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ANNUAL REPORT 2015
DRIVING CHANGE,
DEFINING OUR FUTURE
INTRODUCTION
DRIVING CHANGE,
DEFINING OUR FUTURE
While the mining industry continues to face considerable
external pressures as global economic uncertainty
prevails and the developing world’s demand drivers evolve,
we have responded decisively to materially strengthen our
balance sheet through sustainably improving cash flows
and focusing our strategy.
We will redefine our portfolio by focusing on our global
leadership positions in diamonds and platinum group metals
and our world class position in copper. Anglo American will be
focused on its competitive, long life assets, with considerable
organic growth opportunities, that mine the materials that
are expected to benefit from long term consumer-driven
growth trends as the global economy evolves and emerging
market economies mature. Anglo American will be uniquely
positioned for these expanding markets.
Our ability to operate responsibly, efficiently and effectively
is at the heart of how we do business and cater to society’s
needs, and how we will deliver the sustainable value that
all our stakeholders demand and expect.
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ANNUAL REPORT 2015
DRIVING CHANGE,
DEFINING OUR FUTURE
Cover images
1. Haul trucks in the
open pit at Los Bronces
copper mine in Chile.
2. The expanding
Forevermark™ diamond
brand is now available in
1,760 outlets worldwide.
3. Safety representative
Richard Tshimenze
inspects a blast area
in the open pit at
Venetia diamond mine
in South Africa.
4. Processors
Raesetja Teffo (left)
and Malesela Kutumela
at the water-filtration
plant at Platinum’s
Mogalakwena North
concentrator in
South Africa.
SUSTAINABILITY REPORT 2015
DRIVING CHANGE,
DEFINING OUR FUTURE
5. Inspecting equipment
at the Los Bronces
Las Tórtalas mine are
hyperbaric filters
operation co-ordinator
Sergio Aliago (left) and
mechanical maintenance
operator Luis Toro.
6. Thickeners at the
concentrator plant at
Collahuasi copper mine
located in the Andes in
northern Chile, 3,500
metres above sea level.
Other sources of information
You can find this report and additional information about
Anglo American on our corporate website.
Although we have chosen not to produce an ‘integrated report’,
we have included a comprehensive overview of our non-financial
performance in this report. More detailed information on our
sustainability performance is provided in our Sustainability Report.
This can be found on our corporate website.
For more information, visit
www.angloamerican.com/reporting
Throughout the Strategic Report we use a number of
financial and non-financial measures to assess our
performance. The measures are defined on page 180.
The return on capital employed (ROCE) measure
used throughout this report is attributable ROCE
and is the primary return measure used in the Group.
See page 182 for the definition and calculation of
attributable ROCE.
‘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.
PERFORMANCE HIGHLIGHTS
CONTENTS
GROUP
PERFORMANCE
Underlying EBIT
Total dividends paid per share
$2.2 bn
2015
2014
$2.2 bn
$4.9 bn
$0.32
2015
2014
$0.32
$0.85
Underlying earnings
Total capital expenditure
$0.8 bn
2015
2014
$0.8 bn
$4.0 bn
$2.2 bn
2015
2014
$4.0 bn
$6.0 bn
Underlying earnings per share
Net debt
$0.64
2015
2014
$0.64
$12.9 bn
$1.73
2015
2014
$12.9 bn
$12.9 bn
Loss attributable to equity
shareholders
$(5.6) bn
2015
2014
$(2.5) bn
$(5.6) bn
Loss per share
$(4.36)
2015
2014
$(1.96)
$(4.36)
Number of fatalities
Group attributable ROCE
6
2015
2014
5%
2015
2014
5%
9%
6
6
Total recordable case
frequency rate (TRCFR)
0.93
2015
2014
0.93
0.80
GHG emissions
18 Mt CO2 equivalent
2015
2014
18 Mt
17 Mt
Energy consumption
106 Million GJ
2015
2014
Total new water consumed
222 Mm³
106 Million GJ
108 Million GJ
2015
2014
222 Mm3
196 Mm3
Strategic report
At a glance
02
Chairman’s statement
04
06
Our business model
08 Marketplace review
12
16
20
24
Chief Executive’s statement
Strategic imperative: Focus the portfolio
Strategic imperative: Focus on delivery
Strategic imperative: Develop
core business processes
Strategic imperative: Create a
high performance culture
Key performance indicators
Group financial review
30
34
36
40 Managing risk effectively
46
49
52
54
56
58
62
64
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates
Iron Ore and Manganese
Coal
Corporate and other
Chairman’s introduction
Directors
Executive management
The Board in 2015
Sustainability Committee
Nomination Committee
Audit Committee
Audit Committee report
Remuneration Committee
Directors’ remuneration report
Policy on director remuneration
Director remuneration in 2015
Governance
65
66
69
71
76
77
78
80
82
83
84
93
101 Outstanding share interests
104 Remuneration in 2016
105 Committee members during 2015
106 Seven-year remuneration and returns
108 Statement of directors’ responsibilities
108 Responsibility statement
Independent auditor’s report
Financial statements
110
114 Principal statements
118 Notes to the financial statements
Financial statements of the
169
parent company
172 Summary by business operation
173 Key financial data
174 Exchange rates and commodity prices
Ore Reserves and Mineral Resources
176 Estimated Ore Reserves
178 Estimated Mineral Resources
Other information
180 Performance measures
183 Production statistics
186 Quarterly production statistics
187 Non-financial data
188 The business – an overview
190 Directors’ report
193 Shareholder information
194 Other Anglo American publications
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Strategic reportAnglo American plc Annual Report 2015 STRATEGIC REPORT AT A GLANCE
REPOSITIONING
THE BUSINESS
CORE ASSETS
We are focusing our business on our core portfolio of
world class assets (as highlighted in the map opposite) – in
diamonds, platinum group metals (PGMs) and copper – that
provide the raw materials to meet growing consumer-driven
demand in the world’s maturing and developed economies.
We are focused on making a real difference, through safe
and responsible mining, to provide the ingredients to meet
those aspirations – from homes, vehicles, household
appliances and electronics to luxury goods such as jewellery.
Our mining operations, future growth projects and exploration
and marketing activities will extend across southern Africa,
South and North America, Asia and Europe. Our portfolio
of competitive, long life mining assets will be positioned to
deliver robust profitability and cash flows through the
price cycle.
We are adapting to create a greatly streamlined and agile
business, with the technical and marketing expertise and
critical mass to compete effectively for, and to deliver, future
opportunities, both within and beyond our portfolio.
CANADA
VICTOR
Product: Diamonds
Type: Open pit
Production 2015: 0.6 million carats
Life of Mine: 3 years
GAHCHO KUÉ (PROJECT)
Product: Diamonds
Type: Open pit
Production 2015: due to commence H2 2016
Life of Mine: 13 years
CHILE
COLLAHUASI
Product: Copper
Type: Open pit
Production 2015: 200.3 kt (attributable)
Reserve Life: 70 years
LOS BRONCES(1)
Product: Copper
Type: Open pit
Production 2015: 401.7 kt
Reserve Life: 25 years
Precious metals
Diamonds
Base metals and minerals
PLATINUM
DE BEERS
COPPER
NICKEL
NIOBIUM AND
PHOSPHATES
$263 million
Underlying EBIT
$571 million
Underlying EBIT
$228 million
Underlying EBIT
$(22) million
Underlying EBIT
$119 million
Underlying EBIT
12%
Group EBIT
4%
ROCE
17
Operating assets(2)
2,337,300
Production ounces
platinum
South Africa
Zimbabwe
Asset locations
26%
Group EBIT
6%
ROCE
9
Operating assets(2)
28.7
Production million carats
(100% basis)
Botswana
South Africa
Namibia
Canada
Asset locations
10%
Group EBIT
3%
ROCE
4
Operating assets(2)
708,800
Production tonnes
Chile
Asset location
(1)%
Group EBIT
(1)%
ROCE
2
Operating assets(2)
30,300
Production tonnes
Brazil
Asset location
5%
Group EBIT
14%
ROCE
4
Operating assets(2)
6.3
niobium
1,111
phosphates fertiliser
Production thousand
tonnes
Brazil
Asset location
For more information
See page 46
For more information
See page 49
For more information
See page 52
For more information
See page 54
For more information
See page 56
02
Anglo American plc Annual Report 20151641322803 42002*13122AR REPOSITIONING
THE BUSINESS
We are focusing our business on our core portfolio of
world class assets (as highlighted in the map opposite) – in
diamonds, platinum group metals (PGMs) and copper – that
provide the raw materials to meet growing consumer-driven
demand in the world’s maturing and developed economies.
We are focused on making a real difference, through safe
and responsible mining, to provide the ingredients to meet
those aspirations – from homes, vehicles, household
appliances and electronics to luxury goods such as jewellery.
Our mining operations, future growth projects and exploration
and marketing activities will extend across southern Africa,
South and North America, Asia and Europe. Our portfolio
of competitive, long life mining assets will be positioned to
deliver robust profitability and cash flows through the
price cycle.
We are adapting to create a greatly streamlined and agile
business, with the technical and marketing expertise and
critical mass to compete effectively for, and to deliver, future
opportunities, both within and beyond our portfolio.
ZIMBABWE
UNKI
Product: PGMs
Type: Underground, mechanised
Production 2015: 66,000 ounces
Reserve Life: 30 years
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BOTSWANA
SOUTH AFRICA(3)
JWANENG
Product: Diamonds
Type: Open pit
Production 2015: 9.8 million
carats
Life of Mine: 20 years
ORAPA COMPLEX*
Product: Diamonds
Type: Open pit
Production 2015: 10.6 million
carats
Life of Mine: 2-24 years
NAMIBIA
NAMDEB*
Product: Diamonds
Type: Opencast
Production 2015: 0.5 million carats
Life of Mine: 4-20 years
DEBMARINE NAMIBIA*
Product: Diamonds
Type: Offshore marine mining
Production 2015: 1.3 million carats
Life of Mine: 20 years
MOGALAKWENA*
Product: PGMs
Type: Open pit
Production 2015: 392,000 ounces
Reserve Life: >25 years
AMANDELBULT*
Product: PGMs
Type: Underground
Production 2015: 437,000 ounces
Reserve Life: 13-20 years
VENETIA*
Product: Diamonds
Type: Open pit and underground
Production 2015: 3.1 million carats
Life of Mine: 31 years
VOORSPOED
Product: Diamonds
Type: Open pit
Production 2015: 0.7 million carats
Life of Mine: 6 years
BAFOKENG-RASIMONE
Product: PGMs
Type: Underground
Production 2015: 180,000 ounces
(100% basis)
Reserve Life: 25 years
MOTOTOLO*
Product: PGMs
Type: Underground
Production 2015: 115,000 ounces
(100% basis)
Reserve Life: 5 years
MODIKWA*
Product: PGMs
Type: Underground
Production 2015: 105,000 ounces
(100% basis)
Reserve Life: >27 years
Bulk commodities
Corporate and other
IRON ORE AND
MANGANESE
COAL
$671 million
Underlying EBIT
$457 million
Underlying EBIT
$(64) million
Underlying EBIT
(3)%
Group EBIT
Australia,
Brazil, Chile,
China, Europe,
Singapore,
South Africa
Locations
30%
Group EBIT
5%
ROCE
9
Operating assets(2)
54,052
iron ore
3,112
manganese ore
214
manganese alloys
Production thousand
tonnes
South Africa
Brazil
Australia
Asset locations
21%
Group EBIT
9%
ROCE
19
Operating assets(2)
21,208
metallurgical – export
33,758
thermal – export
Production thousand
tonnes
Australia
South Africa
Colombia
Asset locations
For more information
See page 58
For more information
See page 62
For more information
See page 64
Shaded area represents countries of
operation as at 31 December 2015.
* Orapa complex includes: Damtshaa and
Letlhakane operations; Namdeb includes
Elizabeth Bay, Mining Area 1 and Orange
River operations; and Debmarine
Nambia relates to the Atlantic 1
operation. Amandelbult includes Dishaba
and Tumela operations. Mogalakwena
and Modikwa Reserve Life truncated to
the last year of current Mining Right. Only
five years of Ore Reserves are declared
for Mototolo as per Glencore policy.
Venetia Life of Mine is the combined
open pit and underground operations.
(1) Includes Chagres, which will be retained
and remain as an integrated smelter.
(2) Operating assets relates to mining or
processing operations contributing to
the Group’s results during 2015. Included
within De Beers’ operating assets is
Snap Lake, which was placed onto care
and maintenance in December 2015.
Kumba Iron Ore’s Thabazimbi mine,
which ceased mining in September 2015,
is excluded from Iron Ore and
Manganese operating assets.
(3) In addition to the assets listed, the
Group’s platinum mines are also
supplemented by Anglo American
Platinum’s three smelters at Polokwane,
Mortimer and Waterval, as well as its
Precious Metals Refinery and Base Metals
Refinery, all located in South Africa.
More detailed information on our
Ore Reserves and Mineral Resources
can be found on our corporate website
www.angloamerican.com/ore-reserves-
and-mineral-resources-report-2015
03
Strategic reportAnglo American plc Annual Report 20151641322803 42002*13122AR
STRATEGIC REPORT CHAIRMAN’S STATEMENT
OUR BOLD STEPS TO
TRANSFORM OUR FUTURE
Sir John Parker
In 2015, the world economy continued to struggle,
with most emerging economies slowing sharply.
Russia and Brazil fell into deep recessions.
China’s continuing slowdown, and the associated
renminbi weakness, triggered severe turbulence
in financial markets and depressed demand for
industrial materials. This had a major impact on
the prices of our mined products and mining
equities, which continued their steep fall,
accelerating towards the end of the year.
RESULTS
Anglo American’s own basket of commodity prices, which
declined by 9% in 2014, decreased by a further 24% in 2015,
with our share price slumping to record lows. We delivered
underlying EBIT of $2.2 billion (2014: $4.9 billion). Over the
past two years, price falls have impacted underlying EBIT by
$6.6 billion, of which $4.2 billion was in 2015 alone.
STRATEGIC FOCUS
Given that no mining company in today’s market can rely
on an early uplift in prices, we have acted to create a new
Anglo American with a deleveraged balance sheet.
We are, therefore, refining our focus towards a core portfolio
of a reduced number of world class assets. These comprise
our leading positions in diamonds, platinum group metals
(PGMs) and our very attractive position in copper. They are
long life, competitive assets – with the mineral potential to
organically grow to create an attractive new Anglo American
business with good profitability through the cycle. They are
also mid- to late-cycle commodities and products which
afford our Group greater exposure to the fast-growing
consumer sectors of the global economy, within which
lie a number of next-generation clean energy and other
environmental technologies that rely upon such products.
We will thus, over time, rebalance the Group away from the
commodities which are more heavily linked to the steel
industry and the urbanisation phase of development in
China and other emerging and developing economies.
The restructuring will be challenging given its scale and
boldness, but the streamlined organisation structure and
clearly defined Operating Model under Mark Cutifani’s
leadership, as well as the well-thought-through plans for
discussion with our wide range of stakeholders, give us
confidence in their execution.
04
DISPOSAL AND CLOSURE OF ASSETS
During 2015, disposal transactions completed or
announced amounted to $2.1 billion, and our disposals
programme has subsequently been increased to a
cumulative total of $5-6 billion by the end of 2016.
Discussions are currently under way with potential buyers
of our Niobium and Phosphates businesses and our
Barro Alto and Codemin nickel operations in Brazil; as well
as our Moranbah and Grosvenor coal mines in Australia,
amongst others. Appropriate decisions about such disposals
will be made over time, based on value and other factors.
In light of the commodity price environment, the Company
has ceased or is ceasing production at a number of
operations. Operations that have been placed onto long
term care and maintenance include Peace River Coal
and Snap Lake (diamonds) in Canada, while Thabazimbi
(iron ore) in South Africa has reached the end of its life
and is being closed. Plans have been initiated to place
Twickenham (platinum) in South Africa onto care and
maintenance, while the Damtshaa (diamonds) operation at
the Orapa complex in Botswana was placed onto temporary
care and maintenance from 1 January 2016.
STABILISING THE BALANCE SHEET
We have seen the positive effects of productivity
improvements in our operations throughout the year.
These, combined with significant cost reductions, coupled
with asset sales, and assisted by favourable exchange
rate movements in our major countries of operation,
have enabled us to keep net debt at a stable $12.9 billion,
despite persistent price decreases for our commodities.
LIQUIDITY AND DEBT TARGETS
Despite maintaining strong liquidity, with c.$15 billion of
cash and undrawn facilities, we are nevertheless taking
further steps to substantially strengthen the balance sheet,
thus unlocking value and supporting the rebuilding of
shareholder equity. Given the current extremely low price
levels for our products, which may persist for some time, we
are targeting a significant reduction of our net debt to below
$10 billion in 2016, and to be less than 2.5 times EBITDA in
the medium term.
Following on from these cost reductions and cash savings,
we are targeting being free cash flow positive in 2016, at
current prices and exchange rates.
DIVIDEND
We maintained a 32 cents per share dividend at the
interim stage. However, given the sharply deteriorating
commodity price environment in the second half of the
year, and the need to conserve cash and reduce debt,
regrettably we had to take the unavoidable step of
suspending dividend payments. When we resume
dividend payments, we will move to a payout ratio-based
policy, which we will define at that time.
Anglo American plc Annual Report 2015 S
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as he had expressed a wish to concentrate on his business
interests in South Africa. The Board would like to thank him
for his keen commercial and strategic capability, and sound
judgement over the past four years.
During 2015, we commenced an external evaluation of the
Board and we remain committed to doing this every three
years, as well as to upgrading our internal process of
evaluation in the intervening years.
A WORD OF THANKS
I want to particularly thank all our Board members and the
executive management team led by Mark Cutifani for the
professionalism and dedication to find the right strategic
route through the turbulent and uncertain period we are
experiencing in the mining industry.
My thanks and the appreciation of the whole Board go to
all our employees and contractors, who have been through
and continue to face significant change as we navigate
towards calmer waters.
OUTLOOK
Following the plunge in mining commodity prices from
2012, the outlook for raw materials remains challenging
as China’s continuing slowdown unfolds and policymakers
try to rebalance and restructure the economy away from
its heavy reliance on infrastructure investment. In addition,
the potential for higher US interest rates and a stronger
dollar could present stiff headwinds for the global economy,
especially emerging economies. However, with commodity
prices at such depressed levels, following some four years
of decline, we are finally beginning to see more supply-side
discipline in certain of our commodities and a reduction in
expenditure on large-scale mining expansion projects,
which should in due course put a floor under prices.
Against this background, Anglo American has responded
with a bold plan to concentrate the business, within a
strong balance sheet, on an established core of world class
assets. This will place us well as China’s economy matures
and as developed consumer-led economies – especially
the US and Europe – continue to grow.
As your Chairman, I believe that the new Anglo American
will be more resilient and positioned to generate sustainable
positive returns and growth for shareholders through the
mining cycle.
OUR STRATEGIC REPORT
Our 2015 strategic report, from pages 2 to 64, was reviewed
and approved by the Board on 15 February 2016.
Sir John Parker
Chairman
SAFETY
One critical and enduring priority for us is the Board’s
continued close involvement with safety. We make no
apology that safety performance is at the front end of our
agenda at every Board meeting, with our goal being to
achieve zero injuries.
In 2015, our Group regrettably recorded six fatalities.
However, this level, while six too many, equals the record
low figure reported in 2014 – when the number of
hours worked at many of our deep level, and potentially
hazardous, platinum mines was significantly lower
owing to a five-month period of industrial action.
Any death while on company business saddens us all.
In our Sustainability Committee, under the dedicated
chairmanship of Jack Thompson, himself an experienced
miner, we investigate the causes and lessons learnt for
each loss of human life in great detail. Our much improved
second six months with, notably, a fatality-free final quarter,
was particularly encouraging.
VALUES AND CULTURE
In today’s increasingly stringent legal and regulatory
environment, mining companies are being subjected to
unprecedented close scrutiny by their various stakeholders.
This behoves everyone who works for Anglo American to
constantly work on building the trust that is an integral part
of our deep-seated reputation for doing the right thing,
including a respect for human rights everywhere, and to
show zero tolerance to any form of bribery and corruption.
During the year, the Board requested outside input
and challenge in assessing the Ethical Framework
at Anglo American. Following on from this, several
recommendations were made and considered by
the Board. Implementation of the recommendations
approved by the Board will take place during 2016.
As a Board, we acknowledge that, in practical terms, the
‘tone from the top’ starts with us, regardless of the state
of the market. This is particularly true for me as your
Chairman in my dealings with Board members, senior
management and all manner of stakeholders. It is also the
case for our Chief Executive, and his management team,
who are required to conduct all engagements – both inside
and outside the business – with the respect and integrity
demanded. And it is how each of us, as employees of
Anglo American, should embody the Company’s values in
our daily work. Actions and behaviours speak louder than
any words and set the tone at all levels in our organisation.
In these exceptionally tough times for our industry, it
is especially important that our integrity, consistency
in behaviour and transparency in all our dealings
remain paramount.
THE BOARD
Succession planning at Board level for all Board members,
including the Chairman, is kept under regular review by the
non-executive directors and the Nomination Committee.
Tony O’Neill, our Group Director of Technical and
Sustainability, was appointed to the Board in July as
Technical Director, and I should like to acknowledge his
vast mining experience, knowledge, inventiveness and
the strong leadership he has brought to our technical
team, particularly in supporting the turnaround of
underperforming operations. We have also, with great
regret, had to accept the resignation of Phuthuma Nhleko
05
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT OUR BUSINESS MODEL
OUR BUSINESS
MODEL
TOGETHER,
WE CREATE
SUSTAINABLE
VALUE THAT
MAKES A REAL
DIFFERENCE
06
BUSINESS INPUT
CAPITALS
CREATING VALUE THROUGH MINING THE
RAW MATERIALS REQUIRED TO MEET
GROWING CONSUMER- DRIVEN DEMAND
These capitals are the key stocks
of value that are increased,
decreased or transformed
through the activities of our
organisation, over the short,
medium and long term.
FINANCIAL
Our shareholders own the business.
They expect 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
optimum 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.
The transition to a more streamlined business
delivers a portfolio uniquely positioned for the
expanding consumer-driven markets through:
• Focusing on those commodities positioned to
meet the shift away from infrastructure investment
towards consumer-driven demand, i.e. diamonds,
PGMs and copper.
• Retaining and developing our highest quality
world class ore bodies with competitive industry
cost positions, driving sustainable profitability
throughout the cycle.
• Streamlining the portfolio, though preserving
balance to ensure there is not over-reliance on
any one product group or geography, while retaining
established technical and marketing capabilities and
the critical mass to compete effectively for, and
deliver, future opportunities.
OUR DIVERSE VALUE CHAIN…
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 Mineral 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 pit and underground
mines, although we will move to predominantly
open pit mining as we transition the portfolio.
Process: we generate additional
value by processing and refining many
of our products.
Move and market: we provide products to
our customers around the world, meeting their
specific technical and logistical requirements.
Close or divest: In whatever way we exit an
operation, we do so in accordance with our
Good Citizenship Business Principles, with a
focus on the social and environmental impact.
STRATEGY
The Group Management Committee (GMC) is responsible for developing Anglo American’s strategy
and policies, as discussed and approved by the Board. Implementation of the strategy is monitored by
the GMC, and measured through our KPIs, against our pillars of value.
For more information See page 14
Anglo American plc Annual Report 2015 CREATING VALUE THROUGH MINING THE
RAW MATERIALS REQUIRED TO MEET
GROWING CONSUMER- DRIVEN DEMAND
CAPITAL ALLOCATION
With a high quality asset portfolio and diverse
value chain, 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 current and projected market conditions.
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E
R
L
A
I
C
O
S
CLOSE OR
DIVEST
MOVE AND
MARKET
PLAN AND
BUILD
S
O
C
I
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L
R
E
L
A
T
I
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N
S
H
I
P
S
MINE
S
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I
A
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I
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S
H
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S
MEASURING VALUE THROUGH
OUR SEVEN PILLARS
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 Ore Reserves 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.
PROCESS
For more information See page 34
SOCIAL RELAT I O N S H I P S
For more information on how we allocate capital See page 21
RISK MANAGEMENT
GOVERNANCE
Risk is inherent in all our business activities. We
are committed to an effective, robust system of risk
identification and an effective response to such
risks to support the achievement of our objectives.
The aim of good governance is to promote excellent decision-making and the effective execution of those decisions.
In practice, this means ensuring decisions are made by the right people, with the right information, at the right time
and that they are then executed effectively. Our governance controls throughout the business ensure that we act
ethically and with integrity for the benefit of our people, our stakeholders, our business and the world at large.
For more information See page 40
For more information See page 65
07
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT MARKETPLACE REVIEW
MARKETPLACE
REVIEW
2015 proved to be yet another challenging year
for the mining industry – continued economic
uncertainty, slowing economic growth and demand,
and the resulting sharply lower commodity prices
led to the value of many mining companies falling
to historic lows and management teams having to
implement a range of initiatives to reduce operating
and capital costs, to conserve cash and protect their
balance sheets.
THE SHIFTING GLOBAL
ECONOMIC ENVIRONMENT
A number of global trends have developed in recent
years that have had a significant bearing on the economic
performance and prospects of many countries that play
a major role in the global trade of mined products:
CHINA’S SLOWDOWN
According to the IMF, global GDP increased by 3% in
2015, compared with 3½% in 2014. Since the global
financial crisis in 2008/09, the world economy’s growth
rate has consistently fallen short of its pre-crisis levels,
raising concerns about a protracted ‘secular stagnation’
within the advanced economies, in which growth is
persistently weak. In the emerging economies, average
growth rates are likely to remain depressed as China’s
infrastructure-fuelled boom fades.
The IMF estimates that the advanced economies grew
by 2% in 2015, slightly faster than in 2014. While growth
picked up modestly in the US, Europe and Japan, it remains
subdued relative to the pre-crisis trend, and there are
worries the crisis has had a long term detrimental effect on
the future path of output.
The emerging economies experienced a further marked
slowdown in 2015, with aggregate growth of 4% compared
with 4½% in 2014. China’s economy has slowed
significantly in recent years as it has begun to mature
following a period of unprecedented national infrastructure
development that absorbed ever larger volumes of raw
materials, particularly iron ore and metallurgical coal for
steel production. Most forecasters expect a further
slowdown over the next five to 10 years, reflecting the end
of the investment boom, diminishing potential for ‘catch-up’
growth, a shrinking workforce, and a significant debt
overhang in the corporate sector.
The continuing slowdown in China is inevitably inflicting
damage on other emerging economies, and especially
among mining-commodity producers. Economists are
now becoming more cautious about medium term growth
prospects in these economies. Brazil and South Africa have
suffered particularly from the drop in commodity prices,
which has only been partly offset by their weaker currencies.
Their underlying potential growth rates have fallen to around
2%-2½% a year compared with 3½%-4% at the height of
the commodity boom.
2014
2010
2005
2000
2014
2010
2005
2000
2014
2010
2005
2000
%
60
57
42
23
50
38
22
12
45
34
15
5
Iron ore
Copper
Nickel
Source: IMF
80
70
60
50
40
30
20
10
0
1952
1962
1972
1982
1992
2002
2012
Household consumption
Investment
Source: China’s National Bureau of Statistics
India’s economy is the exception to this weaker growth story.
Following the election of Narendra Modi’s Bharatiya Janata
Party, GDP growth has picked up markedly. If the new
government implements more far-reaching reforms, the
economy could see its growth rate running at around
7%-8% per year in the medium term.
THE TRANSITION OF EMERGING ECONOMIES
China’s slowdown is, however, also a corollary of the
authorities’ determination to rebalance and restructure
the economy. Over the past two decades, the country
has experienced an extended investment boom. The
government is now promoting a less capital-intensive
growth model. Inevitably, this implies lower aggregate
economic growth rates and weaker demand growth in
many commodity-intensive sectors, such as steel and
cement, albeit mitigated by potentially stronger demand
for other metals and minerals, including diamonds, PGMs
and copper.
08
Anglo American plc Annual Report 2015
Indexed 2015 commodity prices
.
0
1
=
5
1
0
2
y
r
a
u
n
a
J
1
,
x
e
d
n
I
e
c
i
r
P
1.1
1.0
0.9
0.8
0.7
0.6
0.5
(15)%
Thermal coal
(15)%
Diamonds
(24)%
Platinum
(24)%
Anglo American
Metallurgical coal (26)%
(28)%
Copper
(29)%
Nickel
(34)%
Iron ore
Jan 2015
Iron ore (Platts 62% CFR China)
Metallurgical coal
Thermal coal
Source: Anglo American Commodity Research
Copper
Nickel
Platinum
Diamonds
Anglo American basket price
Dec 2015
SUPPLY OF COMMODITIES EXCEEDING DEMAND
The decline in investment expenditure in China has
weighed particularly on prices for metals and minerals.
As a result, 2015 marked a year of much weaker demand
growth for most mined commodities, while supply
continued to increase.
A number of supply cuts have been implemented across
the mining industry. To date, however, such cuts have proved
to be insufficient to stimulate a meaningful price recovery
in the absence of stronger demand growth.
Diamonds
End-consumer demand for diamonds continued to be
robust in the US, which is the largest consumer market for
polished diamonds, with an estimated 45% share of
demand. Chinese demand growth for diamond jewellery
saw a considerable slowdown after being the engine of
growth for the industry in the last decade. Other emerging
markets saw weaker consumer demand, exacerbated by the
strength of the US dollar. The resulting demand weakness
was amplified into the value chain, with jewellery retailers
reducing their desired stock levels and, consequently, their
purchasing from the midstream. Faced with lower polished
demand and high stocks, built up during 2014 and early
2015, the midstream sector reduced its demand for rough
diamonds, which caused a build-up of inventory, with
downward pressure on rough diamond pricing.
Looking forward, global carat production is expected
to grow followed by a period of stabilisation. Post-2020,
there is potential for a production decline given the lack
of recent discoveries of significant scale and depletion of
the resource base. This decline in production, combined
with the expected growth in consumer demand for
diamond jewellery, points to strong prospects for the
diamond business in the medium to long term.
Precious metals
Platinum production recovered from strike-affected 2014
levels, with an estimated 14% increase in mined supply, to
reach levels similar to 2013. Supply from autocatalyst
recycling, however, is thought to have decreased as
recyclers held onto scrap in the low price environment.
Higher platinum offtake by the autocatalyst and industrial
sectors was largely offset by lower demand from the
jewellery sector. Combined with outflows from physical
exchange traded funds (ETFs), the net effect was a more
balanced market in comparison with the substantial market
deficit in 2014. Palladium demand for autocatalyst and
industrial applications was relatively stable year-on-year.
In line with the platinum market, the increase in mined
supply, together with outflows from ETFs, reduced the
significant market deficit recorded in 2014. The weak
South African rand contributed to the steady decline in
PGM prices through 2015.
Although, in the near term, the growth outlook for PGMs
is unclear due to potentially reduced platinum jewellery
demand in China and uncertainty surrounding the
autocatalyst market, longer term demand is forecast to be
robust given the expected demand for new and cleaner
vehicles in maturing economies, coupled with increasingly
stringent global emissions legislation.
Base metals
Slowing demand growth was a key contributor to the
weak copper market during 2015 – global consumption
was below expectations, while forecasts for Chinese
demand growth in particular have been scaled back.
Although cuts or unintended disruptions to output increased
during 2015, removing close to 1.2 Mt of copper from global
mined production, recently commissioned mines are now
ramping up and are set to add considerable tonnage to the
market over the medium term. Over the long term, supply is
expected to struggle to meet growing demand given limited
sources of new primary copper supply, declining grades and
more challenging mining conditions in the existing global
portfolio of ageing copper mines.
Despite the ban on Indonesian exports of nickel ore
continuing in 2015, a number of factors negatively affected
the nickel market. These included an abrupt fall-off in
Chinese (and global) stainless steel production, by far the
largest end-using sector of nickel, as well as Chinese nickel
pig iron output beating expectations. Refined production
growth outside of China also remained reasonably strong in
the absence of significant price-induced cutbacks, even as
the declining price cut deep into the global cost curve. As a
consequence, LME inventories increased throughout the
year, reaching unprecedented levels by year end.
Bulk commodities
Steel demand fell globally by about 3% in 2015 – the first
annual decline since 2009 – largely due to Chinese demand
softening by around 5%. This resulted in a decrease in the
consumption of both metallurgical coal and iron ore.
Iron ore fundamentals deteriorated on the back of declining
global demand and strong growth in low-cost supply,
particularly from Australia. A number of new projects are
ramping up, or are expected to be commissioned in the near
future, delivering a total of 250 Mtpa of new supply since
2013, equivalent to 12% of 2015 global supply, compared
with demand growth of only 50 Mtpa.
09
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT MARKETPLACE REVIEW
MARKETPLACE REVIEW continued
In metallurgical coal, the slump in Chinese imports largely
offset stronger demand from India and other Asian markets,
with overall seaborne trade reducing slightly from 290 Mt
in 2014, to around 275 Mt. While Australian supply was
maintained, other less competitive sources such as the
US and Canada were displaced.
The impact of China’s slowing growth profile, coupled with
an increase in hydro-power generation in the country, also
affected thermal coal demand there, with imports falling
by c.25% year-on-year. However, the continued reliance
on thermal coal for power generation, particularly in the
developing world, has limited the downward price impact
of slowing growth relative to other bulk commodities.
PROLONGED DOWNTURN IN COMMODITY PRICES
The combination of subdued demand and, in some
instances, oversupply of commodities has placed
significant downward pressure on prices. The chart on
page 9 shows the percentage reduction in the prices of
the metals and minerals produced by Anglo American
over the course of 2015.
As the global market for commodities has deteriorated,
the mining sector has been characterised by a marked
reduction in costs in most regions, resulting in average
industry costs falling; for example, metallurgical coal costs
have declined by an estimated 15% over the year. However,
the oversupply of many commodities has meant that prices
have generally fallen by considerably more than costs,
which has led to a significant portion of the industry
becoming loss-making.
CHALLENGES FACING
THE MINING INDUSTRY
AND ANGLO AMERICAN
In light of the global trends described above, there are
a number of challenges currently facing the mining industry
and Anglo American, including:
REDUCING COSTS
Significant cost reductions and efficiency efforts are being
undertaken across the mining industry in a bid to improve
relative positions on commodity cost curves and, hence,
profitability. The measures being taken include: headcount
reductions; a focus on core assets to improve productivity,
with many companies taking the decision to close capacity
and remove high cost production; and maintaining strong
capital discipline. Lower oil prices have helped many
producers lower their input costs (although higher energy
costs and high inflation in both South Africa and Brazil
have hampered cost reduction efforts in those commodity
producing countries), while the devaluation of many local
currencies is also helping miners’ costs in US dollar terms.
One of the effects of weakening local currencies, however,
is that marginal producers are being supported for longer,
thereby prolonging the period of oversupply.
MANAGING CAPITAL ALLOCATION PRIORITIES
AND REDUCING DEBT
The now lengthy period of commodity price weakness
has had a significant impact on the health of mining
companies’ balance sheets. Across the mining sector,
companies are making efforts to preserve cash and
reduce capital commitments. Capital expenditure – both
future commitments and actual spend – has been cut
considerably, with few new projects being approved for
development and, indeed, corporate focus has now
shifted to placing loss-making, excess capacity onto care
and maintenance.
A MORE DIFFICULT MINING ENVIRONMENT
Grade deterioration and ore reserve depletion are
important determinants of both longer term supply
requirements and cost trends. A wide variety of factors
is likely to continue to provide structural upward cost
pressure, including: availability of both water and power;
declining head grades; technical problems; increasing
infrastructure costs as mines are built in more remote
locations; and the shift to underground mining as easy to
access near-surface ore bodies are depleted. Consequently,
mining companies face a significant challenge to reduce
costs and improve productivity against a background
of limited investment appetite and few significant
breakthroughs in technological capability. Technological
innovation and a focus on operational improvements are
likely to be critical to the achievement of sustainable cost
and productivity improvements.
STAKEHOLDER ACTIVISM AND
GOVERNMENT REGULATION
Mining companies across the world are facing greater
demands and expectations from increasingly vocal
stakeholder groups, with often competing interests.
Governments, which had become used to high levels of
revenue from mining at the peak of the commodity cycle,
are having to adjust to a much more challenging
environment. They are under pressure to strike a balance
between delivering more benefit and regulatory reform,
while at the same time not deterring much-needed private
sector investment.
TRAINING AND RETAINING SKILLED EMPLOYEES
AND MAINTAINING SOUND LABOUR RELATIONS
As mining methods become more technically complex, the
need to train and retain skilled staff becomes ever more
important. In an environment where older, less-productive
mines are being placed onto care and maintenance or sold,
and technical innovation leads to more mines being
mechanised, maintaining positive labour relations enables
business continuity and enhanced productivity, as skilled
labour shortages and industrial unrest can significantly
affect production and costs.
10
Anglo American plc Annual Report 2015 ANGLO AMERICAN’S
RESPONSE
In response to the significant challenges
facing the mining industry as a whole
and Anglo American, including the lower
commodity price environment, we have
set out the details of wide-ranging
measures that will sustainably improve
cash flows and materially reduce net debt,
while focusing the Group’s strategy and
streamlining the organisation.
Anglo American will be focused on
competitive, long life assets with
considerable organic growth opportunities
that mine the materials expected to benefit
from long term, consumer-driven growth
trends as the global economy evolves and
developing economies mature.
FOCUS ON DE BEERS,
PGMS AND COPPER
• Materially streamlined
core portfolio of 16 assets
• Improved competitive profile
– advantaged cost positions,
world class ore bodies, and
balance of geographic
and end markets
• Asset quality, mineral
endowment options and
scale to support future
opportunities
• Differentiated, premium
positioning for expanding
consumer-driven markets.
PORTFOLIO
TRANSFORMATION
UNDER WAY
CASH FLOW ENHANCEMENTS
FURTHER STRENGTHEN
BALANCE SHEET
• Nickel, Niobium and
• $1.9 billion of cost and
Phosphates, and Moranbah
and Grosvenor metallurgical
coal disposal processes
under way
• Further progress made on
other previously announced
disposal processes, including
certain platinum assets in
South Africa, and thermal and
metallurgical coal operations
in South Africa and Australia.
productivity improvements in
2016, expected to continue
into 2017 and beyond as the
organisation is aligned with
streamlined portfolio
• Step change 50% ($250 million)
central and global support cost
reduction in the medium term
• 25% year-on-year reduction
in total capex expected, to
less than $3.0 billion in 2016
• Dividend suspended and
will resume with payout ratio
when appropriate
• Strong liquidity maintained,
with c.$15 billion of cash and
undrawn facilities.
FOCUSED PORTFOLIO THAT DELIVERS
SOCIO-ECONOMIC
TRENDS
Current global economic trends
suggest slowing demand growth
for infrastructure investment
commodities, towards more
consumer-driven product demand.
512 million
Forecast number of middle class households in
China and India combined by 2030, compared
to 204 million in 2015, a 150% increase.
9
Nine of the most important jurisdictions
worldwide – covering 80% of global car sales –
are adopting more stringent vehicle emission
and fuel economy standards.
$270 billion
Global new investment in renewable energy
in 2014, an increase of 17% on 2013.
Sources:
Bain & Company, The International Council on
Clean Transportation, Frankfurt School – UNEP
Collaborating Centre, Copper Development
Association Inc., and Clean Energy Ministerial.
CONSUMER
TRENDS
The burgeoning middle class in
emerging markets is stimulating
consumer spending, while the
developed world is experiencing
rising demand for clean energy
technologies and renewables.
2%–4.5%
Global rough diamond demand in
real value terms is expected to grow
between 2% and 4.5% annually over
the next 15 years.
20 million
The number of electric vehicles,
including plug-in hybrid and fuel cell
vehicles, the Electric Vehicles Initiative
seeks to help deploy by 2020.
9,000 lbs
A photovoltaic solar farm plant can
use approximately 9,000 lbs of copper
per megawatt of peak capacity.
Meeting
global
consumer-
driven
demands
ANGLO AMERICAN
DELIVERS
Our core portfolio will focus on
De Beers, PGMs and Copper, driven
by consumer-driven markets.
De Beers
Through our 85% interest in De Beers,
the world’s leading diamond company,
we offer a differentiated and high
quality position to meet growing
consumer demand.
PGMs
As the world’s leading PGM
producer, we are helping to develop
innovative technologies in fields
such as automotive, clean energy
and chemicals.
Copper
With interests in two of the world’s
largest copper mines, we supply
copper products to a range of industries,
including telecommunications,
renewable energy technologies and
electric vehicles.
For more information See page 16
11
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
CREATING THE NEW
ANGLO AMERICAN
Mark Cutifani
The global economic environment and its effects
on prices presented the industry with significant
challenges during 2015.
Against the strong headwinds of a 24% decrease in the
basket price of our products, our ongoing intense focus
on operational costs and productivity delivered a
$1.3 billion(1) underlying EBIT benefit in the year, providing
some mitigation. Weaker prices accounted for a $4.2 billion
negative impact to underlying EBIT, while weaker
currencies in our producer countries served to provide
$1.8 billion of mitigating benefit. The net negative effect
of $2.4 billion was the major driver of the 55% decrease
in underlying EBIT to $2.2 billion for the year. Overall, our
copper equivalent unit costs(2) reduced by a further 16%
in US dollar terms, representing a 27% total reduction
since 2012. Despite our internal improvements, underlying
EBITDA decreased by 38% to $4.9 billion and underlying
earnings reduced by 63% to $0.8 billion.
We have, however, been able to maintain our level of
net debt and liquidity at $12.9 billion and $14.8 billion
respectively, through improvements we have made to
the business, significant capex reductions, making the
tough decisions on some of our more marginal assets
and the delivery of our asset disposal commitments.
Recalibrated commodity price assumptions and losses
on the disposal of certain assets have caused us to record
pre-tax impairments and related charges in the second
half of $3.8 billion.
Safety and environmental performance is a leading
indicator of how businesses are run. The greater the
degree of planned work and stable operations, the safer
our people will be. In 2015, we achieved the Group’s best
safety performance in a full production year, reflecting
the intense focus on high risk activities, standards and
controls. I am particularly pleased with the 80% reduction
in environmental incidents since 2013. However, I am
deeply saddened to report that we lost six of our colleagues
during the year, reminding us in the most acute way how
much work we still have to do to ensure our people go
home safely from work every day. I am encouraged,
though, by the significant improvement in the second half
of the year, with a fatality-free final quarter. The achievement
of this milestone reminds us all that our goal of zero harm
is achievable.
(1) Excludes $0.8 billion
volume downside at
De Beers in response
to market conditions.
(2) See page 180 for
the definition and
calculation of copper
equivalent unit costs.
(3) The Life of Mine plan
for Mogalakwena
mine extends until
2105, beyond the
current Mining Right
expiry (in 2040).
Applications for
extensions to the
Mining Right will be
submitted at the
appropriate times.
There is reasonable
expectation that such
extensions will not
be withheld.
12
OPERATIONAL PERFORMANCE
In my previous annual statement I reiterated that creating
a platform of operational excellence is fundamental to
delivering the full potential from our asset base, independent
of the market’s external influences. In fact, weaker markets
emphasised a greater need for operating discipline, to
ensure that we are operating to deliver optimal cash flows
while preserving the assets’ longer term integrity. In 2015,
we have continued to focus our attention on those assets
that contribute the majority of earnings to Anglo American
and that offer us the greatest upside potential.
Of particular note, our two world class copper assets in
Chile have both recovered well from their respective
challenges. The mitigation plans put in place at Los Bronces
in response to the water shortages in the first half of 2015
proved effective and, once those water constraints were
lifted following much-needed snowfall, the operation’s
strong performance in the second half of the year delivered
total annual production of 401,700 tonnes, just 1% below
the prior year. Similarly at Collahuasi, where certain plant
stability issues were identified early in the year, the operation
delivered an exceptional performance in the last quarter,
resulting in production of 200,300 tonnes (attributable) for
the year, only a 3% decrease, despite the major challenges
that were confronted.
In our Platinum business, the flagship Mogalakwena mine,
with more than 25 years of Reserve Life(3) and a highly
competitive cost position, achieved a further 6% increase
in production to 392,000 ounces for the year. The strong
mining performance resulted from a number of operational
enhancements, including improved equipment efficiencies,
better drill penetration rates, increased shovel loading
hours and truck loads, while higher grade and increased
concentrator recovery performance combined to deliver
record production.
In Australia, at our underground longwall metallurgical
coal operations, we have seen significantly improved
performance underpinned by improved cutting rates.
This has been achieved by embedding automation to
enable bi-directional cutting at Grasstree, resulting in
record production at that mine through a 40% increase in
run-of-mine tonnes. Bi-directional cutting is also planned
to be rolled out at Moranbah in 2016, building on the 7%
increase in run-of-mine tonnes achieved in 2015. At both
operations, the implementation of the Operating Model
has resulted in the stabilisation of processes through
detailed planning while driving accountabilities to the
operating teams.
At the Sishen iron ore mine in South Africa, the sharply
deteriorating iron ore price during 2015 caused us to take a
fresh look at the already revised mine plan, with a focus on
reducing operating costs further. This work is in progress
and requires a significant scaling back of the mine’s
considerable waste stripping activities, achieved by
redesigning the pit to a smaller and lower cost configuration,
to preserve the economic sustainability of the mine through
Anglo American plc Annual Report 2015 S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
a potentially prolonged iron ore price environment. As a
result, Kumba is targeting a cash break-even position at an
iron ore price of less than $40 per tonne.
In Brazil, our Nickel business has benefited from the tough
decision, in 2014, to intervene to rebuild the two furnaces.
The 12-month rebuild process was delivered ahead of plan
and below budget and without a single lost time injury –
a remarkable achievement for the entire team. First
production was achieved in September 2015, and we
have seen a 10% improvement in C1 unit costs compared
with 2014, largely as a result of having two furnaces
operating at their full design capacity.
DELIVERING PORTFOLIO COMMITMENTS
Our portfolio transformation is well on track, from c.65
assets in 2013 to 45 today. We completed or announced
$2.1 billion of disposal transactions in 2015, largely from
the $1.6 billion completed sale of our 50% interest in
Lafarge Tarmac to Lafarge SA, as agreed in 2014. This
transaction brought the aggregate proceeds received
by Anglo American for the sale of its Tarmac assets to
approximately $2.5 billion since the decision to sell Tarmac
in 2008. We have subsequently also announced the sale of
our interests in the Tarmac Middle East businesses to Colas,
part of the Bouygues Group.
In Copper, we completed the sale of our Norte assets
(Mantoverde and Mantos Blancos) in Chile to an Audley
Capital-led consortium for $300 million, with potential
upside. We have since agreed a number of other
transactions, including the sale of the Rustenburg platinum
operations to Sibanye Gold for at least ZAR4.5 billion in
nominal terms (approximately $275 million) and the sale of
the Dartbrook thermal coal mine in Australia to Australian
Pacific Coal for up to A$50 million (approximately
$36 million).
Post the year end, we agreed the sale of the Callide
thermal coal mine in Australia to Batchfire Resources for
an undisclosed sum; this transaction remains subject to a
number of conditions.
We have made significant progress, albeit in an environment
that has been deteriorating at a faster pace.
CREATING THE NEW ANGLO AMERICAN
We are taking decisive action to sustainably improve our
cash flows and materially reduce net debt, while focusing on
our most competitive assets. We will focus the portfolio on
our global leadership positions in diamonds and PGMs and
our world class position in copper. This unique combination
of assets, enhanced by our commercial marketing expertise,
will have the advantage of benefiting from the ongoing shift
away from infrastructure investment towards consumer-
driven demand, positioning Anglo American for these
expanding markets. We will manage our other assets, in bulk
commodities and other minerals, for cash generation or
disposal over time.
We have a detailed series of measures, including
the delivery of $1.9 billion of cost and productivity
improvements, to deliver positive free cash flow in 2016
and beyond, and an additional $3-4 billion in asset disposal
proceeds. As a result, we are targeting a net debt reduction
of $3 billion to less than $10 billion in 2016, assuming current
commodity prices and exchange rates, and are targeting net
debt of $6 billion in the medium term, supporting a return to
a solid investment grade credit rating.
We of course recognise the current challenging
environment in which to deliver disposals. We are already
engaged with parties interested in several of our assets,
but we will only complete those transactions which deliver
appropriate value for our investors. So, while we have
accelerated our disposal processes, and given our targeted
positive free cash flow and our robust liquidity position, we
will take appropriate time to secure value outcomes from the
disposal programme.
