serious injuries
or disability by creating safe and healthy work environments.
A detailed review of our safety and health performance is
provided in our Sustainable Development Report, available
online at www.angloamerican.com.
Our safety strategy focuses on improving our ability to
anticipate and prevent harm to our people, and reduce
safety related stoppages at operations. Our principal
safety risks relate to transportation, moving machinery,
fall of ground, working at heights and isolation/lock-out.
Our risk based approach is outlined in Anglo American’s
Anglo American plc Annual Report 2014 Total number of fatal injuries and fatal injury
frequency rate 2010–2014
Lost time injuries, medical treatment cases and
total recordable case frequency rate 2010-2014
Fatalities
30
25
20
15
10
5
0
2010
FIFR
Fatalities
FIFR
0.016
0.014
0.012
0.010
0.008
0.006
0.004
0.002
0
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
TRCFR
2.5
2
1.5
1
0.5
0
2011
2012
2013
2014
2010
2011
2012
2013
2014
Total recordable case frequency rate (TRCFR)
Medical treatment cases
Lost-time injuries
Safety Way – a comprehensive framework of roles and
responsibilities supported by a set of safety principles
and mandatory safety standards. This underpins the
delivery of our safety strategy, which is founded on three
key principles: a mindset of zero harm; the elimination of
repeat incidents; and the consistent application of simple,
non-negotiable standards. Over the past year, we have
focused on embedding and reinforcing five specific
elements of our safety programme: leadership, front-line
supervision, effective planning, incident management, and
risk management.
Anglo American operates in some of the highest risk
regions for road safety, in particular, South Africa, Brazil
and Botswana. In 2014, we launched a Group-wide initiative
to improve public road transportation of employees and
contractors. Focus areas include standardising contracts
for transportation of employees and contractors, and
addressing human behaviour aspects.
We regret to report that in 2014, four employees and two
contractors lost their lives in work related activities at
operations managed by Anglo American. Even taking into
account the suspension of activity at our platinum mines
during the protracted period of industrial unrest, this still
represented a substantial reduction on 2013 when 15
colleagues died on company business. Nevertheless, any
loss of life remains unacceptable and we are committed to
achieving and maintaining zero fatalities and zero harm.
We have made steady progress in managing safety and
our key lagging safety performance indicators suggest that
we are starting to achieve the desired step change in our
performance. The reporting, investigation, analysis and
improved sharing of high potential incidents through the
learning from incidents process ensure improvement of
controls on sites in order to prevent repeats. We believe
that, by mining category and geographical area, we are
performing well in the sector, and we aspire to become
industry leaders.
During 2014, 48 regulatory stoppages and 17
non-compliance notices were issued across the Group
relating to safety, with an additional number of voluntary
stoppages as a result of conditions that were deemed
potentially unsafe.
Promoting health and well-being
Our occupational health strategy is governed through a
series of standards, guidelines and assurance processes
aimed at preventing harm to the workforce. Our principal
health risks relate to noise, inhalable hazards (specifically,
particulate matter – dust), musculoskeletal disorders,
alcohol and substance abuse, and fatigue. Our health and
well-being programmes include the provision of care and
treatment for HIV/AIDS and TB, as well as early diagnosis
and preventative care for any other conditions that may
lead to ill health in the long term. Another strategic focus
is strengthening healthcare systems in underserviced
rural areas that are home to many of our employees in
South Africa, and building partnerships to improve access
to quality healthcare.
During the year we made good progress in managing
health risks and delivering on our health strategy, reflected
in an improved performance across most of our parameters.
Anglo American has not recorded any cases of silicosis
since 2011, which is a positive indication of effective
management of exposure to respirable crystalline silica
over the past 10 years.
WORKING WITH STAKEHOLDERS
Our ability to realise mining’s full benefit to society
requires strong relationships with stakeholders – principally
employees and the communities around our operations,
but also governments, shareholders, joint venture and civil
society 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 as part of our
decision making processes as we develop new mines and
continue to improve our existing operations.
39
Strategic reportAnglo American plc Annual Report 2014
PEOPLE: CRITICAL CORE SKILLS
While specific interests and concerns typically vary
by stakeholder group and region, industrial unrest in
South Africa remains a particular priority. To address this,
we continue to invest in enhancing our relationship with
the South African government, and with communities
around our Rustenburg and Limpopo mines. We are also
engaging more closely with investors, under the leadership
of chief executive Mark Cutifani, on the progressive
business turnaround.
Finding solutions to increasingly complex societal
challenges requires 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 2014
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
3,047
58,257
96,873
127,369
263,062
691,502
335,936
Beneficiaries with improved livelihood
121,005
Managing our social performance
Anglo American’s social performance strategy focuses
on observing human rights, proactive engagement with
our stakeholders and leveraging our business to support
long term socio-economic development. Our approach
is implemented through a comprehensive set of
social performance requirements that are detailed in
Anglo American’s Social Way. In 2014, we revised the
requirements of the Social Way, in line with the latest
best practices and standards and emerging stakeholder
expectations. In-depth site audits of compliance with the
updated Social Way will be undertaken on a three-year
rotation basis from 2015, with desk based assessments
of all sites conducted annually.
Within our host communities, our industry leading
Socio-Economic Assessment Toolbox (SEAT), now in its
third version, 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.
Observing human rights
Incorporating respect for human rights into regular
business practice is both a moral and business imperative.
Our approach is aligned with the ‘Protect, Respect and
Remedy’ framework set out in the UN Guiding Principles
on Business and Human Rights. In 2014, we developed
a stand-alone human rights policy (available online at
www.angloamerican.com) and established the
Anglo American human rights framework to address our
principal human rights risks. Human rights commitments
have been integrated into the Social Way, and will be further
integrated into SEAT and other relevant policies, procedures,
management systems and tools throughout the business.
Complaints and grievances
Our mandatory Group-wide social incident reporting
mechanism, which includes complaints and grievances,
is designed to ensure openness, accountability and
respectfulness in our handling of any stakeholder
grievances. 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, an anonymous tip-off procedure
called ‘Speak Up’ allows any of our stakeholders to
confidentially report concerns and incidents relating to the
integrity of our conduct. Disciplinary proceedings, including
termination, are instituted where employees are found to
have behaved contrary to our principles.
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, corruption, human rights and HIV
management. 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. During 2014, many
of our largest contractors in South Africa received SEAT
training, which includes our stance on responsible sourcing.
In addition, business units have delivered presentations to
smaller suppliers we have identified as being high risk.
Incidents of non-compliance with contractual conditions
typically involve minor issues that are easily addressed.
Community development
Our socio-economic development strategy guides
our approach to building resilience within communities
to prosper beyond mine closure through a range of
interconnected programmes. To support local markets,
we focus on promoting local procurement, enterprise
development and workforce development. These
programmes create a strong platform for job creation
within and outside the mining value chains. To improve the
delivery of public services, we are concentrating on working
with local governments to strengthen their capacity to
deliver on their core public service obligations, and on
sustainable community health and education initiatives.
This new approach to socio-economic development
delivery is being rolled out across the Group, with key sites
being prioritised for early implementation.
40
Anglo American plc Annual Report 2014 Local procurement
Our local procurement initiatives add value to the business
and provide the anchor for boosting economic growth in
communities around our operations. They are designed to
optimise opportunities to integrate local businesses into
our global supply chain and advise them on how to compete
successfully for new business. In promoting inclusive
procurement practices, we do not compromise on quality,
delivery, service, safety, health and environmental
performance, or on any technical requirements.
In 2014, expenditure with suppliers based in the
communities close to our operations was $1.7 billion
(2013: $1.6 billion). This represented 14% of total
addressable supplier expenditure (2013: 12%), against
a Group target of 13%.
In South Africa, our operations contribute to the country’s
drive to promote black economic empowerment. In
2014, Anglo American managed businesses spent
ZAR 39.3 billion (2013: ZAR 32.4 billion) with ‘historically
disadvantaged South African’ businesses (excluding
goods and services procured from the public sector and
public enterprises).
Enterprise development
Our enterprise development programmes are designed
to foster the potential of local entrepreneurs to build
local capacity and ensure that the local economy is able
to provide opportunities, even after mine closure. The
schemes integrate with our supply chain (more than
$18 billion globally) and develop long term platforms
for partnerships with governments, NGOs and private
sector companies.
Our well established schemes, Zimele in South Africa and
Emerge in Chile, have supported more than 95,000 jobs
over the past seven years. Based on our experience with
these schemes, we developed a best practice model, which
was used to implement schemes in Botswana and Brazil in
2013, and in Peru in 2014. These three programmes have
supported more than 1,500 jobs during 2014 and aim to
support an additional 3,000 jobs by the end of 2015 and
close to 10,000 by the end of 2016.
Building local capacity
Our capacity development activities focus on
strengthening the skills, competencies and abilities of
employees, community members and key local institutions
to promote robust, self-sufficient local economies long
after our mines have closed. As we can only offer a limited
number of jobs, diversifying our skills development
initiatives to promote broader employment opportunities
enables us to play a more productive role in meeting
community expectations. Our activities included spending
$6.1 million towards institutional capacity development
in 2014 (2013: $3.1 million), often partnering with local
municipalities on projects. In South Africa in 2014, we
launched a major local government capacity building
programme in 11 municipalities, in partnership with the
Development Bank of Southern Africa, with an investment
of $3 million.
Global expenditure by type
Community
development
$’000
66,084
Education and training 27,409
Other
13,249
Health and welfare
10,273
Institutional
capacity development
Sports, arts, culture
and heritage
Environment
Employee
matched giving
Water and sanitation
Disaster and
emergency relief
6,133
4,891
2,352
2,184
1,721
1,477
%
49
20
10
7
4
4
2
2
1
1
Total
135,773
100
Global expenditure by country
South Africa
Peru
Chile
Brazil
Canada
Namibia
Rest of World
United Kingdom
Botswana
Total
$’000
73,143
18,255
17,906
9,906
9,376
3,419
1,911
938
919
%
54
13
13
7
7
3
1
1
1
135,773
100
Infrastructure development
We operate in areas that are often underdeveloped and
remote, where we can create synergies with infrastructure
associated with our mines – such as roads, health facilities
and water – for the benefit of local communities. A particular
focus is investing in housing development in South Africa,
in areas where services are inadequate or do not exist.
Across the Group’s businesses in the country, we invested
$109 million on housing projects in 2014.
Corporate social investment
To maximise development benefits, we prioritise the
implementation of corporate social investment (CSI)
programmes that are linked to our core functions and
support activities where we have limited opportunities
to contribute through our value chains and expertise.
Anglo American’s CSI expenditure in local communities
totalled $135.8 million(1) (2013: $127.5 million). This figure
represents 3.0% of underlying EBIT, excluding associates
and joint ventures.
41
(1)
Included within the
CSI expenditure
figure for 2014
is expenditure
relating to Zimele
($10.1 million) and
social programmes
delivered as part of
Iron Ore Brazil’s
licensing conditions
($3.5 million).
These items were
not included in
previous years.
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT RISK
EFFECTIVE RISK
MANAGEMENT
Byron Grote
Chairman, Audit Committee
Anglo American’s assessment of strategic,
operational, project and sustainable
development related risks
Understanding our key risks and developing
appropriate responses are critical to our future
success. We are committed to a robust system
of risk identification and an effective response
to such risks.
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:
• Where we compete: optimising our diverse portfolio
We will focus management time and prioritise capital on
the mining assets that offer us the most attractive long
term value creation potential
• How we win: maximising our performance
We will maintain a highly competitive mindset, with
innovation and outstanding delivery at the forefront
of how we drive change
• Critical core skills: creating a capable organisation
We will ensure that our people and organisation have
the critical core skills, supported by key people systems,
to ensure we improve our returns.
For more information on the Sustainability Committee
See page 76
For more information on the Audit Committee
See page 78
42
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
risks also being reported to the Sustainability Committee.
Anglo American plc Annual Report 2014
PRINCIPAL RISKS AT A GLANCE
EXTERNAL
Pages 44–45
Increased risk
• Portfolio restructuring (new risk)
• Commodity prices
No change
in risk
• Political, legal and regulatory
• Currency risk
• Liquidity risk
• Inflation
• Information and cyber security
OPERATIONAL
Pages 46–47
• None
• Community relations
• Environment
• Event risk
• Infrastructure
• Operational risk and
project delivery
• Safety and health
• None
Decreased risk
• Employees
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 2014.
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.
The risks included in this report could threaten our ability to
achieve our 2016 objectives.
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.
43
Strategic reportAnglo American plc Annual Report 2014 STRATEGIC REPORT RISK
EXTERNAL RISKS
COMMODITY PRICES
Pillars of value:
The prices of all the commodities 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.
If commodity prices remain weak for a sustained
period, growth projects may not be viable and we
may not be able to compete for new, complex
projects that require significant capital investment.
Commodity prices are one of the significant
factors that rating agencies use to determine
credit rating.
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: Our diverse commodity portfolio
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.
Increased risk
Commentary: During
2014, prices of most of the
commodities we mine weakened
as a result of lacklustre
economic conditions in many of
our key markets and increased
supply of some products. This
trend is expected to continue for
some time.
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.
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.
No change in risk
Commentary: Due to market
conditions, industry appetite
for developing projects is low,
particularly where political risk
is high. The commodity cycle
downturn may reduce the ability
of host governments to impose
new taxes and royalties.
However, there is a continuing
need to manage government
relations in this period of
significant change.
No change in risk
Commentary: The risk is
unchanged but we recognise
the threat is continually
developing on a global basis.
44
Anglo American plc Annual Report 2014 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.
No change in 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.
Commentary: Further
description of currency risk
and analysis of sensitivity to
foreign exchange movement is
provided on pages 156–157.
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.
The Group’s access to liquidity or cost of funding
could be adversely influenced by any credit rating
agency downgrade.
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.
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.
The Driving Value programme has targeted a
$500 million reduction in overheads by 2016.
No change in risk
Commentary: While operating
improvements, restructuring
and cost saving programmes
are contributing to financial
performance, some of the
benefits will be offset through
uncontrollable cost increases.
PORTFOLIO RESTRUCTURING
Pillars of value:
Inability to achieve asset sales as planned.
Impact: Failure to achieve planned sales may
influence cash flow generation targets and ability
to achieve required levels of return.
Root cause: The current commodity market
climate is creating a challenging environment in
which to sell assets.
New risk
Commentary: N/A
Mitigation: A strategy for the transaction
process has been developed, aimed at
maximising buyer interest.
45
Strategic reportAnglo American plc Annual Report 2014 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, and support,
all communities affected by our operations.
ENVIRONMENT
Pillars of value:
Some of our operations create environmental
risk in the form of dust, noise or leakage of
polluting substances, or through the potential
for uncontrolled breaches of tailings dam
facilities. These can be harmful to our
employees, contractors and the communities
near our operations.
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.
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 standards to prevent, monitor and limit the
impact of its operations on the environment.
EVENT RISK
Pillars of value:
Damage to physical assets from fire,
explosion, natural catastrophe or breakdown
of critical machinery.
and tailings dam walls, fire, explosion and
breakdown of critical machinery, with long lead
times for replacement.
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
nature of our operations exposes us to potential
failure of mining pit slopes, underground shafts
Mitigation: Specialist consultants are engaged
to analyse such event risks and provide
recommendations 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.
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
46
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. We use third parties to
ship products to customers, if required.
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: Further
description of our work
during 2014 to maintain and
improve relationships with our
stakeholders is provided on
pages 38–41.
No change in risk
Commentary: Our
environmental performance
during 2014 is detailed on
pages 33–35.
No change in risk
Commentary: Management
continues to implement
measures to mitigate this risk.
No change in risk
Commentary: Details of
programmes to manage water
consumption and power usage
are provided on pages 34–35.
Anglo American plc Annual Report 2014 No change in risk
Commentary: The Minas-Rio
project achieved first ore on ship
during 2014 (refer to pages
22–23) and our focus is now
on ramp up. We continued
to see improved operational
performance across our
business units as a result of
management actions.
No change in risk
Commentary: Details of safety
performance and our approach
to health management are
provided on pages 38–39.
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 Group’s methodology
for new projects, are vital aspects in managing
this risk.
SAFETY AND HEALTH
Pillars of value:
Failure to maintain high levels of safety
management can result in harm to our
employees, contractors and communities
near our operations. 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 and damage to
health, 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
and health risk management process, global
standards and a technical risk assurance
programme form part of a consistently applied
robust approach to mitigating safety, health and
environmental 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.
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 or recruit skilled
employees may lead to increased costs, and
interruptions to existing operations and new
projects. Industrial disputes adversely affect
production, costs and the results of operations.
Root cause: We are subject to global competition
for skilled labour. Our assets and 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: Anglo American aims to be the
employer of choice in the mining sector.
A comprehensive human resources strategy
has been devised to support that objective.
The Group seeks constructive relationships and
dialogue with trade unions and employees in
all its businesses.
Decrease in risk
Commentary: During 2014
we completed the review of our
Organisational Model, corporate
structure and a number of
business units. Implementation
of the changes and restructuring
programmes identified has
progressed. Further details are
provided on page 38.
47
Strategic reportAnglo American plc Annual Report 2014 STRATEGIC REPORT IRON ORE AND MANGANESE
IRON ORE AND
MANGANESE
Norman
Mbazima
CEO –
Kumba
Iron Ore
Paulo
Castellari-
Porchia
CEO – Iron
Ore Brazil
KEY
Open cut
Other
SOUTH AFRICA
3
16
15
1
2
14
BRAZIL
5 SAMANCOR
MANGANESE –
HOTAZEL
29% ownership
(BHP Billiton owns
44% and has
management control.
Empowerment partners
own 27%)
Wessels is an
underground mine of
hydro-thermally enriched
manganese of a high
grade. Mamatwan is an
opencast operation.
The ore lends itself to
technologically advanced
beneficiation processes.
Wessels reserve life:
46 years
Mamatwan reserve
life: 17 years
3 KUMBA IRON ORE –
THABAZIMBI MINE
51.5% effective
ownership
Thabazimbi mine is
located in the Limpopo
province and produced
1.1 Mt of iron ore in 2014.
Reserve life: 9 years
4 KUMBA IRON ORE
PORT OPERATIONS
Sishen and Kolomela
mines are serviced by a
dedicated iron ore rail link,
which transports iron ore
to domestic customers
and to Saldanha Bay
where it is shipped to
export markets. The
rail and port operations
are owned and operated
by the state owned
entity Transnet.
AUSTRALIA
1
2
1 KUMBA IRON ORE –
SISHEN MINE
51.5% effective
ownership
Sishen mine, located in
the Northern Cape
province, produces a
leading quality lump ore
and also a premium fine
ore. Sishen produced
35.5 Mt of iron ore in 2014.
Reserve life: 16 years
2 KUMBA IRON ORE –
KOLOMELA MINE
51.5% effective
ownership
Kolomela mine is situated
close to Sishen mine and
produced 11.6 Mt of iron
ore in 2014.
Reserve life: 21 years
1 MINAS-RIO
100% ownership
The Minas-Rio operation
is located in the states
of Minas Gerais and
Rio de Janeiro and
includes an open pit
mine and a beneficiation
plant in Minas Gerais,
producing direct
reduction and blast
furnace pellet feeds.
The iron ore produced
is transported to the port
in Rio de Janeiro state
through a 529 km
pipeline. The mine
produced 0.7 Mt (wet
basis) of iron ore in 2014.
Reserve life: 45 years
2 FERROPORT
50% ownership
Ferroport owns and
operates the iron ore
handling and shipping
facilities at the port of Açu,
which is currently under
construction (formerly
referred to as LLX
Minas-Rio).
1
2
6 SAMANCOR
MANGANESE –
METALLOYS
40% ownership
(BHP Billiton owns
60% and has
management control)
With four large
electric furnaces,
Metalloys produces
high-carbon and
medium-carbon
ferromanganese.
1 GROOTE EYLANDT
MINING COMPANY
(GEMCO)
40% ownership
(BHP Billiton owns
60% and has
management control)
The mining operation at
GEMCO extracts high
grade manganese
ore and accounts for more
than 15% of the world’s
12
high grade ore production.
12
Approximately 70% of its
production is exported.
12
Reserve life: 12 years
2 TASMANIAN
ELECTRO
METALLURGICAL
COMPANY (TEMCO)
40% ownership
(BHP Billiton owns
60% and has
management control)
TEMCO is a ferro-alloy
smelter and remains
the only manganese
ferro-alloy plant in
Australia. It produces
high carbon ferro-
manganese,
silicomanganese
and sinter.
48
Anglo American plc Annual Report 2014 Key performance indicators
Segment
Prior year
Kumba Iron Ore
Prior year
Iron Ore Brazil
Prior year
Samancor
Prior year
Projects and Corporate
Prior year
Production
volume (Mt)(1)
Sales
volume (Mt)
Price ($/
tonne)(2)
Revenue
($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)
n/a
n/a
48.2
42.4
0.7
–
n/a
n/a
n/a
n/a
n/a
n/a
45.3
43.7
0.2
–
n/a
n/a
n/a
n/a
n/a
n/a
91
125
n/a
n/a
n/a
n/a
n/a
n/a
5,176
6,517
4,388
5,643
n/a
n/a
788
874
n/a
n/a
2,286
3,390
2,162
3,266
(29)
(27)
251
258
(98)
(107)
1,957
3,119
1,911
3,047
(34)
(31)
178
210
(98)
(107)
2,685
2,518
763
655
1,922
1,863
n/a
n/a
n/a
n/a
ROCE
10%
19%
60%
99%
(1)%
(1)%
22%
23%
n/a
n/a
(1)
Iron Ore Brazil production is Mt (wet basis).
(2) Prices for Kumba Iron Ore (Kumba) are the average realised export basket price.
Samancor
Underlying EBIT decreased by 15% to $178 million, driven
by lower ore prices, offset to some extent by higher sales
volumes and cost control.
MARKETS
Iron ore
Average market prices
(IODEX 62% Fe CFR China spot price –
$/tonne)(1)
Average realised prices
(Kumba export – $/tonne)
2014
2013
97
91
135
125
(1) Different products are priced against a number of different indices in the market.
IODEX 62% has been used in this instance as a generic industry benchmark against
which to compare average realised prices.
Demand for seaborne iron ore grew 6.7% (2013: 7.0%),
or 79 Mt; however this was more than offset by seaborne
supply which increased by 14.2%, or 167 Mt, on an
equivalent basis. The result was a 28% decline in the
average iron ore price, which reached $72 per tonne
(Platts 62% benchmark) at the end of the year. Kumba’s
achieved sales benefited from the inclusion of a significant
share of high grade fines and lump products which attracted
a market premium.
Manganese ore
The manganese ore market remained under pressure,
with the benchmark ore price (CIF China) falling 16% over
the prior year. Infrastructure constraints in South Africa
were loosened, which eliminated a key bottleneck from the
market. This resulted in South African production becoming
the relevant price setting assets.
FINANCIAL AND OPERATING OVERVIEW
Kumba
Underlying EBIT decreased by 37% to $1.9 billion
(2013: $3.0 billion), mainly attributable to the significant
decline in the iron ore benchmark price, which declined
28% to an average of $97/tonne. In 2014, Kumba took steps
to address its cost base and to establish a robust continuous
improvement programme that builds off the implementation
of Anglo American’s Operating Model. Total operating
costs decreased by 4%. Despite the 14% increase in waste
mining, a 12% weakening of the South African rand against
the US dollar, and benefits from the Operating Model, more
than offset this headwind.
Export sales increased by 4% to 40.5 Mt (2013: 39.1 Mt)
as a result of higher iron ore production which increased by
14% to 48.2 Mt (2013: 42.4 Mt). Kumba rebuilt stock on the
back of the higher production. Total finished product stocks
increased to 6.5 Mt as at 31 December 2014 compared
with 2.9 Mt at 31 December 2013.
Iron Ore Brazil
First ore on ship was achieved on 25 October 2014, ahead of
schedule and with total project capital expenditure expected
to be $0.4 billion below the revised budget of $8.8 billion.
Despite the project’s complexity and logistical challenges,
Minas-Rio achieved an exceptional safety performance with
very low lost time injury rates compared to other projects
of similar scale. Delivery of the project is a significant
milestone. The ramp up schedule continues and is expected
to reach design capacity during the second quarter of 2016.
Minas-Rio is a world class asset benefiting from long life
(~45 years); high quality iron ore saleable product
(~67% Fe); and a favourable cash cost, and is expected
to be in the bottom half of the cash cost curve.
Underlying EBIT is expected to be capitalised until the end
of 2015, by which time the Minas-Rio project is expected
to have achieved commercial production capacity. In 2014,
Iron Ore Brazil’s capitalised underlying EBIT loss was
$57 million, while an amount of $34 million was charged
to the income statement in relation to expenses that were
not directly associated with the project.
Sales volumes of 0.2 Mt relate to three Panamax vessels
transporting iron ore from Minas-Rio to customers in China.
Iron ore production volumes for the year reached 0.7 Mt
(wet basis).
49
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT IRON ORE AND MANGANESE
OPERATING PERFORMANCE
Kumba
Overall, Kumba showed a marked improvement in
production as plans put in place over the past few years
yielded benefits. These were complemented by the
implementation of Anglo American’s Operating Model
at Sishen in August.
Sishen production of 35.5 Mt increased 15%
(2013: 30.9 Mt), with total tonnes mined rising to
229.9 Mt (2013: 208.8 Mt). Of this amount, 187.2 Mt was
waste (2013: 167.8 Mt). Although below the waste target
set at the start of the year, waste removal run rates are now
meeting targets. Additional contractor capacity has been
secured and the performance of Kumba’s own mining fleet
improved. The vertical rate of advance at the mine was
increased, further strengthening the exposed ore position.
The strategic redesign of the western pushbacks of the pit,
together with the improved waste removal run rates, have
achieved appropriate waste removal during the year to
ensure sufficient exposed ore to support a 2015 production
target of 36 Mt.
Execution of the pit redesign plan has resulted in an
improved mining plan that enables better use of equipment,
and the deployment of two priority pushbacks. Around
780 Mt of waste was taken out of the revised life of mine
plan, reducing the average life of mine stripping ratio from
4.4 to 3.9, and the reserve life from 18 years to 16 years at
the end of 2014.
Kolomela maintained its strong performance, with total
tonnes mined increasing by 18% to 70.4 Mt (2013: 59.9 Mt).
The mine produced 11.6 Mt of iron ore (2013: 10.8 Mt), an
increase of 7%, and mined 55.5 Mt of waste (2013: 46.7 Mt).
Pre-stripping of the third pit (19.4 Mt), in order to maintain
flexibility, was completed during the year, with first ore
exposed during November.
Thabazimbi lifted output to 1.1 Mt (2013: 0.6 Mt), with
waste mining volumes increasing by 19% to 31.6 Mt
(2013: 26.5 Mt).
Volumes railed on the Iron Ore Export Channel were
6% higher at 42.2 Mt (2013: 39.7 Mt) on the back of the
improved performance at Sishen and Kolomela, accounting
for 31.7 Mt and 10.5 Mt, respectively.
To facilitate the expansion of Sishen mine to the west,
Phase 1 of the Dingleton relocation project was completed,
with 71 homes in Dingleton North being moved to the new
host site. Phase 2, the relocation of the 428 remaining
houses, buildings and businesses, has commenced and
is progressing well.
Samancor
Production of manganese ore remained consistent at
3.3 Mt (attributable basis), with a record performance in
the second half. Production benefited from improved ore
recovery and plant availability in South Africa, which offset
the impact of weather related stoppages in the first quarter
in Australia.
Production of manganese alloys increased by 14% to
286,100 tonnes (attributable basis) owing to greater furnace
stability and availability in South Africa and Australia.
OPERATIONAL OUTLOOK
Kumba
Kumba will focus on optimising its production portfolio
by reconfiguring its project portfolio to focus on low cost
production. The target is an additional ~5 Mt in South Africa
over the next three to five years, through incremental
volumes from projects at Sishen and Kolomela.
Additional port capacity through the use of the Saldanha
Multi-Purpose Terminal is expected to optimise port
throughput. Sishen is aiming to increase production to
around 36 Mt in 2015, as it ramps up its waste stripping to
around 250 Mt. This will be supported by the Dingleton
relocation project and ongoing implementation of
Anglo American’s Operating Model. Following the planned
commissioning of a new modular plant in 2015, production
guidance has been increased by 1 Mt to 38 Mt in both 2016
and 2017.
Kolomela’s life of mine production capacity has been
increased to 11 Mtpa from 2015, and studies are in progress
which could result in increasing production further to 12 Mt
in 2016 and to 13 Mtpa from 2017. The future of Thabazimbi
mine in Kumba’s portfolio is currently being assessed.
Iron Ore Brazil
Iron ore production of between 11 Mt and 14 Mt (wet basis)
is expected in 2015. Nameplate capacity is expected to be
reached by the second quarter of 2016, with production of
between 24 Mt and 26.5 Mt (wet basis) expected in 2016.
In addition to the safe ramp up of operations, activities also
include the completion of the outstanding construction
works and the regular cycle of licence and permit renewals
required for the mining operations.
50
Anglo American plc Annual Report 2014 DEVELOPING SISHEN FOR THE FUTURE
Image
Mining safety officer
Kobus Ellis and
shovel operator
Pitrus Skhungweni
at Sishen mine. Next
to them is a giant
shovel, capable of
delivering a payload
of 108 tonnes in
one scoop, which
is being used to
remove the calcrete
overburden in the
South Western
portion of the pit.
During 2013, Kumba undertook and concluded various
analyses and geological studies in order to better understand
the orebody at Sishen mine, and determine how best to mine
it successfully and sustainably.
The outcome of this review has been the development of
a revised mining plan, with a resultant reduction of almost
780 Mt of waste stripping over the life of the mine, along with
a number of other initiatives aimed at improving efficiencies
and ensuring that Sishen is able to meet its revised
production targets.
Sishen is on track to meet its target of 38 Mt of iron ore
production in 2016 as a result of the following initiatives:
• The implementation of Anglo American’s Operating Model,
a project being piloted at Sishen to improve productivity
through scheduled work. Initiated in August 2014, this is
already yielding significant benefits, including improving
scheduled work from 20% to ~70%, a 50% reduction in
waiting time on shovels, and a 23% efficiency
improvement in total tonnes handled.
• The Dingleton relocation project to facilitate Sishen’s
westward expansion has now commenced. In the
current phase, 17 private homeowners and the occupants
of 54 municipal houses in the northern section of Dingleton
had been relocated by the end of 2014, with the rest to
follow by the end of 2016.
• Two new waste dumps are being constructed to reduce
the distance trucks are required to travel to move waste.
• A five-year fleet and associated infrastructure plan
is currently under way, which includes an on-site
maintenance facility to safely and efficiently service the
mine’s haul trucks. This, along with increasing the fleet
of trucks, is set to increase capacity for moving ore as
the mine ramps up.
Following the success of the Operating Model pilot at
Sishen North, further roll outs are planned at Sishen pre-strip
and Kolomela plant during 2015, followed by roll out at all
other areas.
51
Strategic reportAnglo American plc Annual Report 2014 STRATEGIC REPORT COAL
COAL
All volumes are expressed on an attributable basis.
Seamus
French
CEO
1 MORANBAH NORTH
(MC)
88% ownership
An underground longwall
mining operation based
in Queensland’s Bowen
Basin with a mining lease
covering 100 km2. In 2014,
the mine produced
4.2 Mt of hard coking coal.
Reserve life: 18 years
2 DAWSON (MC/TC)
51% ownership
Dawson is based in
Queensland’s Bowen
Basin and produced
4.2 Mt of coking and
thermal coals in 2014.
Reserve life: 14 years
3 FOXLEIGH (MC)
70% ownership
Foxleigh is based in
Queensland’s Bowen
Basin and produced
2.0 Mt of high quality
pulverised coal injection
(PCI) coal in 2014.
Reserve life: 13 years
4 CAPCOAL (MC/TC)
70% ownership
Capcoal produced
7.6 Mt of hard coking,
PCI and thermal coals
in 2014.
Reserve life: 27 years
(open cut) and 9 years
(underground)
5 JELLINBAH &
LAKE VERMONT
(MC)
23.3% ownership
The mines produced a
combined (attributable)
production of 2.9 Mt of
coking, PCI and thermal
coals in 2014.
6 CALLIDE (TC)
100% ownership
Callide is located in
Queensland and
produced 7.6 Mt of
thermal coal in 2014.
Reserve life: 31 years
1 GOEDEHOOP (TC)
100% ownership
Produced 4.8 Mt of
thermal coal for the
export market in 2014.
Reserve life: 11 years
2 GREENSIDE (TC)
100% ownership
This export biased
operation produced
3.6 Mt of thermal coal
for both the export and
domestic markets in 2014.
Reserve life: 14 years
3 KLEINKOPJE (TC)
100% ownership
This export biased
operation produced
3.9 Mt of thermal coal
for both the export and
domestic markets in 2014.
Reserve life: 11 years
4 LANDAU (TC)
100% ownership
This export biased
operation produced
4.2 Mt of thermal coal
for both the export and
domestic markets in 2014.
Reserve life: 4 years
5 ZIBULO (TC)
73% ownership
Anglo American has
a 73% stake in
Anglo American
Inyosi Coal (AAIC),
a broad based black
empowerment entity.
AAIC wholly owns
Zibulo mine which
produced 5.1 Mt of
thermal coal for both the
export and domestic
markets in 2014.
Reserve life: 21 years
6 MAFUBE (TC)
50% ownership
Mafube is an export
biased joint operation with
Exxaro and produced
3.8 Mt of thermal coal
for both the export and
domestic markets in 2014.
Reserve life: 17 years
7 KRIEL (TC)
73% ownership
Kriel, wholly owned by
AAIC, produced 6.9 Mt of
thermal coal for Eskom,
the domestic state owned
power utility.
Reserve life: 6 years
8 NEW DENMARK
(TC)
100% ownership
In 2014, New Denmark
produced 3.8 Mt of
thermal coal for Eskom.
Reserve life: 25 years
COLOMBIA
1
1 PEACE RIVER
COAL (MC)
100% ownership
Peace River Coal’s
operations were placed
on care and maintenance
in December 2014,
owing to weak market
conditions. In 2014, the
mine produced 1.5 Mt of
metallurgical coal.
AUSTRALIA
SOUTH AFRICA
6
1
4
5
2
10
3
7
8
9
1
5
4
6
3
2
7
11
CANADA
1
52
KEY
Open cut
Underground
Open cut/
underground
Other
MC Metallurgical Coal
TC Thermal Coal
7 DRAYTON (TC)
88.2% ownership
Drayton Mine is based
in the Hunter Valley in
New South Wales and
produced 3.1 Mt of
thermal coal in 2014.
Reserve life: 1 year
9 NEW VAAL (TC)
100% ownership
In 2014, New Vaal
produced 16.7 Mt of
thermal coal for Eskom.
Reserve life: 17 years
10 ISIBONELO (TC)
100% ownership
Isibonelo produced
5.3 Mt of thermal
coal in the year for
Sasol Synthetic Fuels.
Reserve life: 13 years
11 RICHARDS BAY
COAL TERMINAL
23.2% ownership
Export thermal coal
is routed through the
Richards Bay Coal
Terminal to customers
throughout the Atlantic,
Mediterranean and
Asia-Pacific regions.
1 CERREJÓN (TC)
33.3% ownership
Anglo American,
BHP Billiton and
Glencore each have a
one-third shareholding
in Cerrejón. In 2014,
Cerrejón produced
11.2 Mt of thermal coal
for the export market.
Reserve life: 18 years
Anglo American plc Annual Report 2014
Key performance indicators
Segment
Prior year
Australia and Canada
Prior year
South Africa
Prior year
Colombia
Prior year
Projects and Corporate
Prior year
Production
volume (Mt)
Sales
volume (Mt)
(1)
Price
($/tonne)
Revenue ($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)
100
100
99
33
31
56
57
11
11
n/a
n/a
99
34
32
55
57
11
11
n/a
n/a
n/a
n/a
111
140
70
77
67
73
n/a
n/a
5,808
6,400
2,970
3,396
2,083
2,187
755
817
n/a
n/a
1,207
1,347
543
672
463
479
255
299
(54)
(103)
458
587
(1)
106
350
356
163
228
(54)
(103)
1,045
1,263
952
1,049
93
214
n/a
n/a
n/a
n/a
ROCE
7%
8%
(1)%
1%
30%
27%
15%
20%
n/a
n/a
(1) Australia and Canada is the weighted average metallurgical coal sales price achieved. South Africa is the weighted average export thermal coal price achieved.
FINANCIAL AND OPERATING OVERVIEW
MARKETS
Australia and Canada
Australia and Canada recorded an underlying EBIT of
$(1) million. The loss was attributable to a 21% decrease in
the average quarterly hard coking coal (HCC) benchmark
coal price, reducing underlying EBIT by $528 million. The
impact was offset by productivity improvements that
resulted in a 12% increase in metallurgical coal production
despite market related production curtailments, significant
cost reductions across the Australian operations and
favourable Australian dollar exchange rate movements.
Underlying EBIT included a higher onerous contract
provision release at Callide, an $86 million loss at
Peace River Coal in Canada, which was placed on care
and maintenance in December 2014, and the impact of
lower insurance receipts.
Cost savings across labour, contractors and maintenance,
combined with productivity improvements, resulted in the
lowest unit costs since 2010, with Australian export FOB
cash unit costs reducing by 9% from 2013, in local
currency terms.
A focus on higher margin products resulted in a favourable
product mix, with the proportion of HCC sales to total export
sales increasing by 3% to 55%.
South Africa
South Africa’s underlying EBIT of $350 million was
flat year-on-year owing to a strong operational performance,
lower costs and favourable currency movement which
mitigated a 10% reduction in realised export prices. FOB
cash unit costs at trade mines decreased by 5%, benefiting
from the weaker rand and a focus on productivity and cost
efficiency primarily related to maintenance and contractor
costs, as well as lower overhead costs owing to the
business restructuring. Underlying EBIT also included
$38 million from the opportunistic sale of reserves and a
surplus dragline.
Colombia
Underlying EBIT was $163 million, 29% down on the prior
year, mainly owing to weaker prices reducing underlying
EBIT by $73 million, offset in part by favourable exchange
rate movements and cost reductions.
Metallurgical coal
Average market prices ($/tonne)(1)
Average realised prices ($/tonne, FOB)
(1) Represents the quarterly average benchmark.
2014
125
111
2013
159
140
The metallurgical coal market experienced growing
Australian production and resilient US supply, which
resulted in a surplus of seaborne metallurgical coal,
while domestic Chinese production increased. As a key
steelmaking ingredient, global demand growth for seaborne
volumes slowed to 4%, with imports into China declining
by 16% to 63 Mt. This was partially offset, however, by a
19% increase in demand from India to 49 Mt. Seaborne
metallurgical coal prices have traded within a narrow range
since April 2014, with spot price indices trading at historical
lows throughout the year. Term contract prices have,
however, maintained a consistent premium above these
spot indices. The average quarterly HCC reference price
decreased by 21% during 2014, to $125/tonne, reaching
a low of $119/tonne in the fourth quarter.
Thermal coal
Average market prices
($/tonne, FOB Australia)
Average realised prices –
Export Australia ($/tonne, FOB)
Average realised prices –
Export South Africa ($/tonne, FOB)
Average realised prices –
Domestic South Africa ($/tonne)
Average realised prices –
Colombia ($/tonne, FOB)
2014
2013
71
72
70
19
67
84
84
77
19
73
Thermal coal prices decreased during 2014 as supply
growth in the market encountered softening demand
growth, particularly in China. China’s stronger hydro-
electricity power performance displaced thermal coal in
domestic generation and resulted in aggressive coal price
discounting, ultimately dragging down the seaborne thermal
coal price. The price of FOB Newcastle thermal coal
decreased during the year by 27% from $85/tonne to a
low of $62/tonne, ending the year at $65/tonne.
53
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT COAL
OPERATING PERFORMANCE
OPERATIONAL OUTLOOK
Australia and Canada
Peace River Coal operations in Canada were placed on care
and maintenance in December 2014 owing to weak market
conditions. The Drayton South project which was intended
to extend the life of Drayton mine has not yet received
regulatory approval. A new development application and
accompanying Environmental Impact Statement will be
submitted early in 2015.
Metallurgical coal production in 2015 is expected to
remain broadly flat at 20 to 21 Mt as the increase in output
from Australian underground operations and Grosvenor
development coal will be offset by the suspension of activity
at Peace River Coal.
South Africa
Export production is expected to be approximately
17 to 18 Mt in 2015, as productivity improvement
benefits are offset by logistics constraints and challenges
associated with the ageing of the current coal reserves.
Colombia
Production is expected to be approximately 35 Mt
(100% basis), subject to permitting and market conditions.
Australia and Canada
Australia and Canada achieved record metallurgical coal
production of 20.9 Mt, chiefly attributable to a step change
in performance at Grasstree following its implementation
of the management operating system and improvements
across all Australian open cut operations.
Australian export thermal coal production decreased by
17%, mainly the result of lower production at the Drayton
open cut mine as the mine nears the end of its life.
Underground operations increased production by 11%
to record their best ever output. This was offset, however,
by a 14% decrease in production at Moranbah North, from
the prior year’s record performance, owing to equipment
design issues. Given the current market conditions,
Moranbah North plans to rectify these issues during the
planned longwall move in the third quarter of 2015.
Production at the open cut operations rose by 5%, mainly
as a result of the productivity improvements at Dawson
following the implementation of the management operating
system and a recovery in production at Callide following
the flooding and rail closures in the first quarter of 2013.
Foxleigh open cut mine recorded a record output, reflecting
productivity improvements.
South Africa
Export production at 18.2 Mt was 7% higher, with all
operations delivering an increase in production. Trade
mine productivity, measured through the percentage of
benchmark overall equipment effectiveness, increased
by 6% for the underground operations and 5% for the
opencast operations.
Domestic production at 37.6 Mt decreased by 5%, primarily
owing to Eskom reducing offtake from New Vaal, and
planned production decreases at Kriel prior to a move to
new mining areas.
Colombia
Our share of Cerrejón’s output of 11.2 Mt was 2% higher
than in 2013. In 2014, production was impacted by high dust
emissions associated with the extended drought conditions
that constrained production up until August, followed by
heavy rainfall that led to production stoppages.
54
Anglo American plc Annual Report 2014 FUNGCOAL BIOCONVERSION TECHNOLOGY
Image
Kleinkopje colliery
rehabilitation
planner Gustav
Le Roux and
environmental
co-ordinator
Dolly Mthethwa
inspect the results
of the Fungcoal
trials on the Klipan
discard dump,
where a bacterium
has been
introduced to
reduce the rough
discard into viable
organic material
in which plants
can grow.
Our Coal South Africa business has developed and patented
bioconversion technology that could significantly accelerate
and improve the quality of opencast mine rehabilitation.
Known as Fungcoal, the process harnesses fungi and
weathered coal to produce natural fertilisers. The research
project is a partnership with Rhodes University’s Institute
for Environmental Biotechnology in South Africa and began
in 2004, when Coal South Africa investigated solutions to
accelerate and improve the quality of rehabilitation at its
opencast mines.
The technology was trialled at four of our coal mines at a
collective cost of $1.5 million. The outcomes of the research
showed that certain fungi have the ability to break down and
liquefy coal that has been exposed to the elements. In certain
applications, it showed extremely positive results, both on
rehabilitated mining pits and coal discard facilities. In addition
to being more cost effective in certain applications than
traditional rehabilitation, the technology will enhance the
quality of existing rehabilitation by increasing the organic
content and the humic acid concentrations in the soil,
thereby improving vegetation health and reducing soil
compaction – which is a significant rehabilitation challenge
facing the industry.
We are effectively developing a complete toolkit of
organisms to restore the ecology of land that has been
disturbed, so that it can be returned to communities for
economic activity almost immediately after mining. The
technology is expected to achieve in six months, or one
growing season, what nature does in 60 years.
The next steps will be to establish a thorough record
of land rehabilitated with Fungcoal and to gain a greater
understanding of the product’s use in other applications
and over a longer period of time. Engagement with
regulators will take place as the project moves closer
to the commercial phase.
55
Strategic reportAnglo American plc Annual Report 2014 STRATEGIC REPORT BASE METALS AND MINERALS
BASE METALS
AND MINERALS
CHILE
BRAZIL
BRAZIL
1
5
6
3
2
14
Duncan
Wanblad
CEO: Base
Metals
and Minerals
KEY
Open cut
Other
Open cut
Other
Open cut
Open cut
Other
12
1
4
3
5
COPPER
1 COLLAHUASI
44% ownership
The Collahuasi mine
is a joint operation
with Glencore (44%)
and a Mitsui-led
consortium (12%). In
2014, Anglo American’s
share of production was
207,000 tonnes of copper.
Reserve life: 70 years
2 LOS BRONCES
50.1% ownership
Part of Anglo American
Sur, the Los Bronces mine
produced 404,500
tonnes of copper,
together with associated
by-products such as
molybdenum and silver,
in 2014.
Reserve life: 35 years
3 EL SOLDADO
50.1% ownership
Part of Anglo American
Sur, the El Soldado mine
produced 32,400 tonnes
of copper in 2014.
Reserve life: 13 years
4 CHAGRES
50.1% ownership
Part of Anglo American
Sur, the Chagres smelter
produced 128,500 fine
tonnes of copper anode/
blister in 2014.
5 MANTOS BLANCOS
100% ownership
The Mantos Blancos mine
produced 52,400 tonnes
of copper in 2014.
Reserve life: 10 years
6 MANTOVERDE
100% ownership
The Mantoverde mine
produced 51,800 tonnes
of copper in 2014.
Reserve life: 5 years
NICKEL
1 BARRO ALTO
2 CODEMIN
100% ownership
Barro Alto is a ferronickel
producer, based in Goiás,
Brazil. In 2014, Barro Alto
produced 28,300 tonnes
of nickel. Codemin,
located close to Barro
Alto, is currently fed with
ore from the Barro Alto
mine and produced
8,900 tonnes of nickel
in 2014.
Reserve life: 22 years
NIOBIUM
3 BOA VISTA
100% ownership
The Boa Vista operation
produces and exports
ferroniobium. Ore is
mined from the Boa Vista
open cut mine and is
processed, together with
tailings from the adjacent
Phosphates operations,
at the Boa Vista and new
Boa Vista Fresh Rock
processing plants at
Catalão in Goiás. In 2014,
4,700 tonnes of niobium
were produced.
Reserve life: 21 years
PHOSPHATES
4 CHAPADÃO
5 CUBATÃO
100% ownership
Anglo American’s
phosphates business is the
second largest phosphate
fertiliser producer in Brazil.
Mining and beneficiation
of the phosphate ore to
produce phosphorus
pentoxide (P2O5)
concentrate takes place
at the Chapadão mine in
Ouvidor, in Goiás state,
Brazil. Further processing
into intermediate and
final products occurs at
processing plants located
in Catalão, adjacent to the
Chapadão mine, and at
Cubatão, near the port
of Santos in the state of
São Paulo. In 2014,
1.1 Mt of phosphate
fertiliser was produced.
Reserve life: 34 years
56
Anglo American plc Annual Report 2014
COPPER: Key performance indicators
Copper
Prior year
(1) Attributable production volumes.
Production
(1)
volume (kt)
Sales
volume (kt)
Realised price
(c/lb)
Revenue ($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)
748
775
755
768
300
326
4,827
5,392
1,902
2,402
1,193
1,739
728
959
ROCE
18%
25%
FINANCIAL AND OPERATING OVERVIEW
OPERATING PERFORMANCE
Copper recorded an underlying EBIT of $1,193 million,
31% lower, largely due to an 8% decline in the average
realised copper price and a 2% decrease in sales volumes.
Operating costs have increased owing to inflation, higher
treatment and refining charges, and an increase in mine
development at Los Bronces, partially offset by the
benefits of a weaker Chilean peso. At the end of 2014,
164,700 tonnes of copper were provisionally priced at
287 c/lb. Provisional pricing plus final liquidation of copper
sales resulted in a negative EBIT adjustment of $196 million
for 2014, versus a negative EBIT adjustment of $92 million
in 2013.
MARKETS
Average market prices (c/lb)
Average realised prices (c/lb)
2014
311
300
2013
332
326
The average LME copper cash settlement price decreased
by 6% in the year to 311 c/lb (2013: 332 c/lb). The copper
price fell sharply in March due to fears of large scale
destocking in China. Despite a rebound in the price following
the Qingdao warehousing scandal in June, the recovery
was tempered by a mild Chinese summer, leading to slower
growth in the production of air conditioners, while usage
of copper and copper alloys in Europe exhibited seasonal
weakness. On the supply side, strong output from many
of the largest producing mines and the ramp up of new
production more than offset constraints in exports
from Indonesia.
Production at Los Bronces was 404,500 tonnes, 3% lower
than in 2013. Strong throughput performance was achieved
as a result of higher mine extraction rates improving the
continuity of ore supply and debottlenecking of the plants.
This was offset by expected lower grades. Material mined
increased by 13% and reached record levels of 145 Mt,
with waste stripping increasing by 14% to 62 Mt.
Anglo American’s share of Collahuasi’s production of
207,000 tonnes was 6% higher than the prior year. This
was a reflection of continued high grades resulting from
improved fleet and primary crusher performance allowing
accelerated extraction from the Rosario pit, as well as
throughput recovering from the 49-day shutdown of
the SAG Mill 3 in 2013. Material mined also reached
record levels at Collahuasi, increasing by 9% to 251 Mt
(100% basis).
Production at El Soldado decreased by 37% following
expected lower grades arising from the intersection
with a geological fault encountered in 2013. Output at
Mantos Blancos and Mantoverde decreased by 4% and
9% respectively, owing to expected lower grades.
OPERATIONAL OUTLOOK
Production guidance for 2015 is in the range of 720,000 to
750,000 tonnes as lower throughput rates at Los Bronces,
resulting from constrained water supply during the first half
of the year, are only partially offset by higher ore grades.
Production is expected to be maintained at similar levels
to 2014 at the other operations.
57
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT BASE METALS AND MINERALS
NICKEL: Key performance indicators
Nickel
Prior year
Production
volume (t)
Sales
volume (t)
Realised
price (c/lb)
Revenue ($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)(1)
37,200
36,100
34,400
33,800
731
646
142
136
28
(37)
21
(44)
14
(28)
ROCE
1%
(2)%
(1) Cash capital expenditure for Nickel of $164 million (2013: $76 million) is offset by the capitalisation of $150 million (2013: $104 million) of net operating cash inflows generated by Barro Alto, which has not yet
reached commercial production.
FINANCIAL AND OPERATING OVERVIEW
OPERATING PERFORMANCE
Nickel production increased by 8% as the improved
performance at Barro Alto’s furnaces, and recovery from
the operational issues experienced in 2013, more than
offset the impact of the Line 2 rebuild which started in
October 2014. At Codemin, output was 4% lower, reflecting
the planned mining of lower grades.