The materially streamlined core portfolio of 16 assets
will also enable a step change 50% reduction in central
and global support costs and a c.60% reduction in indirect
headcount as assets are sold and central support
requirements are downsized and recalibrated.
Our core portfolio creates a highly attractive, competitive
and well balanced business, with the leverage of scale,
technical expertise and mineral endowment options, which
offer considerable upside potential over the long term.
By taking such action, we are creating a Group that will
also be significantly stronger in the short term – it will be
streamlined, focused, with lower overhead and indirect
costs and positioned to deliver robust profitability and
cash flows through the cycle.
PARTNERS IN THE FUTURE
During the year we maintained our work on developing
strong relationships with host communities and continued
the roll-out of our stringent Social Way standards across
our businesses. Performance against Social Way
requirements improved significantly in 2015, although a
continuing focus will be required to achieve full compliance
by the end of 2016.
Just as 2015 was a difficult year for the mining industry,
it was a challenging one for host communities, with the
implementation of operational efficiency measures, the
placing of mines onto care and maintenance and mine
closures negatively affecting host communities, as
evidenced by protests in mining communities across
South Africa. In response, we have continued to roll out
our new approach to socio-economic development which
leverages our value chains and skills, focusing in particular
on local procurement, enterprise development, and local
government capacity development. We have also
developed a unique diagnostic tool to measure progress
and effectiveness in this critical area and this is being
deployed at certain of our operations.
13
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
We have continued to engage in broader dialogues about
society’s expectations of the mining industry, not least to
ensure that we are listening to what our host communities
need. The engagement between mining companies and
faith groups continues to yield productive discussions, with
events held in Rome and Cape Town and a number of site
visits organised to help contextualise the nature of the
challenge while also highlighting proven successes. We
have also continued to integrate the Development Partner
Framework, whose development was hosted by the
Kellogg Innovation Network at Northwestern University,
into our own approach to managing community relations.
OUTLOOK
The world economy continued to struggle in 2015, with
output growth falling short of expectations yet again.
There were signs of encouragement in the advanced
economies, mainly reflecting some improvement in
Europe. But emerging economies, particularly the large
commodity producers, suffered from the effects of
China’s marked slowdown.
Over the next few years, most forecasters expect a
strengthening of global economic growth, albeit gradually,
principally in response to firmer recoveries in the US and
Europe. Consumer spending is picking up and business
investment should strengthen. India’s economy should
continue to grow more strongly, in contrast to more subdued
activity in Brazil, Russia and South Africa.
China’s economy is adjusting to its ‘new normal’. Its
aggregate growth rate is falling owing to several longer term
trends: the end of its infrastructure investment boom, less
potential for ‘catch-up’ growth, an ageing population, and a
debt overhang in the corporate sector. Its demand for some
commodities – notably those most related to infrastructure
OUR STRATEGY IN ACTION
OUR MISSION
AND VISION
DRIVING
CHANGE
OUR MISSION:
Together, we create
sustainable value
that makes a real
difference
OUR VISION:
To be partners
in the future
FOCUS THE
PORTFOLIO
Prioritising time and
capital on the assets
that offer the most
attractive long term
value creation potential
FOCUS ON
DELIVERY
Maintaining a highly
competitive mindset
with innovation and
outstanding delivery at
the forefront of how we
drive change
DEVELOP CORE
BUSINESS
PROCESSES
Becoming industry
leaders in critical areas,
extracting maximum
value from our assets
and products
$2.1bn
$2.1 billion disposal
transactions
completed or
announced in 2015
A number of
operations across
the Group have
ceased or are
ceasing production
$1.3bn
$1.3 billion(1) of cost
and productivity
improvements
delivered in 2015
$2.0bn
$2.0 billion
capex reduction
to $4.0 billion,
including a 30%
decrease in SIB
capex in 2015
>$400m
>$400 million
underlying EBIT
improvement
from marketing
activities since
2013
~$100m
Avoided energy
costs in 2015 driven
by ECO2MAN
and business
improvement
projects
CREATE A HIGH
PERFORMANCE
CULTURE
Ensuring our
organisation and people
have the critical core
skills to improve returns
1,500
Indirect support
roles reduced by
1,500 in 2015
(1) Excludes $0.8 billion volume downside at De Beers in response to market conditions.
14
DEFINING
OUR FUTURE
A CHANGING
WORLD
The ongoing
economic slowdown
in developing countries
and the precipitous
fall in commodity
prices requires
Anglo American to
strengthen its balance
sheet, while focusing
its strategy, acting
decisively to achieve
our ambition…
“To create a resilient
business that delivers
robust profitability and
sustainable, positive
cash flows through the
price cycle.”
Anglo American plc Annual Report 2015 investment such as iron ore and coal – is likely to remain
weak for several years. But there are some encouraging
signs of a gradual rebalancing of the economy. Consumer
spending has been robust and many analysts expect this
trend to continue, which implies a more positive and
sustainable demand outlook for diamonds, PGMs and
copper, amongst others.
THANK YOU
On behalf of my colleagues on the Group Management
Committee, I would like to thank all our people across the
business and our widespread and diverse stakeholders for
their hard work and support. This is a period of considerable
change in Anglo American’s long history of evolution and
I appreciate the support of our stakeholders in helping to
deliver the sustainable value that we all demand and expect.
I also thank the members of the Board and our chairman,
Sir John Parker, for their wise counsel and unwavering
support for the changes we are making to create the new
Anglo American.
Mark Cutifani
Chief Executive
DECISIVE
ACTION
In order to achieve our
ambition, delivery of the
measures set out on page
11 will now form the focus
of our strategic imperatives:
• Focus on De Beers, PGMs
and Copper
• Portfolio transformation
under way
• Cash flow enhancements
to further strengthen the
balance sheet
THE NEW
ANGLO AMERICAN
A streamlined, competitive business
with a clear and differentiated
investment proposition.
Strategically advantaged world class assets:
World class ore bodies with competitive industry
cost positions and long reserve lives.
Materially streamlined business:
Moving from 45 to 16 core assets across diamonds,
PGMs and copper.
Well-balanced portfolio:
No over-reliance from any one product group
or geography and retaining the critical mass to
compete effectively for, and deliver, the attractive
future growth opportunities across the portfolio.
Sustainable profitability:
With competitive cash cost profiles and long
lives, the portfolio will be positioned to produce
sustainable profitability through the cycle.
Differentiated, premium positioning for
expanding consumer-driven markets:
Enhanced by our marketing expertise, the Group
will be positioned to benefit from changing demand
patterns as the global economy evolves and as
emerging market economies mature.
We measure our
performance
through our
pillars of value
which underpin
everything we do
Safety and Health
Environment
Socio-political
People
Production
Cost
Financial
REMUNERATION
Anglo American’s remuneration policy for executive
directors is designed to encourage delivery of the Group’s
strategy in a responsible and sustainable manner. The main
elements of the remuneration package are basic salary,
annual bonus and long term incentive plan (LTIP).
ANNUAL BONUS
Annual bonus performance measures include:
• 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 is applied if safety targets are not met.
To help ensure sustainable long term performance, 60%
of any annual bonus is deferred into shares for a minimum
of three years and is subject to clawback.
LONG TERM INCENTIVE PLAN
The LTIP performance measures are aligned to our strategic
objectives over a three-year performance period. Vested
LTIP awards are subject to clawback and must be held for
an additional two years, to encourage alignment of executive
and shareholder interests.
The LTIP performance measures and weightings are:
• 25% Group total shareholder return (TSR) relative to the
Euromoney Global Mining Index
• 25% Group TSR relative to the FTSE 100 index
• 50% attributable ROCE to reflect the strategic
focus on disciplined capital allocation.
For more information go to
Key Performance Indicators page 34
15
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT STRATEGIC IMPERATIVE
FOCUS THE PORTFOLIO
At Anglo American, we are accelerating our strategic transformation by focusing on our
core portfolio to meet changing market demand dynamics. World class, long life assets,
focused on De Beers, PGMs and Copper, will create a well-balanced and financially
sustainable business.
DRIVING CHANGE
DEFINING OUR FUTURE
DISPOSAL TRANSACTIONS COMPLETED OR
ANNOUNCED IN 2015
$2.1 billion
IN LIGHT OF THE COMMODITY PRICE ENVIRONMENT
WE HAVE CEASED, OR ARE CEASING, PRODUCTION
AT A NUMBER OF OPERATIONS
SALE OF PLATINUM’S RUSTENBURG OPERATIONS
AGREED; COPPER’S NORTE ASSETS SOLD
Price upside potential from both transactions.
STRATEGIC FOCUS ON:
De Beers, PGMs and Copper
DISPOSALS TARGET IN 2016
$3-4 billion
MATERIALLY STREAMLINED CORE PORTFOLIO
OF 16 ASSETS
Evaluation and sale processes for a number of
Anglo American’s assets are in process.
MOGALAKWENA – ONE OF THE WORLD’S GREAT MINES
Mogalakwena is Platinum’s top-priority asset and the world’s biggest
open pit platinum mine – with the potential to lift annual platinum
production by 50% from ~400,000 ounces to 600,000 ounces.
In 2015, while reducing unit costs by 7% in local currency terms
owing to tight cost management and a series of productivity
initiatives, Mogalakwena commanded the highest rand basket
price in Platinum’s portfolio at R32,850 per platinum ounce. It also
generated significant operating free cash flow, while keeping cash
operating margins at 50%, despite weaker prices.
Whereas traditional underground mines require high labour intensity,
Mogalakwena is a highly mechanised operation, with fewer, more
highly skilled employees. As a result, it is a safer place to work –
reflected in its strong safety performance.
Success has not always come easily. Unlike most platinum operations
based primarily on Merensky and UG2 ore, Mogalakwena mines the
Platreef, where palladium is slightly more abundant than platinum and
grades are more variable. It is also harder to break and uses more
energy to do so – problems only solved through Platinum further
developing its metallurgical and processing technologies.
The mine’s recent introduction of the Operating Model will build on
these firm foundations by improving business performance through
ensuring that the right work is done at the right time in the right way.
Drilling, loading and hauling operations in Mogalakwena’s huge open pit.
16
Anglo American plc Annual Report 2015 The primary source of competitive advantage in the
mining industry is to own high quality, low cost, long
life assets in structurally attractive commodities.
The continuing deterioration in commodity markets
has necessitated decisive action to restore the
strength of our balance sheet by sustainably improving
cash flows and materially reducing net debt. We are
evaluating the sale of a number of large and high
quality assets, while evolving market demand dynamics
have also informed our core asset choices, as we focus
our strategy. These actions will create a more resilient
business to deliver robust profitability and cash flows
through the cycle.
PORTFOLIO TRANSFORMATION
In the assessment of our core portfolio, we examined both
the quality of individual assets and our competitive positions
in our various product groups, while also reviewing evolving
supply and demand dynamics. We will focus on those assets
where we hold most competitive advantage – being our
world class diamond, PGM and copper assets.
This unique combination of assets, enhanced by our
commercial marketing expertise, will have the advantage of
benefiting from the ongoing shift away from infrastructure
investment towards consumer-driven demand, positioning
Anglo American for these expanding markets.
At Anglo American, we believe that the recent pull-back in
Chinese infrastructure investment is a significant structural
trend and think it unlikely that India, or any other emerging
economy, will be in the position to bridge that gap in the
short to medium term. We believe it is more likely that
consumer-driven product demand – for example for homes,
vehicles, household appliances and electronics, as well as
for luxury goods such as jewellery – will be driven by the
burgeoning middle class in emerging and more developed
economies, and will emerge as a stronger force in demand
for mined products.
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Focus on De Beers, PGMs and copper
Anglo American is focusing its portfolio via the
following principles:
• Strategically advantaged world class assets:
Typically characterised by world class ore bodies with
competitive industry cost positions and long reserve
lives, within strategically advantaged product groups –
Anglo American has global leadership positions in
diamonds and PGMs and a highly competitive position
in copper.
• Materially streamlined business: Moving from 45 to
16 core assets across three operating business units will
enable much more efficient and effective management
of an asset portfolio that already drives the vast majority
of long term profitability.
17
Strategic reportAnglo American plc Annual Report 2015Transitioning to a core portfolioMoving to 16 core assetsCopperPlatinumNickelNiobium and PhosphatesDe BeersCoalIron Ore and ManganeseCore16201455201545DE BEERSBotswanaJwanengOrapa complexSouth AfricaVenetiaVoorspoedNamibiaNamdeb (Land)Debmarine NamibiaCanada VictorGahcho KuéOur 16 core assetsCOPPERChileLos BroncesCollahuasiPLATINUMSouth AfricaMogalakwenaAmandelbult BRPMMototoloModikwaZimbabweUnki
STRATEGIC REPORT STRATEGIC IMPERATIVE
FOCUS THE PORTFOLIO continued
• Well-balanced portfolio: Although greatly streamlined
and physically smaller, the portfolio will remain well
balanced to ensure there is not over-reliance from any
one product group or geography. Anglo American
will retain its established technical and marketing
capabilities and the critical mass to compete effectively
for and deliver the attractive future growth opportunities
across the portfolio.
• Sustainable profitability: Due to their competitive cash
cost profile and long lives, the portfolio will be positioned
to produce sustainable profitability through the cycle, with
approximately $2.8 billion of EBITDA delivered from those
core assets in 2015.
• Differentiated, premium positioning for expanding
consumer-driven markets: While strengthening the
balance sheet, the core portfolio, enhanced by the Group’s
marketing expertise, positions the Company to benefit
from changing demand patterns as the global economy
evolves and as emerging market economies mature.
By focusing on De Beers, PGMs, and Copper,
Anglo American will have established a unique and high
quality position to benefit from these consumer trends.
The portfolio will be structured around:
De Beers
Anglo American holds an 85% interest in De Beers,
the world’s leading diamond company, which currently
produces around a third of the world’s rough diamonds
by value.
De Beers will continue its mining operations across
Botswana (Jwaneng and the Orapa complex, which
includes Damtshaa – with Damtshaa placed onto temporary
care and maintenance in January 2016 – and Letlhakane),
Canada (Victor), Namibia (Namdeb (Land) and Debmarine
Namibia) and South Africa (Venetia and Voorspoed).
Within its operating portfolio, De Beers has one of the
largest diamond resources, by volume, in the world at
Orapa and one of the richest diamond mines, by value,
at Jwaneng. De Beers is also due to complete the
development of the 51% owned Gahcho Kué mine in
Canada, with production expected to begin in the second
half of 2016, while progressing the underground
development at the Venetia mine.
PGMs
Anglo American’s interests in PGMs are held through
its 78% owned subsidiary Anglo American Platinum
(Platinum). Our platinum business is the world’s leading
PGM producer with positions in the world’s two largest PGM
deposits – the Bushveld Complex in South Africa and the
Great Dyke in Zimbabwe.
Platinum will continue its current repositioning around
a leaner, ‘best-in-class’ core operating footprint at the
Mogalakwena and Amandelbult mines in South Africa and
Unki in Zimbabwe, alongside its joint venture interests in the
Bafokeng-Rasimone platinum mine, the Mototolo mine and
the Modikwa mine in South Africa.
In 2015, these assets had a combined production of
1.3 million ounces of platinum (metal in concentrate).
Mogalakwena is the highest margin platinum producer
in the industry and, as one of the only large open pit PGM
mines globally, becomes the core of a much more flexible
and lower risk business. The operating mines will be
supplemented by Platinum’s three smelters at Polokwane,
Mortimer and Waterval, as well as its Precious Metals
Refinery and Base Metals Refinery, which will continue to
process material received from both owned mines and
third parties.
Copper
Anglo American has concentrated its copper business
around its interests in two of the world’s largest copper
mines – Los Bronces (including the Chagres smelter)
and Collahuasi in Chile. In 2015, Los Bronces, a 50.1%
owned subsidiary, produced 401,700 tonnes of copper.
Collahuasi, 44% owned, produced 455,300 tonnes of
copper (200,300 tonnes on an attributable basis). On
average, the two assets operate at C1 unit cash costs
of $1.45/lb(1) and, with Reserve Lives of 25 years and
70 years, respectively.
Anglo American’s copper portfolio and global exploration
platform present a number of attractive organic growth
options from relatively high grade mineral endowments,
such as its feasibility stage Quellaveco copper project in
Peru, as well as long term growth projects, including the
further development of the Los Bronces District in Chile,
the expansion of Collahuasi, the copper-nickel-PGM project
Sakatti in Finland and a promising copper exploration
position in Papua New Guinea.
(1) Weighted average
C1 unit cash cost,
including both
Los Bronces and
Collahuasi at 100%.
18
Anglo American plc Annual Report 2015 Asset divestments
Disposals completed in 2015
The evaluation and sales processes for a number of
Anglo American’s major non-core assets are progressing.
During 2015, we completed or announced $2.1 billion of
disposal transactions, including from our 50% share of the
Lafarge Tarmac JV ($1.6 billion) that was agreed in 2014,
and the sale of the Norte copper assets in Chile ($0.3 billion),
while also announcing the sale of the Rustenburg platinum
mines to Sibanye Gold. Sales have recently been agreed
for the Dartbrook and Callide coal mines in Australia
(subject to a number of conditions) and the sale of the
Kimberley Mines has been completed.
Non-core portfolio
Discussions are currently under way to assess the potential
disposal value of the Nickel business and Moranbah and
Grosvenor metallurgical coal assets, alongside our sale
process for the Niobium and Phosphates businesses.
Discussions with potential buyers are expected to take
several months. Any final decision on sale will depend on
value as compared to the significant EBITDA and cash flow
contribution these low operating cost, long life assets are
expected to make to the Group.
Sales processes are also under way across several coal
assets in Australia and South Africa. The Union platinum
mine in South Africa has been restructured and production
significantly reduced, while also progressing the sale of
the asset.
In light of the commodity price environment, the Group has
ceased, or is ceasing, production at a number of operations.
Operations that have been closed or placed onto care and
maintenance include Peace River Coal and Snap Lake
(diamonds) in Canada, while Thabazimbi (iron ore) in
South Africa has reached the end of its life and is being
closed. Plans have also been initiated to place Twickenham
(platinum) in South Africa onto care and maintenance. It
is expected that the aggregate cost of carrying out these
actions will be approximately $0.2 billion in 2016.
At Kumba Iron Ore, the reconfiguration of the Sishen
mine to transition to a lower strip ratio and operational
cost position is progressing well and, combined with further
operational improvements at Kolomela, is expected to add
to the Group’s cash flow generation at prevailing iron ore
prices. The Company has initiated a review to consider
options to exit from Kumba at the appropriate time, including
a potential spin-out.
At the Minas-Rio iron ore operation in Brazil, work has
been prioritised to optimise the operation for the current
iron ore price environment to ensure that it is cash flow
positive in 2016 and subsequent years. Work is also
progressing to secure the required licences that underpin
the full ramp-up over time that will also ensure the long term
sustainability of Minas-Rio for all its stakeholders. All such
work is expected to be completed over the next three years,
at which time options for the asset will be assessed.
At Anglo American Platinum, assets other than those
identified as part of its long term core portfolio will be
reviewed to determine the optimum path to realise
shareholder value. The joint venture operations will continue
to be operated in a separate management structure.
The target for the disposals programme has been
increased to $5-6 billion by the end of 2016, with $3-4 billion
expected in 2016, having already completed or announced
$2.1 billion in 2015. While the full repositioning of
Anglo American is expected to take time to ensure
transactions deliver appropriate value, and to allow
engagement with critical stakeholders, all non-core assets
will be managed actively and their performance optimised
in the best long term interests of all stakeholders.
19
Strategic reportAnglo American plc Annual Report 2015 STRATEGIC REPORT STRATEGIC IMPERATIVE
FOCUS ON DELIVERY
As global uncertainty continues and commodity prices remain volatile, it has become
more important than ever to deliver significant and necessary change within our
business. In such a challenging environment, we are committed to managing what is
in our control; achieving cost and productivity improvements, to enhance cash flows
through the cycle and further strengthen our balance sheet.
DRIVING CHANGE
DEFINING OUR FUTURE
COST AND PRODUCTIVITY IMPROVEMENTS IN 2015
NET DEBT (PRO FORMA) BY END OF 2016
$1.3 billion
REDUCTION IN COPPER EQUIVALENT UNIT COSTS
IN US DOLLAR TERMS SINCE 2012
27%
CAPEX REDUCTION IN 2015, TO $4.0 BILLION
33%
DIVIDEND SUSPENDED AND WILL RESUME WITH A
PAYOUT RATIO-BASED POLICY WHEN APPROPRIATE
<$10 billion
COST AND PRODUCTIVITY IMPROVEMENTS EXPECTED IN
2016 – WITH GROUP EXPECTED TO BE FREE CASH FLOW
POSITIVE IN 2016 AT CURRENT PRICES
$1.9 billion
CAPEX IN 2016
<$3.0 billion
LOS BRONCES ROLLS OUT OUR OPERATING MODEL
Even at the best of operations there is always room for improvement.
At Los Bronces, one of our world class copper assets in Chile, we are
taking a hard look at the operation’s ongoing competitiveness, using
key metrics such as the ore body’s quality and expandability, the mine’s
absolute cost- and margin-curve position, and its operating risk profile.
To date, we have seen encouraging results: plant operating time,
at 94%, is very close to best practice, as is truck utilisation. Labour
productivity is also expected to increase, alongside improving
operational stability and higher plant throughput.
To drive increased value, we recently introduced our Operating
Model, starting in the processing plants. As the Model rolls out, we
will implement a number of new initiatives, including further study on
the nature of the mineral endowment and how best to exploit it. We
will also work on ways to increase metal production through grade
engineering. This is a low cost approach that has the potential to
substantially increase ore grades presented to the mill, thereby leading
to greater output.
Such improvements are expected to yield an additional 15,000 tonnes
of copper a year by 2017, with an 11% lower processing cost per tonne,
offsetting a gradual decline in grade.
Haul trucks unload ore at the primary crusher in Los Bronces’ open pit.
20
Anglo American plc Annual Report 2015 The portfolio decisions we have made have enabled
a comprehensive re-assessment of operating, capital
and indirect costs across Anglo American. Building
upon the platform of the asset review in 2013,
following which our operational performance
improvement programme was executed, we have
taken the appropriate measures to enable the delivery
of positive free cash flow in 2016, with further
improvement expected in 2017 and beyond, assuming
commodity prices and exchange rates remain at or
around current levels.
These operational improvements, coupled with a
substantially reduced capital expenditure profile
and the targeted proceeds from our asset disposal
programme, are expected to reduce net debt to less
than $10 billion in 2016, assuming current commodity
prices and exchange rates. We are targeting net debt
of $6 billion in the medium term, supporting a return to
a solid investment grade credit rating.
Costs and productivity
Embedding the Operating Model principles across various
parts of the business led to a significant improvement in
equipment efficiencies and performance during 2015.
On the basis of a more stable operating platform,
$1.3 billion of underlying EBIT benefit from cost and
productivity improvements was delivered in 2015. As a
result of these initiatives, copper equivalent unit costs
were reduced by a further 16% in US dollar terms,
representing a 27% total reduction since 2012.
Looking forward, our ongoing focus on operational
improvement is expected to deliver $1.9 billion of cost
and productivity improvements in 2016 relative to 2015,
building upon the $1.3 billion delivered in 2015. We will
predominantly concentrate on reducing operating and
support costs by $1.2 billion, as well as $700 million of
productivity (volume) related gains.
For more information on our support cost reductions
See page 31
S
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CASH FLOW ENHANCEMENT THROUGH THE CYCLE
PRIORITISED CAPITAL ALLOCATION
Building a stable operational platform
A key component of our operational performance
improvement programme is the implementation of
Anglo American’s Operating Model.
The Operating Model is an essential enabler for delivering
our production targets, and ultimately for reducing our
operating costs. It enables operational stability to deliver
predictable outcomes; reduces variation in order
to increase capability and efficiency; and provides clarity
so team members have a clear understanding of their work
in order to facilitate consistent outcomes. This focus on
data-driven decision making, detailed planning, operating
excellence and execution has led to lower operating costs,
improved productivity and the potential to both lower and
defer capital expenditure.
The Operating Model has three components, which
address: operational strategy; execution of work; and
continuous improvement. Our approach has been to
establish the sections of the value chain in those assets
which constrain performance and implement the
appropriate component of the Operating Model that
unlocks the most value.
By the end of 2015, the Operating Model principles had
been fully, or partially, implemented at six sites. During 2016,
we will continue to implement the Operating Model across
those assets where it will deliver the most meaningful
improvements in operating and financial performance.
We continue to apply our capital allocation model across
the Group in the management of the balance sheet. In 2013,
we targeted a long term net debt range of $10-12 billion.
At the same time, given the weak market for commodities,
we targeted a level of $15 billion of liquidity. This liquidity
buffer, along with the minimal step-up in interest charges
and lack of covenants, significantly reduces the downside
impact to the Group in the event that an investment grade
credit rating is not sustainable for a period of time.
The deterioration in commodity markets has necessitated
a review of our net debt target and we now expect to reduce
net debt to less than $10 billion (on a pro forma basis) by
the end of 2016, and to c.$6 billion in the medium term
via disposals and positive free cash flows. We are also
targeting a net debt: EBITDA ratio of less than 2.5 times in
the medium term.
Anglo American continues to have strong liquidity,
with $14.8 billion of undrawn facilities and cash as at
31 December 2015, and its objective of a solid investment
grade credit rating remains unchanged. Near term debt
maturities consist of $1.6 billion in 2016 and $2.6 billion
in 2017.
In the near term, our focus remains to optimise the Group’s
cash flow in order to protect and strengthen the balance
sheet, while maintaining the operational integrity of our
assets. Discretionary project spend has been suspended,
with the exception of the investment required to maintain
high value assets or future growth options. We continue to
apply our rigorous processes and criteria for all project
investment, including stay-in-business projects; however,
future performance will not be jeopardised for short term
cash flow gains.
21
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT STRATEGIC IMPERATIVE
FOCUS ON DELIVERY continued
Target net debt evolution
$12.9 bn
$3-4 bn
<$10 bn
To come from
cash generation
and disposals
~$6 bn
Dec 2015
net debt
Disposals
2016
Dec 2016
net debt target
Medium term
net debt target
at spot
In 2016, we expect capital expenditure to be less than
$3.0 billion, with $1.2 billion of project spending as the
Gahcho Kué and Grosvenor projects reach completion
and as Minas-Rio’s ramp-up continues. In 2017, we expect
capital expenditure to be reduced by a further $500 million
to $2.5 billion.
In 2015, as part of the overall capital allocation process,
the Board also reviewed its dividend policy in light of the
significant changes to the market environment and the
subsequent impact on cash flows and net debt. Following
the review, the Board recommended the suspension of the
dividend. The commitment to a dividend during the ordinary
course of business remains a core part of the Group’s overall
capital allocation approach and the Board recommended
that, upon resumption, Anglo American should adopt a
payout ratio-based dividend policy in order to provide
shareholders with exposure to improvements in commodity
prices, while retaining cash flow flexibility during periods of
weaker pricing.
Projects and capital expenditure
Following an increased focus on capital discipline and
in response to current conditions, capital expenditure
was reduced, before capitalised losses, to $4.0 billion
(2014: $6.0 billion). The reduction was largely driven by a
41% decline in expansionary capital expenditure, mainly
owing to the Minas-Rio iron ore project in Brazil moving
into its ramp-up phase.
Expansionary capital expenditure remains focused
on the delivery of our portfolio of existing major projects,
including Gahcho Kué, Venetia Underground and
Grosvenor. As these projects transition into production,
expansionary capital expenditure will continue to
decrease, which will enable the Group to further align its
level of growth investment with prevailing commodity
market conditions.
Capital expenditure(1)
$ million
Expansionary
Stay in business
Development and stripping
Proceeds from disposal of
property, plant and equipment
Total
Net capitalised losses/(profits)
Total capital expenditure
Year ended
31 Dec 2015
Year ended
31 Dec 2014
1,936
1,384
740
(30)
4,030
147
4,177
3,257
1,973
868
(71)
6,027
(9)
6,018
(1) See page 180 for the definition of capital expenditure.
Stay-in-business (SIB) capital expenditure declined by
30% to $1.4 billion (2014: $2.0 billion), as the roll-out of the
Operating Model across our assets delivered an optimised
SIB capital expenditure plan.
Projects in ramp-up in 2015
In Nickel, the rebuild of the two furnaces at Barro Alto
was concluded ahead of schedule and budget. Delivery
of first metal from the second furnace rebuild occurred
in September, more than one month ahead of expectations,
and nameplate capacity production should be achieved
through 2016.
Niobium’s Boa Vista Fresh Rock project reached 69% of
nameplate capacity in December 2015, and is expected to
reach full nameplate capacity in the third quarter of 2016.
The Minas-Rio iron ore operation continued to ramp up
in 2015, with increases in quarter-on-quarter production
throughout the year. The operation is expected to reach
commercial production capacity in 2016, although it will
remain in ramp-up throughout the year.
22
Anglo American plc Annual Report 2015 Projects advanced in 2015
De Beers’ Gahcho Kué project in Canada is progressing
well, with key land use, water licence and surface leases all
now received. In addition, all six Impact Benefit Agreements
(with indigenous communities) have been completed. As at
31 December 2015, the project was 83% complete and
remains on track for first production during the second half
of 2016, with commercial production expected in the first
quarter of 2017.
Construction of De Beers’ Venetia Underground mine
in South Africa continues to progress, with the decline
advanced to more than 1,100 metres and the project
21% complete. The underground operation is expected
to become the principal source of ore at Venetia from
late 2022.
Projects initiated in 2015
No new major growth projects were initiated during 2015,
in line with the Group’s focus on improving cash flows.
Evaluation and exploration expenditure
Recognising the long term nature of the business,
Anglo American’s proven track record and expertise in
exploration discoveries, and the importance of maintaining
a portfolio of high value replacement and organic growth
options, we have continued to retain and advance select
studies, with a focus on maintaining our established social
commitments and managing costs appropriately.
This expenditure is focused on the core product groups
of diamonds, PGMs and copper, with small expenditures
supported where required to enable the exit of certain other
assets for value. We are continuing to enhance our approach
to studies and evaluation, with a greater emphasis on
assessing a broad range of options early in the study phase
in order to mitigate risk, identify opportunities and minimise
sunk costs. As a result, evaluation expenditure reduced to
$145 million in 2015 (2014: $218 million) and expenditure
on exploration activities was 15% lower at $154 million
(2014: $181 million).
23
Strategic reportAnglo American plc Annual Report 2015 STRATEGIC REPORT STRATEGIC IMPERATIVE
DEVELOP CORE
BUSINESS PROCESSES
At Anglo American, our core business processes refer to the fundamentals of our
work throughout our value chain. With innovation and outstanding delivery at the
forefront of how we deliver change, the business processes we are implementing are
vital to the success of our core activities and achieving best practice across the Group.
DRIVING CHANGE
DEFINING OUR FUTURE
AVOIDED ENERGY COSTS IN 2015 DRIVEN BY ECO2MAN
AND BUSINESS IMPROVEMENT PROJECTS
~$100 million
UNDERLYING EBIT IMPROVEMENT SINCE 2013 FROM
MARKETING ACTIVITIES
>$400 million
78% OF LOS BRONCES’ WATER REQUIREMENTS
MET BY RE-USED/RECYCLED WATER IN THE YEAR
78%
MULTI-HORIZON INITIATIVES TO COME OUT OF
OUR OPEN FORUM EVENTS
Focused on finding safer, more efficient, environmentally
friendly and sustainable ways to unlock mineral value.
9
OUR IMMEDIATE FOCUS IS ON SECURING ADEQUATE
SUPPLIES OF ENERGY AND WATER AND USING
THOSE RESOURCES MORE EFFICIENTLY
In the long term, however, we must find viable alternatives for
traditional sources of energy and reduce our reliance on ‘new’
water to near zero.
UNLOCKING VALUE FROM MINOR PGMS
By focusing on understanding the needs of customers and
leveraging Anglo American’s industry-leading position, our
Marketing business unlocked additional value across our range
of PGMs in 2015.
As the world’s largest primary producer of ruthenium, iridium and
osmium – by-products from the mining and refining of platinum,
and palladium – we developed customer relationships covering a
wide range of products in the chemicals, electrical, catalyst and
specialist alloy sectors, in order to deliver greater commercial value
from these ‘minor’ PGMs.
Products developed in these fields are often new and at the
forefront of innovation. By fully understanding the requirements
of our customers, we are able to unlock full commercial value to
market. Revised packaging, stockholding in strategic locations,
local sales offices and adapted payment terms were just some of
the many steps we took to meet customer needs.
Customer mapping, market intelligence, ongoing dialogue with
end-users and tailored solutions have all contributed to making
these metals a steady and reliable source of income.
With PGMs forming part of our core portfolio, we will continue to
focus on market development, including direct funding of research
and/or co-investment in start-ups, thus enabling the sustainable
use of minor PGMs in existing and new applications.
Laboratory processor Tshegofatso Morake tests samples at Platinum’s Precious Metals
Refinery in Rustenburg, South Africa.
24
Anglo American plc Annual Report 2015 We are starting to see tangible benefits from the
roll-out of our Operating Model across our core assets;
a more stable and predictable operating performance
is leading to improved productivity and costs, fewer
environmental incidents and a fuller understanding of
our mine-to-market value chain. Working together with
all our stakeholders, we will begin to deliver on the full
potential of our portfolio and enhance the sustainable
value we can create for our host communities.
DRIVING TOWARDS OPERATING EXCELLENCE
Our technical and operational base is now firmly established,
building on the principles of the Operating Model, which
delivered $1.3 billion of cost and productivity improvements
in 2015, and a 27% improvement in indexed unit costs (in
US dollar terms) since 2012. This foundation of clearly
understanding the main value drivers and achieving
operating excellence across our asset base will continue to
accelerate the delivery of additional benefits as we strive
towards operating our assets to their full potential.
A primary focus has been to recognise the main drivers
of value across our business, from the ore body through to
market. Through a clearer understanding of the potential
of our ore bodies and the application of innovative mining
methods and technologies, combined with the development
of processing flowsheets optimised to specific ore bodies,
we are positioning ourselves to realise even greater value
from our assets.
Los Bronces, as a Tier 1 copper asset, has been the focus
of many of the improvement efforts. Developing a better
understanding of the Los Bronces ore body characteristics
and modifying our operating practices have led to
improvements in copper and molybdenum recoveries.
This approach will unlock additional metal production at
lower cost while minimising capital investment, thereby
enhancing the operation’s sustainability. In addition,
developments in the field of grade engineering may
materially improve the grade of ore feedstock through
integrating our understanding of the ore body with the
optimal configuration of mining and processing practices,
potentially leading to increased metal production.
During 2015, FutureSmart™, Anglo American’s approach
to innovation, successfully completed three Open Forums,
one each on Sustainability, Processing and Mining. The
outcomes, developed in collaboration with 90 external
partners, yielded in excess of 3,000 ideas for step-changes
in business transformation. These have been distilled into
a programme of nine multi-horizon initiatives that seek to
address our critical challenges, and to find safer, more
efficient, environmentally friendly and sustainable ways
to unlock mineral value.
MARKETING PRODUCTS FOR FULL VALUE
Our Marketing business (Marketing), created in 2014,
continues to make solid progress through marketing
activities designed to create maximum value across the
entire value chain – from mine to customer.
S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
Marketing is now well established and, through our
dedicated sales and marketing hubs in Singapore and
London, we have continued to improve customer focus
and build on our strong relationships across the portfolio,
including: PGMs; copper; iron ore; metallurgical and thermal
coal; nickel and niobium. Our collaborative work across
the commodities helps create a more co-ordinated
customer approach, reinforces our customer and supplier
relationships, and deepens our knowledge in order to realise
additional profit from the sale of our own equity volumes, our
trading activities and our third party supply of products.
Good progress has been made against each of the
principal ‘levers’ identified to generate additional profit
for the Group. With increasing market challenges, we
are broadening our focus:
• Marketing excellence: building on the basics.
• 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 and third party supply: buying and trading third
party material to complement the physical portfolio.
• Next generation: new ideas delivering value in the
longer term.
These levers will remain relevant as Anglo American
moves to a more focused, core portfolio. All marketing
activities are executed in an increasingly sophisticated
risk management environment. Ensuring the risk factors
which impact Marketing, including price, credit, operational,
and regulatory risks, are transparent and comprehensively
managed is a key priority, thereby maximising value for
the Group.
Marketing has already improved underlying EBIT by
more than $400 million since 2013, most of it through
additional income. A large proportion of this additional
value is currently being generated through the marketing
excellence activities, while other levers are also becoming
increasingly important.
We continue to increase direct sales to end customers,
rather than through sales agents, across the majority of
commodities. The value of sales made to intermediaries,
rather than end users, reduced from c.60% in 2012, to
less than 10% in 2015. Some specific examples include
increased minor PGM sales made possible by sales channel
development and increased direct copper metallic sales into
China through the development of direct relationships and
establishment of local support.
25
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT STRATEGIC IMPERATIVE
DEVELOP CORE BUSINESS PROCESSES continued
A number of value chain optimisation activities in the year
created additional earnings, including the expansion of our
shipping portfolio with linked freight trades that realised
cost advantages and benefits relative to stand-alone
routes. With this additional capacity, we have expanded
our CFR-delivered shipping offer.
We have made significant progress in our approach to
planning through our Integrated Sales and Operations
Planning work. This work ensures we maximise value
from the ore bodies we mine, and smoothly manages all
activities from mine to customer in a collaborative and
transparent way.
Our improved approach to planning and co-ordination
across the mining value chain has also helped the Group
to continue to increase its logistics capacities.
Good progress has been made with thermal coal trading.
A new activity launched in 2014, thermal coal trading is
now fully established and delivering against expectations.
The trading capability in thermal coal has put a strong
foundation in place, which we are now using to progress
further initiatives across the other commodities, particularly
as we move towards mid- to late-cycle exposure.
MANAGING OUR IMPACTS ON COMMUNITIES
AND THE ENVIRONMENT
As a mining company, our aim is to have a net positive lasting
impact on our host communities. However, in helping to
uplift such communities, typically through the provision
of jobs and infrastructure, we acknowledge that the
exploration, extraction and processing of ore reserves
can result in the disturbance of land and the generation
of mineral residue, as well as atmospheric and water
emissions. Social impacts typically associated with mining
may include population influx and demographic change,
land acquisition and resettlement, competition
for natural resources, effects on community health and
potential human rights infringements in our supply chain.
We have a responsibility to manage our social and
environmental impacts in line with legal requirements, and
in such a way that, on balance, host communities can benefit
from mining. Responsible environmental management
and sound community relations can influence our access
to land and capital, improve resource security, and reduce
operational costs and closure liabilities.
Anglo American’s environmental and social risks and
activities are managed in line with our mandatory
Environment Way and Social Way performance
requirements, and are increasingly integrated into the
roll-out of the Operating Model. The principal environmental
and social risks facing our business are associated with
human rights, socio-economic development, water quality
and security, energy security, climate change and mine
closure. We report extensively on our approach and
performance related to these and other material
sustainability issues in our Sustainability Report.
For more information, visit
www.angloamerican.com/sustainability-report-2015
During 2015, Anglo American recorded six Level 3 (medium
impact) environmental incidents. These incidents had no
material financial impact on the business and resulted in no
lasting harm to the environment. No Level 4-5 (high impact)
incidents were reported.
Water management
Water is of increasing significance to our business, given
that 75% of our operations are located in countries with
high levels of water risk. The water related challenges faced
by our sites typically fall into three categories: water security;
managing highly variable rainfall; and mitigating the impact
of mining activities on water quality and the rights of
other users.
For the third consecutive year, we exceeded our 2020 water
savings target of 14%; by the end of 2015 we had achieved
an estimated 16% water saving against our projected water
usage. Water saving projects, which include more effective
dust suppression, dewatering of tailings and more efficient
ore separation, saved the Group approximately 25 million m3
of water (2014: 36 million m3). Anglo American’s total new
water consumption increased from 196 million m3 in 2014 to
222 million m3 in 2015, largely owing to ramp-up activities
at Minas-Rio.
Production at Los Bronces copper mine in Chile was
constrained by water supply challenges in 2015. The
operation has continued to implement technical solutions
to prevent further impact on business, with water
transported via a 56 kilometre pipeline from the Las Tórtolas
tailings dam to Los Bronces. Los Bronces is currently
recycling 78% of available water. At a Group level, 64%
of our water requirements during the year were met by
recycling/re-using water (2014: 68%).
Total water consumed against business as usual
2011–2015
Million m3
250
200
150
100
50
0
2011
2012
2013
2014
2015
Water consumed in ongoing business
Water consumed by acquisitions, projects and corporate functions(1)
Water consumed by divested businesses
Water savings
(1) Recent acquisitions, projects and corporate functions have not been included
in the energy, GHG and water reduction target setting process.
26
Anglo American plc Annual Report 2015
Energy security
Our core mining, refining, and transport activities are
dependent on adequate and reliable sources of energy.
Insecurity of supply has the potential to compromise our
production goals as well as the safety of our employees.
Reducing energy consumption saves the business money,
helps improve energy security and mitigates our
contribution to climate change.
The Group’s total energy consumption was 106 million GJ
(2014: 108 million GJ). The significant increase in energy
consumption at Minas-Rio, owing to ramp-up activities, was
offset by energy savings at the Coal business in South Africa
and Australia, Kumba Iron Ore and Nickel. Progress on
operational energy and carbon performance is driven
through our energy- and carbon-management programme,
ECO2MAN. By year end, a total of 325 ECO2MAN and
business improvement projects accounted for energy
savings of 5.8 million GJ, representing a 7% reduction
against the 2015 figure and c.$100 million in avoided
energy costs. New energy reduction targets have been
set for all operations.
In South Africa, our operations remain vulnerable to power
outages owing to shortages at peak electricity demand
times. In consequence, all South African business units
have emergency preparedness plans in place, including
specific protocols to minimise the impact of load curtailment
on production by allocating power rationing to sites,
equipment and processes with catch-up capacity. We
are also discussing with the government incentives for
co-generation and base-load independent power projects.
Electricity supply in Brazil is highly reliant on hydropower,
and the recent drought there raised concerns over power
insecurity. These were mitigated by the increased use of
thermal power generation and higher levels of rainfall
experienced towards the end of the year.
Climate change
We recognise our responsibility to play a positive role in
the global transition to a low-carbon future and to protect
our employees, assets and host communities against
the potential physical impacts of climate change.
We expect that climate change will affect our business in
three principal ways: climate regulation and taxation will
have a financial effect on our business; demand for PGMs
and copper in low-carbon technologies will increase; and
the physical and social impacts of a changing climate may
affect our operations and host communities.
In 2015, Anglo American operations were responsible
for 18 million tonnes of CO2-equivalent emissions
(Mt CO2e) (2014: 17 Mt CO2e). This increase was due to
the ramp-up at the Minas-Rio and Grosvenor projects in
Brazil and Australia, respectively, as well as an upwards
revision of the global warming potential of methane by the
Australian government. Through ECO2MAN, we were able
to reduce our greenhouse gas (GHG) emissions by 22% in
relation to 2015’s consumption. This amounts to 4.6 million
tonnes of avoided CO2e. During 2015, new carbon-
reduction targets were set for each operation.
Total energy consumed against business as usual
2011–2015
Million GJ
140
120
100
80
60
40
20
0
2011
2012
2013
2014
2015
Energy consumed in ongoing business
Energy consumed by acquisitions, projects and corporate functions(1)
Energy consumed by divested businesses
Energy savings
(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
2011–2015
Million tonnes CO2e
25
20
15
10
5
0
2011
2012
2013
2014
2015
GHGs emitted in ongoing business
GHGs emitted 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 new focus of Anglo American’s portfolio presents
significant opportunities associated with climate change.
Copper and PGMs are critical products in facilitating
alternative energy technologies. Demand for copper is
expected to increase given its use in several low-carbon
technology applications (such as hybrid and electric
vehicles which typically contain two to three times more
copper than conventional vehicles). A key development
area for platinum is the use of fuel cells to provide power,
both in stationary applications such as residential power,
and in mobile applications such as power trains for vehicles.
27
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT STRATEGIC IMPERATIVE
DEVELOP CORE BUSINESS PROCESSES continued
An important focus of our climate change programme
involves understanding the likely impacts of physical
and regulatory changes associated with climate change
in the future. Carbon pricing scenarios are factored into
project investment decisions and climate change risk
and adaptation assessments have been conducted at
vulnerable operations.
We welcome the important forward commitments
made at Paris COP21. On the ground, we will continue to
engage around proposals for tighter legislation or to help
clarify where there is policy uncertainty. We have a clear
position on climate change and on coal in our business, for
engagement with stakeholders. It is available for download
on angloamerican.com
SOCIAL PERFORMANCE
Our Social Way defines Anglo American’s governing
framework for social performance. It provides clear
requirements for all Anglo American-managed sites to:
ensure that policies and systems are in place to engage
with affected communities; avoid, prevent and mitigate
adverse social impacts; and maximise development
opportunities. During 2015, we rolled out a revised Social
Way, which has been updated to reflect evolving stakeholder
expectations and international best practice. Each site is
assessed annually. More in-depth reviews of priority issues
are undertaken as a part of the operational risk assurance
process. The self-assessment results for 2014 provided a
baseline for performance against the revised Social Way.
The 2015 results reflect a steady improvement across
almost all the requirements and the percentage of serious
non-compliances has decreased from 8% to 1%. Each
site is implementing an improvement plan where it has
not met Anglo American standards or its own stated
performance targets.
Social instability and industrial unrest remain a particular
challenge and priority in South Africa. To address this, we
continue to seek to engage and work collaboratively with
employees, unions and the South African government,
and also with communities around our mines.
Working with stakeholders
2015 was a particularly difficult year for the global mining
industry, characterised by plunging commodity prices,
volatile markets and political instability. This challenging
business context underlines the importance of building
trusted relationships across stakeholder groups. The
uncertain operating environment also has important
implications for mining companies’ socio-political licence
to operate, and is placing renewed pressure on companies
to find approaches that balance short term shareholder
expectations with society’s longer term needs.
Managing uncertainty
The commodity market downturn, combined with the
effects of local currency depreciation, the decision to put
some mines onto care and maintenance, consequent job
losses and the decline in royalty and tax revenues, have all
added pressure on governments in resource-dependent
countries which are now struggling to meet social
expectations. There have also been corruption scandals
in some of our host countries that have affected wider
levels of trust in business and government. This has helped
create a climate of regulatory uncertainty and a lack of clear
political leadership and direction.
Governments want to tighten regulation and drive more
benefit from their mining sector, while at the same time
recognising the need not to deter the incentive to invest and
operate at a time when economic conditions are so difficult.
Policy implications may encompass labour relations,
environmental performance, health and safety, tax reform,
corporate governance, local procurement, beneficiation,
and indigenisation, as well as the wider delivery of social
objectives, such as the provision of housing and roads.
In response, Anglo American strives to develop and
maintain constructive relationships with government and
regulatory officials, both at the individual company and
operational level, as well as more broadly through national
and international industry sector bodies. Strong monitoring
mechanisms are in place to track regulatory developments,
promote understanding of regulatory requirements across
affected areas of the business, and drive full compliance
Group-wide.
Mine closure
Our approach to ensuring responsible mine closure
emphasises the importance of designing, planning and
operating a mine with closure in mind, and planning for
post-closure long term sustainability in consultation with
communities and other stakeholders. In doing so, we aim to
reduce long term risks and liabilities to our business from an
environmental and socio-economic perspective, and to
ensure that we leave a positive legacy when our mines
conclude their operational lives.
Our Mine Closure Toolbox provides a structured approach
to closure planning and management. It is aimed at ensuring
that the full spectrum of opportunities, risks and liabilities is
effectively identified, that plans are fully costed, and that
provision is made for the planned operational life of the mine
or premature closure. The Toolbox is available publicly as a
leading-practice resource for other companies to access.
It is used throughout our managed operations and also at
some operations managed by our joint venture partners.
Within the Group, the Toolbox is designed to be used in
conjunction with our Socio-Economic Assessment Toolbox
(SEAT) in order to support an integrated approach to
mine-closure planning.
28
Anglo American plc Annual Report 2015 Global expenditure by type
Community
development
$’000
50,636
Education and training 22,349
Other
15,318
Health and welfare
13,560
Sports, art, culture
and heritage
Institutional
capacity development
Water and sanitation
Environment
Disaster and
emergency relief
Energy and
climate change
Employee
matched giving
and fundraising
6,668
5,405
4,657
2,523
1,942
902
188
Total
124,148
%
41
18
12
11
5
4
4
2
2
1
–
Global expenditure by country
South Africa
Chile
Brazil
Peru
Namibia
Rest of world
Australia
United Kingdom
Botswana
Total
$’000
85,845
14,147
11,970
4,453
3,521
2,371
943
480
418
124,148
%
69
11
10
4
3
2
1
–
–
Partners in the future
Mining companies across the world are facing greater
demands and expectations from increasingly vocal
stakeholder groups, with often competing interests.