OPERATIONAL OUTLOOK
Production is expected to decline to a range of 20,000 to
25,000 tonnes in 2015, as a consequence of the rebuild of
Barro Alto’s two furnaces, thereafter increasing to between
40,000 and 45,000 tonnes in 2016.
Nickel’s underlying EBIT was $21 million, a $65 million
improvement over the prior year (2013: $44 million loss),
owing to a $24 million favourable non-cash balance sheet
gain, as a result of a weakening in the Venezuelan bolivar
(relating to remaining Minera Loma de Níquel creditors),
higher pricing, favourable exchange rates and improved
cash costs at Codemin.
Underlying EBIT from the Barro Alto project continues to be
capitalised as the asset is not yet in commercial production.
Barro Alto’s underlying EBIT, before capitalisation, was
$152 million, a $208 million improvement over the prior year
(2013: $56 million loss) owing to higher pricing, improved
cash costs, gains on excess electricity sales and favourable
exchange rates.
MARKETS
Average market prices (c/lb)
Average realised prices (c/lb)
2014
765
731
2013
680
646
The average LME nickel cash settlement price increased by
13% in the year to 765 c/lb (2013: 680 c/lb). Demand levels
improved while supply was constrained due to a reduction
in nickel pig iron (NPI) production in China following the
Indonesian nickel ore ban, and reductions in output from
certain other producers. Overall, nickel consumption
increased by 6%, while supply decreased by 2%.
The sizeable market surplus of 184,000 tonnes in 2013
was reduced to 43,000 tonnes by the end of 2014.
58
Anglo American plc Annual Report 2014
NIOBIUM: Key performance indicators
Niobium
Prior year
Production
volume (t)
Sales
volume (t)
Revenue ($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)
4,700
4,500
4,600
4,700
180
182
73
87
67
82
198
206
ROCE
15%
31%
FINANCIAL AND OPERATING OVERVIEW
OPERATING PERFORMANCE
Underlying EBIT at Niobium decreased by 18% to
$67 million (2013: $82 million). This resulted from higher
cash costs, driven by inflation and escalation in the costs
of labour, mining and contracted services, partly offset by
reduced expenditure on project studies.
MARKETS
Global average niobium prices decreased slightly, due
to the euro weakening against the US dollar and production
capacity increasing in an environment of largely stable
overall demand.
Production of 4,700 tonnes was 4% higher, mainly due
to the mining of higher grade ore and the start-up at the
Boa Vista Fresh Rock (BVFR) project.
OPERATIONAL OUTLOOK
Production from existing operations is expected to
increase to 6,800 tonnes once BVFR has completed
its ramp up.
PHOSPHATES: Key performance indicators
Phosphates
Prior year
(1) Average market price ($/tonne) MAP CFR Brazil.
Fertiliser
production
volume (kt)
1,113
1,199
Fertiliser sales
volume (kt)
Price
($/tonne)(1) Revenue ($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)
1,097
1,163
487
494
486
544
79
89
57
68
41
30
ROCE
16%
19%
FINANCIAL AND OPERATING OVERVIEW
OPERATIONAL OUTLOOK
Underlying EBIT of $57 million was $11 million lower,
mainly owing to lower sales prices and inflation, partly
offset by favourable foreign exchange rates.
Fertiliser production over the next three years is expected to
be broadly similar to 2014, with any year-on-year variations
relating to product mix optimisation (reflecting market
demand) and major maintenance activities.
MARKETS
Average annual pricing in 2014 was broadly unchanged
from 2013. In Brazil, demand for phosphate fertilisers
totalled approximately 13.4 Mt, a 3% increase on the
previous year, mainly as a result of increased production
of soybean and corn crops.
OPERATING PERFORMANCE
Production of 1,113 kt of fertiliser was 7% lower than the
prior year, mainly as a result of a reduction in throughput
to optimise product quality, maintenance activities and a
power outage.
59
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT PLATINUM
PLATINUM
Anglo American Platinum Limited (Platinum) is 78% owned by Anglo American.
SOUTH AFRICA: BUSHVELD COMPLEX
BUSHVELD COMPLEX
A
20
7
18
19
9
8
11
3
4
17
5
6
A
1
ZIMBABWE
Chris
Griffith
CEO: Anglo
American
Platinum
Limited
KEY
Open cut
Underground
Other
12
2
16
15
10
14
13
JOHANNESBURG
18 19 PRECIOUS
METAL REFINERY
(PMR) AND
RUSTENBURG
BASE METAL
REFINERY (RBMR)
The PMR and RBMR
refine the precious
metal and base metal
concentrates.
Base metal production
in 2014: 32.2 kt
11 KROONDAL
Ownership 50%
Production: 252.2 koz
Reserve life: 9 years
12 PANDORA
Ownership 42.5%,
Production: 341 kt
Reserve life: 25 years
13 MOTOTOLO
Ownership 50%
Production: 120.0 koz
Reserve life: 5 years(2)
14 MODIKWA
Ownership 50%
Production: 103.0 koz
Reserve life:
>28 years(1)
15 BOKONI
Ownership 49%
Production: 106.9 koz
Reserve life:
>25 years(1)
16 17 20 POLOKWANE,
MORTIMER AND
WATERVAL SMELTERS
Concentrate is received
from the concentrators
operated by Platinum,
joint venture partners
and third parties and is
smelted at one of the three
smelting complexes,
producing furnace matte.
Tonnes smelted in
2014: 1,077 kt
(1) Reserve Life truncated
to the last year of current
Mining Right.
(2) Only five years of Ore
Reserves are declared
as per Glencore policy.
1 UNKI
Ownership 100%
The mine is a mechanised,
trackless bord and pillar
underground operation
based on the Great Dyke
of Zimbabwe.
Production: 61.3 koz
Reserve life: 31 years
2 MOGALAKWENA
Ownership 100%
Consists of five open
pits, mined using the truck
and shovel method.
Production: 369.8 koz
Reserve life:
>26 years(1)
3 DISHABA
Ownership 100%
Consists of one vertical
shaft, one raise bore and
four decline shafts.
Production: 79.4 koz
Reserve life:
>26 years(1)
4 TUMELA
Ownership 100%
Consists of three
vertical and four
decline shaft systems.
Production: 131.4 koz
Reserve life: 16 years
5 UNION
Ownership 85%
Consists of two
vertical shafts.
Production: 86.9 koz
Reserve life: 23 years
6 BAFOKENG-
RASIMONE
PLATINUM MINE
Ownership 33%
Consists of two decline
shafts and a concentrator.
Production: 186.9 koz
Reserve life:
>26 years(1)
7 THEMBELANI
Ownership 100%
Consists of two vertical
shaft systems.
Production: 98.9 koz
Reserve life: 14 years
8 BATHOPELE
Ownership 100%
Consists of two
decline shafts.
Production: 82.2 koz
Reserve life: 15 years
9 SIPHUMELELE
Ownership 100%
Consists of one
shaft system.
Production: 45.7 koz
Reserve life: 10 years
10 TWICKENHAM
Ownership 100%
Projects on the Eastern
Limb of the Bushveld
complex. Steady state
expected in 2020.
Production: 11.4 koz
Reserve life: 19 years
60
Anglo American plc Annual Report 2014 Key performance indicators
Platinum
Prior year
(1) Average US$ basket price.
Equivalent refined
production volume
(koz)
Sales
volume (koz)
Price
$/Pt oz(1) Revenue ($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)
1,842
2,320
2,115
2,320
2,428
2,360
5,396
5,688
527
1,048
32
464
576
601
ROCE
0%
5%
Production at Rustenburg and Union was also reduced
following the planned restructuring and optimisation of
these mines during 2013, and the closure of the last of the
decline sections at Union mine during the fourth quarter
of 2014, all of which accounted for a further reduction of
114,000 ounces.
These losses were partially compensated by strong
performances from Mogalakwena mine and increases at
some of Platinum’s independently managed operations.
Production from these operations rose by 2%, led by a
15% increase at Bokoni, 5% at BRPM and 4% at Kroondal.
The record production at Mogalakwena mine was due
to higher head grades and increased concentrator
throughput, supported by improved mining performance.
On-mine production increased by 9% to 348,000 ounces,
while toll concentrating activities at a third party
concentrator yielded 22,000 ounces.
Refined platinum production was 21% lower at 1.89 million
ounces (2013: 2.38 million ounces) owing to production
shortfalls at the strike affected operations. However, this was
partially offset by a drawdown of pipeline metal inventory.
The pipeline was steadily increased to normal operating
levels by year end, once the mines had ramped up to full
production. Refined palladium output decreased by 11%,
while refined production of rhodium decreased by 22%,
reflecting the industrial action, a different ore source mix
from operations, and different pipeline processing times
for each metal. Refined nickel production increased by
25% to 28,200 tonnes, which was boosted by an additional
2,000 tonnes from toll refining, resulting in an overall
increase in base metal production to 47,600 tonnes, an
increase of 10,000 tonnes.
Sales volumes exceeded production volumes owing to the
drawdown of built up metal inventory, but were 9% lower
than 2013.
OPERATIONAL OUTLOOK
As a result of the successful post-strike ramp up of
operations during the third quarter of 2014, Platinum is
expected to return to baseline production (equivalent
refined and refined production) and sales of between
2.3 and 2.4 million platinum ounces in 2015, with
reduced output from the decline closures at Union mine
in the fourth quarter of 2014 being offset by improved
output through the implementation of operational
improvement plans.
FINANCIAL AND OPERATING OVERVIEW
Underlying EBIT decreased by $432 million to $32 million
(2013: $464 million) as a consequence of the five-month
industrial action in South Africa, which had a material impact
on production. Sales volumes were also impacted, though to
a lesser extent, as sales commitments were met through the
drawdown of both pipeline and refined product inventory.
Year-on-year cash operating costs per equivalent refined
platinum ounce increased by 20% to $2,112 per ounce,
owing primarily to lower production from strike impacted
mines that continued to incur fixed overhead costs during
the period of industrial unrest and increased input costs,
including the wage settlement which added approximately
9% to the cost of employment, and electricity costs. The
impact of the strike was partially mitigated by applying the
‘no work, no pay’ principle and implementing strict cost
controls. The weaker rand also had a favourable impact
on unit costs.
In addition to the higher operating costs, the drawdown
of metal inventory during the year to fulfil sales
commitments also impacted cost of sales adversely.
MARKETS
Average platinum market price ($/oz)
Average palladium market price ($/oz)
Average rhodium market price ($/oz)
Average gold market price ($/oz)
US$ basket price – ($/Pt oz)
Rand basket price – (ZAR/Pt oz)
2014
1,385
803
1,173
1,266
2,428
26,307
2013
1,487
725
1,067
1,410
2,360
22,702
Platinum group metal (PGM) prices in 2014 reflected the
impact of the strike, producers selling from normal working
inventory and inventory built up ahead of the anticipated
industrial action, and macro-economic factors negatively
affecting prices in the second half. For the year as a whole,
the average platinum market price decreased by 7% to
$1,385 per ounce, with an average platinum price in the
first half of $1,438 per ounce and in the second half of
$1,335 per ounce. Palladium and rhodium market prices
increased by 11% and 10% to $803 per ounce and
$1,173 per ounce respectively, and the dollar basket price
increased by 3% to $2,428 per ounce.
OPERATING PERFORMANCE
Total equivalent refined platinum production decreased
by 21% to 1.84 million ounces (2013: 2.32 million ounces).
The decline in production was primarily owing to the
impact of the strike, which commenced on 23 January and
ended on 24 June, and affected all of Platinum’s managed
underground mines. This resulted in a steep fall in output
from Rustenburg, Amandelbult and Union mines and a loss
of 424,000 ounces of platinum. The build up to steady state
production in the third quarter resulted in a further loss of
108,000 ounces, bringing the total strike related impact to
532,000 ounces.
61
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT DE BEERS
DE BEERS
Philippe
Mellier
CEO –
De Beers
Group
KEY
Open cut
Underground
Other
De Beers is 85% owned by Anglo American, with the remaining
15% held by the Government of the Republic of Botswana (GRB).
CANADA MINING OPERATIONS
1
3
2
In Canada, De Beers operates the Snap Lake and Victor
mines and is also a joint venture partner with Mountain
Province Diamonds in the Gahcho Kué project in the
Northwest Territories. In 2014, 1.8 million carats were
produced from De Beers’ mining operations in Canada.
BOTSWANA MINING OPERATIONS
AUSTRALIA
BOTSWANA
4
2
3
1
In Botswana, De Beers’ mining interests are held through
Debswana Diamond Company, a 50:50 partnership
between De Beers and the GRB. In 2014, Debswana
produced 24.2 million carats. Debswana is consolidated
on a 19.2% pre-tax proportionate basis.
1 SNAP LAKE
100% ownership
Located in the
Northwest Territories.
Life of mine: 12 years
2 VICTOR
100% ownership
Located in
northern Ontario.
Life of mine: 5 years
3 GAHCHO KUÉ
(UNDER
CONSTRUCTION)
51% ownership
Located in the Northwest
Territories, Gahcho Kué
production is expected to
commence in the second
half of 2016.
Life of mine: 13 years
1 JWANENG
50% ownership
One of the richest
diamond mines, by
value, in the world.
Life of mine: 19 years
2 ORAPA
50% ownership
Holds the largest
resource, by volume,
in the world.
Life of mine: 15 years
3 LETLHAKANE
50% ownership
Nearing end of mine
life – to be extended
through treatment
of tailings.
Life of mine: 3 years
4 DAMTSHAA
50% ownership
Consists of four small
kimberlite pipes,
although only two
are currently mined.
Life of mine: 18 years
SOUTH AFRICA MINING OPERATIONS
SOUTH AFRICA
3
2
1
1 KIMBERLEY
74% ownership
Tailings processing
facility in Kimberley,
Northern Cape region.
Life of mine: 4 years
2 VOORSPOED
74% ownership
Also a source of large
and coloured stones.
Life of mine: 7 years
3 VENETIA
74% ownership
South Africa’s largest
diamond mine with an
underground project
currently in progress.
Life of mine: 30 years
De Beers Consolidated Mines (DBCM) has been an empowered South African
company since 2006, with 26% owned by broad based black economic empowerment
partner, Ponahalo Holdings. In 2014, DBCM recovered 4.6 million carats. The sale of
Namaqualand Mines to TransHex Group was concluded in October 2014.
NAMIBIA MINING OPERATIONS
1
2
1 NAMDEB
50% ownership
Consists of Southern
Coastal Mines (Mining
Area No. 1), Northern
Coastal Mines (Elizabeth
Bay and Beach and Marine
Contractors) and Orange
River Mines (Daberas and
Sendelingsdrif).
Life of mine: 17 years
2 DEBMARINE
NAMIBIA
50% ownership
Offshore mining
conducted by a
fleet of five vessels.
Life of mine: 15 years
Namdeb Holdings, a 50:50 partnership between De Beers and the Government of the
Republic of Namibia (GRN), has historically been a source of high value gemstones.
Namdeb Holdings has terrestrial and marine operations. In 2014, Namdeb Holdings’
production was 1.9 million carats.
DOWNSTREAM
OTHER
Diamond Trading Company
Botswana (DTCB)
50% ownership with GRB
Based in Gaborone, DTCB sorts
and values Debswana’s rough
diamond production.
Namibia Diamond Trading
Company (NDTC)
50% ownership with GRN
Based in Windhoek, NDTC sorts
and values Namdeb’s rough
diamond production and sells
rough diamonds to local
Sightholder factories.
De Beers Sightholder Sales
South Africa (DBSSSA)
74% ownership with 26%
held by Ponahalo Holdings
DBSSSA sorts and values
DBCM’s rough diamond
production and sells rough
diamonds to local Sightholder
factories and government run
State Diamond Trader.
De Beers Diamond Jewellers
(DBDJ) 50% ownership
DBDJ is an independently
managed, high end jewellery
JV with LVMH Moët Hennessy-
Louis Vuitton.
Forevermark
100% ownership
Diamond brand from The
De Beers Group of Companies
and De Beers’ primary
marketing operation.
Element Six (E6)
Technologies 100% ownership.
Abrasives 60% ownership.
E6 is the global leader in design
and production of synthetic
diamond supermaterials.
MIDSTREAM
De Beers Global Sightholder
Sales (DBGSS)
100% ownership
Based in Gaborone, DBGSS
is De Beers’ primary rough
diamond sales operation.
Auction Sales (AS)
100% ownership
Based in Singapore, AS is
De Beers’ online rough diamond
sales platform.
62
Anglo American plc Annual Report 2014 Key performance indicators
De Beers
Prior year
Production
(1)
volume
(’000 carats)
Consolidated
sales
volume
(’000 carats)
(2)
32,605
32,730
31,159
29,277
Price ($/ct)
(3)
Revenue ($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)
198
198
7,114
6,404
1,818
1,451
1,363
1,003
689
476
ROCE
15%
11%
(1) Represents diamond production on a 100% basis and is not directly comparable to consolidated sales volumes.
(2) Sales volumes (100% basis) were 34.4 million carats in 2014 (2013: 29.8 million carats).
(3) Average realised price.
FINANCIAL AND OPERATING OVERVIEW
De Beers’ underlying EBIT increased by 36% to $1.4 billion
(2013: $1.0 billion). The increase was due primarily to solid
demand across key markets, particularly the US, which
resulted in strong revenue growth. Operating costs
benefited from favourable exchange rate movements,
which offset underlying inflationary pressures.
De Beers’ total sales rose 11% to $7.1 billion, with rough
diamond sales up 12% to $6.5 billion. Higher rough
diamond revenue was driven principally by a 12% increase
in consolidated sales volumes to 32.7 million carats.
Average realised diamond prices were in line with 2013 at
$198/carat, driven by a 5% higher average rough price index
in 2014, offset by a marginally lower product mix.
MARKETS
Consumer demand for diamond jewellery showed positive
growth in local currency terms in all the main markets in
2014. The economic recovery gained momentum in the US,
the largest consumer diamond market, which resulted in
healthy diamond jewellery sales growth throughout the year.
Growth in diamond jewellery demand in China continued,
albeit at more modest levels, reflecting slowing economic
growth. Macro-economic conditions in India started
improving in the final quarter of 2014, following the election
of a new government earlier in the year, which boosted
consumer confidence, lifting hopes that growth will return.
Polished prices ended the year broadly in line with where
they started in 2014, with the increase in the first half of the
year being offset by a reduction in the second half. Rough
diamond prices increased over the course of 2014, albeit
with some softness experienced towards the end of 2014
and early in 2015.
In July, De Beers announced details of a new approach to
its rough diamond Sightholder sales contracts. The new
contract period, which will start in March 2015 and run for
three years, with an option for De Beers to extend, requires,
amongst other things, its rough diamond customers to
comply with more rigorous financial and governance criteria
in order to be eligible for supply.
OPERATING PERFORMANCE
Mining and manufacturing
De Beers’ full year production increase of 5% to 32.6 million
carats (2013: 31.2 million carats) reflected a strong
performance from Debswana, partly offset by slightly lower
production at Snap Lake and Kimberley, with all other
regions performing broadly in line with 2013.
Debswana benefited from greater efficiency at its
processing plants following operational improvement
initiatives, producing 24.2 million carats (Orapa 12.9 million
and Jwaneng 11.3 million). Performance was enhanced by
recovery from the carry-over effects through 2012 and 2013
of the Jwaneng slope failure clean-up as well as the Orapa
No. 1 plant maintenance stoppage that occurred in 2013.
Jwaneng Cut-8 waste mining is progressing well, with just
over 50% of the 500 million tonnes of waste stripping
required to expose the ore now complete. During 2018,
Cut-8 will become the main source of ore for Jwaneng and
extend the life of one of the world’s richest diamond mines
to at least 2033, providing access to an estimated 91 million
tonnes of ore, containing approximately 110 million carats(4).
In Namibia, production was marginally higher at 1.9 million
carats (Namdeb (land operations) 0.6 million and Debmarine
Namibia 1.3 million), driven by strong operational improvement
by the MV Mafuta vessel. Namdeb production was broadly in
line with the previous year, despite a 19-day strike in the third
quarter. Namdeb Holdings has received a 15-year licence
extension for both land and sea operations to 2035.
In South Africa, a 2% decrease in output to 4.6 million carats
(Venetia 3.2 million, Voorspoed 0.7 million and Kimberley
0.7 million), was principally due to lower grades at Kimberley.
In Canada, production was slightly lower at 1.8 million carats
(Snap Lake 1.2 million and Victor 0.6 million). A decline
in production at Snap Lake of 0.1 million carats was due
to the impact of flooding, forest fire smoke protocols,
and reviewing and implementing revised ground
support standards. Work continues to optimise Snap Lake
to enable economic access to the promising, though
challenging, orebody.
Element Six (E6) enjoyed a year of solid growth, with a
strong performance in the synthetic industrial diamond
product groups, both for abrasives and advanced
technology applications. This growth was offset partially by
weakness in tungsten carbide sales in the first six months. In
order to continue improving customer service and operating
efficiencies, E6 announced in April that it would close its
plant in Robertsfors, Sweden, to focus on its primary plants
in Shannon, Ireland, and Springs, South Africa.
Brands
Forevermark saw strong growth in 2014, with retail outlets
up by 20%. The brand is now available in more than 1,500
outlets in 34 markets. Since the launch of Forevermark,
more than one million diamonds have received the
Forevermark inscription and unique identification number.
In 2014, De Beers Diamond Jewellers opened a new store in
Selfridges in London and a concession in Saks Fifth Avenue,
New York. There are now 35 De Beers stores in 12 key
consumer markets around the world.
OPERATIONAL OUTLOOK
Diamond production (on a 100% basis) for 2015 is forecast
to be in the range of 32 to 34 million carats, subject to
market demand.
63
(4) Scheduled Inferred
Resources (below
401 metres below
ground level)
included in the Cut-8
estimates constitute
81% (89.3 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 2014
Life of Mine plan and
reflect changes made
to the Cut-6 and
Cut-7 designs
following the Cut-6
slope failure in 2013.
The scheduled
tonnes and carats
exclude the fourth
pipe that is
intersected during
Cut-8 and stockpiled
for treatment at the
end of the 2014 Life
of Mine plan.
Strategic reportAnglo American plc Annual Report 2014
STRATEGIC REPORT CORPORATE AND OTHER
CORPORATE AND OTHER
Key performance indicators
Segment
Prior year
Other Mining and Industrial
Prior year
Exploration
Prior year
Corporate activities and unallocated costs
Prior year
FINANCIAL AND OPERATING OVERVIEW
Other Mining and Industrial
Underlying EBIT of $62 million was an improvement
on the underlying operating loss of $13 million in 2013,
mainly attributable to an improved performance from
the Lafarge Tarmac joint venture.
Lafarge Tarmac joint venture
Anglo American’s share in the underlying EBIT of the joint
venture was $78 million, a $69 million increase over 2013.
Improved market conditions, combined with synergy
delivery and efficiency initiatives, have led to improved
margins and cash generation. The outlook for the UK
construction market remains positive and further growth
is expected in 2015.
Following the announcement on 7 July 2014 of an
agreement in principle, the Group reached a binding
agreement on 24 July 2014 to sell its 50% ownership
interest in Lafarge Tarmac to Lafarge SA (Lafarge) for a
minimum value of £885 million (approximately $1.35 billion
at present) in cash, on a debt- and cash-free basis and
subject to other customary working capital adjustments.
The sale is subject to a number of conditions, including
the completion of the proposed merger of Lafarge and
Holcim Limited.
Revenue ($m)
Underlying
EBITDA ($m)
Underlying
EBIT ($m)
Capex ($m)
1,859
1,800
1,854
1,795
–
–
5
5
(88)
(257)
162
81
(180)
(205)
(70)
(133)
(215)
(398)
62
(13)
(181)
(207)
(96)
(178)
42
50
2
48
–
1
40
1
Exploration
Anglo American exploration expenditure of $181 million
represented a decrease of 13%, following reductions in
diamonds, metallurgical coal and nickel exploration costs.
Decreases are mainly attributable to an overall reduction
in drilling activities.
Corporate activities and unallocated costs
Underlying EBIT was a $96 million loss, a decrease of
$82 million.
Corporate costs decreased by 24% ($118 million), of which
$44 million resulted from corporate cost savings initiatives
embedded during the year. Further reductions were mainly
owing to a lower share scheme charge of $27 million
(a decrease of 39%) and a foreign exchange gain of
$19 million compared to 2013. This was partly offset by
a 20% reduction in the allocation of corporate costs to
business units of $59 million, reflecting the lower
corporate cost base.
64
Anglo American plc Annual Report 2014
GOVERNANCE CHAIRMAN’S INTRODUCTION
GOVERNANCE
Sir John Parker
Chairman
I have long believed that good governance
equals good business.
CHAIRMAN’S INTRODUCTION
I am pleased once again to introduce the Governance
section of the Annual Report, where we set out our
approach to directing and controlling the activities of the
Group. I have long believed that good governance equals
good business, and I hope this report will offer readers
some insight into how we try to achieve that.
I am pleased to report that your Company has complied in
full with the UK Corporate Governance Code published in
2012 (the ‘Code’).
TONE FROM THE TOP
In this report, we describe the role of the Board and its
committees, and of the chairman and chief executive, and
we do so in terms of the tangible functions they perform –
setting strategy, monitoring performance, etc. This
provides useful factual information, but it does not quite
capture everything. For me, one of the most important,
but intangible, functions of the Board is to set the ‘tone
from the top’. This is driven by the integrity, honesty and
professionalism of the directors and the Board as a whole
setting the drumbeat for the behavioural expectations of
directors and employees.
You cannot write a policy guide for this vital role, but you
can promote it by recruiting the right people to the Board,
with the right mix of skills and experiences, coupled with
committed leadership.
BOARD COMPOSITION
Your Board comprises directors representing seven
nationalities with experience from a broad range of sectors,
as set out in the table on page 72. I am proud that we have
achieved the Davies Report target of 25% women on the
Board, and that our Board has been regularly refreshed
such that no current non-executive director has served
more than six years.
I am also pleased to report that we have been conscious
of the value of incorporating ethnic diversity on our Board.
I have agreed to accept an invitation from the UK
government to set out a practical way ahead for FTSE
companies to target ethnic diversity as a natural part of
the recruitment process.
REGULATORY DISCLOSURES
We have taken the opportunity this year to revise the
content and format of the Governance section to, hopefully,
make it clearer and more concise. So, rather than simply
repeat every piece of information from prior years, we
have tried to report only what is relevant and of interest
for 2014. For example, we have not reported this time
on our approach to director induction as we have
previously reported on the process followed for all
current non-executive directors. The legal and regulatory
requirements concerning disclosure in annual reports
have developed incrementally over the years and, while
this development has on the whole been beneficial, it
has to some extent rendered sections of the report slightly
redundant and repetitious. The Directors’ Report is a good
example of this. Still required by law, but with much of its
content reported elsewhere, it is difficult to decide where it
should sit. We have therefore moved the Directors’ Report to
the ‘Other Information’ section (on page 212). Our hope is
that these changes will make the format flow more logically,
and be more readable, while still ensuring full disclosure.
I do hope the following reports convey the importance we
attach to our governance arrangements and that you find
them useful and interesting.
Sir John Parker
Chairman
65
Anglo American plc Annual Report 2014Governance GOVERNANCE DIRECTORS
DIRECTORS
CHAIRMAN
Sir John Parker
GBE, FREng, DSc (Eng), ScD (Hon),
DSc (Hon), DUniv (Hon), FRINA
FINANCE DIRECTOR
René Médori
Doctorate in Economics
72, 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 Sustainability 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.
He is a non-executive director of Carnival Corporation
and Airbus Group as well as deputy chairman of DP World.
Sir John is a Visiting Fellow of the University of Oxford and
was the President of the Royal Academy of Engineering
from 2011 to 2014. 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.
57, 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 the CorpCo and the Investment
Committee (InvestCo). 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 US.
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).
CHIEF EXECUTIVE
Mark Cutifani
BE (Mining Engineering)
SENIOR INDEPENDENT DIRECTOR
Sir Philip Hampton
MA, ACA, MBA
56, was appointed as a director and chief executive 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 Sustainability
Committee. Mark has over 38 years’ experience of the
mining industry across a wide range of geographies
and commodities.
Mark is a non-executive director of Anglo American
Platinum Limited and Chairman of the De Beers group of
companies, and the previous CEO of AngloGold Ashanti
Limited. Before joining AngloGold Ashanti, Mark was
chief operations officer (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).
61, joined the Board on 9 November 2009. He is chairman
of the Remuneration Committee and a member of the
Audit and Nomination Committees. 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. Sir Philip was appointed
to the board of GSK as a non-executive director and
chair-designate in 2015.
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 succeeded
David Challen as the senior independent director at the
conclusion of the 2014 AGM.
66
Anglo American plc Annual Report 2014 NON-EXECUTIVE DIRECTORS
Judy Dlamini
MBChB, DOH, MBA, DBL
Phuthuma Nhleko
BSc (Eng), MBA
55, was appointed to the Board on 1 January 2014 and is a
member of the Audit and Remuneration Committees. 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
66, was appointed to the Board on 19 April 2013. He is
chairman of the Audit Committee and a member of the
Remuneration Committee. Byron contributes broad
business, financial and board experience in numerous
geographies.
He is a non-executive director of Unilever NV, Unilever plc,
Standard Chartered and Akzo Nobel. 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.
54, 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).
Ray O’Rourke
KBE, HonFREng, CEng, FIEI, FICE
68, joined the Board on 11 December 2009. He is a member
of the Nomination, Remuneration and Sustainability
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 and engineering
practices. As a member of the Sustainability 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.
67
Anglo American plc Annual Report 2014Governance GOVERNANCE DIRECTORS
NON-EXECUTIVE DIRECTORS continued
Mphu Ramatlapeng
MD, MHSc
Anne Stevens
BSc, PhD
62, was appointed to the Board on 8 July 2013 and is a
member of the Sustainability 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)
66, 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. 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 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
55, joined the Board on 4 November 2013. Jim is a member
of the Sustainability and Audit Committees. 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.
Between 1997 and 2013, he was a Senior Vice President
of Capital International Investors, a division of the Capital
Group, and had responsibility for investments in the
mining and metals industry with a broad global geographic
coverage. 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.
64, joined the Board on 16 November 2009, is chairman
of the Sustainability 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.
David Challen and Sir CK Chow also served on the
Board from the beginning of the year until the 2014 AGM.
68
Anglo American plc Annual Report 2014 GOVERNANCE EXECUTIVE MANAGEMENT
EXECUTIVE MANAGEMENT
GROUP MANAGEMENT COMMITTEE MEMBERS
Mark Cutifani
See page 66 for biographical details.
Chris Griffith
B Eng (Mining) Hons, Pr Eng
René Médori
See page 66 for biographical details.
Paulo Castellari-Porchia
Bcom, MBA
50, 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 25 years.
Norman Mbazima
FCCA, FZICA
44, 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 operational, corporate finance and capital
project roles.
Seamus French
B Eng (Chemical)
56, 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. 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
52, 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.
59, 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.
69
Anglo American plc Annual Report 2014Governance GOVERNANCE EXECUTIVE MANAGEMENT
GROUP MANAGEMENT COMMITTEE continued
Phil Mitchell
BEc, CPA
Duncan Wanblad
BSc (Eng) Mech, GDE
(Eng Management)
54, Group Director, HR and corporate affairs. Phil has
extensive experience in the mining industry, following a
32-year career with Rio Tinto. He has worked across many
commodity businesses in roles spanning finance, business
development and M&A, including negotiations with
governments and employees as part of a number of
different strategic initiatives. Phil holds an economics
degree from the Australian National University.
48, 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.
Tony O’Neill
MBA, BASc (Eng)
Peter Whitcutt
BCom (Hons), CA (SA), MBA
57, is Group director, technical and sustainability, and
joined Anglo American in 2013. He is a member of the
Sustainability and Investment Committees. He is also a
non-executive director of De Beers, 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 36-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.
49, is Group director, strategy, business development and
marketing. 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 marketing in 2013.
Khanyisile Kweyama was a member of the GMC during
the year, before being seconded to Business Unity South
Africa to take up the position of CEO for two years, effective
2 January 2015.
70
Anglo American plc Annual Report 2014 GOVERNANCE THE BOARD IN 2014
THE BOARD IN 2014
THE ROLE OF THE BOARD
The Board provides leadership to the Group and is
responsible for its long term success. It seeks to achieve
this by establishing the ‘tone from the top’, through setting
Group strategy and approving business plans, monitoring
performance, overseeing risk management and ensuring
the right people are in place via board and executive
succession planning.
The Board is supported by a number of committees,
to which it has delegated certain powers. The role of these
committees is summarised below, and their membership
and activities during the year are detailed on pages 76–82.
Under the Group’s governance arrangements, certain
key decisions can only be made by the Board and may not
be delegated. The schedule of ‘Matters Reserved for the
Anglo American plc Board’, and the committees’ terms of
reference, detailing the specific responsibilities of the
Board and its committees can be found online.
For more information, visit
www.angloamerican.com/aboutus/ourapproach
Governance structure
The Board
Provides leadership to the Group and is
responsible for its long term success.
Audit Committee
Oversight of financial reporting, audit,
internal control and risk management.
See page 78 for more details.
Nomination Committee
Responsible for board composition,
appointment of directors and senior
management and succession planning.
See page 77 for more details.
Remuneration Committee
Determines the remuneration of
executive directors, the chairman and
senior management and oversees
remuneration policy for all employees.
See page 82 for more details.
Sustainability Committee
Oversees management of sustainability
issues, including safety, health.
environment, social and governmental
relations.
See page 76 for more details.
Role of the chairman
Sir John Parker manages the Board. His main
responsibilities include:
• Board leadership
• Board composition and succession planning
• Governance
• Advising, providing counsel and acting as confidant
to the chief executive
• Ambassador for the Group
• Available for shareholders
Role of the chief executive
Mark Cutifani manages the Group. His main
responsibilities include:
• Executive leadership
• Formulation of Group strategy
• Approval and monitoring of business plans
• Organisational structure and senior appointments
• Acquisitions and disposals and business development
• Shareholder relations
Role of the senior independent director (SID)
Sir Philip Hampton, as the SID, is available to discuss any
concerns with shareholders that cannot be addressed
through the normal chairman/chief executive channels.
He also acts as a sounding board and confidant for
the chairman and as an intermediary for other directors,
if necessary.
Group Management Committee
(GMC)
Principal executive committee.
Responsible for formulating
strategy, setting targets/budgets
and managing the Group’s
portfolio.
For more information see
‘GMC Rules’ on the Group’s
website.
Corporate Committee
(CorpCo)
Reviews corporate policies
and processes, and financial
performance and budgets at
BU level.
Operational Committee
(OpCo)
Responsible for driving
operational best practices
across the Group and
the setting of technical
standards.
Investment Committee
(InvestCo)
Responsible for making
recommendations to the
GMC on capital investment
proposals.
Board committees
Executive committees
71
Anglo American plc Annual Report 2014Governance GOVERNANCE THE BOARD IN 2014
BOARD COMPOSITION
The Board currently comprises the chairman, two executive
directors and nine independent non-executive directors.
Board composition is regularly refreshed, with all the current
non-executive directors having been appointed within the
last six years. In terms of diversity, the Company has
achieved the Davies Report target of 25% women on
the Board, and contains directors from Australia, France,
Ireland, Lesotho, South Africa, the UK, and the US, with a
broad range of professional experience as set out in
the table below.
Australia
France
Ireland
Lesotho
South Africa
UK
UK/US
US
Percentage of
Board membership
8%
17%
17%
33%
33%
17%
25%
58%
8%
17%
Board diversity
Nationality
Professional
experience
Automotive
Educational/
government/
public entities
Energy
Engineering/
construction
Finance
Medical/
healthcare
Mining
Other global
multinational
Social enterprises
Telecoms
72
Anglo American plc Annual Report 2014
BOARD DISCUSSIONS
The chairman has developed and maintains a two-year
rolling agenda which sets the framework for Board
meetings and seeks to ensure that each meeting covers an
appropriate range of topics – from routine business, through
operational reports and project updates, to special items and
matters of strategy and business development – and that
over the course of a year, the Board covers its whole remit.
Each meeting includes a wide-ranging report from
the chief executive and a report from the finance director
on the Group’s financial performance. Reports from the
committee chairmen, updates on major projects and
certain other administrative matters are also reported
at each Board meeting.
In addition to these regular items, the following matters
were discussed, among others, during 2014:
February
• Annual results and dividend recommendation
• Strategic development – update
• Cyber risk
• Litigation update
• Results of the 2013 Board and Committee evaluation
April
• Business Report – Minas-Rio
• AGM preview
• Barro Alto capex proposal
• Various major supply contracts for approval
June
• Business Report – Sishen mine
• De Beers’ Gahcho Kué project
• Board Strategy sessions – two days
July
• Interim results and interim dividend recommendation
• Business Report – Coal
• Strategy update
• Litigation update
October
• Business Report – Platinum (including a Board visit
to Mogalakwena mine)
• Commodity pricing update
• Sishen heavy mining equipment plan
December
• December Investor Day presentation
• Budget and Business Plans 2015–2017
• Business Report – Base Metals
• Commodity pricing – update and long term outlook
Board and Committee meetings 2014 –
frequency and attendance of members
Independent
Board
Audit
Sustainability
Remuneration Nomination
Sir John
Parker
Mark
Cutifani
René
Médori
David
Challen(1)
Sir CK
Chow(1)
Judy
Dlamini
Byron
Grote
Sir Philip
Hampton
Phuthuma
Nhleko
Ray
O’Rourke
Mphu
Ramatlapeng
Jim
Rutherford
Anne
Stevens
Jack
Thompson
n/a
6/6
No
6/6
No
6/6
–
–
–
Yes
2/2
1/1
Yes
2/2
–
Yes
6/6
3/3
Yes
6/6
3/3
Yes
6/6
3/3
Yes
5/6(2)
2/3(2)
Yes
6/6
Yes
6/6
–
–
Yes
6/6
2/2(4)
Yes
6/6
3/3
Yes
6/6
–
4/4
4/4
–
–
–
–
–
–
–
–
–
–
2/2
–
–
2/2
1/1
2/2
1/1
3/3
3/3
–
–
3/3
2/2
–
2/2
3/4(3)
3/3
2/2
4/4
4/4
–
4/4
–
–
–
–
–
2/2
3/3
–
(1) Meetings attended prior to retirement.
(2) Mr Nhleko did not attend the December Board and Committee meetings to avoid a potential conflict of interest.
(3) Mr O’Rourke was unable to attend one Sustainability Committee meeting due to a diary clash.
(4) Meetings attended since appointment.
73
Anglo American plc Annual Report 2014Governance GOVERNANCE THE BOARD IN 2014
BOARD VISITS TO OPERATIONS
We recognise the importance of getting out of the
boardroom and visiting the Group’s operations on the
ground. Such visits provide directors with opportunities to
meet with local employees, ‘kick the tyres’ and gain insights
that are simply not available from spreadsheets and
PowerPoint presentations.
During 2014, the entire Board visited the Mogalakwena
platinum mine in South Africa as part of the October
Board meeting, and individual directors made visits to the
Sishen iron ore mine in South Africa, and the Michiquillay,
Quellaveco, Collahuasi and El Soldado copper projects/
mines in South America.
Images
The Board visited the
Mogalakwena mine
in October 2014.
Pictured during
the visit (clockwise
from top left) are
Judy Dlamini (centre),
Jim Rutherford (left)
and Sir Philip Hampton,
Ray O’Rourke, and
Phuthuma Nhleko.
74
Anglo American plc Annual Report 2014 BOARD EVALUATION
INVESTOR RELATIONS
In accordance with the Code, we conduct an externally
facilitated evaluation every three years, with the next
being due to take place during the course of 2015.
Between the externally facilitated reviews, the Board
undertakes an online, questionnaire based evaluation
of its, and the committees’, performance. This is
augmented by one-to-one interviews by the chairman
with the non-executive directors.
The evaluation undertaken in late 2013 and reviewed
by the Board in February 2014 found that, overall, the
Board and its committees were performing well. The
areas for improvement included: shorter presentations
and longer discussions and, in terms of strategic
discussions, more information on industry trends and
competitor benchmarking was requested. That these
suggested improvements are not new underlines the
fact that improving board performance is an iterative,
ongoing exercise, which is never entirely complete.
A further internal evaluation was undertaken in late
2014, the results of which were reviewed by the Board
in February 2015.
Overall, performance of the Board was highly rated.
However, as one would expect from an engaged board,
there is the opportunity for further improvements. At a time
of increased volatility in the industry the Board needs to
continue its focus on the management of risks. It also
needs to strengthen its links with the Management of the
Businesses to ensure that the expertise and experience
of Board members is utilised in support of restructuring
and strategic change. Suggestions to improve our
strategic debates, especially around our Strategy Day,
will also be addressed.
An action plan incorporating key suggestions for
improvements will be debated at our next Board meeting
to implement agreed change.
The Company maintains an active engagement with its key
financial audiences, including institutional shareholders and
buy 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, including an annual capital markets day.
An active programme of communication with potential
shareholders is also maintained.
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.
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.
The chairman, the senior independent director and other
non-executive directors are 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.
75
Anglo American plc Annual Report 2014Governance GOVERNANCE SUSTAINABILITY COMMITTEE
SUSTAINABILITY COMMITTEE
Jack Thompson
Chairman, Sustainability Committee
COMPOSITION
• Jack Thompson – Chairman
• Mark Cutifani
• Tony O’Neill
• Ray O’Rourke
• Sir John Parker
• Mphu Ramatlapeng
• Jim Rutherford
COMMITTEE DISCUSSIONS IN 2014
At each meeting, the Committee reviews a detailed
quarterly report covering the Group’s performance across a
range of sustainability areas including: safety; occupational
health; political and regulatory risk; and environment and
social performance. In addition to these standing agenda
items, the following matters were discussed during 2014:
February
• business unit sustainability report: Kumba Iron Ore
• key HR risks, derived from the overall sustainability
risk report
• safety update – focused on increased use of leading
indicators and on audits and reviews to measure the
effectiveness of controls.
April
• regulatory update – summary of evolving issues
and regulatory developments
ROLE AND RESPONSIBILITIES
• an update on sustainability activities within the
The Committee changed its name to the Sustainability
Committee (from the Safety & Sustainable Development
Committee) during the year and adopted new terms of
reference to reflect its focus on the whole range of
sustainability issues facing the Group.
The Committee’s purpose is to oversee, on behalf of the
Board, material management policies, processes and
strategies designed to manage safety, health, environment,
socio-political and people risks. It aims to achieve
compliance with sustainable development responsibilities
and commitments and strive for an industry leadership
position on sustainability.
The new terms of reference are available to view online.
For more information, visit
www.angloamerican.com/aboutus/ourapproach
supply chain
• government and social affairs update – focused on
licensing/permitting and on social performance and
socio-economic development
• presentation from the President of the World Business
Council for Sustainable Development.
July
• detailed update on occupational health and hygiene
• business unit sustainability report: Base Metals
and Minerals
• industry benchmarking: benchmarking the Group’s
performance against industry peers across a range
of sustainability metrics
• presentation by the Cambridge Institute for
Sustainability Leadership.
October
• business unit sustainability report: Coal
• integrated reporting: Professor Mervyn King gave a
presentation on the work of the International Integrated
Reporting Council.
76
Anglo American plc Annual Report 2014 GOVERNANCE NOMINATION COMMITTEE
COMMITTEE DISCUSSIONS IN 2014
The Committee met twice during 2014, discussing the
following matters:
February
• discussed the composition of the Board committees
and agreed to propose to the Board that Judy Dlamini
be appointed to the Remuneration Committee and
Jim Rutherford be appointed to the Audit Committee
• recommended the appointment of Sir Philip Hampton
as senior independent director
• noted that the Company would achieve the 25%
Davies target for women on the Board, and discussed
how the ‘pipeline’ of potential candidates could be
expanded through, for example, greater mentoring.
October
• discussed the appointment of the Group Company
Secretary and agreed that John Mills’ nomination
be submitted to the Board
• noted the service profiles of the current NEDs and the
Chairman’s proposal of a structured approach to the
ongoing review of NED appointments. The Committee
agreed this proposal be submitted to the Board
• agreed to recommend to the Board the proposal that
Phil Mitchell join the GMC.
NOMINATION COMMITTEE
Sir John Parker
Chairman, Nomination Committee
COMPOSITION
• Sir John Parker – Chairman
• Sir Philip Hampton
• Phuthuma Nhleko
• Ray O’Rourke
• Anne Stevens
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 potential candidates available in
the market and agreeing a ‘longlist’ 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 diverse board with the
appropriate mix of skills, experience, independence
and knowledge.
• 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.
77
Anglo American plc Annual Report 2014Governance GOVERNANCE AUDIT COMMITTEE
AUDIT COMMITTEE
Byron Grote
Chairman, Audit Committee
COMPOSITION
• Byron Grote – Chairman
• Judy Dlamini
• Sir Philip Hampton
• Phuthuma Nhleko
• Jim Rutherford
• Anne Stevens
ROLE AND RESPONSIBILITIES
• Monitoring the integrity of the annual and interim
financial 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.
• Making recommendations to the Board on
the appointment, retention and removal of the
external auditors.
• Reviewing and monitoring the effectiveness of the
Group’s internal control and risk management systems.
• 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. Further details of such risks are provided
on pages 42–47.
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
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.
78
Anglo American plc Annual Report 2014 COMMITTEE DISCUSSIONS IN 2014
The Audit Committee held three meetings in 2014. The key
issues reviewed included the following:
February
• reviewed in detail the significant accounting issues, the
going concern assessment and the press release for the
2013 financial results
December
• reviewed the significant accounting issues that would
impact the 2014 financial results
• reviewed an update on the outcome of regulatory review
of the statutory audit market
• approved the external audit plan for the 2014 audit and
external auditor’s view on the key audit risks
• reviewed the results of the external audit work
• received a report from management on Treasury
matters and plans for 2015
• reviewed the risks associated with sale of assets
announced for disposal
• reviewed the status of an investigation into an
alleged fraud conducted in Australia and Chile by a
former employee
• reviewed the Committee’s Terms of Reference.
The Audit Committee report is set out below.
• considered the position regarding tendering of the
external auditor appointment
• noted the effective tax rate and developments in mining
taxation
• reviewed the Ore Reserves and Mineral Resources report
• reviewed a report on completion of the 2013 internal
audit plan and discussed the significant findings.
July
• evaluated management’s proposed accounting treatment
and disclosure relating to various matters including the
proposed sale of the Group’s stake in the Lafarge Tarmac
joint venture
• reviewed the assumptions underpinning the going
concern assessment
• satisfied itself that the external auditor was in agreement
with the accounting treatment and judgement proposed
by management on the significant accounting items
• received a report on the progress of the internal audit
plan for 2014
• reviewed the risk profile of Anglo American and each of
its business units
• reviewed the governance framework for the Marketing
business unit
• reviewed an analysis of pricing outlooks and comparison.
79
Anglo American plc Annual Report 2014Governance GOVERNANCE AUDIT COMMITTEE REPORT
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 and will rotate off at the conclusion
of the 2014 audit in accordance with this requirement. The
appointment of a replacement engagement partner has
been approved by the Audit Committee.
• 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.
Conclusions of the Audit Committee for 2014
The Audit Committee has satisfied itself that the UK
professional and regulatory requirements for audit lead
engagement partner rotation were adhered to and the
external auditors’ independence was not impaired.
The Audit 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 Audit 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 2016. Resolutions to authorise
the Board to re-appoint and determine the remuneration
of Deloitte LLP will be proposed at the AGM on
23 April 2015.
Audit Tender
Anglo American recognises the outcome of the reviews of
the statutory audit market undertaken by the EU and the
Competition and Markets Authority including the associated
transition rules. Under these arrangements, Anglo American
will undertake, at the latest, a tender and rotation of the
audit appointment at the time of the rotation of the lead
engagement partner, which is due after completion of the
2019 audit.
Audit Committee actions in 2015
Priorities for 2015 will include assessment of risks for
which the Audit Committee has responsibility, monitoring
significant financial matters and review of new regulatory
requirements for audit committees with respect to reporting
and governance.
80
Anglo American plc Annual Report 2014 Whistleblowing programme
The Group has had a whistleblowing programme in place
for a number of years in all its managed operations.
This facility operates in addition to a standardised Group-
wide stakeholder complaints and grievance procedure
that is operated at all managed operations (see the 2014
Sustainable Development Report for more details). The
whistleblowing 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.
During 2014, 302 (2013: 372) reports were received via
the global ‘Speak Up’ facility 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 necessary, action was taken to address
the issues raised. A governance process is in place to ensure
all reports are analysed and acted upon.
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 of 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 Audit Committee met independently with the head of
internal audit during the year.
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.
During 2014, Anglo American detected a fraud committed
by a project director for a development project in Australia
involving an override of management controls in
procurement and payments to fictitious suppliers. The
project director had performed a similar role in Chile
previously and forensic investigation established a similar
fraud had been committed in that project. A separate fraud
was identified in the Copper business perpetrated by a key
contractor to the Los Bronces mine. In each case, the losses
suffered were not material. The Company is taking steps to
improve its controls to address identified weaknesses.
81
Anglo American plc Annual Report 2014Governance GOVERNANCE REMUNERATION COMMITTEE
REMUNERATION COMMITTEE
COMPOSITION
• Sir Philip Hampton – Chairman
• Judy Dlamini
• Byron Grote
• Ray O’Rourke
• Jack Thompson
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.
82
COMMITTEE DISCUSSIONS IN 2014
The Committee held three meetings in 2014, discussing the
following matters:
February
• reviewed executive director personal key performance
indicators for 2014 and Group financial and safety targets
to ensure alignment with Group strategy
• discussed the chief executive’s and finance director’s
performance in 2013 to adjudicate on bonus outcomes
and an appropriate reduction of bonuses in light of
impairments being taken for the financial year
• reviewed executive directors’ shareholdings in the
Company prior to 2014 share awards being made
• reviewed the forecast vesting of 2011 Bonus Share Plan
(BSP) and Long Term Incentive Plan (LTIP) awards
• reviewed the 2013 Directors’ remuneration report
ahead of publication
• reviewed corporate governance issues in the
previous quarter.
April
• confirmed the adoption of the final rules of the
Anglo American Bonus Share Plan 2014
• confirmed the vesting of 2011 BSP and LTIP awards
and the granting of 2014 BSP and LTIP awards
• reviewed and approved the proposal for Return on Capital
Employed targets for the 2014 LTIP award
• discussed investor feedback on executive remuneration
prior to the vote on the Directors’ remuneration report
• discussed the effect of 2013 impairments on future
remuneration outcomes
• reviewed corporate governance issues that had arisen
since the previous meeting.
December
• reviewed directors’ salaries, taking into account the
general salary review for the broader employee population
• considered GMC remuneration elements and the
retention effect provided by unvested share incentives
• discussed the executive directors’ draft personal key
performance indicators for 2015
• discussed potential changes to the Directors’
remuneration report for 2014
• reviewed and updated its terms of reference
• reviewed corporate governance issues that had arisen
since the previous meeting.