Compounding these demands are the lower levels of
trust that many stakeholders have of the business world.
Anglo American’s ambition is to become ‘partners in the
future’. In so doing, we seek to maximise the benefits of
mining and mitigate net negative consequences, particularly
as they relate to host communities.
With most of our operations in the developing world, our
commitments to host governments and communities
extend far more widely than creating direct jobs and
paying taxes. We seek to ensure that the benefits we
generate flow more directly to communities around our
operations and that we respond effectively to increasing
stakeholder expectations.
Over the past two years, we have been implementing a
new approach to socio-economic development delivery.
The first element involves supporting local markets, where
we promote local procurement, enterprise development
and workforce development. These programmes create
a strong platform for job creation within and outside the
mining value chains. The second element focuses on
building local capacity to allow development to be sustained
beyond the mining sector, and after mine closure. This
includes, for example, social investment such as education
and health programmes.
In 2015, 17% ($1.8 billion) of supplier expenditure was
with host communities (2014: $1.8 billion, 15%), while our
enterprise development programmes in Botswana, Brazil,
Chile, South Africa and Peru supported 62,661 businesses
and created/sustained 108,423 jobs.
In 2015, Anglo American’s corporate social investment
(CSI) expenditure in local communities, including by the
Anglo American Chairman’s Fund and Zimele, totalled
$124.1 million (2014: $135.8 million). This figure represents
6% of underlying EBIT, less underlying EBIT of associates
and joint ventures. While the bulk of our socio-economic
development strategy is designed to leverage core business
activities, much of our CSI investment continues to support
vulnerable and marginalised stakeholders unable to
participate in our core value chains. Health and education
are strategic focus areas in our CSI and a top priority for
national and community level stakeholders.
29
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT STRATEGIC IMPERATIVE
CREATE A HIGH
PERFORMANCE CULTURE
To deliver on our objectives, we rely on a capable and engaged workforce.
Our high performance culture encourages all employees to give their best
and places their health and safety at the top of our agenda.
DRIVING CHANGE
DEFINING OUR FUTURE
INDIRECT ROLES REDUCED TO AROUND 11,500
ACROSS THE GROUP (2014: 13,000)
HEADCOUNT REDUCTION FROM 128,000 TO c.50,000
AS THE PORTFOLIO RESTRUCTURE IS COMPLETED
11,500
FEMALE MANAGERS ACROSS THE GROUP
25%
c.50,000
COST SAVINGS FROM CHANGES TO CENTRAL
SUPPORT COSTS IN THE MEDIUM TERM
$250 million
GLOBAL SAFETY DAY
We inaugurated Global Safety Day in 2011 to unite everyone on the
importance of arriving home safely at the end of each day and of the
responsibility of everyone for safety. It is the only time employees
and contractors come together to focus on our shared challenge.
In 2015, the project team introduced a ‘controls protect and keep
you safe’ theme to drive stronger ownership and engagement.
This highlights the protective role controls play – for individuals,
their families, teams and communities – while encouraging people
to improve their own understanding and use of controls.
Over a three month period, leaders, managers, supervisors and
all employees and contractors were given opportunities to think
about the role controls play in their personal and work lives and
how well they understand and lead on their use. Everyone came
together on Safety Day to identify what could be done to improve
control use. This then fed into local action and improvement plans.
An employee online survey to evaluate the impact of the day
demonstrated that 98% of participants understood completely
or near-completely the importance of controls in protecting and
keeping them safe, with 56% saying controls had significantly
improved their safety behaviour and 30% that they had done
so ‘quite a bit’. Given this successful outcome, we will be adopting
a similar approach for Safety Day in 2016.
Platinum’s CEO, Chris Griffith, addresses staff as part of Mogalakwena mine’s
Global Safety Day events.
30
Anglo American plc Annual Report 2015 We continue to foster our high performance
culture, through building an organisation structure
that is fit for purpose, resourcing this structure with
the best capability and empowering leadership to
deliver results.
BUILDING AN ORGANISATION THAT IS
FIT FOR PURPOSE
We continue to create a lean and more effective business
that is built around strong commodity-focused operating
units and functions that provide value-adding expert
leadership, improve business performance and ensure
effective governance.
During 2015, we reviewed our organisation to structure
work more effectively, establish clear accountabilities and
authorities, and remove duplication. This work focused
initially on indirect support roles (those not directly involved
in production) at the Group Corporate centres. This resulted
in a significant reduction in employee numbers, while
ensuring we have the most capable people in the right roles
to deliver on our strategic objectives. By the end of 2015, the
number of people working for Anglo American in indirect
roles had reduced to around 11,500 from 13,000 in 2014.
As the Group’s portfolio is streamlined to focus on diamonds,
PGMs and copper, we expect our total headcount to reduce
from 128,000 to around 50,000 through disposals and
restructuring, with the majority of these roles expected to
be transferred to new owners of the assets. We will further
review our corporate support structures and overheads to
ensure they remain fit for purpose and are aligned to the
future portfolio. In order to reduce duplication and increase
capability, we will also review the role of each function within
the context of a global support model.
We expect that the future rightsizing of our corporate
support structures will lead to a reduction of indirect roles
from the current 11,500 to less than 5,000. The changes
to central support costs alone are expected to contribute
$250 million of cost savings in the medium term.
MANAGING TALENT AND DEVELOPING SKILLS
Resourcing Anglo American’s simplified organisation
structure with the right capability is essential for success
and continues to be the focus of the ‘fit for purpose’ exercise.
In assessing capability, we consider technical skills and
knowledge that have been acquired through experience
and practice; mental processing ability; social process skills;
and application (the degree of drive and commitment a
person displays).
If we are to withstand the current challenges, we need to
foster a culture centred on business outcomes. Achieving
this hinges on strong leadership from line managers, to
ensure we are doing only essential work, with only people
who are adding significant value, and giving them the
authority to do their job effectively.
Providing development and training to our leaders and
workforce continues to improve the resilience of our
business and is a key means for people to grow in their
work. We have a range of external and internal development
programmes currently in use across the Group, where we
made an investment of more than $100 million on training
in 2015. In an increasingly competitive market for limited
skills, we continue to invest in developing a pipeline of future
talent through our support of 3,500 graduates, bursars,
apprentices and trainees.
S
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DIVERSITY
Anglo American embraces diversity and complies with
relevant legal obligations wherever we have operations.
We seek a workforce that represents the regions within
which we operate and we provide opportunities for broader
development within those regions. A diverse workforce
brings greater diversity of thought to tackle the challenges
we face. We continually develop our workforce so that we
will have this diversity among our leaders of the future. By
year end, women made up 18% of our overall workforce
(2014: 16%) and 25% of managers (2014: 24%).
In our South African operations, we continue to promote
transformation. By year end, 60% of our management
comprised historically disadvantaged South Africans. The
impending third iteration of the Mining Charter is expected
to define new commitments that will encourage further
progress in our business.
ENCOURAGING SOUND INDUSTRIAL RELATIONS
Throughout our organisation restructures, we maintain a
focus on managing employment separations respectfully
and fairly. We endeavour to follow due legal process in all
countries in which we have a presence and seek to engage
with governments, employees and unions in order to make
the difficult situation as fair and transparent as possible. We
work with affected employees to honour our commitments
and offer support measures, including external services, to
assist with finding employment elsewhere.
Approximately 72% of our current permanent workforce is
represented by work councils, trade unions or other similar
bodies and covered by collective bargaining agreements.
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.
31
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT STRATEGIC IMPERATIVE
CREATE A HIGH PERFORMANCE CULTURE continued
ENSURING A SAFE WORKING ENVIRONMENT
PROMOTING HEALTH AND WELL-BEING
The safety, health and well-being of our employees are a
top priority and a core value at Anglo American. We strive to
achieve our goal of zero harm by managing our activities in
a way that eliminates incidents, minimises risk and promotes
excellence in the performance of our operations.
Effective management of health risks protects our
people, enhances productivity and is essential for
minimising potential long term liabilities. Extending our
health promotion activities to the broader community
also supports our internal health drive.
In 2015, three employees and three contractors lost their
lives in work-related activities at operations managed by
Anglo American. This is the same record low of six lives
lost recorded in 2014, when four employees and two
contractors died. The Group’s fatality injury frequency rate
at the end of 2015 represented a negligible increase on
the 2014 performance.
Any loss of life is unacceptable and we continue to dedicate
considerable effort to achieving our vision of zero harm. As
part of this, we initiated a Group-wide control improvement
programme during 2015. This aims to ensure we have the
right controls in place for all our major safety risks and that
they are properly understood, used and their effectiveness
regularly monitored.
For each incident resulting in loss of life or a critical injury, an
independent investigation is conducted to understand the
causes and remedial actions required. The lessons learned
from each are shared via our Group Learning from Incidents
(LFI) process and discussed at Board Sustainability
Committee, executive and site management levels.
Particular emphasis is placed on ensuring that actions
relating to critical controls are implemented in a timely
manner to prevent repeats.
Despite continuing to put considerable effort into improving
how we manage safety, our total recordable case frequency
rate rose by 16% to 0.93 (2014: 0.80). While the regression
was partly due to Platinum having resumed normal
operating conditions following the strike-affected period in
2014, more work needs to be done to renew the downward
trend of recent years.
Regulatory and voluntary safety stoppages resulted in lost
production at Platinum, and to a lesser extent at Kumba.
While the overall number of stoppages and associated lost
production decreased year-on-year at Platinum, it remains a
priority for the business to engage with regulators to ensure
that such interventions are used as a last resort.
Our safety strategy and management approach are
risk-based and focus on making sure that we have the
right culture and controls in place to operate safely. They
are both founded on three key principles: a mindset of
zero harm, no repeats, and the application of simple,
non-negotiable standards. During 2015, we added further
impetus to improving control use, driven by work in five
linked areas: leadership, effective planning and standards,
supervision, incidents, and risk management. These will
remain our priorities in 2016.
In 2015, 42% of employees were reported to be working in
environments with noise levels in excess of the occupational
exposure limit, and approximately 9% of employees were
working in environments where they were potentially at risk
of exposure to inhalable hazards.
Total number of fatal injuries and fatal injury
frequency rate 2011–2015
Fatalities
30
25
20
15
10
5
0
2012
2013
2014
2015
2011
FIFR
Fatalities
Lost time injuries, medical treatment cases and
total recordable case frequency rate 2011–2015
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
2011
2012
2013
2014
2015
Lost-time injuries
Medical treatment cases
TRCFR
TRCFR
2.5
2
1.5
1
0.5
0
32
Anglo American plc Annual Report 2015
While we have intensive programmes in place to ensure that
employees and contractors working in such environments
are trained to use personal protective equipment, our focus
is on addressing the source of occupational health risk.
Our overall approach to occupational hygiene is aligned with
the Anglo American Operational Risk Management (ORM)
process, which requires that operations identify health risks,
implement controls to mitigate those risks, monitor the
effectiveness of controls, and learn from incidents in order
to prevent repeats. Targets for the implementation of the
ORM are being set and will influence the performance-
based remuneration of senior executives.
The number of new cases of occupational diseases reported
in 2015 was 163 (2014: 175). This translates to an incidence
rate of 0.177 (2014: 0.175) per 200,000 hours worked – a
small year-on-year increase due to the reduced number
of employees in 2015. Improvement, in absolute terms,
was noted in the following areas: a 47% reduction in
musculoskeletal disorders; a 33% reduction in coal-
workers’ pneumoconiosis; and a 12% reduction in noise-
induced hearing loss.
Anglo American has recorded no cases of silicosis owing to
exposure at our operations since 2011. However, despite the
significant year-on-year decrease, we continue to report
cases of coal-workers’ pneumoconiosis. These cases are
thoroughly investigated to better understand their causes,
including the past and current occupational exposure
profiles of those who become ill, as well as the potential
sources of coal dust in the workplace. Based on this
information, we continue to implement measures to improve
our management of risks associated with coal dust.
Through the industry work group that was formed by
Anglo American and other South African mining peers,
we continue to address issues relating to compensation
and medical care for occupational lung disease in the
gold mining industry in South Africa.
33
Strategic reportAnglo American plc Annual Report 2015 STRATEGIC REPORT KEY PERFORMANCE INDICATORS
KEY PERFORMANCE
INDICATORS
PILLARS OF VALUE(1)
KEY PERFORMANCE INDICATORS (KPIs)
RESULTS AND TARGETS(2)
Safety and Health
To do no harm to
our workforce.
For more information see
Create a high performance
culture on page 30
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
Develop core business
processes on page 24
Socio-political
To partner in the benefits of
mining with local communities
and governments.
For more information see
Develop core business
processes on page 24
People
To resource the organisation
with an engaged and
productive workforce.
For more information see
Create a high performance
culture on page 30
Production
To extract our Ore Reserves
in a sustainable way to
create value.
For more information see
Group Financial Review on page 36
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.
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.
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 46–64). Quarterly production figures are shown
on page 186.
Cost
To be competitive by operating
as efficiently as possible.
For more information see
Group Financial Review on page 36
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 46–64). Other factors that impact costs across
the Group are discussed in the Group Financial Review
(see page 36).
Financial
To deliver sustainable returns
for our shareholders.
For more information see
Group Financial Review on page 36
Attributable ROCE
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.
(1) The table above reflects historically reported KPIs against our seven pillars. It does not represent our new business scorecard.
34
Underlying earnings per share
Underlying earnings are net profit
attributable to equity shareholders, before
special items and remeasurements.
Anglo American plc Annual Report 2015 PILLARS OF VALUE(1)
KEY PERFORMANCE INDICATORS (KPIs)
Safety and Health
To do no harm to
our workforce.
For more information see
Create a high performance
culture on page 30
Work related fatal injury frequency rate (FIFR)
Total recordable case frequency
FIFR is the number of employee or contractor fatal injuries
rate (TRCFR)
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.
TRCFR is the number of fatal injuries, lost
time injuries and medical treatment cases
for both employees and contractors per
200,000 hours worked.
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.
RESULTS AND TARGETS(2)
FIFR
Target: Zero fatal incidents
TRCFR
Target: 10% year-on-year reduction
The ultimate goal of zero harm remains
NCOD
Target: Zero (long term)
2015
2014
6 fatalities, 0.00352 FIFR
6 fatalities, 0.00346 FIFR
2015
2014
0.93
0.80
2015
2014
163
175
Energy consumption
Million GJ total energy used
Target: 7% saving vs. 2015 projected business as usual (BAU)
Performance: 7% saving vs. 2015
GHG emissions
Mt CO2 -equivalent
Target: 19% saving vs. 2015 projected BAU
Performance: 22% saving vs. 2015
2015
2014
106
108
2015
2014
18
17
Total new water consumed
Mm3 new water consumed
Target: 14% saving vs. 2020 projected BAU
Performance: 16% saving vs. 2015
2015
2014
222222
196
Corporate social investment
Enterprise development
Social investment, as defined by the London Benchmarking
Number of companies supported, and
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.
number of jobs sustained, by companies
supported by Anglo American enterprise
development initiatives.
Corporate social investment
2015: 6.0% of underlying EBIT, less associates and joint ventures
2014: 3.0% of underlying EBIT, less associates and joint ventures
Enterprise development
Businesses supported
Enterprise development
Jobs sustained
2015
2014
$124m
$136m
2015
2014
62,661
58,257
2015
2014
108,423
96,873
Voluntary labour turnover
Number of permanent employee resignations as a
percentage of total permanent employees.
Gender diversity
Percentage of women, and female
managers, employed by the Group.
Production volumes
Production volumes for the year are discussed at a commodity
level within each business unit section of the annual report
(see pages 46–64). Quarterly production figures are shown
on page 186.
Cost
To be competitive by operating
as efficiently as possible.
Unit costs of production
Unit costs of production are discussed at a commodity
level within each business unit section of the annual report
(see pages 46–64). Other factors that impact costs across
the Group are discussed in the Group Financial Review
For more information see
Group Financial Review on page 36
(see page 36).
Voluntary labour turnover
Gender diversity
Women as a percentage of management
Gender diversity
Women as a percentage of total workforce
2015
2014
1.9%
2.0%
2015
2014
25%
24%
2015
2014
18%
16%
Production change
% change versus 2014
Platinum (produced ounces)
25%
(19)%
Nickel
(7)%
Kumba
(12)%
De Beers
Niobium
34%
(5)%
Coal
(5)%
Copper(3)
Phosphates (fertiliser) 0%
Group total
5%
Group unit cost movements – US$ nominal basis
% change versus 2014
(28)%(4)
Platinum
(12)%
Nickel
(23)%
Coal – Australia and Canada
(6)%
De Beers
(9)%
Kumba
(13)%
Coal – South Africa
(9)%
Copper(3)
(16)%
Group (copper equivalent)
Environment
To minimise harm
to the environment.
For more information see
Develop core business
processes on page 24
Socio-political
To partner in the benefits of
mining with local communities
and governments.
For more information see
Develop core business
processes on page 24
People
To resource the organisation
with an engaged and
productive workforce.
For more information see
Create a high performance
culture on page 30
Production
To extract our Ore Reserves
in a sustainable way to
create value.
For more information see
Group Financial Review on page 36
Financial
To deliver sustainable returns
for our shareholders.
Attributable ROCE
Underlying earnings per share
The return on adjusted capital employed attributable to equity
Underlying earnings are net profit
shareholders of Anglo American. It excludes the portion of the
attributable to equity shareholders, before
return and capital employed attributable to non-controlling
special items and remeasurements.
For more information see
Group Financial Review on page 36
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.
Group attributable ROCE
Underlying EPS
2015
2014
5%
9%
2015
2014
$0.64
$1.73
(2) The results and targets in the KPI table above include wholly owned subsidiaries and joint operations over which Anglo American has management control.
(3)
Includes eight months of Anglo American Norte.
(4) Based on reported production in 2014, i.e. not adjusted for impact of strike.
35
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT GROUP FINANCIAL REVIEW
GROUP FINANCIAL
REVIEW
Anglo American reported underlying earnings
of $0.8 billion (2014: $2.2 billion), with underlying
EBIT decreasing by 55% to $2.2 billion.
Falling prices were seen across most products
($4.2 billion impact on underlying EBIT), with the
average iron ore CFR China price down 42% and
copper price down 20%, only partly offset by weaker
commodity currencies ($1.8 billion impact). After
adjusting for inflation, cash costs decreased as a result
of cost-reduction initiatives across the Group and
falling input costs such as diesel, rubber and steel.
Weaker rough diamond demand negatively affected
underlying EBIT, although this was partially offset by
increased sales volumes at Coal Australia, Coal South Africa,
Kumba Iron Ore (Kumba) and Platinum.
Net debt remained flat at $12.9 billion. Significantly weaker
operational cash flows were, for the most part, offset by a
$2.0 billion reduction in capital expenditure, as expansionary
projects approach completion and stay-in-business capital
expenditure has been reduced. In addition, Anglo American
received $1.7 billion in net disposal proceeds, primarily from
Lafarge-Tarmac and Anglo American Norte.
Full year post-tax impairments of $5.7 billion have been
recorded in operating special items, reflecting the impact
of deteriorating market conditions, including weaker prices,
on asset valuations.
OPERATIONAL PERFORMANCE
(PRODUCTION/COSTS)
Operational performance was in line with expectations
across the majority of the business. Platinum production
rose by 25%, largely due to the recovery from the 2014
strike, as well as a strong mining performance at
Mogalakwena and Amandelbult. Rough diamond production
decreased by 12% in response to prevailing trading
conditions. Copper production decreased by 5%, largely
due to the disposal of Anglo American Norte, effective from
1 September 2015. On a pro forma basis (excluding the
impact of Anglo American Norte), production was 1% lower,
driven by the impact of drought conditions on throughput at
Los Bronces and plant instability at Collahuasi during the
third quarter, partly offset by higher grades.
Nickel production decreased by 19% to 30,300 tonnes,
reflecting the impact of the furnace rebuilds at Barro Alto.
At Niobium, the 34% increase in output to 6,300 tonnes
reflected the ongoing ramp-up of the BVFR project.
Production at Kumba decreased by 7% owing to mining
constraints at Sishen. The ramp-up of Minas-Rio continued,
with increases in quarter-on-quarter production throughout
the year. Output at Coal Australia and Canada increased by
1%, despite Peace River Coal (which produced 1.5 Mt in
2014) being on care and maintenance for the year. At Coal
South Africa, export production decreased 4%, owing to
the planned closure of a section at Goedehoop and lower
production at Mafube as it transitions to a new mining area.
36
The Group achieved a favourable cost performance in 2015,
even allowing for the benefits of weaker local currencies.
At Platinum, year-on-year cash operating costs per unit of
platinum production (metal in concentrate) decreased by
28% to $1,508 per ounce, owing primarily to the impact of
the industrial action on costs in 2014, and the benefit of the
weaker rand. As a result of cost savings and the benefit of
weaker local currencies at De Beers, consolidated unit
costs declined from $111/carat to $104/carat, despite lower
volumes. In Copper, there was a $208 million reduction
in on-mine cash costs of the retained operations, driven
by cost saving initiatives, including a 16% reduction in
headcount at Los Bronces. Nickel C1 unit costs decreased
by 12%, driven by the weaker Brazilian real, partly offset by
inflation and lower production volumes owing to the furnace
rebuilds. During the year, Kumba reduced controllable costs
by $8/tonne to achieve an average cash break-even price
of $49/tonne (CFR China). Coal Australia FOB costs
decreased by 7% in local currency terms following increased
productivity at underground mines and cost reductions,
resulting in the lowest unit costs since 2007. Coal South
Africa delivered flat unit costs, despite planned lower
production and inflationary pressures.
INCOME STATEMENT
Group underlying EBIT was $2.2 billion, a 55% decrease
(2014: $4.9 billion).
Underlying EBIT
$ million
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates
Iron Ore and Manganese
Coal
Corporate and other
Total
Year ended
31 Dec 2015
Year ended
31 Dec 2014
263
571
228
(22)
119
671
457
(64)
32
1,363
1,193
21
124
1,957
458
(215)
2,223
4,933
Underlying earnings
Group underlying earnings were $0.8 billion, a 63%
decrease (2014: $2.2 billion).
Net finance costs
Net finance costs, before special items and
remeasurements, excluding associates and joint
ventures, were $458 million (2014: $256 million). The
increase was driven by lower interest income due to
a reduction in the average cash balance held by the
Group (2015: $6,963 million, 2014: $7,878 million)
and net foreign exchange losses in the current period,
primarily driven by the weakening of the Brazilian real
and South African rand.
Anglo American plc Annual Report 2015 Underlying earnings
$ million
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates
Iron Ore and Manganese
Coal
Corporate and other
Total
S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
Year ended 31 Dec 2015
Net finance
costs and
income tax
expense
Underlying
EBIT
Non-
controlling
interests
Underlying
earnings
263
571
228
(22)
119
671
457
(64)
(56)
(274)
(120)
3
(71)
(323)
(158)
(34)
(39)
(39)
(41)
–
–
(250)
(7)
13
2,223
(1,033)
(363)
168
258
67
(19)
48
98
292
(85)
827
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 year attributable to equity shareholders of the Company
Underlying earnings per share (US$)
Year ended
31 Dec 2015
Year ended
31 Dec 2014
827
2,217
(5,972)
(4,374)
(178)
(1,278)
615
47
584
(1)
(385)
36
2
38
(269)
(46)
(5,624)
(2,513)
0.64
1.73
Tax
The effective rate of tax, before special items and
remeasurements and including an attributable share of
associates’ and joint ventures’ tax, increased to 31.0% at
year end (31 December 2014: 29.8%). This increased rate
was due to the net impact of certain prior year adjustments,
the remeasurement of withholding tax provisions across
the Group, and the relative levels of profits arising in our
operating jurisdictions. 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 primarily relate to
impairments in respect of the Minas-Rio iron ore project
of $2.5 billion; Capcoal, Peace River Coal and other
assets within the Coal segment of $1.2 billion; assets and
investments within the Platinum business of $0.7 billion;
the Snap Lake operation within the De Beers business
of $0.6 billion; and the write-down to fair value of the
Rustenburg platinum mine of $0.7 billion. Full details of
the special items and remeasurements charges are to be
found in note 6 to the consolidated financial statements.
37
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT GROUP FINANCIAL REVIEW
GROUP FINANCIAL REVIEW continued
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(2)
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
Disposals (net proceeds)
Other net debt movements
Total movement in net debt
Closing net debt(3)
2015
(12,871)
2014
(10,652)
4,419
25
(204)
4,240
(4,177)
(596)
333
(540)
(242)
(982)
(1,078)
1,745
285
7,104
9
(164)
6,949
(6,018)
(1,298)
460
(473)
(823)
(1,203)
(1,099)
44
39
(30)
(12,901)
(2,219)
(12,871)
(1) EBITDA is underlying EBITDA, as described in note 3 to the financial statements, less EBITDA of associates and joint ventures.
(2) Please see note 22 to the financial statements for the definition of capital expenditure.
(3) Net debt excludes the own credit risk fair value adjustment on derivatives of $555 million (31 December 2014: Nil).
GROUP ROCE
BALANCE SHEET
Attributable ROCE declined to 5% in 2015 (2014: 9%)
primarily as a consequence of weaker commodity prices,
partly offset by improved operational performance and
recovery from the platinum strike in 2014, the benefit of
weaker local currencies, a lower proportion of post-tax
earnings attributable to non-controlling interests and
lower average attributable capital employed. Average
attributable capital employed was lower at $32.6 billion
(2014: $38.7 billion), driven by impairments, offset by
ongoing capital expenditure.
The previous ROCE measure, used to track the Driving
Value programme, incorporated a number of adjustments,
principally to reverse the impact of certain impairments and
acquisition fair value adjustments. The new attributable
ROCE measure has been developed to allow a clearer link to
the published financial statements. Comparatives have been
restated to align with the current period presentation, and
capital employed by segment is disclosed in note 3 to the
consolidated financial statements.
Net assets of the Group decreased to $21.3 billion
(2014: $32.2 billion), driven primarily by impairments of
$5.7 billion, losses on disposals of subsidiaries and joint
ventures, foreign exchange losses of $4.1 billion, and
depreciation of $2.6 billion. Capital expenditure, including
capitalised operating cash outflows, for the year was
$4.2 billion, while net debt remained flat at $12.9 billion,
as explained below.
LIQUIDITY AND FUNDING
At 31 December 2015, the Group had undrawn committed
bank facilities of $7.9 billion and cash of $6.9 billion. The
Group’s forecasts and projections, taking account of
reasonably possible changes in trading performance,
indicate the Group’s ability to operate within the level of its
current facilities. The Group has certain financial covenants
in place in relation to external debt which are not expected
to be breached in the foreseeable future.
38
Anglo American plc Annual Report 2015 DIVIDENDS
Analysis of dividends
US cents per share
Interim dividend
Recommended final dividend
Total dividends
Year ended
31 Dec 2015
Year ended
31 Dec 2014
32
–
32
32
53
85
No final dividend was declared for 2015 (final dividend
2014: 53 US cents per ordinary share). Total dividends
paid to Company shareholders during 2015 were
$1,078 million (31 December 2014: $1,099 million).
Further protecting its balance sheet and cash position,
Anglo American announced in December 2015 its decision
to suspend dividend payments. The commitment to a
dividend during the ordinary course of business remains a
core part of the Group’s overall capital allocation approach
and the Board has recommended that, upon resumption,
Anglo American should adopt a payout ratio-based dividend
policy in order to provide shareholders with exposure to
improvements in commodity prices, while retaining cash
flow flexibility during periods of weaker pricing.
NET DEBT
Net debt (including related hedges) of $12,901 million
was $30 million higher than at 31 December 2014,
representing gearing of 37.7% (31 December 2014: 28.6%).
Net debt is made up of cash and cash equivalents of
$6,889 million (31 December 2014: $6,747 million) and
gross debt including related derivatives of $19,790 million
(31 December 2014: $19,618 million). Net debt remained
flat year-on-year, with significant cash outflows arising on
capital expenditure, the payment of dividends to Company
shareholders and to non-controlling interests, and interest
payments, offset by cash generated from operations and
disposal proceeds.
Anglo American received net proceeds from disposals
of $1,745 million (31 December 2014: $44 million), primarily
for the sale of its 50% interest in Lafarge Tarmac and for the
sale of Anglo American Norte, taking into account disposed
cash and transaction costs.
CASH FLOW
Cash flow from operations
Cash flow from operations decreased by $2,709 million to
$4,240 million (31 December 2014: $6,949 million), driven
by the 38% decrease in underlying EBITDA. Cash inflows on
operating working capital were $25 million (31 December
2014: inflows of $9 million). These were due to a decrease
in operating receivables, primarily at Kumba, owing to lower
realised prices, offset by increases in inventories at
De Beers, resulting from lower volumes sold.
Attributable free cash flow
Attributable free cash flow increased by $221 million
to an outflow of $982 million despite cash flow from
operations decreasing by $2,709 million. The improvement
was primarily due to a reduction in capital expenditure
of $1,841 million to $4,177 million (31 December 2014:
$6,018 million), mainly owing to the Minas-Rio iron
ore project in Brazil moving into its ramp-up phase.
Cash tax paid and dividends paid to non-controlling
interests decreased by $1,283 million in total, driven
by lower earnings.
Net disposal proceeds of $1,745 million relate primarily
to the completion of the sale of the Group’s interests in
Lafarge Tarmac and Anglo American Norte.
39
Strategic reportAnglo American plc Annual Report 2015 STRATEGIC REPORT MANAGING RISK EFFECTIVELY
MANAGING RISK
EFFECTIVELY
Byron Grote
Chairman, Audit Committee
Anglo American recognises that risk is inherent
in all its business activities. Our risks can have
a financial, operational or reputational impact.
As understanding our risks and developing
appropriate responses are critical to our future
success, we are committed to an effective,
robust system of risk identification and an
effective response to such risks to support
the achievement of our objectives.
Anglo American’s assessment
of strategic, operational, project
and sustainable development
related risks
1
4
22
3
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 and in determining
which of the risks should be considered as a principal risk.
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
mitigate key risks and determine if the risk is operating within the limits
of our risk appetite. Management 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.
HOW DOES RISK RELATE TO OUR
STRATEGIC ELEMENTS?
Risks can arise from events outside of our control or from
operational matters. Each of the risks described on the
following pages can have an impact on our ability to achieve
our strategic elements:
• Where we compete: optimising and streamlining
our portfolio;
• How we win: maximising our performance;
• Critical core skills: creating a capable organisation.
VIABILITY STATEMENT
The directors confirm that they have a reasonable
expectation that the Group will continue in operation and
meet its liabilities as they fall due for the next three years.
This period has been selected for the following reasons:
• The Group’s strategy and budgeting process is aligned
with a three-year view;
• The current volatility in commodity markets makes
confidence in a longer assessment of prospects highly
challenging; and
• The Group will undergo a significant transition over the
next three years. The viability statement is aligned with
completion of that transition.
The directors’ assessment has been made with reference
to the Group’s current position and prospects, including the
impact of the proposed restructuring and the expected
disposal proceeds and a robust analysis of its principal risks.
Assessment of financial performance and cash flows,
including debt repayment, has been performed over the
three year period using budgeted commodity prices and
foreign exchange rates. Financial performance and cash
flows have then been subjected to stress and sensitivity
analysis over the three year period, using a range of
conservative commodity prices and foreign exchange rates.
We have then considered the severe but plausible financial
impact of other risks the Group faces, combining certain
different principal risks and other significant risks faced by
the Group under a number of different scenarios modelled
over the three year period.
Our assumptions in making the viability statement primarily
relate to the financial impacts of our principal risks and our
mitigation of those risks.
40
Anglo American plc Annual Report 2015 SIGNIFICANT
HIGH
S
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1
2
7
3
4
5
6
PRINCIPAL RISKS AT A GLANCE
1
Commodity prices
2
Political and regulatory
3
Organisation change
4
Portfolio restructuring
5
Minas-Rio
6
South Africa power
7
Safety
d
o
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h
i
l
e
k
i
8
–
11
Catastrophic risks L
MEDIUM
LOW
Position of arrow indicates
movement of risk since 2014
Impact
8
–
11
PRINCIPAL RISKS
RISK APPETITE
We define a principal risk as a risk or combination of
risks that would threaten the business model, future
performance, solvency or liquidity of Anglo American.
In addition to these principal risks we continue to be
exposed to other risks related to currency, inflation,
information and cyber security, community relations,
environment, infrastructure and human resources. These
risks are subject to our normal procedures to identify,
implement and oversee appropriate mitigation actions.
Principal risks 1–7 on pages 42–44
CATASTROPHIC RISKS
We also face certain risks that we deem catastrophic risks.
These are very high severity, very low likelihood events that
could result in multiple fatalities or injuries, an unplanned
fundamental change to strategy or the way we operate, and
have significant financial consequences. We do not consider
likelihood when assessing these risks as the potential
impacts mean these risks must be treated as a priority.
Catastrophic risks are included as principal risks.
Catastrophic risks 8–11 on pages 44–45
We define risk appetite as ‘the nature and extent of risk
Anglo American is willing to accept in relation to the pursuit
of its objectives’. We look at risk appetite from the context
of severity of the consequences should the risk materialise,
any relevant internal or external factors influencing the risk
and the status of management actions to mitigate the
risk. A scale is used to help determine the limit of appetite
for each risk, recognising that risk appetite will change
over time.
If a risk exceeds appetite, it will threaten the achievement of
objectives and may require a change to strategy. Risks that
are approaching the limit of the Group’s risk appetite may
require management actions to be accelerated or enhanced
in order to ensure the risks remain within appetite levels.
Further details on the risk management and internal control systems and the
review of their effectiveness are provided on pages 80–81
41
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT MANAGING RISK EFFECTIVELY
MANAGING RISK EFFECTIVELY continued
1. COMMODITY PRICES
Pillars of value:
Global macro-economic conditions
leading to sustained low commodity
prices and/or volatility.
Root cause: The most significant factors
contributing to this risk at present are the
slowdown in growth in China and other
emerging markets, low growth rates in
developed economies and an oversupply
of commodities into the market, particularly
the raw materials such as iron ore and
metallurgical coal used in steel making.
Other factors such as weak regional
economies and conflict can also influence
the economic environment and contribute
to weak commodity prices.
Impact: Low commodity prices can result
in weakened levels of cash flow, profitability
and valuation. Debt costs may rise owing
to rating agency downgrades and the
possibility of restricted access to funding.
The Group may be unable to complete its
divestment programme within the desired
timescales or achieve expected values.
The capability to invest in growth projects
is limited during periods of low commodity
prices – which may, in turn, affect future
performance.
Mitigation: High levels of liquidity will
be maintained during the current cycle.
An organisation change programme
incorporating cost reductions, continued
roll-out of the Operating Model, reductions
in capital expenditure and the divestment of
certain assets is under way. The Board
regularly monitors progress of these actions.
2. POLITICAL AND REGULATORY
Pillars of value:
Uncertainty and adverse changes to
mining industry regulation, legislation or
tax rates can occur in any country in
which we operate.
Root cause: The Group has no control over
political acts or changes in local tax rates.
Our licence to operate through mining rights
is dependent on a number of factors
including compliance with regulations.
Impact: Uncertainty over future business
conditions leads to a lack of confidence in
making investment decisions, which can
influence future financial performance.
Increased costs can be incurred through
additional regulations or resource taxes,
while the ability to execute strategic
initiatives that reduce costs or divest
assets may also be restricted; all of
which may reduce profitability and affect
future performance. Political stability can
also result in civil unrest or nullification of
existing agreements, mining permits or
leases. These may adversely affect the
Group’s operations or results of those
operations.
Mitigation: Anglo American has an active
engagement strategy with the governments
and regulators within the countries in which
we operate or plan to operate. We assess
portfolio capital investments against political
risks and avoid or minimise exposure to
jurisdictions with unacceptable risk levels.
We actively monitor regulatory and political
developments on a continuous basis.
Pillars of value:
Safety and Health
Socio-political
Production
Financial
Environment
People
Cost
42
This risk has increased since 2014
Risk appetite: Operating outside the
limits of our appetite and mitigation actions
are in place.
Commentary: Current economic
conditions are having a negative impact on
commodity prices and represent the biggest
immediate threat to Anglo American’s
financial performance. We have announced
significant portfolio changes (see pages
16–19) as a response to commodity
price risk.
No change in risk
Risk appetite: Operating within the limits
of our appetite.
Commentary: Current global economic
conditions have a significant impact on
countries whose economies are exposed
to the downturn in commodities, placing
greater pressure on governments to find
alternative means of raising revenues, and
increase the risk of social and labour unrest.
These factors could increase the political
risks faced by the Group.
Anglo American plc Annual Report 2015
3. ORGANISATION CHANGE
Pillars of value:
Failure to accelerate and deliver the
organisation change programme
will lead to a loss of shareholder
confidence in the ability to transform
Anglo American and result in a
reduced valuation.
Root cause: The urgency to deliver
change is high, but constraints exist in
different geographies, including
employment regulations and political
factors that may delay timing and delivery
of the organisation change.
Impact: Weakened levels of investor
confidence, a decreased company valuation
and reputational damage are possible
outcomes if this risk materialises. Weaker
cash flows, lower levels of profitability and
debt rating downgrades, with a resultant
increased cost of debt and possibly reduced
access to financing, could also occur should
this risk materialise. Employee morale and
retention of key skills may also be affected.
Mitigation: Progress has been achieved
in all the various actions associated with the
Group’s organisation change. Mechanisms
are in place to monitor progress, identify
constraints to implementation, and to
measure the benefits delivered. The
Board regularly reviews the progress of
these initiatives.
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No change in risk
Risk appetite: Operating within the limits
of our appetite.
Commentary: The organisation change
programme incorporates redesign of
corporate functions, implementation of
the Operating Model, capital expenditure
reviews, delivery of the marketing strategy
and cost reduction initiatives. Non-delivery
is deemed a principal risk in its own right as
it is a critical component of the response to
weak commodity prices.
4. PORTFOLIO RESTRUCTURING
Pillars of value:
Inability to divest assets in the timeframe
required and/or for expected value.
Root cause: Current economic conditions,
particularly in commodity markets, are
reducing the number of potential asset
acquirers and are affecting the value that
can be obtained. Completion of transactions
can be complex, and involve numerous
stakeholders – such as regulators,
government, joint venture partners,
employees and local communities – and
each may have different expectations.
Impact: Weakened levels of cash flow,
reduced profitability and a resultant negative
impact on the valuation of Anglo American
may result, along with an inability to reduce
debt and improve financial performance.
Any credit rating agency downgrade may
increase the cost of debt, while an inability
to deliver portfolio changes could result
in loss of investor confidence and
reputational damage.
Mitigation: The divestment process
involves comprehensive stakeholder
engagement and initiatives to generate
buyer interest. The Board regularly monitors
progress of individual transactions.
No change in risk
Risk appetite: Operating within the limits
of our appetite.
Commentary: Progress was made during
2015, following the successful divestment
of the Lafarge Tarmac stake and the
Anglo American Norte assets which,
together, delivered $1.9 billion in gross
proceeds. In addition, the proposed sale
of Anglo American Platinum’s Rustenburg
mining and concentrating operations to
Sibanye was announced in September.
Non-delivery is deemed a principal risk in
its own right as it is a critical component of
the response to weak commodity prices.
5. MINAS-RIO
Pillars of value:
Delay in obtaining the operating licence
extension and inability to achieve
production targets during ramp-up.
Root cause: Production has been impacted
by water availability due to reduced rainfall.
Increased regulatory scrutiny for the licence
extension can be expected as a result of a
major tailings dam incident involving loss
of life at a competitor facility in Brazil in
November, while there is also the continuing
need to manage community issues. Both
may delay completion of the civil works
associated with the mine’s development.
Delays in obtaining licences are causing
operational constraints.
Impact: Inability to achieve planned
production and revenues and/or reductions
in the cost of production. This may also
result in loss of investor confidence and
reputational damage.
Mitigation: A comprehensive
stakeholder engagement plan is in place to
manage the licence extension and actions
are being taken to address the ramp-up
risks identified.
This risk has increased since 2014
Risk appetite: Operating within the limits
of our appetite.
Commentary: An extension to the
operating licence has been requested and
is expected to be delivered by September
2016. The process to extend the licence
through to December 2022 has also started
and risks to achieving that extension have
been identified. Risks to the production
ramp-up have also been assessed, including
optimisation of the flotation plant and
water availability.
43
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT MANAGING RISK EFFECTIVELY
MANAGING RISK EFFECTIVELY continued
6. SOUTH AFRICA POWER
Pillars of value:
Electricity supply not able to meet the
country’s demands, leading to unplanned
outages and failure of the national grid.
Root cause: Anglo American is a
significant consumer of power owing to
the extent of our operations in South Africa.
The risk is created through the state’s lack
of investment in generating capacity and a
maintenance backlog in some generating
facilities, leading to unplanned outages.
Impact: Unplanned and short-notice power
supply outages can lead to production
shortfalls, with a negative effect on revenue,
costs and productivity. There are potential
safety implications, particularly for
underground mines and process activities.
Loss of critical computing systems can
interrupt normal business activities.
Mitigation: Daily interactions are held with
senior management of the state-owned
power supplier to understand short and long
term supply issues. Business units have
emergency generation capability for deep
level shafts and procedures are in place to
minimise disruption.
This risk has increased since 2014
Risk appetite: Operating within the limits
of our appetite.
Commentary: Installed generation capacity
is not operating at 100%, particularly during
summer months, leaving the system
vulnerable, with any supply shortfalls
requiring national load-shedding and/or
curtailment. Significant improvements are
not expected in the near term.
7. SAFETY
Pillars of value:
Failure to deliver a sustained
improvement in safety performance.
Root cause: Inability to deliver a sustained
improvement in safety performance will
result from a failure of management
interventions and training initiatives to
translate into behavioural change by all
employees and contractors.
Impact: Loss of life, workplace injuries and
safety-related stoppages all immediately
impact production; while, over the longer
term, such factors are also a threat to our
licence to operate.
Mitigation: A continued, relentless focus
on safety improvement and safety risk
management is adopted by executive
management. Operating standards and
guidelines are in place to mitigate safety risk,
supported by robust risk management and
risk assurance processes.
No change in risk
Risk appetite: Operating within the limits
of our appetite.
Commentary: Senior management
continues to treat safety risk management
as its top priority. In 2015, lost-time injuries
decreased, excluding Platinum, compared
with the prior year, demonstrating continued
progress in reducing workplace injuries.
Six people lost their lives at Anglo American’s
managed operations during 2015, the same
number as in 2014.
8. TAILINGS DAM FAILURE
Pillars of value:
A release of waste material leading
to loss of life, injuries, environmental
damage, reputational damage, financial
costs and production impacts.
Root cause: Tailings dam failures can result
from over-topping, poor operating practices,
instability of pit slopes, inadequate design and
construction, or seismic events.
Impact: Potential for multiple fatalities and
injuries, long term environmental damage,
significant reputational damage and loss of
licence to operate. The financial impact
associated with clean-up costs and legal
liability claims could be substantial.
Mitigation: Anglo American employs
technical standards that provide minimum
design criteria and operational performance
requirements; all of which are regularly
inspected by technical experts. Assurance
work is conducted to monitor the controls
associated with management of tailings
dam facilities.
No change in risk
Risk appetite: Operating within the limits
of our appetite.
Commentary: Tailings dam failure is
considered a catastrophic risk – i.e. a very
high severity but very low frequency event
that must be treated with the highest priority.
Pillars of value:
Safety and Health
Socio-political
Production
Financial
Environment
People
Cost
44
Anglo American plc Annual Report 2015
9. SLOPE WALL FAILURE
Pillars of value:
A sudden and unexpected failure
of a slope causing landslides and
inrush to pit or other asset (such as
a pipeline), leading to loss of life,
injuries, environmental damage,
reputational damage, financial costs
and production impacts.
Root cause: Slope wall failure can result
from inadequate design, unexpected
adverse geological conditions, shortcomings
in the mining process, or natural events such
as seismic activity or excessive rainfall.
Impact: Potential for multiple fatalities or
injuries, significant production impact and
damage to assets. Financial costs associated
with recovery and legal claims may be
extensive. Regulatory issues may result
and community relations may be affected.
Mitigation: Technical standards exist
that provide minimum criteria for slope
stability design and operation. Monitoring
of slope movement is conducted at all
open pit operations. Inspections and training
and awareness programmes are provided
by technical experts, and assurance work
is conducted to assess the effectiveness
of controls.
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No change in risk
Risk appetite: Operating within the limits
of our appetite.
Commentary: Slope wall failure is
considered a catastrophic risk – i.e. a very
high severity but very low frequency event
that must be treated with the highest priority.
10. MINESHAFT FAILURE
Pillars of value:
A sudden and unexpected failure of
a mineshaft.
Root cause: There are 23 vertical shafts
in our Platinum and Coal business units.
Mineshaft failure can occur as a result of
rope failure, fire and explosion in a shaft,
flooding, power failure, mud rush,
conveyance failure or structural failure.
Impact: Multiple fatalities and injuries,
damage to assets, production loss and
reputational damage. Financial costs
associated with recovery and liability
claims may be significant.
Mitigation: Technical standards exist that
provide minimum criteria for mineshaft
management. Inspections are carried out
by technical experts and assurance work
is conducted to assess the effectiveness
of controls.
No change in risk
Risk appetite: Operating within the limits
of our appetite.
Commentary: Mineshaft failure is
considered a catastrophic risk – i.e. a very
high severity but very low frequency event
that must be treated with the highest priority.
11. FIRE AND/OR EXPLOSION
Pillars of value:
Fire and explosion risks are present at
all mining operations and processing
facilities such as smelters and refineries
in our Platinum, Copper and Nickel
businesses.
Root cause: The combined presence of
fuel, heat and oxygen, as well as conditions
that can lead to the concentration and
confinement of these elements, can cause
an explosion – including gas, coal dust
(particularly in underground mines),
sulphide dust or furnace gas explosions.
Impact: Multiple fatalities and injuries,
damage to assets, loss of production,
reputation damage and loss of licence
to operate. Financial costs associated
with recovery and liability claims may
be significant.
Mitigation: Technical standards exist
that provide minimum criteria for prevention
of underground explosions and fire.
Inspections are carried out by technical
experts and assurance work is conducted
to assess the effectiveness of controls.
Third party reviews of fire risk are
conducted at each location where
significant risk is present.
No change in risk
Risk appetite: Operating within the limits
of our appetite.
Commentary: Fire and explosion is
considered a catastrophic risk – i.e. a very
high severity but very low frequency event
that must be treated with the highest priority.
45
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT: PLATINUM
PLATINUM
Chris
Griffith
CEO –
Anglo
American
Platinum
Anglo American is the leading primary producer of PGMs, providing the world
with around 40% of all newly mined platinum. All of our operations are located
in the Bushveld Complex in South Africa, with the exception of Unki mine on the
Great Dyke formation in Zimbabwe.
DRIVING CHANGE
DEFINING OUR FUTURE
PRODUCTION RECORD AT MOGALAKWENA
392,000 ounces
COST PER TONNE REDUCTION AT MOGALAKWENA
7% VS 2014
HEADCOUNT REDUCTION IN YEAR
8%
SALE OF RUSTENBURG OPERATIONS AGREED WITH
SIBANYE GOLD FOR AT LEAST R4.5 BILLION (NOMINAL)
Sibanye shareholder approval gained and South African
competition and regulatory approvals in train
UNION PLATINUM MINE IDENTIFIED FOR SALE
Operation has been restructured and production significantly
reduced while also progressing the sale of the asset
JOINT VENTURE OPERATIONS WILL CONTINUE TO BE
OPERATED IN A SEPARATE MANAGEMENT STRUCTURE
Kroondal, Pandora and other joint ventures under review to
determine optimum path to realise shareholder value over time
Boom drill operator Adros Bonongwa drilling in the south section of Unki mine in Zimbabwe.