The Directors’ remuneration report is set out opposite.
Anglo American plc Annual Report 2014 DIRECTORS’
REMUNERATION
REPORT
Sir Philip Hampton
Chairman, Remuneration Committee
The role of the Company’s Remuneration
Committee remains to ensure that the
remuneration arrangements for executive
directors offer every encouragement for them
to enhance the Company’s performance and
deliver our strategy in a responsible manner.
1. INTRODUCTORY LETTER
Dear Shareholder,
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. It is also our task 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.
As reported by the chief executive in his introduction to
this year’s Annual Report, it has been a challenging year
for Anglo American. Whilst 2014 has seen a marked
softening of commodity prices, the Company is continuing
its operational turnaround and delivering on many of its
strategic objectives, for example:
• completing the Minas-Rio project, with first iron ore
shipped before the end of October and production
being ramped up
• rolling out a revised operating model to
improve operational performance
• continuing the review of its asset portfolio
• implementing organisational change.
The economic challenges and business performance
are reflected in the remuneration received by executive
directors in 2014. Specifically:
• underlying earnings were ahead of the targets set at the
start of the year
• the relatively subdued level of earnings over the last
three years means that the required three-year earnings
growth was not achieved and, therefore, of the
Enhancement Shares initially awarded in 2012, none
vested at the end of 2014
• the results of the Company’s longer term efficiency
programmes mean that half the Long Term Incentive Plan
(LTIP) awards initially granted to executive directors in
2012 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 Total Shareholder
Return (TSR).
We have chosen to reproduce the Company’s
Remuneration Policy (as approved at the 2014 Annual
General Meeting (AGM)) in full, rather than an abridged
version, so that the Implementation Report for 2014, starting
on page 93, will be more meaningful for you.
The Remuneration Policy continues to support the delivery
of our strategic objectives as evidenced by the performance
measures and targets for both the Bonus Share Plan (BSP)
and LTIP awards made in 2014, both of which are outlined in
the Implementation Report.
I am pleased to report that the strengthening of the malus
and clawback provisions of the BSP and LTIP, introduced for
awards made from 2014 onwards, meet the requirements of
the revised Corporate Governance Code that will apply for
the 2015 reporting year.
Sir Philip Hampton
Chairman, Remuneration Committee
83
GovernanceAnglo American plc Annual Report 2014 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 took effect for the purposes of S226D of the
Companies Act on approval by shareholders at the AGM
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 AGM,
subject to any unforeseen developments. It is the
Committee’s intention that commitments entered into
before these policies took formal effect and which are
inconsistent with them should be honoured, as explained
further below.
Figure 1 shows the Remuneration Policy approved at the
AGM in 2014, updated to reflect the fact that some historical
information is no longer relevant.
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
Maximum (threshold)
210% of salary (0% of salary)
Each year executive directors participate in the BSP, which
rewards EPS and individual performance targets
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 and reflect management’s
underlying activity towards delivering the company’s
strategy regardless of price or other 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, 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
84
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 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, 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)
85
GovernanceAnglo American plc Annual Report 2014 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
2013 BSP Enhancement
Share awards
Maximum award:
65.6% of salary
Performance measure:
Real EPS growth
Performance period:
Three years
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
Pension
To offer market-
competitive levels
of benefit
30% of basic salary
Other benefits
To provide
market-
competitive
benefits
Maximum level of ongoing benefits
Capped at 10% of salary
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
It is the Committee’s intention that these outstanding awards
should be paid out according to the terms on grant
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 being paid into an unregistered retirement
benefits scheme (an EFRBS). Since 6 April 2011, executive
directors have the option for contributions which may not 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
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). In terms of HMRC
rules these plans do not have performance conditions
The Company reimburses all necessary and reasonable
business expenses
86
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 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 basic 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 this 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
87
GovernanceAnglo American plc Annual Report 2014 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
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 necessary and reasonable 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
88
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 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.
£8.8 m
£6.3 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 in respect of the chief executive and two
times basic salary in respect of other executive directors.
The Committee takes into consideration achievement
against these targets when making grants under the
Company’s various long term incentive plans.
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
£5.2 m
£3.7 m
£1.1m
Indicative total pay (£m)
0
2.0
4.0
6.0
8.0
10.0
2015 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 comprises basic salary,
benefits and pension only.
(1) Estimates of £76,000 and £36,000 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 2015 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 13% 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 2015 basic salary, benefits, pension, a notional 65% of maximum bonus opportunity (60% of which is deferred into Bonus Shares)
and a notional 65% of maximum LTIP opportunity. For this level of pay, the Company’s attributable ROCE would need to be 11.1% 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 2015 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.
89
GovernanceAnglo American plc Annual Report 2014
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 chief executive and the finance
director vary under three different performance scenarios:
• Above – representing 100% of maximum for variable
pay opportunity
• Target – representing a notional 65% of maximum
for variable pay opportunity
• Below – representing 0% of maximum for variable
pay opportunity.
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
Circumstances
of 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 prorated bonus award may be made by the
Company, with the Committee’s approval, and can be
paid wholly in cash
90
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
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 Voluntary Resignation
Forfeit
‘Bad Leaver’
Forfeit
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 prorated
Exceptional circumstances
(e.g. 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 prorated, 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
(e.g. 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
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
All awards are time prorated
Exceptional circumstances
(e.g. 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
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
(e.g. 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
91
GovernanceAnglo American plc Annual Report 2014 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
remaining 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 and comments throughout
the year. For example, greater clarity has been provided
in the remuneration policy in respect of the maximum
level of ongoing benefits for executive directors
• 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 3% and 2% of salary
for 2014 and 2015 respectively, has been the same as the
general increase, in both years, 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
sensible 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.
92
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 3. DIRECTOR REMUNERATION IN 2014
The information set out in this section has been subject to
external audit.
Figures 6 to 11 show the outcomes for 2014 of the main
components of executive director remuneration, including
the expected vesting of share awards with a performance
period ending in 2014, and Figure 12 sets out the total
remuneration outcomes.
Conditional share awards made in 2014 are set out in
Figure 15 in Section 4.1.
3.1 Basic salary for 2014
Figure 6 sets out the basic salaries for 2014.
Mark Cutifani was appointed chief executive with effect
from 3 April 2013. His annual salary level on appointment
was £1,200,000. Mark Cutifani received a salary increase
of 3% in 2014.
René Médori received a salary increase of 3% in 2014.
3.2 Annual BSP outcomes for 2014
Figure 7 shows the BSP outcomes for 2014. Figures 8a
and 8b summarise the annual financial and personal
strategic measures for the 2014 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
2014 are set out under BSP Key Performance Aspects.
The Committee reviewed the annual targets set at the
beginning of 2014 and, in light of the positive results
achieved across the group in 2013, decided to raise
threshold performance expectations to a more stretching
level in 2014 (threshold of $1.50). To ensure the core
structure of the incentive scheme remained the same, the
potential pay out at threshold performance was increased to
17.6%, on this measure, with no payment for performance
below threshold. The resulting target and maximum
outcomes remained the same.
The executives’ 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 (LTIFR)
and a risk and change management rating).
Figure 6: Basic salaries for 2014
(all amounts in ’000)
MARK CUTIFANI
(2013: £891)
£1,236
RENE MEDORI
(2013: £765)
£788
Figure 7: BSP outcomes for 2014
(cash bonus and Bonus Shares)
(all amounts in ’000)
MARK CUTIFANI
(2013: £1,218)
£1,557
RENE MEDORI
(2013: £979)
£960
93
GovernanceAnglo American plc Annual Report 2014 Figure 8a: BSP performance assessment for 2014 – Chief Executive
Mark Cutifani
Corporate financial (50% of award)
Below
Earnings per Share
Threshold
$1.50 = 8.8%
of award
Target
$1.67 = 20%
of award
Above
Maximum
$2.25 = 50%
of award
Achieved
(% of award)
21.5%
Personal/Strategic (50% of award)
Below
Threshold
Target
Above
Maximum
Strategic development (15%)
Talent management (10%)
Business improvement (15%)
Endowment (5%)
Stewardship (5%)
Overall personal performance
Group safety performance
Static/declining
Improving
Strongly
improving
Best practice/
world class
Deductor
Overall performance
Below
Threshold
Target
Above
Maximum
46%
(7.5%)
60%
Resulting BSP award
60% of maximum bonus award (126% of salary)
(40% payable in cash, 60% as Bonus Shares, with deferred receipt. Two-thirds of the Bonus Shares will vest after a further three years, subject to
continued employment; for the remaining third, there is a further two-year holding period in addition to the three-year vesting period)
BSP KEY PERFORMANCE ASPECTS
• Further improvement in year-on-year production
performance across the majority of businesses, most
notably at Kumba (+14%), Coal – Australia and Canada
(+12% in metallurgical coal), Coal – South Africa (+5%
trade production) and De Beers (+5%). An exception to
this performance was at Platinum, which lost 532 koz as
a result of a strike during 2014. Group 4% increase on
Copper Equivalent (Cu Eq.) basis (strike adjusted).
• Real unit costs down across the Group with increased
• Significant progress in the Platinum restructuring
process; sales execution process under way for
Union. Rustenburg sale preparation has commenced.
Announcement of intention to divest four small
copper assets.
• Review and update of capital allocation ongoing.
2014 capex of $6.0 bn, below guidance of $7.0-$7.5 bn.
Notice given to Peruvian government to terminate the
2007 privatisation agreement for Michiquillay in line
with focusing on early stage pipeline opportunities.
production, cost savings at Coal Australia and decreasing
commodity input costs, partially offset by labour and
logistics costs increases, notably in South Africa.
• Continued implementation of organisational
redesign. Completion of redesign processes in
Nickel, Niobium and Phosphates, Coal and Group.
• Improvement in number of Priority 1 assets exceeding
budget in 3 out of 4 quarters, from 6 in 2013 to 8 in 2014.
• Continued, increased engagement with host
governments in all principal geographies.
• Exceeded targeted 35Mt of production at Sishen mine.
• Continued progress achieved in the drive for safety
• Minas-Rio first iron ore shipped in October 2014.
Ramp up proceeding on plan.
improvement – reductions in lost time and total injury
rates, with LTIFR falling from 0.49 to 0.35 and
total recordable case frequency rate (TRCFR)
falling from 1.08 to 0.81.
94
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014
Figure 8b: BSP performance assessment for 2014 – Finance Director
René Médori
Corporate financial (50% of award)
Below
Earnings per Share
Threshold
$1.50 = 8.8%
of award
Target
$1.67 = 20%
of award
Above
Maximum
$2.25 = 50%
of award
Achieved
(% of award)
21.5%
Personal/Strategic (50% of award)
Below
Threshold
Target
Above
Maximum
Organisation/Driving Value targets (10%)
Treasury (10%)
Tax (10%)
Capital allocation (5%)
Information Management (5%)
Finance Function operational targets (10%)
Overall personal performance
Group safety performance
Static/declining
Improving
Strongly
improving
Best practice/
world class
Deductor
Overall performance
Below
Threshold
Target
Above
Maximum
44%
(7.5%)
58%
Resulting BSP award
58% of maximum bonus award (121.8% of salary)
(40% payable in cash, 60% as Bonus Shares, with deferred receipt. Two-thirds of the Bonus Shares will vest after a further three years, subject to
continued employment; for the remaining third, there is a further two-year holding period in addition to the three-year vesting period)
BSP KEY PERFORMANCE ASPECTS
• Further improvement in year-on-year production
performance across the majority of businesses, most
notably at Kumba (+14%), Coal – Australia and Canada
(+12% in metallurgical coal), Coal – South Africa (+5%
trade production) and De Beers (+5%). An exception to
this performance was at Platinum, which lost 532 koz as
a result of a strike during 2014. Group 4% increase on
Cu Eq. basis (strike adjusted).
• Real unit costs down across the Group with increased
production, cost savings at Coal Australia and decreasing
commodity input costs, partially offset by labour and
logistics costs increases, notably in South Africa.
• Minas-Rio first iron ore shipped in October 2014.
Ramp up proceeding on plan.
• Significant progress in the Platinum restructuring
process; sales execution process under way for
Union. Rustenburg sale preparation has commenced.
Announcement of intention to divest four small
copper assets.
• Review and update of capital allocation ongoing.
2014 capex of $6.0 bn, below guidance of $7.0-$7.5 bn.
Notice given to Peruvian government to terminate the
2007 privatisation agreement for Michiquillay in line
with focusing on early stage pipeline opportunities.
• Net debt of $12.9 bn delivered below guidance
of $13.5-$14.0 bn in the face of weakening
operational cashflows.
• In 2014, the Group issued corporate bonds with
the US dollar equivalent value of $3.2 bn through
accessing the European, US and South African
capital markets.
• Continued progress achieved in the drive for safety
improvement – reductions in lost time and total
injury rates, with LTIFR falling from 0.49 to 0.35
and TRCFR falling from 1.08 to 0.81.
95
GovernanceAnglo American plc Annual Report 2014
3.3 BSP Enhancement
Share outcomes for 2014
In 2012, René Médori was awarded 16,538
Enhancement Shares under the BSP. Vesting was subject
to the Company’s real EPS growth over the three-year
period to 31 December 2014. The growth targets set on
award were the UK Retail Price Index (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 2014
(all amounts in ’000)
Figure 10: LTIP assessment for 2014
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 2014, 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.
RENE MEDORI
(2013: £0)
£0
3.4 Long Term Incentive
Plan outcomes for 2014
In 2012, René Médori received an LTIP grant of 85,048
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 2014 results, and
(b) the level of savings delivered by the Asset Optimisation
and Supply Chain programmes to 31 December 2014.
Figure 10 sets out further details of the measures and
the Company’s expected performance against each.
As the performance period for the TSR measures ends
immediately after the date of this report on the
announcement of the 2014 results, performance and
vesting in respect of the TSR measures are based on the
latest available information as at 31 December 2014.
Figure 11 sets out the assumed outcome for René Médori,
including accrued dividend equivalents.
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 2014, 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 2014 of $4.6 bn and maximum vesting
required cumulative savings of $5.6 bn.
• Actual performance was $7.7 bn, leading to
100% vesting of this part of the award (50% of the
overall award).
96
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 Figure 10: LTIP assessment for 2014
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 2014, 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 2014, 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 2014 of $4.6 bn and maximum vesting
required cumulative savings of $5.6 bn.
• Actual performance was $7.7 bn, leading to
100% vesting of this part of the award (50% of the
overall award).
3-year TSR performance against Sector Index
% pa
25%
7.5%
0%
)
d
r
a
w
a
P
T
L
I
l
a
t
o
t
f
o
%
(
g
n
i
t
s
e
V
Threshold: 0% pa
Max: 5% pa
Vesting schedule and actual performance to 31 December 2014
Arrow represents expected vesting
3-year TSR ranking vs FTSE 100 index
25%
7.5%
0%
)
d
r
a
w
a
P
T
L
I
l
a
t
o
t
f
o
%
(
g
n
i
t
s
e
V
Threshold: 50th
Max: 80th
Vesting schedule and actual performance to 31 December 2014
Arrow represents expected vesting
Anglo American’s AOSC efficiency
($ 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%
0%
Min: $4.6 bn
Max: $5.6 bn
Actual: $7.7 bn
Vesting schedule and actual performance
Arrow represents actual vesting
Figure 11: LTIP vesting outcomes for 2014
(all amounts in ‘000)
RENE MEDORI
(2013: £303)
£618
LTIP KEY PERFORMANCE ASPECTS
• Actions taken on the back of the 2013 Asset Review
process continued to assist in delivering AOSC benefits
across all businesses during 2014. The implementation
of either quick return or long term value initiatives
identified during the asset review process was
kick-started during 2014.
• Specific AO highlights include improvements in
Longwall cutting hours at Moranbah and Grasstree
(Coal in Australia), increased average throughput at
Los Bronces SAG Mill (Copper) and secondary crusher
debottlenecking at Mogalakwena North (Platinum).
• Specific SC highlights include Global Framework
Agreements with Komatsu and Caterpillar which
resulted in preferential pricing; increased rail capacity
and reduced rail rates in Kumba; and electricity cost
savings derived through the resale of electricity at
Iron Ore Brazil and Nickel.
• Continuing Improvement in relationships with suppliers
are driving reduced cost, lead time and supply risk to
our business.
• Should the 2012 LTIP awards vest at 50%, 42,524
shares are receivable by René Médori. At a share price
of £12.98 (the average for the last quarter of 2014), this
results in a value of £551,962. Dividend equivalents
over the vesting period will also be payable at vesting,
estimated to be £66,105.
97
GovernanceAnglo American plc Annual Report 2014
Figure 12: Total remuneration outcomes for 2014
Total basic
Benefits
Annual
performance
bonus – cash
and Bonus
salary(1)
£’000
in kind(2)
£’000
Pension(3)
£’000
Shares(4)
£’000
2012
Enhancement
Share Award(5)
£’000
2012
LTIP
Award(6)
£’000
Other(7)
£’000
Total
2014
£’000
Total
2013
£’000
Section 3.2
Section 3.3
Section 3.4
Section 3.1
1,236
891
788
765
561
860
62
53
371
267
237
230
1,557
1,218
960
979
–
406
–
25
–
122
–
472
–
–
0
0
0
0
–
–
618
303
509
437
– 3,725
2,069
5,305
0 2,665
0
0
2,330
509
1,462
Total fees
2014
£’000
Benefits in
kind 2014
£’000
Total
2014
£’000
Total fees
2013
£’000
Benefits in
kind 2013
£’000
Total
2013
£’000
700
22
722
45
26
80
101
131
80
80
80
80
80
110
–
–
–
–
–
–
–
–
–
–
–
–
–
45
26
80
101
131
80
80
80
80
80
110
–
675
130
80
–
56
105
80
80
38
13
80
97
32
2
–
–
–
–
–
–
–
–
–
–
–
–
677
130
80
–
56
105
80
80
38
13
80
97
32
Executive Directors
Mark Cutifani
Mark Cutifani (2013)
René Médori
René Médori (2013)
Former Executive
Directors(8)
Cynthia Carroll
Cynthia Carroll (2013)
Non-executive Directors
Sir John Parker(9)
David Challen(10)
Sir CK Chow(10)
Judy Dlamini
Byron Grote
Sir Philip Hampton
Phuthuma Nhleko
Ray O’Rourke(11)
Mphu Ramatlapeng
Jim Rutherford
Anne Stevens
Jack Thompson
Peter Woicke
98
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014
(1)
In addition to his basic salary, René Médori retained fees amounting to £81,000 in respect of one external directorship (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. As indicated in the 2013 Annual Report, the Company reimbursed Mark Cutifani for the tax paid on his
relocation benefits (except the relocation allowance) on a ‘grossed up’ basis in 2014.
Mark Cutifani
René Médori
Car related
benefits
Untaken holiday
reimbursement
Compensation for
tax on relocation
benefits
28,840
28,130
–
26,496
530,194
–
(3) The pension contribution amounts should be read in conjunction with the following information:
(a) The amount stated for Mark Cutifani for 2014 includes a cash allowance of £288,000.
(b) The total amount of pension contributions treated as having been paid into the UURBS for 2014 was £237,000 for René Médori (2013: £221,000).
(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 2014 was
£59,000 for René Médori (2013: £45,000).
(d) As at 31 December 2014, the total balances due to the executive directors in relation to the UURBS was £1,330,000 for René Médori (2013: £1,034,000). Retirement
benefits can only be drawn from the UURBS if a member has attained age 55 and has left Group service.
(4) 60% of the amount shown for 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 2012 Enhancement Share award was not met and none of these shares will vest.
(6) As vesting of the LTIP awards granted in 2012 is due to take place after publication of this report, vesting levels are on an ‘expected’ basis and a share price of £12.98 has been
used to calculate the values shown. The value shown includes a dividend equivalent amount £66,105 for René Médori. The LTIP amounts shown in last year’s report in respect
of the LTIPs awarded in 2011 were also calculated on an ‘expected’ vesting levels basis with an assumed share price of £14.12. The actual vesting levels were as expected but
the actual share price at vesting was £14.22, leading to the following increases in value: René Médori – estimated value £301,000; actual value £303,000 (increase of £2,000).
(7) The amount stated for Mark Cutifani in 2013 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.
(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.
In 2012, Cynthia Carroll was awarded 26,573 Enhancement Shares, none of which vested, as set out in Section 3.3.
In 2012, Cynthia Carroll received an LTIP grant of 157,333 shares relating to performance primarily over the three-year period to 31 December 2014. 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
prorated to 70,103 shares as she did not serve the last 20 months of the performance period. If the award vests at 50%, 35,051 shares are receivable by Ms Carroll and using
the same share price, £12.98, as outlined in Figure 11, this results in a value of £454,962 and a dividend equivalent amount of £54,488. The LTIP amounts shown in last year’s
report in respect of the LTIPs awarded in 2011 were also calculated on an ‘expected’ vesting levels basis with an assumed share price of £14.12. The actual vesting levels were
as expected but the actual share price at vesting was £14.22, leading to the following increases in value: Cynthia Carroll – estimated value £434,000; actual value £437,000
(increase of £3,000).
(9) Sir John Parker’s Chairman’s fee was increased, for the first time since his appointment in 2009, with effect from 1 July 2013 and he has elected to waive his Nomination
Committee chairman fees. Benefits with a value over £5,000 comprise car related benefits and medical insurance in line with the remuneration policy set out in Figure 2.
(10) David Challen and Sir CK Chow both retired from the Board with effect from 24 April 2014.
(11) Ray O’Rourke has instructed the Company that his net fees be donated to charity.
99
GovernanceAnglo American plc Annual Report 2014
3.5 Change in the chief executive’s remuneration
in 2014 relative to London employees
Figure 13 sets out the chief executive’s basic salary, benefits
and BSP amounts for 2014 and the year-on-year change.
We show the average change in each element for London
employees, which is considered to be the most relevant
employee comparator group given the Group-wide nature
of roles performed at Head Office.
3.6 Distribution statement for 2014
Figure 14 sets out the total spend on employee reward
over 2014, compared to profit generated by the Company
and the dividends received by investors. Underlying
earnings are shown, as these are one of the Company’s key
measures of performance and employee numbers help put
the payroll costs of employees into context.
Figure 13: Change in chief executive’s remuneration compared to UK employees
Chief Executive
London employees(2)
£’000
% change
Average
% change
(per capita)
Salary
1,236
3.0
3.1
Benefits
561
(34.8)
Bonus
(1)
1,557
(5.1)
3.1
4.7
(1) The chief executive’s BSP for 2013 was calculated on the basic salary he received in 2013. To make the comparison with the prior year BSP meaningful, the year-on-year change
has been calculated with reference to an ‘annualised’ BSP for 2013.
(2) Benefits for London employees comprise pension and car allowances (where applicable), these being the most material.
Figure 14: Distribution statement for 2014
Distribution statement
Underlying earnings(1)
(Total Group)
Dividends payable for year (Total)
Payroll costs for all employees
Employee numbers
$m
% change
$m
% change
$m
% change
’000
% change
2014
2,217
(17.1)
1,081
(0.3)
5,072
(3.5)
95
(3.1)
2013
2,673
(6.5)
1,084
0.1
5,255
(2.2)
98
(6.7)
(1) Please see note 5 of the consolidated financial statements for details on how underlying earnings are calculated.
100
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 4. OUTSTANDING SHARE INTERESTS
The information in this section has been subject to
external audit.
4.1 Conditional share awards granted in 2014
Figure 15 summarises the longer term, conditional share
awards granted to directors during 2014. Receipt of these
awards is dependent on the Company’s performance over
2014–16, as detailed below. Also included in Figure 15
are the options granted to directors in 2014 under the
Company’s SAYE scheme.
The value of Bonus Shares awarded to directors in 2014
is included in the Annual Performance Bonus figures
for 2013, set out in Figure 12.
4.2 Further details of LTIP awards granted in 2014
4.2.1 TSR – Euromoney Global Mining Index
comparison
• One quarter of the LTIP awards granted in 2014 vests
according to the Company’s three-year TSR performance
relative to the Euromoney Global Mining Index (the Index),
previously named the HSBC Mining Index
• The threshold for vesting is the Company’s three-year TSR
being equal to the Index
• Maximum vesting occurs when the Company’s TSR
outperforms the Index by 6% pa
• Between threshold and maximum, vesting is based on
a straight line.
Figure 15: Summary of conditional share awards and options granted in 2014
Performance
period end
Director
Basis of award
Number of
shares awarded
Face value
at grant(1)
31/12/2016
Mark Cutifani
350% of salary
285,733
£4,325,998
René Médori
300% of salary
156,222
£2,365,201
Type of award
LTIP share
awards
Performance
measure
TSR vs.
the Index
(25%)
Section 4.2.1
TSR vs.
FTSE 100
Index (25%)
Section 4.2.2
ROCE (50%)
Section 4.2.3
Vesting schedule
25% for TSR
equal to the Index
100% for the Index
+6% pa or above
25% for TSR
equal to median
100% for 80th
percentile or above
25% for 12%
100% for 16%
(1) The face value of each award has been calculated using the share price at time of grant (£15.14 for the 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 2016 remuneration report.
Type of award
SAYE share
options
Date of Award
Options granted
Mark Cutifani
01/05/2014
2,396
Face value
at grant(2)
£37,485
Exercise period
01/09/2019 to 28/02/2020
René Médori
01/05/2014
1,198
£18,743
01/09/2019 to 28/02/2020
(2) Directors, like all eligible UK employees, are able to make monthly savings over a set period. At the end of the period the funds can be used to purchase shares under option. The exercise price of the 2014 SAYE
option was set at a 20% discount to the share price at the date of invitation, which is the same for any employee who participates in the scheme.
101
GovernanceAnglo American plc Annual Report 2014 4.2.2 TSR – FTSE 100 comparison
• One quarter of the LTIP awards granted in 2014 vests
according to the Company’s three-year TSR performance
compared with the TSR performance of the constituents
of the FTSE 100 Index
4.2.3 Return on Capital Employed (ROCE)
• Vesting of one half of LTIP awards granted in 2014
depends on the performance of the Company’s
attributable ROCE over the three-year period to
31 December 2016
• 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 set to
ensure that an appropriate level of performance would be
required for each level of vesting. PwC, using a Monte Carlo
model, have assessed the probability of achieving full
vesting as approximately 20% and chance of achieving
threshold vesting as 50%.
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 on the ex-dividend date.
• The measure, tied to underlying achieved business return,
aligns management reward with those of our shareholders.
It is not adjusted for price or foreign exchange movements
and refers to the externally reported attributable ROCE in
the year of assessment, 2016
• By design, attributable ROCE covers the financial
outcomes of all management actions, both on balance
sheet and income statement. The company’s Driving Value
programme supports delivery of EBIT in the measure,
through its focus on operational improvement, efficiencies
and also improved marketing performance. Balance sheet
efficiency is being progressed through Anglo American’s
greater focus on capital efficiency and debt reduction.
4.3 Total interests in shares
Figure 17 summarises the total interests of the directors
in shares of Anglo American plc as at 12 February 2015
(and at the end of the 2014 financial year). These include
beneficial and conditional interests. As already disclosed,
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 60% of basic salary by the 2015
AGM. Incentives awarded under the Company’s LTIP
from 2013 will start to vest, subject to the satisfaction of
performance conditions, from 2016 onwards and under the
BSP from 2017. The requirements for René Médori will have
been exceeded by the 2015 AGM.
102
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 Figure 16: Shares in Anglo American plc
Conditional
(no performance
conditions)
Beneficial
Conditional
(with performance conditions)
Conditional
(no performance conditions)
Total
Directors
Mark Cutifani(1)
René Médori(2)
Sir John Parker
Judy Dlamini(3)
Byron Grote(4)
Sir Philip Hampton
Phuthuma Nhleko
Ray O’Rourke(4)
Mphu Ramatlapeng
Jim Rutherford
Anne Stevens
Jack Thompson(4)
Former Directors(5)
David Challen
Sir CK Chow
at 12 February 2015
(at 31 December 2014)
32,747
32,734
at 12 February 2015
140,668
(at 31 December 2014)
140,650
at 12 February 2015
(at 31 December 2014)
at 12 February 2015
(at 31 December 2014)
at 12 February 2015
(at 31 December 2014)
at 12 February 2015
(at 31 December 2014)
at 12 February 2015
(at 31 December 2014)
at 12 February 2015
54,456
54,456
–
–
16,000
16,000
7,719
6,869
10,766
9,494
76,965
(at 31 December 2014)
76,965
at 12 February 2015
(at 31 December 2014)
at 12 February 2015
(at 31 December 2014)
at 12 February 2015
(at 31 December 2014)
at 12 February 2015
(at 31 December 2014)
1,135
881
4,595
3,279
2,122
2,122
14,950
14,950
(at 24 April 2014)
1,820
(at 24 April 2014)
5,500
BSP
Bonus Shares
BSP
Enhancement
Shares
47,055
47,055
71,615
71,615
–
–
25,346
25,346
LTIP
SAYE/SIP
530,061
530,061
358,488
358,488
2,673
2,660
2,525
2,517
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
70,545
683,081
70,545
683,055
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
598,642
598,616
54,456
54,456
–
–
16,000
16,000
7,719
6,869
10,766
9,494
76,965
76,965
1,135
881
4,595
3,279
2,122
2,122
14,950
14,950
1,820
5,500
(1) Mark Cutifani was appointed to the Board as chief executive with effect from 3 April 2013. ‘Other’ interests above comprise 70,545 shares in the Company which will vest, subject to Mr Cutifani’s continued
appointment as chief executive, in two remaining tranches, as follows: 67,475 shares in February 2015 and 3,070 shares in February 2016.
(2) René Médori’s beneficial interests in 138,990 shares held at the date of this report arise as a result of his wife’s interests in shares.
(3) Judy Dlamini was appointed to the Board on 1 January 2014.
(4)
Included in the interests of Messrs Grote, O’Rourke and Thompson are unsponsored ADRs representing 0.5 ordinary shares of $0.54945 each.
Interests are shown as at date of resignation.
(5)
103
GovernanceAnglo American plc Annual Report 2014 5. REMUNERATION IN 2015
The Company’s policy on executive director remuneration
for 2015 is summarised in the policy statements in Figure 1.
Figure 17 summarises how that policy will be implemented
in 2015. It is the Company’s intention that the fees for
non-executive directors will remain at their 2014 levels
during 2015, although this will be kept under review.
The EPS performance range for 2015 is considered to be
commercially sensitive, although it will be disclosed in
the 2015 remuneration report.
The Committee determined the target range of 9–13% for
the LTIP in 2015 based upon the following considerations:
• A range of 9–13% is the equivalent of the 2014 LTIP
target of 12–16% should prices remain at the levels seen
in early 2015 over the performance period. It is clear that
unless there is a significant increase in prices over the
performance period, there will be zero vesting on the
ROCE element of the 2014 LTIP, even if there are material
operational improvements during that time
• The Threshold ROCE of 9% is higher than the 8%
ROCE achieved in 2014 when prices were above the
spot prices in early 2015
• The range is based upon a Capital Employed figure
which is not reduced by the impairments made over
the past two years.
Figure 17: Summary of key remuneration aspects in 2015
Element
Performance measure 1,
weighting and vesting schedule
Performance measure 2,
weighting and vesting schedule
Basic salary
–
–
Director
Level
Mark Cutifani
£1,260,720 (2% increase)
René Médori
£804,173 (2% increase)
BSP
EPS (50%)
Personal strategic measures (50%)
Mark Cutifani
210% of salary
LTIP share
awards
ROCE (50%)
25% for 9%
100% for 13%
René Médori
210% of salary
Mark Cutifani
350% of salary
René Médori
300% of salary
Personal and strategic objectives
supporting the Company’s delivery
on projects, business improvement,
capital allocation, commercial
activities, employee development
and stakeholder engagement.
TSR vs Euromoney Global Mining
Index (25%)
25% for TSR equal to Index
100% for Index +6% pa or above
TSR vs FTSE 100 (25%)
25% for TSR equal to median
100% for 80th percentile or above
104
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014 COMMITTEE MEMBERS
DURING 2014
6. REMUNERATION COMMITTEE IN 2014
Membership
The Committee comprised the non-executive directors
shown during the year ended 31 December 2014.
External advisers to the Committee
Figure 18 details the external advisers to the Committee and
the fees paid for services provided during 2014. The fees are
charged in accordance with the terms and conditions set out
in each relevant engagement letter.
Both PricewaterhouseCoopers and Towers Watson are
signatories to, and adhere to, the Code of Conduct for
Remuneration Consultants (which can be found at
(www.remunerationconsultantsgroup.com). In addition,
the Committee chairman has regular direct dialogue with
advisers. For these reasons, the Committee considers that
the advice it receives is independent.
Sir Philip Hampton
David Challen (to 24 April 2014)
Figure 18: External advisers and fees
Judy Dlamini (from 24 April 2014)
Advisers
Pricewaterhouse
Coopers
LLP (PwC)
Linklaters LLP
(Linklaters)
Towers Watson
(TW)
Deloitte LLP
(Deloitte)
Appointed by the Company,
with the agreement of the
Committee, to support and
advise on the Company’s
incentive arrangements, in
addition to the provision of
specialist valuation services
and market remuneration
data
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 provide advice on
performance metrics in 2014
In its capacity as Group
auditor, Deloitte undertakes
an audit of sections 3 and 4
of the remuneration report
annually. However, it provides
no advice to the Committee
Fees for Committee
assistance
£6,000
Other services provided
to the Company
Investment advice, actuarial
and audit work for various
pension schemes; advice
on internal audit projects;
taxation, payroll and
executive compensation
advice
Legal advice on certain
corporate matters
£15,500
Human resources advice
on various reward and
other matters
£2,000
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.
Byron Grote
Ray O’Rourke
Jack Thompson
105
GovernanceAnglo American plc Annual Report 2014 Figure 19: Response to 2014 AGM shareholder voting
Vote
Binding vote
on 2013
remuneration
policy
Advisory vote
on 2013
implementation
report
For
Against
Abstain
Company response to issues raised
Number of votes
854,429,671
(95%)
48,556,157
(5%)
9,604,261
847,094,937
(95%)
45,535,173
(5%)
19,959,979
During 2013 and in the lead-up to the 2014 AGM, the
Committee consulted with leading investors over a number
of proposed changes to the Company’s remuneration
arrangements that were to apply for 2014, and refined
these proposals in response to investor feedback.
Since the 2014 AGM, the Committee has continued its
approach to understand and address investors’ concerns,
which has led to the provision of greater clarity in parts of
the remuneration policy and the contents of the
Implementation Report.
Remuneration report voting results
The Committee considered the results of the shareholders’
vote on the 2013 remuneration report. As mentioned earlier
in this report, feedback from investors at the time of the
2014 AGM, and more generally, helped shape clarifications
to the remuneration policy for 2014 onwards.
Cynthia Carroll’s remuneration levels in 2011 also reflect
record profits and strong EPS performance for the year in
addition to 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.
The outcome of longer term incentives from 2012, have
been much lower, reflecting, in part, the impact of the fall
in commodity prices on earnings and the returns delivered
to shareholders.
Figure 20a: Six-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
300
275
250
225
200
175
150
125
100
2008
2009
2010
2011
2012
2013
2014
Source: Datastream Return Index
7. SIX-YEAR REMUNERATION AND RETURNS
Figure 20a shows the Company’s TSR performance
against the performance of the FTSE 100 Index from
1 January 2009 to 31 December 2014. 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 20b shows the total remuneration earned by the
incumbent chief executive over the same six-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 2014).
For the period 2009 to 2011, the TSR performance of the
Company, and the remuneration received by Cynthia Carroll
as chief executive, demonstrates 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.
106
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2014
Figure 20b: Chief Executive remuneration
Financial year ending
Cynthia Carroll
31 December
2009
31 December
2010
31 December
2011
31 December
2012
31 December
2013
31 December
2014
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
1,462
35%
50%
0%
67%
28%
0%
–
–
–
–
–
–
5,305
65%
3,725
60%
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
12 February 2015
107
GovernanceAnglo American plc Annual Report 2014 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 2014
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 strategic 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
108
Anglo American plc Annual Report 2014 FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
CONTENTS
Independent auditor’s report to the members of Anglo American plc
110
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 from subsidiaries and joint operations
Underlying EBIT and underlying earnings by segment
Special items and remeasurements
Net finance costs
Income tax expense
Earnings per share
Intangible assets
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
Investments in associates and joint ventures
Financial asset investments
Inventories
Trade and other receivables
Trade and other payables
Financial instruments
Cash flow statement, net debt and related notes
22 Capital expenditure
23 Net debt
24 Borrowings
25 Commitments
Employee remuneration
26 Employee numbers and costs
27 Retirement benefits
28 Share-based payments
Group structure and transactions
29 Business combinations and formation of joint ventures
30 Disposals of subsidiaries
31 Non-controlling interests
Additional disclosures
32 Called-up share capital and consolidated equity analysis
33 Auditor’s remuneration
34 Contingent liabilities
35 Related party transactions
36 Events occurring after end of year
37 Group companies
38
39 Accounting policies
Financial risk management
Financial statements of the parent company
Summary by business operation
Key financial data
Exchange rates and commodity prices
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
112
112
113
114
115
116
117
119
122
123
124
126
126
128
129
129
130
130
131
132
132
132
133
135
136
137
138
139
140
142
143
144
147
149
149
149
150
152
152
153
153
154
155
158
163
166
167
168
Anglo American plc Annual Report 2014
109
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 2014 and of the
Group’s loss 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
The financial reporting framework that has been applied in the preparation of
the Group financial statements is applicable law and IFRSs 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’ report
on page 212 that the Group is a going concern. We confirm that:
accordance with United Kingdom Generally Accepted Accounting Practice
(UK GAAP); and
• we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate; 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 39 and the
balance sheet of the parent company and related information.
• we have not identified any material uncertainties that may cast significant
doubt on the Group’s ability to continue as a going concern.
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 (notes 1 and 6)
As a consequence of the current volatility in
commodity prices and foreign exchange rates, the
assessment of the recoverable amount of operating
assets and development projects is a key judgement.
This includes specifically the Minas-Rio project
within the Iron Ore and Manganese segment (where
a post-tax impairment of $3.5 billion has been
recorded) and the mines within the Coal segment
(where a post-tax impairment of $0.3 billion has
been recorded).
Taxation (notes 1, 8 and 21)
The assessment of the Group’s taxation exposures in
all jurisdictions is a key area of judgement particularly
with respect to transfer pricing arrangements and the
appropriateness of the recognition of deferred
taxation assets.
Special items and remeasurements (note 6)
The assessment of the appropriateness of items
disclosed within ‘special items and remeasurements’
is a key judgement because of their impact upon
the underlying financial performance achieved by
the Group.
We challenged management’s assessment as to whether indicators of impairment exist for specific
assets. Where such indicators were identified, specifically in relation to the Minas-Rio project and the
mines within the Coal segment, 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 short-term
and long-term commodity prices, capital expenditure and operating cost forecasts and the expected
production profiles, by comparison to recent third party forecast commodity price data, reference to
third party documentation where available, review of reserves and resources reports, consultation
with operational management and consideration of sensitivity analyses. We assessed whether the
assumptions had been determined and applied on a consistent basis across the Group.
We reviewed all potential taxation exposures within the Group and, through discussions with the
Group’s tax 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 to confirm that they are
reasonable.
We considered and challenged each item disclosed 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.
The description of risks above should be read in conjunction with the significant issues considered by the Audit Committee discussed on page 42.
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.
110
Anglo American plc Annual Report 2014
Our application of materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use
materiality both in planning the scope of our audit work and in evaluating the
results of our work.
We determined planning materiality for the Group to be $225 million
(2013: $250 million), which is below 5% (2013: 5%) of pre-tax profit before
special items and remeasurements, and below 1% (2013: 1%) of equity.
Pre-tax profit is normalised for the materiality calculation to exclude special
items (including 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 (2013: $10 million), as well as
differences below that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Audit Committee on disclosure
judgements in the financial statement that we identified when assessing the
overall presentation of the financial statements.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Group and its
environment, including internal control, and assessing the risks of material
misstatement. Audit work to respond to the risks of material misstatement
was performed directly by the audit engagement team.
All business units were subject to a full scope audit with the exception of
Manganese where specific audit procedures were performed.
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; or
• 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. We have nothing to report arising from
these matters.
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
ten 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; or
• 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 Statement of Directors’ Responsibilities, 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. We also comply with International Standard on
Quality Control 1 (UK and Ireland). Our audit methodology and tools aim to
ensure that our quality control procedures are effective, understood and
applied. Our quality controls and systems include our dedicated professional
standards review team and independent partner reviews.
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
12 February 2015
Anglo American plc Annual Report 2014
111
Financial statements
2013
Total
29,342
(26,935)
2,407
(469)
168
2,106
271
(584)
(93)
(406)
1,700
(1,274)
426
1,387
(961)
(75)
(4,305)
–
–
(130)
(130)
(4,435)
587
(3,848)
(214)
(3,634)
(2.84)
(2.83)
(0.75)
(0.75)
2014
(1,524)
(6)
1
(5)
2013
426
60
–
60
(1,943)
5
(4,716)
73
(124)
–
3
(7)
–
(2,066)
(3,595)
736
(4,331)
(56)
(77)
14
(12)
4
(4,770)
(4,284)
769
(5,053)
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2014
US$ million
Group revenue
Operating costs
Operating profit
Non-operating special items
Share of net income from associates and
joint ventures
(Loss)/profit before net finance costs and tax
Investment income
Interest expense
Other financing gains/(losses)
Net finance costs
(Loss)/profit before tax
Income tax expense
(Loss)/profit for the financial year
Attributable to:
Non-controlling interests
Equity shareholders of the Company
(Loss)/earnings per share (US$)
Basic
Diluted
Note
3
3, 4
6
3, 13
7
8
31
9
9
Before special
items and
remeasurements
27,073
(22,560)
4,513
–
254
4,767
242
(497)
(1)
(256)
4,511
(1,267)
3,244
1,027
2,217
Special items and
remeasurements
(note 6)
–
(4,375)
(4,375)
(385)
(46)
(4,806)
–
(65)
101
36
(4,770)
2
(4,768)
(38)
(4,730)
2014
Total
27,073
(26,935)
138
(385)
208
(39)
242
(562)
100
(220)
(259)
(1,265)
(1,524)
989
(2,513)
1.73
1.72
(3.69)
(3.68)
(1.96)
(1.96)
243
6,411
271
(584)
37
(276)
6,135
(1,861)
4,274
1,601
2,673
2.09
2.08
Before special
items and
remeasurements
29,342
(23,174)
6,168
–
Special items and
remeasurements
(note 6)
–
(3,761)
(3,761)
(469)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
US$ million
(Loss)/profit for the financial year
Items that will not be reclassified to the income statement (net of tax)(1)
Remeasurement of net retirement benefit obligation
Share of associates’ and joint ventures’ other comprehensive income
Net items that will not be reclassified to the income statement
Items that have been or may subsequently be reclassified to the income statement (net of tax)(1)
Net exchange differences:
Net loss (including associates and joint ventures)
Cumulative loss transferred to the income statement on disposal of foreign operations
Revaluation of available for sale investments:
Net revaluation loss
Cumulative revaluation gain transferred to the income statement on disposal
Impairment losses transferred to the income statement
Revaluation of cash flow hedges:
Net loss
Transferred to the initial carrying amount of hedged items
Net items that have been or may subsequently be reclassified to the income statement
Total comprehensive expense for the financial year
Attributable to:
Non-controlling interests
Equity shareholders of the Company
(1) Tax amounts are shown in note 8c. Comparatives have been reclassified to align with current year presentation.
112
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED BALANCE SHEET
as at 31 December 2014
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
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
Total non-current liabilities
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
Note
2014
2013
11
12
20
13
14
16
21
19
15
14
16
19
23a
17
23a, 24
20
19
17
23a, 24
27
21
19
20
32
31
3,912
38,475
358
4,376
1,266
745
1,351
986
233
51,702
4,720
–
2,568
125
147
6,748
14,308
66,010
(3,515)
(1,618)
(680)
(375)
(539)
(6,727)
(25)
(16,917)
(1,073)
(4,498)
(1,785)
(2,808)
(27,106)
(33,833)
32,177
772
4,358
(6,359)
(7,205)
34,851
26,417
5,760
32,177
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
The financial statements of Anglo American plc, registered number 03564138, were approved by the Board of directors on 12 February 2015 and signed on its
behalf by:
Mark Cutifani
Chief Executive
René Médori
Finance Director
Anglo American plc Annual Report 2014
113
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2014
US$ million
Cash flows from operating activities
(Loss)/profit before tax
Net finance costs including financing special items and remeasurements
Share of net income from associates and joint ventures
Non-operating special items
Operating profit
Operating special items and remeasurements
Cash element of operating special items
Depreciation and amortisation
Share-based payment charges
Decrease in provisions
Increase in inventories
Decrease/(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 (advance)/repayment of loans granted
Interest received and other investment income
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
Proceeds from issuance of bonds
Proceeds from other borrowings
Repayment of 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(1)
Other financing activities
Net cash used in 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)
Includes purchase of Kumba Iron Ore Limited and Anglo American Platinum Limited shares for their respective employee share schemes.
Note
2014
2013
(259)
220
(208)
385
138
4,375
(100)
2,591
170
(200)
(129)
576
(438)
(34)
6,949
435
25
(1,298)
6,111
(5,974)
(157)
71
(81)
(12)
(80)
157
44
–
–
(93)
(6,125)
(833)
203
(1,099)
(823)
3,165
1,419
(2,801)
42
–
14
(111)
(3)
(827)
(841)
7,702
(841)
(114)
6,747
1,700
406
(168)
469
2,407
3,761
(146)
2,638
201
(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)
3,562
1,127
(3,717)
71
(395)
14
(92)
(9)
(2,402)
(1,235)
9,298
(1,235)
(361)
7,702
6
4
6
3
13
22
22
22
13
14
14
30
13
14
23b
24
23b
23b
114
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2014
US$ million
At 1 January 2013
Total comprehensive (expense)/income
Dividends payable
Changes in ownership interest in subsidiaries
Issue of shares to non-controlling interests
Equity settled share-based payment schemes
Other
At 31 December 2013
Total comprehensive (expense)/income
Dividends payable
Issue of shares to non-controlling interests
Equity settled share-based payment schemes
Other
At 31 December 2014
(1)
Includes share capital and share premium.
Total share
capital(1)
5,129
–
–
–
–
–
1
5,130
–
–
–
–
–
5,130
Own
shares(2)
(6,659)
–
–
–
–
196
–
(6,463)
–
–
–
104
–
(6,359)
Cumulative
translation
adjustment
reserve
(2,617)
(4,023)
–
–
–
–
–
(6,640)
(1,703)
–
–
–
–
(8,343)
Fair value and
other reserves
(note 32)
1,415
(129)
–
–
–
(1)
(17)
1,268
(122)
–
–
(8)
–
1,138
Retained
earnings
40,343
(901)
(1,078)
38
–
(43)
17
38,376
(2,506)
(1,099)
–
31
49
34,851
Total equity
attributable
to equity
shareholders
of the
Company
37,611
(5,053)
(1,078)
38
–
152
1
31,671
(4,331)
(1,099)
–
127
49
26,417
Non-
controlling
interests
6,127
769
(1,273)
(14)
47
37
–
5,693
736
(749)
42
29
9
5,760
Total equity
43,738
(4,284)
(2,351)
24
47
189
1
37,364
(3,595)
(1,848)
42
156
58
32,177
(2) Own shares comprise shares of Anglo American plc held by the Company (treasury shares), its subsidiaries and employee benefit trusts.
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
2014
53
678
85
1,099
2013
53
678
85
1,078
Anglo American plc Annual Report 2014
115
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
NOTES TO THE FINANCIAL STATEMENTS
• 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.
• Foreign exchange rates
Foreign exchange rates are based on latest internal forecasts, benchmarked
with external sources of information for relevant countries of operation.
Foreign exchange rates are kept constant (on a real basis) from 2019 onwards.
• 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%
(2013: 6.5%). Adjustments to the rate are made for any risks that are not
reflected in the underlying 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 Life of Mine 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.
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 (CGUs), 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 on assessments of either fair
value less costs of disposal or value in use. The cash flow projections used in
these assessments 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.
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 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:
• changes to Proved and Probable Ore Reserves
• 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 unaudited 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. Where discounted cash flows are
used, the resulting fair value measurements are considered to be at level 3
in the fair value hierarchy as defined in IFRS 13 Fair Value Measurement as
they depend to a significant extent on unobservable valuation inputs. 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,
exchange rates, discount rates and estimates of production costs and future
capital expenditure.
Cash flow projections
Cash flow projections are based on financial budgets and Life of Mine 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.
116
Anglo American plc Annual Report 2014
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 affect the amounts
recognised in the financial statements.
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 provision 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 contingent
liabilities is made in note 34 unless the possibility of a loss arising is
considered remote.
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
39k. 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.
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 2013, except for the adoption of amendments to
IAS 36 Impairment of Assets: Recoverable Amount Disclosures for
Non-Financial Assets.
The amendment introduces the requirement to disclose the recoverable
amount of CGUs that have been impaired in the period. In addition, the
amendment requires the disclosure of certain additional information on
valuation assumptions, where the recoverable amount of a CGU is assessed
on a fair value less costs of disposal basis using a discounted cash flow
method. The required disclosures are reflected in these financial statements.
A number of other accounting pronouncements, principally amendments to
existing standards, issued by the IASB became effective on 1 January 2014
and were adopted by the Group. The Group has early adopted IFRIC 21 Levies
which has been endorsed by the European Union (EU) but is effective for
annual periods beginning on or after 17 June 2014. These pronouncements
have not had a material impact on the accounting policies applied by the Group.
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.
New IFRS accounting standards, amendments and
interpretations not yet adopted
The following new IFRS accounting standards in issue but not yet effective
(and not yet endorsed by the EU) are expected to have a significant impact
on the Group:
IFRS 9 Financial Instruments
IFRS 9 will replace IAS 39 Financial Instruments: Recognition and
Measurement and addresses the following three key areas:
• Classification and measurement establishes a single, principles-based
approach for the classification of financial assets, which is driven by cash
flow characteristics and the business model in which an asset is held.
• Impairment introduces a new ‘expected loss’ impairment model, requiring
expected credit losses to be recognised from when financial instruments
are first recognised.
• Hedge Accounting aligns the accounting treatment with risk management
practices of an entity.
IFRS 9 is expected to have a number of impacts on the Group financial
statements including changes in the presentation of gains and losses
on financial assets classified as available for sale.
IFRS 9 is effective for annual reporting periods beginning on or after
1 January 2018.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 replaces IAS 11 and IAS 18 and establishes a unified framework for
determining the timing, measurement and recognition of revenue. The focus
of the new standard is to recognise revenue as performance obligations are
met rather than based on the transfer of risks and rewards.