46
Anglo American plc Annual Report 2015 KEY PERFORMANCE INDICATORS
Platinum
Prior year
Mogalakwena
Prior year
Amandelbult
Prior year
Other operations
Prior year
Project and corporate
Prior year
Production
volume
(k’oz)(1)
2,337
1,870
392
370
437
219
1,508
1,281
–
–
Sales
volume
(k’oz)
2,471
2,115
422
382
433
279
1,616
1,454
–
–
Price
($/Pt oz)(2)
Unit cost
($/Pt oz)
Revenue
($m)
Underlying
EBITDA
($m)
Underlying
EBIT
($m)
Capex
($m)
ROCE
1,905
2,413
2,585
3,277
1,641
2,117
–
–
–
–
1,508
2,081
1,369
1,742
1,382
2,384
–
–
–
–
4,900
5,396
1,092
1,271
712
593
3,096
3,532
–
–
718
527
496
504
97
(37)
177
118
(52)
(58)
263
32
368
371
36
(96)
(89)
(185)
(52)
(58)
366
576
151
196
53
68
156
306
6
6
4%
0%
–
–
–
–
–
–
–
–
S
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(1)
In keeping with industry benchmarks, production disclosure has been amended to reflect own mine production and purchases of metal in concentrate. Previous disclosure of own mine production and
purchases of metal in concentrate was converted to equivalent refined production using standard smelting and refining recoveries.
(2) Average US$ basket price.
INTRODUCTION
At Anglo American Platinum, we are optimising and
reconfiguring our portfolio. Once complete, we will
have a ‘best in class’ core operating footprint at the
Mogalakwena and Amandelbult mines in South Africa
and Unki in Zimbabwe, alongside our joint venture
interests in Bafokeng-Rasimone, the Mototolo mine
and Modikwa mine in South Africa. Also in South Africa,
we own smelting and refining operations which treat
concentrates, not only from our wholly owned mines,
but also from our joint venture partners and third parties.
dampened sentiment towards PGMs. In addition, further
supply from above ground inventories and a weakening rand
led to price declines in the year. Mined metal in South Africa
recovered to above 2013 levels, following strike-affected
2014, though production from both Russia and North
America fell. Total secondary supply declined owing to lower
jewellery recycling volumes in China and reduced scrap
incentives in the automotive sector. Declines in jewellery
and investment demand were offset by a relatively strong
performance by the automotive and industrial sectors.
For more information refer to the Marketplace review section
See pages 8–10
FINANCIAL AND OPERATING OVERVIEW
OPERATING PERFORMANCE
Underlying EBIT increased by $231 million to $263 million
(2014: $32 million). This was due to an improved operational
performance following the 2014 industrial action, higher
sales volumes, the weakening of the South African rand
against the dollar, and an annual inventory adjustment which
improved underlying EBIT by $181 million.
Total platinum production (metal in concentrate) rose by
25% to 2,337,000 ounces (2014: 1,870,000 ounces). The
increase was attributable to recovery from the five-month
strike and subsequent ramp-up in the prior year, as well as a
strong mining performance at Mogalakwena, Amandelbult
and Unki mines.
Year-on-year cash operating costs per unit of platinum
production (metal in concentrate) decreased by 28% to
$1,508 per ounce, excluding projects, owing primarily to
the impact of the industrial action on costs in 2014, and
the benefit of the weaker rand. On a 2014 financial year
strike-adjusted unit cost basis, rand cash operating costs
per unit of platinum production increased by 6% as a result
of mining inflation costs, specifically relating to electricity
and employment. This compares, however, to a mining
inflation rate of ~7% in South Africa. On a strike-adjusted
US dollar basis, unit costs were 10% lower, reflecting the
benefit of the weaker rand.
MARKETS
Average platinum market price ($/oz)
Average palladium market price ($/oz)
Average rhodium market price ($/oz)
Average gold market price ($/oz)
US$ realised basket price – Pt ($/Pt oz)
Rand realised basket price – Pt (ZAR/Pt oz)
2015
1,051
691
932
1,160
1,905
24,203
2014
1,385
803
1,173
1,266
2,413
26,219
The average US dollar basket price per platinum ounce sold
decreased by 21% in 2015 to $1,905, despite platinum and
palladium demand exceeding supply from mining and
recycling for the fourth consecutive year. The prospect of
monetary tightening in the US, growth concerns in China,
uncertainty surrounding Greece’s possible exit from the
euro, and the unfolding vehicle emissions scandal all
Mogalakwena mine, which was unaffected by strike action
in 2014, continued its robust operational performance, with
growth in production resulting from higher concentrator
recoveries and higher head grades, despite a community
protest action which resulted in a loss of 9,000 ounces. Total
output from Mogalakwena increased by 6% to 392,000
ounces (2014: 370,000 ounces), with a 5% increase in
on-mine production of platinum to 368,000 ounces, while toll
concentrating activities at a third party concentrator yielded
24,000 ounces. As a result, the unit cost per platinum ounce
(metal in concentrate) at Mogalakwena decreased by 20%
to $1,369 per ounce, including the benefit of the weaker rand.
Production at Amandelbult increased from 219,000 ounces
to 437,000 ounces owing to the mine returning to normal
production following the strike, as well as an improved
mining performance.
Unki mine in Zimbabwe produced 66,000 ounces, an
increase of 7%, on the back of improved mining efficiencies
and higher grades.
Rustenburg, including the Western Limb Tailings, increased
output by 202,000 ounces to 485,000 ounces, largely
driven by the recovery from the industrial action. Rustenburg
was further consolidated into two mines; East and West
mine, and is in the process of implementing its optimised
mine plan. This has led to an increase in immediately
available Ore Reserves, improved productivity and
increased profitability.
47
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT PLATINUM
PLATINUM continued
Platinum demand by use in 2015
Autocatalyst: gross
Industrial
Jewellery: net
Investment
Total
Source: Anglo American Platinum
%
43
26
26
5
100
Palladium demand by use in 2015
Autocatalyst: gross
Industrial
Jewellery: net
Investment
Total
Source: Anglo American Platinum
%
81
24
2
(7)
100
Union mine, which has recovered in the aftermath of
the 2014 strike, produced 141,000 ounces, an increase of
53,000 ounces, despite the closure of its decline section in
2014. Union’s continued focus is on ensuring it improves
performance in line with its optimised mine plan.
Section 54 safety stoppages affected production across
almost all operations, predominantly in the first half of the
year. The Department of Mineral Resources has been
engaged to ensure the impact of such stoppages is limited
and that Section 54 notices are only used as a last resort.
Production from the joint venture and associate portfolio,
inclusive of both mined and purchased production,
decreased by 2%. Lower output was largely the result of
safety stoppages following fatal incidents at Bafokeng-
Rasimone platinum mine, closure of two shafts at Bokoni
and lower grades at Mototolo. This was partly offset by
higher production from Kroondal.
Refined platinum production increased by 30% to
2,459,000 ounces (2014: 1,890,000 ounces) owing to
production returning to normal following the 2014 strike,
as well as operational improvements. In addition, a physical
count of in-process metals conducted in the first half of the
year led to an inventory increase of 130,000 ounces. The
subsequent processing of this additional inventory resulted
in refined platinum production of 2,459,000 ounces
exceeding 2,337,000 ounces of produced metal.
In line with the return to normal production levels, refined
palladium output increased by 30%, while refined
production of rhodium was 33% higher.
As a result of higher refined production, platinum sales
volumes increased by 17% to 2,471,000 platinum ounces.
OPERATIONAL OUTLOOK
It is anticipated that platinum production (metal in
concentrate) will remain between 2.3-2.4 million ounces
in 2016. The required process to put the Twickenham
project onto care and maintenance will commence in 2016.
It is estimated that cash unit costs will be R19,250-R19,750
per platinum ounce (metal in concentrate) for 2016. Platinum
believes the focus on cost rationalisation will enable it to meet
its goals of keeping costs below mining inflation.
48
Anglo American plc Annual Report 2015
STRATEGIC REPORT: DE BEERS
DE BEERS
Philippe
Mellier
CEO –
De Beers
Group
Anglo American owns 85% of De Beers, the world’s leading diamond company.
The balance of 15% of De Beers is owned by the Government of the Republic of
Botswana. Our diamond operations are located in four countries: Botswana, Canada,
Namibia and South Africa. In Botswana and Namibia, we work in partnership with
our host governments.
DRIVING CHANGE
PRODUCTION REDUCED IN RESPONSE
TO WEAKER TRADING CONDITIONS
12% (3.9 million carats)
UNIT COST REDUCTIONS
6% vs 2014
NUMBER OF FOREVERMARK™ ‘DOORS’(1)
1,760
(1) A Diamond is Forever™ and Forevermark™ are trademarks
of The De Beers Group of Companies.
DEFINING OUR FUTURE
CONTINUED INVESTMENT IN FUTURE GROWTH
• Gahcho Kué progress at 83% with first production
scheduled for H2 2016
• Jwaneng’s Cut-8 is expected to become the mine’s main
source of ore in 2018
• Venetia Underground continues to progress and is expected
to become the mine’s principal source of ore from 2022
PORTFOLIO CHANGES:
• Snap Lake mine in Canada placed onto long term care and
maintenance as of December 2015
• Damtshaa – a satellite mine at Orapa in Botswana – was
placed onto temporary care and maintenance in January 2016
• Sale of Kimberley Mines, in South Africa, completed in
January 2016
INTRODUCTION
De Beers and its partners produce about a third of the world’s
rough diamonds by value, with the majority sold via Global
Sightholder Sales to long term contract customers and
accredited buyers, and the remainder via De Beers Auction
Sales to auction customers. Downstream assets include the
De Beers Diamond Jewellers joint venture and the Forevermark™
brand, which now features in 1,760 outlets in 35 key consumer
markets around the world. Finally, Element Six sells synthetic
diamonds to the industrial diamond supermaterials industry.
FINANCIAL AND OPERATIONAL OVERVIEW
De Beers’ underlying EBIT decreased by 58% to $571 million
(2014: $1,363 million). This was the result of weaker rough diamond
demand and lower revenue, offset in part by tight operating cost
control and favourable exchange rates.
Total De Beers revenue fell by 34% to $4.7 billion (2014: $7.1 billion),
mainly driven by lower rough diamond sales, which declined by 36%
to $4.1 billion. This was due to a 39% reduction in consolidated sales
volumes to 19.9 million carats (2014: 32.7 million carats), partly offset
by a 5% increase in the average realised diamond price.
In Botswana, Jwaneng’s Cut-8 extension is progressing on the south eastern side of the open pit.
49
Strategic reportAnglo American plc Annual Report 2015 STRATEGIC REPORT DE BEERS
DE BEERS continued
KEY PERFORMANCE INDICATORS(1)
De Beers
Prior year
Debswana
Prior year
Namdeb Holdings
Prior year
South Africa
Prior year
Canada
Prior year
Trading
Prior year
Other(6)
Prior year
Production
volume
(000’cts)
Sales
volume
(000’cts)(2)
Price
($/ct)(3)
Unit cost
Revenue
($/ct)(4)
($m)(5)
Underlying
EBITDA
($m)
Underlying
EBIT
($m)
Capex
($m)
28,692
32,605
20,368
24,237
1,764
1,886
4,673
4,634
1,887
1,848
–
–
–
–
19,945
32,730
–
–
–
–
–
–
–
–
–
–
–
–
207
198
178
172
553
581
131
155
275
312
–
–
–
–
104
111
34
31
273
283
81
89
229
279
–
–
–
–
4,671
7,114
–
–
–
–
–
–
–
–
–
–
–
–
990
1,818
379
604
147
207
282
344
154
178
107
579
(79)
(94)
571
1,363
352
579
120
177
174
243
65
77
100
572
(240)
(285)
697
689
101
114
30
37
279
296
254
186
2
4
31
52
ROCE
6%
13%
–
–
–
–
–
–
–
–
–
–
–
–
(1) Prepared on a consolidated accounting basis, except for production which is stated on a 100% basis.
(2) Total sales volumes on a 100% basis were 20.6 million carats (2014: 34.4 million carats).
(3) Price for the mining business units based on 100% selling value post-aggregation.
(4) Based on the total cost per carat recovered, including depreciation.
(5)
Includes rough diamond sales of $4.1 billion (2014: $6.5 billion).
(6) Other includes Element Six, downstream and acquisition accounting adjustments.
This 5% increase in average realised diamond prices to
$207/carat (2014: $198/carat), reflected a stronger product
mix, despite an 8% lower average rough price index for the
period. From the final Sight in 2014 to the final Sight in 2015,
the De Beers rough price index declined by 15%.
Owing to weaker rough diamond demand, De Beers
reduced production, costs and capital expenditure. As
a result of the cost saving programmes, supported by
favourable exchange rate movements, consolidated
unit costs declined from $111/carat to $104/carat.
MARKETS
Global consumer demand for diamond jewellery in 2015
is expected to have declined marginally in US dollar terms
from the record levels of 2014, as growth in the US was
offset by the economic slowdown in China and the strength
of the dollar.
The US, the largest market for polished diamonds at
approximately 45% of global market value, again saw
the strongest growth, albeit at a slower rate than in 2014.
Demand for diamond jewellery by Chinese consumers
was stable, while in India, diamond jewellery demand
contracted in local currency terms.
Weaker than expected consumer demand in 2015 resulted in
retailers reducing their demand for polished diamonds from
the midstream manufacturers. A build-up in polished stocks
in the midstream put downward pressure on polished prices,
and reduced the midstream’s willingness to purchase
additional rough diamonds. This was exacerbated by a more
stringent financing environment.
For more information refer to the Marketplace review section
See pages 8–10
OPERATING PERFORMANCE
Mining and manufacturing
Rough diamond production decreased by 12% to
28.7 million carats (2014: 32.6 million carats) as
De Beers reduced production in response to prevailing
trading conditions.
Debswana’s production decreased by 16% to 20.4 million
carats, driven by a reduction in tailings production at
Jwaneng, combined with the bringing forward of planned
maintenance at both Jwaneng and Orapa. Debswana is
focusing on improving reliability and cash costs, while
maintaining flexibility, with Damtshaa, a satellite of Orapa,
being placed onto temporary care and maintenance from
1 January 2016, affording the option of efficiently resuming
production when market conditions allow.
In South Africa, production was in line with 2014, though
below planned 2015 production. A decline at Venetia,
owing to lower throughput and a reduction in tailings
processing – again, in response to softer trading conditions
– was offset by increased production at Kimberley. The
completion of the sale of Kimberley Mines to Ekapa
Minerals was announced on 21 January 2016.
Production at Namdeb Holdings decreased by 6%, as a
result of a focus on lower grade mining areas in response
to prevailing trading conditions. This impact was partly
compensated by increased availability of the Mafuta vessel
at Debmarine Namibia. The terms of a new 10-year sales
agreement between De Beers and the Government of the
Republic of Namibia are currently being finalised.
50
Anglo American plc Annual Report 2015 De Beers’ strategy across the pipeline
De Beers operates across the diamond value chain. The Upstream stage is concerned with exploration and mining. Moving down the
pipeline, the Midstream stage involves the sorting and selling of rough diamonds. At the Downstream stage, manufactured jewellery
pieces arrive at retail jewellers, to be purchased by the end consumer.
De Beers has mining operations in four countries. Its principal sales channel is Global Sightholder Sales, which sells diamonds to around
80 of the world’s leading diamantaires, or Sightholders, at its 10 annual Sights. Finally, De Beers has access to the end consumer through
its Forevermark™ brand, which now features in 1,760 outlets worldwide, and through the De Beers Diamond Jewellers joint venture retail
jewellery stores.
Upstream
Operational excellence
Midstream
Unique value proposition
Downstream
Demand generation and
future growth platform
Exploration
and projects
Mining
Rough
distribution
and trading
Polished
manufacturing
and trading
Jewellery
manufacturing
Jewellery
retail
Consumers
In Canada, production was in line with the prior year as
lower grades at both Snap Lake and Victor were offset
by improved throughput. In December 2015, De Beers
announced that Snap Lake would be placed onto long term
care and maintenance with immediate effect.
De Beers Diamond Jewellers maintained its focus on
fast-growing markets, with 35 stores in 12 key consumer
markets around the world, and continued to see strong
sales in the higher-end market and with Chinese
consumers worldwide.
Element Six experienced challenging trading conditions
throughout the year, primarily as a result of the effect on
sales of the contraction in global oil and gas drilling activity.
The resulting impact on revenue and operating margins was
partly offset by a cost-containment programme, affecting
both direct and indirect costs. The plant in Sweden has been
closed, while the plants in South Africa and Ireland have
been upgraded and restructured to optimise production
and reduce the cost base.
Outlook
De Beers expects the US market to remain the main driver
of growth in consumer demand in 2016. The extent of
global growth will, however, be dependent upon a number
of macro-economic factors, including the strength of the
dollar and economic performance in China, and their impact
worldwide. Longer term, the sector is likely to continue to
see benefit from a continuing rise in the world’s middle
classes in emerging markets, particularly in China and India.
Brands
Forevermark™ continued to expand and is now available
in 1,760 outlets – a 14% increase on 2014 – across
35 markets and, despite the challenging trading conditions,
the brand achieved double-digit sales growth. In March
2015, a new grading and inscription facility was opened
in Surat in India, with the potential to process up to
$500 million worth of diamonds annually. In August,
Forevermark™ announced the relaunch of the
A Diamond is Forever™ marketing campaign, which began
in the US and India in advance of the key selling season
in the fourth quarter. De Beers also invested in additional
holiday marketing campaigns to further stimulate diamond
jewellery gift giving across the key US and China markets;
these campaigns were received positively by the industry.
Rough diamond demand in 2016 will be dependent upon
consumer demand for diamond jewellery and the resultant
levels of restocking required by retailers and, consequently,
the midstream. Diamond production (on a 100% basis) for
2016 is forecast to be in the range of 26-28 million carats,
subject to trading conditions. Consistent with this level of
production, plans are in place to deliver $200 million
of cash savings in production costs, overheads and
capital expenditure.
51
Strategic reportAnglo American plc Annual Report 2015 STRATEGIC REPORT: COPPER
COPPER
Duncan
Wanblad
CEO –
Base Metals
and Minerals
In Chile, we have interests in two major copper operations: a 50.1% interest in the
Los Bronces mine, which we manage and operate, and a 44% share in the Collahuasi
mine; we also manage and operate the El Soldado mine and Chagres smelter
(50.1% interest in both). In Peru, we have an 81.9% interest in the Quellaveco project.
DRIVING CHANGE
LTIFR
36%
reduction versus 2014
(managed operations)
PLANT OPERATING TIME
94%
Los Bronces’ average grinding time, excluding impact
of water restrictions in 2015
C1 UNIT COST(1)
9% reduction versus 2014
(1)
Includes eight months of Anglo American Norte.
DEFINING OUR FUTURE
$300 MILLION RECEIVED FROM SALE OF NORTE
COPPER ASSETS
Chagres to be retained as an integrated smelter
OPERATING MODEL ROLL-OUT AT LOS BRONCES PLANT
Optimisation of the entire plant process stream is expected
to achieve a step-up in plant throughput of 10,000 tonnes per
day during 2016, increasing productivity and reducing plant
operating costs. Operating Model to be fully rolled out at the
mine in 2017, further increasing operational efficiency and
cost performance
RESPONDING TO MARKET CONDITIONS THROUGH
REDESIGN AND RIGHTSIZING OF THE BUSINESS
Reduction of over 1,700 permanent headcount during 2015
(excluding sale of Anglo American Norte), c.13% of workforce,
plus additional reductions of head office and support
functions under way
Holding tanks at the Confluencia plant at the Los Bronces operation in Chile.
52
Anglo American plc Annual Report 2015 KEY PERFORMANCE INDICATORS
Copper
Prior year
Los Bronces
Prior year
Collahuasi(2)
Prior year
Other operations
Prior year
Projects and corporate
Prior year
(1) Excludes 41kt third party sales from Mantos Blancos.
(2) 44% share of Collahuasi production, sales and financials.
Production
volume
(kt)
Sales
volume
(kt)(1)
Realised
price
(c/lb)
C1 unit
cost
(c/lb)
Revenue
($m)
Underlying
EBITDA
($m)
Underlying
EBIT
($m)
709
748
402
405
200
207
107
137
–
–
706
755
408
404
198
209
100
142
–
–
228
300
–
–
–
–
–
–
–
–
154
169
149
154
142
144
–
–
–
–
3,539
4,827
1,852
2,497
971
1,311
716
1,019
–
–
942
1,902
622
1,173
381
707
55
138
(116)
(116)
228
1,193
240
822
167
495
(63)
(8)
(116)
(116)
Capex
($m)
659
728
228
199
109
185
322
344
–
–
ROCE
3%
18%
–
–
–
–
–
–
–
–
S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
INTRODUCTION
Our operations produce copper concentrate, copper
cathodes, copper anodes and associated by-products
such as molybdenum, silver and gold.
FINANCIAL AND OPERATING OVERVIEW
Underlying EBIT decreased by 81% to $228 million. This
was largely due to a 20% decline in the average LME copper
price, as well as lower by-product prices and a 7% decline
in sales volumes. The decrease in revenue was partly
mitigated by the effects of the weaker Chilean peso and a
$208 million reduction in on-mine cash costs of the retained
operations. These were driven by cost-reduction initiatives
and productivity improvements, including a 16% reduction
in headcount at Los Bronces and an 18% reduction at
Collahuasi. At 31 December 2015, 197,631 tonnes of
copper were provisionally priced at 214 c/lb. Provisional
pricing of copper sales resulted in a negative underlying
EBIT adjustment of $366 million (2014: $196 million).
MARKETS
Average market prices (c/lb)
Average realised prices (c/lb)
2015
249
228
2014
311
300
Growth in mine supply outweighed underlying demand
growth in 2015, resulting in a market surplus for the
metal. In particular, prices were adversely affected by
weaker construction activity and manufacturing output
in China, which accounts for almost half of global copper
consumption. After a collapse at the start of the year,
LME copper prices steadily gained ground, peaking close
to $3/lb in May. Since then, bearish speculative funds have
driven prices lower, culminating in a retreat towards $2/lb
in the fourth quarter. Sell-offs by investors have been fuelled
by volatile equity markets and concerns over China’s
economic outlook.
For more information refer to the Marketplace review section
See pages 8–10
Operating performance
Production at Los Bronces was marginally lower at
401,700 tonnes, with the impact of drought-related water
restrictions on plant throughput offset by an increased
cut-off grade and higher achieved recoveries. The water
restrictions had a net negative impact on production of
18,000 tonnes. The operation is focused on its longer term
water strategy, which aims to achieve greater resilience to
extreme climatic conditions.
Escondida
Morenci
Collahuasi
Chuquicamata
El Teniente
Los Bronces
Los Pelambres
Antamina
Grasberg
Buenavista
Source: Wood Mackenzie
Anglo American’s share of Collahuasi’s production
decreased by 3% to 200,300 tonnes owing to lower ore
feed as a result of planned plant maintenance, as well as
speed restrictions imposed on the two smaller processing
lines in the second and third quarters following the detection
of vibrations in the SAG mills. The vibration issue was
successfully resolved, delivering a step-change in plant
operating times in the fourth quarter, as part of the
implementation of a wider plan to achieve stability in
the operation of the plant. Higher-cost oxide production
ramped down from 1 October, resulting in lost production
of ~3,000 tonnes.
Production at El Soldado increased by 11% to 36,100 tonnes,
attributable to higher grades and increased recovery arising
from improved ore availability.
Operational outlook
Production in 2016 is expected to be in line with 2015,
when adjusted for the disposal of Anglo American Norte
and the curtailment of oxide production at Collahuasi,
which have a combined impact of around 120,000 tonnes.
A recovery in throughput at Los Bronces and Collahuasi
is anticipated to be offset by expected lower grades,
particularly at Los Bronces. Full year 2016 production
guidance remains unchanged for the retained operations
at 600,000-630,000 tonnes.
53
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT: NICKEL
NICKEL
Duncan
Wanblad
CEO –
Base Metals
and Minerals
Our Nickel business is well placed to serve the global stainless steel industry,
which depends on nickel and drives demand for it. Our assets are in Brazil, with
two ferronickel production sites: Barro Alto and Codemin, in the state of Goiás.
DRIVING CHANGE
DEFINING OUR FUTURE
FURNACE REBUILDS AT BARRO ALTO
COMPLETED BELOW BUDGET AND WITH
DESIGN CAPACITY ACHIEVED
30 kt production in 2015
DECREASE IN C1 UNIT COSTS AT BARRO ALTO(1)
15% since 2012 (pre-rebuild)
SIGNIFICANT IMPROVEMENT IN SAFETY
Codemin LTI-free since June 2014 – over 2.1 million man-hours
worked. Barro Alto furnace rebuild project registered more than
1.3 million man-hours without an LTI
(1) Barro Alto C1 unit costs from Q4 2015 (after furnace rebuilds), excluding the impact of
foreign exchange and inflation.
A DECISION HAS BEEN TAKEN TO EVALUATE A SALE
OF OUR NICKEL BUSINESS
Discussions with potential buyers are under way
EARLY ATTAINMENT OF COMMERCIAL PRODUCTION
FROM BARRO ALTO IN 2015
Successful furnace rebuilds and ramp-ups executed in 2015,
setting the stage to reach a nominal capacity production year in
2016. Total nickel production (including Codemin) expected to
reach 45,000-47,000 tonnes
C1 UNIT COSTS AT BARRO ALTO EXPECTED
TO BE <350 C/LB
Full capacity production and other operational improvements
leading to an expected C1 unit cost of less than 350 c/lb – firmly
within the lower half of the industry cost curve
The ferronickel plant at Barro Alto in Brazil, where rebuilding of the operation’s two furnaces has recently been completed.
54
Anglo American plc Annual Report 2015 KEY PERFORMANCE INDICATORS
Nickel segment
Prior year
Nickel
Prior year
Projects and corporate
Prior year
Production
volume
(t)
30,300
37,200
30,300
37,200
–
–
Sales
volume
(t)
32,000
36,100
32,000
36,100
–
–
Price
(c/lb)
498
731
498
731
–
–
C1 unit
cost
(c/lb)
Revenue
($m)
Underlying
EBITDA
($m)
Underlying
EBIT
($m)
Capex
($m)
431
491
431
491
–
–
146
142
146
142
–
–
(3)
28
9
40
(12)
(12)
(22)
21
(10)
33
(12)
(12)
26
14
26
14
–
–
ROCE
(1)%
1%
(1)%
1%
–
–
FINANCIAL AND OPERATING OVERVIEW
OPERATING PERFORMANCE
S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
Nickel production decreased by 19% to 30,300 tonnes,
reflecting the furnace rebuilds at Barro Alto. The rebuilds
were concluded ahead of schedule, with the delivery of first
metal from the second furnace occurring in September
(more than one month ahead of plan), and production has
now reached nameplate capacity of 2.4 million tonnes of ore
feed per annum. At Codemin, production was in line with
2014 at 9,000 tonnes.
OPERATIONAL OUTLOOK
Following the successful furnace rebuilds and faster
than anticipated ramp-ups executed in 2015, nameplate
capacity production should be achieved at Barro Alto
through 2016, with total nickel output expected to be
45,000-47,000 tonnes.
Underlying EBIT loss of $22 million was $43 million lower
(2014: $21 million profit), principally driven by the lower
nickel price and inflation, partly offset by the benefit to
costs of the weaker Brazilian real.
The Barro Alto project continued to be capitalised until
October, when commercial production was achieved.
Barro Alto’s underlying capitalised operating loss was
$(46) million, a $198 million decrease over the prior year
(2014: $152 million profit), owing to the ongoing furnace
rebuild and consequent lower production volumes, lower
nickel prices and inflation, partially offset by a net exchange
rate benefit.
Nickel C1 unit costs decreased 12%, driven by the weaker
Brazilian real, partly offset by inflation and lower production
volumes owing to the furnace rebuilds.
Following the successful furnace rebuilds and subsequent
ramp-up, Barro Alto C1 unit costs averaged 350 c/lb in the
last quarter of the year, a significant improvement compared
with 2012 (pre-rebuild). This was mainly the result of higher
throughput, lower energy consumption (owing to higher
efficiencies being achieved at the new coal pulverisation
plant and efforts to reduce electricity consumption), lower
overhead costs and favourable exchange rates.
MARKETS
Average market prices (c/lb)
Average realised prices (c/lb)
2015
536
498
2014
765
731
The average LME nickel cash settlement price decreased
by 30% to 536 c/lb as the impact of slower Chinese
economic growth continued to exert downward pressure
on commodity prices. World stainless steel production (the
end use for around 65% of all nickel) was flat year-on-year,
matching 2014’s record output. Nickel pig iron production
in China declined by approximately 18%, or 85,000 tonnes,
owing to the ongoing Indonesian nickel ore export ban; this
led to a near-doubling of Chinese ferronickel imports in
2015, which reached a record high of 137,000 tonnes
(Ni contained). This, in turn, resulted in an improvement
in ferronickel market fundamentals, and a decrease in
ferronickel discounts, through the year.
For more information refer to the Marketplace review section
See pages 8–10
55
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT: NIOBIUM AND PHOSPHATES
NIOBIUM AND
PHOSPHATES
Duncan
Wanblad
CEO –
Base Metals
and Minerals
With the ramp-up of the Boa Vista Fresh Rock (BVFR) plant, we move to being the
No. 2 niobium producer in the world, with our operations located in Goiás state, Brazil.
Our phosphates business, based in the country’s agricultural heartland in Goiás state,
is the second largest in Brazil.
DRIVING CHANGE
RAMP-UP AT BVFR – % COMPLETE
69%
NIOBIUM PRODUCTION INCREASE
34% vs 2014
SIGNIFICANT IMPROVEMENT IN SAFETY AT CUBATÃO
2.4 million man-hours LTI-free
DEFINING OUR FUTURE
OUR NIOBIUM AND PHOSPHATES BUSINESSES
HAVE BEEN IDENTIFIED FOR SALE
Discussions are under way with parties interested in acquiring
the Niobium and Phosphates businesses
FULL PRODUCTION EXPECTED FROM BVFR IN Q3 2016
Once the BVFR plant reaches nameplate capacity, production
from installed capacity is expected to increase to 6,800 tonnes
per year
POTENTIAL FOR FURTHER PLANT DEBOTTLENECKING
Capacity increases in Niobium’s metallurgy section and
adjustments at the existing concentrator to allow the processing
of alternative feed sources will take total annual capacity to
9,000 tonnes
The secondary grinding mills at the Boa Vista Fresh Rock niobium facility in Brazil.
56
Anglo American plc Annual Report 2015 KEY PERFORMANCE INDICATORS
Niobium and Phosphates
Prior year
Niobium
Prior year
Phosphates
Prior year
Projects and corporate
Prior year
Production
volume
(kt)
Sales
volume
(kt)
–
–
6.3
4.7
1,111
1,113
–
–
–
–
5.1
4.6
1,060
1,097
–
–
Price
($/t)
–
–
–
–
479
487
–
–
Unit cost
(c/lb)
Revenue
($m)
Underlying
EBITDA
($m)
Underlying
EBIT
($m)
–
–
–
–
–
–
–
–
544
666
111
180
433
486
–
–
146
152
40
75
111
88
(5)
(11)
119
124
33
69
91
66
(5)
(11)
Capex
($m)
50
239
26
198
24
41
–
–
ROCE
14%
16%
6%
15%
30%
16%
–
–
S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
INTRODUCTION
OPERATING PERFORMANCE
Most of the niobium ore we mine comes from the
Boa Vista open pit; it is then processed to produce
ferroniobium, which is exported to steel plants, where
it is a key component in the manufacture of specialist
high strength steels.
Niobium
Production increased by 34% to 6,300 tonnes, mainly due
to the ongoing ramp-up of the BVFR plant (which achieved
first production in late 2014). The plant reached 69% of
nameplate capacity in December 2015.
Phosphorus is a basic component of all living things
and phosphates are a vital ingredient of fertilisers. Our
Chapadão mine in Ouvidor has a long mine life, as well
as some of Brazil’s highest grades of phosphate ore.
Ours is an integrated operation that covers mining
phosphate ore, refining it to produce P2O5 concentrate,
and processing into intermediate and final products.
Phosphates
Production of 1.1 million tonnes of fertiliser was broadly in line
with the prior year. Phosphoric acid production decreased
by 10%, mainly due to maintenance repairs at the Cubatão
processing plant. Phosphoric acid is a key component of
dicalcium phosphate (DCP); consequently, DCP production
was 10% lower owing to the priority given to phosphoric acid
sales in Cubatão.
OPERATIONAL OUTLOOK
Niobium
Production from installed capacity is expected to increase
to 6,800 tonnes once the BVFR plant reaches nameplate
capacity in the third quarter of 2016. This, when combined
with certain metallurgical debottlenecking activities
currently being implemented, will take the total annual
capacity to 9,000 tonnes.
Phosphates
Fertiliser and DCP production in 2016 is expected to
be broadly similar to 2015. Phosphoric acid production is
expected to increase to around 300,000 tonnes, driven
by improved performance at Cubatão following the
maintenance repairs in the second half of 2015.
FINANCIAL AND OPERATING OVERVIEW
Niobium
Underlying EBIT of $33 million was 52% lower
(2014: $69 million), as a result of the capitalisation of sales
associated with the ramp-up of Boa Vista Fresh Rock
(BVFR), inflation and rehabilitation provision increases,
partly compensated by the benefit of the weaker
Brazilian real.
Underlying EBIT of $17 million from BVFR was
capitalised in 2015, as the project had not reached
commercial production.
Phosphates
Underlying EBIT of $91 million was 38% higher
(2014: $66 million), mainly due to the positive impact of
the weaker Brazilian currency on operating costs and lower
study costs, partly offset by inflation, reduced sales volumes
and lower realised pricing (including the impact of the
weaker Brazilian real on prices).
MARKETS
Niobium
Despite a strong first six months, worldwide demand
for ferroniobium has softened, while global production
capacity has increased slightly. This decline in demand was
driven by the challenging conditions in the Chinese steel
industry and lower investments in oil and gas pipeline
steel. As a result, average niobium prices weakened across
all regions.
Phosphates
The average MAP CFR Brazil price was marginally lower at
$479/tonne (2014: $487/tonne), mainly as a result of softer
demand in Brazil and lower than expected Indian imports in
the second half.
57
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT: IRON ORE AND MANGANESE
IRON ORE AND
MANGANESE
Norman
Mbazima
CEO –
Kumba
Iron Ore
Pedro
Borrego
Interim CEO
– Iron Ore
Brazil
Anglo American’s iron ore operations provide customers with niche, high iron content ore,
a large percentage of which is direct-charge product for blast furnaces.
DRIVING CHANGE
DEFINING OUR FUTURE
REDUCTION IN COST PER WASTE TONNE
AT SISHEN MINE (INCLUDING DEFERRED STRIPPING)
3% vs 2014
HEADCOUNT REDUCTION AT KUMBA
16% vs 2014
CAPEX AT IRON ORE OPERATIONS OF $1.4 BILLION
47% reduction vs 2014
KUMBA IRON ORE IDENTIFIED AS NON-CORE
Kumba Iron Ore’s Sishen and Kolomela assets will be actively
managed to further improve performance in the short term,
while determining the optimal route and timing for exit
OPTIMISING MINAS-RIO AS A NON-CORE ASSET
Work has been prioritised to secure the necessary licences
to underpin the ramp-up and long term sustainability of the
operation, while also optimising the business to ensure positive
cash flows at expected iron ore levels
THABAZIMBI MINE CLOSURE PLAN
IN IMPLEMENTATION
Mining at Thabazimbi ceased at the end of September 2015.
Closure procedures have been implemented and all activity at
the mine is expected to cease at the end of H1 2016
Drilling, loading and hauling activity in Kumba Iron Ore’s open pit at Kolomela, South Africa.
58
Anglo American plc Annual Report 2015 KEY PERFORMANCE INDICATORS
Iron Ore and Manganese
Prior year
Kumba Iron Ore
Prior year
Iron Ore Brazil
Prior year
Samancor(3)
Prior year
Projects and corporate
Prior year
(1)
Iron Ore Brazil production is Mt (wet basis).
Production
volume
(Mt)(1)
Sales
volume
(Mt)
Price
($/t)(2)
Unit cost
($/t)
Revenue
($m)
Underlying
EBITDA
($m)
Underlying
EBIT
($m)
–
–
44.9
48.2
9.2
0.7
3.3
3.6
–
–
–
–
47.8
45.3
8.5
0.2
3.3
3.7
–
–
–
–
54
91
41
57
–
–
–
–
–
–
31
34
60
–
–
–
–
–
3,390
5,176
2,876
4,388
–
–
514
788
–
–
1,026
2,286
1,011
2,162
(20)
(29)
104
251
(69)
(98)
671
1,957
739
1,911
(21)
(34)
22
178
(69)
(98)
Capex
($m)
1,422
2,685
523
763
899
1,922
–
–
–
–
ROCE
5%
12%
26%
60%
(1)%
(1)%
4%
22%
–
–
S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
(2) Prices for Kumba Iron Ore (Kumba) are the average realised export basket price (FOB Saldanha). Prices for IOB are average realised export basket price (FOB Açu) (wet basis).
(3) Production and sales include ore and alloy.
INTRODUCTION
In South Africa, we have a majority share (c.70%) in
Kumba Iron Ore, which supplies lump and fine ore;
while, in Brazil, we have developed the integrated
Minas-Rio operation, which supplies iron ore pellet-
feed products.
In manganese, we have a 40% share in Samancor
Holdings in South Africa, Groote Eylandt Mining
Company Pty Ltd (GEMCO) and Tasmanian Electro
Metallurgical Company (TEMCO) in Australia.
FINANCIAL AND OPERATING OVERVIEW
Kumba
Underlying EBIT decreased by 61% to $739 million
(2014: $1,911 million), mainly attributable to the 42% fall in
the iron ore benchmark price to an average of $56/tonne.
Realised FOB export prices averaged $54/tonne, 42%
lower than in 2014. Total cash costs, however, declined by
18%, with costs associated with the 10% increase in waste
mined more than offset by the weakening of the South
African rand against the dollar. Kumba reduced controllable
costs by $8/tonne to achieve an average cash break-even
price of $49/tonne (CFR China) in 2015. In 2016, Kumba is
targeting to be cash break-even at an iron ore price of below
$40/tonne. The cost improvements include savings in
capital expenditure, in operating costs, and productivity
gains in mining and processing operations.
Sales of 47.8 Mt (2014: 45.3 Mt) were achieved, an increase
of 6%, following an improved logistics performance and the
shipment of 3.4 Mt through the multi-purpose terminal at
the Saldanha port. As a result, Kumba reduced its Saldanha
port stockpile to 1.2 Mt, while total finished-product stock
decreased to 4.7 Mt by year end (2014: 6.5 Mt).
Iron Ore Brazil
Underlying EBIT loss was $21 million (2014: $34 million
loss), net of a $251 million loss that was capitalised as the
Minas-Rio project continued to ramp up.
The project is expected to reach commercial production
during 2016, although it will remain in ramp-up throughout
the year.
Samancor
Underlying EBIT decreased by $156 million to $22 million,
driven primarily by lower manganese prices and a 9%
decrease in ore sales.
MARKETS
Iron ore
Average market prices
(IODEX 62% Fe CFR China spot price –
$/tonne)
Average realised prices
(Kumba export – $/tonne) (FOB Saldanha)
Average market prices
Iron ore (MB 66% Fe Concentrate
CFR – $/tonne)
Average realised prices
(Minas-Rio – $/tonne) (FOB wet basis)
2015
2014
56
54
67
41
97
91
112
57
Seaborne iron ore prices continued their downward trend
in 2015, with the Platts IODEX 62% Fe CFR China spot
price falling 42% to average $56 per dry metric tonne.
Overcapacity in the Chinese steel sector has resulted in
steel prices touching record lows. A shift in the focus of
Chinese mills to cost rather than productivity has led to
reduced price differentials across iron ore grades. In
addition, the seaborne iron market remained oversupplied
throughout the year, further depressing the iron ore price,
although there was a noticeable slowdown in supply growth
as projects reached execution and high-cost marginal
suppliers withdrew from the market.
Kumba and ArcelorMittal SA have amended the pricing
terms of their supply agreement from a cost-based to an
export-parity price. In the current market environment,
which presents significant challenges for the mining and
steel industries in South Africa, this amendment will align
prices charged to domestic and export customers.
For more information refer to the Marketplace review section
See pages 8–10
Manganese
2015 saw significant weakness in both manganese ore
and alloy prices, with the decline in steel output in China
and all other major steel producing regions exacerbating
manganese ore market volatility. Supply cuts started to
materialise as prices continued to slide through the year,
leaving 70% of the industry in a loss-making position. The
index ore price (44% Mn CIF China) declined by 57%,
ending the year at $1.86/dmtu.
59
Strategic reportAnglo American plc Annual Report 2015
STRATEGIC REPORT: IRON ORE AND MANGANESE
IRON ORE AND MANGANESE continued
OPERATING PERFORMANCE
Kumba
Production was down by 7% to 44.9 Mt owing to mining
constraints at Sishen, experienced largely in the second half.
Production at Sishen declined by 12% to 31.4 Mt, mainly
arising from difficulties in providing the DMS plant with
the correct quality feedstock because of a shortage of
sufficient exposed high grade ore required for blending.
In order to improve exposed ore levels and increase
operational flexibility, it was necessary to mine more waste
material, which increased by 19% to 222.2 Mt.
During the year the deteriorating price environment
necessitated a further optimisation of the Sishen mine plan.
It was decided to reconfigure the Sishen pit to a lower cost
shell to safeguard the mine’s viability at lower prices.
At Sishen, implementation of the Operating Model has
already seen a 24% improvement in efficiency in internal
waste mining activity at the North Mine, where work
management aspects of the model were introduced in
August 2014. The Operating Model was implemented
across pre-strip mining and heavy equipment activities
in July 2015 and is working well.
At Kolomela, a revised mining plan was implemented,
including cessation of mining at one of the pits to conserve
cash. Efficiencies and throughput at the plant continued to
improve, resulting in a 4% increase in production to 12.1 Mt
for the year. To feed the plants at this rate, waste mining
increased to 45.7 Mt from the previously guided 44-45 Mt.
Thabazimbi mine produced 1.4 Mt. During the year,
Kumba announced closure plans, with mining ceasing at
the end of September 2015. Material mined previously was
processed during the final quarter of 2015 and is expected
to continue into the second quarter of 2016. Closure
procedures have been implemented and all activity at the
mine is expected to cease at the end of the first half of 2016.
Iron Ore Brazil
Minas-Rio continued to ramp up in 2015, with increases
in quarter-on-quarter production throughout the year.
Ramp up will continue in 2016. Full year production in 2015,
at 9.2 Mt (wet basis), was lower than the original market
guidance of 11-14 Mt (wet basis), mostly due to filtration
plant adjustments being required, together with water
availability and ore quality issues. Following recent rainfall,
water conditions are now closer to normal, while the iron ore
variability is expected to improve as the mining footprint
expands over time. Export sales amounted to 8.5 Mt
(wet basis).
Samancor
Production of manganese ore declined by 6% to 3.1 Mt
(attributable basis). Production volumes were negatively
affected by the temporary suspension of operations at both
Mamatwan and Wessels following a fatality at Mamatwan
mine in November. The suspension of the operations
remained in effect until the completion of the strategic
review, with mining activity restarted in February 2016.
The decrease in production in South Africa was slightly
offset by increased output from Australia, with the GEMCO
operations delivering record production in the second half
of the year.
Production of manganese alloys decreased by 25% to
213,600 tonnes (attributable basis) following the suspension
of operations at Metalloys in South Africa.
OPERATIONAL OUTLOOK
Kumba
Kumba will target a cash break-even price of below $40/t
CFR for 2016. Waste movement is expected to be materially
below previous guidance of ~230 Mt, at 135-150 Mt for
2016-2020, while production guidance for 2016 is
reduced from 36 Mt to ~27 Mt.
In the medium term, Sishen mine will also be exploring
further opportunities to utilise spare plant capacity,
including the use of low grade stockpiles. It is expected
that the Reserve Life will remain stable at ~15 years due
to the lower production rates and will be reviewed and
finalised during 2016.
At Kolomela, the mine’s annual production has been revised
upwards to 13 million tonnes per annum (Mtpa) from 2017,
with 12 Mt expected in 2016.
Iron Ore Brazil
Operational challenges experienced in 2015, together
with the confinement of the mining area owing to licensing
constraints, have resulted in production guidance for
2016 being revised downwards to around 15-18 Mt
(wet basis).
Iron Ore Brazil’s FOB cash cost is expected to be
$26-$28 per tonne(1).
Samancor
A strategic review of the South African Manganese
operations has now been completed, with mining activity
restarted at the operations in February 2016, although at a
substantially reduced rate and with greater flexibility. Subject
to market conditions, the Hotazel mines will ramp up to a
saleable production rate of 2.9 Mtpa (100% basis), taking
approximately 900,000 tonnes (23%) of saleable
production out of the market for the foreseeable future.
Optimised mine plans, redundancies and other restructuring
initiatives are expected to reduce costs, with stay-in-
business capital expenditure also expected to decline by
approximately 80% in 2016.
(1) Average over first
22 years when friable
itabirite is mined.
60
Anglo American plc Annual Report 2015 Loading iron ore from Minas-Rio at the dedicated export terminal at the Port of Açu in Brazil.
LEGAL UPDATE
In December 2013, the Constitutional Court ruled that
Sishen Iron Ore Company (Pty) Ltd (SIOC) held a 78.6%
undivided share of the Sishen mining right and 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% 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 of
Mineral Resources (‘the Minister’) to be appropriate. SIOC
applied for the residual right in early 2014.
SIOC received notice from the Department of Mineral
Resources (DMR) that the Director General of the DMR had
consented to the amendment of SIOC’s mining right in
respect of the Sishen mine to include the residual 21.4%
undivided share of the mining right for the Sishen mine. The
consent letter is subject to certain conditions (which are
described by the DMR as “proposals”).
The conditions contained in the Letter of Grant relate
substantively to domestic supply, support for skills
development, research and development, and procurement.
Until the legal and practical implications of the proposed
conditions have been clarified with the DMR, SIOC is unable
to accept the conditions.
Section 96 of the MPRDA allows for an internal appeal to the
Minister. SIOC therefore submitted an internal appeal to the
Minister, as required by the MPRDA. SIOC has not yet
received a response to its appeal.
In the interim, SIOC continues to engage with the DMR in
relation to the proposed conditions in order to achieve a
mutually acceptable solution.
61
Strategic reportAnglo American plc Annual Report 2015 STRATEGIC REPORT: COAL
COAL
Seamus
French
CEO – Coal
Our coal portfolio is geographically diverse, with metallurgical coal assets in Australia,
and thermal coal assets in South Africa, Colombia and Australia, which mine products
attuned to the individual requirements of our diversified customer base. We are the
world’s third largest exporter of metallurgical coal.
DRIVING CHANGE
DEFINING OUR FUTURE
PRODUCTION INCREASE FROM UNDERGROUND
LONGWALL METALLURGICAL COAL OPERATIONS
33% vs 2014
UNIT COST REDUCTIONS AT AUSTRALIAN OPERATIONS
23% vs 2014
UNIT COST REDUCTIONS AT SOUTH AFRICAN
EXPORT MINES
13% vs 2014
MORANBAH AND GROSVENOR
Discussions under way to assess potential disposal value of the
Moranbah and Grosvenor metallurgical coal assets in Australia
DARTBROOK AND CALLIDE
Conditional sales agreed for the Dartbrook and Callide mines
in Australia
OTHER PROCESSES IN TRAIN
The remaining coal assets, including the South African domestic
thermal coal operations and the balance of coal mines in
Australia, will be managed to improve performance and value,
while considering appropriate options in the best long term
interests of all stakeholders
FINANCIAL AND OPERATING OVERVIEW
Australia and Canada
Australia and Canada underlying EBIT increased by $191 million to
$190 million. This was the result of a 6% rise in production in Australia,
substantial cost reductions, and a weaker Australian dollar also
benefiting the cost base. These positives were offset by a 19%
reduction in the average quarterly hard coking coal (HCC) benchmark
coal price. Placing Peace River Coal onto long term care and
maintenance resulted in an underlying EBIT benefit of $81 million.
Underground productivity improvements, including an Australian
longwall production record at Capcoal’s Grasstree operation, and
focused cost-reduction initiatives across labour, material inputs and
equipment hire, resulted in the lowest unit costs since 2007. Export
FOB cash unit costs ($55/tonne) were 23% lower in US dollar terms,
and 7% lower in local currency terms.
South Africa
South Africa’s underlying EBIT of $230 million decreased by 34%.
This was the result of a 21% reduction in the export thermal coal price
and the effect of industrial action in October, partly offset by a 13%
increase in export sales volumes, with a record railing and shipping
performance, as well as cost reductions and the benefit of the weaker
rand. The export sales performance generated an additional
$73 million of cash.
Export mine US dollar unit costs were 13% lower, with local currency
costs flat year-on-year despite inflationary pressures and a 4% decline
in production, supported by a 7% improvement in underground
operations equipment performance and a 12% improvement in open
cut operations.
Colombia
Underlying EBIT decreased by 45% to $90 million (2014: $163 million),
mainly owing to weaker prices reducing underlying EBIT by $90 million
and a weather-related decline in production. This was compensated in
part by lower costs as a result of a comprehensive cost-control
programme and favourable exchange rates.
MARKETS
Metallurgical coal
Average market prices ($/tonne)(1)
Average realised prices ($/tonne)(2)
2015
102
90
2014
125
111
(1) Represents the quarterly average benchmark for premium low-volume hard coking coal.
(2) Average realised price of various grades of metallurgical coal, including hard and semi-soft coking
coal and PCI coal.
Metallurgical coal prices showed a steady decline across 2015, driven
by lower imports into China and weaker producer currencies. Strong
steel exports from China had a negative effect on global steel prices
and margins, putting further pressure on raw material prices.
Metallurgical coal spot prices averaged $90/tonne(1), down 19%.
While Australian supply was relatively stable in 2015, high-cost
metallurgical coal supply continues to exit the market, in particular
from the US.
(1) TSI Premium HCC FOB Australia East Coast Port $/tonne.
62
Anglo American plc Annual Report 2015 KEY PERFORMANCE INDICATORS
Coal
Prior year
Australia and Canada
Prior year
South Africa
Prior year
Colombia
Prior year
Projects and corporate
Prior year
Production
volume
(Mt)(1)
Sales
volume
(Mt)(2)
Price
($/t)(3)
Unit cost
($/t)(4)
Revenue
($m)
Underlying
EBITDA
($m)
Underlying
EBIT
($m)
94.9
100.2
33.5
33.2
50.3
55.8
11.1
11.2
–
–
96.8
100.2
34.0
33.8
51.6
54.8
11.2
11.3
–
–
–
–
90
111
55
70
55
67
–
–
–
–
55
71
39
45
31
37
–
–
4,888
5,808
2,374
2,970
1,893
2,083
621
755
–
–
1,046
1,207
586
543
345
463
168
255
(53)
(54)
457
458
190
(1)
230
350
90
163
(53)
(54)
Capex
($m)
941
1,045
837
952
104
93
–
–
–
–
ROCE
9%
8%
6%
(1)%
19%
30%
11%
15%
–
–
S
i
t
r
a
t
e
g
c
r
e
p
o
r
t
(1) Production volumes are saleable tonnes.
(2) South African sales volumes exclude non-equity traded sales volumes of 3.4 Mt (2014: 1.3 Mt).
(3) Australia and Canada is the weighted average metallurgical coal sales price achieved. South Africa is the weighted average export thermal coal price achieved.
(4) FOB cost per saleable tonne, excluding royalties. Australia/Canada excludes study costs/Callide. South Africa unit cost is for the export operations.
Thermal coal
Average market prices ($/t, FOB Australia)
Average realised prices –
Export Australia ($/t, FOB)
Average realised prices –
Export South Africa ($/t, FOB)
Average realised prices –
Domestic South Africa ($/t)
Average realised prices –
Colombia ($/t, FOB)
2015
2014
59
55
55
20
55
71
72
70
19
67
Thermal coal prices declined by 17% as overall demand
contracted. Chinese import demand in particular has
continued to soften, while other growth markets, notably
India, have not been able to offset this decrease in demand.
In response, on the supply side, Indonesian volumes are
being withdrawn from the market.
For more information refer to the Marketplace review section
See pages 8–10
OPERATING PERFORMANCE
Australia and Canada
Total export metallurgical coal production increased by
1%, despite Peace River Coal (which produced 1.5 Mt in
2014) being placed onto long term care and maintenance
since December 2014.
In Australia, production increased by 6%, benefiting
from a strong performance at the underground longwall
operations, with a record performance from Capcoal’s
Grasstree underground operation.
Australian export metallurgical coal production was 9%
higher, with increases from the underground operations
compensating for lower open cut volumes as capacity at
the shared Capcoal Complex plant was given to the higher
margin Grasstree underground mine.
Production from underground operations was 33% higher,
largely as a result of a step-change in productivity at
Capcoal’s Grasstree underground operation following the
implementation of bi-directional cutting. Production from
Moranbah increased by 17%, despite equipment design
issues, which were successfully rectified in the extended
longwall move in the third quarter, with a stepped
improvement in production in November and December.
Production at the Australian open cut operations decreased
by 4%, with a robust performance from Callide and Jellinbah
being offset by lower volumes at Capcoal, where plant and
rail capacity was prioritised for Capcoal’s Grasstree
underground operation’s higher margin coal.
South Africa
Export production totalled 17.4 Mt, a 4% decrease, owing
to the planned closure of a section at Goedehoop and lower
production at Mafube as it transitions to a new mining area.
Productivity improvements resulted in record production at
Goedehoop and Zibulo following the implementation of
elements of the Anglo American Operating Model.
Productivity improvement plans at Landau were offset by
coal sector wage-related industrial action in October, which
resulted in the loss of 0.6 Mt (3%) of full year production.
Export sales rose by 13% to 19.9 Mt as a result of a planned
drawdown of stocks, facilitated by a record railing and
shipping performance.
Production from the domestic mines decreased by 15% to
27.7 Mt, owing to reduced offtake by Eskom at New Vaal and
New Denmark, exacerbated by unplanned maintenance on
the dragline at Isibonelo.
Colombia
Anglo American’s share of Cerrejón’s output of 11.1 Mt
decreased by 1% as the operation was affected by adverse
weather conditions impacting production.
OPERATIONAL OUTLOOK
Australia and Canada
Metallurgical coal production in 2016 is expected to increase
to 21-22 Mt, with the first longwall coal from Grosvenor due
in July and subsequent ramp-up through the second half of
the year.
Export thermal coal
In 2016, export production from South Africa and Colombia
is expected to be 28-30 Mt.
63
Strategic reportAnglo American plc Annual Report 2015
Revenue
($m)
Underlying
EBITDA
($m)
Underlying
EBIT
($m)
Capex
– SIB
($m)
925
1,859
921
1,854
–
–
4
5
(11)
(88)
110
162
(152)
(180)
31
(70)
(64)
(215)
64
62
(154)
(181)
26
(96)
16
42
3
2
–
–
13
40
Exploration
Anglo American exploration expenditure of $154 million
decreased by 15%, following reductions in iron ore, thermal
coal, diamonds and polymetallics exploration costs. The
decreases were mainly attributable to an overall reduction
in drilling activities.
Corporate activities and unallocated costs
Underlying EBIT was $26 million, an increase of
$122 million (2014: $96 million loss).
Corporate costs decreased by 8% ($46 million), of which
$61 million represented a foreign exchange gain compared
to 2014, partially offset by inflationary cost increases of
$17 million. This reduction in corporate costs was mitigated
by a 10% fall in the recharge and allocation of corporate
costs to business units of $46 million, reflecting the lower
corporate cost base.
A year-on-year gain of $122 million was recognised in the
Group’s self-insurance entity, reflecting lower net claims and
settlements during 2015.
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 $64 million was $2 million higher
(2014: $62 million), mainly attributable to lower corporate
and other costs, largely offset by the lower contribution
from Anglo American’s interest in the Lafarge Tarmac
joint venture, which was disposed of on 17 July 2015.
Lafarge Tarmac joint venture
Anglo American’s share in the underlying EBIT of the
joint venture was $60 million for the six months prior to
transfer to Held For Sale at 30 June 2015, an $18 million
decrease compared to the full year share in 2014.
On 17 July 2015, Anglo American announced that it
had completed the sale of its 50% ownership interest
in Lafarge Tarmac Holdings Limited (Lafarge Tarmac)
to Lafarge SA (Lafarge). Anglo American received
provisional cash proceeds of approximately £992 million
($1,559 million), constituting the agreed minimum
consideration of £885 million set out in the July 2014
binding agreement, and approximately £107 million of
working capital and other adjustments. The final price
has since been agreed at the same level as the provisional
price after finalisation of the post-closing review process.
Tarmac Middle East
The divestment of Anglo American’s interests in the
majority of the Tarmac Middle East operations had been
completed by January 2016. Disposal of one remaining
interest is well advanced.
64
Anglo American plc Annual Report 2015 GOVERNANCE CHAIRMAN’S INTRODUCTION
GOVERNANCE
Sir John Parker
Chairman
We continually work to maintain and develop
the framework for good governance.
CHAIRMAN’S INTRODUCTION
The term ‘Corporate Governance’ has become
commonplace, but I sense people often attach quite
different meanings to it. Although there is wide
agreement that it relates to the ‘directing and controlling’
of an organisation, there is much less clarity on what this
actually means in practice.
I thought it might be useful therefore to state briefly
what we mean by corporate governance, and what it
encompasses at Anglo American. It is perhaps helpful
to consider this in terms of the overall aim of good
governance – to promote quality decision-making and
the execution of those decisions, within a disciplined
framework of policies, procedure and authorities.
In practice, this means ensuring decisions are made by
the right people, with the right information, at the right time
and that they are then executed effectively. That requires,
for example, ensuring adequate challenge and avoiding
groupthink, clearly defining roles and responsibilities,
and regularly and candidly reviewing performance. This
represents the corporate ‘infrastructure’ that is described
over the next few pages and which provides the framework
for good governance.
We continually work to maintain and develop this
framework, while at the same time taking care not to
allow the focus on means to obscure the end – the overall
goal of making and executing good decisions in the
commercial interests of the Group, its shareholders and
other stakeholders.
In these challenging times for our industry and our Group,
I believe it is all the more important that companies maintain
the highest standards of corporate governance.
We will not compromise our governance principles and
I am pleased to report that, once again, your company has
complied in full with the UK Corporate Governance Code
(the ‘Code’).
BOARD COMPOSITION
A crucial component of good governance is ensuring
diversity and an appropriate mix of skills, experience
and effective challenge on the Board.
Since I became chairman in 2009, the non-executive
membership of the Board has been entirely renewed and
half of them were appointed within the last three years. I am
mindful however of the importance of balancing the need
for regular refreshment with the need for experience and
continuity, so we have naturally slowed the pace of renewal
over the last couple of years.
During the year, Phuthuma Nhleko stepped down as a
non-executive director and Tony O’Neill, technical director,
joined the Board. Phuthuma has been a valued member of
the Board since 2011 and we have benefited greatly from
his broad international business experience and insights
and, in particular, from his knowledge of southern Africa.
In welcoming Tony to the Board, we signal our
commitment to engineering excellence and our continuing
drive to achieve best practice operational, safety and
environmental performance.
I believe we have achieved a good balance of the right skills
and domain knowledge on your Board at this time, but it is
something we keep under constant review. More details on
the mix of skills and experience on the Board are given on
page 72.
BOARD VISITS TO OPERATIONS
Directors visited a number of operations during the year,
which are described on page 74.
I strongly believe that these opportunities to get out of
the boardroom, meet employees and ‘kick the tyres’
at operations are vitally important in terms of properly
understanding the business and in actively monitoring
its values and culture in action.
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 2015Governance 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
73, 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. He 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 chairman of Pennon Group PLC and a non-executive
director of Carnival Corporation and Airbus Group. 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, Deputy Chairman of DP World, 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.
58, 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)
TECHNICAL DIRECTOR
Tony O’Neill
MBA, BASc (Eng)
57, 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 Anglo American
South Africa and of the De Beers group of companies.
He was previously the CEO of AngloGold Ashanti Limited.
Before joining AngloGold Ashanti, Mark was COO at Vale
Inco, where he was responsible for Vale’s global nickel
business. Prior to this he held senior executive positions
with the Normandy Group, Sons of Gwalia, Western Mining
Corporation, Kalgoorlie Consolidated Gold Mines and
CRA (Rio Tinto).
58, was appointed to the Board as technical director on
22 July 2015, having joined the Group in 2013. He is a
member of the Sustainability and Investment Committees.
He is also a non-executive director of De Beers, 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.
66
Anglo American plc Annual Report 2015 SENIOR INDEPENDENT DIRECTOR
Sir Philip Hampton
MA, ACA, MBA
Byron Grote
PhD Quantitative Analysis
62, 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 GlaxoSmithKline and brings to Anglo American
significant financial, strategic and boardroom experience
across a number of industries.
His previous appointments include chairman of The Royal
Bank of Scotland and 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 became the senior independent
director at the conclusion of the 2014 AGM.
67, 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 Standard Chartered,
Akzo Nobel and Tesco PLC. Byron has extensive
management experience across the oil and gas industry.
He served on the BP plc board from 2000 until 2013 and
was BP’s chief financial officer during much of that period.
Ray O’Rourke
KBE, HonFREng, CEng, FIEI, FICE
NON-EXECUTIVE DIRECTORS
Judy Dlamini
MBChB, DOH, MBA, DBL
69, 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.
56, 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.
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.
She is the founder and chairman of Mbekani Group, a South
African healthcare investment company, and a former
chairman of Aspen Pharmacare. 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.
67
Anglo American plc Annual Report 2015Governance GOVERNANCE DIRECTORS
NON-EXECUTIVE DIRECTORS continued
Mphu Ramatlapeng
MD, MHSc
Anne Stevens
BSc, PhD
63, 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)
67, 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
56, 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 understanding of the mining industry.
Jim is also a non-executive director of Dalradian Resources
Inc. 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. 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.
65, joined the Board on 16 November 2009 and 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.
Phuthuma Nhleko stepped down from the Board in
November 2015.
68
Anglo American plc Annual Report 2015 GOVERNANCE EXECUTIVE MANAGEMENT
EXECUTIVE MANAGEMENT
GROUP MANAGEMENT COMMITTEE MEMBERS
Mark Cutifani
See page 66 for biographical details.
Seamus French
B Eng (Chemical)
René Médori
See page 66 for biographical details.
Tony O’Neill
See page 66 for biographical details.
Didier Charreton
MSc
52, was appointed Group director – human resources on
1 December 2015. He served as Chief Human Resources
Officer for Baker Hughes for seven years until 2014, based
in Houston, in the US, with operations across 90 countries
and 60,000 employees. Prior to 2007, he held a number of
senior HR roles, including with Coats plc in the UK, and
Schlumberger for 12 years, based in the US, Argentina,
Venezuela and France. Didier has a master’s degree in
Business from the Clermont Management School and a
postgraduate degree in Management Science from the
University of Lyon.
Bruce Cleaver
BSc, LLB, LLM
50, was appointed Group director – strategy and business
development in January 2016. He was previously executive
head of strategy and corporate affairs for De Beers, having
joined De Beers in 2005. Bruce continues to serve on the
board of De Beers as a non-executive director.
53, is CEO of Bulk Commodities, with responsibility for
the Group’s coal businesses and the Minas-Rio iron ore
business in Brazil, since January 2016. 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 joined Anglo American in
2007, and was CEO of Metallurgical Coal between 2009
and 2013 and CEO Coal until 2015.
Chris Griffith
B Eng (Mining) Hons, Pr Eng
51, 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
57, 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.
69
Anglo American plc Annual Report 2015Governance GOVERNANCE EXECUTIVE MANAGEMENT
GROUP MANAGEMENT COMMITTEE continued
Philippe Mellier
MSc (Mechanical Engineering), MBA
Duncan Wanblad
BSc (Eng) Mech, GDE
(Eng Management)
60, was appointed CEO of De Beers 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.
49, 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.
Peter Whitcutt
BCom (Hons), CA (SA), MBA
Anik Michaud
LL.L (Law)
48, was appointed Group director – corporate relations
in June 2015, having Joined the Group in 2008 as Group
head of corporate communication. Anik’s remit includes
corporate communication and government and social
affairs. She was previously director of public affairs for
Rio Tinto Alcan, after 10 years with the Alcan group. Anik
began her career as the political attaché to the Minister of
Finance for Quebec.
50, is CEO of 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 Group director – strategy, business
development and marketing in 2013. he was appointed to
his present position in January 2016.
Paulo Castellari-Porchia was a member of the GMC
during the year, before leaving the Group with effect from
31 December 2015.
70
Anglo American plc Annual Report 2015 GOVERNANCE THE BOARD IN 2015
THE BOARD IN 2015
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 debating
and stress-testing Group strategy proposals, approving
business plans, monitoring performance, overseeing risk
management and ensuring that 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
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 for the chairman and
as an intermediary for other directors, if necessary.
Governance structure
The Board
Provides leadership to the Group and
is responsible for its long term success.
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 and ethical
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.
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.
Board committees
Executive committees
71
Anglo American plc Annual Report 2015Governance GOVERNANCE THE BOARD IN 2015
BOARD COMPOSITION
The Board currently comprises the chairman, three
executive directors and eight independent non-executive
directors. Composition is regularly refreshed, with half of
the Board appointed within the last three years and no
non-executive director having served more than seven
years. In terms of diversity, the Company has achieved
the Davies Report target of 25% women on the Board,
with 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.
Board diversity
Nationality
Australia
South Africa
France
Ireland
Lesotho
Professional
experience
Automotive
Education/
government/
public entities
Energy
Engineering/
construction
Finance
Medical/
healthcare
Mining
Other global
multinational
Social enterprises
Telecoms
72
UK
UK/US
US
Percentage of
Board membership
8%
17%
17%
33%
33%
17%
33%
58%
8%
8%
Anglo American plc Annual Report 2015
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, including the impact
of declining commodity prices. 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 2015:
February
• Annual results and dividend recommendation
• Business Report – Engineering and large projects
• Litigation update
• Review of 2014 Board and committee evaluation
April
• Business Report – Kumba Iron Ore
• Commodity forecasts/macro-economic scenarios
• Strategy update
• AGM preview
June
• Business Report – Platinum
• Major supply contract for approval
• Board Strategy sessions – two days
• External presentation on the economic, social and political
outlook for South Africa
• External presentation on the global economy
July
• Interim results and interim dividend recommendation
• Business Report – Coal South Africa
• Litigation update
October
• Business Report – De Beers (including a Board visit
to the Gaborone diamond sorting office and Jwaneng
mine, Botswana)
• Engineering and large projects – update
• Business Report – Exploration
• Investor roadshows – summary of feedback
December
• December Investor Day presentation
• External presentation on global mining trends
• Decision to suspend dividends
• Strategic re-focusing of the Group
• Budget and Business Plans 2016-2018
• Business Report – Base Metals
• Mining industry – update and long term outlook
Sir John
Parker
Mark
Cutifani
René
Médori
Phuthuma
Nhleko(1)
Judy
Dlamini
Byron
Grote
Sir Philip
Hampton
Tony
O’Neill
Ray
O’Rourke
Board and Committee meetings 2015 –
frequency and attendance of members
Independent
Board
Audit
Sustainability
Remuneration Nomination
n/a
6/6
No
6/6
No
6/6
–
–
–
Yes
0/6
0/3
Yes
6/6
4/4
Yes
6/6
4/4
Yes
6/6
4/4
4/4
4/4
–
–
–
–
–
–
–
–
–
3/3
3/3
3/3
–
–
0/3
–
–
3/3
3/3
No
3/3(2)
Yes
5/6(3)
–
–
–
Mphu
Ramatlapeng
Yes
6/6
Jim
Rutherford
Anne
Stevens
Jack
Thompson
Yes
6/6
4/4
Yes
5/6(3)
2/4(3)
Yes
6/6
–
4/4
–
–
3/4(3)
3/3
2/3(3)
4/4
4/4
–
4/4
–
–
–
–
–
3/3
3/3
–
(1) Mr Nhleko did not attend meetings to avoid a potential conflict of interest, and stepped down from the Board
in November 2015.
(2) Meetings attended since appointment.
(3) Unable to attend due to illness.
73
Anglo American plc Annual Report 2015Governance GOVERNANCE THE BOARD IN 2015
BOARD VISITS TO OPERATIONS
Our directors value the opportunity to get out of the
boardroom and see the Group’s operations on the ground.
Visiting mines, processing facilities and surrounding
communities and talking to local employees provides
vital operational context to the Board’s deliberations.
During 2015, the Board visited the Minas-Rio iron ore
project in Brazil, the De Beers diamond sorting office
and Jwaneng mine in Botswana and Judy Dlamini and
Mphu Ramatlapeng visited an Anglo American Platinum
community agriculture project in South Africa.
Images
Top: Board visit to
Jwaneng mine.
Middle left: Mark Cutifani
address to De Beers
staff.
Middle right: Board
visit to De Beers
sorting office.
Bottom left: Board visit
to Jwaneng mine.
Bottom right: Board
visit to Minas Rio
74
Anglo American plc Annual Report 2015 BOARD EVALUATION
INVESTOR RELATIONS
In accordance with the Code, we conduct an externally
facilitated evaluation every three years, with the 2015
exercise undertaken by Independent Board Evaluation
currently being finalised. Its conclusions and resulting
actions will be reported in the 2016 annual report.
Between the externally facilitated reviews, the Board
and committees undertake an online, questionnaire
based, evaluation of performance. This is augmented
by one-to-one interviews by the chairman with the
non-executive directors.
The internal evaluation undertaken in late 2014 was
reviewed by the Board and relevant committees in early
2015. Overall, performance of the Board was highly rated.
However, as one would expect from an engaged board,
there was 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 strategic debates,
especially around the Strategy Day, were also addressed.
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 the 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 Canada 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.
In November 2015 the Board received notice of a
shareholder requisitioned resolution which will be proposed
at the AGM in April 2016. The resolution, proposed by the
‘Aiming for A’ partners, would require the Group to report
on its response to the long-term challenge posed by climate
change. Further details are provided in the Notice of AGM.
75
Anglo American plc Annual Report 2015Governance 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
ROLE AND RESPONSIBILITIES
Overseeing on behalf of the Board, material management
policies, processes, and strategies designed to manage
safety, health, environment, socio-political and people risks
and achieve compliance with sustainable development
responsibilities and commitments and strive for an industry
leadership position on sustainability.
The Committee terms of reference are available
to view online.
For more information, visit
www.angloamerican.com/aboutus/ourapproach
COMMITTEE DISCUSSIONS IN 2015
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 environmental and
social performance. In addition to these standing agenda
items, the following matters were discussed during 2015:
February
• business unit sustainability report: Kumba Iron Ore
• operational risk assurance – new approach to risk
monitoring
• applaud awards – employee awards for sustainability
issues
• review of 2014 committee evaluation.
April
• HR performance report – key HR risks
• business unit sustainability report: Platinum
• ICMM benchmarking report – comparing safety
performance and trends across the industry
• socio-economic development – an update on the Group’s
approach and performance.
July
• government and social affairs – detailed update
• business unit sustainability report: De Beers
• water – managing the material risk of water usage/
conservation
• key legislative developments in the sustainability area.
October
• operational risk assurance – audit findings
• business unit sustainability report: Exploration
• mine closure planning – with a particular focus
on Thabazimbi.
76
Anglo American plc Annual Report 2015 GOVERNANCE NOMINATION COMMITTEE
COMMITTEE DISCUSSIONS IN 2015
The Committee met three times during 2015, discussing
the following matters:
February
• discussed the composition of the Board and its
committees and, in line with the results of the recent
evaluation, concluded it was currently appropriate and
working well
• reviewed the effectiveness of senior and executive
management succession planning
• reviewed the results of the 2014 Board evaluation and
discussed possible learnings.
July
• a recommendation that Tony O’Neill be appointed to
the Board
• an update on the process to recruit a new HR Director
• an update on the Group-wide review of indirect
headcount and discussed potential changes at senior
levels within the organisation.
October
• noted that Mr Nhleko was likely to step down from the
Board to focus on his South African business interests
• the CEO reported on the structure and composition of
the Group’s executive committees.
NOMINATION COMMITTEE
Sir John Parker
Chairman, Nomination Committee
COMPOSITION
• Sir John Parker – Chairman
• Sir Philip Hampton
• 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 search 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 succession plans for all executive Board
members, Chairman and senior executives below the
Board are kept under review.
• 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.
The Committee’s terms of reference are available
to view online.
For more information, visit
www.angloamerican.com/aboutus/ourapproach
77
Anglo American plc Annual Report 2015Governance GOVERNANCE AUDIT COMMITTEE
AUDIT COMMITTEE
Byron Grote
Chairman, Audit Committee
COMPOSITION
• Byron Grote – Chairman
• Judy Dlamini
• Sir Philip Hampton
• 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.
• Reviewing and monitoring the effectiveness of the Group’s
risk management and internal control mechanisms.
• Approving the terms of reference 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 Principal
Risks of the Group. Details of the Principal Risks are
contained on pages 41-45.
The Committee terms of reference are available
to view online.
For more information, visit
www.angloamerican.com/aboutus/ourapproach
FAIR, BALANCED AND UNDERSTANDABLE
A key requirement of our financial statements is for the
report 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 provided to all
contributors
• revisions to regulatory requirements, including the Code
are provided to contributors and monitored on an
on-going basis
• early-warning meetings are conducted between business
unit management and auditors in advance of the year end
reporting process
• a thorough process of review, evaluation and verification
of the inputs from business units is undertaken to ensure
accuracy and consistency
• external advisors provide advice to management and the
Audit Committee on best practice with regard to creation
of the report and accounts
• a meeting of the Audit Committee was held in February
2016 to review and approve the draft 2015 annual report
and accounts in advance of the final sign-off by the Board.
This review included the critical accounting judgements
explained in Note 1, pages 118-119 and the conclusions of
the external auditors (page 110).
COMMITTEE DISCUSSIONS IN 2015
Throughout the course of 2015 the audit committee paid
particular attention to the evolving commodity price risk and
management’s actions to mitigate the effects of the risk.
Discussion included the actions to maintain sufficient
liquidity, the disposal programme and the dividend policy. In
addition, the implications of the weaker price environment
on asset values was subject to detailed review
The Audit Committee held four meetings in 2015.
The specific items covered in each meeting included
the following:
February
• significant accounting issues, the going concern
assessment, the 2014 final dividend proposal and
the press release for the 2014 annual results
• the results of the external audit work
• the Ore Reserves and Mineral Resources report
• report on completion of the 2014 internal audit plan
and monitoring of the completion of actions agreed
in audit work
• the Audit Committee’s members’ evaluation of its
performance during 2014.
78
Anglo American plc Annual Report 2015 April
• the Group’s accounting policies over asset valuations,
restructuring costs, the accounting implications of
Ore Reserve and Mineral Resource estimates and
developments in financial reporting. The Audit Committee
approved changes to policies as proposed, including
separate disclosure for Group-wide, permanent
restructuring programmes as a special item if greater than
$50 million in total, and noting the stricter guidelines being
applied to use of Inferred Resources in life of mine plans
• the 2014 management letter from Deloitte, noting that no
points were raised that could lead to a misstatement in the
Group’s accounts. The committee reviewed the
observations highlighted by Deloitte
• management’s assessment of the auditor independence
• the interim internal audit report, including progress with
the 2015 plan
• the Principal Risks of the Group including movement in
each risk since the prior review, potential impacts, root
causes and mitigation actions
• a report on renewal of the Group’s insurance
arrangements.
December
• the significant accounting and financial reporting matters
for the 2015 year end, including impairments (Note 6,
page 126) and disposals (Note 30, page 151). The Audit
Committee also reviewed the enhanced disclosure of the
Group accounting policy on depreciation of property, plant
and equipment (Note 39, page 161)
and effectiveness in delivery of the 2014 audit
• an update on tax matters
• the audit fee proposed for 2015
• approved the external audit plan for 2015 and requested
the auditors to include findings of their work in the auditors
report (page 110)
• a paper on trading and agreed to recommend to the Board
approval for an expansion in trading activities
• progress in developing a new code of ethical conduct for
the Group
• a paper providing an update on management’s response
to the 2014 Deloitte management letter observations
referred to in the April meeting
• the process concerning the Viability Statement
preparation and the Principal Risks that form part of the
analysis. Included a discussion of risk appetite in respect
of each of the Principal Risks
• reviewed and approved the internal audit plan for 2016
• agreed changes to the Terms of Reference of the Audit
Committee to include oversight responsibility of the Code
of Conduct and preparation of the Viability Statement.
The Audit Committee report is set out below.
• a report on the Group’s ethical framework and approved
recommendations, including the development of a new
code of conduct
• a report on the governance, policy and approach to
mitigating risk of bribery and corruption
• a report on governance, risk and compliance activities
associated with the Marketing business unit, including
trading activities
• a report on the management of cyber risk, including
actions planned to enhance the maturity of information
security measures
• a report analysing the Group’s pension assets and liabilities
and management’s approach to mitigating pension risk
• executive director expenses for 2014 and the Group
Travel policy.
July
• the significant accounting issues for the half-year report,
including impairments (Note 6, page 126) and disposals
(Note 30, page 151)
• the going concern assessment including the underlying
assumptions, risks and mitigating actions to support the
assessment
• a report on tax matters including an update on transfer
pricing matters and developments in regulations relating
to tax reporting
• a report from Deloitte on their interim review which
covered the accounting issues referred to above and 2015
audit planning considerations
• the interim financial statements, draft press release and
the interim dividend proposal
• the schedule of approved non-audit fees for the half year
• a paper from management on an initiative to extend
trading activity beyond thermal coal
• a briefing on changes to the UK Corporate Governance
Code, including management’s approach to developing
the Viability Statement
79
Anglo American plc Annual Report 2015Governance GOVERNANCE AUDIT COMMITTEE REPORT
AUDIT COMMITTEE REPORT
ENSURING INDEPENDENCE OF THE
EXTERNAL AUDITORS
Anglo American’s policy on auditor’s independence is
consistent with the ethical standards published by the Audit
Practices Board.
A key factor that may impair an auditor’s independence is
a lack of control over non-audit services provided by the
external auditors. The external auditor’s 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 auditor 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 service
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 2015 and will rotate off at the
end of the 2019 audit in accordance with this requirement.
• Any partner designated as a key audit partner of
Anglo American shall not be employed by Anglo American
in a key management position unless a period of at least
two years has elapsed since the conclusion of the last
relevant audit.
• The external auditors are required to assess periodically
whether in their professional judgement they are
independent of the Group.
• The Audit Committee ensures that the scope of the auditors’
work is sufficient and that the auditors are fairly remunerated.
• The Audit Committee has primary responsibility for making
recommendations to the Board on the appointment,
re-appointment and removal of the external auditors.
• The Audit Committee has the authority to engage
independent counsel and other advisers as they determine
necessary to resolve issues on auditors’ independence.
• An annual assessment is undertaken of the
auditors’ effectiveness.
Audit tender
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.
Anglo American confirms compliance during the year
with the provisions of the Competition and Markets
Authority Order on mandatory tendering and audit
committee responsibilities.
Conclusions of the Audit Committee for 2015
The Audit Committee has satisfied itself that 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 lead 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 2017. Resolutions to authorise the
Board to re-appoint and determine the remuneration of
Deloitte LLP will be proposed at the AGM on 21 April 2016.
Risk Management
Risk Management is the responsibility of the Board and is
integral to the achievement of our objectives. The Board
establishes the system of risk management, setting risk
appetite and maintaining the system of internal control to
manage risk within the Group. The Group’s system of risk
management and internal control are monitored by the
Audit Committee under delegation from the Board.
The system of risk management is designed to ensure
awareness of risks that threaten the achievement of
objectives. The controls that mitigate those risks are
identified so that assurance can be provided on the
effectiveness of those controls and a determination can be
made as to whether the risk is operating within the Group’s
risk appetite. We seek to embed a culture of risk awareness
into development of our strategic and operational objectives.
The process for identification and assessment of the
Principal Risks combines a top down and bottom up
approach. At the operations level, a process to identify all
risks that prevent the achievement of objectives is being
introduced, building on our safety risk management
programme. Detailed analysis of the material risks at each
location is performed to ensure management understanding
of the risk and controls that reduce likelihood of occurrence
and impact should the risk materialise. These operational risk
profiles contribute to the assessment of risks at the business
unit level. Executive management at each business unit
assess risks that threaten achievement of the business unit
objectives and the status of controls, or actions, that mitigate
those risks. At the Group level, risks are identified through
assessment of global factors affecting the industry and the
Group specifically, as well as the risks arising from the
business unit assessments. Materiality of risk is determined
80
Anglo American plc Annual Report 2015 through assessment of the various impacts that may arise
and likelihood of occurrence. An exception relates to those
risks deemed catastrophic in nature, where the focus of
assessment is on impact and status of internal controls, given
the very low likelihood of occurrence. When considering the
impact of any risk, we assess financial, safety, environmental,
legal or regulatory, social and reputation consequences.
The robust process of identifying and evaluating the Principal
Risks is ongoing and was in place during 2015. Regular
reports on the status of risks and controls are presented
to executive management teams throughout the year.
The Audit Committee reviews reports on the overall
Anglo American risk profile on two occasions during the
year and conducts in-depth reviews of specific risks during
its meetings over the course of the year. Each Principal
Risk is assigned to either the Board or the relevant Board
Committees to oversee executive management actions in
response to that risk. The Audit Committee reviews that
oversight process on an annual basis.
Details of the Principal Risks are provided on pages 41-45.
Risk appetite
We define risk appetite as ‘the nature and extent of risk that
Anglo American is willing to accept in relation to the pursuit of
its objectives’. Each Principal Risk is assessed as to whether it
is operating within the limit of appetite for the Group based on
review of the external factors influencing that risk, the status
of management actions to mitigate or control the risk and
the potential impact should the risk materialise. For risks
operating beyond the limit of appetite, a change in strategy
may be required. For risks operating within, but approaching
the limit of, appetite, specific management actions may be
required to ensure the risk remains within the limit of appetite.
Risk Management and the system of Internal Control
Controls either reduce the likelihood or impact of any risk
once it has occurred and the identification of material
controls – i.e. those controls that have the most influence in
mitigating a risk – is an important input for audit planning.
The system of internal control operates on a traditional
‘three lines of defence’ approach, with operating
management implementing and monitoring controls on
a day-to-day basis, and business unit or functional
management providing a second line of defence through
regular and frequent oversight of operating management’s
implementation of controls. A centrally managed internal
audit department provides the third line of defence by
reviewing design and operating effectiveness of the internal
control environment, which includes the work performed by
the first and second lines of defence management teams.
Internal audit operated in all of the Group’s managed
businesses in 2015, reporting its work to executive
management and the Audit Committee on a regular basis.
The internal audit department’s mandate and annual audit
coverage plans were approved by the Audit Committee.
The scope of internal audit work covers the broad spectrum
of risk that the Group is exposed to. The audit of controls
associated with major operating/technical risks is
undertaken in conjunction with relevant experts from the
Technical and Sustainability function, and a programme
was introduced during 2015 that strengthened the audit of
controls associated with major technical risks, the results
of which were shared with the Sustainability Committee
and Audit Committee.
In determining its opinion on the effectiveness of the internal
control environment, the Audit Committee considered the
following factors:
• the results of internal audit work, including the response
of management to completion of actions arising from
audit work
• the output of risk management work
• the output of external audit work and other
assurance providers
• issues identified by management or reported through
whistleblowing arrangements, and the results of
investigations into allegations of breaches of our values
and business principles.
Reviewing the effectiveness of the system of risk
management and internal control
The Board, through the Audit Committee, fulfils its
responsibility in reviewing the effectiveness of the system
of risk management and internal control through review of
reports submitted over the course of the year covering the
risk management process, adequacy of the internal control
environment, consideration of risk appetite, in-depth reviews
of specific risks and the results of external audit work. The
Sustainability Committee also reviews technical and safety
risks in detail and report its findings to the Board.
Whistleblowing programme
The Group has a whistleblowing facility operating in all its
managed operations and a Group-wide stakeholder
complaints and grievance procedure (see the 2015
Sustainability 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 to raise concerns on a
confidential basis where conduct is deemed to be contrary
to our values.
During 2015 388 (2014: 302) 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 anonymous to Anglo American.
All received the appropriate attention and, where necessary
action was taken to address issues. A governance process
is in place to ensure all reports are acted upon in a timely
manner and actions completed where necessary.
81
Anglo American plc Annual Report 2015Governance GOVERNANCE
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
COMMITTEE DISCUSSIONS IN 2015
The Committee held three meetings in 2015, discussing the
following matters:
February
• reviewed executive director personal key performance
indicators for 2015 and Group financial and safety targets
to ensure alignment with Group strategy
• discussed the chief executive’s and finance director’s
performance in 2014 to adjudicate on bonus outcomes
• reviewed executive directors’ shareholdings in the
Company prior to 2015 share awards being made
chairman and executive directors for review and approval
by the Board.
• reviewed the forecast vesting of 2012 Bonus Share Plan
(BSP) and Long Term Incentive Plan (LTIP) awards
• Designing the Company’s share incentive schemes.
• reviewed the proposed performance targets for the 2015
LTIP award
• reviewed the 2014 Directors’ remuneration report ahead
of publication
• reviewed amendments to the Bonus Share Plan rules
• reviewed the external and internal directorship policy
• reviewed corporate governance issues arising in the
previous quarter
• reviewed the remuneration policy.
April
• confirmed the vesting of 2012 BSP and LTIP awards and
the granting of 2015 BSP and LTIP awards
• confirmed the performance targets for the 2015 LTIP
award
• discussed investor feedback on executive remuneration
prior to the vote on the Directors’ remuneration report
• reviewed corporate governance issues arising since the
previous meeting.
December
• reviewed directors’ salaries, taking into account the
general salary review for the broader employee population
• discussed the application of safety targets in executive
directors’ bonuses
• discussed the executive directors’ draft personal key
performance indicators for 2015
• discussed the application of LTIP metrics
• reviewed and updated its terms of reference
• reviewed corporate governance issues arising since the
previous meeting.
The Directors’ remuneration report is set out opposite.
82
Anglo American plc Annual Report 2015 GOVERNANCE DIRECTORS’ REMUNERATION REPORT
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. This
is particularly pertinent in light of the ongoing challenges
being faced by the Company and by the mining industry
more generally.
As reported by the chief executive in his introduction to this
year’s Annual Report, it has been a very challenging year for
Anglo American. Against the strong headwinds of a 24%
decrease in the basket price of our products, our ongoing
intense focus on operational costs and productivity has
generated a $1.3 billion(1) underlying EBIT benefit in the year,
providing some mitigation.
The economic challenges and business performance are
reflected in the remuneration received in 2015. Specifically:
• despite strong performance by individuals, the earnings
per share performance resulted in significantly lower
bonus outcomes than in recent years
• the steep fall in prices and the impact on earnings over
the last three years mean that the required three-year
earnings growth was not achieved; therefore, of the
Enhancement Shares initially awarded in 2013, none
vested at the end of 2015
• half of the Long Term Incentive Plan (LTIP) awards
initially granted to executive directors in 2013 will not vest
as the Total Shareholder Return (TSR) target was not
met. The results of the Company’s longer term efficiency
programmes mean that the remainder of the award will
vest. The Committee has carefully reviewed this outcome
in the context of total variable pay, and is satisfied that the
vesting level is appropriate, particularly in the light of
overall variable pay delivered to executive directors in
2015. This means, for example, that for the CEO variable
pay represents 33% of target and 21% of maximum.
In the light of the current challenging conditions faced by
the Company, the Remuneration Committee has decided
not to increase the executive directors’ salaries in 2016.
Tony O’Neill joined the Company in 2013, and was appointed
to the Board in July 2015. His remuneration arrangements,
which are described on page 93, are consistent with the
Company’s approved remuneration policy.
We have again 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 2015,
starting on page 93, will be more meaningful for you,
and Tony O’Neill’s arrangements will be in context.
The Remuneration Policy continues to support the
delivery of our strategic objectives as demonstrated by
the performance measures and targets for both the
Bonus Share Plan (BSP) and LTIP awards made in 2015,
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
now in force.
Sir Philip Hampton
Chairman, Remuneration Committee
(1) Excludes $0.8 billion
volume downside at
De Beers in response
to market conditions.
83
GovernanceAnglo American plc Annual Report 2015 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 2015 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 so that only a quarter of the
award is payable for median performance, while 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 2015 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 detailed in the 2013
Annual Report
30% of basic salary
Pension
To offer market-
competitive levels
of benefit
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
Any outstanding awards will be paid out according to the
terms on grant
The BSP and LTIP awards from 2013 were the only such
outstanding awards at the end of 2015, and the vesting
outcomes are described in the Implementation Report on
pages 96 and 97
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 2015 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
As previously reported, the restricted awards granted
to Mark Cutifani on appointment have been released in
accordance with the terms on grant, with the final tranche
due to be released before publication of this report. 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. This applies to the
restricted awards made to Tony O’Neill when he joined the
Company in 2013
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 2015 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
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.
Other fees/
payments
To have the flexibility to
provide additional fees/
benefits if required
Maximum additional fee
£30,000
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, René Médori and Tony O’Neill are
consistent with the policies outlined in Figure 1 and in
Figure 4 (termination provisions).
88
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2015 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, the finance
director and the technical 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.
Figure 3: Executive director total remuneration at
different levels of performance
£8.8 m
)
m
£
(
y
a
p
£6.3 m
l
a
t
o
t
e
v
i
t
a
c
d
n
i
I
£1.7 m
10.0
8.0
6.0
4.0
2.0
0
£5.2 m
£5.1 m
£3.7 m
£3.7 m
£1.1m
£1.1m
Above
Target
Performance Level
Chief Executive
Below
Above
Target
Performance Level
Finance Director
Below
Above
Target
Performance Level
Technical Director
Below
2016 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, £36,000 and £36,000 have been used for ongoing non-pension benefits for the chief executive, finance director, and technical 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 2016 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 15% 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 2016 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 10.3% 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 2016 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 2015
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 pro-rated 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
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
90
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2015 Figure 4: Principles of determining payments for loss of office
‘Good Leaver’
Unvested Bonus
Shares
Normal circumstances
Bonus Shares are released in full on the normal
release date (ie awards will not be released early)
Exceptional circumstances
(e.g. death or other compassionate grounds)
Bonus Shares are released in full, and eligible for
immediate release
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
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 pro-rated
Voluntary resignation
Forfeit
‘Bad Leaver’
Forfeit
Forfeit
If an employee resigns to join a
competitor (as defined by the
Committee) then even those vested
Bonus Shares that remain subject only
to the holding period will be forfeit
Outside of these circumstances, such
awards are released to the employee
at the end of the holding period
Forfeit
Forfeit
Vested LTIP
awards subject
to a holding
period
Normal circumstances
Vested LTIP awards that are subject only to a holding
period are released in full to the employee at the end
of the holding period
Exceptional circumstances
(e.g. death or other compassionate grounds)
Vested LTIP awards subject to a holding period may be
released on departure
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
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
Generally forfeit
Forfeit
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
Other
Limited disbursements (for example, legal costs, relocation
costs, untaken holiday)
None
None
91
GovernanceAnglo American plc Annual Report 2015 Figure 5: Policy on change in control
Incentive plan
provisions relating
to change of
control (without
termination)
Bonus Shares
The Bonus Shares awarded under the BSP will be released
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.
• the Committee considers any general basic salary
increase for the broader UK employee population when
determining any annual salary increases for the executive
directors. No basic salary increase has been awarded
for 2016 to the executive directors or to the general UK
employee population. The rate of basic salary increase for
the chief executive and the finance director, at 2% of salary
for 2015, was the same as the general increase for the UK
employee population.
• each year the Committee also reviews in detail how
the arrangements for the executive directors compare
to those for other members of the Group Management
Committee to ensure an appropriate relationship and to
support career development and succession.
Given the geographic spread of the Company’s workforce,
the Committee does not consider that consulting with
employees on the remuneration policy for directors
is a 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 2015 3. DIRECTOR REMUNERATION IN 2015
The information set out in this section (which constitutes the
Implementation Report) has been subject to external audit.
Figures 6 to 11 show the outcomes for 2015 of the main
components of executive director remuneration, including
the expected vesting of share awards with a performance
period ending in 2015, and Figure 12 sets out the total
remuneration outcomes.
Conditional share awards made in 2015 are set out in
Figure 15 in Section 4.1.
Figure 6: Basic salaries for 2015
(all amounts in ’000)
MARK CUTIFANI
(2014: £1,236)
£1,261
RENE MEDORI
(2014: £788)
£804
TONY O’NEILL
(2014: Not applicable)
£352(1)
Figure 7: BSP outcomes for 2015
(cash bonus and Bonus Shares)
(all amounts in ’000)
MARK CUTIFANI
(2014: £1,557)
£966
RENE MEDORI
(2014: £960)
£583
TONY O’NEILL
(2014: Not applicable)
£284(1)
(1) For the period between appointment and year-end.
3.1 Tony O’Neill’s remuneration arrangements
Tony O’Neill was appointed as technical director during the
year, having initially joined the Company in September 2013.
His remuneration package is consistent with the Company’s
approved remuneration policy, and comprises basic salary of
£787,950, pension contribution rate of 30% of basic salary,
eligibility for BSP and LTIP awards, all-employee share plan
participation, and benefits including a car allowance, medical
cover and life assurance. On joining the Company in 2013,
Tony O’Neill was granted awards of cash and shares to reflect
the value and vesting periods of incentives forfeit as a result
of his leaving his previous employment. The cash award, and
the first two tranches of the share award, were released prior
to Tony’s appointment to the Board. The remaining 39,872
shares are due to be released before publication of this report.
3.2 Basic salaries for 2015
Figure 6 sets out the basic salaries for 2015. Mark Cutifani
and René Médori each received a salary increase of 2%
in 2015. In Tony O’Neill’s case, figure 6 shows the outcome
in relation to the period between his appointment and
31 December 2015.
3.3 Annual BSP outcomes for 2015
Figure 7 shows the BSP outcomes for 2015 (in Tony
O’Neill’s case, the figure reflects the outcome in relation
to the period between his appointment to the Board on
23 July 2015 and 31 December 2015). Figures 8a to 8c
summarise the annual financial and personal strategic
measures for the 2015 BSP for Mark Cutifani, René Médori
and Tony O’Neill, along with the performance targets, where
relevant, the level of performance achieved and the resulting
award levels. Key details of the performance delivered over
2015 are set out under BSP Key Performance Aspects.
The Committee reviewed the annual targets set at the
beginning of 2015 and, in light of the speed and severity of
the falls in commodity prices and the environment faced
by the Company, decided to set threshold performance
expectations at $0.85. Payout at threshold performance
would be 25% on this measure, with no payment for
performance below threshold.
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 to 8c. The overall outcome for each
executive director was then adjusted by the safety deductor
(based on loss of life, recordable case frequency rates,
lost-time injury frequency rates, and an operational risk
management rating). Safety targets are based on fixed
percentage improvements from the prior year result with
20% reduction on the prior year resulting in no bonus
adjustment and any lesser improvement resulting in a
reduction up to a maximum of 20%. The exception was
safety improvement in the platinum division where strike
action in 2014 led to an unrepresentative baseline. In this
case the improvement target of 20% was measured relative
to the stretch target set at the start of 2014 (itself a 20%
improvement on 2013).
93
GovernanceAnglo American plc Annual Report 2015 Figure 8a: BSP performance assessment for 2015 – Chief executive
Mark Cutifani
Corporate financial (50% of award)
Earnings per share
Personal/Strategic (50% of award)
Strategic development (15%)
Talent management (10%)
Business improvement (15%)
Endowment (5%)
Stewardship (5%)
Overall personal performance
Group safety performance
Deductor
Overall performance
Threshold
$0.85 = 12.5%
of award
Target
$0.98 = 20%
of award
Above
Maximum
$1.50 = 50%
of award
Below
Achieved
(% of award)
0%
Below
Threshold
Target
Above
Maximum
Static/declining
Improving
Strongly
improving
Best practice/
world class
Below
Threshold
Target
Above
Maximum
43%
(6.5%)
36.5%
Resulting BSP award
36.5% of maximum bonus award (77% 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)
Figure 8b: BSP performance assessment for 2015 – Finance director
René Médori
Corporate financial (50% of award)
Earnings per share
Personal/Strategic (50% of award)
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
Deductor
Overall performance
Threshold
$0.85 = 12.5%
of award
Target
$0.98 = 20%
of award
Above
Maximum
$1.50 = 50%
of award
Below
Achieved
(% of award)
0%
Below
Threshold
Target
Above
Maximum
Static/declining
Improving
Strongly
improving
Best practice/
world class
Below
Threshold
Target
Above
Maximum
41%
(6.5%)
34.5%
Resulting BSP award
34.5% of maximum bonus award (72% 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)
94
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2015
Figure 8c: BSP performance assessment for 2015 – Technical director
Tony O’Neill
Corporate financial (50% of award)
Earnings per share
Personal/Strategic (50% of award)
Strategic development (15%)
Talent management (10%)
Business improvement (15%)
Endowment (5%)
Stewardship (5%)
Overall personal performance
Group safety performance
Deductor
Overall performance
Threshold
$0.85 = 12.5%
of award
Target
$0.98 = 20%
of award
Above
Maximum
$1.50 = 50%
of award
Below
Achieved
(% of award)
0%
Below
Threshold
Target
Above
Maximum
Static/declining
Improving
Strongly
improving
Best practice/
world class
Below
Threshold
Target
Above
Maximum
45%
(6.5%)
38.5%
Resulting BSP award
38.5% of maximum bonus award (81% 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
All
• Copper equivalent (Cu Eq) volumes(1) up 5% vs prior year,
driven by recovery from the strike at Platinum (+25%)
and good performance at Coal Australia (+1%) as well
as ramp up of new projects. A management-driven
reduction at De Beers (-12%) in response to a challenging
market, and at Kumba (-7%) with the implementation of a
new mine plan in response to low prices reduced volume
• Nominal unit costs down across the Group (16% on
a Cu Eq basis). Cost savings implemented throughout
the portfolio, whilst the Group has also benefited from
weakening FX rates, partially offset by inflation
• Project Marathon, a restructuring of indirect costs
across the Group, was completed for Group functions
during 2015. BU restructuring is also ongoing, with
many BUs completed. A wider portfolio review of the
Group is underway
• Three major projects progressed their ramp up in 2015.