IFRS 15 includes a comprehensive set of disclosure requirements including
qualitative and quantitative information about its contracts with customers
to help investors understand the nature, amount, timing and uncertainty
of revenue.
The Group’s revenue is predominantly derived from the sale of goods under
arrangements in which the transfer of risks and rewards of ownership and
the fulfilment of the Group’s performance obligations are likely to coincide.
Therefore, for the majority of sales the timing and amount of revenue is
unlikely to be materially affected by the adoption of the new standard. The
standard is effective for annual reporting periods beginning on or after
1 January 2017.
Anglo American plc Annual Report 2014
117
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
continued
The following new or amended IFRS accounting standards, amendments and
interpretations in issue but not yet effective (and in some cases not yet
adopted by the EU) are not expected to have a significant impact on the Group:
• 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.
• Amendments to IAS 1 Presentation of Financial Statements: Disclosure
Initiative provides guidance on the use of judgement in presenting financial
statement information, including: the application of materiality, order of
notes, use of subtotals, accounting policy referencing and disaggregation
of financial and non-financial information.
• Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions
of Interests in Joint Operations provides guidance on accounting for the
acquisition of an interest in a joint operation that constitutes a business.
• Amendments to IAS 16 Property, Plant and Equipment and IAS 38
Intangible Assets: Clarification of Acceptable Methods of Depreciation
and Amortisation clarifies that there is a rebuttable presumption that
revenue-based methods of depreciation are not appropriate.
• Amendments to IFRS 10 Consolidated Financial Statements and IAS 28
Joint Ventures: Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture removes an inconsistency between the two
standards on the accounting treatment for gains and losses arising on the
sale or contribution of assets by an investor to its associate or joint venture.
Following the amendment, such gains and losses may only be recognised to
the extent of the unrelated investor’s interest, except where the transaction
involves assets that constitute a business.
Other issued standards and amendments that are not yet effective are not
expected to have an impact on the financial statements.
118
Anglo American plc Annual Report 2014
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, and in the instance of Copper, Nickel, Niobium and Phosphates, the same management team is responsible for the
management of all four business units, collectively referred to as Base Metals and Minerals. To align with changes in the management structure of the Group’s
coal businesses and the way their results are internally reported, Coal South Africa and Coal Colombia (formerly the Thermal Coal segment) and Coal Australia
and Canada (formerly the Metallurgical Coal segment) are now reported together as the Coal segment. Niobium and Phosphates are now reported as
separate segments, having previously been aggregated and the Diamonds segment is now referred to as De Beers.
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 is no longer considered to be individually significant to the Group and is therefore now shown within ‘Corporate and
other’ together with unallocated corporate costs and exploration costs. Exploration costs represent the cost of the Group’s exploration activities across all
segments, and were previously reported separately. Comparatives have been reclassified to align with current year presentation.
The Group Management Committee evaluates the financial performance of the Group and its segments principally with reference to earnings before interest
and tax (underlying EBIT). Underlying EBIT is operating profit presented before special items and remeasurements and includes the Group’s attributable
share of associates’ and joint ventures’ underlying EBIT. Underlying EBIT of associates and joint ventures is the Group’s attributable share of revenue less
operating costs before special items and remeasurements of associates and joint ventures.
Underlying EBITDA is underlying EBIT before depreciation and amortisation in subsidiaries and joint operations and includes the Group’s attributable share of
associates’ and joint ventures’ underlying EBIT before depreciation and amortisation.
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; Coal: metallurgical coal and thermal coal; Copper: copper; Nickel: nickel; Niobium: niobium;
Phosphates: phosphates; Platinum: platinum group metals; and De Beers: rough and polished diamonds.
The segment results are stated after elimination of inter-segment transactions and include an allocation of corporate costs.
Segment results
See note 39a for the Group’s accounting policy on revenue recognition.
US$ million
Iron Ore and Manganese
Coal
Copper
Nickel
Niobium
Phosphates
Platinum
De Beers
Corporate and other
Segment measure
Reconciliation:
Less: associates and joint ventures
Include: operating special items and remeasurements
Statutory measure
US$ million
Iron Ore and Manganese
Coal
Copper
Nickel
Niobium
Phosphates
Platinum
De Beers
Corporate and other
Less: associates and joint ventures
2014
5,176
5,808
4,827
142
180
486
5,396
7,114
1,859
30,988
Revenue
2013
6,517
6,400
5,392
136
182
544
5,688
6,404
1,800
33,063
(3,915)
–
27,073
(3,721)
–
29,342
Underlying EBIT
2014
1,957
458
1,193
21
67
57
32
1,363
(215)
4,933
(420)
(4,375)
138
2013
3,119
587
1,739
(44)
82
68
464
1,003
(398)
6,620
(452)
(3,761)
2,407
Depreciation and amortisation
Underlying EBITDA
2014
329
749
709
7
6
22
495
455
127
2,899(1)
(308)
2,591
2013
271
760
663
7
5
21
584
448
141
2,900(1)
(262)
2,638
2014
2,286
1,207
1,902
28
73
79
527
1,818
(88)
7,832
(728)
7,104
2013
3,390
1,347
2,402
(37)
87
89
1,048
1,451
(257)
9,520
(714)
8,806
(1)
In addition $129 million (2013: $131 million) of depreciation and amortisation charges arising due to the fair value uplift of the Group’s pre-existing 45% shareholding in De Beers has been
included within operating remeasurements (see note 6), and $105 million (2013: $100 million) of pre-commercial production depreciation has been capitalised.
Anglo American plc Annual Report 2014
119
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION continued
Underlying EBITDA is reconciled to underlying EBIT and to ‘(Loss)/profit before net finance costs and tax’:
US$ million
Underlying EBITDA
Depreciation and amortisation: subsidiaries and joint operations
Depreciation and amortisation: associates and joint ventures
Underlying EBIT
Operating special items and remeasurements
Non-operating special items
Associates’ and joint ventures’ net special items and remeasurements
Share of associates’ and joint ventures’ net finance costs, tax and non-controlling interests
(Loss)/profit before net finance costs and tax
Associates’ and joint ventures’ results by segment
2014
7,832
(2,591)
(308)
4,933
(4,375)
(385)
(46)
(166)
(39)
2013
9,520
(2,638)
(262)
6,620
(3,761)
(469)
(75)
(209)
2,106
US$ million
Iron Ore and Manganese
Coal
Platinum
De Beers
Corporate and other
US$ million
Iron Ore and Manganese
Coal
Platinum
De Beers
Corporate and other
Revenue
Underlying EBIT
Share of net income
2014
788
1,050
263
79
1,735
3,915
2013
874
1,136
228
89
1,394
3,721
2014
178
189
(19)
(9)
81
420
2013
205
275
(19)
(21)
12
452
2014
104
73
(26)
(6)
63
208
2013
91
162
(30)
(35)
(20)
168
Depreciation and amortisation
Underlying EBITDA
2014
73
106
28
3
98
308
2013
48
86
35
5
88
262
2014
251
295
9
(6)
179
728
The reconciliation of associates’ and joint ventures’ underlying EBIT to ‘Share of net income from associates and joint ventures’ is as follows:
US$ million
Associates’ and joint ventures’ underlying EBIT
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
2014
420
(46)
(113)
(7)
254
–
(46)
–
208
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 EBIT are as follows:
US$ million
Iron Ore and Manganese
Coal
Copper
Nickel
Niobium
Phosphates
Platinum
De Beers
Corporate and other
2014
36
160
87
7
1
4
37
94
54
480
120
Anglo American plc Annual Report 2014
2013
253
361
16
(16)
100
714
2013
452
(36)
(158)
(15)
243
(80)
3
2
168
2013
73
214
142
16
3
3
56
42
76
625
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION continued
Segment assets and liabilities
US$ million
Iron Ore and Manganese
Coal
Copper
Nickel
Niobium
Phosphates
Platinum
De Beers
Corporate and other
Non-operating assets and liabilities
Segment assets(1)
Segment liabilities(2) Net segment assets/(liabilities)
2014
9,788
6,897
9,082
1,745
782
412
8,729
12,070
365
49,870
16,140
66,010
2013
11,502
7,483
9,549
1,695
546
409
9,584
12,688
610
54,066
17,099
71,165
2014
(660)
(2,257)
(1,132)
(92)
(27)
(61)
(919)
(1,428)
(350)
(6,926)
(26,907)
(33,833)
2013
(470)
(2,305)
(1,248)
(131)
(25)
(77)
(999)
(1,489)
(680)
(7,424)
(26,377)
(33,801)
2014
9,128
4,640
7,950
1,653
755
351
7,810
10,642
15
42,944
(10,767)
32,177
2013
11,032
5,178
8,301
1,564
521
332
8,585
11,199
(70)
46,642
(9,278)
37,364
(1) Segment assets are operating assets and consist of intangible assets of $3,912 million (2013: $4,083 million), property, plant and equipment of $38,475 million (2013: $41,505 million),
environmental rehabilitation trusts of $358 million (2013: $348 million), biological assets of $11 million (2013: $16 million), retirement benefit assets of $184 million (2013: $191 million),
inventories of $4,720 million (2013: $4,789 million) and operating receivables of $2,210 million (2013: $3,134 million).
(2) Segment liabilities are operating liabilities and consist of non-interest bearing current liabilities of $2,984 million (2013: $3,392 million), operating provisions for liabilities and charges of
$2,869 million (2013: $2,828 million) and retirement benefit obligations of $1,073 million (2013: $1,204 million).
Product analysis
Revenue by product
US$ million
Iron ore
Manganese ore and alloys
Metallurgical coal
Thermal coal
Copper
Nickel
Niobium
Phosphates
Platinum
Palladium
Rhodium
Diamonds
Heavy building materials
Other
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
2014
4,029
788
2,290
3,529
4,688
638
180
486
3,097
1,058
280
7,104
1,854
967
30,988
2014
2,464
1,663
939
1,033
23
1,218
275
5,109
3,079
3,496
3,580
3,090
5,019
30,988
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
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
Anglo American plc Annual Report 2014
121
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION continued
Non-current assets by location
US$ million
South Africa
Botswana
Other Africa
Brazil
Chile
Other South America
North America
Australia and Asia
United Kingdom (Anglo American plc's country of domicile)
Other Europe
Non-current assets by location
Unallocated assets
Total non-current assets
Intangible assets and
property, plant and equipment
2014
12,998
5,138
1,138
8,001
7,347
740
1,483
4,136
1,277
129
42,387
2013
13,542
5,748
1,197
9,650
7,472
556
1,764
4,260
1,257
142
45,588
(1)
Total non-current assets
2013
14,950
5,748
1,205
9,713
7,472
1,727
1,768
5,017
2,833
144
50,577
4,429
55,006
2014
14,450
5,138
1,145
8,097
7,347
1,750
1,488
4,764
2,838
131
47,148
4,554
51,702
(1) Total non-current assets by location primarily comprise intangible assets, property, plant and equipment, environmental rehabilitation trusts and investments in associates and joint ventures.
4. OPERATING PROFIT 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 (see below)
Operating profit
US$ million
Operating profit is stated after charging:
Depreciation of property, plant and equipment (note 12)(1)
Amortisation of intangible assets (note 11)(2)
Rentals under operating leases
Exploration expenditure (see below)
Evaluation expenditure (see below)
Research and development expenditure
Operating special items (note 6)
Employee costs (note 26)
Provisional pricing adjustment(3)
Royalties(4)
Other gains and losses comprise:
Operating remeasurements (note 6)
Other fair value losses on derivatives – realised
Foreign exchange gains on other monetary items
Other
Total other gains and losses
2014
27,073
(23,305)
3,768
(1,661)
(1,937)
149
(181)
138
2013
29,342
(22,336)
7,006
(1,780)
(2,214)
(398)
(207)
2,407
2014
2013
(2,545)
(46)
(134)
(181)
(218)
(101)
(4,374)
(4,514)
(219)
(405)
(1)
(20)
172
(2)
149
(2,579)
(59)
(142)
(207)
(326)
(103)
(3,211)
(4,834)
(88)
(629)
(550)
(21)
182
(9)
(398)
(1)
(2)
In addition $110 million (2013: $111 million) of depreciation arising due to the fair value uplift of the Group’s pre-existing 45% shareholding in De Beers has been included within operating
remeasurements (see note 6) and $105 million (2013: $100 million) of pre-commercial production depreciation has been capitalised.
In addition $19 million (2013: $20 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 (see note 6).
(3) Provisionally priced contracts resulted in a total (realised and unrealised) loss in revenue of $226 million (2013: $76 million) and total (realised and unrealised) gain in operating costs
of $7 million (2013: loss of $12 million).
(4) Excludes those royalties which meet the definition of income tax on profit and accordingly have been accounted for as taxes.
122
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
4. OPERATING PROFIT FROM SUBSIDIARIES AND JOINT OPERATIONS continued
Exploration and evaluation expenditure
See note 39j for the Group’s accounting policy on exploration and evaluation expenditure.
The Group’s analysis of exploration and evaluation expenditure recognised in the Consolidated income statement is as follows:
US$ million
By commodity/product
Iron ore
Metallurgical coal
Thermal coal
Copper
Nickel
Niobium
Phosphates
Platinum group metals
Diamonds
Central exploration activities
Exploration expenditure(1)
Evaluation expenditure(2)
2014
25
8
9
37
16
–
4
8
37
37
181
2013
24
19
14
31
22
–
6
2
53
36
207
2014
56
19
11
84
4
1
8
9
26
–
218
2013
69
39
21
112
8
7
9
15
46
–
326
(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.
5. UNDERLYING EBIT AND UNDERLYING EARNINGS BY SEGMENT
The following table analyses underlying EBIT (including the Group’s attributable share of associates’ and joint ventures’ underlying EBIT) by segment and
reconciles it to underlying earnings by segment. Refer to note 3 for the definition of underlying EBIT and changes in reporting segments. Comparatives have
been reclassified to align with current year presentation.
Underlying earnings is an alternative earnings measure, which the directors consider to be a useful additional measure of the Group’s performance.
Underlying earnings is profit for the financial year attributable to equity shareholders of the Company before special items and remeasurements and is
therefore presented after net finance costs, income tax expense and non-controlling interests. For a reconciliation from ‘Loss for the financial year attributable
to equity shareholders of the Company’ to ‘Underlying earnings for the financial year’, see note 9.
US$ million
Iron Ore and Manganese
Coal
Copper
Nickel
Niobium
Phosphates
Platinum
De Beers
Corporate and other
US$ million
Iron Ore and Manganese
Coal
Copper
Nickel
Niobium
Phosphates
Platinum
De Beers
Corporate and other
Underlying
EBIT
Operating
special items and
remeasurements
EBIT after
special items and
remeasurements
Net finance costs
and income tax
expense
Non-controlling
interests
Underlying
earnings
2014
1,957
458
1,193
21
67
57
32
1,363
(215)
4,933
3,670
372
–
21
5
8
52
155
92
4,375
(1,713)
86
1,193
–
62
49
(20)
1,208
(307)
558
(583)
(154)
(482)
(15)
(37)
(22)
(14)
(264)
(111)
(1,682)
(657)
(8)
(218)
–
–
–
7
(176)
18
(1,034)
717
296
493
6
30
35
25
923
(308)
2,217
2013
Underlying
EBIT
Operating
special items and
remeasurements
EBIT after
special items and
remeasurements
Net finance costs
and income tax
expense
Non-controlling
interests
Underlying
earnings
3,119
587
1,739
(44)
82
68
464
1,003
(398)
6,620
435
1,015
337
1,028
6
–
522
330
168
3,841
2,684
(428)
1,402
(1,072)
76
68
(58)
673
(566)
2,779
(963)
(116)
(497)
(10)
(40)
(18)
(112)
(387)
(188)
(2,331)
(1,031)
(14)
(439)
–
–
–
(65)
(84)
17
(1,616)
1,125
457
803
(54)
42
50
287
532
(569)
2,673
Anglo American plc Annual Report 2014
123
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
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 include impairment charges, onerous contract provisions and restructuring costs. Non-operating special items
include costs in relation to closure of operations, 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. Remeasurements include:
• Unrealised gains and losses on financial assets and liabilities that represent economic hedges, including accounting hedges related to financing
arrangements. Where the underlying transaction is recorded in the income statement, the realised gains or losses are reversed from remeasurements and
are recorded in underlying earnings in the same year as the underlying transaction for which the instruments provide the economic 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.
US$ million
Subsidiaries and joint operations
Minas-Rio impairment
Coal impairments
Platinum operations
Impairment of Barro Alto
Impairment of Michiquillay
Other impairments and related charges
Restructuring costs
Onerous contract provisions
Reversal of De Beers inventory uplift
Operating special items
Operating remeasurements
Operating special items and remeasurements
Closure of Drayton
Disposal of Amapá
Exit from Pebble
Loss on formation of Lafarge Tarmac joint venture
Ponahalo refinancing
Atlatsa refinancing (note 35)
Kumba Envision Trust
Other
Non-operating special items
Financing special items and remeasurements
Special items and remeasurements before tax and non-controlling interests
Special items and remeasurements tax
Non-controlling interests on special items and remeasurements
Share of associates' and joint ventures' special items and remeasurements(1)
Total special items and remeasurements
(1) Relates to the Coal segment (2013: Coal, De Beers and Corporate and other segments).
2014
2013
(3,800)
(363)
(44)
–
–
(39)
(128)
–
–
(4,374)
(1)
(4,375)
(222)
(46)
–
–
(58)
22
(44)
(37)
(385)
36
(4,724)
2
38
(46)
(4,730)
–
(574)
(379)
(1,012)
(337)
(172)
(177)
(434)
(126)
(3,211)
(550)
(3,761)
–
(175)
(311)
(55)
–
(37)
(54)
163
(469)
(130)
(4,360)
587
214
(75)
(3,634)
Operating special items
Minas-Rio
The Minas-Rio iron ore project (Minas-Rio) (Iron Ore and Manganese) in Brazil was acquired in two separate transactions in 2007 and 2008. Production
commenced in the last quarter and successful delivery of First Ore On Ship (FOOS) was announced on 27 October 2014. The project is currently ramping
up to capacity of 26.5 Mtpa over the next 18-20 months, and work continues to progress on the regular cycle of required licence and permit renewals.
An impairment charge of $4,960 million (before tax) was recorded in 2012 against the carrying value of Minas-Rio. This was based on the value in use of the cash
generating unit (CGU) and reflected an increase in estimate of attributable project capital expenditure to $8.8 billion, including a $0.6 billion contingency as well as
the impact of high inflation on operational costs. The long term iron ore price used in the 2012 valuation was within the range of published analyst forecasts.
The successful progress of the project up to delivery of FOOS indicates that the $0.6 billion of contingency will not be fully utilised and consequently total
capital expenditure for the project now is estimated at $8.4 billion, on an attributable basis. In 2014, a material worsening of the pricing environment for iron
ore has been in evidence, driven by revisions to the outlook for global GDP growth, especially in the context of weaker Chinese construction activity, whilst
at the same time supply from Western Australia has ramped up to outstrip weakening demand. The value in use of Minas-Rio has been updated to reflect
management’s best estimate of the future iron ore prices based on a detailed analysis of market fundamentals in the medium and long term. The long term
price which is used in the valuation from 2024 onwards is within the range of published analyst forecasts and broadly in line with the mean.
The valuation of Minas-Rio at 31 December 2014 determined on a pre-tax discounted cash flow basis (real pre-tax discount rate of 8.5%) is $5.6 billion.
Based on this valuation, the Group has recorded an impairment charge of $3,800 million (before tax) against the carrying value of the CGU. Of this charge,
$971 million has been recorded against mining properties and $2,829 million against capital works in progress, with an associated deferred tax credit of
$320 million. The post-tax impairment charge is $3,480 million. The valuation remains sensitive to price and further deterioration in long term prices may
result in additional impairment.
124
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
6. SPECIAL ITEMS AND REMEASUREMENTS continued
Coal
In September 2014, the Group announced that it had decided, in view of the subdued hard coking coal price environment, to place Peace River Coal in British
Columbia, Canada on care and maintenance to preserve the long term future of the operation. The recoverable amount of the Peace River Coal CGU has been
assessed based on the operation’s fair value less costs of disposal, measured using discounted cash flow projections (see note 1).
Despite the decision to place the operation on care and maintenance, the decrease in hard coking coal prices has driven a decrease in the valuation of Peace
River Coal to $0.1 billion. Based on this valuation, the Group has recorded an impairment charge of $265 million (before tax) against the carrying value of the
CGU. The post-tax impairment charge is also $265 million. Of this charge, $124 million has been recorded against plant and equipment, $123 million against
mining properties and the remainder against capital works in progress. The valuation remains sensitive to price and further deterioration in the pricing outlook
may result in additional impairment. The long term hard coking coal price used in the valuation from 2019 onwards is within the range of published analyst
forecasts and broadly in line with the mean. The remaining $98 million of the impairment charge recognised in special items ($69 million after tax) relates to
other Coal assets in Australia.
Platinum
The charge of $44 million relates to the closure of the declines at the Union operation in the Platinum business. The charge after tax and non-controlling
interests is $21 million.
Restructuring costs
Restructuring costs of $128 million principally relate to organisational changes as part of the Driving Value programme (2013: $177 million of which
$146 million related to the implementation of the Platinum portfolio review). Restructuring costs after tax and non-controlling interests amount to $93 million.
2013
Operating special items in 2013 principally comprised impairments and related charges in respect of the Barro Alto nickel project (Nickel), the Platinum
portfolio review, the Michiquillay copper project (Copper), and the Foxleigh, Isibonelo and Kleinkopje coal operations (Coal).
Operating special items in 2013 also included charges relating to onerous contract provisions, principally at Callide (Coal), the reversal on sale of fair value
uplifts recognised on inventories as part of the De Beers acquisition accounting, and costs associated with the Platinum portfolio review.
Operating remeasurements
Operating remeasurements reflect a net loss of $1 million (2013: $550 million) which principally comprises gains of $136 million in respect of derivatives
related to capital expenditure in Iron Ore Brazil offset by a $129 million depreciation and amortisation charge (2013: $131 million) arising due to the fair value
uplift on the pre-existing 45% shareholding in De Beers, which was required on acquisition of a controlling stake.
Derivatives in relation to Iron Ore Brazil which have been realised during the period had a cumulative net operating remeasurement loss of $140 million
(2013: $137 million) since their inception.
Non-operating special items
A charge of $222 million ($155 million after tax) has been recognised following the decision by the New South Wales Planning Assessment Committee (PAC)
not to approve the Group’s application to proceed with the Drayton South project (Coal). The reserves of the existing Drayton operation are expected to be
depleted during 2015 and the Drayton South project would have extended the life of the operation by approximately 27 years. Management is preparing a
revised application for the project, to be submitted in the first half of 2015, and continues to work to allow operations to continue at Drayton. However, in view
of the uncertainty caused by the PAC decision, assets associated with the project and the existing operation have been written down to their residual values,
and a provision has been made for the cost of meeting contractual and other obligations beyond the life of the existing Drayton mine.
A $46 million charge has been recognised primarily in relation to the revaluation of deferred contingent consideration for the disposal of Amapá in 2013
(Corporate and other). The contingent consideration receivable is calculated on the basis of the market price for iron ore, which has seen a material worsening.
There is no tax impact.
In November 2014, De Beers concluded the refinancing of its Black Economic Empowerment partner, Ponahalo Investments (RF) Proprietary Limited
(Ponahalo), which owns a 26% share in De Beers’ principal South African subsidiary, De Beers Consolidated Mines (DBCM). The refinancing extended the
period over which Ponahalo may repay borrowings that were used to finance the purchase of its share in DBCM in 2006 by seven years. A charge of $58 million
has been recognised and no tax arises in relation to this transaction.
The Kumba Envision Trust charge of $44 million (2013: $54 million) relates to Kumba’s (Iron Ore and Manganese) 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.
2013
Non-operating special items in 2013 principally relate to the loss on disposal of Amapá, the Group’s exit from the Pebble project in Alaska (Copper), the loss
recognised on the formation of the Lafarge Tarmac joint venture (Corporate and other), the Kumba Envision Trust charge, the gain on deferred proceeds of
undeveloped coal assets in Australia (Coal) and the gain on disposal of the Group’s interest in Palabora Mining Company Limited (Corporate and other).
Financing special items and remeasurements
Financing special items and remeasurements reflect a net gain of $36 million (2013: net loss of $130 million) principally comprising gains on derivatives
relating to debt.
Special items and remeasurements tax
Total special items and remeasurements tax relating to subsidiaries and joint operations amounts to a credit of $2 million (2013: $587 million). This includes
one-off tax charges of $105 million (2013: $188 million), tax credits on special items and remeasurements of $412 million (2013: $902 million) and tax
remeasurement charges of $305 million (2013: $127 million).
One-off tax charges of $105 million comprise a $100 million charge for the derecognition of deferred tax assets at Peace River Coal (Coal), a $61 million
charge for the derecognition of a deferred tax asset in Coal Australia relating to the Mineral Resource Rent Tax which was repealed in 2014, and a $56 million
credit for the recognition of a deferred tax asset in Barro Alto.
Of the total tax credit of $2 million (2013: $587 million), $31 million relates to a current tax credit (2013: charge of $159 million) and $29 million relates to
a deferred tax charge (2013: credit of $746 million).
Anglo American plc Annual Report 2014
125
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
7. NET FINANCE COSTS
See note 39b for the Group’s accounting policy on borrowing costs.
Net finance costs are presented net of hedges for respective interest bearing and foreign currency borrowings. The weighted average capitalisation rate
applied to qualifying capital expenditure was 3.83% (2013: 4.79%).
US$ 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(1)
Interest expense
Interest and other finance expense
Net interest cost on defined benefit arrangements
Unwinding of discount relating to provisions
Less: interest expense capitalised
Total interest expense(1)
Other net financing (losses)/gains
Net foreign exchange losses
Other net fair value gains
Total other net financing (losses)/gains
Net finance costs before special items and remeasurements
Special items and remeasurements (note 6)
Net finance costs after special items and remeasurements
2014
2013
128
88
14
25
255
(13)
242
(709)
(69)
(101)
(879)
382
(497)
(37)
36
(1)
(256)
36
(220)
113
134
13
18
278
(7)
271
(731)
(74)
(106)
(911)
327
(584)
(21)
58
37
(276)
(130)
(406)
(1)
Interest income recognised at amortised cost is $152 million (2013: $172 million) and interest expense recognised at amortised cost is $286 million (2013: $324 million).
8. INCOME TAX EXPENSE
See note 39c for the Group’s accounting policy on tax.
a) Analysis of charge for the year
US$ million
United Kingdom corporation tax credit
South Africa tax
Other overseas tax
Prior year adjustments
Current tax(1)
Deferred tax
Income tax expense before special items and remeasurements
Special items and remeasurements tax
Income tax expense
(1)
Includes royalties which meet the definition of income tax and are in addition to royalties recorded in operating costs.
2014
(14)
479
712
(68)
1,109
158
1,267
(2)
1,265
2013
(1)
863
692
32
1,586
275
1,861
(587)
1,274
126
Anglo American plc Annual Report 2014
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 (488.4)% (2013: 74.9%) is lower (2013: higher) than the applicable weighted average statutory rate of corporation tax in
the United Kingdom of 21.5% (2013: 23.25%). The reconciling items, excluding the impact of associates and joint ventures, are:
US$ million
(Loss)/profit before tax
Less: share of net income from associates and joint ventures
(Loss)/profit before tax (excluding associates and joint ventures)
Tax on (loss)/profit (excluding associates and joint ventures) calculated at United Kingdom corporation tax rate of 21.5%
(2013: 23.25%)
Tax effects of:
Items non-taxable/deductible for tax purposes
Exploration expenditure
Non-taxable net foreign exchange gains
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
2014
(259)
(208)
(467)
(100)
18
(12)
(8)
72
(138)
79
(143)
(13)
65
106
95
1,014
193
106
(68)
(1)
1,265
2013
1,700
(168)
1,532
356
22
(16)
(9)
110
(105)
25
(6)
(8)
29
14
(28)
427
242
173
31
17
1,274
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 2014 is $159 million (2013: $155 million). Excluding special items and remeasurements this becomes
$113 million (2013: $158 million).
The effective tax rate before special items and remeasurements including attributable share of associates’ and joint ventures’ tax for the year ended
31 December 2014 was 29.8%. This is lower than the equivalent effective tax rate of 32.0% for the year ended 31 December 2013 due to the impact of certain
prior year adjustments, the remeasurement of withholding tax provisions across the Group and the recognition of previously unrecognised losses. In future
periods it is expected that the effective tax rate will remain above the United Kingdom statutory tax rate.
c) Tax amounts included in other comprehensive income
An analysis of tax by individual item presented in the Consolidated statement of comprehensive income is presented below:
US$ million
Tax credit/(charge) on items recognised directly in equity that will not be reclassified to the income statement
Remeasurement of net retirement benefit obligation
Tax credit/(charge) on items recognised directly in equity that may subsequently be reclassified to the income statement
Net exchange differences on translation of foreign operations
Net loss on revaluation of available for sale investments
Net loss on cash flow hedges
Tax credit 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
2014
2013
9
(37)
(15)
26
4
24
–
1
1
156
13
4
136
12
–
12
d) Tax amounts recognised directly in equity
No significant amounts of tax have been charged directly to equity in 2014 (2013: a deferred tax credit of $106 million and current tax charge of $106 million
were recognised directly in equity in relation to the disposal of a 24.5% interest in Anglo American Sur SA in 2011).
Anglo American plc Annual Report 2014
127
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
9. EARNINGS PER SHARE
US$
Loss per share
Basic
Diluted
Headline earnings per share
Basic
Diluted
Underlying earnings per share
Basic
Diluted
2014
2013
(1.96)
(1.96)
(0.75)
(0.75)
1.20
1.19
1.73
1.72
1.02
1.02
2.09
2.08
Basic and diluted earnings per share are shown based on headline earnings, a Johannesburg Stock Exchange (JSE) defined performance measure, and
underlying earnings (explained in note 5) which the directors consider to be a useful additional measure of the Group’s performance.
The calculation of basic and diluted earnings per share is based on the following data:
(Loss)/earnings (US$ million)
Basic and diluted (loss)/earnings
Number of shares (million)
Basic number of ordinary shares outstanding
Effect of dilutive potential ordinary shares:
Share options and awards
Diluted number of ordinary shares outstanding
Loss attributable to equity
shareholders of the Company
Headline earnings
Underlying earnings
2014
2013
2014
2013
2014
2013
(2,513)
(961)
1,535
1,312
2,217
2,673
1,284
1,281
1,284
1,281
1,284
1,281
–
1,284
–
1,281
5
1,289
4
1,285
5
1,289
4
1,285
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 18,431,061 (2013: 16,688,080) potential ordinary shares are anti-dilutive and 178,808
(2013: 134,679) 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.
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
Non-operating special items – tax
Non-operating special items – non-controlling interests
Headline earnings for the financial year
Operating special items(1)
Operating remeasurements
Non-operating special items(2)
Financing special items and remeasurements
Tax special items
Special items and remeasurements tax
Non-controlling interests on special items and remeasurements
Underlying earnings for the financial year
(1)
Includes restructuring costs (2013: onerous contract provisions, restructuring costs and the reversal of the inventory uplift in De Beers).
(2) Principally relates to the Kumba Envision Trust and Ponahalo refinancing (2013: Kumba Envision Trust and elements of the Atlatsa refinancing).
2014
(2,513)
4,268
(362)
(16)
218
(51)
(9)
1,535
106
1
167
(36)
105
352
(13)
2,217
2013
(961)
2,491
(569)
(53)
456
10
(62)
1,312
800
550
13
130
188
(219)
(101)
2,673
128
Anglo American plc Annual Report 2014
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 2013 – 53 US cents per ordinary share (2012: 53 US cents per ordinary share)
Interim ordinary dividend for 2014 – 32 US cents per ordinary share (2013: 32 US cents per ordinary share)
2014
696
403
1,099(1)
2013
672
406
1,078(1)
(1) Of this, $620 million (2013: $618 million) was recognised in the parent company.
Total dividends paid during the year were $1,099 million (2013: $1,078 million).
The directors are proposing a final dividend in respect of the financial year ended 31 December 2014 of 53 US cents per share. This will result in an estimated
distribution of $678 million of shareholders’ funds, of which $421 million will be distributed by the parent company. These financial statements do not reflect
this dividend payable as it is still subject to shareholder approval.
The employee benefit trust has waived the right to receive dividends on the shares it holds (see note 32).
11. INTANGIBLE ASSETS
See notes 39d, 39e and 39i for the Group’s accounting policy on intangible assets.
US$ million
Net book value
At 1 January
Additions
Amortisation charge for the year(2)
Impairments
Remeasurements
Currency movements
At 31 December
Cost
Accumulated amortisation
2014
2013
Brands,
contracts
and other
intangibles(1)
1,415
22
(65)
–
–
(13)
1,359
1,592
(233)
Goodwill
Total
2,668
–
–
–
46
(161)
2,553
2,553
–
4,083
22
(65)
–
46
(174)
3,912
4,145
(233)
Brands,
contracts
and other
intangibles(1)
1,615
15
(79)
(2)
–
(134)
1,415
1,599
(184)
Goodwill
Total
2,954
–
–
–
(18)
(268)
2,668
2,668
–
4,569
15
(79)
(2)
(18)
(402)
4,083
4,267
(184)
(1)
(2)
Includes brands, contracts and other intangibles of $1,308 million (2013: $1,380 million) relating to De Beers, principally comprising assets that were recognised at fair value on acquisition of
a controlling interest in De Beers in August 2012. Of these, $517 million (2013: $517 million) have indefinite useful lives.
Includes $19 million (2013: $20 million) of amortisation arising due to the fair value uplift of the Group’s pre-existing 45% shareholding in De Beers. This has been included within operating
remeasurements (see note 6).
Impairment tests for goodwill
See note 39f for the Group’s accounting policy on impairment of goodwill.
Goodwill is allocated for impairment testing purposes to cash generating units (CGUs) or groups of CGUs which reflect how it is monitored for internal
management purposes. This allocation largely represents the Group’s segments. Any goodwill associated with CGUs subsumed within these segments is not
significant when compared to the goodwill of the Group. The allocation of goodwill to CGUs or groups of CGUs is as follows:
US$ million
Coal South Africa
Copper
Platinum
De Beers
Other
2014
88
124
230
1,895
216
2,553
2013
88
124
230
2,056
170
2,668
For the purposes of goodwill impairment testing, the recoverable amount of each of the CGUs or group of CGUs has been 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.
Anglo American plc Annual Report 2014
129
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
12. PROPERTY, PLANT AND EQUIPMENT
See notes 39g to 39j for the Group’s accounting policies on property, plant and equipment.
US$ million
Net book value
At 1 January
Additions
Depreciation charge
for the year(3)
Impairments
Disposal of assets
Reclassifications
Currency movements
At 31 December
Cost
Accumulated
depreciation
Mining
properties
and leases(1)
Land and
buildings(2)
Plant and
equipment
Capital works
in progress
2014
Total
14,996
596
3,030
46
11,530
311
11,949
5,452
41,505
6,405
(1,065)
(1,242)
(3)
859
(1,123)
13,018
24,206
(161)
(26)
(20)
345
(147)
3,067
4,307
(1,534)
(213)
(30)
1,573
(522)
11,115
21,525
–
(2,935)
(3)
(2,777)
(411)
11,275
14,497
(2,760)
(4,416)
(56)
–
(2,203)
38,475
64,535
Mining
properties
and leases(1)
17,301
827
(1,125)
(959)
(286)
1,432
(2,194)
14,996
24,334
Land and
buildings(2)
Plant and
equipment
Capital works
in progress
2013
Total
2,996
43
(135)
(147)
(10)
599
(316)
3,030
4,191
14,268
209
10,166
5,818
44,731
6,897
(1,530)
(817)
(52)
780
(1,328)
11,530
21,263
–
(401)
(106)
(2,811)
(717)
11,949
12,279
(2,790)
(2,324)
(454)
–
(4,555)
41,505
62,067
(11,188)
(1,240)
(10,410)
(3,222)
(26,060)
(9,338)
(1,161)
(9,733)
(330)
(20,562)
(1) Additions to mining properties and leases include amounts of $524 million (2013: $382 million) in relation to deferred stripping.
(2) Net book value principally comprises freehold land and buildings.
(3)
Includes $2,545 million (2013: $2,579 million) of depreciation within operating profit, $110 million (2013: $111 million) of depreciation arising due to the fair value uplift on the pre-existing 45%
shareholding in De Beers which has been included within operating remeasurements (see note 6), and $105 million (2013: $100 million) of pre-commercial production depreciation which has
been capitalised.
For information on the impairments recorded in the year see note 6.
Included in the additions is $369 million (2013: $320 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 $70 million (2013: $50 million), of which depreciation charges in the
year amounted to $13 million (2013: $13 million).
13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
See note 39k for the Group’s accounting policy on associates and joint arrangements, which includes joint ventures.
Details of principal associates and joint ventures are set out in note 37.
US$ million
At 1 January
Share of net income/(loss) from associates and joint ventures
Dividends received
Investment in equity and capitalised loans
Repayment of capitalised loans
Acquired through formation of joint ventures (note 29)
Impairment
Other movements
Currency movements
At 31 December(2)
Associates
2,936
140
(432)
(1)
125
–
–
–
1
(89)
2,681
Joint
ventures
1,676
68
(3)
25
–
–
–
28
(99)
1,695
2014
Total
4,612
208
(435)
150
–
–
–
29
(188)
4,376
Associates
3,063
238
(242)
175
(108)
–
–
–
(190)
2,936
Joint
ventures
99
(70)
(4)
46
–
1,658
(98)
–
45
1,676
(1)
Includes non-cash investment of $69 million relating to the refinancing of Atlatsa Resources Corporation (see note 35).
(2) The fair value of the Group’s investment in its associate Atlatsa Resources Corporation at 31 December 2014 was $25 million (2013: $64 million).
The Group’s total investments in associates and joint ventures comprise:
US$ million
Equity
Loans(1)
Associates
2,294
387
2,681
Joint
ventures
1,695
–
1,695
2014
Total
3,989
387
4,376
Associates
2,553
383
2,936
Joint
ventures
1,676
–
1,676
2013
Total
3,162
168
(246)
221
(108)
1,658
(98)
–
(145)
4,612
2013
Total
4,229
383
4,612
(1) 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.
130
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued
None of the Group’s associates or joint ventures are considered to be individually material to the Group. We have therefore disclosed the Group’s share of the
financial information of associates and joint ventures 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
Total comprehensive income/(expense)
Associates
2,742
924
(363)
(622)
2,681
2,101
140
141
Joint
ventures
2,035
626
(557)
(409)
1,695
1,814
68
68
2014
Total
4,777
1,550
(920)
(1,031)
4,376
3,915
208
209
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
Segmental information is provided in aggregate for associates and joint ventures in the table below. Refer to note 3 for changes in reporting segments.
Comparatives have been reclassified to align with current year presentation.
US$ million
Iron Ore and Manganese
Coal
Platinum
De Beers
Corporate and other
Aggregate investment
2014
867
1,225
659
33
1,592
4,376
2013
907
1,417
648
29
1,611
4,612
14. FINANCIAL ASSET INVESTMENTS
See notes 39l and 39m for the Group’s accounting policies on financial asset investments.
US$ million
At 1 January
Additions
Interest receivable
Net loans granted/(repaid)(1)
Disposals
Movements in fair value
Currency movements
At 31 December
Loans and
receivables
759
–
52
33
–
(1)
(82)
761
Available
for sale
investments
706
12
–
–
–
(150)
(63)
505
2014
Total
1,465
12
52
33
–
(151)
(145)
1,266
Loans and
receivables
1,427
–
37
(424)
(9)
(37)
(235)
759
Available
for sale
investments
1,064
–
–
–
(99)
(69)
(190)
706
2013
Total
2,491
–
37
(424)
(108)
(106)
(425)
1,465
(1)
Includes net non-cash settlements of $47 million (2013: $123 million) relating to the refinancing of Atlatsa Resources Corporation (see note 35).
Maturity analysis of financial asset investments is as follows:
US$ million
Current
Non-current
2014
–
1,266
1,266
2013
19
1,446
1,465
Anglo American plc Annual Report 2014
131
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
15. INVENTORIES
See note 39q for the Group’s accounting policy on inventories.
US$ million
Raw materials and consumables
Work in progress
Finished products
2014
1,087
1,445
2,188
4,720
2013
915
1,496
2,378
4,789
The cost of inventories recognised as an expense and included in cost of sales amounted to $17,779 million (2013: $17,929 million). In 2013, an additional
$126 million was recognised as an expense within operating special items relating to the reversal of fair value uplifts on De Beers inventory.
Inventories held at net realisable value amounted to $1,014 million (2013: $308 million).
Write-down of inventories (net of revaluation of provisionally priced purchases) amounted to $153 million (2013: $58 million).
16. TRADE AND OTHER RECEIVABLES
Trade receivables do not incur any interest, are principally short term in nature and are measured at their nominal value (with the exception of receivables
relating to provisionally priced sales, as set out in the revenue recognition accounting policy, see note 39a), net of appropriate provision for estimated
irrecoverable amounts. Such provisions are raised based on an assessment of debtor ageing, past experience or known customer circumstances.
US$ million
Trade receivables
Other receivables
Prepayments
Due within
one year
1,807
604
157
2,568
Due after
one year
161
526
58
745
2014
Total
1,968
1,130
215
3,313
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
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, $61 million (2013: $65 million) were past due at 31 December, stated after an associated impairment provision of $30 million
(2013: $19 million). The overdue debtor ageing profile is typical of the industry in which certain of the Group’s businesses operate. Given this, the use of
payment security instruments (including letters of credit from acceptable financial institutions), and the nature of the related counterparties, these amounts
are considered recoverable.
17. TRADE AND OTHER PAYABLES
Trade payables are not interest bearing and are measured at their nominal value with the exception of amounts relating to purchases of provisionally priced
concentrate which are marked to market (using the appropriate forward price) until settled.
US$ million
Trade payables
Tax and social security
Other payables
Accruals and deferred income(1)
(1)
Includes $25 million (2013: $22 million) of deferred income recorded within non-current liabilities.
2014
1,931
99
478
1,032
3,540
2013
2,364
100
903
1,024
4,391
132
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
18. FINANCIAL INSTRUMENTS
See notes 39m and 39n for the Group’s accounting policies on impairment of financial assets, derivative financial instruments and hedge accounting.
The carrying amounts of financial assets and financial liabilities are as shown below. Where the carrying amount of a financial asset or liability does not
approximate its fair value, this is also disclosed.
For financial assets and liabilities which are traded on an active market, such as listed investments or listed debt instruments, fair value is determined by
reference to market value. For non-traded financial assets and liabilities, fair value is calculated using discounted cash flows, considered to be reasonable and
consistent with those that would be used by a market participant, and based on observable market data where available, unless carrying value is considered to
approximate fair value.
All derivatives that have been designated into hedge relationships have been separately disclosed. Comparatives have been reclassified to align with current
year presentation.
US$ million
Financial assets
Trade and other receivables(1)
Derivative financial assets(2)
Cash and cash equivalents
Financial asset investments
Financial liabilities
Trade and other payables(1)
Derivative financial liabilities(2)
Borrowings(3)
Net financial assets/(liabilities)
US$ million
Financial assets
Trade and other receivables(1)
Derivative financial assets(2)
Cash and cash equivalents
Financial asset investments
Financial liabilities
Trade and other payables(1)
Derivative financial liabilities(2)
Borrowings(3)
Net financial assets/(liabilities)
At fair value
through profit
and loss
Loans and
receivables
Available
for sale
Designated
into hedges
Financial
liabilities at
amortised cost
912
153
–
–
1,065
(314)
(2,277)
–
(2,591)
(1,526)
1,553
–
6,748
761
9,062
–
–
–
–
9,062
–
–
–
505
505
–
–
–
–
505
–
980
–
–
980
–
(47)
(15,048)
(15,095)
(14,115)
–
–
–
–
–
(3,073)
–
(3,487)
(6,560)
(6,560)
At fair value
through profit
and loss
Loans and
receivables
Available
for sale
Designated
into hedges
Financial
liabilities at
amortised cost
1,652
312
–
–
1,964
(279)
(1,361)
–
(1,640)
324
2,222
–
7,704
759
10,685
–
–
–
–
10,685
–
–
–
706
706
–
–
–
–
706
–
362
–
–
362
–
(150)
(14,619)
(14,769)
(14,407)
–
–
–
–
–
(3,923)
–
(3,229)
(7,152)
(7,152)
2014
Total
2,465
1,133
6,748
1,266
11,612
(3,387)
(2,324)
(18,535)
(24,246)
(12,634)
2013
Total
3,874
674
7,704
1,465
13,717
(4,202)
(1,511)
(17,848)
(23,561)
(9,844)
(1) Trade and other receivables exclude prepayments and tax receivables. Trade and other payables exclude tax and social security and deferred income.
(2) Derivative instruments are analysed between those which are ‘Held for trading’ and those designated into hedge relationships in note 19.
(3) Borrowings designated in fair value hedges represent listed debt. The fair value of these borrowings is $15,339 million (2013: $14,907 million), which is based on the quoted market price
and consequently categorised as level 1 in the fair value hierarchy. For the majority of borrowings at amortised cost the carrying value is considered to approximate the fair value. In certain
circumstances the fair value of borrowings at amortised cost is based on management’s estimates of future cash flows and consequently the valuation is categorised as level 3 in the fair
value hierarchy.
Anglo American plc Annual Report 2014
133
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
18. FINANCIAL INSTRUMENTS continued
Fair value hierarchy
An analysis of financial assets and liabilities carried at fair value is set out below:
US$ million
Financial assets
At fair value through profit and loss
Provisionally priced trade receivables
Other receivables
Derivatives hedging net debt
Other derivatives
Designated into hedges
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
Designated into hedges
Derivatives hedging net debt
Other derivatives
Net (liabilities)/assets carried at fair value
Level 1(1)
Level 2(2)
Level 3(3)
–
–
–
1
–
1
812
–
51
42
979
–
–
100
59
–
–
–
2014
Total
812
100
110
43
979
1
457
459
–
1,884
48
207
505
2,550
–
–
(2)
–
–
(2)
457
(314)
(1,647)
(129)
(27)
(20)
(2,137)
(253)
–
(499)
–
–
–
(499)
(292)
(314)
(2,146)
(131)
(27)
(20)
(2,638)
(88)
Level 1(1)
Level 2(2)
Level 3(3)
–
–
–
–
–
–
647
647
–
–
(3)
–
–
(3)
644
1,510
–
266
22
362
–
–
2,160
(279)
(576)
(326)
(138)
(12)
(1,331)
829
–
142
24
–
–
–
59
225
–
(446)
(10)
–
–
(456)
(231)
2013
Total
1,510
142
290
22
362
–
706
3,032
(279)
(1,022)
(339)
(138)
(12)
(1,790)
1,242
(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 certain cross currency swaps of Brazilian real denominated borrowings (whose
valuation depends upon regulated interest rates), contingent proceeds and related receivables relating to disposals and unlisted equity investments.
The movements in the fair value of the level 3 financial assets and liabilities are shown as follows:
US$ million
At 1 January
Net (loss)/gain recorded in the income statement(1)
Net (loss)/gain recorded in the statement of comprehensive income
Currency movements
At 31 December
(1) This is principally recorded in special items and remeasurements.
2014
225
(7)
(6)
(5)
207
Assets
2013
107
134
2
(18)
225
2014
(456)
(43)
–
–
(499)
Liabilities
2013
(216)
(195)
–
(45)
(456)
For the level 3 financial assets and liabilities, changing certain inputs to reasonably possible alternative assumptions does not change the fair value
significantly.
134
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
19. DERIVATIVES
See note 39n 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 ‘Held for trading’
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 recognised in the
Consolidated income statement as financing remeasurements.
Net investment hedges
In certain instances, the Group uses derivative instruments to hedge exposures in non-US dollar functional subsidiaries to exchange rate fluctuations on
US dollar denominated borrowings. These derivatives are designated as net investment hedges and principally relate to the Group’s Australian coal operations.
Fair value changes in these derivatives are recognised within the cumulative translation adjustment reserve and recycled upon disposal of the related subsidiary.
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. Fair value changes on these derivatives 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(1)
Interest rate swaps
Net investment hedge
Forward foreign currency contracts
Held for trading
Forward foreign currency contracts
Cross currency swaps
Interest rate swaps
Other derivatives(2)
Total derivatives
Asset
15
–
51
38
–
104
43
147
2014
Liability
Asset
–
–
(10)
(386)
–
(396)
(143)
(539)
8
–
18
24
–
50
20
70
Current
2013
Liability
–
–
(86)
(15)
–
(101)
(271)
(372)
2014
Liability
Non-current
2013
Liability
Asset
(27)
354
(138)
–
–
(1,750)
–
(1,777)
(8)
(1,785)
–
–
248
–
602
2
604
–
–
(919)
(2)
(1,059)
(80)
(1,139)
Asset
617
347
–
21
–
985
1
986
(1) Recognised in the Consolidated income statement is a loss on fair value hedged items of $440 million (2013: gain of $555 million), partly offset by a gain on fair value hedging instruments of
$381 million (2013: loss of $474 million).
(2) Other derivatives primarily relate to forward foreign currency contracts hedging capital expenditure that are accounted for as ‘Held for trading’.
These marked to market valuations are not predictive of the future value of the hedged position, nor of the future impact on the profit of the Group.
The valuations represent the cost of closing all hedge contracts at year end, at market prices and rates available at the time.
The Group is exposed in varying degrees to a variety of financial instrument related risks. For more information about these risks and the ways in which the
Group manages them see notes 24 and 38.
Anglo American plc Annual Report 2014
135
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
20. PROVISIONS FOR LIABILITIES AND CHARGES
See note 39r for the Group’s accounting policy on environmental restoration and decommissioning obligations.
US$ million
At 1 January 2014
Charged to the income statement
Capitalised
Unwinding of discount
Amounts applied
Unused amounts reversed
Currency movements
At 31 December 2014
Current
Non-current
Environmental
restoration Decommissioning
488
8
106
33
(2)
(11)
(27)
595
3
592
1,155
40
18
57
(27)
(53)
(100)
1,090
21
1,069
Employee
benefits
418
242
–
2
(183)
(12)
(30)
437
383
54
Onerous
contracts
702
38
–
65
(92)
–
(69)
644
67
577
Other
693
214
63
9
(194)
(53)
(10)
722
206
516
Total
3,456
542
187
166
(498)
(129)
(236)
3,488
680
2,808
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, based on management’s best estimate of the legal
and constructive obligations incurred. These estimates reflect industry best practice and currently applicable legislation. Significant changes in legislation
could result in changes in provisions recognised. It is anticipated that these costs will be incurred over a period in excess of 20 years.
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 and similar 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 16 years.