Minas-Rio and the Boa Vista Fresh Rock plant have
continued to increase production, whilst Barro Alto
completed its furnace rebuild early and is now operating
at full capacity. Grosvenor project is also progressing in
line with project schedule
• Lafarge Tarmac and AA Norte disposed in 2015, with
Dartbrook and Kimberly also announced. Discussions
regarding the divestment of a number of Copper, Niobium
and Phosphates, and Coal assets commenced during the
year, whilst the sale of Rustenburg to Sibanye was agreed
(1) AA Norte volumes excluded from both periods.
• Safety performance across the Group remains a key
focus. The Group achieved a fatality-free quarter in Q4
2015, and the Platinum business, in 2015, achieved its
longest period without a fatality in its history
Mark Cutifani
• The Anglo Operating Model, critical to the continued
operational improvement at major assets, is being
implemented at key assets including Los Bronces
and Mogalakwena
• Continued, effective engagement with host governments
and other stakeholders in principal geographies
René Médori
• Liquidity at $14.8 bn with $2.2 bn of bonds successfully
issued during the year
• Net debt of $12.9 bn delivered below guidance of
$13-$13.5 bn despite weakening operational cash flows.
This is a result of aggressive capital discipline and the
successful implementation of the disposal program
Tony O’Neill
• Delivery of FutureSmart strategy milestones
• Executive principles of Quellaveco project development
strategy aligned
• Development strategy potential of Barro Alto, Platinum,
and Niobium and Phosphate
• Continued development of strategic supply relationships
95
GovernanceAnglo American plc Annual Report 2015
3.3 BSP Enhancement Share outcomes for 2015
In 2013, René Médori was awarded 8,808 Enhancement
Shares under the BSP. Vesting was subject to the
Company’s real EPS growth over the three-year period
to 31 December 2015. 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 2015
(all amounts in ’000)
Figure 10: LTIP assessment for 2015
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 2015, the Company’s TSR
performance was below the weighted median;
therefore no shares will vest for
this part of the award.
RENE MEDORI
(2014: £0)
£0
3.4 Long Term Incentive
Plan outcomes for 2015
In 2013, Mark Cutifani and René Médori received LTIP
grants of 244,328 and 117,218 conditional shares
respectively, with 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 31 December
2015, and (b) the level of savings delivered by the Asset
Optimisation and Supply Chain programmes to
31 December 2015.
Figure 10 sets out further details of the measures and
the Company’s performance against each. Figure 11
sets out the assumed value of the vesting outcomes for
Mark Cutifani and 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 2015, the Company’s TSR
performance was ranked below the 50th percentile
of the FTSE 100; therefore 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 2015 of $5.9 bn and maximum
vesting required cumulative savings of $7.2 bn.
• Actual performance was $8.6 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 2015 Figure 10: LTIP assessment for 2015
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 2015, the Company’s TSR
performance was below the weighted median;
therefore no 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 2015, the Company’s TSR
performance was ranked below the 50th percentile
of the FTSE 100; therefore 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 2015 of $5.9 bn and maximum
vesting required cumulative savings of $7.2 bn.
• Actual performance was $8.6 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 2015
Arrow represents actual 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 2015
Arrow represents actual vesting
Anglo American’s AOSC efficiency
)
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: $5.85 bn
Max: $7.15 bn
Actual: $8.6 bn
Vesting schedule and actual performance
Arrow represents actual vesting
Figure 11: LTIP vesting outcomes for 2015
(all amounts in ‘000)
MARK CUTIFANI
(2014: not applicable)
£778
RENE MEDORI
(2014: £523)
£373
LTIP KEY PERFORMANCE ASPECTS
• Actions taken on the back of the 2013 Asset Review
process and implementation of the Anglo Operating
Model continued to assist in delivering AOSC benefits
across all businesses during 2015
• 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 improved blasting
efficiency at Tumela and Union (Platinum)
• Specific SC highlights include Global Inventory
Optimisation resulting in reduced stocking levels
at Platinum; introduction of dry-drilling at Kumba
increasing drill bit life and penetration rates and
reduced rates per tonne for Mining Waste Services
at Kumba
• The 2013 LTIP awards will vest at 50% in 2016;
consequently, 122,164 shares are receivable by
Mark Cutifani and 58,609 by René Médori. At a share
price of £4.73 (the average for the last quarter of 2015),
this results in values of £577,836 and £277,221,
respectively. Dividend equivalents over the vesting
period will also be payable at vesting, to be £199,691
and £95,803 respectively
97
GovernanceAnglo American plc Annual Report 2015
Figure 12: Total remuneration outcomes for 2015
Total basic
Benefits
Annual
performance
bonus – cash
and Bonus
salary(1)
£’000
in kind(2)
£’000
Pension(3)
£’000
Shares(4)
£’000
2013
Enhancement
Share Award(5)
£’000
2013
LTIP
Award(6)
£’000
Total
2015
£’000
Total
2014
£’000
Executive Directors
Mark Cutifani
Mark Cutifani (2014)
René Médori
René Médori (2014)
Tony O’Neill(7)
Tony O’Neill (2014)
Section 3.1
1,261
1,236
804
788
352
–
Section 3.2
Section 3.3
Section 3.4
32
561
65
62
14
–
378
371
241
237
106
–
966
1,557
583
960
284
–
–
–
0
0
–
–
778
3,415
–
373
523
–
–
2,066
756
3,725
2,570
–
Non-executive Directors
Sir John Parker(8)
Judy Dlamini
Byron Grote(8)
Sir Philip Hampton(8)
Phuthuma Nhleko(9)
Ray O’Rourke(10)
Mphu Ramatlapeng
Jim Rutherford
Anne Stevens
Jack Thompson
Total fees
2015
£’000
Benefits in
kind 2015
£’000
Total
2015
£’000
Total fees
2014
£’000
Benefits in
kind 2014
£’000
Total
2014
£’000
700
80
110
140
73
80
80
80
80
110
24
–
–
–
–
–
–
–
–
–
724
80
110
140
73
80
80
80
80
700
80
101
131
80
80
80
80
80
110
110
22
722
–
–
–
–
–
–
–
–
–
80
101
131
80
80
80
80
80
110
98
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2015
(1)
In addition to his basic salary, René Médori retained fees amounting to £82,000 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, medical insurance and other ancillary benefits. As reported in the 2014 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
Tony O’Neill
Car-related
benefits
Untaken holiday
reimbursement
29,420
28,700
12,669
–
27,837
–
(3) The pension contribution amounts should be read in conjunction with the following information:
(a) The amounts stated for Mark Cutifani and Tony O’Neill for 2015 include a cash allowance of £297,000 (2014: £288,000) and £93,000 (2014: n/a), respectively.
(b) The total amount of pension contributions treated as having been paid into the UURBS for 2015 were £241,000 for René Médori (2014: £237,000).
(c)
Contributions treated as being paid into the UURBS earn a return equivalent to the Company’s pre-tax sterling nominal cost of debt, capped at a rate determined by the
Remuneration Committee. The total return earned in 2015 was £73,000 for René Médori (2014: £59,000).
(d) As at 31 December 2015, the total balances due to the executive directors in relation to the UURBS were £1,644,000 for René Médori (2014: £1,330,000). 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 2013 Enhancement Share award was not met and none of these shares will vest.
(6) As vesting of the LTIP awards granted in 2013 is due to take place after publication of this report, vesting values are on an ‘expected’ basis and a share price of £4.73 has been
used to calculate the values shown. The values shown include dividend equivalent amounts of £199,691 for Mark Cutifani and £95,803 for René Médori. The LTIP amounts
shown in last year’s report in respect of the LTIPs awarded in 2012 were also calculated on an ‘expected’ vesting levels basis with an assumed share price of £12.98. The actual
vesting levels were as expected but the actual share price at vesting was £10.75, leading to the following decrease in value: René Médori – estimated value £618,000; actual
value £523,000 (decrease of £95,000).
The LTIP amounts shown in last year’s report for Cynthia Carroll were also calculated on an ‘expected’ vesting levels basis with an assumed share price of £12.98 the actual
vesting levels were as expected but the actual share price at vesting was £10.75, leading to the following decrease in value: Cynthia Carroll – estimated value £509,000; actual
value £431,000 (decrease of £78,000).
(7) Amounts relate to the period between appointment and 31 December 2015.
(8) Sir John Parker 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.
Byron Grote and Sir Philip Hampton became chairman of the Audit Committee and senior independent non-executive director respectively, with effect from 24 April 2014.
(9) Phuthuma Nhleko retired from the Board with effect from 27 November 2015.
(10) Ray O’Rourke has instructed the Company that his net fees be donated to charity.
99
GovernanceAnglo American plc Annual Report 2015
3.5 Change in the chief executive’s remuneration
in 2015 relative to London employees
Figure 13 sets out the chief executive’s basic salary, benefits
and BSP amounts for 2015 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 2015
Figure 14 sets out the total expenditure on employee reward
over 2015, 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, while 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(1)
£’000
% change
Average
% change
(per capita)
Salary
1,261
2.0
2.0
Benefits
32
(94.3)
Bonus
966
(38.0)
2.0
(15.6)
(1) Benefits for London employees comprise pension and car allowances (where applicable), these being the most material.
Figure 14: Distribution statement for 2015
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
2015
827
(62.7)
398
(63.2)
4,474
(11.8)
91
(4.2)
2014
2,217
(17.1)
1,081
(0.3)
5,072
(3.5)
95
(3.1)
(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 2015 4. OUTSTANDING SHARE INTERESTS
The information in this section has been subject to
external audit.
4.1 Conditional share awards granted in 2015
Figure 15 summarises the longer-term, conditional share
awards granted to directors during 2015. Receipt of these
awards is dependent on the Company’s performance over
2015-17, as detailed below. Also included in Figure 15
are the options granted to directors in 2015 under the
Company’s SAYE scheme.
The value of Bonus Shares awarded to directors in 2015
is included in the annual performance bonus figures
for 2014, set out in Figure 12.
Figure 15: Summary of conditional share awards and options granted in 2015
Performance
period end
Director (1)
Basis of award
Number of
shares awarded
Face value
at grant(2)
31/12/2017
Mark Cutifani
350% of salary
362,275
£4,412,510
René Médori
300% of salary
198,072
£2,412,517
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 10%
100% for 14%(3)
(1) Tony O’Neill was granted an award of 195,000 shares under the LTIP in 2015, prior to his appointment to the Board. Vesting of this award will be reported in the 2017 remuneration report.
(2) The face value of each award has been calculated using the share price at time of grant (£12.18 for the LTIP awards). As receipt of these awards is conditional on performance, the actual value of these awards
(3)
may be nil. Vesting outcomes will be disclosed in the 2017 remuneration report.
In the 2014 Annual Report, the ROCE target range for the 2015 LTIP was stated as 9-13%. This was to be calculated using Driving Value ROCE (which excludes the impact of impairments taken post
December 2013 on both attributable EBIT and Capital Employed – see page 182 for the definition). Subsequently, the Committee agreed to amend the assessment metric to Attributable ROCE (which takes
into account the impact of all impairments), in order to facilitate easy calculation of assessment metrics by users of the accounts). The ROCE target range was restated to 10-14%, which recognises the lower
capital base on which returns would be generated whilst retaining the original stretch.
Type of award
SAYE share
options
Date of Award
Options granted
Mark Cutifani
18/09/2015
René Médori
18/09/2015
Tony O’Neill
18/09/2015
5,110
5,110
3,066
Face value
at grant(4)
£36,792
£36,792
£22,075
Exercise period
01/11/2020 to 30/04/2021
01/11/2020 to 30/04/2021
01/11/2018 to 30/04/2019
(4) 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 2015 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 2015 4.2 Further details of LTIP awards granted in 2015
4.2.1 TSR – Euromoney Global Mining Index
comparison
• One quarter of the LTIP awards granted in 2015 vests
according to the Company’s three-year TSR performance
relative to the Euromoney Global Mining Index (the 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.
4.2.2 TSR – FTSE 100 comparison
• One quarter of the LTIP awards granted in 2015 vests
according to the Company’s three-year TSR performance
compared with the TSR performance of the constituents
of the FTSE 100 Index
• Threshold vesting occurs when the Company’s three-year
TSR is equal to the median TSR of the FTSE 100
constituents
• Maximum vesting occurs when the Company’s TSR is
equal to or exceeds the TSR of the FTSE 100 company
whose TSR performance is ranked at the 80th percentile
• Between threshold and maximum, vesting is based on
a straight line.
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. PricewaterhouseCoopers
LLP (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.
4.2.3 Return on capital employed (ROCE)
• Vesting of one half of LTIP awards granted in 2015
depends on the performance of the Company’s
attributable ROCE over the three-year period to
31 December 2017
• The measure, tied to underlying achieved business return,
aligns management reward with the performance of the
Group. It is not adjusted for price or foreign exchange
movements and refers to the externally reported
attributable ROCE in the year of assessment, 2017
• By design, attributable ROCE covers the financial
outcomes of all management actions, both on balance
sheet and income statement. The Company’s ongoing
improvement programmes support 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 15 February 2016
(and at the end of the 2015 financial year). These include
beneficial and conditional interests, and shareholdings of
their connected persons.
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 and Tony O’Neill
to a value of two times salary. Mark Cutifani, Rene Medori,
and Tony O’Neill are expected to have net shareholdings
of beneficial shares equal to 40%, 80%, and 30% of basic
salary respectively, by the 2016 AGM. The Committee is
mindful that ongoing share price volatility has materially
impacted the extent to which the shareholding
requirements have been achieved, and will continue to
monitor the position.
102
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2015 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)
Tony O’Neill(3)
Sir John Parker
Judy Dlamini
Byron Grote(4)
Sir Philip Hampton
Ray O’Rourke(4)
Mphu Ramatlapeng
Jim Rutherford
Anne Stevens
Jack Thompson(4)
Former directors(5)
Phuthuma Nhleko
at 15 February 2016
(at 31 December 2015)
68,441
68,441
at 15 February 2016
173,213
(at 31 December 2015)
173,213
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
at 15 February 2016
(at 31 December 2015)
25,576
25,576
62,696
62,696
4,443
1,790
26,000
26,000
14,634
11,104
76,965
76,965
3,282
2,204
14,552
9,506
2,122
2,122
14,950
14,950
(at 27 November 2015)
15,707
BSP
Bonus Shares
BSP
Enhancement
Shares
LTIP
SAYE/SIP
123,646
123,646
96,790
96,790
59,778
59,778
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,808
8,808
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
892,336
892,336
471,512
471,512
348,071
348,071
6,310
6,184
8,335
8,207
3,540
3,540
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
3,070
1,093,803
3,070
1,093,677
–
–
39,872
39,872
758,658
758,530
476,837
476,837
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
62,696
62,696
4,443
1,790
26,000
26,000
14,634
11,104
76,965
76,965
3,282
2,204
14,552
9,506
2,122
2,122
14,950
14,950
15,707
(1)
‘Other’ interests above comprise 3,070 shares in the Company which are due to vest before publication of this report.
(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) Tony O’Neill was appointed to the Board as technical director with effect from 23 July 2015. ‘Other’ interests above comprise 39,872 shares in the Company which are due to vest before the publication
of this report.
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.
(4)
(5)
103
GovernanceAnglo American plc Annual Report 2015 5. REMUNERATION IN 2016
The Company’s policy on executive director remuneration
for 2016 is summarised in the policy statements in Figure 1.
Figure 17 summarises how that policy will be implemented
in 2016. It is the Company’s intention that the fees for
non-executive directors will remain at their 2015 levels
during 2016, although this will be kept under review.
The EPS performance range for 2016 is considered to be
commercially sensitive, although it will be disclosed in
the 2016 Remuneration Report.
The Committee determined the ROCE target range of
5–15% for the LTIP in 2016 based on the following factors:
• in light of the significant volatility in returns in the recent
past, the Committee decided to broaden the target range
from 4 to 10 percentage points. This was to reflect better
the uncertainty around macro-economic projections and
volatility in returns during the performance period, while
also retaining a meaningful incentive for management to
deliver value to shareholders throughout the cycle
• the threshold ROCE of 5% is the same as that achieved
in 2015.
Figure 17: Summary of key remuneration aspects in 2016
Element
Performance measure 1,
weighting and vesting schedule
Performance measure 2,
weighting and vesting schedule
Basic salary
–
–
Director
Level
Mark Cutifani
£1,260,720 (no increase)
René Médori
£804,173 (no increase)
Tony O’Neill
£787,950 (no increase)
BSP
EPS (50%)
Personal strategic measures (50%)
Mark Cutifani
210% of salary
LTIP share
awards
ROCE (50%)
25% for 5%
100% for 15%
René Médori
210% of salary
Tony O’Neill
210% of salary
Mark Cutifani
350% of salary
René Médori
300% of salary
Tony O’Neill
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 2015 COMMITTEE MEMBERS
DURING 2015
6. REMUNERATION COMMITTEE IN 2015
Membership
The Committee comprised the non-executive directors
shown on the right during the year ended 31 December
2015.
External advisers to the Committee
Figure 18 details the external advisers to the Committee and
the fees paid for services provided during 2015. The fees are
charged in accordance with the terms and conditions set out
in each relevant engagement letter.
PwC is a signatory to, and adheres 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.
Remuneration report voting results
The Committee considered the results of the shareholders’
vote on the 2014 remuneration report. Feedback from
investors at the time of the 2015 AGM, and more generally,
has helped shape clarifications to the remuneration policy
for 2015 onwards.
Sir Philip Hampton
Judy Dlamini
Byron Grote
Figure 18: External advisers and fees
Advisers
Pricewaterhouse
Coopers
LLP (PwC)
Perelamon
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 support and
advise on the Company’s
incentive arrangements
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
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
Fees for Committee
assistance
£25,000
Ray O’Rourke
Jack Thompson
Executive compensation
and reward advice
£12,000
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.
105
GovernanceAnglo American plc Annual Report 2015 Figure 19: Response to 2015 AGM shareholder voting
Vote
Advisory vote
on 2014
implementation
report
For
Against
Abstain
Company response to issues raised
Number of votes
762,065,523
(94%)
45,666,841
(6%)
21,099,176
During 2015, the Committee 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.
7. SEVEN-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 2015. 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 seven-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 2015).
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.
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 vesting levels of long term incentives from 2012 have
been much lower, reflecting, in part, the impact of the severe
decline in commodity prices on earnings and the returns
delivered to shareholders.
Mark Cutifani’s remuneration levels in 2013 and 2014
are not reflective of his underlying remuneration, given
that he received a compensatory share award in 2013
and a compensation for tax on relocation benefits in
2014. The impact of longer-term incentives was only
realised in 2015 as a consequence of the vesting of the
2013 LTIP award.
Figure 20a: Seven-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
250
200
150
100
50
0
2008
2009
2010
2011
2012
2013
2014
2015
Source: Datastream Return Index
106
GOVERNANCE DIRECTORS’ REMUNERATION REPORTAnglo American plc Annual Report 2015
Figure 20b: Chief executive’s remuneration
Financial year ending
Cynthia Carroll
31 December
2009
31 December
2010
31 December
2011
31 December
2012
31 December
2013
31 December
2014
31 December
2015
8,113
94%
96%
100%
–
–
–
3,203
1,462
35%
50%
0%
–
–
–
67%
28%
0%
5,305
65%
–
–
–
–
–
–
–
–
–
3,725
60%
3,415
36.5%
–
50%
Total remuneration (single figure, £’000)
4,379
4,235
99%
61%
0%
–
–
–
88%
50%
0%
–
–
–
BSP (% of maximum)
LTIP (% of maximum)
BSP Enhancement Shares (% of maximum)
Mark Cutifani
Total remuneration (single figure, £’000)
BSP (% of maximum)
LTIP (% of maximum)
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
15 February 2016
107
GovernanceAnglo American plc Annual Report 2015 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
Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’. 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 Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ has 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 2015
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 the
By order of the Board
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
15 February 2016
René Médori
Finance Director
108
Anglo American plc Annual Report 2015 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 (loss)/profit from subsidiaries and joint operations
Underlying EBIT and underlying earnings by segment
Special items and remeasurements
Net finance income/(costs)
Income tax expense
Loss 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 Assets and liabilities held for sale
30 Disposals of subsidiaries and joint ventures
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
40 Related undertakings of the Group
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
114
114
115
116
117
118
120
121
124
125
126
129
129
131
132
132
133
133
134
135
135
135
136
138
139
140
141
142
143
145
146
147
150
151
151
152
153
154
155
155
156
156
157
160
165
169
172
173
174
Anglo American plc Annual Report 2015
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:
We have nothing material to add or draw attention to in relation to:
• the directors’ confirmation on page 40 that they have carried out
• 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 2015 and of the
Group’s loss for the year then ended;
a robust assessment of the principal risks facing the Group, including
those that would threaten its business model, future performance,
solvency or liquidity;
• the Group financial statements have been properly prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the
European Union;
• the Parent Company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice,
including FRS 101 ‘Reduced Disclosure Framework’; 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 40 and the
balance sheet of the Parent Company and related information. 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), including FRS 101 ‘Reduced Disclosure Framework’.
Going concern
As required by the Listing Rules we have reviewed the directors’ statement
regarding the appropriateness of the going concern basis of accounting
contained within note 39 to the financial statements and the directors’
statement on the longer-term viability of the Group contained within the
strategic report on page 40.
• the disclosures on pages 41 to 45 that describe those risks and explain how
they are being managed or mitigated;
• the directors’ statement in note 39 to the financial statements about
whether they considered it appropriate to adopt the going concern basis
of accounting in preparing them and their identification of any material
uncertainties to the Group’s ability to continue to do so over a period of at
least twelve months from the date of approval of the financial statements;
• the director’s explanation on page 40 as to how they have assessed the
prospects of the Group, over what period they have done so and why they
consider that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
We agreed with the directors’ adoption of the going concern basis of
accounting and we did not identify any such material uncertainties. 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.
Independence
We are required to comply with the Financial Reporting Council’s Ethical
Standards for Auditors and we confirm that we are independent of the Group
and we have fulfilled our other ethical responsibilities in accordance with
those standards. We also confirm we have not provided any of the prohibited
non-audit services referred to in those standards.
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:
The Audit Committee has requested that while not required under International Standards on Auditing (UK and Ireland), we include in our report any significant
key observations in respect of these assessed risks of material misstatement.
Risk
How the scope of our audit responded to the risk
Findings
Impairments (notes 1 and 6)
As a consequence of the current volatility in current
commodity prices and foreign exchange rates, the
assessment of the recoverable amount of operating
assets and development projects in particular is a
key judgement.
This includes specifically the platinum operations
(where a post-tax impairment of $0.6 billion has
been recorded), the coal operations (where a
post-tax impairment of $1.0 billion has been
recorded), the Sishen mine (where a post-tax
impairment of $0.4 billion has been recorded) and
at the Minas-Rio project within the Iron Ore Brazil
business unit (where a post-tax impairment of
$2.9 billion has been recorded).
We challenged management’s assessment as to whether
indicators of impairment exist for specific assets specifically in
relation to the platinum, coal and Sishen Mine operations and the
Minas-Rio project. On the basis that such indicators were
identified we obtained copies of the valuation models used to
determine the value in use or fair value less costs of disposal of
the relevant asset.
We concluded that the
assumptions had been
determined and applied on
a consistent basis across the
Group and no additional
impairments were identified
from the work performed.
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 analyst forecast commodity
price data, reference to third party documentation where
available, utilisation of Deloitte valuation specialists, review of
Ore Reserves and Mineral Resources reports, consultation with
operational management and consideration of sensitivity
analyses.
We found that the impairments
recorded at the platinum, coal
and Sishen mine operations and
the Minas-Rio project were
primarily due to reduced
commodity prices, but this effect
was partially offset by forecast
exchange rate movements and
targeted reductions in forecast
operating costs.
We assessed whether the assumptions had been determined
and applied on a consistent basis across the Group.
110
Anglo American plc Annual Report 2015
Risk
How the scope of our audit responded to the risk
Findings
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 tax provisions and deferred
taxation assets.
Corporate asset transactions (notes 29 and 30)
In light of announced developments in the strategy
of the Group it is anticipated that the volume and
materiality of asset disposals will continue to
increase in significance.
The appropriate accounting treatment of corporate
asset disposals which have either completed during
the year or which are on-going at 31 December 2015
is a key area of judgment specifically in respect of
assessing the point at which control is transferred
from the seller to the buyer and the calculation of any
profit or loss on disposal.
In 2015 this includes specifically the sale of Anglo
American Norte (pre-tax loss on disposal of
$287 million) and the Tarmac businesses (pre-tax
loss on disposal of $172 million) which completed
in 2015, as well as the status of the announced sale
of Rustenburg.
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 reviewed all potential taxation exposures within the Group
and, through discussions with the Group’s taxation department,
the tax specialists within the audit team and review of relevant
documentation, we assessed the appropriateness of the
provisions raised.
We considered, in the context of our tax specialists’ prior
experience of similar issues and the legal advice received by the
Group, the Group‘s transfer pricing arrangements to confirm that
they are reasonable and the Group’s deferred taxation assets
and liabilities to confirm they are appropriate.
We are satisfied that the
provisions raised in respect of
the Group’s potential taxation
exposures are appropriate.
For the sales of Anglo American Norte and the Tarmac
businesses completed in the year, we reviewed the sales and
purchase agreements to confirm that control had passed to the
buyer prior to 31 December 2015 and to recalculate any profit
or loss on disposal.
We are satisfied that the asset
disposals that completed in
2015 have been accounted for
correctly, with appropriate
disclosures properly made.
For those asset sales where agreements had been signed, for
example at Rustenburg, but not completed or where the sales
process was ongoing, we considered whether the criteria of
IFRS 5 ‘Non-current Assets Held for Sale and Discontinued
Operations’ had been met and in particular whether the sale
could be considered as highly probable to complete within the
next twelve months.
Our work included particular focus on whether the conditions
precedent for a sale to complete included conditions outside of
management’s control such as government approvals.
For all other planned asset sales
we are satisfied that only where
the criteria have been met have
the disposals been accounted for,
and disclosed as, held for sale
in accordance with IFRS 5.
In the context of our review of the overall income statement we
considered and challenged each item disclosed within ‘special
items and remeasurements’ as defined in note 6 to the financial
statements.
We determined 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.
We are satisfied that all items
included within ‘special items and
remeasurements’ display no
indication of management bias in
the categorisation and that where
relevant the categorisation was
consistent with prior practice.
We consider that the related
disclosures are also appropriate.
The only change to the assessed risks of material misstatement that we report in 2015 has been the addition of ‘corporate asset transactions’. This risk has
been included in our audit report for 2015 as a consequence of the increased scale of ongoing and planned divestment activity across the group consequent
to developments in the group’s strategy in 2015.
The description of risks above should be read in conjunction with the significant issues considered by the Audit Committee discussed on page 40.
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.
Anglo American plc Annual Report 2015
111
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO AMERICAN PLC
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 $200 million
(2014: $225 million), which is below 5% (2014: 5%) of the normalised three
year pre-tax profit before special items and remeasurements, and below 1%
(2014: 1%) of equity.
The use of a normalised three year average pre-tax profit is a change to our
approach last year, when materiality was based on the normalised 2014
pre-tax profit only. This change of approach was determined to be appropriate
given the current volatility in commodity prices and their impact on current
year performance and the cyclical nature of the mining industry. Consistent
with the prior year, normalised pre-tax profit excludes 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 known audit differences in excess of $10 million (2014: $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.
All business units were subject to a full scope audit with the exception of
Manganese where specific audit procedures were performed. The work
performed by the component audit teams at each business unit is guided by
the Group audit team and is executed at levels of materiality applicable to
each individual entity which were lower than Group materiality and ranged
from $80 million to $110 million.
The Senior Statutory Auditor and/or a senior member of the Group audit team
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, based on the work undertaken in the course of the audit:
• 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
certain 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 Directors’ Responsibilities Statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is to
audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). 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.
112
Anglo American plc Annual Report 2015
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.
Kari Hale (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
15 February 2016
Anglo American plc Annual Report 2015
113
Financial statements
PRINCIPAL STATEMENTS
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2015
US$ million
Group revenue
Operating costs
Operating (loss)/profit
Non-operating special items
Share of net (loss)/income from associates and
joint ventures
Loss before net finance income/(costs) and tax
Note
3
3, 4
6
3, 13
Investment income
Interest expense
Other financing gains
Net finance income/(costs)
Loss before tax
Income tax expense
Loss for the financial year
Attributable to:
Non-controlling interests
Equity shareholders of the Company
Loss per share (US$)
Basic
Diluted
7
8
31
9
9
Before special
items and
remeasurements
20,455
(18,417)
2,038
–
48
2,086
172
(489)
(141)
(458)
1,628
(435)
1,193
366
827
0.64
0.64
Special items and
remeasurements
(note 6)
–
(6,150)
(6,150)
(1,278)
(269)
(7,697)
–
(54)
669
615
(7,082)
47
(7,035)
2015
Total
20,455
(24,567)
(4,112)
(1,278)
(221)
(5,611)
172
(543)
528
157
(5,454)
(388)
(5,842)
(584)
(6,451)
(218)
(5,624)
(5.00)
(5.00)
(4.36)
(4.36)
Before special
items and
remeasurements
27,073
(22,560)
4,513
–
254
4,767
242
(497)
(1)
(256)
4,511
(1,267)
3,244
1,027
2,217
1.73
1.72
Special items and
remeasurements
(note 6)
–
(4,375)
(4,375)
(385)
(46)
(4,806)
–
(65)
101
36
(4,770)
2
(4,768)
(38)
(4,730)
2014
Total
27,073
(26,935)
138
(385)
208
(39)
242
(562)
100
(220)
(259)
(1,265)
(1,524)
989
(2,513)
(3.69)
(3.68)
(1.96)
(1.96)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2015
US$ million
Loss 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
Impairment losses transferred to the income statement
Revaluation of cash flow hedges:
Net gain/(loss)
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.
2015
(5,842)
2014
(1,524)
260
–
260
(6)
1
(5)
(4,185)
101
(1,943)
5
(203)
52
9
(4,226)
(9,808)
(877)
(8,931)
(124)
3
(7)
(2,066)
(3,595)
736
(4,331)
114
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED BALANCE SHEET
as at 31 December 2015
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
Trade and other receivables
Current tax assets
Derivative financial assets
Cash and cash equivalents
Total current assets
Assets classified as held for sale
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Short term borrowings
Provisions for liabilities and charges
Current tax liabilities
Derivative financial liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Medium and long term borrowings
Retirement benefit obligations
Deferred tax liabilities
Derivative financial liabilities
Provisions for liabilities and charges
Total non-current liabilities
Liabilities directly associated with assets classified as held for sale
Total liabilities
Net assets
EQUITY
Called-up share capital
Share premium account
Own shares
Other reserves
Retained earnings
Equity attributable to equity shareholders of the Company
Non-controlling interests
Total equity
Note
2015
2014
11
12
20
13
14
16
21
19
15
16
19
23a
29
17
23a, 24
20
19
17
23a, 24
27
21
19
20
29
32
31
3,394
29,621
290
1,817
846
539
914
460
335
38,216
4,051
1,983
152
689
6,895
13,770
27
52,013
(2,753)
(1,649)
(620)
(340)
(477)
(5,839)
(26)
(16,318)
(667)
(3,253)
(1,986)
(2,565)
(24,815)
(17)
(30,671)
21,342
772
4,358
(6,051)
(10,811)
28,301
16,569
4,773
21,342
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
The financial statements of Anglo American plc, registered number 03564138, were approved by the Board of directors on 15 February 2016 and signed on its
behalf by:
Mark Cutifani
Chief Executive
René Médori
Finance Director
Anglo American plc Annual Report 2015
115
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2015
US$ million
Cash flows from operating activities
Loss before tax
Net finance (income)/costs including financing special items and remeasurements
Share of net loss/(income) from associates and joint ventures
Non-operating special items
Operating (loss)/profit
Operating special items and remeasurements
Cash element of operating and non-operating special items
Depreciation and amortisation
Share-based payment charges
Decrease in provisions
Increase in inventories
Decrease 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 loans advanced
Interest received and other investment income
Net proceeds from disposal of subsidiaries and joint ventures
Repayments of capitalised loans by associates
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
Issue of shares to non-controlling interests
Proceeds from 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 increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Cash movements in the year
Effects of changes in foreign exchange rates
Cash and cash equivalents at end of year
Note
2015
2014
(5,454)
(157)
221
1,278
(4,112)
6,150
(118)
2,381
151
(239)
(84)
187
(78)
2
4,240
324
9
(596)
3,977
(4,053)
(200)
30
(80)
(1)
(216)
101
1,745
67
(7)
(2,614)
(810)
(170)
(1,078)
(242)
2,159
1,160
(1,987)
46
11
(42)
6
(947)
416
6,747
416
(274)
6,889
(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
6
4
6
3
13
22
22
22
13
14
14
30
13
23b
10
24
22
23b
23b
(1)
Includes purchase of Anglo American Platinum Limited shares (2014: Kumba Iron Ore Limited and Anglo American Platinum Limited) for their respective employee share schemes.
116
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION PRINCIPAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2015
US$ million
At 1 January 2014
Total comprehensive expense
Dividends payable
Issue of shares to non-controlling interests
Equity settled share-based payment schemes
Other
At 31 December 2014
Total comprehensive expense
Dividends payable
Issue of shares to non-controlling interests
Equity settled share-based payment schemes
Other
At 31 December 2015
(1)
Includes share capital and share premium.
Total share
capital(1)
5,130
–
–
–
–
–
5,130
–
–
–
–
–
5,130
Own
shares(2)
(6,463)
–
–
–
104
–
(6,359)
–
–
–
308
–
(6,051)
Cumulative
translation
adjustment
reserve
(6,640)
(1,703)
–
–
–
–
(8,343)
(3,404)
–
–
–
–
(11,747)
Fair value and
other reserves
(note 32)
1,268
(122)
–
–
(8)
–
1,138
(144)
–
–
(41)
(17)
936
Retained
earnings
38,376
(2,506)
(1,099)
–
31
49
34,851
(5,383)
(1,078)
–
(112)
23
28,301
Total equity
attributable
to equity
shareholders
of the
Company
31,671
(4,331)
(1,099)
–
127
49
26,417
(8,931)
(1,078)
–
155
6
16,569
Non-
controlling
interests
5,693
736
(749)
42
29
9
5,760
(877)
(189)
46
33
–
4,773
Total equity
37,364
(3,595)
(1,848)
42
156
58
32,177
(9,808)
(1,267)
46
188
6
21,342
(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
2015
–
–
85
1,078
2014
53
678
85
1,099
Anglo American plc Annual Report 2015
117
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
NOTES TO THE FINANCIAL STATEMENTS
1. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES
OF ESTIMATION UNCERTAINTY
In the course of preparing financial statements, management necessarily
makes judgements and estimates that can have a significant impact on
the financial statements. The most critical of these relate to impairment of
assets, taxation, retirement benefits, contingent liabilities, joint arrangements,
estimation of Ore Reserves, assessment of fair value, restoration,
rehabilitation and environmental costs and deferred stripping. The use of
inaccurate assumptions in assessments made for any of these judgements
and estimates could result in a significant impact on financial results.
Critical accounting judgements
Impairment of assets
Mining operations are large, scarce assets requiring significant technical
and financial resources to operate. Their value may be sensitive to a range
of characteristics unique to each asset and key sources of estimation
uncertainty include ore reserve estimates and cash flow projections.
In performing impairment reviews, the Group assesses the recoverable
amount of its operating assets principally with reference to fair value less
costs of disposal, assessed using discounted cash flow models. There is
judgement in determining the assumptions that are considered to be
reasonable and consistent with those that would be applied by market
participants as outlined above.
In addition, 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).
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.
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. Given the many
uncertainties that could arise from these factors, judgement is often required
in determining the tax that is due. Where management is aware of potential
uncertainties that are more likely than not to result in a liability for additional
tax, a provision is made for management’s best estimate of the liability,
determined with reference to similar transactions and, in some cases, reports
from independent experts.
In addition, the recognition and measurement of deferred tax requires the
application of judgement in assessing the amount, timing and probability
of future taxable profits and repatriation of retained earnings. These factors
affect the determination of the appropriate rates of tax to apply and the
recoverability of deferred tax assets. These judgements are influenced,
inter alia, by factors such as estimates of future production, commodity
lines, operating costs, future capital expenditure, and dividend policies.
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. Management applies its judgement in determining
whether or not a provision or contingent liability should be recorded.
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. Judgement is required in determining this classification through
an evaluation of the facts and circumstances arising from each individual
arrangement. 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.
Key sources of estimation uncertainty
Ore Reserves
When determining Ore Reserves, which may be used to calculate useful
economic lives of assets and depreciation on the Group’s mining properties,
assumptions that were valid at the time of estimation may change when new
information becomes available. In addition, 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.
Any changes in estimate could affect prospective depreciation rates and
asset carrying values and, as a result, the determination of Ore Reserves is
considered a key source of estimation uncertainty.
Factors which could impact useful economic lives of assets and Ore Reserve
estimates include:
• 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 Report 2015.
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.
The fair value of an asset or liability is the price that would be received to
sell the asset, or paid to transfer a liability in an orderly transaction between
market participants. Fair value is determined based on observable market
data including market share price at 31 December of the respective entity,
discounted cash flow models (and other valuation techniques), where relevant
signed sales agreements and assumptions considered to be reasonable and
consistent with those that would be applied by a market participant. Where
discounted cash flow models based on management’s assumptions 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.
118
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
1. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES
OF ESTIMATION UNCERTAINTY continued
Fair value of financial instruments
Certain of the Group’s financial instruments, principally derivatives, are
required to be measured on the balance sheet at fair value. Where a quoted
market price for an identical instrument is not available, a valuation model is
used to calculate the fair value based on the net present value of the expected
cash flows under the contract. Valuation assumptions are usually based on
observable market data (for example forward foreign exchange rate, interest
rate or commodity price curves) where available.
The valuations of financial instruments are adjusted for the risk that
contractual cash flows will not be paid because of the risk of default by one
of the parties. A credit valuation adjustment (CVA) is applied to the valuation
of financial assets, reflecting the possibility of default by the counterparty.
A debit valuation adjustment (DVA) is applied to the valuation of financial
liabilities, reflecting the possibility that the Group may default on its
obligations. These adjustments are calculated based on the expected net
positive or negative exposure to the counterparty, and with reference to the
counterparty’s and the Group’s credit default swap spread at the balance
sheet date.
Cash flow projections
Expected future cash flows 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
Mineral 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 are based on financial budgets and Life of Mine Plans
or, for non-mine assets, an equivalent appropriate long term forecasts,
incorporating key assumptions as detailed below:
• Ore Reserves and Mineral 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
required confidence to convert to Ore Reserves.
• 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 2020 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, assessed
annually, of 6.5% (2014: 6.5%). Adjustments to the rate are made for any
risks that are not reflected in the underlying cash flows, including the risk
profile of the individual asset and country risk.
• Operating costs, capital expenditure and other operating factors
Operating costs and capital expenditure are based on financial budgets
covering a five year period. Cash flow projections beyond five 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.
Where an asset has potential for future development through capital
investment, to which a market participant would attribute value, and the
costs and economic benefits can be estimated reliably, this development
is included in the cash flows (with appropriate risk adjustments).
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. The amount recognised as a provision represents management’s
best estimate of the consideration required to complete the restoration and
rehabilitation activity, the application of the relevant regulatory framework
and timing of expenditure. These estimates are inherently uncertain and
could materially change over time. To the extent that the actual future costs
differ from these estimates, adjustments will be recorded and the amount
provided could be impacted.
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.
Deferred stripping
In certain mining operations, rock or soil overlying a mineral deposit, known
as overburden, and other waste materials must be removed to access ore
from which minerals can be extracted economically. The process of removing
overburden and other mine waste materials is referred to as 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 design and Life of Mine Plan and therefore changes to the 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.
Changes in estimates
Due to the nature of Platinum in-process inventories being contained in weirs,
pipes and other vessels, physical counts only take place annually, except in
the Precious Metal Refinery which take place once every five years (the latest
being in 2015). Consequently, the Platinum business runs a theoretical metal
inventory system based on inputs, the results of previous physical counts and
outputs. Once the results of the physical count are finalised, the variance
between the theoretical count and actual count is investigated and recorded
as a change in estimate. During 2015, the change in estimate following the
annual physical count has had the effect of increasing the value of inventory
by $181 million (2014: decrease of $11 million), resulting in the recognition of
a post tax gain of $130 million (2014: loss of $8 million).
Anglo American plc Annual Report 2015
119
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
• Hedge Accounting aligns the accounting treatment with risk management
practices of an entity, including making a broader range of exposures
eligible for hedge accounting and introducing a more principles-based
approach to assessing hedge effectiveness. The adoption of IFRS 9 will not
require changes to existing hedging arrangements but may provide scope
to apply hedge accounting to a broader range of transactions in the future.
IFRS 9 is effective for annual reporting periods beginning on or after
1 January 2018.
The Group’s implementation activities to date have principally focused on
gaining a high level understanding of the likely effects of IFRS 9 given the
nature of financial instruments held by the Group. A more detailed impact
analysis and transition activities will be undertaken during 2016.
IFRS 16 Leases
IFRS 16 replaces the following standards and interpretations: IAS 17 Leases
and IFRIC 4 Determining whether an Arrangement contains a Lease. The new
standard provides a single lessee accounting model for the recognition,
measurement, presentation and disclosure of leases. IFRS 16 applies to all
leases including subleases and requires lessees to recognise assets and
liabilities for all leases, unless the lease term is 12 months or less, or the
underlying asset has a low value. Lessors continue to classify leases as
operating or finance.
IFRS 16 was issued in January 2016 and applies to annual reporting periods
beginning on or after 1 January 2019. The Group will evaluate the potential
impact of IFRS 16 on the financial statements and performance measures.
This will include an assessment of whether any arrangements the Group
enters into will be considered a lease under IFRS 16.
The following new amendments and interpretations in issue but not yet
effective are not expected to have a significant impact on the Group:
• 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 IAS 27 Equity Method in Separate Financial Statements will
allow entities to use the equity method in their separate financial statements
to measure investments in subsidiaries, joint ventures and associates.
• Amendments to IAS 16 Property, Plant and Equipment and IAS 38
Clarification of Acceptable Methods of Depreciation clarify that a revenue-
based method of depreciation or amortisation is generally 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 remove 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.
• Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint
Operations and IAS 28 Investments in Associates and Joint Ventures clarify
the accounting for the acquisition of an interest in a joint operation where
the activities of the operation constitute a business.
Other issued standards and amendments that are not yet effective are not
expected to have an impact on the financial statements.
The accounting policies applied are consistent with those adopted and disclosed
in the Group financial statements for the year ended 31 December 2014,
except for changes arising from the adoption of the following new accounting
pronouncements which became effective in the current reporting period:
• Amendments to IAS 19 Employee Benefits: Defined Benefit Plans –
Employee Contributions.
• Annual Improvements to IFRSs 2010-2012 cycle.
• Annual Improvements to IFRSs 2011-2013 cycle.
The adoption of these new accounting pronouncements has not had a
significant impact on the accounting policies, methods of computation or
presentation 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
are expected to have a significant impact on the Group:
IFRS 15 Revenue from Contracts with Customers
IFRS 15 will replace IAS 18 Revenue and IAS 11 Construction Contracts and
establishes a unified framework for determining the timing, measurement and
recognition of revenue. The principle of the new standard is to recognise
revenue as performance obligations are met rather than based on the transfer
of risks and rewards.
The effective date of the standard has been deferred to 1 January 2018 to
allow companies more time to deal with transitional issues of application.
The Group is currently reviewing the potential impact of adopting IFRS 15
with the primary focus being understanding those sales contracts where
the timing and amount of revenue recognised could differ under IFRS 15,
which may occur for example if contracts with customers incorporate
performance obligations not currently recognised separately, or where such
contracts incorporate variable consideration. As the Group’s revenue is
predominantly derived from arrangements in which the transfer of risks and
rewards coincides with the fulfilment of performance obligations, the timing
and amount of revenue recognised is unlikely to be materially affected for the
majority of sales.
IFRS 15 also includes disclosure requirements including qualitative and
quantitative information about contracts with customers to help users of the
financial statements understand the nature, amount, timing and uncertainty
of revenue.
In addition to the potential accounting implications outlined above, the
implementation of IFRS 15 is expected to impact the Group’s systems,
processes and controls. The Group will start developing a transition plan
to identify and implement the required changes during 2016.
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. This is
expected to have a number of presentational impacts on the Group financial
statements including changes in the presentation of gains and losses on
financial assets and liabilities carried at fair value on the balance sheet.
• Impairment introduces a new ‘expected credit loss’ impairment model,
requiring expected credit losses to be recognised from when financial
instruments are first recognised. The transition to this model is expected
to result in changes in the systems and computational methods used by the
Group to assess receivables and similar assets for impairment. However,
given the profile of the Group’s counterparty exposures, this is not expected
to have a material impact on the amounts recorded in the financial
statements.
120
Anglo American plc Annual Report 2015
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 the existing business units based around commodities, as at 31 December 2015. 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. Niobium and Phosphates are not considered to
be individually significant to the Group and are therefore aggregated, having previously been presented separately. To align with the management structure of
the Group’s coal businesses and the way their results are internally reported, Coal South Africa, Coal Colombia and Coal Australia and Canada are reported
together as the Coal segment.
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 ‘Corporate and other’ segment comprises the Other Mining and Industrial business unit, which is not considered to be individually significant to the Group,
together with unallocated corporate costs and exploration costs. Exploration costs represent the cost of the Group’s exploration activities across all segments.
The Group Management Committee evaluates the financial performance of the Group and its segments principally with reference to underlying 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 –
Platinum: platinum group metals; De Beers: rough and polished diamonds; Copper: copper; Nickel: nickel; Niobium and Phosphates: niobium and phosphates;
Iron Ore and Manganese: iron ore, manganese ore and alloys; Coal: metallurgical coal and thermal coal.
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
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates
Iron Ore and Manganese
Coal
Corporate and other
Segment measure
Reconciliation:
Less: associates and joint ventures
Include: operating special items and remeasurements
Statutory measure
US$ million
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates
Iron Ore and Manganese
Coal
Corporate and other
Less: associates and joint ventures
2015
4,900
4,671
3,539
146
544
3,390
4,888
925
23,003
Revenue
2014
5,396
7,114
4,827
142
666
5,176
5,808
1,859
30,988
(2,548)
–
20,455
(3,915)
–
27,073
Underlying EBIT
2015
263
571
228
(22)
119
671
457
(64)
2,223
(185)
(6,150)
(4,112)
2014
32
1,363
1,193
21
124
1,957
458
(215)
4,933
(420)
(4,375)
138
Depreciation and amortisation(1)
Underlying EBITDA
2015
455
419
714
19
27
355
589
53
2,631
(250)
2,381
2014
495
455
709
7
28
329
749
127
2,899
(308)
2,591
2015
718
990
942
(3)
146
1,026
1,046
(11)
4,854
(435)
4,419
2014
527
1,818
1,902
28
152
2,286
1,207
(88)
7,832
(728)
7,104
(1)
In addition $99 million (2014: $129 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 $73 million (2014: $105 million) of pre-commercial production depreciation and $3 million (2014: nil) of pre-commercial production
amortisation have been capitalised.
Anglo American plc Annual Report 2015
121
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION continued
Underlying EBITDA is reconciled to underlying EBIT and to ‘Loss before net finance income/(costs) and tax’:
US$ 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 before net finance income/(costs) and tax
Associates’ and joint ventures’ results by segment
2015
4,854
(2,381)
(250)
2,223
(6,150)
(1,278)
(269)
(137)
(5,611)
2014
7,832
(2,591)
(308)
4,933
(4,375)
(385)
(46)
(166)
(39)
US$ million
Platinum
De Beers
Iron Ore and Manganese
Coal
Corporate and other
US$ million
Platinum
De Beers
Iron Ore and Manganese
Coal
Corporate and other
Revenue
Underlying EBIT
Share of net (loss)/income
2015
187
89
514
877
881
2,548
2014
263
79
788
1,050
1,735
3,915
2015
(33)
(9)
22
142
63
185
2014
(19)
(9)
178
189
81
420
2015
(42)
(6)
(264)
40
51
(221)
2014
(26)
(6)
104
73
63
208
Depreciation and amortisation
Underlying EBITDA
2015
28
3
82
91
46
250
2014
28
3
73
106
98
308
2015
(5)
(6)
104
233
109
435
2014
9
(6)
251
295
179
728
2014
420
(46)
(113)
(7)
254
–
(46)
208
The reconciliation of associates’ and joint ventures’ underlying EBIT to ‘Share of net (loss)/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
Special items and remeasurements tax
Share of net (loss)/income from associates and joint ventures
2015
185
(40)
(100)
3
48
(226)
(43)
(221)
Other non-cash expenses/(income)
In addition to depreciation and amortisation, other non-cash expenses/(income) include equity settled share-based payment charges and amounts in respect
of provisions, excluding amounts recorded within special items. Significant other non-cash expenses/(income) included within underlying EBIT are as follows:
US$ million
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates
Iron Ore and Manganese
Coal
Corporate and other
2015
30
(1)
69
(10)
24
62
125
72
371
2014
37
94
87
7
5
36
160
54
480
122
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
3. SEGMENTAL INFORMATION continued
Capital employed by segment
Segment assets and liabilities have been replaced by closing capital employed by segment, now being the principal measure of assets and liabilities reported
to the Group Management Committee. Capital employed is defined as net assets excluding net debt (including related hedges and net debt in disposal groups)
and financial asset investments.
Capital employed
Attributable capital employed(1)
US$ million
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates
Iron Ore and Manganese
Coal
Corporate and other
Capital employed
Include:
Net debt
Debit valuation adjustment attributable to derivatives hedging net debt(2)
Financial asset investments
Net assets
2015
3,726
7,402
4,176
1,968
834
5,756
3,978
(71)
27,769
2014
5,943
8,654
4,739
1,934
896
8,361
5,455
1,413
37,395
2015
4,392
8,642
6,332
1,968
834
6,666
4,079
(71)
32,842
(12,901)
555
846
21,342
2014
7,010
10,058
7,062
1,931
896
9,837
5,575
1,413
43,782
(12,871)
–
1,266
32,177
(1) Attributable capital employed is capital employed attributable to equity shareholders of the Company, and therefore excludes the portion of capital employed attributable to non-controlling
interests in operations where the Group has control but does not hold 100% of the equity. Joint operations, associates and joint ventures are included in their proportionate interest and in line
with appropriate accounting treatment.
(2) See note 18 for details of the debit valuation adjustment.
Product analysis
Revenue by product
US$ million
Platinum
Palladium
Rhodium
Diamonds
Copper
Nickel
Niobium
Phosphates
Iron ore
Manganese ore and alloys
Metallurgical coal
Thermal coal
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
2015
2,720
1,159
309
4,660
3,495
450
111
433
2,610
514
1,832
3,068
921
721
23,003
2015
1,764
982
745
500
12
855
214
4,662
2,421
2,325
3,199
2,220
3,104
23,003
2014
3,097
1,058
280
7,104
4,688
638
180
486
4,029
788
2,290
3,529
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
Anglo American plc Annual Report 2015
123
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
2015
8,714
4,247
938
6,361
6,481
955
688
3,237
1,278
116
33,015
2014
12,998
5,138
1,138
8,001
7,347
740
1,483
4,136
1,277
129
42,387
(1)
Total non-current assets
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
2015
9,449
4,247
943
6,455
6,481
1,846
690
3,568
1,320
137
35,136
3,080
38,216
(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 (LOSS)/PROFIT FROM SUBSIDIARIES AND JOINT OPERATIONS
US$ million
Group revenue
Cost of sales
Operating special items (note 6)
Gross (loss)/profit
Selling and distribution costs
Administrative expenses
Other losses and gains (see below)
Exploration expenditure (see below)
Operating (loss)/profit
US$ million
Operating (loss)/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 losses and gains comprise:
Operating remeasurements (note 6)
Other fair value losses on derivatives – realised
Foreign exchange gains on other monetary items
Other
Total other losses and gains
2015
20,455
(15,507)
(5,972)
(1,024)
(1,464)
(1,422)
(48)
(154)
(4,112)
2014
27,073
(18,931)
(4,374)
3,768
(1,661)
(1,937)
149
(181)
138
2015
2014
(2,337)
(44)
(123)
(154)
(145)
(83)
(5,972)
(3,955)
(578)
(264)
(178)
(19)
149
–
(48)
(2,545)
(46)
(134)
(181)
(218)
(101)
(4,374)
(4,514)
(219)
(405)
(1)
(20)
172
(2)
149
(1)
(2)
In addition $82 million (2014: $110 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 $73 million (2014: $105 million) of pre-commercial production depreciation has been capitalised.
In addition $17 million (2014: $19 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) and $3 million (2014: nil) of pre-commercial amortisation has been capitalised.
(3) Provisionally priced sales contracts resulted in a total (realised and unrealised) loss in revenue of $610 million (2014: $226 million). Of this, $79 million relates to realised losses
(2014: $49 million) for sales outstanding at 31 December 2014 that were settled in 2015, $390 million relates to realised losses (2014: $73 million) for sales entered into and settled
in 2015, and $141 million relates to unrealised losses (2014: $104 million) for sales outstanding at 31 December 2015. In addition, provisionally priced purchase contracts resulted in
operating gains of $32 million (2014: $7 million).
(4) Excludes those royalties which meet the definition of income tax on profit and accordingly have been accounted for as taxes.
124
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
4. OPERATING (LOSS)/PROFIT FROM SUBSIDIARIES AND JOINT OPERATIONS continued
Exploration and evaluation expenditure
See note 39j for the Group’s accounting policy on exploration and evaluation expenditure.
The Group’s analysis of exploration and evaluation expenditure recognised in the Consolidated income statement is as follows:
US$ million
By commodity/product
Platinum group metals
Diamonds
Copper
Nickel
Niobium
Phosphates
Iron ore
Metallurgical coal
Thermal coal
Central exploration activities
Exploration expenditure(1)
Evaluation expenditure(2)
2015
7
34
41
9
–
4
13
7
4
35
154
2014
8
37
37
16
–
4
25
8
9
37
181
2015
6
29
69
4
1
1
11
14
10
–
145
2014
9
26
84
4
1
8
56
19
11
–
218
(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.
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
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates(1)
Iron Ore and Manganese
Coal
Corporate and other
US$ million
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates(1)
Iron Ore and Manganese
Coal
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
2015
263
571
228
(22)
119
671
457
(64)
2,223
788
709
282
2
(1)
3,314
1,235
47
6,376
(525)
(138)
(54)
(24)
120
(2,643)
(778)
(111)
(4,153)
(56)
(274)
(120)
3
(71)
(323)
(158)
(34)
(1,033)
(39)
(39)
(41)
–
–
(250)
(7)
13
(363)
168
258
67
(19)
48
98
292
(85)
827
2014
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
32
1,363
1,193
21
124
1,957
458
(215)
4,933
52
155
–
21
13
3,670
372
92
4,375
(20)
1,208
1,193
–
111
(1,713)
86
(307)
558
(14)
(264)
(482)
(15)
(59)
(583)
(154)
(111)
(1,682)
7
(176)
(218)
–
–
(657)
(8)
18
(1,034)
25
923
493
6
65
717
296
(308)
2,217
(1) Niobium and Phosphates are now aggregated, having previously been presented separately (see note 3).
Anglo American plc Annual Report 2015
125
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 and remeasurements are those items of financial performance that, due to their size and nature, 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.
Special items that relate to the operating performance of the Group are classified as operating special items and principally include impairment charges
and restructuring costs. Non-operating special items include costs in relation to closure of operations, profits and losses on disposal of investments and
businesses as well as certain adjustments relating to business combinations.
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.
• The remeasurement and subsequent depreciation and amortisation of a previously held equity interest as a result of a business combination.
• 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 reported as tax remeasurements within income tax expense.
US$ million
Subsidiaries and joint operations
Minas-Rio impairment
Coal impairments
Platinum impairments
De Beers Snap Lake care and maintenance
Sishen impairment
El Soldado impairment
Other impairments and related charges
Restructuring costs
Operating special items
Operating remeasurements
Operating special items and remeasurements
Write-down to fair value of Rustenburg mine
Disposal of Anglo American Norte
Disposal of Tarmac businesses
Disposal of Amapá
Closure of Drayton
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 Iron Ore and Manganese, Coal and Platinum segments (2014: Coal segment).
2015
2014
(2,503)
(1,218)
(720)
(595)
(514)
(274)
–
(148)
(5,972)
(178)
(6,150)
(728)
(287)
(172)
(35)
–
–
–
(40)
(16)
(1,278)
615
(6,813)
47
584
(269)
(6,451)
(3,800)
(363)
(44)
–
–
–
(39)
(128)
(4,374)
(1)
(4,375)
–
–
–
(46)
(222)
(58)
22
(44)
(37)
(385)
36
(4,724)
2
38
(46)
(4,730)
Operating special items
Impairments: Iron ore and coal operations
During 2015 a number of factors, including slowing of the expected rate of economic growth in China, together with a rebalancing of the Chinese economy,
have driven a fundamental shift in the commodity demand outlook. At the same time, excess supply of a number of commodities, notably steel-making
materials including iron ore and hard coking coal, is likely to persist in the short to medium term, further weighing on the prices of these commodities.
Consequently, the valuations of the Group’s iron ore and hard coking coal operations have been reviewed based on the latest operating assumptions and
management’s current estimates of future commodity prices and foreign exchange rates. This has resulted in a number of asset impairments which are
detailed below.
The valuations prepared as at 31 December 2015 assume that prices and foreign exchange rates will remain close to those that prevailed in the final quarter of
2015 for a three- to five-year period with a gradual recovery thereafter as supply tightens and producer country economies recover. The long- and short-term
price assumptions used in the valuations are within the range of published analyst forecasts.
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 2014 and First Ore On Ship (FOOS) was delivered in October 2014.
In 2012, an impairment charge of $4,960 million (before tax) was recorded against the carrying value of Minas-Rio. This was based on the value in use of the
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. In 2014, a further impairment charge of $3,800 million (before tax) was recorded due to a continued decline in the pricing
environment for iron ore based on a value in use of $5.6 billion. At the time it was highlighted that the valuation remained sensitive to price and further
deterioration in prices might result in additional impairment.
126
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
6. SPECIAL ITEMS AND REMEASUREMENTS continued
In June 2015 the Group recorded an additional impairment charge of $2,503 million (before tax) against the carrying value of the CGU, driven by a further
deterioration in iron ore pricing. The valuation of Minas-Rio, based on the value in use of the CGU, determined on a pre-tax discounted cash flow basis
(see note 1) (real pre-tax discount rate of 8.5% (2014: 8.5%)) was $3.6 billion as at 30 June 2015. This charge was recorded against capital works in progress.
A related deferred tax asset of $404 million was also written down to reflect a reduced likelihood of recovering the associated tax deductions.
The valuation of Minas-Rio was re-assessed as at 31 December 2015 in light of the continued decline in iron ore prices. No further impairment has been
recorded as the impact of lower pricing in the short term has been offset by a number of factors, notably a significant weakening of the Brazilian real. However,
the valuation remains sensitive to price, and to assumptions regarding the permit and licence issuance schedule. Adverse changes to these assumptions could
result in further impairments.
Sishen
The Sishen iron ore mine (Iron Ore and Manganese) is located in the Northern Cape Province in South Africa. As a result of the deterioration in the iron ore
market, management has undertaken a strategic review to reconfigure the Sishen pit in order to optimise margins. The new pit shell configuration will enable
a more flexible mining approach and lower unit costs and capital expenditure over the Life of Mine.
Whilst these measures have been undertaken to respond to the impact of the weaker iron ore price environment, a pre-tax impairment charge of $514 million
($372 million after tax) has been recorded against the carrying value of the CGU, based on a valuation of $1.3 billion. The valuation has been assessed based
on the asset’s fair value less costs of disposal and measured using discounted cash flow projections (see note 1). Of the impairment charge, $184 million has
been recorded against mining properties and leases, $55 million against land and buildings, $61 million against capital works in progress and $214 million
against plant and equipment, with an associated tax credit of $142 million. The valuation remains sensitive to price and execution of the new pit design, and
adverse changes to these assumptions could result in further impairments.
Coal
In June 2015, a pre-tax impairment of $624 million ($437 million after tax) was recorded in relation to the Coal Australia assets, principally comprising an
impairment of $539 million at Capcoal. At the time it was highlighted that the valuation remained sensitive to price and further deterioration in prices might
result in additional impairment.
In the second half of the year, further pre-tax impairments totalling $429 million have been recorded against the Group’s metallurgical coal operations in
central Queensland, driven by the impact of weak coal prices on margins, particularly for the open cut operations. The post-tax impairment charge is also
$429 million. This comprises an additional impairment of $100 million at Capcoal, based on a valuation of $0.2 billion, $234 million at Dawson, based on
a valuation of $0.2 billion, and $95 million at Foxleigh, which has been fully impaired. Of this charge, $201 million has been recorded against plant and
equipment, $155 million against mining properties and leases, $41 million against land and buildings and $32 million against capital works in progress.
The remaining impairment charge of $165 million relates to Peace River Coal in Canada which was fully impaired at 30 June 2015. The post-tax impairment
charge is also $165 million.
The valuations have been assessed based on the respective operations’ fair value less costs of disposal and measured using discounted cash flow projections
(see note 1). The valuation of the Group’s Coal Australia assets remains sensitive to price and further deterioration in pricing could result in additional impairments.
Other impairments
Platinum
During 2015 there has been a significant deterioration in platinum group metals (PGM) market conditions. Although, in the near term, the growth outlook
for PGMs is unclear due to potentially reduced platinum jewellery demand in China and uncertainty surrounding the auto-catalyst market, longer term
demand is forecast to be robust given the expected demand for new and cleaner vehicles in maturing economies, coupled with increasingly stringent global
emissions legislation.
The Group has taken a number of steps to respond to these conditions. These include restructuring the business to reduce overheads, cutting cash negative
production, and suspending capital expenditure on growth projects other than those that are already near completion.
In the second half of 2015, development of the Twickenham project has been suspended. Existing operations at Twickenham will be placed on care and
maintenance during 2016 and the project is being reconfigured for the longer term as a largely mechanised underground operation. As a result, some of the
previously capitalised costs associated with the development of Twickenham as a conventional mine, along with related assets and infrastructure, are no
longer expected to provide future economic benefits, resulting in an impairment charge of $236 million. In addition, as a result of the review of capital projects
across the Platinum business, further capitalised development costs and assets of $42 million have been written off.
The Group, along with Atlatsa Resources Corporation (Atlatsa), the controlling shareholder of Bokoni, has conducted a technical review of the Bokoni
operation to optimise the mine plan and allow it to operate on a cash-positive basis. The revised plan is currently being implemented but Bokoni is likely to
remain cash negative for some time. Consequently, the Group has fully impaired its equity interests in Bokoni, which comprise a 49% interest in the underlying
operation, and a 23% interest in Atlatsa. In addition, the Group has fully impaired the loans it has extended to Atlatsa and Atlatsa Holdings (the controlling Black
Economic Empowerment shareholder of Atlatsa). The total impairment charge relating to Bokoni is $212 million, of which $93 million has been recorded
against Investments in associates and $119 million against Financial asset investments.
The Group holds a 33% interest in the Bafokeng-Rasimone Platinum Mine (BRPM) and a 12% shareholding in Royal Bafokeng Platinum Limited (RBPlat),
the Johannesburg Stock Exchange listed controlling shareholder of the operation. Given the reduction in the market capitalisation of RBPlat, the carrying
value of the investment in BRPM has been assessed for impairment. This has resulted in an impairment of $178 million which has been recorded against
Investments in associates.
In addition, cumulative fair value losses of $52 million on the Group’s 12% investment in RBPlat, which have previously been recorded in the statement of
comprehensive income, have been recycled to the income statement as an impairment loss, as the decline in RBPlat’s market value is considered to have been
significant and prolonged.
The aggregate pre-tax impairment charge is $720 million and the aggregate post-tax impairment charge is $642 million.
Snap Lake (De Beers)
Following a review of the operation, and in light of current market conditions, management has decided to place the Snap Lake operation, located in the North
West Territory in Canada, on long term care and maintenance. A pre-tax impairment of $595 million has been recorded. The carrying value associated with the
operation, comprising $502 million of mining properties and leases, is considered unlikely to provide future economic benefit and has been reduced to nil. The
remainder of the impairment charge relates to the write-off of associated goodwill, redundant consumables and provisions for severance costs and similar
items. The aggregate post-tax impairment charge is also $595 million.
Anglo American plc Annual Report 2015
127
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
6. SPECIAL ITEMS AND REMEASUREMENTS continued
El Soldado (Copper)
The Group holds a 50.1% interest in the El Soldado copper mine, which is part of Anglo American Sur. To mitigate the impact of the recent deterioration in
copper prices, management has made changes to the mine sequencing, in order to optimise cash flows in the near term. Despite these modifications, an
impairment of $274 million (before tax) has been recorded against the carrying value of the asset. The valuation of the asset, based on the operation’s fair
value less costs of disposal and measured using discounted cash flow projections (see note 1), is $0.2 billion. Of this charge, $202 million has been recorded
against mining properties and leases and $72 million against plant and equipment with an associated tax credit of $82 million. The post-tax impairment charge
is $192 million. The valuation is sensitive to price and further deterioration might result in additional impairment.
Restructuring costs
Restructuring costs of $148 million (2014: $128 million) relate to organisational changes as part of the Driving Value programme. The post-tax charge is
$119 million (2014: $107 million).
2014
Operating special items in 2014 principally comprise impairments and related charges in respect of Minas-Rio and Peace River Coal.
Operating remeasurements
Operating remeasurements reflect a net loss of $178 million (2014: $1 million) which principally comprises losses of $78 million (2014: gains of $136 million) in
respect of derivatives related to capital expenditure in Iron Ore Brazil and a $99 million depreciation and amortisation charge (2014: $129 million) arising due
to the fair value uplift on the Group’s pre-existing 45% shareholding in De Beers, which was required on acquisition of a controlling stake. The post-tax loss is
$123 million (2014: $27 million).
Derivatives in relation to Iron Ore Brazil which have been realised during the period had a cumulative net operating remeasurement loss of $162 million
(2014: $140 million).
Non-operating special items
Rustenburg
On 9 September, Anglo American Platinum announced that it had entered into a binding agreement to sell the Rustenburg mine to Sibanye Gold Limited,
subject to certain conditions.
The value of the Rustenburg mine and its associated mineral rights is expected to be recovered principally through sale. A pre-tax impairment charge of $728
million ($537 million after tax) has been recorded against the carrying value of the Rustenburg assets in order to bring their carrying value into line with fair
value less costs of disposal, based upon the estimated value of the agreed sale consideration, of $0.2 billion. This excludes any economic value generated from
the future purchase of concentrate and toll treatment arrangements which will be recognised for accounting purposes at the time when the benefit is received.
The impairment charge has been recorded principally against property, plant and equipment, of which $452 million is against mining properties and leases,
and includes an allocation of goodwill of $41 million.
Anglo American Norte
On 11 September 2015, the Group completed the sale of its interest in Anglo American Norte S.A. (AA Norte) (Copper). The company consists of the
Mantoverde and Mantos Blancos copper mines located in northern Chile. The consideration comprises $300 million in cash plus deferred consideration up
to a maximum of $200 million, contingent upon certain conditions (see note 30). At 31 December 2015 the remaining deferred contingent consideration, of up
to $150 million, has been valued at nil. A pre-tax loss on disposal of $287 million (post-tax $350 million) has been recorded.
Tarmac
On 17 July 2015, the Group completed the sale of its 50% ownership interest in Lafarge Tarmac (Corporate and other) to Lafarge for cash proceeds of
approximately £992 million ($1,559 million), constituting the agreed minimum consideration of £885 million and approximately £107 million of working capital
and other adjustments. In addition, during the year the Group has disposed of the majority of its interests in Tarmac Middle East (TME) (Corporate and other)
which supplies aggregates, asphalt and road base contracting services to the Middle East construction industry. The sale of a further interest in TME was
completed in January 2016. Disposal of the one remaining TME interest is well advanced. A loss of $172 million (also $172 million after tax) has been
recognised on disposal of the Tarmac businesses.
2014
Non-operating special items in 2014 principally relate to closure provisions and asset write downs in relation to Drayton and Drayton South (Coal), charges
arising on the revaluation of deferred contingent consideration for the disposal of Amapá (Corporate and other), the refinancing of Ponahalo Investments (RF)
Proprietary Limited, a Black Economic Empowerment partner (De Beers), and a net gain on the refinancing transaction for Atlatsa (Platinum).
Financing special items and remeasurements
Financing special items and remeasurements reflect a net gain of $615 million (2014: $36 million). The associated tax is a credit of $54 million (2014: charge of
$36 million). This principally relates to a debit valuation adjustment on derivative liabilities hedging net debt of $555 million. This adjustment is incorporated
into the valuation of these derivatives to reflect the impact on the fair value of Anglo American’s own credit quality. The net gain reflects an increase in
observed credit spreads for Anglo American, see note 18 for further detail.
Tax associated with special items and remeasurements
Total tax relating to subsidiaries and joint operations amounts to a credit of $47 million (2014: $2 million).
This includes one-off tax charges of $829 million (2014: $105 million), tax credits on special items and remeasurements of $769 million (2014: $412 million)
and tax remeasurement credits of $107 million (2014: charges of $305 million).
One-off tax charges of $829 million primarily comprise the write down of deferred tax assets at Minas-Rio of $404 million, Kumba Iron Ore of $65 million,
Coal of $175 million, De Beers Canada of $61 million and Corporate of $83 million, where it is no longer considered probable that these assets can be
recovered against future taxable profits.
Of the total tax credit of $47 million, $55 million relates to a current tax charge (2014: credit of $31 million) and $102 million relates to a deferred tax credit
(2014: charge of $29 million).
128
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
7. NET FINANCE INCOME/(COSTS)
See note 39b for the Group’s accounting policy on borrowing costs.
Net finance income/(costs) are presented net of hedges for respective interest bearing and foreign currency borrowings. The weighted average capitalisation
rate applied to qualifying capital expenditure was 2.90% (2014: 3.83%).
US$ 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
Net foreign exchange losses
Other net fair value gains
Total other net financing losses
Net finance costs before special items and remeasurements
Special items and remeasurements (note 6)
Net finance income/(costs) after special items and remeasurements
(1)
Interest income recognised at amortised cost is $115 million (2014: $152 million) and interest expense recognised at amortised cost is $307 million (2014: $286 million).
8. INCOME TAX EXPENSE
See note 39c for the Group’s accounting policy on tax.
a) Analysis of charge for the year
US$ million
United Kingdom corporation tax
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 (note 6)
Income tax expense
(1)
Includes royalties which meet the definition of income tax and are in addition to royalties recorded in operating costs.
2015
2014
92
69
12
9
182
(10)
172
(706)
(54)
(96)
(856)
367
(489)
(180)
39
(141)
(458)
615
157
2015
(11)
214
338
(58)
483
(48)
435
(47)
388
128
88
14
25
255
(13)
242
(709)
(69)
(101)
(879)
382
(497)
(37)
36
(1)
(256)
36
(220)
2014
(14)
479
712
(68)
1,109
158
1,267
(2)
1,265
Anglo American plc Annual Report 2015
129
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
8. INCOME TAX EXPENSE continued
b) Factors affecting tax charge for the year
The effective tax rate for the year of (7.1)% (2014: (488.4%)) is lower (2014: lower) than the applicable weighted average statutory rate of corporation tax in
the United Kingdom of 20.25% (2014: 21.5%). The reconciling items, excluding the impact of associates and joint ventures, are:
US$ million
Loss before tax
Less: share of net loss/(income) from associates and joint ventures
Loss before tax (excluding associates and joint ventures)
Tax on loss (excluding associates and joint ventures) calculated at United Kingdom corporation tax rate of 20.25%
(2014: 21.5%)
Tax effects of:
Items non-taxable/deductible for tax purposes
Exploration expenditure
Non-deductible/(taxable) net foreign exchange losses/(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(1)
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
2015
(5,454)
221
(5,233)
(1,060)
15
15
(29)
144
(92)
12
(18)
(13)
29
(2)
13
2014
(259)
(208)
(467)
(100)
18
(12)
(8)
72
(138)
79
(143)
(13)
65
106
95
1,333
1,014
52
46
(58)
1
388
193
106
(68)
(1)
1,265
(1) The special items and remeasurements reconciling item of $1,333 million (2014: $1,014 million) relates to the net tax impact of total special items and remeasurements before tax calculated
at the United Kingdom corporation tax rate less the associated tax recorded against these items, one-off tax charges and tax remeasurements. See note 6 for further details of the tax amounts
included within special items and remeasurements.
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 excluded from the Group’s income tax expense. Associates’ and joint ventures’ tax included within ‘Share of net (loss)/income from associates
and joint ventures’ for the year ended 31 December 2015 is $143 million (2014: $159 million). Excluding special items and remeasurements this becomes
$100 million (2014: $113 million).
The effective tax rate before special items and remeasurements including attributable share of associates’ and joint ventures’ tax for the year ended
31 December 2015 was 31.0%. This is higher than the equivalent effective tax rate of 29.8% for the year ended 31 December 2014 due to the net impact of
certain prior year adjustments, the remeasurement of withholding tax provisions across the Group, and the relative levels of profits arising in the Group’s
operating jurisdictions. In future periods it is expected that the effective tax rate will remain above the United Kingdom statutory tax rate.
c) Tax amounts included in other comprehensive income
An analysis of tax by individual item presented in the Consolidated statement of comprehensive income is presented below:
US$ million
Tax (charge)/credit 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 (gain)/loss on cash flow hedges
Tax credit on items transferred from equity
Transferred to initial carrying amount of hedged items: cash flow hedges
2015
2014
(30)
9
35
33
(5)
33
–
–
(15)
26
4
24
1
1
d) Tax amounts recognised directly in equity
No significant amounts of tax have been charged directly to equity in 2015 or 2014.
130
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
9. LOSS PER SHARE
US$
Loss per share
Basic
Diluted
Headline earnings per share
Basic
Diluted
Underlying earnings per share
Basic
Diluted
2015
2014
(4.36)
(4.36)
(1.96)
(1.96)
0.29
0.29
0.64
0.64
1.20
1.19
1.73
1.72
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.
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 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
2015
2014
(5,624)
(2,513)
Headline earnings
Underlying earnings
2015
369
2014
2015
2014
1,535
827
2,217
1,289
1,284
1,289
1,284
1,289
1,284
–
1,289
–
1,284
3
1,292
5
1,289
3
1,292
5
1,289
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 12,855,264 (2014: 18,431,061) potential ordinary shares are anti-dilutive. 8,996,586 (2014: 178,808)
shares have been excluded from the calculation of diluted headline earnings per share and diluted underlying earnings per share as they are anti-dilutive.
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 (2014: restructuring costs).
(2) Principally relates to the Kumba Envision Trust (2014: Kumba Envision Trust and Ponahalo refinancing).
2015
(5,624)
5,899
(489)
(413)
1,181
(127)
(58)
369
299
178
97
(615)
829
(217)
(113)
827
2014
(2,513)
4,268
(362)
(16)
218
(51)
(9)
1,535
106
1
167
(36)
105
352
(13)
2,217
Anglo American plc Annual Report 2015
131
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
10. DIVIDENDS
Dividends payable during the year are as follows:
US$ million
Final ordinary dividend for 2014 – 53 US cents per ordinary share (2013: 53 US cents per ordinary share)
Interim ordinary dividend for 2015 – 32 US cents per ordinary share (2014: 32 US cents per ordinary share)
2015
680
398
1,078
2014
696
403
1,099
Total dividends paid during the year were $1,078 million (2014: $1,099 million).
No final dividend is proposed in respect of the financial year ended 31 December 2015 (2014: 53 US cents per share).
The employee benefit trust has waived the right to receive dividends on the shares it holds (see note 32).
11. INTANGIBLE ASSETS
See notes 39d, 39e and 39i for the Group’s accounting policies on intangible assets.
US$ million
Net book value
At 1 January
Additions
Amortisation charge for the year(2)
Impairments(3)
Remeasurements
Currency movements
At 31 December
Cost
Accumulated amortisation
2015
2014
Brands,
contracts
and other
intangibles(1)
1,359
10
(64)
–
–
(81)
1,224
1,481
(257)
Goodwill
Total
2,553
–
–
(93)
–
(290)
2,170
2,170
–
3,912
10
(64)
(93)
–
(371)
3,394
3,651
(257)
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)
(1)
(2)
(3)
Includes brands, contracts and other intangibles of $1,185 million (2014: $1,308 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 (2014: $517 million) have indefinite useful lives.
Includes $17 million (2014: $19 million) of amortisation arising due to the fair value uplift of the Group’s pre-existing 45% shareholding in De Beers, which has been included within operating
remeasurements (see note 6) and $3 million (2014: nil) of pre-commercial production amortisation which has been capitalised.
Includes goodwill of $52 million allocated to Snap Lake (De Beers) which has been written off as the operation has been placed on care and maintenance, and goodwill of $41 million allocated
to Rustenburg (Platinum) which has been written down to fair value. See note 6 for further details.
Impairment tests for goodwill
See note 39f for the Group’s accounting policy on impairment of goodwill.
Goodwill is allocated for impairment testing purposes to cash generating units (CGUs) or groups of CGUs which reflect how it is monitored for internal
management purposes. This allocation largely represents the Group’s segments. The allocation of goodwill to CGUs or groups of CGUs is as follows:
US$ million
Platinum
De Beers
Copper
Coal South Africa
Other
2015
189
1,553
124
88
216
2,170
2014
230
1,895
124
88
216
2,553
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.
132
Anglo American plc Annual Report 2015
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(2)
Impairments and
losses on assets
transferred to held
for sale
Disposal of assets
Disposal of business
and transferred to held
for sale
Reclassifications
Currency movements
At 31 December
Cost
Accumulated
depreciation
Mining
properties
and leases
Land and
buildings(1)
Plant and
equipment
Capital works
in progress
2015
Total
Mining
properties
and leases
Land and
buildings(1)
Plant and
equipment
Capital works
in progress
2014
Total
13,018
568
3,067
25
11,115
160
11,275
3,846
38,475
4,599
14,996
596
3,030
46
11,530
311
11,949
5,452
41,505
6,405
(921)
(150)
(1,421)
–
(2,492)
(1,065)
(161)
(1,534)
–
(2,760)
(2,104)
–
(166)
(5)
(1,018)
(18)
(2,699)
(5)
(5,987)(3)
(28)
(1,242)
(3)
(26)
(20)
(213)
(30)
(2,935)
(3)
(4,416)
(56)
(63)
714
(2,239)
8,973
21,859
(9)
380
(371)
2,771
4,199
(294)
1,602
(1,196)
8,930
19,321
(60)
(2,696)
(714)
8,947
14,520
(426)(4)
–
(4,520)
29,621
59,899
–
859
(1,123)
13,018
24,206
–
345
(147)
3,067
4,307
–
1,573
(522)
11,115
21,525
–
(2,777)
(411)
11,275
14,497
–
–
(2,203)
38,475
64,535
(12,886)
(1,428)
(10,391)
(5,573)
(30,278)
(11,188)
(1,240)
(10,410)
(3,222)
(26,060)
(1) Net book value principally comprises freehold land and buildings.
(2)
Includes $2,337 million (2014: $2,545 million) of depreciation within operating loss, $82 million (2014: $110 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 $73 million (2014: $105 million) of pre-commercial production depreciation which has
been capitalised.
Includes $684 million for the write-down of Rustenburg (see note 6).
Includes $412 million for the transfer and subsequent disposal of Anglo American Norte (see note 30).
(3)
(4)
For information on the impairments recorded in the year see note 6.
Included in the additions is $357 million (2014: $369 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 $56 million (2014: $70 million), of which depreciation charges in the
year amounted to $6 million (2014: $13 million).
13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
See note 39k for the Group’s accounting policy on associates and joint arrangements, which includes joint ventures.
Details of principal associates and joint ventures are set out in note 37.
US$ million
At 1 January
Share of net (loss)/income from associates and joint ventures
Dividends received
Investment in equity and capitalised loans
Repayments of capitalised loans
Reclassification(2)
Impairments and losses on assets transferred to held for sale
Transferred to assets held for sale
Other movements
Currency movements
At 31 December
Associates
2,681
14
(81)
77
(67)
(812)
(271)(3)
–
–
(167)
1,374
Joint
ventures
1,695
(235)
(243)
3
–
812
(71)
(1,547)
45
(16)
443
2015
Total
4,376
(221)
(324)
80
(67)
–
(342)
(1,547)
45
(183)
1,817
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
(1)
Includes non-cash investment of $69 million relating to the refinancing of Atlatsa Resources Corporation (see note 35).
(2) The reclassification relates to the Group's interest in Samancor (Iron Ore and Manganese). Samancor has been accounted for as a joint venture since March 2015, following amendments to the
agreement that governs the Group's interests in Samancor which resulted in the Group acquiring joint control over the business (previously accounted for as an associate).
Includes $93 million relating to the impairment of the Group’s interest in Bokoni and $178 million for the Group’s interest in Bafokeng Rasimone Platinum Mine (see note 6).
(3)
The Group’s total investments in associates and joint ventures comprise:
US$ million
Equity
Loans(1)
Associates
1,233
141
1,374
Joint
ventures
294
149
443
2015
Total
1,527
290
1,817
Associates
2,294
387
2,681
Joint
ventures
1,695
–
1,695
2014
Total
3,989
387
4,376
(1) The Group’s total investments in associates and joint ventures include long term loans which in substance form part of the Group’s net investment. These loans are not repayable in the
foreseeable future.
Anglo American plc Annual Report 2015
133
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued
None of the Group’s associates or joint ventures are considered to be individually material to the Group, and therefore the Group’s share of the financial
information of associates and joint ventures is disclosed on an aggregated basis.
US$ million
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Revenue
Share of net (loss)/income from associates and joint ventures
Total comprehensive (expense)/income
Associates
1,314
458
(184)
(214)
1,374
1,208
14
14
Joint
ventures
640
50
(172)
(75)
443
1,340
(235)
(235)
2015
Total
1,954
508
(356)
(289)
1,817
2,548
(221)
(221)
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
Segmental information is provided in aggregate for associates and joint ventures in the table below.
US$ million
Platinum
De Beers
Iron Ore and Manganese
Coal
Corporate and other
Aggregate investment
2015
251
44
391
1,096
35
1,817
2014
659
33
867
1,225
1,592
4,376
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
Impairments
Movements in fair value
Currency movements
At 31 December
Loans and
receivables
761
–
43
216
(130)(2)
(7)
(221)
662
Available
for sale
investments
505
1
–
–
–
(236)
(86)
184
2015
Total
1,266
1
43
216
(130)
(243)
(307)
846
Loans and
receivables
759
–
52
33(1)
–
(1)
(82)
761
Available
for sale
investments
706
12
–
–
–
(150)
(63)
505
2014
Total
1,465
12
52
33
–
(151)
(145)
1,266
(1)
(2)
Includes net non-cash settlements of $47 million relating to the refinancing of Atlatsa Resources Corporation (see note 35).
Includes $119 million relating to the impairment of loans to Atlatsa and Atlatsa Holdings (see note 6).
134
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
15. INVENTORIES
See note 39q for the Group’s accounting policy on inventories.
US$ million
Raw materials and consumables
Work in progress
Finished products
2015
952
1,076
2,023
4,051
2014
1,087
1,445
2,188
4,720
The cost of inventories recognised as an expense and included in cost of sales amounted to $13,945 million (2014: $17,779 million).
Inventories held at net realisable value amounted to $1,048 million (2014: $1,014 million).
The write-down of inventories (net of revaluation of provisionally priced purchases) amounted to $121 million (2014: $153 million).
16. TRADE AND OTHER RECEIVABLES
Trade receivables do not incur any interest, are principally short term in nature and are measured at their nominal value (with the exception of receivables
relating to provisionally priced sales, as set out in the revenue recognition accounting policy, see note 39a), net of appropriate provision for estimated
irrecoverable amounts. Such provisions are raised based on an assessment of debtor ageing, past experience or known customer circumstances.
US$ million
Trade receivables
Tax receivables
Prepayments
Other receivables
Due within
one year
1,355
271
105
252
1,983
Due after
one year
135
238
23
143
539
2015
Total
1,490
509
128
395
2,522
Due within
one year
1,807
383
157
221
2,568
Due after
one year
161
253
58
273
745
2014
Total
1,968
636
215
494
3,313
Of the year end trade receivables balance, $55 million (2014: $61 million) were past due at 31 December, stated after an associated impairment provision
of $18 million (2014: $30 million). The overdue debtor ageing profile is typical of the industry in which certain of the Group’s businesses operate. Given this,
the use of payment security instruments (including letters of credit from acceptable financial institutions), and the nature of the related counterparties, these
amounts are considered recoverable. The historical level of customer default is minimal and as a result the credit quality of year end trade receivables is
considered to be high.
17. TRADE AND OTHER PAYABLES
Trade payables are not interest bearing and are measured at their nominal value (with the exception of payables relating to purchases of provisionally priced
concentrate which are marked to market using the appropriate forward price) until settled.
US$ million
Trade payables
Accruals
Deferred income(1)
Tax and social security
Other payables
(1)
Includes $26 million (2014: $25 million) of deferred income recorded within non-current liabilities.
2015
1,610
741
46
71
311
2,779
2014
1,931
975
57
99
478
3,540
Anglo American plc Annual Report 2015
135
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
18. FINANCIAL INSTRUMENTS
See notes 39l, 39m and 39n for the Group’s accounting policies on impairment of financial assets, derivative financial instruments and hedge accounting.
The carrying amounts of financial assets and financial liabilities are as shown below. Where the carrying amount of a financial asset or liability does not
approximate its fair value, this is also disclosed.
For financial assets and liabilities which are traded on an active market, such as listed investments or listed debt instruments, fair value is determined by
reference to market value. For non-traded financial assets and liabilities, fair value is calculated using discounted cash flows, considered to be reasonable and
consistent with those that would be used by a market participant, and based on observable market data where available, unless carrying value is considered to
approximate fair value.
All derivatives that have been designated into hedge relationships have been separately disclosed.
US$ 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 (liabilities)/assets
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 (liabilities)/assets
At fair value
through profit
and loss
Loans and
receivables
Available
for sale
Designated
into hedges
Financial
liabilities at
amortised cost
632
672
–
–
1,304
(225)
(2,439)
–
(2,664)
(1,360)
1,253
–
6,895
662
8,810
–
–
–
–
8,810
–
–
–
184
184
–
–
–
–
184
–
477
–
–
477
–
(24)
(14,800)
(14,824)
(14,347)
–
–
–
–
–
(2,437)
–
(3,167)
(5,604)
(5,604)
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)
2015
Total
1,885
1,149
6,895
846
10,775
(2,662)
(2,463)
(17,967)
(23,092)
(12,317)
2014
Total
2,465
1,133
6,748
1,266
11,612
(3,387)
(2,324)
(18,535)
(24,246)
(12,634)
(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 which is held at amortised cost, adjusted for the fair value of the hedged risk (for example interest rate risk). The fair value of
these borrowings is $10,898 million (2014: $15,339 million), which is based on the quoted market price and consequently categorised as level 1 in the fair value hierarchy. The fair value of the
remaining borrowings at amortised cost of $3,167 million, principally comprising bank borrowings, is $2,463 million as at 31 December 2015, with the difference between the carrying value
and the fair value reflecting primarily the debit valuation adjustment to reflect the effect of Anglo American’s own credit quality based on observed credit spreads at the balance sheet date.
At 31 December 2014 the carrying value of borrowings at amortised cost of $3,487 million was considered to approximate the fair value.
136
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
18. FINANCIAL INSTRUMENTS continued
Fair value hierarchy
An analysis of financial assets and liabilities carried at fair value is set out below:
US$ 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
Debit valuation adjustment to derivative
liabilities (4)
Net assets/(liabilities) carried at fair value
Level 1(1)
Level 2(2)
Level 3(3)
Level 1(1)
Level 2(2)
Level 3(3)
2015
Total
562
70
645
27
477
–
–
70
17
–
–
–
22
109
–
–
–
1
–
1
812
–
51
42
979
–
184
1,965
457
459
–
1,884
–
(736)
–
(225)
(2,943)
(63)
–
–
(17)
(7)
181
(555)
(446)
567
(2,688)
(723)
–
–
(2)
–
–
–
(2)
457
(314)
(1,647)
(129)
(27)
(20)
–
(2,137)
(253)
2014
Total
812
100
110
43
979
1
505
2,550
(314)
(2,146)
(131)
(27)
(20)
–
(2,638)
(88)
–
100
59
–
–
–
48
207
–
(499)
–
–
–
–
(499)
(292)
–
–
–
9
–
–
562
–
628
18
477
–
162
171
–
1,685
–
–
–
–
–
–
–
171
(225)
(2,207)
(63)
(17)
(7)
386
(2,133)
(448)
(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.
(4) The debit valuation adjustment is recorded to reflect in the fair value of financial liabilities the effect of Anglo American’s own credit quality based on observed credit spreads. This adjustment
is calculated in total for each counterparty based on the net expected exposure. In many cases this includes exposures on a number of different types of derivative instruments. Consequently
the impact of this adjustment has been presented as a separate item within the analysis of derivatives above. Based on an allocation weighted by exposure to each category of instrument,
$555 million is attributable to derivatives hedging net debt and $12 million relates to other derivatives. The impact of this adjustment at 31 December 2014 was insignificant and consequently
no adjustment has been made to the prior year presentation.
Financial assets and liabilities included within level 3 primarily consist of certain cross currency swaps of Brazilian real denominated borrowings (whose
valuation depends upon regulated interest rates), contingent proceeds and related receivables relating to disposals and unlisted equity investments.
The movements in the fair value of the level 3 financial assets and liabilities are shown as follows:
US$ million
At 1 January
Net loss recorded in the income statement(1)
Net loss recorded in the statement of comprehensive income
Settlement
Currency movements
At 31 December
(1) This is principally recorded in special items and remeasurements.
2015
207
(75)
(15)
–
(8)
109
Assets
2014
225
(7)
(6)
–
(5)
207
2015
(499)
(90)
–
34
–
(555)
Liabilities
2014
(456)
(43)
–
–
–
(499)
For the level 3 financial assets and liabilities, changing certain estimated inputs to reasonably possible alternative assumptions does not change the fair value
significantly.
Anglo American plc Annual Report 2015
137
Financial statements
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 contracted maturity 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. Such derivatives may be designated as net investment hedges and at 31 December 2014 principally related 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 positions 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
Other
Debit valuation adjustment to derivative
liabilities(2)
Other derivatives(3)
Total derivatives
Asset
23
–
628
14
–
–
665
24
689
2015
Liability
–
–
(10)
(430)
–
19
(421)
(56)
(477)
Current
2014
Liability
–
–
(10)
(386)
–
–
(396)
(143)
(539)
Asset
15
–
51
38
–
–
104
43
147
Asset
2015
Liability
454
(18)
–
–
3
–
–
457
3
460
–
–
(2,502)
–
536
(1,984)
(2)
(1,986)
Non-current
2014
Liability
(27)
–
–
(1,750)
–
–
(1,777)
(8)
(1,785)
Asset
617
347
–
21
–
–
985
1
986
(1) Recognised in the Consolidated income statement is a loss on fair value hedged items of $143 million (2014: $440 million), offset by a gain on fair value hedging instruments of $146 million
(2014: $381 million).
(2) Relates to cross currency swaps. Refer to note 18.
(3) Other derivatives primarily relate to forward foreign currency contracts hedging capital expenditure that are accounted for as ‘Held for trading’.
These marked to market valuations are not predictive of the future value of the hedged position, nor of the future impact on the profit of the Group.
The valuations represent the cost of closing all hedge contracts at 31 December, at market prices and rates available at the time.
The Group is exposed in varying degrees to a variety of financial instrument related risks. For more information about these risks and the ways in which the
Group manages them see notes 24 and 38.
138
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED BALANCE SHEET
20. PROVISIONS FOR LIABILITIES AND CHARGES
See note 39r for the Group’s accounting policy on environmental restoration and decommissioning obligations.
US$ million
At 1 January 2015
Charged to the income statement
Capitalised
Unwinding of discount
Amounts applied
Unused amounts reversed
Disposal of business and transferred to held for sale
Currency movements
At 31 December 2015
Current
Non-current
Environmental
restoration Decommissioning
595
–
44
36
(1)
(6)
(27)
(98)
543
5
538
1,090
136
70
49
(25)
(24)
(53)
(194)
1,049
72
977
Employee
benefits
437
114
–
2
(156)
(43)
(10)
(19)
325
295
30
Onerous
contracts
644
17
–
55
(64)
(11)
–
(69)
572
67
505
Other
722
229
28
10
(182)
(34)
–
(77)
696
181
515
Total
3,488
496
142
152
(428)
(118)
(90)
(457)
3,185
620
2,565
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 that these costs will be incurred over a period of up to 15 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
2015
115
121
54
290
2014
139
155
64
358
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 8.1% (2014: 8.2%) for an average period of four years (2014: four years). Equity investments are recorded at
fair value through profit and loss and bonds are recorded at amortised cost.
These funds are not available for the general purposes of the Group. All income from these assets is reinvested to meet specific environmental obligations.
These obligations are included in provisions stated above.
Anglo American plc Annual Report 2015
139
Financial statements
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
Credited/(charged) to the income statement(1)
Credited to the statement of comprehensive income
Disposal of business
Currency movements
At 31 December
Comprising:
Deferred tax assets
Deferred tax liabilities
2015
(3,147)
150
33
(72)
697
(2,339)
914
(3,253)
2014
(3,293)
(187)
25
–
308
(3,147)
1,351
(4,498)
(1) This includes a charge to tax special items of $788 million (2014: $104 million) relating to the write-off of deferred tax, a credit of $107 million (2014: charge of $306 million) relating to deferred
tax remeasurements and a credit of $783 million (2014: $381 million) relating to deferred tax on special items.
The amount of deferred tax recognised in the Consolidated balance sheet is as follows:
US$ 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 credited/(charged) to the Consolidated income statement is as follows:
US$ million
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses
Derivatives
Provisions
Withholding tax
Other temporary differences
2015
534
31
10
121
218
914
(2,080)
(689)
24
2
278
(510)
(278)
(3,253)
2015
123
(243)
(54)
87
(163)
58
342
150
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
Tax
losses –
capital
Other
temporary
differences
–
334
239
5,580
6,153
–
–
–
806
806
–
–
3,398
1,547
4,945
2015
Total
–
334
3,637
7,933
11,904
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
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)
2014
Total
3
420
3,414
9,296
13,133
The Group has no unused tax credits (2014: $11 million) for which no deferred tax asset is recognised in the Consolidated balance sheet.
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
$15,103 million (2014: $17,488 million).
140
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
22. CAPITAL EXPENDITURE
Capital expenditure is defined as cash expenditure on property, plant and equipment including related derivatives, proceeds from disposal of property, plant
and equipment and direct funding for capital expenditure from non-controlling interests.
Capital expenditure by segment
US$ million
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates(1)
Iron Ore and Manganese
Coal
Corporate and other
Capital expenditure(2)
Exclude:
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
2015
366
697
659
26
50
1,422
941
16
4,177
(200)
30
46
4,053
2014
576
689
728
14
239
2,685
1,045
42
6,018
(157)
71
42
5,974
(1) Niobium and Phosphates are now aggregated, having previously been presented separately (see note 3).