Other
Other provisions primarily relate to restructuring costs, indemnities, legal and other claims. It is anticipated that the majority of 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
2014
139
155
64
358
2013
149
134
65
348
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% (2013: 8.2%) for an average period of four years (2013: 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.
136
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
21. DEFERRED TAX
See note 39c 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
(Charged)/credited to the income statement
Credited to the statement of comprehensive income
Credited directly to equity
Currency movements
At 31 December
Comprising:
Deferred tax assets
Deferred tax liabilities
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
Withholding tax
Other temporary differences
The amount of deferred tax (charged)/credited to the Consolidated income statement is as follows:
US$ million
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses
Derivatives
Provisions
Withholding tax
Other temporary differences
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
3
420
297
4,463
5,183
Tax
losses –
capital
Other
temporary
differences
–
–
–
1,058
1,058
–
–
3,117
3,775
6,892
2014
Total
3
420
3,414
9,296
13,133
Tax
losses –
revenue
16
294
3
4,858
5,171
Tax
losses –
capital
Other
temporary
differences
–
–
–
753
753
–
–
4,370
2,077
6,447
The Group also has unused tax credits of $11 million (2013: $17 million) for which no deferred tax asset is recognised in the Consolidated balance sheet. All of
these credits expire within three months.
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
$17,488 million (2013: $19,117 million).
Anglo American plc Annual Report 2014
137
2014
(3,293)
(187)
25
–
308
(3,147)
1,351
(4,498)
2013
(4,847)
471
148
106
829
(3,293)
1,364
(4,657)
2014
2013
573
66
13
653
46
1,351
(2,845)
(1,068)
53
3
255
(568)
(328)
(4,498)
2014
(523)
12
20
(39)
(14)
2
355
(187)
593
71
5
414
281
1,364
(2,871)
(1,476)
29
4
436
(570)
(209)
(4,657)
2013
(238)
73
187
220
134
(3)
98
471
2013
Total
16
294
4,373
7,688
12,371
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
22. CAPITAL EXPENDITURE
Capital expenditure is defined as cash expenditure on property, plant and equipment including related derivatives, and is now presented net of proceeds from
disposal of property, plant and equipment and includes direct funding for capital expenditure from non-controlling interests in order to match more closely the
way in which it is managed. Comparatives have been re-presented to align with current year presentation.
Capital expenditure by segment
US$ million
Iron Ore and Manganese
Coal(1)
Copper
Nickel(2)
Niobium(1)
Phosphates(1)
Platinum
De Beers
Corporate and other(1)
Excluding:
Cash outflows from derivatives related to capital expenditure
Proceeds from disposal of property, plant and equipment
Direct funding for capital expenditure received from non-controlling interests
Expenditure on property, plant and equipment
2014
2,685
1,045
728
14
198
41
576
689
42
6,018
(157)
71
42
5,974
2013
2,518
1,263
959
(28)
206
30
601
476
50
6,075
(136)
140
46
6,125
(1) Refer to note 3 for changes in reporting segments. Comparatives have been reclassified to align with current year presentation.
(2) Cash capital expenditure for Nickel of $164 million (2013: $76 million) is offset by the capitalisation of $150 million (2013: $104 million) of net operating cash inflows generated by Barro Alto
which has not yet reached commercial production.
Capital expenditure by category
US$ million
Expansionary(1)
Stay-in-business
Stripping and development
Proceeds from disposal of property, plant and equipment
2014
3,248
1,973
868
(71)
6,018
2013
3,213
2,241
761
(140)
6,075
(1) The expansionary category includes the cash flows from derivatives related to capital expenditure and is net of direct funding for capital expenditure received from non-controlling interests.
138
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
23. NET DEBT
See note 39o 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 net debt, see note 19).
a) Reconciliation to the balance sheet
US$ million
Balance sheet
Bank overdrafts
Net debt classifications
b) Movement in net debt
US$ million
At 1 January 2013
Cash flow
Disposal of businesses
Reclassifications
Movement in fair value
Other non-cash movements
Currency movements
At 31 December 2013
Cash flow
Reclassifications
Movement in fair value
Other non-cash movements
Currency movements
At 31 December 2014
Cash and cash equivalents
Short term borrowings
2014
6,748
(1)
6,747
2013
7,704
(2)
7,702
2014
(1,618)
1
(1,617)
2013
(2,108)
2
(2,106)
Medium and
long term borrowings
2014
(16,917)
–
(16,917)
2013
(15,740)
–
(15,740)
Cash
and cash
equivalents
9,298
(1,235)
–
–
–
–
(361)
7,702
(841)
–
–
–
(114)
6,747
Short term
borrowings
(2,490)
2,307
69
(2,084)
24
(5)
73
(2,106)
1,785
(1,487)
(7)
(2)
200
(1,617)
Medium and
long term
borrowings
(15,150)
(3,279)
–
2,084
521
(39)
123
(15,740)
(3,568)
1,487
(434)
(72)
1,410
(16,917)
Net debt
excluding
derivatives
(8,342)
(2,207)
69
–
545
(44)
(165)
(10,144)
(2,624)
–
(441)
(74)
1,496
(11,787)
Derivatives
hedging
net debt
(168)
(181)
–
–
(155)
–
(4)
(508)
(203)
–
(373)
–
–
(1,084)
Net debt
including
derivatives
(8,510)
(2,388)
69
–
390
(44)
(169)
(10,652)
(2,827)
–
(814)
(74)
1,496
(12,871)
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 23d 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.
US$ million
Iron Ore and Manganese
Coal(1)
Copper
Nickel
Niobium(1)
Phosphates(1)
Platinum
De Beers
Corporate and other(1)
2014
(2,294)
201
738
(262)
44
32
24
(126)
(11,228)
(12,871)
2013
(1,413)
169
531
(398)
22
46
(50)
(311)
(9,248)
(10,652)
(1) Refer to note 3 for changes in reporting segments. Comparatives have been reclassified to align with current year presentation.
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 (debt)/cash excluding derivatives
Derivatives hedging net debt
Net (debt)/cash including derivatives
2014
1,298
(118)
(1,252)
(72)
1
(71)
2013
2,247
(512)
(1,000)
735
4
739
Anglo American plc Annual Report 2014
139
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
24. BORROWINGS
See note 39o for the Group’s accounting policy on 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, the Australian Medium Term Note (AMTN) programme and through accessing the United States (US)
bond markets. 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 2014, the Group issued corporate bonds with a US dollar equivalent value of $3.2 billion. These included the following bonds:
• €750 million 1.75% guaranteed loan notes due 2018 and €750 million 3.25% guaranteed loan notes due 2023 issued under the EMTN programme.
• $500 million LIBOR plus 0.95% senior floating rate notes due 2016 and $500 million 4.125% senior notes due 2021 through accessing the US bond markets.
• R650 million 9.49% senior notes due 2021 and R400 million JIBAR plus 1.47% floating rate notes due 2021 issued under the DMTN programme.
An analysis of borrowings, as presented on the Consolidated balance sheet, is set out below:
US$ million
Secured
Bank loans and overdrafts(1)
Obligations under finance leases(2)
Unsecured
Bank loans and overdrafts
Bonds issued under EMTN programme
5.875% €1,000m bond due April 2015
4.375% €750m bond due December 2016
1.75% €900m bond due November 2017
1.75% €750m bond due April 2018
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
3.25% €750m bond due April 2023
US bonds
9.375% $1,250m bond due April 2014
LIBOR+0.95% $500m bond due April 2016
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% $500m bond due April 2021
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
9.49% R650m bond due April 2021
JIBAR+1.47% R400m bond due April 2021
Other loans
Total borrowings
Short term
borrowings
Medium and
long term
borrowings
Total
borrowings
2014
Contractual
repayment at
hedged rates
Short term
borrowings
Medium and
long term
borrowings
Total
borrowings
2013
Contractual
repayment at
hedged rates
9
25
34
21
52
73
30
77
107
30
77
107
9
7
16
32
49
81
41
56
97
41
56
97
211
2,198
2,409
2,805
433
2,003
2,436
2,467
1,228
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
86
–
–
–
–
–
59
1,584
1,618
–
959
1,107
922
701
938
84
956
769
947
1,025
976
–
499
604
738
804
521
505
578
423
–
17
52
121
56
35
309
16,844
16,917
1,228
959
1,107
922
701
938
84
956
769
947
1,025
976
–
499
604
738
804
521
505
578
423
86
17
52
121
56
35
368
18,428
18,535
1,577
1,122
1,211
1,033
793
959
97
941
807
977
992
1,033
–
500
600
750
750
500
500
600
470
86
17
52
121
56
35
368
19,752
19,859
–
–
–
–
–
–
–
–
–
–
–
–
1,256
–
–
–
–
–
–
–
–
–
–
–
–
–
–
403
2,092
2,108
1,445
1,098
1,206
–
747
1,029
95
1,039
787
987
1,065
–
–
–
605
733
807
509
–
540
440
98
19
57
133
–
–
217
15,659
15,740
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
98
19
57
133
–
–
620
17,751
17,848
95
19
57
133
–
–
621
17,788
17,885
(1) Assets with a book value of $73 million (2013: $81 million) have been pledged as security, of which $47 million (2013: $30 million) are property, plant and equipment, $24 million
(2013: $47 million) are financial assets and $2 million (2013: $4 million) are inventories. Related to these assets are borrowings of $30 million (2013: $41 million).
(2) Details of assets held under finance leases are provided in note 12.
140
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
24. BORROWINGS continued
Liquidity risk
The Group ensures that there are sufficient committed loan facilities (including refinancing, where necessary) in order to meet short term business
requirements, after taking into account cash flows from operations and its holding of cash and cash equivalents, as well as any Group distribution restrictions
that exist. In addition, certain projects may be financed by means of limited recourse project finance, if appropriate.
The expected undiscounted cash flows of the Group’s net debt related and other financial liabilities, by remaining contractual maturity, based on conditions
existing at the balance sheet date are as follows:
US$ 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
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
Net debt related financial liabilities
Expected
future interest
payments
Derivatives
hedging
net debt
(752)
(670)
(581)
(489)
(320)
(556)
(2,616)
(3,368)
(175)
(101)
(47)
(277)
44
(201)
(582)
(757)
Borrowings
(1,602)
(1,866)
(2,806)
(3,555)
(2,053)
(6,094)
(16,374)
(17,976)
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)
2014
Total
(5,916)
(2,637)
(3,434)
(4,321)
(2,329)
(6,851)
(19,572)
(25,488)
2013
Total
(6,819)
(2,604)
(2,005)
(3,177)
(3,001)
(6,685)
(17,472)
(24,291)
Other
financial
liabilities
(3,387)
–
–
–
–
–
–
(3,387)
Other
financial
liabilities
(4,204)
–
–
–
–
–
–
(4,204)
2014
2013
1,073
525
1,172
597
5,000
8,367
1,318
637
1,449
–
5,847
9,251
(1) Includes undrawn rand facilities equivalent to $0.9 billion (2013: $1.2 billion) in respect of facilities with 364 day maturity which roll automatically on a daily basis, unless notice is served.
In April 2014, the Group amended a $5 billion revolving credit facility, extending the maturity to 2019. The facility was undrawn as at 31 December 2014.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders
and benefits for other stakeholders and, with cognisance of forecast future market conditions and structuring, to maintain an optimal capital structure to
enable the business to operate effectively.
In order to manage the short and long term capital structure, the Group has a number of options including raising and refinancing debt, adjusting returns to
equity shareholders, managing the allocation of capital and divesting of non-core assets to reduce debt.
The Group monitors capital using various financial metrics including the ratio of net debt to total capital (gearing). Net debt is calculated as total borrowings
less cash and cash equivalents (including derivatives which provide an economic hedge of net debt). Total capital is calculated as ‘Net assets’ (as shown in the
Consolidated balance sheet) excluding net debt. Total capital and gearing are as follows:
US$ million
Net assets
Net debt including related derivatives (note 23)
Total capital
Gearing
2014
32,177
12,871
45,048
28.6%
2013
37,364
10,652
48,016
22.2%
Gearing has increased from 22.2% to 28.6% as net debt has increased and total capital has decreased. Net debt increased from $10.7 billion to $12.9 billion at
31 December 2014 as cash inflows from operating activities were offset by outflows primarily relating to capital expenditure and dividends to Anglo American
plc shareholders as well as to non-controlling interests. Total capital decreased from $48.0 billion to $45.0 billion primarily due to the impact of impairments
and the effect of a stronger US dollar on assets denominated in other currencies.
Anglo American plc Annual Report 2014
141
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
24. BORROWINGS continued
Market risk
Market risk is the risk that financial instrument fair values and related cash flows will fluctuate due to changes in market prices. The Group manages interest
rate risks and foreign exchange risks on borrowings and cash with the use of cross currency swaps and interest rate swaps in order to ensure that the majority
of borrowings are floating rate US dollar denominated. The Group does not hedge foreign exchange exposures on rand denominated borrowings in South
Africa. For more information regarding the Group’s financial risk management see note 38.
The table below reflects the exposure of the Group’s net debt to currency and interest rate risk.
US$ 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
6,151
24
134
211
61
29
137
–
6,747
Cash
and cash
equivalents
5,460
22
1,225
716
103
41
135
–
7,702
Floating
rate
borrowings
Fixed
rate
borrowings
(1,291)
–
(703)
(1,303)
–
–
(7)
(15,050)
(18,354)
(3,896)
(9,827)
(266)
–
(423)
(701)
(117)
15,050
(180)
Non-interest
bearing
borrowings
–
–
–
–
–
–
–
–
–
Derivatives
hedging
net debt
(1,087)
–
3
–
–
–
–
–
(1,084)
Impact of
currency
derivatives
(12,336)
9,827
–
1,301
423
701
84
–
–
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
Impact of
currency
derivatives
(510)
–
2
–
–
–
–
–
(508)
(11,257)
8,656
–
1,319
440
747
95
–
–
2014
Total
(12,459)
24
(832)
209
61
29
97
–
(12,871)
2013
Total
(11,726)
22
99
714
103
41
95
–
(10,652)
25. COMMITMENTS
See note 39x for the Group’s accounting policy on leases.
The Group had $1,936 million (2013: $3,391 million) outstanding capital commitments relating to subsidiaries and joint operations which were contracted but
not provided.
In addition, the Group had outstanding commitments under contracts relating to shipping services of $2,124 million (2013: $1,168 million).
The Group’s share of joint ventures’ capital commitments, including its share of commitments made jointly with other investors, is $63 million
(2013: $364 million).
At 31 December the Group had the following commitments under non-cancellable operating leases:
US$ 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 mining equipment.
2014
94
65
115
80
354
2013
104
83
145
145
477
142
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
26. 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
Coal(1)
Copper
Nickel
Niobium(1)
Phosphates(1)
Platinum
De Beers
Corporate and other(1)
(1) Refer to note 3 for changes in reporting segments. Comparatives have been reclassified to align with current year presentation.
The average number of employees by principal location of employment was:
Thousand
South Africa
Other Africa
South America
North America
Australia and Asia
Europe
Payroll costs in respect of the employees included in the tables above were:
US$ million
Wages and salaries
Social security costs
Post employment benefits(1)
Share-based payments (note 28)
Total payroll costs
Reconciliation:
Less: employee costs capitalised
Less: employee costs included within special items
Employee costs included in operating costs
2014
2013
9
12
6
2
1
1
51
10
3
95
2014
72
4
11
2
4
2
95
8
11
6
2
1
1
55
10
4
98
2013
75
4
11
2
4
2
98
2014
4,244
166
404
258
5,072
(367)
(191)
4,514
2013
4,439
160
395
261
5,255
(265)
(156)
4,834
(1)
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 27).
Key management
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. Key management comprises members of the Board and the Group
Management Committee.
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
2014
31
5
3
3
18
60
2013
30
5
11
4
21
71
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 2014
143
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
27. RETIREMENT BENEFITS
See note 39t 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.
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 $244 million (2013: $261 million) and for defined contribution medical plans (net of amounts capitalised) was $81 million (2013: $88 million).
Defined benefit pension plans and post employment medical plans
The Group operates defined benefit pension and medical plans across a number of segments. The most significant plans are in South Africa and the
United Kingdom.
A summary of the movements in the net pension plan assets and retirement benefit obligations on the Consolidated balance sheet is as follows:
US$ million
Net liability recognised at 1 January
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(1)
Retirement benefit obligation – pension plans
Retirement benefit obligation – medical plans
(1)
Included in ‘Other non-current assets’ on the Consolidated balance sheet.
2014
(1,013)
(113)
(15)
132
31
89
(889)
184
(615)
(458)
(889)
2013
(1,233)
(88)
97
151
(10)
70
(1,013)
191
(727)
(477)
(1,013)
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 2014. 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 are exposed to risks such as longevity, investment risk, inflation risk, interest rate risk and foreign exchange risk.
The weighted average duration of the South African plans is 12 years (2013: 12 years), United Kingdom plans is 18 years (2013: 19 years) and plans in other
regions is 14 years (2013: 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 may vary from year to year. Employer contributions made in the year ended
31 December 2014 were $132 million to pension plans and in addition $27 million of benefits were paid in relation to post employment medical plans. The
Group expects to contribute $134 million to its pension plans and $25 million to its post employment medical plans in 2015.
The responsibility for the governance of the funded retirement benefit plans, including investment and funding decisions, lies with the Trustees of each scheme.
South Africa
The pension plans in South Africa are in surplus, with the asset recognised on the Consolidated 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 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 does not significantly impact the post employment medical plan liability.
United Kingdom
The Group operates funded pension plans in the United Kingdom. These plans are closed to new members. The only plan still open to future benefit accrual
will close to accrual on 30 September 2015.
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 hedging and inflation hedging to manage 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.
144
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
27. 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
post employment benefit obligation 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 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 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
8.3%
6.2%
6.2%
8.3%
6.2%
7.9%
3.6%
3.1%
3.2%
3.9%
3.3%
8.0%
2014
Other
6.4%
3.5%
3.2%
7.0%
5.2%
7.7%
South
Africa
United
Kingdom
8.8%
6.4%
6.4%
8.8%
6.4%
8.2%
4.4%
3.4%
3.3%
4.3%
3.4%
8.1%
2013
Other
7.3%
3.5%
3.4%
8.1%
5.7%
8.1%
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 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. The mortality tables used imply that a male or female aged 60 at the balance sheet date has the following future life
expectancy (shown as weighted averages):
Years
South Africa
United Kingdom
Other
2014
19.9
28.7
22.8
Male
2013
19.8
28.7
22.7
2014
24.6
30.2
27.1
Female
2013
24.6
30.2
27.0
The table below summarises the expected life expectancy from the age of 60 for a male or female age 45 at the balance sheet date. When viewed together with
the respective life expectancy at age 60 in the table above this indicates the anticipated improvement in life expectancy (shown as weighted averages):
Years
South Africa
United Kingdom
Other
2014
19.9
29.7
23.3
Male
2013
19.8
29.7
23.2
2014
24.6
31.9
27.5
Female
2013
24.6
32.0
27.3
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 – pension plans – 0.5% increase
Inflation rate – medical plans – 0.5% increase
Life expectancy – increase by 1 year
Income statement
The amounts recognised in the Consolidated income statement are as follows:
South
Africa
United
Kingdom
(79)
(54)
(23)
(65)
(433)
(222)
–
(130)
Other
(21)
(12)
(4)
(5)
US$ million
Amount charged within operating costs
Net charge to net finance costs
Total charge to the income statement
Post
employment
medical
plans
4
37
41
Pension
plans
54
18
72
2014
Total
58
55
113
Post
employment
medical
plans
4
36
40
Pension
plans
23
25
48
2014
Total
(533)
(288)
(27)
(200)
2013
Total
27
61
88
Anglo American plc Annual Report 2014
145
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
27. 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 (losses)/gains on plan liabilities(1)
Movement in surplus restriction
Remeasurement of net defined benefit obligation
Post
employment
medical
plans
(1)
(8)
–
(9)
Pension
plans
542
(527)
(21)
(6)
2014
Total
541
(535)
(21)
(15)
Post
employment
medical
plans
–
17
–
17
Pension
plans
146
8
(74)
80
2013
Total
146
25
(74)
97
(1) Comprises (losses)/gains from changes in financial and demographic assumptions as well as experience on plan liabilities.
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(1)
Active members
Deferred members
Pensioners
Present value of funded obligations
Present value of unfunded obligations(2)
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
454
275
687
69
–
1,485
(9)
(24)
(1,136)
(1,169)
–
316
(182)
134
134
–
134
United
Kingdom
885
1,368
1,513
48
203
4,017
(307)
(1,672)
(2,372)
(4,351)
–
(334)
–
2014
Total
1,350
1,709
2,237
118
213
5,627
(351)
(1,705)
(3,601)
(5,657)
(219)
(249)
(182)
Other
11
66
37
1
10
125
(35)
(9)
(93)
(137)
(219)
(231)
–
(334)
(231)
(431)
50
(384)
(334)
–
(231)
(231)
184
(615)
(431)
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)
(1) 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 99% (2013: 97%) of the benefits that
had accrued to members after allowing for expected increases in future earnings and pensions.
Includes $214 million (2013: $200 million) relating to active members.
(2)
All investments have been fair valued based on quoted market prices.
Movement analysis
The changes in the fair value of plan assets are as follows:
US$ million
At 1 January
Effects of settlements
Interest income
Return on plan assets, excluding interest income
Contributions paid by employer
Benefits paid(2)
Other
Currency movements
At 31 December
Post
employment
medical
plans
17
–
1
(1)
–
(1)
–
(2)
14
Pension
plans
5,315
(4)
(1)
284
(1)
542
132
(236)
6
(412)
5,627
2014
Total
5,332
(4)
285
541
132
(237)
6
(414)
5,641
Post
employment
medical
plans
21
–
1
–
–
(1)
–
(4)
17
Pension
plans
5,327
(3)
269(1)
146(1)
151
(253)
(24)
(3)
(298)
5,315
2013
Total
5,348
(3)
270
146
151
(254)
(24)
(302)
5,332
(1) The actual return on assets in respect of pension plans was $826 million (2013: $415 million).
(2)
(3)
Includes $10 million (2013: $11 million) of benefits paid to defined contribution plans.
Includes $26 million refund of surplus plan assets as agreed with the pension plan Trustees. These funds relate to plans in South Africa and will be used to make future contributions to post
employment medical plans. The refund is included within ‘Other non-current assets’ on the Consolidated balance sheet.
146
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
27. RETIREMENT BENEFITS continued
The changes in the present value of defined benefit obligations are as follows:
US$ million
At 1 January
Current service costs
Effects of curtailments/settlements
Interest cost
Actuarial (losses)/gains(1)
Benefits paid
Other
Currency movements
At 31 December
Post
employment
medical
plans
(494)
(4)
–
(38)
(8)
27
–
45
(472)
Pension
plans
(5,674)
(25)
(17)
(302)
(527)
241
(6)
434
(5,876)
2014
Total
(6,168)
(29)
(17)
(340)
(535)
268
(6)
479
(6,348)
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)
(1)
Includes losses of $557 million (2013: gains of $44 million) relating to changes in financial assumptions.
28. SHARE-BASED PAYMENTS
See note 39u for the Group’s accounting policy on share-based payments.
During the year ended 31 December 2014 the Group had share-based payment arrangements with employees relating to shares of the Company, the details
of which are described in the Remuneration report. All of these Company schemes are equity settled, either by award of ordinary shares (BSP, LTIP and SIP)
or award of options to acquire ordinary shares (ESOS, DOP and SAYE). The ESOS is now closed to new participants, having been replaced with the BSP.
No options have been granted under the DOP.
The total share-based payment charge relating to Anglo American plc shares for the year is split as follows:
US$ million
BSP
LTIP
Other schemes
Share-based payment charge relating to Anglo American plc shares(1)
2014
94
60
3
157
2013
82
52
10
144
(1)
In addition, there are equity settled share-based payment charges of $58 million (2013: $65 million) relating to Kumba Iron Ore Limited shares and $35 million (2013: $52 million) relating
to Anglo American Platinum Limited shares. Certain business units also operate cash settled employee share-based payment schemes. These schemes had a charge of $8 million
(2013: nil).
Schemes settled by award of ordinary shares
The fair value of ordinary shares awarded under the BSP, LTIP and LTIP–ROCE, being the more material share schemes, was calculated using a Black Scholes
model. The fair value of shares awarded under the LTIP–TSR scheme was calculated using a Monte Carlo model. The assumptions used in these calculations
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(6)
Risk free interest rate(7)
Expected departures
Dividend yield
Fair value at date of grant (weighted
average) (£)
BSP
07/03/14
5,128,574
14.63
3
(2)
LTIP
07/03/14
1,934,900
14.63
3
(2)
LTIP–ROCE
07/03/14
613,682
14.63
3
(3)
35%
1.1%
5% pa
2.1%
35%
1.1%
5% pa
2.1%
35%
1.1%
5% pa
2.1%
2014
LTIP–TSR
07/03/14
613,682
14.63
3
(4)
35%
1.1%
5% pa
2.1%
BSP
01/03/13
4,830,179
19.00
3
(5)
LTIP
01/03/13
1,285,634
19.00
3
(2)
LTIP–AOSC
01/03/13
470,561
19.00
3
(3)
35%
0.3%
5% pa
1.9%
35%
0.3%
5% pa
1.9%
35%
0.3%
5% pa
1.9%
2013
LTIP–TSR
01/03/13
470,561
19.00
3
(4)
35%
0.3%
5% pa
1.9%
14.63
14.63
14.63
7.87
18.55
19.00
19.00
9.31
(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.
(3) Variable vesting dependent on three years of continuous employment and Group ROCE (2013: AOSC) target being achieved.
(4) Variable vesting dependent on three years of continuous employment and market based performance conditions being achieved.
(5) Three years of continuous employment with enhancement shares having variable vesting based on non-market based performance conditions.
(6) Based on historic volatility over the last five years.
(7) 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 2014
147
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
28. 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
2014
9,656,833
10,871,470
4,830,179
5,128,574
(2,144,872) (2,234,189)
(1,751,162) (1,381,353)
10,871,470
12,104,010
(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)
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 or expired in year
Outstanding at 31 December
2014
4,762,211
3,162,264
(986,324)
(806,153)
6,131,998
2013
3,985,771
2,226,755
(901,610)
(548,705)
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. 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(3)
Dividend yield
Expected option life (years)(4)
Risk free interest rate (weighted average)(5)
Expected departures
Fair value per option granted (weighted average) (£)
2014 SAYE
01/05/14
133,625
12.52
15.64
3.5-5.5
3-5
35%
2.1%
3.5-5.5
1.7%
5% pa
5.15
2013 SAYE
19/04/13
87,224
13.84
15.97
3.5-5.5
3-5
35%
1.9%
3.5-5.5
0.5%
5% pa
4.53
(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.
(3) Based on historic volatility over the last five years.
(4) Average expected period to exercise.
(5) 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 2014 and the prior year
is shown below. All options outstanding at 31 December 2014 with an exercise date on or prior to 31 December 2014 are deemed exercisable. Options were
exercised regularly during the year and the weighted average share price for the year ended 31 December 2014 was £14.47 (2013: £15.79).
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
2014
Weighted
average
exercise
price £
14.36
12.52
10.08
17.14
13.22
Number
of options
208,716
133,625
(61,319)
(85,969)
195,053
Number
of options
1,048,504
87,224
(366,319)
(560,693)
208,716
2013
Weighted
average
exercise
price £
16.26
13.84
9.88
20.76
14.36
(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 2014 have a weighted average remaining contractual life of 3.5 years (2013: 1.9 years) and an exercise price range
of £9.56 – £25.47 (2013: £9.56 – £25.47).
148
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
GROUP STRUCTURE AND TRANSACTIONS
28. 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
2014
Weighted
average
exercise
price £
13.39
13.42
13.25
–
Number
of options
845,683
(687,383)
(158,300)
–
Number
of options
1,634,797
(760,114)
(29,000)
845,683
2013
Weighted
average
exercise
price £
11.64
9.72
11.07
13.39
(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.
29. BUSINESS COMBINATIONS AND FORMATION OF JOINT VENTURES
See note 39d for the Group’s accounting policy on business combinations and goodwill arising thereon.
2014
There were no business combinations in the year ended 31 December 2014.
2013
Lafarge Tarmac transaction
On 7 January 2013 the Group announced the completion of a 50:50 joint venture with Lafarge SA (Lafarge), combining their cement, aggregates, ready-mix
concrete, asphalt and asphalt surfacing, maintenance services and waste services businesses in the United Kingdom.
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 certain of Tarmac Quarry Materials’ operations that were sold pursuant to the Competition
Commission’s conditions precedent to the formation of the joint venture.
This resulted in the derecognition of all assets and liabilities relating to the Tarmac Quarry Materials’ operations and recognition of an investment of
$1,658 million in the Lafarge Tarmac joint venture (included in ‘Investments in associates and joint ventures’ on the Consolidated balance sheet). The Group
recognised a net loss on disposal of $55 million in relation to the transaction.
30. DISPOSALS OF SUBSIDIARIES
2014
There were no significant disposals in the year ended 31 December 2014.
Disposal proceeds of $44 million received in 2014 primarily relate to deferred consideration from the sale of certain Tarmac Quarry Materials’ operations prior
to the formation of the Lafarge Tarmac joint venture in 2013 (see note 29).
2013
Disposals in 2013 related to the disposal of Amapá (Corporate and other segment).
31. NON-CONTROLLING INTERESTS
Non-controlling interests that are material to the Group relate to the following subsidiaries:
• Kumba Iron Ore Limited (Kumba Iron Ore), which is a company incorporated in South Africa and listed on the JSE. Its principal mining operations are the
Sishen, Kolomela and Thabazimbi iron ore mines which are located in South Africa. Non-controlling interests hold an effective 46.3% interest in the
operations of Kumba Iron Ore, comprising the 30.3% interest held by other shareholders in Kumba Iron Ore and the 23% of Kumba Iron Ore’s principal
operating subsidiary, Sishen Iron Ore Company (Proprietary) Limited, that is held by shareholders outside the Group.
• Anglo American Sur SA (Anglo American Sur), which is a company incorporated in Chile. Its principal operations are the Los Bronces and El Soldado copper
mines and the Chagres smelting plant, which are located in Chile. Non-controlling interests hold a 49.9% interest in Anglo American Sur.
US$ million
Profit attributable to non-controlling interests
Equity attributable to non-controlling interests
Dividends paid to non-controlling interests
Kumba
Iron Ore
614
1,060
(674)
Anglo
American Sur
218
2,212
(116)
Other(1)
157
2,488
(33)
2014
Total
989
5,760
(823)
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)
(1) Other consists of individually immaterial non-controlling interests.
Anglo American plc Annual Report 2014
149
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
31. NON-CONTROLLING INTERESTS continued
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
2014
2013
Kumba
Iron Ore
3,405
1,161
(841)
(1,271)
2,454
Anglo
American Sur
4,746
958
(616)
(653)
4,435
4,388
1,339
1,124
1,657
2,792
441
424
1,136
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
871
1,306
There were no significant changes in ownership interests in subsidiaries in 2014 or 2013.
32. 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
2014
2013
50,000
–
50,000
–
1,405,465,332
–
1,405,465,332
772
–
772
1,405,459,753
5,579
1,405,465,332
772
–
772
During 2014, no ordinary shares were allotted to non-executive directors (2013: 5,579 ordinary shares of 5486/91 US cents were allotted to certain non-executive
directors by subscription of their post-tax directors’ fees).
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 2014 was 1,396,671,247 and $767 million
(2013: 1,394,149,340 and $766 million).
At general meetings, every member who is present in person has one vote on a show of hands and, on a poll, every member who is present in person or by
proxy has one vote for every ordinary share held.
In the event of winding up, the holders of the cumulative preference shares will be entitled to the repayment of a sum equal to the nominal capital paid up, or
credited as paid up, on the cumulative preference shares held by them and any accrued dividend, whether such dividend has been earned or declared or not,
calculated up to the date of the winding up.
Own shares
Own shares
Treasury shares
Own shares held by subsidiaries and employee benefit trusts
Total
The movement in treasury shares during the year is as follows:
Treasury shares
At 1 January
Transferred to employees in settlement of share awards
At 31 December
Number of shares
US$ million
Number of shares
US$ million
2014
2013
8,794,085
116,665,530
125,459,615
481
5,878
6,359
11,315,992
115,691,282
127,007,274
2014
599
5,864
6,463
2013
Number of shares
US$ million
Number of shares
US$ million
11,315,992
(2,521,907)
8,794,085
599
(118)
481
14,505,120
(3,189,128)
11,315,992
801
(202)
599
150
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
32. CALLED-UP SHARE CAPITAL AND CONSOLIDATED EQUITY ANALYSIS continued
Tenon
Tenon Investment Holdings Proprietary Limited (Tenon), a wholly owned subsidiary of Anglo American South Africa Limited (AASA), has entered into
agreements with Epoch Investment Holdings Proprietary Limited (Epoch), Epoch Two Investment Holdings Proprietary Limited (Epoch Two) and Tarl
Investment Holdings Proprietary 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 $4.69 per share to Epoch, $7.29 per share to Epoch Two and $6.05 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, as these are own shares of the Company, 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 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 2014 the Investment Companies together held 112,300,129 (2013: 112,300,129) Anglo American plc shares, which represented 8.0%
(2013: 8.1%) of the ordinary shares in issue (excluding treasury shares) with a market value of $2,100 million (2013: $2,451 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.
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. The employee benefit trust has waived the right to receive dividends on these shares. The costs of operating the trust are borne by the Group but are
not material.
The market value of the 1 share (2013: 985 shares) held by the trust at 31 December 2014 was $19 (2013: $21,000).
Consolidated equity analysis
Fair value and other reserves comprise:
US$ million
At 1 January 2013
Total comprehensive expense
Equity settled share-based payment schemes
Other
At 1 January 2014
Total comprehensive expense
Equity settled share-based payment schemes
At 31 December 2014
Share-based
payment
reserve
549
–
(1)
–
548
–
(8)
540
Available
for sale
reserve
694
(123)
–
–
571
(115)
–
456
Cash
flow hedge
reserve
15
(6)
–
–
9
(7)
–
2
Other
reserves(1)
157
–
–
(17)
140
–
–
140
Total
fair value
and other
reserves
1,415
(129)
(1)
(17)
1,268
(122)
(8)
1,138
(1) Other reserves comprise a capital redemption reserve of $115 million (2013: $115 million), a revaluation reserve of $17 million (2013: $17 million) and a legal reserve of $8 million
(2013: $8 million).
Anglo American plc Annual Report 2014
151
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
33. AUDITOR’S REMUNERATION
US$ 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
2014
Paid/payable
to auditor (if
not Deloitte)
Paid/payable to Deloitte
2013
Paid/payable
to auditor (if
not Deloitte)
United
Kingdom
Overseas
Total
Overseas
United
Kingdom
Overseas
Total
Overseas
1.6
2.5
4.1
–
1.4
3.1
4.5
–
0.7
2.3
0.7
–
0.2
0.4
0.3
1.6
6.4
8.9
1.7
0.3
1.0
0.4
0.3
3.7
7.1
11.2
2.4
0.3
1.2
0.8
0.6
5.3
0.1
0.1
–
–
–
–
–
–
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
–
–
–
–
–
–
(1)
(2)
Includes $1.4 million (2013: $1.5 million) for the interim review.
Includes $0.1 million (2013: $0.1 million) for the audit of Group pension plans.
34. CONTINGENT LIABILITIES
The Group is subject to various claims which arise in the ordinary course of business. Additionally, the Group has provided indemnities against certain liabilities
as part of agreements for the sale or other disposal of business operations. Having taken appropriate legal advice, the Group believes that a material liability
arising from the indemnities provided is remote.
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 2014 or 31 December 2013.
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 a lawsuit filed in the High Court in London on behalf of approximately 2,700 named former mineworkers or their dependants.
In South Africa: (i) AASA is a defendant in approximately 4,400 separate lawsuits filed in the North Gauteng High Court (Pretoria) which have been referred to
arbitration; and (ii) AASA is named as one of 32 defendants in a consolidated class certification application filed in South Africa.
AASA successfully contested the jurisdiction of the English courts to hear certain claims filed against it in that jurisdiction. AASA is defending the separate
lawsuits filed in South Africa and will oppose the application for consolidated class certification in South Africa.
AASA, AngloGold Ashanti, Gold Fields, Harmony Gold and Sibanye Gold announced in November 2014 that they have formed an industry working group to
address issues relating to compensation and medical care for occupational lung disease (OLD) in the gold mining industry in South Africa. The companies
have begun to engage all stakeholders on these matters, including government, organised labour, other mining companies and legal representatives of
claimants who have filed legal suits against the companies. These legal proceedings are being defended. The industry working group is seeking a
comprehensive solution to address legacy compensation issues and future legal frameworks that is fair to past and current employees and enables companies
to continue to be competitive over the long term.
Kumba Iron Ore
21.4% undivided share of the Sishen mine mineral rights
Sishen Iron Ore Company (Pty) Limited (SIOC) has not yet been awarded the 21.4% Sishen mining right, which it applied for early in 2014 following the
Constitutional Court judgment on the matter in December 2013. The Constitutional Court ruled that SIOC held a 78.6% undivided share of the Sishen mining
right and that, based on the provisions of the Minerals and Petroleum Resources Development Act (MPRDA), only SIOC can apply for, and be granted, the
residual 21.4% share of the mining right at the Sishen mine. 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. Kumba Iron Ore is actively continuing its discussions with the
Department of Mineral Resources (DMR) in order to finalise the grant of the residual right.
Kumba Iron Ore tax
At 31 December 2014, Kumba Iron Ore has certain unresolved tax matters that are currently under review with the South African Revenue Service (SARS).
Kumba Iron Ore management has consulted with external tax and legal advisers, who support the positions taken. Nonetheless, Kumba Iron Ore management
is actively discussing the issue with SARS with a view to seeking resolution and believes that the accounting for these matters is appropriate in the results for
the year ended 31 December 2014.
152
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
35. RELATED PARTY TRANSACTIONS
The Group has a related party relationship with its subsidiaries, joint operations, associates and joint ventures (see note 37). 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, 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 $3,493 million (2013: $3,064 million).
Loans receivable(1)
US$ million
Associates
Joint ventures
(1) These loans are included in ‘Financial asset investments’.
2014
98
329
427
2013
164
265
429
At 31 December 2014 the directors of the Company and their immediate relatives controlled 0.1% (2013: 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 26.
Information relating to pension fund arrangements is disclosed in note 27.
Refinancing of Atlatsa
In January 2014, Platinum completed the second and final phase of the refinancing transaction for Atlatsa Resources Corporation (Atlatsa). Platinum sold
its existing 27.0% indirect equity interest in Atlatsa to the controlling Black Economic Empowerment (BEE) shareholders and subscribed for equity shares
in Atlatsa representing a 22.8% direct interest. In return the level of debt outstanding from Atlatsa was reduced. These transactions resulted in an increase
in ‘Investments in associates’ of $69 million, a net decrease in ‘Financial asset investments’ of $47 million and a net gain of $22 million recorded within
‘Non-operating special items’.
The first phase of the refinancing transaction completed in December 2013. Platinum acquired certain properties from Bokoni Platinum Holdings Proprietary
Limited, which is an associate of the Group and is controlled by Atlatsa. In return the level of debt outstanding from Atlatsa was reduced. A charge of $37 million
was recorded within ‘Non-operating special items’ for the year ended 31 December 2013 in relation to this transaction.
36. EVENTS OCCURRING AFTER END OF YEAR
With the exception of the proposed final dividend for 2014 (see note 10), there have been no reportable events since 31 December 2014.
Anglo American plc Annual Report 2014
153
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
37. 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 32. 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.
Country of incorporation(1)
Business
Percentage of equity owned(2)
2014
2013
Brazil
Brazil
South Africa
South Africa
Australia
South Africa
Canada
Chile
Chile
Peru
Brazil
Brazil
Brazil
Brazil
Iron ore project
Iron ore
Iron ore
Iron ore
Coal
Coal
Coal
Copper
Copper
Copper project
Nickel project
Nickel
100%
100%
69.7%
73.9%
100%
100%
100%
50.1%
100%
81.9%
100%
100%
69.7%
73.9%
100%
100%
100%
50.1%
100%
81.9%
100%
100%
100%
100%
Niobium
100%
100%
Phosphates
100%
100%
South Africa
Platinum
78%
78%
South Africa
Luxembourg
Diamonds
Diamonds
74%
85%
74%
85%
Country of incorporation(1)
Australia
Australia
Australia
Australia
Australia
Chile
Botswana
Namibia
Business
Coal
Coal
Coal
Coal
Coal
Copper
Diamonds
Diamonds
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
Percentage of equity owned(8)
2014
70%
51%
88.2%
70%
88%
44%
50%
50%
2013
70%
51%
88.2%
70%
88%
44%
50%
50%
Percentage of equity owned(8)
2014
50%
50%
49%
50%
50%
2013
49%
50%
49%
50%
50%
Subsidiary undertakings
Iron Ore and Manganese
Anglo American Minério de Ferro Brasil SA
Anglo Ferrous Brazil SA
Kumba Iron Ore Limited
Sishen Iron Ore Company (Proprietary) Limited(3)
Coal
Anglo American Metallurgical Coal Holdings Limited
Anglo Coal(4)
Peace River Coal Inc.
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
Anglo American Nióbio Brasil Limitada
Phosphates
Anglo American Fosfatos Brasil Limitada
Platinum
Anglo American Platinum Limited(6)
De Beers
De Beers Consolidated Mines Proprietary Limited(7)
De Beers Société Anonyme
Proportionately consolidated joint operations
Capcoal(9)
Dawson(9)
Drayton(9)
Foxleigh(9)
Moranbah North(9)
Compañía Minera Doña Inés de Collahuasi SCM
Debswana Diamond Company (Proprietary) Limited(10)
Namdeb Holdings (Proprietary) Limited(11)
Joint ventures
LLX Minas-Rio Logística Comercial Exportadora SA(12)
Lafarge Tarmac Holdings Limited
AI Futtain Tarmac Quarry Products Limited
Tarmac Oman Limited
Midmac Tarmac Qatar LLC
See page 155 for footnotes.
154
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
37. GROUP COMPANIES continued
Associates
Samancor Holdings Proprietary Limited(13)(14)
Groote Eylandt Mining Company Pty Limited (GEMCO)(13)
Tasmanian Electro Metallurgical Company Pty Limited (TEMCO)(13)
Carbones del Cerrejón LLC
Cerrejón Zona Norte SA
Jellinbah Group Pty Limited(15)
Country of incorporation(1)
South Africa
Australia
Australia
Anguilla
Colombia
Australia
Business
Manganese
Manganese
Manganese
Coal
Coal
Coal
Percentage of equity owned(8)
2014
40%
40%
40%
33.3%
33.3%
33.3%
2013
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 (Proprietary) Limited (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 79.8% (2013: 79.9%), which includes shares issued as part of a community empowerment deal.
(7) The 74% interest in De Beers Consolidated Mines Proprietary Limited (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, Ponahalo, which holds the remaining 26%. The Group’s effective interest in DBCM is 85%.
(8) All equity interests shown are ordinary shares.
(9) The wholly owned subsidiary Anglo American Metallurgical Coal Holdings Limited holds the proportionately consolidated joint operations. These operations are unincorporated and
jointly controlled.
(10) The 50% interest in Debswana Diamond Company (Proprietary) Limited 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 Diamond Company (Proprietary) Limited is 16.3%.
(11) The 50% interest in Namdeb Holdings (Proprietary) Limited is held indirectly through De Beers. The Group’s effective interest in Namdeb Holdings (Proprietary) Limited is 42.5%.
(12) Operating as Ferroport.
(13) These entities have a 30 June year end.
(14) Samancor Holdings Proprietary Limited is the parent company of Hotazel Manganese Mines (HMM) and the Metalloys Smelter. BEE shareholders hold a 27% interest in HMM and therefore the
Group’s effective ownership interest in HMM is 29%.
(15) The Group’s effective interest in the Jellinbah operation is 23.3%. The entity has a 30 June year end.
38. FINANCIAL RISK MANAGEMENT
The Board approves and monitors the risk management processes, including documented treasury policies, counterparty limits and 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 as follows (subcategorised into credit risk, commodity price risk, foreign exchange risk and interest rate risk). See note 24 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 the Group by failing to pay for its obligation. The Group’s principal financial
assets 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(1)
Financial asset investments(2)
Derivative financial assets
(1) Trade and other receivables exclude prepayments and tax receivables.
(2) Financial asset investments exclude available for sale investments.
2014
6,747
2,465
761
1,133
11,106
2013
7,702
3,874
759
674
13,009
The Group limits credit risk on liquid funds and derivative financial instruments through diversification of exposures with a range of financial institutions
approved by the Board. Counterparty limits are set for each financial institution with reference to credit ratings assigned by Standard & Poor’s, Moody’s and
Fitch Ratings, shareholder equity (in case of relationship banks) and fund size (in case of asset managers).
Given the diverse nature of the Group’s operations (both in relation to commodity markets and geographically), and the use of payment security instruments
(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.
Anglo American plc Annual Report 2014
155
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
38. FINANCIAL RISK MANAGEMENT continued
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 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)
Derivatives
2014
Commodity price linked
Commodity price linked
Subject to
price
movements(1)
498
3
501
Not
linked to
commodity
price
Subject to
price
Total
movements(1)
(12,590)
(1,194)
(13,784)
(11,443)
(1,191)
(12,634)
1,261
(3)
1,258
Fixed
price(2)
649
–
649
Not
linked to
commodity
price
(10,946)
(834)
(11,780)
Fixed
price(2)
678
–
678
2013
Total
(9,007)
(837)
(9,844)
(1)
(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.
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, South African rand and Australian dollar 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 the Group’s underlying earnings. The Group’s policy is generally
not to hedge such exposures given the correlation, over the longer term, with commodity prices and 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 24. Net
other financial assets (excluding net debt related balances) are $237 million. This includes net assets of $510 million which are denominated in US dollar,
$158 million in Brazilian real and $42 million in South African rand, partially offset by net liabilities of $331 million which are denominated in Chilean peso and
$223 million in Australian dollar.
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 is principally
exposed to US and South African interest rates.
The Group’s policy is to borrow funds at floating rates of interest given the link with economic output and therefore the correlation, over the longer term, with
commodity prices. The Group uses interest rate swap contracts to manage its exposure to interest rate movements on its 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 24. Of net other
financial assets (excluding net debt related balances) of $237 million, the majority are non-interest bearing.
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FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
38. FINANCIAL RISK MANAGEMENT continued
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 foreign currencies, commodity
prices and interest rates.
The sensitivity analysis has been prepared on the basis that the components of net debt, the ratio of fixed to floating interest rates of the debt and derivatives
portfolio and the proportion of financial instruments in foreign currencies are all constant and on the basis of the hedge designations in place at 31 December.
In addition, the commodity price impact for provisionally priced contracts is based on the 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
• 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
• 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.
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
Interest rate sensitivity
50bps increase in LIBOR(3)
50bps decrease in LIBOR(3)
Income
61
(61)
(154)
154
30
(30)
36
(40)
103
(103)
(21)
21
(4)
4
2014
Equity
61
(61)
(154)
154
30
(30)
36
(40)
103
(103)
(21)
21
(4)
4
Income
16
(16)
(167)
155
37
(37)
30
(32)
109
(109)
(15)
15
(7)
7
2013
Equity
16
(16)
(167)
155
37
(37)
30
(32)
109
(109)
(15)
15
(7)
7
(1) + represents strengthening of US dollar against the respective currency.
(2)
Includes sensitivities for derivatives related to capital expenditure.
(3) Without the impact of capitalised interest, the Group’s sensitivity to a 50bps increase and decrease in LIBOR would be $49 million (2013: $44 million) loss and gain respectively.
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.
Anglo American plc Annual Report 2014
157
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39. 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 212.
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.
39a. 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 and is 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.
39b. 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.
39c. 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.
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FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39. ACCOUNTING POLICIES continued
39d. 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.
39e. 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.
39f. 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.
Impairment of goodwill is not subsequently reversed.
39g. 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 reach commercial
production, at which point they are transferred to the appropriate asset class.
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
Reserve 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.
39h. 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.
Anglo American plc Annual Report 2014
159
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39. ACCOUNTING POLICIES continued
39i. 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 (VIU). In assessing VIU, 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.
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.
39j. 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.
39k. 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 arrangement’s 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.
160
Anglo American plc Annual Report 2014
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.
39l. 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 classified as
held-to-maturity or as loans and receivables are measured at amortised cost,
less any impairment losses. Other investments 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.
39m. 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 a 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.
39n. 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.
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39. ACCOUNTING POLICIES continued
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.
39o. 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.
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.
39p. 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.
39q. 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.
• Work in progress and 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.
39r. 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.
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.
39s. 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. On classification as held for sale the
assets are no longer depreciated. Comparative amounts are not adjusted.
Anglo American plc Annual Report 2014
161
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39w. 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.
39x. 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.
39. ACCOUNTING POLICIES continued
39t. 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.
39u. Share-based payments
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.
39v. 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 the cost, representing the fair value of the BEE credentials obtained by
the subsidiary, is recorded in the income statement.
162
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
FINANCIAL STATEMENTS OF THE PARENT COMPANY
Balance sheet of the Company, Anglo American plc, as at 31 December 2014
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
2014
2013
1
15,071
13,278
13,908
–
3
13,911
(309)
(1)
(310)
13,601
28,672
28,672
772
4,358
115
1,955
–
21,472
28,672
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
2
2
2
2
2
2
The financial statements of Anglo American plc, registered number 03564138, were approved by the Board of directors on 12 February 2015 and signed on its
behalf by:
Mark Cutifani
Chief Executive
René Médori
Finance Director
Anglo American plc Annual Report 2014
163
Financial statements
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
At 31 December
Provisions for impairment at 1 January and 31 December
Net book value
(1) This amount is net of $6 million (2013: $30 million) of intra-group recharges.
Investment in subsidiaries
2014
2013
13,295
142
1,651
15,088
(17)
15,071
12,378
110
807
13,295
(17)
13,278
During 2014 Anglo American plc (the Company) increased its investment in Anglo American Services (UK) Limited by $1,651 million in return for 10,000
additional shares.
2) Reconciliation of movements in equity shareholders’ funds
US$ million
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 1 January 2014
Profit for the financial year
Dividends payable to Company shareholders(3)
Net purchase of treasury shares under employee share schemes
Capital contribution to Group undertakings
Transfer between share-based payment reserve and profit and
loss account
Balance at 31 December 2014
Called-up
share capital
772
–
–
–
–
–
772
–
–
–
–
–
772
Share
premium
account
4,357
–
–
–
–
1
4,358
–
–
–
–
–
4,358
Capital
redemption
reserve
115
–
–
–
–
–
115
–
–
–
–
Other
reserves(1)
1,955
–
–
–
–
–
1,955
–
–
–
–
Share-based
payment
reserve
1
–
–
–
–
–
1
–
–
–
–
Profit
and loss
account(2)
19,704
700
(618)
15
140
–
19,941
2,019
(620)
(17)
148
Total
26,904
700
(618)
15
140
1
27,142
2,019
(620)
(17)
148
–
115
–
1,955
(1)
–
1
21,472
–
28,672
(1) At 31 December 2014 other reserves of $1,955 million (2013: $1,955 million) were not distributable under the Companies Act 2006.
(2) At 31 December 2014 $2,685 million (2013: $2,685 million) of the Company profit and loss account of $21,472 million (2013: $19,941 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 2014 of 53 US cents per share (see note 10 of the Consolidated financial statements).
The audit fee in respect of the Company was $7,807 (2013: $8,133). 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 33.
164
Anglo American plc Annual Report 2014
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 $2,019 million (2013: $700 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 28 to the Consolidated financial statements of the Group for the year ended 31 December 2014.
New accounting standards, amendments and interpretations not yet adopted
Anglo American plc intends to apply FRS 101 in its separate financial statements for the financial year ended 31 December 2015. Any objections should be
notified to the Company Secretary by 31 May 2015.
Anglo American plc Annual Report 2014
165
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
SUMMARY BY BUSINESS OPERATION
Marketing activities are allocated to the underlying operation to which they relate.
Revenue(1)
Underlying EBITDA(2)
Underlying EBIT(3)
Underlying earnings
US$ million
Iron Ore and Manganese
Kumba Iron Ore
Iron Ore Brazil
Samancor
Projects and corporate
Coal(5)
Australia and Canada
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(5)
Catalão
Projects and corporate
Phosphates(5)
Copebrás
Projects and corporate
Platinum
Operations
Projects and corporate
De Beers
Operations
Projects and corporate
Corporate and other(5)
Other Mining and Industrial
Exploration
Corporate activities and unallocated costs
2014
5,176
4,388
–
788
–
5,808
2,970
2,083
755
–
4,827
2,792
724
1,311
–
142
142
–
–
–
180
180
–
486
486
–
5,396
5,396
–
7,114
7,114
–
1,859
1,854
–
5
30,988
2013
6,517
5,643
–
874
–
6,400
3,396
2,187
817
–
5,392
3,300
778
1,314
–
136
136
–
–
–
182
182
–
544
544
–
5,688
5,688
–
6,404
6,404
–
1,800
1,795
–
5
33,063
2014
2,286
2,162
(29)
251
(98)
1,207
543
463
255
(54)
1,902
1,185
126
707
(116)
28
43
22
(25)
(12)
73
75
(2)
79
88
(9)
527
585
(58)
1,818
1,862
(44)
(88)
162
(180)
(70)
7,832
2013
3,390
3,266
(27)
258
(107)
1,347
672
479
299
(103)
2,402
1,642
191
718
(149)
(37)
23
(5)
(38)
(17)
87
94
(7)
89
100
(11)
1,048
1,121
(73)
1,451
1,516
(65)
(257)
81
(205)
(133)
9,520
2014
1,957
1,911
(34)
178
(98)
458
(1)
350
163
(54)
1,193
762
52
495
(116)
21
37
22
(26)
(12)
67
69
(2)
57
66
(9)
32
90
(58)
1,363
1,407
(44)
(215)
62
(181)
(96)
4,933
2013
3,119
3,047
(31)
210
(107)
587
106
356
228
(103)
1,739
1,220
135
533
(149)
(44)
17
(5)
(39)
(17)
82
89
(7)
68
79
(11)
464
537
(73)
1,003
1,068
(65)
(398)
(13)
(207)
(178)
6,620
2014
717
747(4)
(32)
78
(76)(4)
2013
1,125
1,171(4)
(51)
92
(87)(4)
296
(30)
271
105
(50)
493
301
69
207
(84)
6
23
22
(25)
(14)
30
31
(1)
35
39
(4)
25
80
(55)
923
959
(36)
(308)
44
(163)
(189)
2,217
457
111
283
151
(88)
803
464
85
386
(132)
(54)
5
(7)
(38)
(14)
42
48
(6)
50
57
(7)
287
356
(69)
532
591
(59)
(569)
(2)
(190)
(377)
2,673
(1) Revenue includes the Group’s attributable share of associates’ and joint ventures’ revenue. Revenue for copper is shown after deduction of treatment and refining charges (TC/RCs).
(2) Underlying EBITDA is underlying EBIT before depreciation and amortisation in subsidiaries and joint operations, and includes the Group’s attributable share of associates’ and joint ventures’
underlying EBITDA.
(3) Underlying EBIT is operating profit before special items and remeasurements, and includes the Group’s attributable share of associates’ and joint ventures’ underlying EBIT.
(4) Of the projects and corporate expense, which includes a corporate cost allocation, $54 million (2013: $63 million) relates to Kumba Iron Ore. The total contribution from Kumba Iron Ore to the
Group’s underlying earnings is $693 million (2013: $1,108 million).
(5) Refer to note 3 of the Consolidated financial statements for changes in reporting segments. Comparatives have been reclassified to align with current year presentation.
166
Anglo American plc Annual Report 2014
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
KEY FINANCIAL DATA
US$ million (unless otherwise stated)
Group revenue including associates and joint ventures
Group revenue
Underlying EBIT(3)
Operating and non-operating special items and remeasurements
(including associates and joint ventures)
Net finance costs, tax and non-controlling interests of associates
and joint ventures
(Loss)/profit before net finance costs and tax
(Loss)/profit before tax
(Loss)/profit for the financial year
Non-controlling interests
(Loss)/profit attributable to equity shareholders of
the Company
(Loss)/earnings per share (US$)
Underlying earnings(4)
Underlying earnings per share (US$)
Ordinary dividend per share (US cents)
Underlying EBITDA(5)
Underlying EBITDA interest cover(6)
Underlying operating margin
Ordinary dividend cover (based on underlying earnings per share)
Net assets
Non-controlling interests
Equity attributable to equity shareholders of the Company
Total capital employed(7)
Cash flows from operations
Capital expenditure(8)
Net debt(9)
Dividends received from associates, joint ventures and financial
asset investments
Underlying EBITDA/average total capital employed(7)
Net debt to total capital (gearing)(10)
2014
2013
2012
restated(1)
2011
2010
2009
2008
2007
2006(2)
2005(2)
30,988 33,063 32,785 36,548 32,929 24,637 32,964 30,559 29,404 24,872
27,073 29,342 28,680 30,580 27,960 20,858 26,311 25,470 24,991 20,132
5,549
4,957 10,085
6,253 11,095
6,620
8,888
9,763
9,590
4,933
(4,760) (4,310) (5,755)
(44)
1,727
(208)
(330)
(227)
24
16
(212)
(39)
(259)
(1,524)
(204)
2,106
1,700
426
(989) (1,387)
(281)
(423)
(452)
217 10,599 11,067
(171) 10,782 10,928
8,119
7,922
(564)
(1,575)
(1,753)
(906)
(313)
4,436
4,029
2,912
(487)
(783)
8,972
8,571
6,120
(905)
(434)
8,929
8,821
8,172
(868)
(398)
8,514
8,443
6,922
(736)
(315)
5,250
5,030
3,933
(412)
52.1
2,425
2.02
2,569
2.14
–
7,304
5.58
5,761
4.40
124.0
5,215
4.34
5,237
4.36
44.0
(2,513)
(1.96)
2,217
1.73
85.0
7,832
47.8
(961) (1,470)
(1.17)
(0.75)
2,860
2,673
2.28
2.09
85.0
85.0
9,520
51.5
6,544
6,169
5.43
5.10
4,976
6,120
4.13
5.06
65.0
74.0
8,860 13,348 11,983
42.0
n/a
6,186
4.21
5,471
3.73
108.0
6,930 11,847 12,132 12,197
45.5
3,521
2.43
3,736
2.58
90.0
8,959
20.0
15.9% 20.0% 19.1% 30.4% 29.6% 20.1% 30.6% 28.4% 25.4% 18.5%
2.9
32,177 37,364 43,738 43,189 37,971 28,069 21,756 24,330 27,127 27,578
(5,760) (5,693) (6,127)
(3,957)
26,417 31,671 37,611 39,092 34,239 26,121 20,221 22,461 24,271 23,621
43,782 46,551 49,757 41,667 42,135 36,623 29,808 24,401 28,285 31,643
7,265
(1,831)
(4,980)
9,579
4,904
9,924
(4,902)
(5,282)
(4,707)
(7,384) (11,280) (11,340)
7,729
6,949
(6,018) (6,075) (5,947)
(12,871) (10,652) (8,510)
9,845 10,057
(3,575)
(4,002)
(3,131)
(4,851)
7,370 11,498
(5,672)
(1,374)
(1,948) (1,535)
(3,732)
(4,097)
(1,869)
(2,856)
28.3
27.4
42.0
2.0
3.5
2.5
2.7
6.8
6.4
9.9
3.5
–
264
460
470
17.3% 19.8% 19.4% 31.9% 30.4% 20.9% 43.7% 46.1% 40.7% 27.0%
28.6% 22.2% 16.3% 3.1% 16.3% 28.7% 34.3% 16.6% 10.3% 15.3%
288
403
348
285
639
659
363
(1) Certain balances relating to 2012 were restated to reflect the adoption of new accounting pronouncements. See note 2 of the 2013 Consolidated financial statements for details.
(2) Comparatives for 2006 and 2005 were adjusted in the 2007 Annual Report to reclassify amounts relating to discontinued operations where applicable.
(3) Underlying EBIT is operating profit presented before special items and remeasurements and includes the Group’s attributable share of associates’ and joint ventures’ underlying EBIT.
Underlying EBIT of associates and joint ventures is the Group’s attributable share of revenue less operating costs before special items and remeasurements of associates and joint ventures.
(4) 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.
(5) Underlying EBITDA is underlying EBIT before depreciation and amortisation in subsidiaries and joint operations and includes the Group’s attributable share of associates’ and joint ventures’
underlying EBIT before depreciation and amortisation.
(6) Underlying EBITDA interest cover is underlying EBITDA divided by net finance costs, excluding net foreign exchange gains and losses, unwinding of discount relating to provisions and other
liabilities, financing special items and remeasurements, and including the Group’s attributable share of associates’ and joint ventures’ net finance costs, which in 2011 resulted in a net finance
income and therefore the ratio is not applicable.
(7) Total capital employed is net assets excluding net debt (including related hedges and net debt in disposal groups) and financial asset investments. Comparatives are presented on a
consistent basis.
(8) Capital expenditure is defined as cash expenditure on property, plant and equipment including related derivatives, and is now presented net of proceeds from disposal of property, plant and
equipment and includes direct funding for capital expenditure from non-controlling interests in order to match more closely the way in which it is managed. Comparatives have been
re-presented to align with current year presentation.
(9) Net debt is calculated as total borrowings less cash and cash equivalents (including related hedges and net debt in disposal groups).
(10) 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.
Anglo American plc Annual Report 2014
167
Financial statements
2014
11.57
2.66
0.64
1.22
0.82
607
9.51
10.85
2.35
0.61
1.11
0.75
571
8.97
2014
72
66
65
119
288
677
1,210
798
1,245
97
72
71
125
311
765
1,385
803
1,173
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
135
85
85
152
335
663
1,358
711
975
135
80
84
159
332
680
1,487
725
1,067
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 (62% Fe CFR)(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(6)
Average market prices for the year
Iron ore (62% Fe CFR)(1)
Thermal coal (FOB South Africa)(2)
Thermal coal (FOB Australia)(2)
Hard coking coal (FOB Australia)(7)
Copper(4)
Nickel(4)
Platinum(5)
Palladium(5)
Rhodium(6)
(1) Source: Platts.
(2) Source: McCloskey.
(3) Source: Represents the quarter four benchmark.
(4) Source: London Metal Exchange (LME).
(5) Source: London Platinum and Palladium Market (LPPM).
(6) Source: Comdaq.
(7) Source: Represents the average quarterly benchmark.
168
Anglo American plc Annual Report 2014
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. 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.
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 listed in the Ore Reserve and Mineral Resource Report 2014
along with their affiliation and years of relevant experience.
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 of
the entity and time that has lapsed since an independent third-party review
is also considered. Those operations/projects that were subjected to
independent third-party reviews during the year are indicated in footnotes
to the tables.
The JORC and SAMREC Codes require due consideration of reasonable
prospects for eventual economic extraction for Mineral Resource
definition. 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. The calculation
of Mineral Resource and Ore Reserve estimates are based on long-term
prices determined at the beginning of the second quarter each year. 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, infrastructure, 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. 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 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.
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 2014
which is available in the Reporting Centre on the Anglo American website.
To accommodate the various factors that are important in the development
of a classified Mineral Resource estimate, a scorecard approach is
generally 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
(in particular density) 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 estimates of Ore Reserves and Mineral Resources are stated as
at 31 December 2014. The figures in the tables have been rounded and,
if used to derive totals and averages, minor differences with stated results
could occur.
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 Limited
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. Reserve Life reflects the scheduled
extraction period in years for the total Ore Reserves in the approved
Life of Mine Plan.
The Attributable Percentage that Anglo American holds in each operation
and project is presented 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.
In South Africa, the Minerals and Petroleum Resources Development
Act, Number 28 of 2002 (MPRDA) was implemented on 1 May 2004
(subsequently amended by the Minerals and Petroleum Resources
Development Amendment Act 49 of 2008) effectively transferred
custodianship of the previously privately held mineral rights to the State.
A Prospecting Right is a 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.
A Mining Right is a right issued in terms of the MPRDA and is valid for
up to 30 years, with the possibility of a further extension of 30 years. The
Minister of Mineral Resources will grant a renewal of the Mining Right if the
terms and conditions of the Mining Right have been complied with and the
applicant is not in contravention of any relevant provisions of the MPRDA.
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 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 Mining Rights and 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
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c
e
s
Anglo American plc Annual Report 2014
169
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
IRON ORE
estimates as at 31 December 2014
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. Rounding of figures may cause computational discrepancies. Reserve Life is reported from 2014 onwards and is aligned with the current
approved Life of Mine Plan.
Anglo American plc’s interest in Kumba Iron Ore Limited is 69.7%. Detailed information appears in the Kumba Iron Ore Limited Annual Report.
Kumba Iron Ore – Operations
ORE RESERVES
Kolomela (OP)
Hematite
Attributable %
51.5
Reserve
Life
21
Sishen (OP)
Hematite
Thabazimbi (OP)
Hematite
51.5
16
51.5
9
Kumba Iron Ore – Operations
MINERAL RESOURCES
Kolomela (OP)
Hematite
Attributable %
51.5
Sishen (OP)
Hematite
Thabazimbi (OP)
Hematite
51.5
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 (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
Magnetite and Hematite
Attributable %
25.8
Classification
Measured
Indicated
Measured and Indicated
Inferred
ROM Tonnes
2013
Mt
101.3
98.7
200.0
428.9
435.1
864.1
0.5
10.8
11.3
Tonnes
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
0.3
9.8
10.1
1.6
4.6
6.2
Tonnes
2013
Mt
107.0
206.4
313.4
162.7
2014
Mt
83.3
104.7
188.0
556.8
159.8
716.6
0.4
9.3
9.7
2014
Mt
21.9
81.2
103.1
44.1
105.7
149.8
324.5
142.6
467.1
28.9
67.8
96.7
0.3
10.8
11.1
1.4
4.6
6.0
2014
Mt
107.0
206.4
313.4
162.7
2014
%Fe
64.6
64.3
64.4
%Fe
59.4
56.2
58.7
%Fe
61.9
60.3
60.4
2014
%Fe
64.9
64.1
64.3
64.5
64.2
64.3
%Fe
61.8
56.9
60.3
52.5
57.2
55.8
%Fe
64.0
62.1
62.1
59.5
62.9
62.1
2014
%Fe
34.7
34.4
34.5
34.5
Grade
2013
%Fe
64.4
64.5
64.4
%Fe
59.2
59.1
59.1
%Fe
62.2
60.4
60.5
Grade
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
%Fe
64.0
62.8
62.8
59.7
62.9
62.1
Grade
2013
%Fe
34.7
34.4
34.5
34.5
Saleable Product
2013
2014
Mt %Fe
Mt %Fe
101 64.4
83 64.6
104 64.3
99 64.5
188 64.4 200 64.4
311 65.4
427 65.7
108 64.3
311 65.1
535 65.4 622 65.3
0 62.5
7 62.9
7 62.9
0 64.4
8 62.9
9 63.0
2014
%Fe3O4
41.5
42.5
42.2
38.1
Grade
2013
%Fe3O4
41.5
42.5
42.2
38.1
Mining method: OP = Open Pit. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
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.
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 2014 at Thabazimbi.
170
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
IRON ORE
estimates as at 31 December 2014
EXPLANATORY NOTES
Kolomela – Ore Reserves: The decrease is primarily due to production. Ore Reserves are reported above a cut-off of 42.0 %Fe inclusive of dilution.
Sishen – Ore Reserves: In addition to production, the decrease is due to an alignment of the Ore Reserve economic assumptions with budget parameters as well
as a strategic redesign of the Sishen Mine waste pushback strategy in 2014 in order to achieve a lower cost (lower stripping ratio) Life of Mine Plan solution. A minor
decrease in Ore Reserves due to the re-allocation of a portion of the conglomeratic ore body to Inferred Mineral Resource in accordance with the Kumba Iron Ore
Mineral Resource Classification Guideline. Ore Reserves are reported above a cut-off of 40.0 %Fe inclusive of dilution.
Thabazimbi – Ore Reserves: The decrease is primarily due to production. The Thabazimbi Mine is subject to a Life of Mine Plan review, which is currently ongoing.
As a result, it was considered prudent to revert to the 2013 Ore Reserves (and Mineral Resources to retain alignment) in terms of public reporting. The 2014 Ore
Reserve Statement for Thabazimbi Mine is therefore based on the 2013 Ore Reserves, depleted with the 2014 production. Ore Reserves are reported above a
cut-off of 54.3 %Fe inclusive of dilution.
Kolomela – Mineral Resources: The increase is due to new information that results in the initial declaration of resources from Kapstevel South orebody and
updated geological models for Leeuwfontein. Mineral Resources are reported above a cut-off of 50.0 %Fe.
Sishen – Mineral Resources: The increase is primarily due to incorporation of the previous ‘Stockpile’ material (Measured Resources: 7.3 Mt at 53.1 %Fe and
Indicated Resources: 22.8 Mt at 50.8 %Fe) into the Mineral Resources as these are now considered as part of the modifying factors and therefore not reported
separately. Mineral Resources are reported above a cut-off of 40.0 %Fe.
Thabazimbi – Mineral Resources: The increase is due to incorporation of the previous ‘Stockpile’ material into the Mineral Resources as these are now considered
as part of the modifying factors and therefore not reported separately. The 2014 Resource Statement for Thabazimbi Mine is based on the 2013 Mineral Resources
(aligned with the decision to revert back to the 2013 Ore Reserves), depleted with the 2014 production. Mineral Resources are reported above a cut-off of 55.0 %Fe.
Zandrivierspoort: The Zandrivierspoort Project Mineral Resources are reported above a cut-off of 21.7 %Fe.
Mineral Tenure
Sishen: On 12 December 2013 the Constitutional Court (of South Africa) ruled that the Sishen Iron Ore Company (SIOC) had a 78.6% undivided share of the Sishen
mining right. The Constitutional Court ruled further that, based on the provisions of the Mineral and Petroleum Resources Development Act (MPRDA), only SIOC
can apply for and be granted 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 (of Mineral Resources) to be appropriate. SIOC has lodged applications to be granted the residual 21.4% undivided share of the Sishen
Mining Right. Kumba Iron Ore is actively continuing its engagement with the South African Department of Mineral Resources (DMR) in order to finalise the grant of
the residual right.
Based on the outcome of the Constitutional Court ruling, SIOC has a reasonable expectation for the grant of the 21.4% Mining Right and therefore declares 100%
of the Sishen Ore Reserves and Mineral Resources in terms of the provisions of the SAMREC Code. SIOC derives 100% of the economic benefit of the material
extracted from the Sishen Mine, and is not required to account to any other entity for the value thus derived. SIOC is mining lawfully in accordance with its approved
Mine Works Programme. SIOC has submitted its applications to be granted the 21.4% Mining Right. At the time of reporting, the Mining Right had not yet been
granted. In 2013, the attributable percentage was based on the Mining Rights held. For 2014, the attributable percentage is based on the full economic benefit
to Sishen.
A Section 102 application to incorporate the old Transnet railway properties transecting the mining area from north to south was granted by the DMR on 28 February
2014. This resulted in Probable Reserves being upgraded back to Proved Reserves.
Anglo American plc Annual Report 2014
171
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
IRON ORE
estimates as at 31 December 2014
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. Rounding of figures may cause computational discrepancies. Reserve Life is reported from 2014 onwards and is aligned with the current approved
Life of Mine Plan.
Iron Ore Brazil – Operations
ORE RESERVES
Serra do Sapo (OP)
Attributable %
100
Reserve
Life
45
Friable Itabirite and Hematite
Itabirite
Iron Ore Brazil – Operations
MINERAL RESOURCES
Serra do Sapo (OP)
Attributable %
100
Friable Itabirite and Hematite
Itabirite
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
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Iron Ore Brazil – Projects
MINERAL RESOURCES
Itapanhoacanga
Attributable %
100
Friable Itabirite and Hematite
Compact Itabirite
Serro
100
Friable Itabirite and Hematite
Compact Itabirite
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
Saleable Product
2013
2014
Mt %Fe
Mt %Fe
–
–
–
–
690 67.5
686 67.5
690 67.5 686 67.5
–
–
–
–
534 67.5
534 67.5
–
–
–
–
2014
Mt
–
1,414.6
1,414.6
–
1,384.3
1,384.3
2014
Mt
192.7
207.0
399.7
68.6
18.7
87.4
512.5
1,036.1
1,548.6
178.8
402.2
581.0
2014
Mt
31.0
117.5
148.6
114.5
23.2
73.4
96.6
57.0
4.7
87.3
92.0
32.8
7.3
274.4
281.7
111.1
ROM Tonnes
2013
Mt
–
1,385.3
1,385.3
–
–
–
Tonnes
2013
Mt
187.7
229.4
417.1
50.4
21.8
72.1
737.7
2,092.9
2,830.5
–
201.1
201.1
Tonnes
2013
Mt
31.0
117.5
148.6
114.5
23.2
73.4
96.6
57.0
4.7
87.3
92.0
32.8
7.3
274.4
281.7
111.1
2014
%Fe
–
37.9
37.9
–
30.9
30.9
2014
%Fe
31.8
33.6
32.7
37.9
32.1
36.7
30.4
31.1
30.9
31.1
31.1
31.1
2014
%Fe
40.6
41.3
41.1
40.4
33.6
34.5
34.3
34.5
%Fe
44.7
41.0
41.2
41.0
33.0
32.1
32.1
34.6
Grade
2013
%Fe
–
38.8
38.8
–
–
–
Grade
2013
%Fe
31.8
33.3
32.6
38.4
32.3
36.5
30.5
31.2
31.0
–
31.2
31.2
Grade
2013
%Fe
40.6
41.3
41.1
40.4
33.6
34.5
34.3
34.5
%Fe
44.7
41.0
41.2
41.0
33.0
32.1
32.1
34.6
Mining method: OP = Open Pit. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
The ROM tonnage is quoted as dry metric tonnes and abbreviated as Mt for million 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.
EXPLANATORY NOTES
Minas-Rio: Minas-Rio comprises the Serra do Sapo operation and the Itapanhoacanga project. Metallurgical test work confirms 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.
Serra do Sapo – Ore Reserves: Ore Reserves are reported above a cut-off of 25.0 %Fe inclusive of dilution. ROM Tonnes and grades are on a dry basis. 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 increase in Friable Itabirite and
Hematite is due to new drilling information and updated economic assumptions. Itabirite Ore Reserves are declared and included in the mine plan for the first time
due to metallurgical studies confirming the viability of processing this ore type and results in an increase in the Reserve Life.
The Ore Reserves exclude 1.9Mt (at 37.9 %Fe) of material stockpiled during pre-stripping operations.
Serra do Sapo – Mineral Resources: Mineral Resources are reported above a cut-off of 25.0 %Fe. In-situ tonnes and grade are on a dry basis.
Friable Itabirite and Hematite includes Friable Itabirite, Semi-Friable Itabirite, High Alumina Friable Itabirite, Soft Hematite and Canga.
The decrease in Itabirite Mineral Resources is primarily due to coversion of resources to reserves which is partially offset by new drilling information which indicates
additional resources in the Central domain.
Itapanhoacanga: Mineral Resources are reported above a cut-off of 25.0 %Fe. In-situ tonnes and grade are on a dry basis.
Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite, Soft Hematite and Hard Hematite
Serro: Mineral Resources are reported above a cut-off of 25.0 %Fe. In-situ tonnes and grade are on a dry basis.
Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite and Hard Hematite.
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2014 at Serra do Sapo.
Audits related to the generation of the Mineral Resource estimates were carried out by independent consultants during 2014 at Itapanhoacanga and Serro.
172
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
MANGANESE
estimates as at 31 December 2014
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). Rounding of figures may cause computational discrepancies.
Samancor Manganese – Operations
ORE RESERVES
GEMCO (OP)
Attributable %
40.0
Reserve
Life
12
Hotazel Manganese Mines
29.6
Mamatwan (OP)
Wessels (UG)
17
46
Samancor Manganese – Operations
MINERAL RESOURCES
GEMCO (OP)
Attributable %
40.0
Hotazel Manganese Mines
29.6
Mamatwan (OP)
Wessels (UG)
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
2014
%
58.3
57.0
58.1
2014
%
48.2
47.0
47.7
49.2
Yield
2013
%
59.1
58.7
59.0
Yield
2013
%
48.2
46.8
47.6
48.6
2014
Mt
73.6
16.0
89.6
17.6
43.0
60.6
2.9
66.1
69.0
2014
Mt
90.1
46.3
136.4
33.5
25.8
69.0
94.8
11.1
15.7
123.8
139.5
–
Tonnes
2013
Mt
68.9
27.6
96.5
38.3
30.5
68.8
4.2
63.9
68.1
Tonnes
2013
Mt
79.8
55.4
135.2
35.4
58.6
54.5
113.1
4.3
16.4
125.1
141.5
–
2014
%Mn
44.8
42.6
44.4
%Mn
37.6
37.1
37.2
43.6
42.2
42.3
2014
%Mn
46.0
43.6
45.2
42.7
%Mn
35.7
35.1
35.3
33.2
44.3
42.1
42.3
–
Grade
2013
%Mn
44.4
44.7
44.5
%Mn
37.1
36.9
37.0
44.5
42.3
42.4
Grade
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
–
Mining method: OP = Open Pit, UG = Underground. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
The tonnage is quoted 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.
EXPLANATORY NOTES
GEMCO – Ore Reserves: The decrease is due to production. Ore Reserves are reported above a cut-off of 40%Mn with a minimum of 1m thickness. Manganese
grades are given as per washed ore samples and should be read together with their respective yields.
Mamatwan – Ore Reserves: The decrease is primarily due to production as well as the use of a new block model. Ore Reserves for all zones are reported above
a cut-off of 35.0 %Mn.
Wessels – Ore Reserves: The change is due to depletion from mining which is offset by the use of a new block model. Ore Reserves for the Lower Body-HG ore
type are reported above a cut-off of 45.0 %Mn and Lower Body-LG and Upper Body ore types are reported above a cut-off of 37.5 %Mn.
GEMCO – Mineral Resources: New drilling information and the consequent updating of the resource model has allowed for the upgrading in resource confidence.
A 40 %Mn washed product cut-off is used to define the Mineral Resource.
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.
Mamatwan – Mineral Resources: The decrease is due to a new geological model being used which utilised implicit modelling techniques as well as a change in the
estimation parameters. 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.
Wessels – Mineral Resources: The decrease is due to a new geological model being used. 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.
Anglo American plc Annual Report 2014
173
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COAL
estimates as at 31 December 2014
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 as well as 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 Coal Reserves and Coal Resources. Rounding of figures may cause computational discrepancies. Reserve Life is reported from 2014 onwards
and is aligned with the current approved Life of Mine Plan.
Coal – Australia Operations
COAL RESERVES(1)
Callide (OC)
Thermal – Domestic
Attributable %
100
Reserve
Life Classification
31
ROM Tonnes(2)
Yield(3)
Saleable Tonnes(2)
Saleable Quality
(4)
2014
Mt
6.2
196.5
202.6
66.3
69.5
135.9
2013
Mt
185.5
52.0
237.5
73.4
69.5
142.9
36.7
6.8
43.5
56.6
64.1
120.7
1.6
0.4
1.9
0.5
19.3
19.8
78.5
50.8
129.3
Mt
246.5
407.2
653.7
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
2014
ROM %
94.8
100
99.8
2013
ROM %
97.9
98.0
97.9
2014
Mt
5.9
196.4
202.3
2013
Mt
181.6
51.0
232.6
26.1
27.4
26.8
37.4
36.0
36.7
4.7
4.5
4.6
72.4
75.0
72.8
46.0
35.1
40.2
29.9
38.6
34.5
55.1
61.8
56.3
79.9
70.8
71.0
73.9
72.6
73.4
Plant %
61.6
52.5
58.0
38.1
48.4
44.3
27.1
35.0
31.6
94.8
100
99.8
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
18.0
19.8
37.8
25.8
26.0
51.8
3.3
3.2
6.5
27.7
5.3
33.1
26.9
23.1
50.0
17.4
25.5
42.9
0.9
0.2
1.1
0.4
14.4
14.8
61.2
38.9
100.1
Mt
133.8
87.1
221.0
26.2
40.3
66.6
21.6
28.9
50.5
5.9
196.4
202.3
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
2014
kcal/kg
4,330
4,450
4,450
CSN
6.0
6.0
6.0
kcal/kg
6,860
6,850
6,860
kcal/kg
6,150
6,290
6,220
CSN
9.0
8.5
9.0
CSN
7.5
7.0
7.5
kcal/kg
6,370
6,640
6,530
kcal/kg
6,530
6,480
6,520
kcal/kg
7,200
7,030
7,040
CSN
8.0
8.0
8.0
CSN
8.0
7.5
7.5
kcal/kg
6,870
6,910
6,900
kcal/kg
6,340
6,600
6,490
kcal/kg
4,330
4,450
4,450
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
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2014
Mt
–
11.6
11.6
–
36.8
36.8
Mt
–
48.4
48.4
2013
Mt
10.5
2.3
12.8
32.6
2.9
35.5
Mt
43.0
5.3
48.3
2014
ROM %
–
69.5
69.5
–
67.0
67.0
Plant %
–
67.6
67.6
2013
ROM %
75.1
76.8
75.4
71.2
73.3
71.4
Plant %
72.2
74.9
72.5
2014
Mt
–
8.3
8.3
–
25.8
25.8
Mt
–
34.1
34.1
2013
Mt
8.1
1.9
10.0
24.3
2.3
26.6
Mt
32.5
4.1
36.6
2014
CSN
–
7.0
7.0
CSN
–
7.0
7.0
CSN
–
7.0
7.0
2013
CSN
7.0
7.0
7.0
CSN
7.0
7.0
7.0
CSN
7.0
7.0
7.0
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
Proved
Probable
Total
Proved
Probable
Total
Capcoal (OC)
Metallurgical – Coking
77.5
27
Metallurgical – Other
Thermal – Export
Capcoal (UG)
Metallurgical – Coking
70.0
9
Dawson (OC)
Metallurgical – Coking
51.0
14
Thermal – Export
Drayton (OC)
Thermal – Export
Foxleigh (OC)
Metallurgical – Other
88.2
1
70.0
13
Moranbah North (UG)
Metallurgical – Coking
88.0
18
Australia Metallurgical – Coking 75.1
Australia Metallurgical – Other
75.8
Australia Thermal – Export
55.2
Australia Thermal – Domestic
100
Coal – Canada Operations
COAL RESERVES(1)
Trend (OC)
Metallurgical – Coking
Attributable %
100
Reserve
Life Classification
7
Roman Mountain (OC)
Metallurgical – Coking
100
15
Canada Metallurgical – Coking
100
174
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
COAL
estimates as at 31 December 2014
Coal – Colombia Operations
COAL RESERVES(1)
Cerrejón (OC)
Thermal – Export
Reserve
Attributable %
33.3
Life Classification
18
Proved
Probable
Total
Reserve
Life Classification
11
Coal – South Africa Operations
COAL RESERVES(1)
Goedehoop (UG)
Thermal – Export
Attributable %
100
100
14
100
13
100
11
73.0
100
6
4
Greenside (UG)
Thermal – Export
Isibonelo (OC)
Synfuel
Kleinkopje (OC)
Thermal – Export
Thermal – Domestic
Kriel (UG&OC)
Thermal – Domestic
Landau (OC)
Thermal – Export
Thermal – Domestic
Mafube (OC)
Thermal – Export
50.0
17
Thermal – Domestic
New Denmark (UG)
Thermal – Domestic
New Vaal (OC)
Thermal – Domestic
Zibulo (UG&OC)
Thermal – Export
Thermal – Domestic
100
25
100
17
73.0
21
South Africa Thermal – Export
80.3
South Africa Thermal – Domestic 94.8
South Africa – Synfuel
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
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2014
Mt
574.6
91.6
666.2
2013
Mt
645.1
96.2
741.3
2014
ROM %
96.3
95.6
96.2
2013
ROM %
96.0
95.7
96.0
2014
Mt
561.2
89.5
650.7
2013
Mt
626.6
93.9
720.4
2014
kcal/kg
6,150
6,130
6,150
2013
kcal/kg
6,150
6,130
6,150
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2014
Mt
40.6
9.9
50.5
29.1
29.4
58.5
59.0
–
59.0
31.3
–
31.3
28.0
–
28.0
15.2
10.2
25.4
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
5.8
113.0
118.7
10.2
113.0
123.2
19.5
87.3
106.8
270.0
–
270.0
67.2
35.6
102.8
25.8
82.7
108.6
296.3
–
296.3
84.1
34.2
118.2
Mt
565.7
285.3
851.0
Mt
631.1
318.8
949.9
2014
ROM %
58.0
67.3
59.8
2013
ROM %
52.5
58.5
55.5
72.8
66.5
69.6
100
–
100
45.7
–
45.7
20.3
–
20.3
100
–
100
48.0
46.3
47.3
21.3
20.2
20.9
50.0
42.8
43.2
23.6
18.4
18.7
100
100
100
95.3
–
95.3
57.9
46.2
53.9
14.7
20.2
16.6
Plant %
58.4
50.2
54.6
91.1
79.1
88.0
100
–
100
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
Plant %
57.8
53.3
55.5
91.3
81.5
88.9
100
–
100
2014
Mt
24.0
6.8
30.8
21.9
20.3
42.2
59.0
–
59.0
14.8
–
14.8
6.4
–
6.4
28.0
–
28.0
7.4
4.8
12.3
3.3
2.1
5.3
2.9
48.4
51.3
1.4
21.1
22.5
19.5
87.3
106.8
265.7
–
265.7
39.3
16.6
55.9
9.9
7.2
17.1
Mt
110.4
96.9
207.3
334.2
117.7
451.8
59.0
–
59.0
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
Mt
112.5
114.3
226.8
378.7
123.6
502.3
65.2
–
65.2
2014
kcal/kg
5,970
5,750
5,920
kcal/kg
6,010
5,980
6,000
kcal/kg
4,680
–
4,680
kcal/kg
6,210
–
6,210
kcal/kg
4,630
–
4,630
kcal/kg
4,870
–
4,870
kcal/kg
6,130
6,160
6,140
kcal/kg
4,210
4,310
4,250
kcal/kg
6,260
6,040
6,050
kcal/kg
5,130
5,060
5,060
kcal/kg
5,020
4,910
4,930
kcal/kg
3,660
–
3,660
kcal/kg
6,100
6,100
6,100
kcal/kg
4,830
4,820
4,830
kcal/kg
6,070
6,020
6,050
kcal/kg
3,910
4,920
4,170
kcal/kg
4,680
–
4,680
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
kcal/kg
6,150
6,000
6,070
kcal/kg
3,840
5,030
4,130
kcal/kg
4,690
–
4,690
Mining method: OC = Open Cast/Cut, UG = Underground. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
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.
Anglo American plc Annual Report 2014
175
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COAL
estimates as at 31 December 2014
Coal – Australia Operations
COAL RESOURCES(5)
Callide (OC)
Attributable %
100
Classification
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
71.9
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)
Coal – Canada Operations
COAL RESOURCES(5)
Trend (OC)
Attributable %
100
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
(7)
(8)
(7)
(8)
(7)
(8)
Roman Mountain (OC)
100
Canada – Mine Leases
100
COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.
176
Anglo American plc Annual Report 2014
Tonnes
2013
(5)
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
Coal Quality
(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
(6)
2014
kcal/kg
5,010
4,850
4,890
4,850
4,640
4,700
6,890
6,900
6,900
6,630
6,930
6,820
6,820
6,640
6,760
–
6,340
6,340
6,780
6,760
6,770
6,870
6,710
6,730
6,950
6,970
6,960
5,600
7,160
6,080
–
7,240
7,240
7,050
7,160
7,100
6,690
6,600
6,670
6,620
6,720
6,710
6,450
5,970
6,190
6,380
6,470
6,440
Tonnes
Coal Quality
(5)
2013
MTIS
21.0
6.7
27.7
0.0
2.7
2.7
1.6
2.7
4.2
0.3
0.7
1.0
22.6
9.4
31.9
0.3
3.4
3.6
(6)
2014
kcal/kg
7,010
6,900
6,980
7,600
6,370
6,370
7,870
7,940
7,910
7,920
7,960
7,950
7,080
7,180
7,110
7,920
7,000
7,100
(6)
2013
kcal/kg
7,030
6,910
7,000
7,320
6,390
6,390
7,930
7,960
7,950
7,960
7,960
7,960
7,090
7,210
7,130
7,930
6,720
6,810
(5)
2014
MTIS
73.5
188.7
262.2
24.0
53.6
77.6
29.4
42.6
72.0
53.5
91.7
145.2
51.5
23.5
75.0
–
10.1
10.1
180.8
173.0
353.9
22.2
185.7
207.9
1.5
2.4
3.8
0.0
0.0
0.0
–
2.7
2.7
17.8
15.9
33.8
52.9
19.0
72.0
0.3
1.9
2.2
389.6
452.0
841.5
117.9
358.9
476.7
(5)
2014
MTIS
20.1
6.5
26.5
0.0
2.6
2.6
1.9
2.4
4.3
0.5
1.7
2.2
21.9
8.9
30.8
0.5
4.2
4.8
ORE RESERVES AND MINERAL RESOURCES COAL
estimates as at 31 December 2014
Coal – Colombia Operations
COAL RESOURCES(5)
Cerrejón (OC)
Attributable %
33.3
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
(7)
(8)
Coal – South Africa Operations
COAL RESOURCES(5)
Goedehoop (UG)
Attributable %
100
Classification
Greenside (UG)
100
Isibonelo (OC)
Kleinkopje (OC)
Kriel (UG&OC)
100
100
73.0
Landau (OC)
100
Mafube (OC)
50.0
New Denmark (UG)
100
Zibulo (UG&OC)
73.0
South Africa – Mine Leases
83.3
COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.
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
Measured
Indicated
Measured and Indicated
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)
(5)
2014
MTIS
942.1
161.2
1,103.3
58.8
32.5
91.3
Tonnes
2013
(5)
MTIS
911.3
162.9
1,074.2
68.0
29.5
97.5
Coal Quality
(6)
2014
kcal/kg
6,540
6,570
6,540
6,710
6,910
6,780
(6)
2013
kcal/kg
6,410
6,340
6,400
6,770
6,580
6,710
Tonnes
Coal Quality
(5)
2014
MTIS
221.7
29.3
250.9
1.6
11.2
12.7
19.0
1.3
20.3
0.5
–
0.5
–
16.8
16.8
28.6
–
28.6
98.4
1.0
99.4
–
–
–
50.4
36.1
86.5
–
18.1
18.1
53.3
4.3
57.5
0.9
1.2
2.1
70.3
–
70.3
–
–
–
178.9
145.9
324.9
28.2
169.3
197.5
720.6
234.6
955.1
31.2
199.8
231.0
(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
(6)
2014
kcal/kg
5,300
4,900
5,250
4,820
4,820
4,820
5,660
5,140
5,630
5,390
–
5,390
–
5,400
5,400
5,010
–
5,010
4,850
4,930
4,850
–
–
–
5,110
5,260
5,170
–
5,500
5,500
5,330
4,370
5,260
4,040
5,360
4,770
5,790
–
5,790
–
–
–
4,970
5,000
4,980
5,150
4,710
4,770
5,190
5,050
5,160
5,100
4,790
4,830
(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
Anglo American plc Annual Report 2014
177
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COAL
estimates as at 31 December 2014
Coal – Australia Projects
COAL RESERVES(1)
Capcoal (UG) – Aquila
Metallurgical – Coking
Attributable %
70.0
Reserve
Life Classification
14
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Grosvenor (UG)
Metallurgical – Coking
100
34
Australia – Projects
Metallurgical – Coking
93.8
Coal – Australia Projects
COAL RESOURCES(5)
Capcoal (UG) – Aquila
Attributable %
70.0
Dartbrook
Drayton South
Grosvenor (UG)
Moranbah South
Teviot Brook
Theodore
83.3
88.2
100
50.0
100
51.0
Australia – Projects
73.9
ROM Tonnes
(2)
Yield
(3)
Saleable Tonnes
(2)
Saleable Quality
(4)
2014
Mt
35.4
11.3
46.6
29.1
163.8
192.9
Mt
64.5
175.1
239.6
2013
Mt
26.3
19.2
45.5
115.0
78.7
193.7
Mt
141.3
97.9
239.2
2014
ROM %
68.2
67.8
68.1
66.9
62.5
63.2
Plant %
67.6
62.9
64.2
2013
ROM %
69.2
66.4
68.0
65.5
61.9
64.0
Plant %
66.2
62.8
64.8
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)
2014
Mt
25.5
8.1
33.5
20.6
108.1
128.6
Mt
46.0
116.2
162.2
(5)
2014
MTIS
17.5
16.1
33.6
0.0
3.6
3.6
386.1
24.8
410.9
1.3
492.1
189.0
681.1
90.7
121.1
69.0
190.1
12.0
25.3
37.3
481.9
222.5
704.4
28.0
4.6
163.3
167.9
32.2
–
258.5
258.5
106.0
1,503.3
943.2
2,446.5
12.1
287.2
299.2
2013
Mt
19.2
13.5
32.7
79.6
51.4
130.9
Mt
98.8
64.9
163.6
Tonnes
2013
(5)
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
2014
CSN
9.0
9.0
9.0
CSN
8.0
8.5
8.5
CSN
8.5
8.5
8.5
(6)
2014
kcal/kg
6,820
6,450
6,640
6,660
6,030
6,030
5,720
5,460
5,700
5,080
6,240
6,260
6,250
5,950
6,520
6,680
6,580
6,340
6,800
6,650
6,270
6,420
6,320
6,700
6,750
6,610
6,610
6,510
–
6,260
6,260
6,160
6,150
6,370
6,230
6,340
6,240
6,240
2013
CSN
9.0
9.0
9.0
CSN
8.5
8.0
8.5
CSN
8.5
8.0
8.5
Coal Quality
2013
(6)
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
COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.
Attributable percentages for country totals are weighted by Total MTIS.
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.
178
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
COAL
estimates as at 31 December 2014
Coal – Canada Projects
COAL RESOURCES(5)
Belcourt Saxon
Attributable %
50.0
Coal – South Africa Projects
COAL RESOURCES(5)
Elders
Attributable %
73.0
Elders UG Extension
73.0
Kriel Block F
Kriel East
New Largo
Nooitgedacht
South Rand
Vaal Basin
100
73.0
73.0
100
73.0
100
South Africa – Projects
81.5
Attributable percentages for country totals are weighted by Total MTIS.
Classification
Measured
Indicated
Measured and Indicated
Inferred
(5)
2014
MTIS
166.7
4.3
171.0
0.2
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)
2014
MTIS
169.9
9.5
179.5
20.1
66.2
83.2
149.4
84.7
47.7
11.1
58.8
–
117.4
13.3
130.7
7.5
410.2
161.4
571.6
13.5
34.5
10.2
44.7
10.8
79.2
172.7
251.9
225.1
348.2
203.3
551.5
83.6
1,273.3
664.8
1,938.1
445.3
Tonnes
(5)
2013
MTIS
166.7
4.3
171.0
0.2
Tonnes
2013
(5)
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
Coal Quality
(6)
2014
kcal/kg
6,500
6,500
6,500
6,500
(6)
2013
kcal/kg
6,500
6,500
6,500
6,500
Coal Quality
(6)
2014
kcal/kg
4,970
4,700
4,960
4,830
5,520
5,560
5,540
5,460
5,300
5,360
5,310
–
4,940
4,920
4,940
4,880
4,410
4,270
4,370
5,290
5,330
5,410
5,350
5,280
4,840
4,770
4,790
4,600
4,320
4,190
4,270
4,200
4,650
4,590
4,630
4,740
(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
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.
Anglo American plc Annual Report 2014
179
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COAL
estimates as at 31 December 2014
(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) 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.
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).
Synfuel refers to a coal specifically for the domestic production of synthetic fuel and chemicals; quality measured by calorific value (CV).
Capcoal comprises opencast operations at Lake Lindsay and Oak Park, an underground longwall operation at Grasstree and the Aquila Project each of which has a different JV structure. The attributable
shareholding is determined annually on the proportion of the ROM and Saleable tonnes produced by the individual pits, and thus may vary from one year to the next due to differing production schedules.
Jellinbah is not reported as Anglo American’s shareholding is below the internal threshold for reporting.
Peace River Coal consists of Trend and Roman Mountain mines. The Belcourt Saxon project is a Joint Venture between Peace River Coal and Walter Energy Inc.
Estimates for the following operations were updated by depletion (geological models not updated): Capcoal OC, Capcoal UG – Grasstree, Drayton and Trend.
EXPLANATORY NOTES
Australia – Operations:
Callide: Coal Reserves decrease primarily due to a reduction in the Boundary Hill South LOMP which is aligned to the most recent mining lease application
(additional buffer zone around the homestead required). Proved Reserves have been downgraded to Probable due to contractual obligations (see note 6 to the
financial statements for further details). Coal Resources decrease due to the rationalisation of upper and lower seam thicknesses, prevailing low commodity prices
together with a change of mine design, offset by the removal of geological losses.
Dawson: Coal Reserves decrease due to prevailing low commodity price and a revision of the mine plan and mining methodology impacting on the Reserve Life.
Coal Resources decrease due to a revised mine plan and a change of mining methodology as well as the impact of a revised resource shell based on a lower
long-term commodity price forecast.
Drayton: Coal Reserves decrease due to production. The current Reserve Life is limited, pending the New South Wales Planning Assessment Commission’s (PAC)
decision on revised mine plan to be submitted for the Drayton South project.
Foxleigh: Coal Reserves decrease primarily due to production. The current approved Life of Mine Plan includes material amounts of Inferred Resources and
additional low confidence material.
Moranbah North: Proved Coal Reserves have been downgraded to Probable due to a revision of the resource classification to include seismic data. Coal
Resources increase due to additional drilling information and the removal of geological loss.
Canada – Operations: (see note 6 to the financial statements for further details)
Trend: Proved Coal Reserves have been downgraded to Probable due to the mine being placed on care and maintenance at the end of 2014.
Roman Mountain: Proved Coal Reserves have been downgraded to Probable due to the mine being placed on care and maintenance at the end of 2014.
Colombia – Operations:
Cerrejón: Coal Reserves decrease due to production and revision of the LOM Plan.
South Africa – Operations:
Goedehoop: Coal Reserves decrease due to the reallocation of South Shaft (Seam 4) blocks to resources due to revised economic parameters. This was offset by
the conversion of the Seam 1 blocks to Coal Reserves and optimisation of the layout.
Kleinkopje: Coal Reserves decrease primarily due to production.
Kriel: Coal Reserves decrease due to the reallocation of Mini-pits 1 and 2 to resources as a result of delays in the Pre-Feasibility studies affecting the Reserve Life.
Landau: Coal Reserves decrease primarily due to production, seam thickness changes as a result of weathering along the sub-crop and adjustments to geological
losses.
New Denmark: Coal Resources decrease due to the conversion of Inferred Resource from additional drilling information and the exclusion of panels in dyke
affected areas. The Reserve Life is limited to 25 years as the current Mining Right expires in 2039.
Zibulo: Coal Reserves decrease primarily due to production and the reallocation to Coal Resources of low yielding blocks.
Australia – Projects:
Grosvenor: Proved Coal Reserves have been downgraded to Probable due to a revision of the Resource classification to include seismic data. Coal Resources
increase due to additional drilling and the removal of geological losses.
Teviot Brook: Coal Resources increase due to the removal of geological losses. The Teviot Brook project area contains additional Coal Resources identified for
extraction by the adjacent Moranbah North mine.
South Africa – Projects:
South Rand: Coal Resources increase due to additional drilling information which resulted in classification upgrades.
180
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
COAL
estimates as at 31 December 2014
Mineral Tenure:
Callide: Mining Leases ML80121 and ML80186 are currently pending grant. There is reasonable expectation that such rights will not be withheld.
Capcoal: Exploration Permit for Coal EPC2033 will expire in 2015 and an application for renewal will be submitted. There is reasonable expectation that such rights
will not be withheld.
Dawson: Mining Lease ML5644 will expire in 2015 and an application for its renewal has been submitted. There is reasonable expectation that such rights will not
be withheld.
Foxleigh: Grant of Mining Lease ML70310 is currently pending. There is reasonable expectation that such rights will not be withheld.
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 at Nooitgedacht has been granted and executed in 2013. A Water Use Licence for the pans at Springboklaagte
has been granted late in 2014, the mining schedule will be updated.
New Largo: The New Largo Mining Right has been granted in August 2013; The execution of the mining right is awaited.
Audits related to the generation of the Coal Reserve estimates were carried out by independent consultants during 2014 at the following operations and projects:
Australia – Callide
South Africa – Greenside, Isibonelo and Kriel in progress
Audits related to the generation of the Coal Resource estimates were carried out by independent consultants during 2014 at the following operations and projects:
Australia – Callide (Dunn Creek), Foxleigh (Carlo Creek, Daggers Tip and Eagles Nest), Moranbah North-Grosvenor-Teviot Brook (combined geological model)
Canada – Roman Mountain
South Africa – Isibonelo and Zibulo in progress
Anglo American plc Annual Report 2014
181
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COPPER
estimates as at 31 December 2014
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. Rounding of figures may cause computational discrepancies for totals. Reserve Life is reported from 2014 onwards and is aligned with the current
approved Life of Mine Plan.
Copper – Operations
ORE RESERVES
Collahuasi (OP)
Oxide and Mixed
Heap Leach
Attributable %
44.0
Reserve
Life
70
Classification
Sulphide
Flotation – direct feed
Copper
Molybdenum
Low Grade Sulphide
Flotation – stockpile
Copper
Molybdenum
50.1
13
El Soldado (OP)
Sulphide
Flotation
Oxide
Heap Leach
Los Bronces (OP)
50.1
35
Sulphide
Flotation
Sulphide
Dump Leach
Copper
Molybdenum
Mantos Blancos (OP)
100
10
Sulphide
Flotation
Oxide
Vat and Heap Leach
Oxide
Dump Leach
Mantoverde (OP)
Oxide
Heap Leach
Oxide
Dump Leach
100
5
2014
Mt
17.7
19.9
37.5
Tonnes
2013
Mt
–
7.0
7.0
422.2
1,601.9
2,024.2
422.4
1,683.0
2,105.4
41.3
1,151.5
1,192.8
28.2
1,137.8
1,166.0
53.4
35.6
89.0
–
–
–
48.1
39.1
87.2
–
2.3
2.3
670.1
843.1
1,513.2
721.4
724.1
1,445.4
368.5
177.1
545.6
439.1
158.5
597.6
17.4
29.4
46.8
2.2
12.7
14.9
0.6
37.5
38.1
38.3
9.7
47.9
30.9
13.0
43.9
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
2014
%TCu
0.67
0.73
0.70
%TCu
1.03
0.99
1.00
%Mo
0.021
0.023
0.023
%TCu
0.42
0.48
0.48
%Mo
0.013
0.010
0.010
%TCu
0.85
0.78
0.82
–
–
–
%TCu
0.66
0.53
0.59
%Mo
0.015
0.013
0.014
%TCu
0.31
0.27
0.30
%ICu
0.89
0.70
0.77
%ASCu
0.48
0.32
0.34
%ASCu
0.17
0.20
0.20
%ASCu
0.52
0.49
0.51
%ASCu
0.19
0.19
0.19
Grade
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
Contained Metal
2014
kt
118
145
263
2013
kt
–
40
40
4,349
15,859
20,208
4,351
16,494
20,845
89
368
457
174
5,527
5,701
5
115
121
454
278
731
–
–
–
4,422
4,468
8,891
101
110
210
1,142
478
1,620
155
205
361
11
41
51
1
74
75
199
47
246
59
25
83
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
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. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
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.
182
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
COPPER
estimates as at 31 December 2014
EXPLANATORY NOTES
Copper Reserves: A minimum cut-off of 0.20% (TCu, ICu or ASCu) is applied to determine Ore Reserves on operations.
Collahuasi – Oxide and Mixed: The increase is due to new economic assumptions in the mine plan for the Rosario Sur I and II areas.
El Soldado – Sulphide (Flotation): The Ore Reserve estimates include mineralised void-fill material from the collapse of previously mined areas of approximately
178kt Contained Metal (20.6Mt at 0.86 %TCu)
El Soldado – Oxide (Heap Leach): Production has exhausted the remaining Heap Leach material.
Los Bronces – Sulphide (Dump Leach): The decrease is due to production and adjustment as a result of a modified cut-off grade strategy applied in the latest life
of mine plan.
Mantos Blancos – Oxide (Vat and Heap Leach): The decrease is due to production, a modified design of Phase 17 and exclusion of phase 21 from the latest life of
mine plan. The decrease is partially offset by drilling of the Mercedes Dump and application of new estimation parameters.
Mantos Blancos – Oxide (Dump Leach): The increase is due to a sonic drill campaign on the Mercedes Dump. The Dump Leach Reserves are comprised primarily
of two major components, Mercedes Dump and Este Dump, split as follows:
Este Dump – Probable: 7kt Contained Metal (3.6 Mt at 0.20 %ASCu).
Mercedes Dump – Proved: 1kt Contained Metal (0.6 Mt at 0.17 %ASCu), Probable: 58kt Contained Metal (29.0 Mt at 0.20 %ASCu).
Mantoverde – Oxide (Dump Leach): The increase is due to the application of new mine designs for Celso, Kuroki and Montecristo pits along with lower cut-off
grades.
Mineral Tenure:
Los Bronces: As per the latest Life of Mine Plan, the development of the Los Bronces Open Pit will require a modification to the Environmental Permits (EIA
Process) as of 2030. This in accordance with the current limits approved in the EIA-LBDP 2007 (RCA N° 3159).
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2014 at the following operations:
El Soldado, Los Bronces, Mantos Blancos and Mantoverde.
Anglo American plc Annual Report 2014
183
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COPPER
estimates as at 31 December 2014
Copper – Operations
MINERAL RESOURCES
Collahuasi (OP)
Oxide and Mixed
Heap Leach
Attributable %
44.0
Sulphide
Flotation – direct feed
Copper
Molybdenum
Low Grade Sulphide
Flotation – stockpile
Copper
Molybdenum
50.1
50.1
Copper
Molybdenum
El Soldado (OP)
Sulphide
Flotation
Los Bronces (OP)
Sulphide
Flotation
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
2014
Mt
13.7
27.6
41.3
0.0
32.9
32.9
11.6
1,227.3
1,238.9
419.8
3,071.4
3,491.2
Tonnes
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
16.6
345.6
362.1
423.0
1,119.6
1,542.6
11.2
295.1
306.4
399.2
1,065.0
1,464.2
107.4
16.5
123.9
4.1
20.2
24.3
232.1
1,220.1
1,452.2
190.6
2,544.1
2,734.7
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
–
–
–
138.4
–
138.4
–
–
–
175.0
–
175.0
2014
%TCu
0.68
0.51
0.57
0.41
0.52
0.52
%TCu
0.75
0.96
0.96
1.12
0.98
1.00
%Mo
0.005
0.050
0.050
0.011
0.024
0.022
%TCu
0.46
0.43
0.43
0.43
0.46
0.45
%Mo
0.013
0.021
0.021
0.003
0.006
0.005
%TCu
0.62
0.57
0.61
0.54
0.36
0.39
%TCu
0.42
0.39
0.39
0.49
0.38
0.39
%Mo
0.006
0.008
0.008
0.012
0.008
0.008
%TCu
–
–
–
0.27
–
0.27
Grade
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
Contained Metal
2014
kt
93
141
234
0
171
171
87
11,782
11,869
4,702
30,099
34,801
1
614
614
46
737
783
76
1,486
1,562
1,819
5,150
6,969
2
73
75
13
67
80
666
94
760
22
73
95
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
975
4,758
5,733
934
9,667
10,601
641
4,219
4,860
898
12,204
13,101
14
98
112
23
204
226
–
–
–
374
–
374
8
84
92
21
339
360
–
–
–
490
–
490
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.
184
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
COPPER
estimates as at 31 December 2014
Copper – Operations continued
MINERAL RESOURCES (1)
Mantos Blancos (OP)
Attributable %
100
Sulphide
Flotation
Oxide
Vat and Heap Leach
Oxide
Dump Leach
Mantoverde (OP)
Oxide
Heap Leach
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
2014
Mt
28.8
61.9
90.8
–
22.0
22.0
4.5
13.9
18.4
9.1
7.1
16.3
1.0
10.0
11.0
65.3
5.4
70.7
33.8
33.6
67.4
0.3
2.3
2.6
13.9
11.5
25.3
1.2
1.0
2.3
Tonnes
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
2014
%ICu
0.76
0.59
0.64
–
0.56
0.56
%ASCu
0.48
0.41
0.43
0.19
0.42
0.29
%ASCu
0.18
0.17
0.17
0.18
0.17
0.18
%ASCu
0.35
0.36
0.35
0.42
0.28
0.29
%ASCu
0.16
0.15
0.16
0.17
0.15
0.16
Grade
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
Contained Metal
2014
kt
219
365
585
–
123
123
21
57
79
17
30
47
2
17
19
121
9
130
118
121
239
1
7
8
22
17
39
2
2
4
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
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.
EXPLANATORY NOTES
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 variable cut-off grades not lower than 0.2 %TCu.
Los Bronces – Sulphide (Flotation) and Sulphide (Dump Leach): The overall decrease is due to updated economic assumptions leading to conversion of
resources to reserves and new drilling information.
Mantos Blancos – Oxide (Dump Leach): The decrease is due to due to removal of material for which metallurgical test work is outstanding. The Dump Leach
Resources are comprised primarily of two major components, Mercedes Dump and Este Dump, split as follows:
Este Dump – Inferred: 54kt Contained Metal (30.2 Mt at 0.18 %ASCu).
Mercedes Dump – Measured: 2kt Contained Metal (1.0 Mt at 0.18 %ASCu), Indicated: 17kt Contained Metal (10.0 Mt at 0.17 %ASCu), Inferred : 72kt Contained
Metal (38.6 Mt at 0.19 %ASCu).
Mantoverde – Oxide (Heap Leach): The increase is due to new drilling information at Rebosadero, Quisco and Montecristo areas and the transfer of oxide material
from the Mantoverde Development Project to the Mantoverde operation as a result of a change in the pit design.
Mantoverde – Oxide (Dump Leach): The increase is due to changes in economic assumptions (lower cut-off grade applied).
Anglo American plc Annual Report 2014
185
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
COPPER
estimates as at 31 December 2014
Copper – Projects
ORE RESERVES
Quellaveco (OP)
Sulphide
Flotation
Attributable %
81.9
Reserve
Life
29
Copper
Classification
Proved
Probable
Total
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 (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
Measured
Indicated
Measured and Indicated
Inferred
2014
Mt
951.4
380.6
1,332.0
Tonnes
2013
Mt
701.8
214.6
916.4
2014
Mt
120.1
48.4
168.5
144.6
106.3
18.4
124.7
18.9
135.0
653.1
788.1
12.6
771.5
784.0
Tonnes
2013
Mt
118.2
54.6
172.8
147.9
48.0
5.7
53.7
3.4
285.1
807.5
1,092.7
6.9
858.0
864.9
–
495.0
495.0
970.0
–
495.0
495.0
970.0
Inferred
900.0
900.0
Inferred
1,200.0
1,200.0
2014
%TCu
0.58
0.57
0.58
%Mo
0.018
0.020
0.019
2014
%TCu
0.71
0.64
0.69
0.62
%ASCu
0.28
0.23
0.27
0.19
%TCu
0.32
0.39
0.38
0.67
0.32
0.33
%Mo
0.008
0.014
0.013
0.010
0.010
0.010
%TCu
–
0.55
0.55
0.48
%TCu
0.81
%TCu
1.46
Grade
2013
%TCu
0.65
0.63
0.65
%Mo
0.019
0.021
0.019
Grade
2013
%TCu
0.71
0.64
0.69
0.61
%ASCu
0.40
0.34
0.39
0.32
%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
–
0.55
0.55
0.48
%TCu
0.81
%TCu
1.46
Contained Metal
2014
kt
5,518
2,169
7,687
171
76
247
2013
kt
4,562
1,352
5,914
133
45
178
Contained Metal
2014
kt
852
310
1,162
897
298
42
340
36
432
2,547
2,979
84
2,469
2,553
11
91
102
1
77
78
–
2,723
2,723
4,656
2013
kt
839
349
1,189
902
192
19
211
11
998
3,311
4,309
54
2,831
2,886
29
121
150
1
93
93
–
2,723
2,723
4,656
7,290
7,290
17,520
17,520
Molybdenum
Copper – Projects
MINERAL RESOURCES
Attributable %
Mantoverde Development Project 100
Sulphide
Flotation
Oxide
Heap and Dump Leach
Quellaveco (OP)
Sulphide
Flotation
West Wall
Sulphide
Los Bronces Sur
Sulphide
Los Bronces Underground
Sulphide
81.9
Copper
Molybdenum
50.0
50.1
50.1
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Mining method: OP = Open Pit. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
TCu = Total 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.
Los Bronces Sur (previously known as San Enrique Monolito) and Los Bronces Underground (previously known as Los Sulfatos) are part of Anglo American Sur.
Mantoverde Development Project is part of Anglo American Norte.
West Wall is a Joint Venture with Glencore.
EXPLANATORY NOTES
Quellaveco – Ore Reserves: A minimum cut-off of 0.30 %TCu is applied to determine Ore Reserves. The increase is due to a new mine plan which incorporates
increase plant throughput and a new cut-off grade.
Quellaveco – Mineral Resources: Mineral Resources are quoted above a 0.3 %TCu cut-off within an optimised pit shell. The decrease is due to a conversion of
resources to reserves in a new mine plan.
Mantoverde Development Project – Sulphide (Flotation): Mineral Resources are quoted above a 0.35 %TCu cut-off.
Mantoverde Development Project – Oxide (Flotation): Mineral Resources are quoted above a 0.1 %ASCu (Dump Leach) or 0.2 %ASCu (Heap Leach) and less
than 20 %CaCO3 cut-off. The increase is due to declaration of resources in new areas mainly in the Mantoverde Fault area with additional resources in the
Mantoruso, Quisco and Celso areas.
West Wall: Mineral Resources are quoted above a 0.3 %TCu cut-off within an optimised pit shell.
Los Bronces Sur (San Enrique Monolito): To align with the location of the deposit within the Los Bronces mining district, San Enrique Monolito will be referred to
as Los Bronces Sur going forward. The test for reasonable prospects of eventual economic extraction is based on an underground operation.
Los Bronces Underground (Los Sulfatos): To align with the location of the deposit within the Los Bronces mining district, Los Sulfatos will be referred to as Los
Bronces Underground going forward. 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.
Audits related to the generation of the Mineral Resource estimates were carried out by independent consultants during 2014 at the Mantoverde Development Project.
186
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
NICKEL
estimates as at 31 December 2014
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. Rounding of figures may cause computational discrepancies for totals. Reserve Life is reported from 2014 onwards and is aligned with the current
approved Life of Mine Plan.
Nickel – Operations
ORE RESERVES
Barro Alto (OP)
Saprolite
Niquelândia (OP)
Saprolite
Attributable %
100
Reserve
Life
22
100
22
Nickel – Operations
MINERAL RESOURCES
Barro Alto (OP)
Saprolite
Attributable %
100
Ferruginous Laterite
Niquelândia (OP)
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
Ferruginous Laterite
Attributable %
100
Saprolite
Classification
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
2014
Mt
15.3
24.1
39.3
5.2
1.7
6.9
2014
Mt
6.5
9.3
15.9
26.9
16.9
43.8
1.6
7.3
8.9
1.4
0.1
1.5
1.9
1.8
3.7
–
–
–
2014
Mt
6.3
53.8
60.1
125.0
–
39.6
39.6
81.9
Tonnes
2013
Mt
20.0
25.2
45.3
4.5
1.1
5.6
Tonnes
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
–
–
–
Tonnes
2013
Mt
6.3
53.8
60.1
125.0
–
39.6
39.6
81.9
2014
%Ni
1.67
1.42
1.52
%Ni
1.29
1.18
1.26
2014
%Ni
1.46
1.38
1.41
1.43
1.27
1.37
1.20
1.09
1.11
1.07
1.07
1.07
%Ni
1.23
1.25
1.24
–
–
–
2014
%Ni
1.15
1.21
1.21
1.17
–
1.49
1.49
1.39
Grade
2013
%Ni
1.71
1.42
1.55
%Ni
1.31
1.25
1.30
Grade
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
–
–
–
Grade
2013
%Ni
1.15
1.21
1.21
1.17
–
1.49
1.49
1.39
Contained Metal
2014
kt
255
342
597
67
20
87
2013
kt
342
358
700
59
14
73
Contained Metal
2014
kt
96
128
224
385
214
600
20
79
99
15
2
16
23
23
46
–
–
–
2013
kt
114
101
215
491
179
670
30
65
95
13
0
13
31
28
59
–
–
–
Contained Metal
2014
kt
72
653
726
1,468
–
589
589
1,138
2013
kt
72
653
726
1,468
–
589
589
1,138
Mining method: OP = Open Pit. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
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.
EXPLANATORY NOTES
Barro Alto – Ore Reserves: The decrease is due to increased haulage costs resulting in reallocation of Ore Reserves to Mineral Resources. This is partially
offset by a change in the modelling method of dilution. The Ore Reserves are derived from a mine plan which targets a smelter feed with an iron grade below
19 %Fe and a SiO2/MgO ratio less than or equal to 1.80.
Niquelândia – Ore Reserves: The increase is primarily due to changes in economic assumptions which enables conversion of resources to reserves. The
Ore Reserves are derived from a mine plan which targets a smelter feed with an iron grade below 19 %Fe and a SiO2/MgO ratio less than or equal to 1.75.
Niquelândia Mine is adjacent to the Codemin Ferro-Nickel smelter which is fed with ore from Barro Alto and is blended with Niquelândia ore to achieve an
appropriate smelter feed chemistry.
Barro Alto – Saprolite Mineral Resources: The decrease is due to new information enabling improved resource classification of material close to the basal
contact of the orebody which offsets the reallocation from Ore Reserves. Transfer of material to a Low-MgO Stockpile also contributes to the decrease.
The Low-MgO material (Measured: 7.2 Mt at 1.59 %Ni, excluded from the table) is used for blending when the appropriate smelter feed chemistry can be achieved.
Mineral Resources are quoted above a 0.9 %Ni cut-off.
Barro Alto – Ferruginous Laterite Mineral Resources: Material that is scheduled for stockpiling or has already been mined and stockpiled.
A surface stockpile of 0.8 Mt at 1.36 %Ni (Measured) is excluded from the table.
Niquelândia – Mineral Resources: The decrease is due to conversion of Mineral Resources to Ore Reserves.
Mineral Resources are quoted above a 0.9 %Ni cut-off.
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 Mineral
Resources (>1.3 %Ni) that are expected to feed a pyrometallurgical treatment facility and lower-grade Mineral 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 2014
187
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
NIOBIUM
estimates as at 31 December 2014
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. Rounding of figures may cause computational discrepancies. Reserve Life is reported from 2014 onwards and is aligned with the current approved
Life of Mine Plan.
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Classification
Classification
Proved
Probable
Total
Classification
Niobium – Operations
ORE RESERVES
Boa Vista (OP)
Attributable %
100
Reserve
Life
1
Catalão II Carbonatite Complex
Oxide
Mina II (OP)
100
1
Catalão I Carbonatite Complex
Oxide
Tailings
100
21
Catalão I Carbonatite Complex
Phosphate Tailings
Niobium – Operations
MINERAL RESOURCES
Boa Vista (OP)
Attributable %
100
Catalão II Carbonatite Complex
Oxide
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Niobium – Projects
ORE RESERVES
Boa Vista (OP)
Attributable %
100
Reserve
Life
21
Catalão II Carbonatite Complex
Fresh Rock
Niobium – Projects
MINERAL RESOURCES
Area Leste
Attributable %
100
Catalão I Carbonatite Complex
Oxide
Catalão I Carbonatite Complex
Fresh Rock
Boa Vista (OP)
100
Catalão II Carbonatite Complex
Fresh Rock
Mina I
Catalão I Carbonatite Complex
Oxide
Mina II
Catalão I Carbonatite Complex
Fresh Rock
Morro do Padre
Catalão II Carbonatite Complex
Fresh Rock
100
100
100
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
2014
Mt
0.8
0.3
1.1
0.3
–
0.3
–
19.4
19.4
2014
Mt
–
0.0
0.0
0.6
0.0
0.7
2014
Mt
0.9
27.2
28.0
2014
Mt
–
–
–
2.9
–
–
–
11.8
–
0.6
0.6
6.0
4.5
10.5
–
–
–
1.7
0.1
2.4
2.5
1.5
–
–
–
8.3
Tonnes
2013
Mt
0.8
0.4
1.3
0.4
–
0.4
–
14.5
14.5
Tonnes
2013
Mt
0.2
0.4
0.6
0.2
0.5
0.7
Tonnes
2013
Mt
0.2
23.8
24.0
Tonnes
2013
Mt
–
–
–
2.9
–
–
–
11.8
–
4.8
4.8
1.3
9.2
10.5
–
–
–
1.7
–
–
–
5.1
–
–
–
8.3
2014
%Nb2O5
1.23
1.26
1.24
%Nb2O5
1.17
–
1.17
%Nb2O5
–
0.69
0.69
2014
%Nb2O5
–
0.55
0.55
0.79
0.61
0.79
2014
%Nb2O5
1.14
0.87
0.88
2014
%Nb2O5
–
–
–
1.25
–
–
–
1.17
%Nb2O5
–
0.92
0.92
0.95
1.24
1.08
%Nb2O5
–
–
–
0.79
%Nb2O5
1.22
1.19
1.19
1.04
%Nb2O5
–
–
–
1.26
Grade
2013
%Nb2O5
1.21
1.03
1.15
%Nb2O5
1.16
–
1.16
%Nb2O5
–
0.69
0.69
Grade
2013
%Nb2O5
1.56
1.18
1.30
0.91
0.79
0.83
Grade
2013
%Nb2O5
1.24
0.95
0.95
Grade
2013
%Nb2O5
–
–
–
1.25
–
–
–
1.17
%Nb2O5
–
0.98
0.98
0.86
1.11
1.08
%Nb2O5
–
–
–
0.79
%Nb2O5
–
–
–
1.17
%Nb2O5
–
–
–
1.26
Contained Product
2014
kt
10
4
14
4
–
4
–
134
134
2013
kt
10
5
14
4
–
4
–
100
100
Contained Product
2014
kt
–
0
0
5
0
5
2013
kt
3
5
8
2
4
6
Contained Product
2014
kt
10
236
246
2013
kt
3
226
229
Contained Product
2014
kt
–
–
–
37
–
–
–
138
–
5
5
57
56
113
–
–
–
13
1
29
30
16
–
–
–
104
2013
kt
–
–
–
37
–
–
–
138
–
47
47
11
102
113
–
–
–
13
–
–
–
60
–
–
–
104
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Mining method: OP = Open Pit, UG = Underground. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
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.
188
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
NIOBIUM
estimates as at 31 December 2014
EXPLANATORY NOTES
Boa Vista – Oxide Ore Reserves (OP): The remaining Oxide Ore Reserves will be extracted as part of the combined Oxide and Fresh Rock mine plan.
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 optimisation of the Boa Vista Fresh Rock pit design enabling the tailings plant to continue operating once the Oxide Reserves are depleted.
Boa Vista – Oxide Mineral Resources (OP): The decrease is due to conversion of Mineral Resource to Ore Reserves as a result of the increased size of the Fresh
Rock pit. The Oxide Mineral Resources are reported above a 0.5 %Nb2O5 cut-off.
Boa Vista – Fresh Rock Ore Reserves (OP): The increase is due to the optimisation of the pit design. The project is in the ramp-up phase.
Area Leste – Oxide Mineral Resources: The Oxide Resources are reported above a 0.5 %Nb2O5 cut-off.
Area Leste – Fresh Rock Mineral Resources: The Fresh Rock Resources are reported above a 0.7 %Nb2O5 cut-off.
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 conversion
of Mineral Resources to Ore Reserves as a result of the optimisation of the pit design.
Additional Mineral Resource estimates using an underground mining method as the basis for reasonable prospects for eventual economic extraction are:
Inferred Resources: 106kt Contained Product (10.7 Mt at 0.99 %Nb2O5).
Mina I – Oxide Mineral Resources: The Oxide Resources are reported above a 0.5 %Nb2O5 cut-off.
Mina II – Fresh Rock Mineral Resources: The Fresh Rock Resources are reported above a 0.5 %Nb2O5 cut-off. The application of an open pit mining method is
the basis for reasonable prospect for eventual economic extraction of this material. The decrease is due to a change in the planned pit slope angle which reduces the
volume of the Resource Shell. A new block model has been completed but the underground design study demonstrating the viability of the extension to the orebody
has not been completed yet. No Mineral Resource estimates are therefore declared using an underground mining method as the basis for reasonable prospects for
eventual economic extraction.
Morro do Padre – Fresh Rock Mineral Resources: 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.
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 ongoing to upgrade the confidence in the project resources.
Anglo American plc Annual Report 2014
189
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
PHOSPHATES
estimates as at 31 December 2014
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. Rounding of figures may cause computational discrepancies. Reserve Life is reported from 2014 onwards and is aligned with the current approved
Life of Mine Plan.
Phosphates – Operations
ORE RESERVES
Chapadão (OP)
Carbonatite Complex
Oxide
Attributable %
100
Reserve
Life
34
Phosphates – Operations
MINERAL RESOURCES
Chapadão (OP)
Carbonatite Complex
Oxide
Attributable %
100
Attributable %
100
Phosphates – Projects
MINERAL RESOURCES
Coqueiros (OP)
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
2014
Mt
36.8
75.1
112.0
2014
Mt
–
0.1
0.1
19.4
165.7
185.1
2014
Mt
1.8
16.5
18.3
26.2
1.2
34.0
35.2
16.2
Tonnes
2013
Mt
41.0
77.0
118.1
Tonnes
2013
Mt
–
0.1
0.1
19.5
165.7
185.2
Tonnes
2013
Mt
1.8
16.5
18.3
26.2
1.2
34.0
35.2
16.2
2014
%P2O5
12.4
13.0
12.8
2014
%P2O5
–
13.2
13.2
13.5
12.1
12.3
2014
%P2O5
10.5
12.9
12.6
11.2
7.3
8.5
8.5
7.6
Grade
2013
%P2O5
12.5
13.0
12.8
Grade
2013
%P2O5
–
13.2
13.2
13.6
12.1
12.3
Grade
2013
%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. Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
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.
EXPLANATORY NOTES
Chapadão – Oxide Ore Reserves: The decrease is due to production.
Chapadão – Oxide Mineral Resources: Mineral Resources are quoted above a 6 %P2O5 cut-off and a CaO/P2O5 ratio between 1 and 1.5.
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) has been
approved with additional hydrogeological and geotechnical studies in progress.
Audits related to the generation of the Mineral Resource estimates were carried out by independent consultants during 2014 at Chapadão.
190
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
PLATINUM GROUP METALS
estimates as at 31 December 2014
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. Reserve Life
is reported from 2014 onwards and is aligned with the current approved Life of Mine Plan.
Anglo American plc’s ownership of Anglo American Platinum Limited is 78%.
Platinum – South Africa Operations
ORE RESERVES
Merensky Reef
Classification
UG2 Reef
Platreef
All Reefs
Merensky, UG2 & Platreef
Tailings
Proved
Probable
Total
Proved
Probable
Total
Proved
Primary stockpile Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Platinum – Zimbabwe Operations
ORE RESERVES
Main Sulphide Zone
Classification
Proved
Probable
Total
2014
Mt
58.2
18.5
76.7
328.4
83.3
411.7
688.8
38.1
847.6
1,574.5
1,113.5
949.4
2,062.9
–
20.9
20.9
2014
Mt
11.7
37.7
49.5
Tonnes
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
Tonnes
2013
Mt
14.1
36.6
50.7
2014
4E PGE
4.69
4.74
4.70
3.96
4.13
4.00
2.72
1.71
2.68
2.67
3.15
2.84
3.01
–
1.06
1.06
2014
4E PGE
3.56
3.52
3.54
Grade
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
Grade
2013
4E PGE
3.72
3.68
3.69
Contained Metal
Contained Metal
2014
4E tonnes
273.0
88.0
361.0
1,301.0
344.0
1,645.0
1,870.0
65.0
2,268.0
4,203.0
3,509.0
2,700.0
6,209.0
–
22.0
22.0
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
2014
4E Moz
8.8
2.8
11.6
41.8
11.0
52.9
60.1
2.1
72.9
135.2
112.8
86.8
199.6
–
0.7
0.7
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
Contained Metal
Contained Metal
2014
4E tonnes
42.0
133.0
175.0
2013
4E tonnes
52.3
134.6
186.9
2014
4E Moz
1.3
4.3
5.6
2013
4E Moz
1.7
4.3
6.0
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 (UG) range from 86% to 89%, UG2 Reef (UG) from 78% to 87%, Platreef from 75% to 85% and Main Sulphide Zone from 70% to 78%.
Tailings reprocessing recoveries range from 30% to 40%.
EXPLANATORY NOTES
Merensky Reef and UG2 Reef: The pay limits built into the basic mining equation are directly linked to the 2015 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 Ore Reserve pay-limit varies across
all operations between 2.1g/t and 5.3g/t (4E PGE). The range is a function of various factors including depth of the orebody, geological complexity, mining method,
infrastructure and economic parameters.
Merensky Reef: The global Ore Reserve 4E ounce content and tonnage increased due to conversion of Mineral Resources to Ore Reserves mainly at Bokoni,
BRPM and Thembelani mines. These increases were partially offset by the decrease in Ore Reserves mainly from Tumela Mine where Ore Reserves have been
reallocated to Mineral Resources.
UG2 Reef: The primary contribution to the overall decrease is production. Additionally the global Ore Reserve 4E content decreased but the tonnage increased
largely due to the reallocation of Ore Reserves to Mineral Resources mainly at Dishaba, Tumela and Modikwa mines. Adjusted modifying factors applied to AAPL
managed mines resulted in a tonnage increase and a grade decrease. These decreases were partially offset by the conversion of Mineral Resources to Ore
Reserves mainly at Siphumelele 3 (managed by Aquarius Platinum Ltd), Mototolo and Thembelani mines.
Platreef: The pay limit is 2.3 g/t 4E for the mining operations and varies between 1.0g/t and 1.7 g/t 4E for the stockpiles.
The Ore Reserves 4E content and tonnage decreased as a result of a change in the detailed ramp designs associated with Cut 18 during planning optimisation which
resulted in reallocation of Ore Reserves to Mineral Resources. The change in the design only affects the southern portion of the Mogalakwena pit. The anticipated
Life of Mine Plan exceeds the current Mining Right expiry date.
Platreef Primary stockpile: Mined ore retained for future treatment and reported separately as Proved Reserves but included in the Total Platreef Ore Reserves.
All Reefs – Alternative units: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2014 is:
Total: 2,274.0 Mton (2013: 2,331.7 Mton) at 0.088 oz/ton (2013: 0.089 oz/ton).
Tailings: Operating tailings dams are not reported as part of the published Ore Reserves. At Rustenburg mines dormant dams have been evaluated and are
separately reported as Probable Ore Reserves. The treatment of tailings is sensitive to both price and volume therefore resulting in tailings dam material being
reported as Probable Reserves only.
Main Sulphide Zone: The Ore Reserve tonnage and 4E content decreased mainly due to changes in the modifying factors as well as production. Anglo American
Platinum Limited currently reports an effective 100% interest in Unki Mine, subject to the finalisation of the indigenisation agreement.
Main Sulphide Zone – Alternative units: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2014 is:
Total: 54.5 Mton (2013: 55.8 Mton) at 0.103 oz/ton (2013: 0.108 oz/ton).
Anglo American plc Annual Report 2014
191
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
PLATINUM GROUP METALS
estimates as at 31 December 2014
Platinum – South Africa Operations
MINERAL RESOURCES
Merensky Reef
Classification
UG2 Reef
Platreef
All Reefs
Merensky, UG2 & Platreef
Tailings
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
2014
Mt
241.8
344.0
585.8
7.2
550.3
557.5
669.8
684.4
1,354.2
3.3
591.1
594.4
152.8
790.9
943.7
70.7
1,104.1
1,174.8
1,064.4
1,819.3
2,883.7
81.2
2,245.6
2,326.7
137.5
23.6
161.0
–
1.2
1.2
MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.
Platinum – Zimbabwe Operations
MINERAL RESOURCES
Main Sulphide Zone
Classification
Measured
Indicated
Measured and Indicated
Inferred (in LOM Plan)
Inferred (ex. LOM Plan)
Total Inferred
2014
Mt
23.2
113.9
137.1
11.2
41.8
53.0
Tonnes
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
Tonnes
2013
Mt
23.4
114.6
138.1
0.0
45.1
45.1
2014
4E PGE
5.49
5.32
5.39
6.65
4.89
4.91
5.19
5.16
5.17
4.74
5.35
5.34
2.66
2.23
2.30
2.59
1.82
1.86
4.89
3.92
4.28
3.04
3.50
3.48
0.95
1.02
0.96
–
0.91
0.91
2014
4E PGE
3.83
4.31
4.22
3.95
4.36
4.27
Grade
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
Grade
2013
4E PGE
3.83
4.35
4.26
3.48
4.64
4.64
Contained Metal
Contained Metal
2014
4E tonnes
1,327.0
1,831.0
3,158.0
48.0
2,691.0
2,739.0
3,474.0
3,532.0
7,006.0
16.0
3,161.0
3,177.0
407.0
1,765.0
2,172.0
183.0
2,005.0
2,188.0
5,208.0
7,128.0
12,336.0
247.0
7,857.0
8,104.0
130.0
24.0
154.0
–
1.0
1.0
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
2014
4E Moz
42.7
58.9
101.5
1.5
86.5
88.1
111.7
113.5
225.2
0.5
101.6
102.1
13.1
56.8
69.8
5.9
64.5
70.3
167.4
229.2
396.6
7.9
252.6
260.5
4.2
0.8
5.0
–
0.0
0.0
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
Contained Metal
Contained Metal
2014
4E tonnes
89.0
490.0
579.0
44.0
182.0
226.0
2013
4E tonnes
89.6
498.2
587.8
0.1
208.9
209.0
2014
4E Moz
2.9
15.8
18.6
1.4
5.9
7.3
2013
4E Moz
2.9
16.0
18.9
0.0
6.7
6.7
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.
EXPLANATORY NOTES
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.
Merensky Reef: The Mineral Resource 4E content decreased but the tonnage increased mainly due to an improved resource evaluation methodology applied to
the Tumela Pothole Reef facies, partially offset by the Mineral Resources content and tonnage increase at Union, Rustenburg and Dishaba mines due to lower
geological losses applied.
UG2 Reef: The Mineral Resource 4E content and tonnage increased mainly at Union, Dishaba and Bokoni mines due to lower geological losses applied. A decrease
of Mineral Resources occurred due to the disposal of Driekop, a reconciliation adjustment at Kroondal and Marikana and conversion of Mineral Resources to Ore
Reserves at Mototolo.
Platreef: A 1.0g/t 4E cut-off is used to define Platreef Mineral Resources. The Mineral Resources increased due to reallocation of Ore Reserves to Mineral
Resources mainly as a result of changes in the detailed ramp designs associated with Cut 18.
All Reefs – Alternative units: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2014 is:
Measured and Indicated: 3,178.7 Mton (2013: 3,085.2 Mton) at 0.125 oz/ton (2013: 0.125 oz/ton).
Total Inferred: 2,564.8 Mton (2013: 2,586.2 Mton) at 0.102 oz/ton (2013: 0.103 oz/ton).
Tailings: Operating tailings dams are not reported as part of the Mineral Resources. At Rustenburg, Amandelbult and Union mines dormant tailings dams have been
evaluated and are separately reported as Tailings Mineral Resources.
Main Sulphide Zone: Anglo American Platinum currently reports an effective 100% interest in Southridge Limited, subject to the finalisation of the indigenisation
agreement.
Main Sulphide Zone – Alternative units: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2014 is:
Measured and Indicated: 151.2 Mton (2013: 152.2 Mton) at 0.123 oz/ton (2013: 0.124 oz/ton).
Total Inferred: 58.4 Mton (2013: 49.7 Mton) at 0.125 oz/ton (2013: 0.135 oz/ton).
192
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES PLATINUM GROUP METALS
estimates as at 31 December 2014
Platinum – Other 3E Projects
MINERAL RESOURCES
South Africa
Classification
Boikgantsho
Platreef
Sheba’s Ridge
Brazil
Pedra Branca
Measured
Indicated
Measured and Indicated
Inferred
Measured
Indicated
Measured and Indicated
Inferred
Inferred
2014
Mt
–
45.5
45.5
3.3
28.0
34.0
62.0
149.9
6.6
Tonnes
2013
Mt
–
45.5
45.5
3.3
28.0
34.0
62.0
149.9
6.6
2014
3E PGE
–
1.22
1.22
1.14
3E PGE
0.88
0.85
0.87
0.96
3E PGE
2.27
Grade
2013
3E PGE
–
1.22
1.22
1.14
3E PGE
0.88
0.85
0.87
0.96
3E PGE
2.27
Contained Metal
Contained Metal
2014
3E tonnes
–
55.4
55.4
3.8
24.6
29.1
53.6
144.5
15.0
2013
3E tonnes
–
55.4
55.4
3.8
24.6
29.1
53.6
144.5
15.0
2014
3E Moz
–
1.8
1.8
0.1
0.8
0.9
1.7
4.6
0.5
2013
3E Moz
–
1.8
1.8
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.
EXPLANATORY NOTES
Boikgantsho: Anglo American Platinum Limited holds an attributable interest of 100% of the Boikgantsho project.
A cut-off grade of 1g/t (3E PGE) is applied for Mineral Resource definition.
Sheba’s Ridge: Anglo American Platinum Limited holds an attributable interest of 35% of the Joint Venture between Anglo American Platinum Limited, Aquarius
Platinum Limited and the South African Industrial Development Corporation (IDC). A cut-off grade of 0.5g/t (3E PGE) is applied for Mineral Resource definition.
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 Mineral Resource definition.
The following operations and projects contributed to the combined 2014 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
Kroondal and Marikana Platinum Mine
Modikwa Platinum Mine
Mogalakwena Mine
Mototolo Platinum Mine
Pandora Mine
Siphumelele Mine•
Thembelani Mine•
Tumela Mine
Twickenham Platinum Mine
Union Mine
Unki Mine
Projects:
Der Brochen Project
Hoedspruit Portions (Rustenburg area)
Reef Types
MR/UG2
UG2
MR/UG2
MR/UG2
UG2
MR/UG2
PR
UG2
UG2
MR/UG2
MR/UG2
MR/UG2
MR/UG2
MR/UG2
MSZ
MR/UG2
MR/UG2
Mining Method
UG
UG
UG
UG
UG & OC
UG
OP
UG
UG
UG
UG
UG
UG
UG
UG
AAPL %
33%
100%
49%
100%
50%
50%
100%
50%
42.5%
100%
100%
100%
100%
85%
100%
%
100%
37.5% to 100%
Reserve Life
+
+
+
+
+
> 26
15
> 25
> 26
9
> 28
> 26
5*
25
10
14
16
19
23
31
Total Ore Reserves (4E Moz)
5.3
3.8
6.2
15.7
3.2
3.7
135.2
1.0
1.0
1.5
3.7
5.6
4.8
6.9
5.6
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.
Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan, 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.
+Reserve Life truncated to the last year of current Mining Right.
* Only five years of Ore Reserves are declared as per Glencore policy.
• Rustenburg Mines.
Union North and South Mines have been merged into a single reporting entity.
Anglo American Platinum Limited attributable portion of Driekop project has been fully disposed of during 2014.
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 Modikwa).
3E Projects – Boikgantsho, Pedra Branca, Sheba’s Ridge.
4E Projects – Der Brochen, Portions of Hoedspruit (Rustenburg area) – previously reported under ‘Other Exploration Projects’.
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2014 at the following operations:
Bathopele, Siphumelele 1, Thembelani (including Khuseleka shaft), Tumela, Twickenham and Union mines.
Anglo American plc Annual Report 2014
193
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
DIAMONDS
estimates as at 31 December 2014
DE BEERS CANADA
The Diamond Reserve and Diamond Resource estimates were compiled in accordance with the Canadian Institute of Mining and Metallurgy (CIM) Definition
Standards on Mineral Resources and Mineral Reserves. The figures reported represent 100% of the Diamond Reserves and Diamond Resources. Rounding of
figures may cause computational discrepancies. The mines, located in Canada, are operated under De Beers Canada Incorporated (DBCi). Snap Lake and
Victor Mines are wholly owned by DBCi. Gahcho Kué is currently being developed and is held by an unincorporated Joint Venture between DBCI (51%) and
Mountain Province Diamonds Incorporated (49%).
De Beers Canada – Operations
DIAMOND RESERVES
Snap Lake (UG)
Kimberlite
Attributable %
85.0
LOM
12
BCO
(mm)
1.14
Classification
Victor (OP)
Kimberlite
De Beers Canada
TOTAL Kimberlite
85.0
5
1.50
85.0
multiple
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
De Beers Canada – Operations
DIAMOND RESOURCES
Snap Lake (UG)
Kimberlite
Attributable %
85.0
BCO
(mm)
1.14
Classification
Measured
Indicated
Measured and Indicated
Inferred
Victor (OP)
Kimberlite
De Beers Canada
TOTAL Kimberlite
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)
Kimberlite
Attributable %
43.4
LOM
13
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)
Attributable %
43.4
Kimberlite
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
Treated Tonnes
Recovered Grade
Saleable Carats
2013
Mt
–
5.6
5.6
–
9.3
9.3
–
14.9
14.9
Tonnes
2013
Mt
–
9.0
9.0
15.8
–
9.7
9.7
17.3
–
18.7
18.7
33.0
2014
cpht
–
125.8
125.8
cpht
–
17.3
17.3
cpht
–
61.8
61.8
2014
cpht
–
182.4
182.4
184.2
cpht
–
18.2
18.2
29.2
cpht
–
106.7
106.7
152.0
2013
cpht
–
119.8
119.8
cpht
–
18.3
18.3
cpht
–
56.4
56.4
Grade
2013
cpht
–
178.9
178.9
173.3
cpht
–
18.7
18.7
22.6
cpht
–
96.1
96.1
94.5
2014
M¢
–
6.1
6.1
–
1.2
1.2
–
7.3
7.3
2014
M¢
–
15.4
15.4
26.1
–
1.3
1.3
1.1
–
16.8
16.8
27.2
2013
M¢
–
6.7
6.7
–
1.7
1.7
–
8.4
8.4
Carats
2013
M¢
–
16.1
16.1
27.3
–
1.8
1.8
3.9
–
17.9
17.9
31.2
Treated Tonnes
Recovered Grade
Saleable Carats
2013
Mt
–
31.0
31.0
Tonnes
2013
Mt
–
34.2
34.2
11.5
2014
cpht
–
154.5
154.5
2014
cpht
–
161.9
161.9
141.1
2013
cpht
–
153.7
153.7
Grade
2013
cpht
–
162.3
162.3
142.5
2014
M¢
–
52.4
52.4
2014
M¢
–
56.2
56.2
18.6
2013
M¢
–
47.6
47.6
Carats
2013
M¢
–
55.6
55.6
16.3
2014
Mt
–
4.8
4.8
–
7.0
7.0
–
11.8
11.8
2014
Mt
–
8.5
8.5
14.2
–
7.2
7.2
3.7
–
15.7
15.7
17.9
2014
Mt
–
33.9
33.9
2014
Mt
–
34.7
34.7
13.2
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 0.80mm 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 Diamond Resources, it cannot be assumed that all or part of an Inferred Diamond Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
194
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
DIAMONDS
estimates as at 31 December 2014
EXPLANATORY NOTES
Snap Lake: The decrease in Diamond Reserve estimates is primarily due to production and a revision of the Diamond Resource estimates. Indicated Resource
estimates are continuously generated from information gained from underground footwall drilling ahead of the mining face, resulting in a rolling Probable Reserve.
Longer-term Diamond Reserve development is considered impractical due to technical and cost considerations. Estimates are based on both micro-diamonds
and macro-diamonds.
Victor: The decrease is primarily due to production. The Stockpile Probable Reserves at a 1.50mm BCO of 0.03 M¢ (0.25 Mt at 13.5 cpht) are excluded
from the table. The inclusive Stockpile Resource estimates (including run of mine) at a 1.50 mm BCO of 0.03 M¢ (0.24 Mt at 13.9 cpht) Indicated and
0.01 M¢ (0.04 Mt at 30.8 cpht) Inferred Resource are excluded from the table. The geographically separate Tango Extension Inferred Resource estimates
of 4.3 M¢ (22.0 Mt at 19.6 cpht, BCO 1.50mm) are no longer reported as part of the Victor resource. The increase in Tango Extension is due to the inclusion
of two additional geological units.
Gahcho Kué: The increase in saleable carats is due to the addition of Indicated Resources in the 5034 NE Pipe in combination with a revision of the LOM Plan.
The estimates for 5034 NE and Tuzo are based on both micro-diamonds and macro-diamonds. During 2014 the Land Use Permit and Water Licence were issued.
The project has been approved for implementation by Anglo American. The project is expected to treat approximately 35 Mt of ore containing an estimated 54 M¢
(100% basis). Scheduled Inferred Resources (1.2 Mt) constitute 2.6% (1.4 M¢) of the estimated carats. The estimates are scheduled tonnes and carats as per the
2014 Life of Mine Plan.
EXCLUSIVE DIAMOND RESOURCES
Snap Lake (UG): 1.14 mm BCO – Indicated: 8.5 M¢ (4.9 Mt at 171.6 cpht); Inferred: 26.1 M¢ (14.2 Mt at 184.2 cpht).
Victor (OP): 1.50 mm BCO – Indicated: 0.1 M¢ (0.3 Mt at 24.6 cpht); Inferred : 1.1 M¢ (3.7 Mt at 29.2 cpht).
Gahcho Kué (OP): 1.00 mm BCO – Indicated: 3.3 M¢ (2.3 Mt at 140.6 cpht); Inferred: 18.6 M¢ (13.2 Mt at 141.1 cpht).
LOM and LICENCE INFORMATION
Operations
LOM Plan
(years)
LOM Plan
Final Year
Mining Licence
Last Year
DBCi – Snap Lake
DBCi – Victor
* Snap Lake produces rolling reserves 2–3 years ahead of mining.
12
5
2026
2019
2021/2023
2024
% Inferred carats
in LOM Plan
68%*
40%
Projects
DBCi – Gahcho Kué
LOM Plan
(years)
13
LOM Plan
Final Year
2028
Mining Licence
Last Year
2023
% Inferred carats
in LOM Plan
3%
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2014 at Snap Lake and Victor.
Anglo American plc Annual Report 2014
195
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
DIAMONDS
estimates as at 31 December 2014
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. 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 %
62.9
Venetia
LOM
30
BCO
(mm)
1.00
Classification
Kimberlite (OP)
Kimberlite (UG)
Life Extension Project
Voorspoed (OP)
Kimberlite
62.9
7
1.47
De Beers Consolidated Mines
62.9
multiple
TOTAL Kimberlite
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
De Beers Consolidated Mines – Operations
DIAMOND RESOURCES
Attributable %
62.9
Namaqualand (OC)
Beach Placers
BCO
(mm)
multiple
Classification
Measured
Indicated
Measured and Indicated
Inferred
Venetia
Kimberlite (OP)
Kimberlite (UG)
Life Extension Project
Voorspoed (OP)
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
De Beers Consolidated Mines
62.9
multiple
TOTAL Kimberlite and Beach Placer
Measured
Indicated
Measured and Indicated
Inferred
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
De Beers Consolidated Mines – Tailings Operations
DIAMOND RESOURCES
Kimberley Mines
Attributable %
62.9
BCO
(mm)
1.15
Classification
TMR
Measured
Indicated
Measured and Indicated
Inferred
Treated Tonnes
Recovered Grade
Saleable Carats
2014
Mt
–
27.5
27.5
–
95.0
95.0
–
8.0
8.0
–
130.5
130.5
2014
Mt
–
12.7
12.7
39.5
–
29.0
29.0
26.5
–
108.5
108.5
69.9
–
9.1
9.1
20.3
–
159.4
159.4
156.2
2014
Mt
–
–
–
25.9
2013
Mt
–
31.3
31.3
–
91.3
91.3
–
–
–
–
122.6
122.6
Tonnes
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
Tonnes
2013
Mt
–
–
–
32.1
2014
cpht
–
101.1
101.1
–
75.1
75.1
cpht
–
23.7
23.7
cpht
–
77.4
77.4
2014
cpht
–
6.5
6.5
1.4
cpht
–
109.0
109.0
18.1
–
87.0
87.0
85.3
cpht
–
26.2
26.2
19.2
cpht
–
81.1
81.1
44.1
2014
cpht
–
–
–
10.8
2013
cpht
–
96.3
96.3
–
74.2
74.2
cpht
–
–
–
cpht
–
79.8
79.8
Grade
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
Grade
2013
cpht
–
–
–
12.1
2014
M¢
–
27.9
27.9
–
71.3
71.3
–
1.9
1.9
–
101.1
101.1
2014
M¢
–
0.8
0.8
0.6
–
31.6
31.6
4.8
–
94.3
94.3
59.6
–
2.4
2.4
3.9
–
129.2
129.2
68.9
2014
M¢
–
–
–
2.8
2013
M¢
–
30.1
30.1
–
67.7
67.7
–
–
–
–
97.9
97.9
Carats
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
Carats
2013
M¢
–
–
–
3.9
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 0.80mm 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 Diamond Resources, it cannot be assumed that all or part of an Inferred Diamond Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
196
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
DIAMONDS
estimates as at 31 December 2014
EXPLANATORY NOTES
Venetia: The LOM is stated as 30 years which reflects the full duration of the current Venetia consolidated OP and UG Life of Mine Plan. The current Mining Right
expires in 2038; Venetia Mine will apply to extend the Mining Right at the appropriate time in the future.
Venetia (OP): The Life of Mine plan includes the K01, K02 and K03 pipes. The K01 estimates are based on both micro-diamonds and macro-diamonds. The
planned production for 2015 includes a significant portion of Inferred Resources. The inclusive Old Recovery Tailings Resource estimates at a 0.80 mm BCO of
1.8 M¢ (0.05 Mt at 3804.4 cpht) Inferred Resource are excluded from the table.
Venetia (UG): The Diamond Reserves increased due to an updated underground mine plan. The project is expected to treat approximately 133 Mt of ore containing
an estimated 94 M¢. Scheduled Inferred Resources (37.7 Mt) constitute 24% (22.2 M¢) of the estimated carats. The estimates are scheduled tonnes and carats as
per the 2014 Life of Mine Plan.
Namaqualand: The sale of Namaqualand Mines (excluding the Buffels Marine mining right) to Emerald Panther Investments (PTY) Limited was concluded in 2014.
The remaining Diamond Resource estimates reflects the tonnes and carats associated with the Buffels Marine mining right.
Voorspoed: The change is due to production and refinement of the geological model. Indicated Resources are reported to a depth of 200mbgl. This has allowed for
Probable Reserve estimates to be reported.
Kimberley Mines: The decrease in the Diamond Resource estimates is due to production and model refinement. 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 inclusive Stockpile estimates at a 1.15mm BCO of 0.04M¢ (0.35 Mt at 11.3 cpht)
Inferred Resource are excluded from the table.
EXCLUSIVE DIAMOND RESOURCES
Venetia (OP): 1.00 mm BCO – Indicated: 0.6 M¢ (0.5 Mt at 122.7 cpht); Inferred: 4.8 M¢ (26.5 Mt at 18.1 cpht).
Venetia (UG): 1.00 mm BCO – Inferred: 59.6 M¢ (69.9 Mt at 85.3 cpht).
Voorspoed (OP): 1.47 mm BCO – Indicated: 0.4 M¢ (1.4 Mt at 27.8 cpht); Inferred: 3.9 M¢ (20.3 Mt at 19.2 cpht).
LOM and LICENCE INFORMATION
LOM Plan
Operations
Final Year
DBCM – Venetia
2044
DBCM – Voorspoed
2021
DBCM – Kimberley Mines
2018
* The Kimberley Life of Mine Plan contains 12% low geoscientific confidence material which has not been classified as Diamond Resource.
% Inferred carats
in LOM Plan
19%
80%
88%*
Mining Licence
Last Year
2038
2023
2040
LOM Plan
(years)
30
7
4
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2014 at Venetia.
Anglo American plc Annual Report 2014
197
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
DIAMONDS
estimates as at 31 December 2014
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. 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. Two resource types are mined,
Kimberlite and Tailings Mineral Resource (TMR).
Debswana – Operations
DIAMOND RESERVES
Damtshaa (OP)
Kimberlite
Jwaneng (OP)
Kimberlite
Letlhakane (OP)
Kimberlite
Orapa (OP)
Kimberlite
Attributable %
42.5
LOM
18
BCO
(mm)
1.65
Classification
42.5
19
1.47
42.5
3
1.65
42.5
15
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)
Kimberlite
Attributable %
42.5
BCO
(mm)
1.65
Classification
Measured
Indicated
Measured and Indicated
Inferred
Jwaneng (OP)
Kimberlite
Letlhakane (OP)
Kimberlite
Orapa (OP)
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
2014
Mt
–
25.0
25.0
–
47.3
47.3
–
1.8
1.8
–
173.4
173.4
–
247.4
247.4
2014
Mt
–
29.3
29.3
16.2
–
53.0
53.0
257.5
–
13.0
13.0
3.2
–
286.1
286.1
203.4
–
381.5
381.5
480.4
2013
Mt
–
25.0
25.0
–
61.8
61.8
–
3.2
3.2
–
140.3
140.3
–
230.3
230.3
Tonnes
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
2014
cpht
–
18.8
18.8
cpht
–
134.4
134.4
cpht
–
18.4
18.4
cpht
–
77.8
77.8
cpht
–
82.2
82.2
2014
cpht
–
21.5
21.5
25.4
cpht
–
119.7
119.7
104.6
cpht
–
31.0
31.0
17.5
cpht
–
94.5
94.5
85.0
cpht
–
90.2
90.2
93.0
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
Grade
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
2014
M¢
–
4.7
4.7
–
63.5
63.5
–
0.3
0.3
–
134.9
134.9
–
203.5
203.5
2014
M¢
–
6.3
6.3
4.1
–
63.4
63.4
269.3
–
4.0
4.0
0.6
–
270.3
270.3
172.9
–
344.0
344.0
446.9
2013
M¢
–
4.1
4.1
–
77.3
77.3
–
0.6
0.6
–
89.6
89.6
–
171.7
171.7
Carats
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
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 0.80mm 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 Diamond Resources, it cannot be assumed that all or part of an Inferred Diamond Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
198
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES
DIAMONDS
estimates as at 31 December 2014
Debswana – Operations
DIAMOND RESOURCES
Jwaneng
TMR
Attributable %
42.5
BCO
(mm)
1.47
Classification
Measured
Indicated
Measured and Indicated
Inferred
Debswana – Projects
DIAMOND RESERVES
Letlhakane
TMR
Attributable %
42.5
LOM
24
BCO
(mm)
1.15
BCO
(mm)
1.15
Classification
Proved
Probable
Total
Classification
Measured
Indicated
Measured and Indicated
Inferred
Debswana – Projects
DIAMOND RESOURCES
Letlhakane
TMR
Attributable %
42.5
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
Tonnes
2013
Mt
–
–
–
37.0
2014
cpht
–
–
–
46.0
Grade
2013
cpht
–
–
–
45.9
Treated Tonnes
Recovered Grade
2013
Mt
–
34.9
34.9
Tonnes
2013
Mt
–
34.9
34.9
49.6
2014
cpht
–
24.2
24.2
2014
cpht
–
24.8
24.8
27.1
2013
cpht
–
25.4
25.4
Grade
2013
cpht
–
24.8
24.8
27.1
2014
Mt
–
–
–
36.6
2014
Mt
–
34.9
34.9
2014
Mt
–
34.9
34.9
51.9
Carats
2013
M¢
–
–
–
17.0
Saleable Carats
2013
M¢
–
8.9
8.9
Carats
2013
M¢
–
8.6
8.6
13.4
2014
M¢
–
–
–
16.8
2014
M¢
–
8.5
8.5
2014
M¢
–
8.6
8.6
14.1
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 0.80mm 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 Diamond Resources, it cannot be assumed that all or part of an Inferred Diamond Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
EXPLANATORY NOTES
Damtshaa: The increase in saleable carats is due to the application of revised plant recovery factors. Higher grade Inferred Resources from the BK/12 Kimberlite
are mined for the first three years before including Probable Reserves from BK/9. The BK/9 and BK/12 inclusive Stockpile Inferred Resource estimates at a
1.65mm BCO of 0.1 M¢ (1.6 Mt at 8.1 cpht) are excluded from the table.
Jwaneng – Kimberlite: The decrease due to production was largely offset by the increase associated with upgrading of Old Recovery Tailings to Inferred Resource
status. The 2014 Life of Mine Plan includes the Cut 8 estimates of 91 Mt of ore to be treated containing an estimated 110 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 Cut 8 estimates (68.1 Mt)
constitute 81% (89.3 M¢) of the estimated carats. The last three years of LOM includes treatment of Kimberlite stockpiles. The Stockpile Probable Reserves at a
1.47mm BCO of 0.9 M¢ (1.4 Mt at 62.2 cpht) are excluded from the table. The DK/2 inclusive Stockpile estimates at a 1.47mm BCO, consisting of 0.9 M¢ (1.4 Mt at
62.2 cpht) Indicated Resources and 4.8 M¢ (11.3 Mt at 42.7 cpht) Inferred Resources are excluded from the table.
Jwaneng – TMR: Old Recovery Tailings estimates at a 1.00 mm BCO of 10.2 M¢ (0.1 Mt at 9,500 cpht) Inferred Resource are excluded from the table.
Letlhakane – Kimberlite: The decrease is due to production. DK/1 and DK/2 inclusive Stockpile estimates at a 1.65mm BCO of 0.6 M¢ (3.6 Mt at 17.8 cpht)
Inferred Resources are excluded from the table.
Letlhakane – TMR: The decrease in saleable carats is primarily due to a downward adjustment of the TMR plant recovery factor. The project is expected to treat
approximately 83 Mt of ore containing an estimated 21 M¢. Scheduled Inferred Resources (48.5 Mt) constitute 60% (12.8 M¢) of the estimated carats.
The estimates are scheduled tonnes and carats as per the 2014 Life of Mine Plan.
Orapa: A total of 91 M¢ is added to the Diamond Resource estimates by the inclusion of new information resulting in new grade estimates in the South Pipe model.
This is associated with a material increase in the Diamond Reserve. These increases are partially offset by production. The Orapa (AK1 South Pipe) estimates are
based on both micro-diamonds and macro-diamonds. The AK/1 Stockpile estimates at a 1.65mm BCO of 7.7 M¢ (17.4 Mt at 44.1 cpht) Inferred Resources are
excluded from the table. The Tailings Resource estimates at a 1.47mm BCO of 88.3 M¢ (151.7 Mt at 58.2 cpht) Inferred Resource are excluded from the table;
Large Diameter Auger Drilling at a wide spacing took place in 2014.
EXCLUSIVE DIAMOND RESOURCES
Damtshaa (OP): 1.65 mm BCO – Indicated: 1.1 M¢ (4.3 Mt at 25.0 cpht); Inferred: 4.1 M¢ (16.2 Mt at 25.4 cpht).
Jwaneng (OP): 1.47 mm BCO – Indicated: 3.6 M¢ (5.7 Mt at 64.2 cpht); Inferred: 269.3 M¢ (257.5 Mt at 104.6 cpht).
Letlhakane (OP): 1.65 mm BCO – Indicated: 3.8 M¢ (11.3 Mt at 33.5 cpht); Inferred: 0.6 M¢ (3.2 Mt at 17.5 cpht).
Letlhakane (TMR): 1.15 mm BCO – Inferred: 14.1 M¢ (51.9 Mt at 27.1 cpht).
Orapa (OP): 1.65 mm BCO – Indicated: 121.1 M¢ (112.7 Mt at 107.4 cpht); Inferred: 172.9 M¢ (203.4 Mt at 85.0 cpht).
LOM and LICENCE INFORMATION
Operations
Debswana – Damtshaa
Debswana – Jwaneng
Debswana – Letlhakane (Kimberlite)
Debswana – Letlhakane (TMR)
Debswana – Orapa
LOM Plan
(years)
18
19
3
24
15
LOM Plan
Final Year
2032
2033
2017
2039
2029
Mining Licence
Last Year
2029
2029
2029
2029
2029
% Inferred carats
in LOM Plan
34%
68%
83%
60%
12%
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2014 at Jwaneng and Orapa.
Anglo American plc Annual Report 2014
199
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
DIAMONDS
estimates as at 31 December 2014
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. 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.
Namdeb Holdings – Terrestrial Operations
DIAMOND RESERVES
Elizabeth Bay (OC)
Attributable %
42.5
LOM
3
BCO
(mm)
1.40
Classification
Aeolian and Marine
Mining Area 1 (OC)
Beaches
Orange River (OC)
Fluvial Placers
Namdeb Holdings
TOTAL Terrestrial
42.5
17
2.00
42.5
9
3.00
42.5
multiple
Namdeb Holdings – Offshore Operations
DIAMOND RESERVES
Attributable %
42.5
Atlantic 1 (MM)
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 %
42.5
Bogenfels (OC)
Pocket Beach and Deflation
BCO
(mm)
multiple
Classification
Measured
Indicated
Measured and Indicated
Inferred
Douglas Bay (OC)
Aeolian and Deflation
Elizabeth Bay (OC)
Aeolian, Marine and Deflation
Mining Area 1 (OC)
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.
Treated Tonnes
Recovered Grade
Saleable Carats
2014
kt
–
1,236
1,236
–
4,652
4,652
–
34,178
34,178
–
40,066
40,066
2014
k m²
–
17,872
17,872
2014
kt
–
–
–
10,955
–
2,269
2,269
127
–
2,091
2,091
10,194
2013
kt
–
1,076
1,076
–
3,124
3,124
–
36,711
36,711
–
40,911
40,911
Area
2013
k m²
–
69,642
69,642
Tonnes
2013
kt
–
–
–
10,955
–
2,269
2,269
127
–
2,491
2,491
29,032
–
17,090
17,090
269,080
–
82,341
82,341
41,015
–
103,791
103,791
331,371
–
21,270
21,270
283,369
–
93,347
93,347
45,658
–
119,377
119,377
369,141
2014
cpht
–
10.11
10.11
cpht
–
2.47
2.47
cpht
–
0.93
0.93
cpht
–
1.40
1.40
2013
cpht
–
13.01
13.01
cpht
–
0.51
0.51
cpht
–
0.95
0.95
cpht
–
1.23
1.23
2014
k¢
–
125
125
–
115
115
–
319
319
–
559
559
2013
k¢
–
140
140
–
16
16
–
349
349
–
505
505
Recovered Grade
Saleable Carats
2014
cpm²
–
0.11
0.11
2014
cpht
–
–
–
6.86
cpht
–
7.05
7.05
0.79
cpht
–
9.71
9.71
11.16
cpht
–
1.57
1.57
1.26
cpht
–
0.57
0.57
0.42
cpht
–
1.06
1.06
1.64
2013
cpm²
–
0.08
0.08
Grade
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
2014
k¢
–
1,997
1,997
2014
k¢
–
–
–
752
–
160
160
1
–
203
203
1,138
–
269
269
3,381
–
468
468
174
–
1,100
1,100
5,446
2013
k¢
–
5,504
5,504
Carats
2013
k¢
–
–
–
740
–
160
160
1
–
279
279
2,289
–
172
172
3,344
–
503
503
162
–
1,114
1,114
6,536
200
Anglo American plc Annual Report 2014
ORE RESERVES AND MINERAL RESOURCES DIAMONDS
estimates as at 31 December 2014
Namdeb Holdings – Offshore Operations
DIAMOND RESOURCES
Attributable %
42.5
Atlantic 1 (MM)
Marine
DIAMOND RESOURCES INCLUDE DIAMOND RESERVES.
BCO
(mm)
1.47
Classification
Measured
Indicated
Measured and Indicated
Inferred
2014
k m²
–
119,968
119,968
1,102,497
Area
2013
k m²
–
126,801
126,801
1,042,516
2014
cpm²
–
0.10
0.10
0.08
Grade
2013
cpm²
–
0.09
0.09
0.09
2014
k¢
–
12,274
12,274
89,981
Carats
2013
k¢
–
11,349
11,349
90,044
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 0.80mm 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 Diamond Resources, it cannot be assumed that all or part of an Inferred Diamond Resource will necessarily be upgraded to an Indicated
or Measured Resource after continued exploration.
Namdeb Land consists of Elizabeth Bay, Mining Area 1 and Orange River.
Orange River consist of the Auchas, Daberas, Obib and Sendelingsdrif operations.
Namdeb Marine consists of Atlantic 1.
EXPLANATORY NOTES
Elizabeth Bay: The decrease in saleable carats is primarily due to production and changes in economic assumptions mainly impacting Inferred Resources.
Mining Area 1: The increase in saleable carats is primarily due to new information in the Ultra Shallow Water A zone (0–7m) at substantially higher grade.
The increased Life of Mine includes a material portion of scheduled tonnes with low geoscientific confidence, planned to be upgraded to Inferred Resources on
a continuous two-year rolling basis. 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 under water. The accretion is accomplished by sand build-up derived from
current mining and dredging activities. The inclusive Overburden Stockpile estimates at a 2.00mm BCO of 34 k¢ (9,227 kt at 0.37 cpht) Inferred Resource, the DMS
and Recovery Tailings Resource estimates at a 2.00mm BCO of 679 k¢ (52,987 kt at 1.28 cpht) Inferred Resource are excluded from the table.
Orange River: The decrease is primarily due to production. The mining transition from Daberas to Sendelingsdrif will be completed within the next three years.
Atlantic 1: The decrease in reserve carats is primarily due to a planning methodology change. The Life of Mine remains the same and includes a material portion of
Inferred Resources. Previously all Indicated Resources were used to declare the Diamond Reserve, whereas now only scheduled Indicated Resources in the Life of
Mine are converted. This reduction in Diamond Reserve carats is partially offset by new information allowing conversion of additional Diamond Resources to
Diamond 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 converted to Diamond Reserves on an annual basis to ensure scheduled reserves are available two years ahead of current mining.
Bogenfels: The increase in carats is due to application of a different estimation methodology.
Bottom screen cut off details for Inferred Resource estimates are as follows:
1.40 mm BCO: 524 k¢ (7,913 kt at 6.62 cpht).
2.00 mm BCO: 228 k¢ (3,042 kt at 7.50 cpht).
Midwater: The Midwater Resource comprises the offshore portion of the Diamond Area No. 1 (DA1) Mining Licences 43, 44 and 45, as well as the offshore licences
ML 128A, B and C, at water depths greater than 30m. Midwater is not part of current operations or a project.
The Aeolian, Fluvial and Marine inclusive Diamond Resource estimates at a 2.00mm BCO, consisting of 492 k¢ (2,533 k m² at 0.19 cpm²) Indicated Resources and
930 k¢ (12,720 k m² at 0.07 cpm²) are excluded from the table.
EXCLUSIVE DIAMOND RESOURCES
Elizabeth Bay (OC): 1.40 mm BCO – Indicated: 70 k¢ (930 kt at 7.53 cpht); Inferred: 1,138 k¢ (10,194 kt at 11.16 cpht).
Mining Area 1 (OC): 2.00 mm BCO – Indicated: 154 k¢ (12,623 kt at 1.22 cpht); Inferred: 3,381 k¢ (269,080 kt at 1.26 cpht).
Orange River (OC): 3.00 mm BCO – Indicated: 149 k¢ (48,163 kt at 0.31 cpht); Inferred: 174 k¢ (41,015 kt at 0.42 cpht).
Atlantic 1 (MM): 1.47 mm BCO – Indicated: 7,150 k¢ (102,096 k m² at 0.07 cpm²); Inferred: 89,981 k¢ (1,102,497 k m² at 0.08 cpm²).
LOM and LICENCE INFORMATION
Operations
LOM Plan
(years)
LOM Plan
Final Year
Mining Licence
Last Year
Namdeb Holdings Terrestrial – Elizabeth Bay
Namdeb Holdings Terrestrial – Mining Area 1
Namdeb Holdings Terrestrial – Orange River
Namdeb Holdings Offshore – Atlantic 1
* Elizabeth Bay, Mining Area 1 and Orange River are integrated into a single mine plan.
** The Mining Area 1 Life of Mine Plan contains 65% low geoscientific confidence material which has not been classified as Diamond Resource.
*** Atlantic 1 produces rolling reserves 2 years ahead of mining.
2017
2031
2023
2029
2035
2035
2035
2035
3
17
9
15
% Inferred carats
in LOM Plan
81%*
32%**
15%*
90%***
Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2014 at Atlantic 1.
Anglo American plc Annual Report 2014
201
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
OTHER INFORMATION
PERFORMANCE MEASURES
Throughout this report a number of financial and non-financial measures
are used to assess the Group’s performance. The measures are defined
as follows:
Underlying EBIT
Underlying EBIT is operating profit presented before special items and
remeasurements and includes the Group’s attributable share of associates’
and joint ventures’ underlying EBIT. Underlying EBIT of associates and joint
ventures is the Group’s attributable share of associates’ and joint ventures’
revenue less operating costs before special items and remeasurements of
associates and joint ventures. See notes 3 and 5 to the financial statements
for underlying EBIT.
Copper equivalent unit costs
Copper equivalent unit costs divide the gross costs associated with unit
costs, by relevant copper equivalent volume. Only own equity volumes
(and costs) are considered. Thabazimbi (iron ore) and domestic thermal
coal production is excluded, as are operations not in commercial production.
Both the copper equivalent production and copper equivalent unit cost
metrics have been adjusted for the 532 koz of platinum production lost due
to the strikes at Platinum operations.
Fatal-injury frequency rate (FIFR)
FIFR is the number of employee or contractor fatal injuries due to all causes
per 200,000 hours worked.
Lost time injury frequency rate (LTIFR)
LTIFR is the number of lost time injuries (LTIs) for both employees and
contractors per 200,000 hours worked. An LTI is a work related injury
resulting in the person being unable to attend work or 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. Restricted work cases are therefore
counted as LTIs.
Total recordable case frequency rate (TRCFR)
TRCFR is the number of fatal injuries, lost time injuries and medical treatment
cases for both employees and contractors per 200,000 hours.
New cases of occupational disease (NCOD)
NCOD is the sum of occupational diseases due to asbestosis, noise-induced
hearing loss, silicosis, coal-workers’ pneumoconiosis, chronic obstructive
airways disease, occupational tuberculosis, occupational asthma, hand/arm
vibration syndrome, musculoskeletal disorders, dermatitis, occupational
cancers and other occupational diseases.
Total energy consumed
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 and is measured in million gigajoules (GJ).
Total new water consumed
Total amount of water used is the total new or make-up water entering the
operation and used for the operation’s primary operational activities and is
measured in million m3.
Underlying earnings
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. See note 9 to the financial statements for the basis
of calculation of underlying earnings. See note 6 to the financial statements
for the definition of special items and remeasurements.
Net debt
Net debt includes related hedges and net debt in disposal groups.
See note 23 to the financial statements.
Capital expenditure
Capital expenditure is defined as cash expenditure on property, plant
and equipment, including related derivatives, and is now presented net of
proceeds from disposal of property, plant and equipment and includes
direct funding for capital expenditure from non-controlling interests in order
to match more closely the way in which it is managed. Comparatives have
been re-presented to align with current year presentation.
Underlying EBITDA
Underlying EBITDA is underlying EBIT before depreciation and amortisation
in subsidiaries and joint operations and includes the Group’s attributable
share of associates’ and joint ventures’ underlying EBIT before depreciation
and amortisation. EBITDA, as presented in the net debt table on page 20 of
this report excludes the Group’s attributable share of associates’ and joint
ventures’ EBITDA.
Real cash costs
Real cash costs are the annual increase/decrease in the Group’s
operating cash costs versus the prior year, excluding depreciation, the
impact of Consumer Price Inflation (CPI) and foreign exchange, and is
after capitalisation of stripping costs.
Copper equivalent production
Copper equivalent production, expressed as copper equivalent tonnes,
is a metric used to show changes in underlying production volume. Each
commodity’s volumes are expressed as revenue, and then converted
into a copper equivalent volume by dividing revenue by copper price
(per tonne). The prices used for conversion by Anglo American are those
from 30 June 2013. When aggregated, these give the Group’s production
expressed in units of copper equivalent. Production volumes considered
include both equity and purchased volumes (e.g. platinum concentrate from
joint operation partners), as well as volumes from mines in pre-commercial
production. Thabazimbi (iron ore) and domestic thermal coal production
is excluded.
202
Anglo American plc Annual Report 2014
OTHER INFORMATION PERFORMANCE MEASURES
Attributable return on capital employed (ROCE)
Attributable ROCE definitions:
• ROCE 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 and is calculated as underlying EBIT divided by capital employed.
• Adjusted ROCE is calculated as underlying EBIT 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. Earnings and return impacts from such impairments (due to reduced depreciation or amortisation
expense) are not taken into account.
• Attributable ROCE is the return on the adjusted capital employed attributable to equity shareholders of Anglo American plc, and therefore excludes the portion
of underlying EBIT and capital employed attributable to non-controlling interests in operations where Anglo American plc 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.
• Attributable ROCE is based on realised prices and foreign exchange rates, and includes the below adjustments to capital employed.
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 have been included
• The De Beers fair value uplift which resulted from the revaluing upward of Anglo American plc’s pre-existing 45% share in De Beers is removed from
opening 2012 capital employed onwards
• Impairments announced after 10 December 2013 are not removed from total capital employed. Earnings and return impacts from such impairments (due to
reduced depreciation or amortisation expense) are not taken into account
• 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.
The 2014 attributable EBIT of $3,429 million is the underlying EBIT attributable to equity shareholders of Anglo American plc.
Reconciliation of total capital employed to average attributable capital employed
US$ 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 2013 that had been announced before 10 December 2013(2)
Add:
2013 impairments where no benefit taken for attributable ROCE purposes(3)
2014 impairments where no benefit taken for attributable ROCE purposes(4)
Total capital employed
Less: non-controlling interest capital employed
Closing attributable capital employed
Average attributable capital employed
2014
32
(1)
13
(1)
43
–
1
4
47
(6)
41
40
2013
37
(2)
11
(1)
45
–
1
–
46
(6)
40
40
2012
44
(2)
9
(2)
48
(1)
–
–
46
(7)
40
38
(1) Removal of the accounting fair value uplift adjustment on the Group’s pre-existing 45% holding following acquisition of control on 16 August 2012.
(2) 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 exit from Pebble ($0.3 billion).
(3) 2013 impairments (post-tax) not removed from capital employed: Barro Alto impairment ($0.5 billion) and Foxleigh ($0.2 billion).
(4) 2014 impairments (post-tax) not removed from capital employed: Minas-Rio ($3.5 billion) and Coal impairments ($0.3 billion).
Anglo American plc Annual Report 2014
203
OTHER INFORMATION Other information
OTHER INFORMATION
PRODUCTION STATISTICS
The figures below include the entire output of consolidated entities and the Group’s attributable share of joint operations, associates and joint ventures where
applicable, except for Collahuasi in the Copper segment and De Beers’ joint ventures which are quoted on a 100% basis.
Iron Ore and Manganese (tonnes)
Kumba Iron Ore
Lump
Fines
Total Kumba production
Sishen
Kolomela
Thabazimbi
Total Kumba production
Kumba sales volume
RSA export iron ore
RSA domestic iron ore
Minas-Rio
Pellet feed (wmt)
Minas-Rio sales volumes
Export – pellet feed (wmt)
Samancor
Manganese ore(1)
Manganese alloys(1)(2)
Samancor sales volume
Manganese ore
Manganese alloys
Coal (tonnes)
Australia
Metallurgical – Export Coking
Metallurgical – Export PCI
Production total
Thermal – Export
Thermal – Domestic
Production total
Canada
Metallurgical – Export Coking
Metallurgical – Export PCI
Production total
South Africa
Thermal – Export
Thermal – Domestic (Eskom)
Thermal – Domestic (Non-Eskom)
Production total
Colombia
Thermal – Export
Production total
Total Metallurgical coal production
Total Export Thermal coal production
Total Domestic Thermal coal production
Total Coal production
Weighted average achieved US$/t FOB prices
Australia and Canada
Metallurgical – Export(3)
Thermal – Export
Thermal – Domestic
South Africa
Thermal – Export
Thermal – Domestic
Colombia
Thermal – Export
Sales volumes
Australia and Canada
Metallurgical – Export(4)
Thermal – Export
Thermal – Domestic
South Africa
Thermal – Export
Thermal – Domestic
Colombia
Thermal – Export
(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.
204
Anglo American plc Annual Report 2014
2014
2013
31,268,800
16,927,700
48,196,500
35,540,600
11,568,100
1,087,800
48,196,500
27,086,600
15,286,500
42,373,100
30,938,500
10,808,700
625,900
42,373,100
40,467,700
4,819,800
39,076,000
4,631,400
687,700
239,600
–
–
3,308,600
286,100
3,301,700
251,100
3,382,100
294,800
3,262,100
248,700
13,442,300
5,990,800
19,433,100
5,173,900
7,114,600
12,288,500
11,711,600
5,260,200
16,971,800
6,264,000
6,239,400
12,503,400
1,393,600
79,000
1,472,600
1,663,800
20,000
1,683,800
18,213,100
30,988,500
6,594,900
55,796,500
11,227,000
11,227,000
20,905,700
34,614,000
44,698,000
100,217,700
17,031,300
33,567,400
5,992,000
56,590,700
11,001,000
11,001,000
18,655,600
34,296,300
45,798,800
98,750,700
111
72
35
70
19
67
140
84
39
77
19
73
20,568,200
5,966,200
7,293,100
19,044,500
6,371,600
6,125,400
17,572,800
37,217,300
17,501,800
39,044,100
11,314,000
11,152,000
OTHER INFORMATION OTHER INFORMATION PRODUCTION STATISTICS
Coal (tonnes) (continued)
Coal by mine (tonnes)
Australia
Callide
Capcoal (incl. Grasstree)
Dawson
Drayton
Foxleigh
Jellinbah
Moranbah North
Production total
Canada
Peace River Coal
Production total
South Africa
Goedehoop
Greenside
Isibonelo
Kleinkopje
Kriel
Landau
Mafube
New Denmark
New Vaal
Zibulo
Production total
Colombia
Carbones del Cerrejón
Production total
Total Coal production
Copper (tonnes) on a contained metal basis unless stated otherwise(1)
Collahuasi
100% basis (Anglo American share 44%)
Ore mined
Ore processed – Oxide
Ore processed – Sulphide
Ore grade processed – Oxide (% ASCu)(2)
Ore grade processed – Sulphide (% TCu)(3)
Production – Copper cathode
Production – Copper in concentrate
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 – Sulphide
Ore grade processed – Sulphide (% TCu)
Production – Copper cathode
Production – Copper in sulphate
Production – Copper in concentrate
Production total
El Soldado mine(5)
Ore mined
Ore processed – Sulphide
Ore grade processed – Sulphide (% TCu)
Production – Copper cathode
Production – Copper in concentrate
Production total
Chagres Smelter(5)
Ore smelted
Production
Total copper production for Anglo American Sur
2014
2013
7,557,000
7,642,800
4,240,200
3,104,800
2,034,500
2,923,700
4,218,600
31,721,600
6,317,800
6,061,400
3,985,700
3,710,700
1,966,600
2,516,500
4,916,500
29,475,200
1,472,600
1,472,600
1,683,800
1,683,800
4,771,600
3,624,100
5,262,600
3,911,800
6,878,100
4,178,400
1,675,400
3,767,900
16,672,800
5,053,800
55,796,500
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
11,227,000
11,227,000
100,217,700
11,001,000
11,001,000
98,750,700
65,845,300
6,657,500
48,936,100
0.72
1.08
25,000
445,400
470,400
207,000
57,666,200
26,236,100
54,147,700
0.78
36,200
–
368,300
404,500
3,118,400
7,203,600
0.58
1,200
31,200
32,400
132,100
128,500
436,900
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
37,800
600
378,000
416,400
8,576,700
7,312,500
0.88
1,200
50,400
51,600
149,800
145,200
468,000
(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 ownership interest of Anglo American Sur is 50.1%. Production is stated at 100% as Anglo American consolidates Anglo American Sur.
Anglo American plc Annual Report 2014
205
OTHER INFORMATION Other information
OTHER INFORMATION PRODUCTION STATISTICS
PRODUCTION STATISTICS
Copper (tonnes) (continued)
Anglo American Norte
Mantos Blancos mine
Ore processed – Sulphide
Ore grade processed – Sulphide (% TCu)
Production – Copper cathode
Production – Copper in concentrate
Production total
Mantoverde mine
Ore processed – Oxide
Ore processed – Marginal ore
Ore grade processed – Oxide (% ASCu)
Ore grade processed – Marginal ore (% ASCu)
Production – Copper cathode
Total copper production for Anglo American Norte
Total Copper segment copper production
Total Attributable copper production(1)
Total Attributable payable copper production
Attributable sales volumes
Total Attributable payable sales volumes
Nickel (tonnes) unless stated otherwise(2)
Barro Alto
Ore mined
Ore processed
Ore grade processed – %Ni
Production
Codemin
Ore mined
Ore processed
Ore grade processed – %Ni
Production
Total Nickel segment nickel production
Sales volumes
Niobium (tonnes) unless otherwise stated
Ore mined
Ore processed
Ore grade processed – %Nb
Production
Sales volumes
Phosphates (tonnes) unless otherwise stated
Concentrate
Concentrate grade – %P2O5
Phosphoric acid
Fertiliser(3)
High analysis fertiliser
Low analysis fertiliser
Dicalcium phosphate (DCP)
Fertiliser sales volumes
Platinum
Refined production
Platinum (troy oz)
Palladium (troy oz)
Rhodium (troy oz)
Copper refined (tonnes)(4)
Copper matte (tonnes)(4)
Nickel refined (tonnes)(4)
Nickel matte (tonnes)(4)
Gold (troy oz)
Equivalent refined
Platinum (troy oz)
4E built-up head grade (g/tonne milled)(5)
2014
2013
4,402,400
0.69
26,700
25,700
52,400
10,312,800
8,646,100
0.48
0.23
51,800
104,200
1,011,500
748,100
725,900
755,100
732,600
4,329,600
0.73
29,500
25,100
54,600
10,385,200
8,280,400
0.57
0.25
56,800
111,400
1,023,900
775,000
752,100
768,200
745,400
2,510,400
1,827,400
1.81
28,300
1,998,900
1,616,300
1.82
25,100
6,800
593,600
1.67
8,900
37,200
36,100
6,800
602,400
1.71
9,300
34,400
33,800
985,900
1,084,000
1.04
4,700
4,600
1,415,700
37.0
295,000
1,112,500
184,700
927,700
164,100
1,096,600
1,889,500
1,225,400
229,400
12,500
6,200
20,500
7,700
95,600
1,228,800
963,100
1.17
4,500
4,700
1,406,300
37.2
317,100
1,199,000
209,400
989,700
159,600
1,163,300
2,379,500
1,380,800
294,700
8,300
5,800
16,800
5,800
100,000
1,841,900
3.00
2,320,400
3.26
(1) Difference between total copper production and attributable copper production arises from Anglo American’s 44% interest in Collahuasi.
(2) Excludes Anglo American Platinum’s nickel production.
(3) 2013 fertiliser includes updated production quantification methodology in the acidulation plant at Cubatão.
(4) 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 Q2 2013
from 2012 and 2013 production stockpiles.
(5) 4E: the grade measured as the combined content of the four most valuable precious metals: platinum, palladium, rhodium and gold.
206
Anglo American plc Annual Report 2014
OTHER INFORMATION
OTHER INFORMATION PRODUCTION STATISTICS
De Beers
Carats recovered 100% basis
Orapa
Letlhakane
Damtshaa
Jwaneng
Debswana
Namdeb
Debmarine Namibia
Namdeb Holdings
Kimberley
Venetia
Voorspoed
DBCM
Snap Lake
Victor
De Beers Canada
Total carats recovered
2014
2013
12,074,000
548,000
303,000
11,312,000
24,237,000
613,000
1,273,000
1,886,000
722,000
3,201,000
711,000
4,634,000
1,201,000
647,000
1,848,000
32,605,000
11,375,000
682,000
264,000
10,386,000
22,707,000
602,000
1,160,000
1,762,000
815,000
3,192,000
717,000
4,724,000
1,312,000
654,000
1,966,000
31,159,000
Anglo American plc Annual Report 2014
207
Other information
QUARTERLY PRODUCTION STATISTICS
Copper (tonnes)(3)(4)
174,800
176,900
194,400
202,000
214,300
Iron Ore and Manganese (tonnes)
Iron ore – Kumba
Iron ore – Minas-Rio
Manganese ore(1)
Manganese alloys(1)(2)
Coal (tonnes)
Australia
Metallurgical – Export
Thermal – Export
Thermal – Domestic
Canada
Metallurgical – Export
South Africa
Thermal – Export
Thermal – Domestic (Eskom)
Thermal – Domestic (Non-Eskom)
Colombia
Thermal – Export
Nickel (tonnes)(5)
Niobium (tonnes)
Phosphates (tonnes)
Concentrate
Phosphoric Acid
Fertiliser
Dicalcium phosphate (DCP)
Platinum
Platinum (troy oz)
Palladium (troy oz)
Rhodium (troy oz)
Copper refined (tonnes)
Copper matte (tonnes)
Nickel refined (tonnes)
Nickel matte (tonnes)
Gold (troy oz)
Equivalent refined platinum (troy oz)
De Beers (diamonds recovered – carats)
100% basis
Diamonds
31 December
2014
30 September
2014
30 June
2014
31 March
2014
31 December
2013
31 December 2014 v
30 September 2014
31 December 2014 v
31 December 2013
Quarter ended
% Change (Quarter ended)
12,431,600
687,700
882,100
80,400
12,972,100
–
866,000
68,400
11,465,000
–
868,300
72,500
11,327,800
–
692,200
64,800
11,285,700
–
846,000
66,200
4,760,200
1,871,600
1,966,300
4,690,100
1,574,600
2,074,400
4,359,500
958,400
1,846,000
5,623,300
769,300
1,227,900
4,375,800
1,584,700
1,688,800
(4)%
nm
2%
18%
1%
19%
(5)%
10%
nm
4%
21%
9%
18%
16%
171,400
400,000
471,200
430,000
357,600
(57)%
(52)%
4,782,800
7,434,600
1,761,400
5,007,600
8,000,200
1,862,800
4,273,600
8,146,800
1,611,200
4,149,100
7,406,900
1,359,500
4,602,000
7,617,800
1,234,100
3,002,300
2,368,800
2,907,700
2,948,200
3,290,300
6,700
10,700
10,600
1,300
1,200
1,100
355,600
78,600
284,900
44,800
573,700
357,700
71,700
2,600
1,400
4,800
1,800
28,900
593,900
362,700
81,300
284,700
44,100
460,000
316,400
48,400
2,800
1,300
5,200
1,800
14,600
532,800
349,500
81,300
275,700
43,600
420,600
294,600
48,700
3,900
2,300
5,600
2,700
26,700
358,200
9,200
1,100
347,900
53,800
267,200
31,600
435,200
256,700
60,600
3,200
1,200
4,900
1,400
25,400
357,000
10,200
1,200
353,400
78,000
299,000
38,700
692,100
428,200
83,500
1,800
1,400
5,200
100
26,700
520,300
(4)%
(7)%
(5)%
27%
(1)%
(37)%
8%
(2)%
(3)%
0%
2%
25%
13%
48%
(7)%
8%
(8)%
0%
98%
11%
4%
(2)%
43%
(9)%
(18)%
(34)%
8%
1%
1%
(5)%
16%
(17)%
(16)%
(14)%
44%
0%
(8)%
1,700%
8%
14%
8,366,000
8,193,000
8,515,000
7,531,000
9,132,000
2%
(8)%
(1) Saleable production.
(2) Production includes medium carbon ferro-manganese.
(3) Excludes Anglo American Platinum’s copper production.
(4) Copper segment attributable production.
(5) Excludes Anglo American Platinum’s nickel production.
208
Anglo American plc Annual Report 2014
OTHER INFORMATION NON-FINANCIAL DATA
Safety(1)
Work-related fatalities
Fatal-injury frequency rate (FIFR)(3)
Total recordable case frequency rate (TRCFR)(3)
Lost time injury frequency rate (LTIFR)(3)
Occupational health(1)
New cases of occupational disease (NCOD)(3)
Occupational disease incidence rate (per 200,000 hours) (ODIR)
Environment(1)
Total CO2 emissions (Mt CO2e)
Total energy consumed (million GJ)(3)
Total new water consumed (million m3)(3)
Human Resources(1)(4)
Women in management (%)(5)
Historically Disadvantaged South Africans in management (%)(6)
Resignations (%)(7)
Redundancies (%)(8)
Dismissals (%)(9)
Other reasons for leaving (%)(10)
Social(1)
CSI spend (total in US$ million)(11)
CSI spend (% of underlying EBIT)(11)
Procurement: BEE spend (rand billion)
Businesses supported through enterprise development initiatives
Jobs created/maintained through enterprise development programmes
2014
2013
2012
2011
2010
6
0.003
0.81
0.35
175
0.175
17
108
195
24
60
2.0
0.9
1.0
1.9
(2)
15
0.008
1.08
0.49
209
0.217
17
106
201
23
64
2.0
4.1
1.5
2.7
13
0.007
1.29
0.58
174
0.185
18
113
156
23
62
2.4
0.6
1.4
2.4
136
3
39.3
58,257
96,873
127
2
32.4
48,111
76,543
(12)
146
3
25.8
40,217
64,927
17
0.009
2.01
0.64
197
0.205
19
102
124
22
51
2.7
1.4
1.1
0.3
129
1
23.3
38,681
47,070
15
0.008
1.44
0.64
268
0.284
20
100
125
21
46
2.4
2.1
1.3
2.8
112
1
20.9
9,392
17,200
(1) The data includes 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) 2013 data revised due to issue of certificate of presumed death for one previously unaccounted for individual.
(3) See page 202 for definitions.
(4) Excludes Other Mining and Industrial.
(5) Women in management is the number of female managers as a percentage of all managers in the workforce excluding contractors.
(6) Historically Disadvantaged South Africans in management is the percentage of managers at Anglo American in South Africa who are ‘Historically Disadvantaged South Africans’.
(7) The number of people who resigned as a percentage of the total workforce excluding contractors.
(8) The number of people who have been retrenched as a percentage of total workforce excluding contractors.
(9) The number of people who have been dismissed or have resigned to avoid dismissal, as a percentage of total workforce excluding contractors.
(10) 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.
(11) 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). Included within the CSI expenditure figure for 2014 is expenditure relating to Zimele ($10.1 million) and social programmes delivered as
part of Iron Ore Brazil’s licensing conditions ($3.5 million). These items were not included in previous years.
(12) Subsequent to the publication of the 2013 Annual Report, the provisional BEE spend figure for 2013 provided at the time of publication was revised from ZAR 37.6 billion to ZAR 32.4 billion
following the validation process. The final figure of ZAR 32.4 billion was declared in the Transformation Report to the South African Government published in June 2014.
Anglo American plc Annual Report 2014
209
OTHER INFORMATION Other information
THE BUSINESS – AN OVERVIEW
as at 31 December 2014
Iron Ore and Manganese
Kumba Iron Ore (South Africa)
Sishen Iron Ore Company(1)
Minas-Rio (Brazil)
Ferroport (Brazil)(2)
Samancor (South Africa and Australia)
Coal
100% owned
Australia
Callide
Grosvenor
Monash Energy Holdings Ltd
Canada
Peace River Coal
South Africa
Goedehoop
Greenside
Isibonelo
Kleinkopje
Landau
New Denmark
New Vaal
Copper
100% owned
Chile
Mantos Blancos(4)
Mantoverde(4)
Nickel
100% owned
Brazil
Codemin
Barro Alto
Niobium
100% owned
Brazil
Anglo American Nióbio Brasil Limitada
Phosphates
100% owned
Brazil
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
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%
50%
40%
Overall ownership:
100%
70%
83.3%
51%
88.2%
70%
88%
23.3%
25.4%
17.6%
19.2%
50%
50%
73%
73%
23.2%
33.3%
Overall ownership:
100%
50.1%
50.1%
50.1%
44%
81.9%
Overall ownership:
100%
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) Ferroport owns and operates the iron ore handling and shipping facilities at the port of Açu which is currently under construction (formerly referred to as LLX Minas-Rio).
(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%.
210
Anglo American plc Annual Report 2014
OTHER INFORMATION OTHER INFORMATION THE BUSINESS – AN OVERVIEW
Platinum
100% owned
South Africa
Bathopele Mine
Thembelani 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
De Beers
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
De Beers Global Sightholder Sales
Auction Sales
Brands
Forevermark
Corporate and other
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
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%
49%
42.5%
33%
23%
17.5%
13%
11.6%
Other interests
South Africa
De Beers Consolidated
Mines(2)
Venetia
Voorspoed
Kimberley
De Beers Sightholder Sales
South Africa
Botswana
Debswana(4)
Damtshaa
Jwaneng
Orapa
Letlhakane
Canada
De Beers Canada
Gahcho Kué
Overall ownership:
85%
Namibia
Namdeb Holdings(3)
50%
74%
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
51%
Brands
De Beers Diamond Jewellers
50%
Other interests
Aggregates and building materials
Lafarge Tarmac Holdings Limited
Tarmac Middle East
Exxaro Resources (southern Africa and Australia)
50%
50%
9.8%
(1) The Group’s effective interest in Anglo American Platinum is 79.8%, 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%. 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%.
(4) The 50% interest in Debswana is held indirectly through De Beers. The Group’s effective interest in Debswana is 16.3%.
Anglo American plc Annual Report 2014
211
Other information
OTHER INFORMATION
DIRECTORS’ REPORT
This section includes certain disclosures which are required by law to be
included in the Directors’ Report.
Significant shareholdings
The Company has been notified of the following significant shareholdings:
In accordance with the Companies Act 2006, the following items have
been reported in other sections of the Annual Report and are included in
this Directors’ Report by reference:
• Details of the directors of the Company can be found on pages 66–68
• Directors’ interests in shares at 31 December 2014 and any changes
thereafter can be found on page 103 of the Directors’ remuneration report
• Post-balance sheet events are set out in note 36 to the financial statements
Company
Public Investment Corporation (PIC)
Coronation Asset Management (Pty) Ltd
at 12 February 2015
(at 31 December 2014)
Genesis Asset Managers, LLP
Tarl Investment Holdings Limited(1)
Epoch Two Investment Holdings Limited(1)
Number
of shares
116,355,956
Percentage
of voting rights
8.33
70,145,508
69,352,522
55,426,734
47,275,613
42,166,686
5.02
4.96
3.97
3.38
3.02
on page 153
• The Strategic Report on pages 2–64 gives a fair review of the business and
an indication of likely future developments
• Details of the Group’s governance arrangements and its compliance with
the Code can be found on pages 65–108
• Comprehensive details of the Group’s approach to financial risk
management are given in Note 38 to the financial statements on
page 155
• The Group’s disclosure of its greenhouse gas emissions can be found
on page 35.
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
18–21. In addition, detail is given on the Group’s policy on managing liquidity
risk in the Risk section on pages 42–47, with further details of our policy
on financial risk management being set out in note 38 to the financial
statements. The Group’s net debt at 31 December 2014 was $12.9 billion
(2013: $10.7 billion), representing a gearing level of 28.6% (2013: 22.2%).
Details of borrowings and facilities are set out in note 24 and net debt is set
out in note 23.
The directors have considered the Group’s cash flow forecasts for the
period to the end of March 2016. 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
18 September 2014. The directors are recommending that a final dividend
of 53 US cents per ordinary share be paid on 28 April 2015 to ordinary
shareholders on the register at the close of business on 20 March 2015,
subject to shareholder approval at the AGM to be held on 23 April 2015.
This would bring the total dividend in respect of 2014 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 2015.
Share capital
The Company’s issued share capital as at 31 December 2014, together
with details of share allotments and issue of treasury shares during the year,
is set out in note 32 on page 150.
The Company was authorised by shareholders at the AGM held on
24 April 2014, to purchase its own shares in the market. No shares were
purchased under this authority during 2014. This authority will expire at
the 2015 AGM and, in accordance with usual practice, a resolution to renew
it for another year will be proposed.
(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.
Disclosure table pursuant to Listing Rule LR9.8.4C
Listing Rule
9.8.4(1)
9.8.4(2)
9.8.4(4)
9.8.4(5)
9.8.4(6)
9.8.4(7)
Information to be included
Interest capitalised by the Group
Unaudited financial information
(LR9.2.18)
Long term incentive scheme only
involving a director (LR9.4.3)
Directors’ waivers of emoluments
Directors’ waivers of future
emoluments
Non pro-rata allotments for cash
(issuer)
9.8.4(8)
9.8.4(9)
9.8.4(10)
9.8.4(11)
Non pro-rata allotments for cash
(major subsidiaries)
Listed company is a subsidiary of
another company
Contracts of significance involving
a director
Contracts of significance involving
a controlling shareholder
9.8.4(12) Waivers of dividends
9.8.4(13) Waivers of future dividends
9.8.4(14)
Agreement with a controlling
shareholder LR9.2.2AR(2)(a)
Disclosure
See note 7, page 126
None
None
See page 99
See page 99
Treasury Shares have been
issued pursuant to the exercise
of options awarded under
shareholder-approved schemes
None
Not applicable
None
Not applicable
See note 32, page 151
See note 32, page 151
Not applicable
Sustainable development
The Sustainable Development Report 2014 will be published online on
16 March 2015. 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.
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.
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
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Anglo American plc Annual Report 2014
OTHER INFORMATION DIRECTORS’ REPORT
• 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 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.
Political donations
No political donations were made during 2014. 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.
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.
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.
Anglo American plc Annual Report 2014
213
Other information
OTHER INFORMATION DIRECTORS’ REPORT
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.
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Anglo American plc Annual Report 2014
Directors
Directors shall not be fewer 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.
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.
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 2014, Anglo American had committed bilateral and
syndicated borrowing facilities totalling $11.0 billion with a number of
relationship banks which contain change of control clauses. $6.2 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. In the
ordinary course of its business the Group’s subsidiaries enter into a number of
other commercial agreements, some of which would alter or terminate upon a
change of control of the Company. None of these are considered by the
Group to be significant to the Group as a whole.
Purchases of own shares
At the AGM held on 24 April 2014, authority was given for the Company to
purchase, in the market, up to 208.9 million Ordinary Shares of 5486⁄91
US cents each. The Company did not purchase any of its own shares under
this authority during 2014.
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
John Mills
Company Secretary
12 February 2015
OTHER INFORMATION
SHAREHOLDER INFORMATION
Annual General Meeting
Will be held at 14:30 on Thursday 23 April 2015, at The Queen Elizabeth II
Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE.
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
On the Investors section of the Group website a whole range of useful
information for shareholders can be found, including amongst other things:
– investor calendar
– share price and tools
– dividend information
– AGM information
– FAQs.
* 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.
Electronic communication
Shareholders may elect to receive, electronically, notification of the
availability on the Company’s website of future shareholder correspondence
e.g. Annual Reports and Accounts and Notices of AGMs.
By registering for this service, UK shareholders can also vote online in respect
of future AGMs and access information on their shareholding including, for
example, dividend payment history, sales and purchases and indicative share
prices. In order to register for the services, UK shareholders should contact
the UK registrars or log on to www.shareview.co.uk and follow the
on-screen instructions. It will be necessary to have a shareholder reference
number when registering, which is shown on share certificates, dividend tax
vouchers and proxy cards. New UK shareholders also have the option to elect
via their proxy card.
Dividends
Dividends are declared and paid in US dollars to shareholders with registered
addresses in all countries except the UK, eurozone countries and South Africa
where they are paid in sterling, euros and South African rand respectively.
Shareholders outside South Africa may elect to receive their dividends in
US dollars.
Shareholders with bank accounts in the UK or South Africa can have their
cash dividends credited directly to their own accounts. Shareholders should
contact the relevant registrar to make use of this facility. South African branch
register shareholders would need South African exchange control approval to
mandate their dividends to an account outside South Africa.
The Company operates a dividend reinvestment plan (DRIP), which
enables shareholders to reinvest their cash dividends into purchasing
Anglo American shares. Details of the DRIP and how to join are available
from Anglo American’s UK Registrars and South African Transfer Secretaries
and on the Company’s website.
ShareGift
The Company supports ShareGift, the charity share donation scheme
administered by The Orr Mackintosh Foundation (registered charity number
1052686). Through ShareGift, shareholders with very small numbers of
shares which might be considered uneconomic to sell are able to donate
them to charity. Donated shares are aggregated and sold by ShareGift,
the proceeds being passed on to a wide range of charities. For those
shareholders who wish to use ShareGift, transfer forms are available from
the Registrars and further details of the scheme can be found on the website
www.sharegift.org.
Share dealing service
Telephone, internet and postal share dealing services have been arranged
through Equiniti, providing a simple way for UK residents to buy or sell
Anglo American shares. For telephone transactions call 0845 603 7037
during normal office hours and for internet dealing log on to www.shareview.
co.uk/dealing. You will need your shareholder reference number, found on
share certificates, dividend tax vouchers and proxy cards. For further details
on the postal dealing service call 0871 384 2026* (or +44 121 415 7558
from overseas).
Unsolicited mail
Under the Companies Act, the Company is obliged to make the share register
available upon request on payment of the appropriate fee. Because of this,
some shareholders may receive unsolicited mail. If you wish to limit the
receipt of addressed marketing mail you can register with the Mailing
Preference Service (MPS). The quickest way to register with the MPS is
via the website: www.mpsonline.org.uk. Alternatively you can register by
telephone on: 020 7291 3310, or by email to: mps@dma.org.uk, or by writing
to MPS Freepost LON20771, London W1E 0ZT.
Anglo American plc Annual Report 2014
215
Other information
OTHER ANGLO AMERICAN PUBLICATIONS
• Sustainable Development Report 2014
• Fact Book 2014
• Notice of 2015 AGM and Shareholder Information Booklet
• Business Unit Sustainable Development Reports (2014)
• 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 2014 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 2014:
216
Anglo American plc Annual Report 2014
OTHER INFORMATION Designed and produced by
SALTERBAXTER MSLGROUP
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Anglo American plc
20 Carlton House Terrace
London
SW1Y 5AN
England
Tel +44 (0)20 7968 8888
Fax +44 (0)20 7968 8500
Registered number 3564138
www.angloamerican.com
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