(2) Cash capital expenditure includes capitalised operating cash outflows of $147 million (2014: $9 million cash inflows) generated by operations that have not yet reached commercial production,
principally in relation to Minas-Rio (Iron Ore and Manganese) and Barro Alto (Nickel).
Capital expenditure by category
US$ million
Expansionary(1)
Stay-in-business
Stripping and development
Proceeds from disposal of property, plant and equipment
2015
2,083
1,384
740
(30)
4,177
2014
3,248
1,973
868
(71)
6,018
(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.
Anglo American plc Annual Report 2015
141
Financial statements
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
Balance sheet – disposal groups
Bank overdrafts
Net cash/(debt) classifications
b) Movement in net debt
US$ million
At 1 January 2014
Cash flow
Reclassifications
Movement in fair value
Other non-cash movements
Currency movements
At 31 December 2014
Cash flow
Reclassifications
Movement in fair value
Other non-cash movements
Currency movements
At 31 December 2015
Cash and cash equivalents
Short term borrowings
2015
6,895
9
(15)
6,889
2014
6,748
–
(1)
6,747
2015
(1,649)
–
15
(1,634)
2014
(1,618)
–
1
(1,617)
Medium and
long term borrowings
2015
(16,318)
–
–
(16,318)
2014
(16,917)
–
–
(16,917)
Cash
and cash
equivalents
7,702
(841)
–
–
–
(114)
6,747
416
–
–
–
(274)
6,889
Short term
borrowings
(2,106)
1,785
(1,487)
(7)
(2)
200
(1,617)
1,404
(1,616)
(9)
(2)
206
(1,634)
Medium and
long term
borrowings
(15,740)
(3,568)
1,487
(434)
(72)
1,410
(16,917)
(2,736)
1,616
151
(45)
1,613
(16,318)
Net debt
excluding
derivatives
(10,144)
(2,624)
–
(441)
(74)
1,496
(11,787)
(916)
–
142
(47)
1,545
(11,063)
Derivatives
hedging
net debt(1)
(508)
(203)
–
(373)
–
–
(1,084)
170
–
(924)
–
–
(1,838)
Net debt
including
derivatives
(10,652)
(2,827)
–
(814)
(74)
1,496
(12,871)
(746)
–
(782)
(47)
1,545
(12,901)
(1) Derivatives hedging net debt represents the mark to market valuation of such derivatives before taking into account the effect of debit valuation adjustments which reduce the valuation of
derivative liabilities hedging net debt by $555 million (2014: nil). Further details on this adjustment are provided in note 18.
c) Net debt by segment
The Group’s policy is to hold the majority of its cash and borrowings at the corporate centre. Business units may from time to time raise borrowings in
connection with specific capital projects, and subsidiaries with non-controlling interests have borrowings which are without recourse to the Group. Other than
the impact of South African exchange controls (see 23d below), there are no significant restrictions over the Group’s ability to access these cash balances or
repay these borrowings. Net cash/(debt) by segment is stated after elimination of inter-segment balances.
US$ million
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates(1)
Iron Ore and Manganese
Coal
Corporate and other
2015
(176)
(109)
820
(138)
123
(2,370)
260
(11,311)
(12,901)
2014
24
(126)
738
(262)
76
(2,294)
201
(11,228)
(12,871)
(1) Niobium and Phosphates are now aggregated, having previously been presented separately (see note 3).
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 excluding derivatives
Derivatives hedging net debt
Net debt including derivatives
142
Anglo American plc Annual Report 2015
2015
1,419
(49)
(1,471)
(101)
(4)
(105)
2014
1,298
(118)
(1,252)
(72)
1
(71)
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 2015, the Group issued corporate bonds with a US dollar equivalent value of $2.2 billion. These included the following bonds:
• €600 million 1.5% guaranteed loan notes due 2020 issued under the EMTN programme.
• $850 million 3.625% senior notes due 2020 and $650 million 4.875% senior notes due 2025 through accessing the US bond markets.
An analysis of borrowings, as presented on the Consolidated balance sheet, is set out below:
US$ 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
1.5% €600m bond due April 2020
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
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
3.625% $850m bond due May 2020
4.45% $500m bond due September 2020
4.125% $500m bond due April 2021
4.125% $600m bond due September 2022
4.875% $650m bond due May 2025
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
2015
Contractual
repayment at
hedged rates
Short term
borrowings
Medium and
long term
borrowings
Total
borrowings
2014
Contractual
repayment at
hedged rates
9
7
16
10
53
63
19
60
79
19
60
79
9
25
34
21
52
73
30
77
107
30
77
107
270
1,961
2,231
2,979
211
2,198
2,409
2,805
–
839
–
–
–
–
–
–
–
–
–
–
–
500
–
–
–
–
–
–
–
–
–
–
–
995
829
644
841
83
854
651
688
849
908
868
–
602
744
795
842
522
508
588
644
379
–
839
995
829
644
841
83
854
651
688
849
908
868
500
602
744
795
842
522
508
588
644
379
–
1,122
1,211
1,033
793
959
97
941
659
807
977
992
1,033
500
600
750
750
850
500
500
600
650
470
–
13
–
–
–
–
11
1,633
1,649
–
–
39
87
40
26
268
16,255
16,318
–
13
39
87
40
26
279
17,888
17,967
–
13
39
91
42
26
279
20,263
20,342
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) Assets with a book value of $91 million (2014: $73 million) have been pledged as security, of which $40 million (2014: $47 million) are property, plant and equipment, $49 million
(2014: $24 million) are financial assets and $2 million (2014: $2 million) are inventories. Related to these assets are borrowings of $19 million (2014: $30 million).
(2) Details of assets held under finance leases are provided in note 12.
Anglo American plc Annual Report 2015
143
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
24. BORROWINGS continued
Liquidity risk
The Group ensures that there are sufficient committed loan facilities (including refinancing, where necessary) in order to meet short term business
requirements, after taking into account cash flows from operations and its holding of cash and cash equivalents, as well as any Group distribution restrictions
that exist. In addition, certain projects may be financed by means of limited recourse project finance, if appropriate.
The expected undiscounted cash flows of the Group’s net debt related and other financial liabilities, by remaining contractual maturity, based on conditions
existing at the balance sheet date are as follows:
US$ 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
(702)
(657)
(587)
(424)
(286)
(459)
(2,413)
(3,115)
(232)
(113)
(544)
(43)
(101)
(420)
(1,221)
(1,453)
Borrowings
(1,631)
(2,617)
(3,067)
(1,871)
(3,508)
(4,853)
(15,916)
(17,547)
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)
2015
Total
(5,227)
(3,387)
(4,198)
(2,338)
(3,895)
(5,732)
(19,550)
(24,777)
2014
Total
(5,916)
(2,637)
(3,434)
(4,321)
(2,329)
(6,851)
(19,572)
(25,488)
Other
financial
liabilities
(2,662)
–
–
–
–
–
–
(2,662)
Other
financial
liabilities
(3,387)
–
–
–
–
–
–
(3,387)
2015
2014
683
32
1,110
192
5,862
7,879
1,073
525
1,172
597
5,000
8,367
(1) Includes undrawn South African rand facilities equivalent to $0.5 billion (2014: $0.9 billion) in respect of facilities with 364 day maturity which roll automatically on a daily basis, unless notice
is served.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders
and benefits for other stakeholders and, with cognisance of forecast future market conditions and structuring, to maintain an optimal capital structure to
enable the business to operate effectively.
In order to manage the short and long term capital structure, the Group has a number of options including raising and refinancing debt, adjusting returns to
equity shareholders, managing the allocation of capital and divesting non-core assets to reduce debt.
The Group monitors capital using various financial metrics including the ratio of net debt to total capital (gearing). Net debt is calculated as total borrowings
less cash and cash equivalents (including derivatives which provide an economic hedge of net debt). Total capital is calculated as ‘Net assets’ (as shown in the
Consolidated balance sheet) excluding net debt. Total capital and gearing are as follows:
US$ million
Net assets
Net debt including related derivatives (note 23)
Total capital
Gearing
2015
21,342
12,901
34,243
37.7%
2014
32,177
12,871
45,048
28.6%
Gearing has increased from 28.6% to 37.7% as total capital has decreased. Net debt remained consistent at $12.9 billion at 31 December 2015 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 $45.0 billion to $34.2 billion primarily due to the impact of impairments and the effect of a stronger
US dollar on assets denominated in other currencies.
144
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
CASH FLOW STATEMENT, NET DEBT AND RELATED NOTES
24. BORROWINGS continued
Market risk
Market risk is the risk that financial instrument fair values and related cash flows will fluctuate due to changes in market prices. The Group manages interest
rate risks and foreign exchange risks on borrowings and cash with the use of cross currency swaps and interest rate swaps in order to ensure that the majority
of borrowings are floating rate US dollar denominated. The Group does not hedge foreign exchange exposures on rand denominated borrowings in South
Africa. For more information regarding the Group’s financial risk management see note 38.
The table below reflects the exposure of the Group’s net debt to currency and interest rate risk.
US$ million
US dollar
Euro
South African rand
Brazilian real
Australian dollar
Sterling
Other
Impact of interest derivatives
Total
US$ million
US dollar
Euro
South African rand
Brazilian real
Australian dollar
Sterling
Other
Impact of interest derivatives
Total
Cash
and cash
equivalents
6,239
6
116
238
148
18
124
–
6,889
Cash
and cash
equivalents
6,151
24
134
211
61
29
137
–
6,747
Floating
rate
borrowings
Fixed
rate
borrowings
(1,197)
–
(966)
(793)
–
–
(17)
(14,800)
(17,773)
(5,400)
(8,322)
(136)
–
(379)
(644)
(98)
14,800
(179)
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)
Derivatives
hedging
net debt
(1,835)
–
(3)
–
–
–
–
–
(1,838)
Derivatives
hedging
net debt
(1,087)
–
3
–
–
–
–
–
(1,084)
Impact of
currency
derivatives
(10,221)
8,322
–
793
379
644
83
–
–
Impact of
currency
derivatives
(12,336)
9,827
–
1,301
423
701
84
–
–
2015
Total
(12,414)
6
(989)
238
148
18
92
–
(12,901)
2014
Total
(12,459)
24
(832)
209
61
29
97
–
(12,871)
25. COMMITMENTS
See note 39x for the Group’s accounting policy on leases.
A commitment is a contractual obligation to make a payment in the future which is not provided for in the balance sheet. The Group also has purchase
obligations relating to take or pay agreements which are legally binding and enforceable.
Capital commitments for subsidiaries and joint operations relating to the acquisition of property, plant and equipment is $1,168 million (2014: $1,936 million),
of which 82% (2014: 80%) relates to expenditure to be incurred within the next year.
The Group’s share of joint ventures’ outstanding capital commitments, including its share of commitments made jointly with other investors, relating to the
acquisition of property, plant and equipment is $5 million (2014: $63 million), of which 100% (2014: 98%) relates to expenditure to be incurred within the
next year.
The Group’s outstanding commitments relating to take or pay agreements is $9,552 million (2014: $10,197 million), of which 10% (2014: 9%) relates to
expenditure to be incurred within the next year.
At 31 December the Group had the following commitments under non-cancellable operating leases:
US$ 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.
2015
92
75
72
24
263
2014
94
65
115
80
354
Anglo American plc Annual Report 2015
145
Financial statements
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
Platinum
De Beers
Copper
Nickel
Niobium and Phosphates(1)
Iron Ore and Manganese
Coal
Corporate and other
(1) Niobium and Phosphates are now aggregated, having previously been presented separately (see note 3).
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
2015
2014
48
11
5
2
2
10
11
2
91
2015
69
4
10
2
4
2
91
51
10
6
2
2
9
12
3
95
2014
72
4
11
2
4
2
95
2015
3,798
135
332
209
4,474
(319)
(200)
3,955
2014
4,244
166
404
258
5,072
(367)
(191)
4,514
(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
2015
22
4
2
3
13
44
2014
31
5
3
3
18
60
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.
146
Anglo American plc Annual Report 2015
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 $221 million (2014: $244 million) and for defined contribution medical plans (net of amounts capitalised) was $73 million (2014: $81 million).
Defined benefit pension plans and post employment medical plans
The Group operates defined benefit pension and medical plans across a number of regions. The most significant plans are in South Africa and the
United Kingdom.
A summary of the movements in the net pension plan assets and retirement benefit obligations on the Consolidated balance sheet is as follows:
US$ million
Net liability recognised at 1 January
Net income statement charge
Remeasurement of net defined benefit obligation
Employer contributions to funded pension plans
Benefits paid to unfunded plans
Disposal of business
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.
2015
(889)
(60)
290
118
24
41
12
103
(361)
306
(330)
(337)
(361)
2014
(1,013)
(113)
(15)
132
15
–
16
89
(889)
184
(615)
(458)
(889)
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 2015. Assumptions are set after consultation with the qualified actuaries. While management believes 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 11 years (2014: 12 years), United Kingdom plans is 18 years (2014: 18 years) and plans in other
regions is 14 years (2014: 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 to funded plans
in the year ended 31 December 2015 were $118 million. In addition $24 million of benefits were paid to unfunded plans and $23 million of benefits were paid in
relation to post employment medical plans. The Group expects to contribute $118 million to its pension plans and $20 million to its post employment medical
plans in 2016.
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 and to the future accrual of benefits.
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.
Anglo American plc Annual Report 2015
147
Financial statements
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
10.3%
7.9%
7.9%
10.3%
7.9%
9.6%
3.9%
3.1%
3.1%
3.9%
3.1%
7.8%
2015
Other
6.8%
3.6%
3.2%
9.1%
6.9%
9.1%
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%
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
2015
19.8
28.2
22.8
Male
2014
19.9
28.7
22.8
2015
24.5
30.0
27.2
Female
2014
24.6
30.2
27.1
The table below summarises the expected life expectancy from the age of 60 for a male or female aged 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
2015
19.8
29.6
25.1
Male
2014
19.9
29.7
23.3
2015
24.5
32.0
29.3
Female
2014
24.6
31.9
27.5
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:
US$ million
Amount charged within operating costs
Net charge to net finance costs
Total charge to the income statement
(1)
Includes interest expense on surplus restriction of $13 million.
South
Africa
United
Kingdom
(57)
(39)
(17)
(48)
(360)
(169)
–
(126)
Other
(14)
(10)
(3)
(4)
Post
employment
medical
plans
4
33
37
Pension
plans
14
9(1)
23
2015
Total
18
42
60
Post
employment
medical
plans
4
37
41
Pension
plans
54
18
72
2015
Total
(431)
(218)
(20)
(178)
2014
Total
58
55
113
148
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
27. RETIREMENT BENEFITS continued
Comprehensive income
The amounts recognised in the Consolidated statement of comprehensive income are as follows:
US$ million
Return on plan assets, excluding interest income
Actuarial gains/(losses) on plan liabilities(1)
Movement in surplus restriction
Remeasurement of net defined benefit obligation
Post
employment
medical
plans
–
23
–
23
Pension
plans
(125)
401
(9)
267
2015
Total
(125)
424
(9)
290
Post
employment
medical
plans
(1)
(8)
–
(9)
Pension
plans
542
(527)
(21)
(6)
2014
Total
541
(535)
(21)
(15)
(1) Comprises gains/(losses) 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
354
247
459
66
–
1,126
(7)
(12)
(827)
(846)
–
280
(156)
124
124
–
124
United
Kingdom
857
1,356
1,378
51
199
3,841
(179)
(1,401)
(2,242)
(3,822)
–
19
–
19
182
(163)
19
2015
Total
1,220
1,636
1,872
118
205
5,051
(203)
(1,418)
(3,136)
(4,757)
(161)
133
(157)
(24)
306
(330)
(24)
Other
9
33
35
1
6
84
(17)
(5)
(67)
(89)
(161)
(166)
(1)
(167)
–
(167)
(167)
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)
(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 106% (2014: 99%) of the benefits that
had accrued to members after allowing for expected increases in future earnings and pensions.
Includes $151 million (2014: $214 million) relating to active members.
(2)
All investments have been fair valued based on quoted market prices.
Movement analysis
The changes in the fair value of plan assets are as follows:
US$ million
At 1 January
Effects of settlements
Interest income
Return on plan assets, excluding interest income
Contributions paid by employer to funded pension plans
Benefits paid(2)
Other
Currency movements
At 31 December
(1) The actual return on assets in respect of pension plans was $135 million (2014: $826 million).
(2)
Includes $10 million (2014: $10 million) of benefits paid to defined contribution plans.
Post
employment
medical
plans
14
–
1
–
–
(1)
–
(1)
13
Pension
plans
5,627
(6)
260(1)
(125)(1)
118
(243)
5
(585)
5,051
2015
Total
5,641
(6)
261
(125)
118
(244)
5
(586)
5,064
Post
employment
medical
plans
17
–
1
(1)
–
(1)
–
(2)
14
Pension
plans
5,315
(4)
(1)
284
542
132
(236)
6
(412)
5,627
(1)
2014
Total
5,332
(4)
285
541
132
(237)
6
(414)
5,641
Anglo American plc Annual Report 2015
149
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
EMPLOYEE REMUNERATION
27. RETIREMENT BENEFITS continued
The changes in the present value of defined benefit obligations are as follows:
US$ million
At 1 January
Current service costs
Effects of curtailments/settlements
Interest cost
Actuarial gain/(loss) arising from changing financial assumptions
Actuarial gain arising from changing demographic assumptions
Actuarial gain arising from experience adjustment
Benefits paid
Disposal of business
Other
Currency movements
At 31 December
Post
employment
medical
plans
(472)
(4)
–
(34)
18
–
5
23
–
–
114
(350)
Pension
plans
(5,876)
(21)
6
(256)
221
40
140
257
41
(5)
535
(4,918)
2015
Total
(6,348)
(25)
6
(290)
239
40
145
280
41
(5)
649
(5,268)
Post
employment
medical
plans
(494)
(4)
–
(38)
(9)
1
–
27
–
–
45
(472)
Pension
plans
(5,674)
(25)
(17)
(302)
(548)
19
2
241
–
(6)
434
(5,876)
2014
Total
(6,168)
(29)
(17)
(340)
(557)
20
2
268
–
(6)
479
(6,348)
28. SHARE-BASED PAYMENTS
See note 39u for the Group’s accounting policy on share-based payments.
During the year ended 31 December 2015 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, and
there have been no outstanding awards since 31 December 2014. 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)
2015
88
42
5
135
2014
94
60
3
157
(1)
In addition, there are equity settled share-based payment charges of $47 million (2014: $58 million) relating to Kumba Iron Ore Limited shares and $26 million (2014: $35 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 $1 million
(2014: $8 million).
Schemes settled by award of ordinary shares
The fair value of ordinary shares under the BSP, LTIP and LTIP-ROCE, being the more material 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 awards were granted on 03/03/15 (2014: 07/03/14) with a share price of £12.05 (2014: £14.63). These awards have a contractual life of three years and
are conditional on three years continuous employment. The LTIP-ROCE and LTIP-TSR awards are conditional on a Group ROCE target and market based
performance conditions, respectively, being achieved. The following assumptions were used in the valuation of the awards: expected volatility of 35%
(2014: 35%) based on historic volatility over the last five years; risk free interest rate of 0.9% (2014: 1.1%) based on the yield on zero-coupon UK government
bonds with a term similar to the expected life of the award; expected departures rate of 5% pa (2014: 5% pa); and a dividend yield of 2.1% (2014: 2.1%).
The awards granted during the year under these assumptions are summarised below:
BSP
LTIP
LTIP-ROCE
LTIP-TSR
2015
Fair value at
date of grant
(weighted
average)(£)
12.05
12.05
12.05
5.30
Number of
instruments⁽¹⁾
5,560,276
2,792,470
827,674
827,674
2014
Fair value at
date of grant
(weighted
average)(£)
14.63
14.63
14.63
7.87
Number of
instruments⁽¹⁾
5,128,574
1,934,900
613,682
613,682
(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.
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.
150
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
GROUP STRUCTURE AND TRANSACTIONS
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 or expired in year
Outstanding at 31 December
2015
2014
12,104,010 10,871,470
5,128,574
5,560,276
(2,937,812) (2,144,872)
(2,102,712) (1,751,162)
12,623,762 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
2015
6,131,998
4,447,817
(1,313,835)
(707,091)
8,558,889
2014
4,762,211
3,162,264
(986,324)
(806,153)
6,131,998
(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.
29. ASSETS AND LIABILITIES HELD FOR SALE
Assets classified as held for sale as at 31 December 2015 of $27 million and associated liabilities of $17 million principally relate to the Kimberley Mines
(De Beers) in South Africa. The sale transaction was announced on 1 December 2015 and completion was subsequently announced on 21 January 2016.
The Group’s investment in the Lafarge Tarmac joint venture (Corporate and other) was classified as held for sale at 30 June 2015, and the disposal
subsequently completed on 17 July 2015, see note 30.
30. DISPOSALS OF SUBSIDIARIES AND JOINT VENTURES
US$ million
Property, plant and equipment
Investments in joint ventures
Other non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets disposed
Consideration net of transaction costs
Cash and cash equivalents disposed
Cash inflow from hedging of proceeds
Net cash inflow
Loss on transfer to held for sale
Cumulative translation loss recycled from reserves
Other credits
Net loss on disposal
Tarmac
businesses
–
1,539
–
–
–
–
1,539
1,543
–
13
1,556
(100)
(101)
12
(172)
Anglo
American
Norte
412
–
73
316
(119)
(114)
568
281
(82)
–
199
–
–
–
(287)
2015
Total
412
1,539
73
316
(119)
(114)
2,107
1,824
(82)
13
1,755
(100)
(101)
12
(459)
Anglo American plc Annual Report 2015
151
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
GROUP STRUCTURE AND TRANSACTIONS
30. DISPOSALS OF SUBSIDIARIES AND JOINT VENTURES continued
2015
Tarmac businesses
On 17 July 2015, the Group completed the sale of its 50% ownership interest in Lafarge Tarmac (Corporate and other) to Lafarge for cash proceeds of
approximately £992 million ($1,559 million, which includes $13 million of proceeds on a related hedge).
In addition, during the year the Group disposed of the majority of its interests in Tarmac Middle East (Corporate and other), which supplies aggregates, asphalt
and road base contracting services to the Middle East construction industry.
The net loss on disposal of Tarmac businesses of $172 million comprises a net cash inflow of $1,556 million less net assets disposed of $1,539 million, a loss
on transfer to held for sale of $100 million (recognised in the six months ended 30 June 2015), a cumulative translation loss recycled from reserves of
$101 million, and other credits of $12 million. The net loss is recorded in non-operating special items (see note 6). The post-tax loss is also $172 million.
Anglo American Norte
On 11 September 2015, the Group completed the sale of its interest in Anglo American Norte S.A. (AA Norte) (Copper). The company consists of the
Mantoverde and Mantos Blancos copper mines located in northern Chile.
The consideration comprised $300 million in cash plus deferred consideration up to a maximum of $200 million, contingent upon factors including the average
London Metals Exchange copper price and any future decision to pursue the sulphide life extension of the Mantoverde mine. At 31 December 2015 the
remaining deferred contingent consideration, of up to $150 million, has been valued at nil. A pre-tax loss of $287 million (post-tax $350 million) on disposal
has been recorded in non-operating special items (see note 6) which comprises net consideration of $281 million less net assets disposed of $568 million.
Other
In addition to the above, the Group incurred a net cash outflow of $10 million relating, inter alia, to payments in respect of provisions recognised on completion
of disposals in prior years.
2014
There were no significant disposals in 2014.
Disposal proceeds of $44 million received in 2014 primarily related to deferred consideration from the sale of certain Tarmac Quarry Materials’ operations
prior to the formation of the Lafarge Tarmac joint venture in 2013.
31. NON-CONTROLLING INTERESTS
Non-controlling interests that are material to the Group relate to the following subsidiaries:
• Kumba Iron Ore Limited (Kumba Iron Ore), which is a company incorporated in South Africa and listed on the JSE. Its principal mining operations are the
Sishen, Kolomela and Thabazimbi iron ore mines which are located in South Africa. Non-controlling interests hold an effective 46.3% interest in the
operations of Kumba Iron Ore, comprising the 30.3% interest held by other shareholders in Kumba Iron Ore and the 23% of Kumba Iron Ore’s principal
operating subsidiary, Sishen Iron Ore Company (Proprietary) Limited, that is held by shareholders outside the Group.
• Anglo American Sur SA (Anglo American Sur), which is a company incorporated in Chile. Its principal operations are the Los Bronces and El Soldado copper
mines and the Chagres smelting plant, which are located in Chile. Non-controlling interests hold a 49.9% interest in Anglo American Sur.
US$ million
(Loss)/profit attributable to non-controlling
interests
Equity attributable to non-controlling interests
Dividends paid to non-controlling interests
Kumba
Iron Ore
Anglo
American Sur
52
731
(131)
(55)
2,130
(62)
Other(1)
(215)
1,912
(49)
2015
Total
(218)
4,773
(242)
Kumba
Iron Ore
Anglo
American Sur
614
1,060
(674)
218
2,212
(116)
Other(1)
157
2,488
(33)
2014
Total
989
5,760
(823)
(1) Other consists of individually immaterial non-controlling interests.
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/(loss) for the financial year(1)
Total comprehensive (expense)/income
Net cash inflow from operating activities
(1) Stated after special items. See note 6.
There were no significant changes in ownership interests in subsidiaries in 2015 or 2014.
2015
2014
Kumba
Iron Ore
2,205
931
(320)
(1,189)
1,627
Anglo
American Sur
4,419
751
(271)
(627)
4,272
2,876
43
(566)
1,119
2,080
(102)
(108)
599
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
152
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
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 and 31 December
Number of shares
US$ million
Number of shares
US$ million
2015
2014
50,000
–
50,000
–
1,405,465,332
772
1,405,465,332
772
During 2015, no ordinary shares were allotted to non-executive directors (2014: no ordinary shares were allotted to non-executive directors).
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 2015 was 1,401,861,508 and $770 million
(2014: 1,396,671,247 and $767 million).
At general meetings, every member who is present in person has one vote on a show of hands and, on a poll, every member who is present in person or by
proxy has one vote for every ordinary share held.
In the event of winding up, the holders of the cumulative preference shares will be entitled to the repayment of a sum equal to the nominal capital paid up, or
credited as paid up, on the cumulative preference shares held by them and any accrued dividend, whether such dividend has been earned or declared or not,
calculated up to the date of the winding up.
Own shares
Own shares
Treasury shares
Own shares held by subsidiaries and employee benefit trusts
Total
The movement in treasury shares during the year is as follows:
Treasury shares
At 1 January
Transferred to employees in settlement of share awards
At 31 December
Number of shares
US$ million
Number of shares
US$ million
2015
2014
3,603,824
117,334,305
120,938,129
173
5,878
6,051
8,794,085
116,665,530
125,459,615
481
5,878
6,359
Number of shares
US$ million
Number of shares
US$ million
2015
2014
8,794,085
(5,190,261)
3,603,824
481
(308)
173
11,315,992
(2,521,907)
8,794,085
599
(118)
481
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 $3.51 per share to Epoch, $5.46 per share to Epoch Two and $4.53 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 2015 the Investment Companies together held 112,300,129 (2014: 112,300,129) Anglo American plc shares, which represented 8.0%
(2014: 8.0%) of the ordinary shares in issue (excluding treasury shares) with a market value of $498 million (2014: $2,100 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 Group considers that the agreement outlined above, including Tenon’s right to nominate the transferee of the
Anglo American plc shares held by the Investment Companies, result in the Group having control over the Investment Companies as defined under IFRS 10.
Accordingly, the Investment Companies are required to be consolidated by the Group.
Anglo American plc Annual Report 2015
153
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
32. CALLED-UP SHARE CAPITAL AND CONSOLIDATED EQUITY ANALYSIS continued
Employee benefit trust
The provision of shares to certain of the Company’s share option and share incentive schemes may be facilitated by an employee benefit trust or settled
by the issue of treasury shares. Shares held by the trust are recorded as own shares, and the carrying value is shown as a reduction within shareholders’
equity. 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 (2014: 1 share) held by the trust at 31 December 2015 was $4 (2014: $19).
Consolidated equity analysis
Fair value and other reserves comprise:
US$ million
At 1 January 2014
Total comprehensive expense
Equity settled share-based payment schemes
At 1 January 2015
Total comprehensive expense
Equity settled share-based payment schemes
Other
At 31 December 2015
Share-based
payment
reserve
548
–
(8)
540
–
(41)
–
499
Available
for sale
reserve
571
(115)
–
456
(153)
–
–
303
Cash
flow hedge
reserve
9
(7)
–
2
9
–
–
11
Other
reserves(1)
140
–
–
140
–
–
(17)
123
Total
fair value
and other
reserves
1,268
(122)
(8)
1,138
(144)
(41)
(17)
936
(1) Other reserves comprise a capital redemption reserve of $115 million (2014: $115 million), a revaluation reserve of nil (2014: $17 million) and a legal reserve of $8 million (2014: $8 million).
33. AUDITOR’S REMUNERATION
US$ 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
2015
Paid/payable
to auditor (if
not Deloitte)
Paid/payable to Deloitte
2014
Paid/payable
to auditor (if
not Deloitte)
United
Kingdom
Overseas
Total
Overseas
United
Kingdom
Overseas
Total
Overseas
1.5
2.1
3.6
–
1.6
2.5
4.1
–
0.5
2.0
0.6
–
0.1
0.3
0.4
1.4
5.9
8.0
1.3
0.2
0.4
0.4
0.7
3.0
6.4
10.0
1.9
0.2
0.5
0.7
1.1
4.4
0.2
0.2
–
0.1
0.1
–
0.1
0.3
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
–
–
–
–
–
–
(1)
(2)
Includes $1.5 million (2014: $1.4 million) for the interim review.
Includes nil (2014: $0.1 million) for the audit of Group pension plans.
154
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
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 2015 or 31 December 2014.
Anglo American South Africa Limited (AASA)
AASA, a wholly owned subsidiary of the Company, is a defendant in a number of lawsuits filed in 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.
The law suits in South Africa against AASA are: (i) Approximately 4,400 separate lawsuits filed in the North Gauteng High Court (Pretoria) which have been
referred to arbitration; and (ii) A consolidated class certification application filed in the South Gauteng High Court (Johannesburg) in which AASA is named
as one of 32 defendants.
AASA is defending the separate lawsuits and is opposing the application for consolidated class certification.
AASA, AngloGold Ashanti, Gold Fields, Harmony Gold and Sibanye Gold announced in November 2014 that they had formed an industry working group to
address issues relating to compensation and medical care for occupational lung disease in the gold mining industry in South Africa. The companies are in
the process of engaging 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
In December 2013 the Constitutional Court ruled that Sishen Iron Ore Company (SIOC) held a 78.6% undivided share of the Sishen mining right and 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%
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 of Mineral
Resources (‘the Minister’) to be appropriate. SIOC applied for the residual right in early 2014.
SIOC received notice from the Department of Mineral Resources (DMR) that the Director General of the DMR had consented to the amendment of SIOC’s
mining right in respect of the Sishen mine to include the residual 21.4% undivided share of the mining right for the Sishen mine. The consent letter is subject to
certain conditions (which are described by the DMR as ‘proposals’). The conditions contained in the Letter of Grant relate substantively to domestic supply,
support for skills development, research and development, and procurement.
Until the legal and practical implications of the proposed conditions have been clarified with the DMR, SIOC is unable to accept the conditions.
Section 96 of the MPRDA allows for an internal appeal to the Minister. SIOC therefore submitted an internal appeal to the Minister, as required by the MPRDA.
SIOC has not yet received a response to its appeal.
In the interim, SIOC continues to engage with the DMR in relation to the proposed conditions in order to achieve a mutually beneficial solution.
Kumba Iron Ore tax
At 31 December 2015, 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 2015.
35. RELATED PARTY TRANSACTIONS
The Group has a related party relationship with its subsidiaries, joint operations, associates and joint ventures (see note 37 and 40). 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 sale, 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.
US$ million
Transactions with related parties
Sale of goods and services
Purchase of goods and services
Balances with related parties
Trade and other receivables from related parties
Trade and other payables to related parties
Loans receivable from related parties(2)
Associates
Joint ventures
Joint operations(1)
2015
2014
2015
2014
2015
2014
28
(425)
7
(135)
–(3)
31
(587)
23
(140)
98
3
(183)
–
(15)
431(4)
–
(31)
37
(17)
329
123
(2,606)
141
(3,949)
15
(68)
21
28
(97)
23
(1) Represents the portion of balances and transactions with joint operations or joint operation partners that the Group does not have the right to offset against the corresponding
amount recorded by the respective joint operations. These amounts primarily relate to purchases by De Beers and Platinum from their joint operations in excess of the Group’s attributable
share of their production.
Included in Financial asset investments on the Consolidated balance sheet.
(2)
(3) An impairment charge of $98 million has been recorded against loans receivable from associates during the year. This relates to loans to Atlatsa Resources Corporation (Platinum) and its
(4)
subsidiaries, which have been fully impaired. The impairment charge is included within operating special items. See note 6 for further details.
Includes $200 million receivable from Samancor (Iron Ore and Manganese). Samancor has been accounted for as a joint venture since March 2015, following amendments to the
agreement that governs the Group’s interests in Samancor which resulted in the Group acquiring joint control over the business (previously accounted for as an associate).
Anglo American plc Annual Report 2015
155
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
35. RELATED PARTY TRANSACTIONS continued
At 31 December 2015 the directors of the Company and their immediate relatives controlled 0.2% (2014: 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 final phase of the refinancing transaction for Atlatsa Resources Corporation, which 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.
36. EVENTS OCCURRING AFTER END OF YEAR
There have been no reportable events since 31 December 2015.
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 are set out below. All these
interests are held indirectly by the parent company and are consolidated within these financial statements. A complete list of the Group’s related undertakings
can be found in note 40.
Subsidiary undertakings
Platinum
Anglo American Platinum Limited(3)
De Beers
De Beers Consolidated Mines Proprietary Limited(4)
De Beers Société Anonyme
Copper
Anglo American Sur SA
Anglo American Quellaveco SA
Anglo American Norte SA(5)
Nickel
Anglo American Níquel Brasil Limitada (Barro Alto)
Anglo American Níquel Brasil Limitada (Codemin)
Niobium and Phosphates(6)
Anglo American Nióbio Brasil Limitada
Anglo American Fosfatos Brasil Limitada
Iron Ore and Manganese
Anglo American Minério de Ferro Brasil S.A.
Anglo Ferrous Brazil SA
Kumba Iron Ore Limited
Sishen Iron Ore Company (Proprietary) Limited(7)
Coal
Anglo American Metallurgical Coal Holdings Limited
Anglo Coal(8)
Peace River Coal Inc.
Proportionately consolidated joint operations
Debswana Diamond Company (Proprietary) Limited(10)
Namdeb Holdings (Proprietary) Limited(11)
Compañía Minera Doña Inés de Collahuasi SCM
Capcoal(12)
Dawson(12)
Drayton(12)
Foxleigh(12)
Moranbah North(12)
See page 157 for footnotes.
156
Anglo American plc Annual Report 2015
Country of incorporation(1)
Business
South Africa
Platinum
South Africa
Luxembourg
Diamonds
Diamonds
Chile
Peru
Chile
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
South Africa
South Africa
Australia
South Africa
Canada
Copper
Copper project
Copper
Nickel project
Nickel
Niobium
Phosphates
Iron ore project
Iron ore
Iron ore
Iron ore
Coal
Coal
Coal
Country of incorporation(1)
Botswana
Namibia
Chile
Australia
Australia
Australia
Australia
Australia
Business
Diamonds
Diamonds
Copper
Coal
Coal
Coal
Coal
Coal
Percentage of equity owned(2)
2015
78%
74%
85%
50.1%
81.9%
–
100%
100%
100%
100%
100%
100%
69.7%
73.9%
100%
100%
100%
2014
78%
74%
85%
50.1%
81.9%
100%
100%
100%
100%
100%
100%
100%
69.7%
73.9%
100%
100%
100%
Percentage of equity owned(9)
2015
50%
50%
44%
70%
51%
88.2%
70%
88%
2014
50%
50%
44%
70%
51%
88.2%
70%
88%
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
37. GROUP COMPANIES continued
Joint ventures
Ferroport Logistica Comercial Exportadora S.A.(13)
Samancor Holdings Proprietary Limited(14)(15)(16)
Groote Eylandt Mining Company Pty Limited (GEMCO)(14)(15)
Tasmanian Electro Metallurgical Company Pty Limited (TEMCO)(14)(15)
Lafarge Tarmac Holdings Limited(17)
AI Futtain Tarmac Quarry Products Limited (18)
Tarmac Oman Limited (18)
Midmac Tarmac Qatar LLC (18)
Country of incorporation(1)
Brazil
South Africa
Australia
Australia
United Kingdom
Dubai
Hong Kong
Qatar
Business
Port
Manganese
Manganese
Manganese
Heavy building materials
Heavy building materials
Heavy building materials
Heavy building materials
Associates
Carbones del Cerrejón LLC
Cerrejón Zona Norte SA
Jellinbah Group Pty Limited(19)
Country of incorporation(1)
Anguilla
Colombia
Australia
Business
Coal
Coal
Coal
Percentage of equity owned(9)
2015
50%
40%
40%
40%
–
–
–
–
2014
50%
40%
40%
40%
50%
49%
50%
50%
Percentage of equity owned(9)
2015
33.3%
33.3%
33.3%
2014
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, 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 Group’s effective interest in Anglo American Platinum Limited is 79.6% (2014: 79.8%), which includes shares issued as part of a community empowerment deal.
(4) 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%.
(5) Non-controlling interest of 0.018%. On 24 August 2015, Anglo American announced that it had reached an agreement to sell its interest in Anglo American Norte SA to an investor consortium.
On 11 September 2015 this transaction was completed. See note 30.
(6) Niobium and Phosphates are now aggregated, having previously been presented separately (see note 3).
(7) The 73.9% interest in Sishen Iron Ore Company (Proprietary) Limited (SIOC) is held indirectly through Kumba Iron Ore Limited, 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 Limited. Consequently the effective interest in SIOC included in the
Group’s results is 53.7%.
(8) A division of Anglo Operations Proprietary Limited, a wholly owned subsidiary.
(9) All equity interests shown are ordinary shares.
(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) The wholly owned subsidiary Anglo American Metallurgical Coal Holdings Limited holds the proportionately consolidated joint operations. These operations are unincorporated and
jointly controlled.
(13) Previously LLX Minas-Rio Logistica Comercial Exportadora S.A.
(14) Samancor has been accounted for as a joint venture since March 2015, following amendments to the agreement that governs the Group’s interests in Samancor which resulted in the Group
acquiring joint control over the business (previously accounted for as an associate).
(15) These entities have a 30 June year end.
(16) 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%.
(17) On 17 July 2015 the Group disposed of its 50% interest in Lafarge Tarmac Holdings Limited to Lafarge SA. See note 30.
(18) The Group disposed of its interest in these joint ventures during December 2015.
(19) 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.
2015
6,895
1,885
662
1,149
10,591
2014
6,748
2,465
761
1,133
11,107
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 2015
157
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
2015
Commodity price linked
Commodity price linked
Subject to
price
movements(1)
337
16
353
Fixed
price(2)
334
–
334
Not
linked to
commodity
price
Subject to
price
Total
movements(1)
(11,674)
(1,330)
(13,004)
(11,003)
(1,314)
(12,317)
498
3
501
Fixed
price(2)
649
–
649
Not
linked to
commodity
price
2014
Total
(12,590)
(1,194)
(13,784)
(11,443)
(1,191)
(12,634)
(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 and cash in disposal groups, but including the debit valuation adjustment attributable to derivatives
hedging net debt) are $593 million. This includes net assets of $920 million denominated in US dollars and $92 million denominated in Brazilian real, and net
liabilities of $231 million denominated in Australian dollars, $217 million denominated in Chilean pesos and $191 million denominated in South African rand.
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. Net other
financial assets (excluding net debt related balances and cash in disposal groups, but including the debit valuation adjustment attributable to derivatives
hedging net debt) of $593 million, are primarily 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 group metals price
10% decrease in the platinum group metals price
Interest rate sensitivity
50bps increase in LIBOR(3)
50bps decrease in LIBOR(3)
Income
(19)
19
(46)
46
9
(9)
21
(24)
117
(117)
(13)
13
(32)
32
2015
Equity
(19)
19
(46)
46
9
(9)
21
(24)
117
(117)
(13)
13
(32)
32
Income
(13)
13
(154)
154
30
(30)
36
(40)
103
(103)
(21)
21
(33)
33
2014
Equity
(13)
13
(154)
154
30
(30)
36
(40)
103
(103)
(21)
21
(33)
33
(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 $61 million (2014: $49 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 2015
159
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.
Sales of metal concentrate are stated at their invoiced amount which is
net of treatment and refining charges. 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, see note 4 for more information on provisional price adjustments.
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.
Revenue from services is recognised as services are rendered and accepted
by the customer. Amounts billed to customers in respect of shipping and
handling activities are classified as revenue where the Group is responsible
for freight. In situations where the Group is acting as an agent, amounts billed
to customers are offset against the relevant costs.
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.
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 190.
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 non-controlling interests 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. 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.
39b. Borrowing costs
Interest on borrowings directly relating to the financing of qualifying assets
in the course of construction is added to the capitalised cost of those projects
under ‘Capital works in progress’, until such time as the assets are
substantially ready for their intended use or sale. 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.
160
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39. ACCOUNTING POLICIES continued
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.
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 interests’ 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
Property, plant and equipment is stated at cost, less accumulated
depreciation and accumulated impairment losses. Cost is the fair value of
consideration required to acquire and develop the asset and includes the
purchase price, acquisition of mineral rights, costs directly attributable to
bring the asset to its location and condition necessary for it to be capable of
operating in the manner intended by management, the initial estimate of any
decommissioning obligation and, for assets that take a substantial period of
time to get ready for their intended use, borrowing costs.
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.
Depreciation of property, plant and equipment
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 included in the Life
of Mine Plan. These other Mineral Resources are included in depreciation
calculations where, taking into account historic rates of conversion to Ore
Reserves, there is a high degree of confidence that they will be extracted
in an economic manner. This is the case principally for diamond operations,
where depreciation calculations are based on Diamond Reserves and
Diamond Resources included in the Life of Mine Plan. This reflects the unique
nature of diamond deposits where, due to the difficulty in estimating grade,
Life of Mine Plans frequently include significant amounts of Indicated or
Inferred Resources.
Buildings and items of plant and equipment for which the consumption of
economic benefit is linked primarily to utilisation or to throughput rather
than production, 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.
Under limited circumstances, items of plant and equipment may be
depreciated over a period that exceeds the Reserve Life by taking into
account additional Mineral Resources other than Proved and Probable
Reserves included in the Life of Mine Plan, after making allowance for
expected production losses based on historic rates of resource conversion.
‘Capital works in progress’ are measured at cost less any recognised
impairment. Depreciation commences when the assets are capable of
operating in the manner intended by management, at which point they are
transferred to the appropriate asset class.
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.
39h. Deferred stripping
The removal of rock or soil overlying a mineral deposit, overburden, and other
waste materials is often necessary during the initial development of an open
pit mine site, in order to access the mineral ore deposit. The process of
removing overburden and other mine waste materials is referred to as
stripping. 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 operating in the manner intended by
management. This is classified as expansionary capital expenditure, within
investing cash flows.
The removal of waste material after the point at which depreciation
commences 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.
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ADDITIONAL DISCLOSURES
39. ACCOUNTING POLICIES continued
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 ‘Mining properties and leases’. This is classified
as stripping and development capital expenditure, within investing cash
flows. 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 to ‘Mining properties
and leases’.
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 Ore Reserves for a component are accounted for
prospectively as a change in estimate.
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 and evaluation expenditure
Exploration and evaluation expenditure is expensed in the year in which it
is incurred.
Exploration expenditure is the cost of exploring for Mineral Resources other
than that occurring at existing operations and projects and comprises
geological and geophysical studies, exploratory drilling and sampling and
resource development.
Evaluation expenditure includes the cost of conceptual and pre-feasibility
studies and evaluation of Mineral Resources at existing operations.
When a decision is taken that a mining project is technically feasible and
commercially viable, usually after a pre-feasibility study has been completed,
subsequent directly attributable expenditure, including feasibility study costs,
are considered development expenditure and are capitalised within property,
plant and equipment.
Exploration properties acquired are recognised in the balance sheet when
management considers that their value is recoverable. These properties are
measured at cost less any accumulated impairment losses.
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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.
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.
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
39. ACCOUNTING POLICIES continued
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.
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 asset. 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.
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ADDITIONAL DISCLOSURES
39. ACCOUNTING POLICIES continued
Changes in the measurement of a liability relating to the decommissioning of
plant or other site preparation work (that result from changes in the estimated
timing or amount of the cash flow or a change in the discount rate), are added
to or deducted from the cost of the related asset in the current period. If a
decrease in the liability exceeds the carrying amount of the asset, the excess
is recognised immediately in the income statement. If the asset value is
increased and there is an indication that the revised carrying value is not
recoverable, an impairment test is performed in accordance with the
accounting policy set out above.
For some South African operations annual contributions are made to
dedicated environmental rehabilitation trusts to fund the estimated cost of
rehabilitation during and at the end of the life of the relevant mine. The Group
exercises full control of these trusts and therefore the trusts are consolidated.
The trusts’ assets are disclosed separately on the balance sheet as
non-current assets.
The trusts’ assets are measured based on the nature of the underlying assets
in accordance with accounting policies for similar assets.
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.
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.
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.
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FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
40. RELATED UNDERTAKINGS OF THE GROUP
The Group consists of the parent company, Anglo American plc, incorporated
in the United Kingdom and its subsidiaries, joint operations, joint ventures and
associates. In accordance with Section 409 of the Companies Act 2006 a full
list of related undertakings, the country of incorporation and the effective
percentage of equity owned as at 31 December 2015 is disclosed below. See
note 37 for the Group’s principal subsidiaries, joint operations, joint ventures
and associates.
Wholly owned subsidiaries(1)(2)
0912055 BC Ltd (Canada)
A.C.N 127 881 510 Pty Ltd (Australia)
A.R.H. Investments (Luxembourg)
A.R.H. Limited (Luxembourg)
AA Holdings Argentina B.V. (Netherlands)
AA Sakatti Mining Oy (Finland)
Acro (Hanise) (South Africa)
Addon Investments (Private) Limited (Zimbabwe)
Alluvium Limited (Ireland)
Almenta 127 (Pty) Ltd (South Africa)
Amaprop Townships Limited (South Africa)
Ambase Exploration (Botswana) (Pty) Ltd (Botswana)
Ambase Exploration Africa (RDC) SPRL (Democratic Republic of Congo)
Ambase Exploration (Zambia) (Pty) Ltd (Zambia)
Ambase Exploration Mocambique Limitada (Mozambique)
Ambase Investment Africa (Botswana) (Pty) Ltd (South Africa)
Ambase Investment Africa (DRC) (Pty) Ltd (South Africa)
Ambase Investment Africa (Mozambique) (Pty) Ltd (South Africa)
Ambase Investment Africa (Namibia) (Pty) Ltd (South Africa)
Ambase Investment Africa (Tanzania) (Pty) Ltd (South Africa)
Ambase Investment Africa (Zambia) (Pty) Ltd (South Africa)
Ambase Prospecting (Botswana) (Pty) Ltd (Botswana)
Ambase Prospecting (Namibia) (Pty) Ltd (Namibia)
Ambase Prospecting (Tanzania) (Pty) Ltd (Tanzania)
Ambras Holdings (Luxembourg)(3)
Amcoal Collieries Recruiting Organisation (Hanise) (Proprietary) Limited
(South Africa)
Amcoal Collieries Recruiting Organisation (Lesotho) (Pty) Ltd (Lesotho)
Amcoal Collieries Recruiting Organisation (Pty) Limited (South Africa)
Ammin Coal Holdings (Luxembourg)
Ampros (Pty) Ltd (South Africa)
Amzim Holdings Limited (Zimbabwe)
Anglo (Operation) Netherlands BV (Netherlands)
Anglo African Exploration Holdings (Luxembourg)
Anglo American (London) (United Kingdom)
Anglo American (London) 2 (United Kingdom)
Anglo American (NA) 1 BV (Netherlands)
Anglo American (NA) 3 BV (Netherlands)
Anglo American 2005 Limited (United Kingdom)(4)
Anglo American Amcoll (UK) Limited (Cyprus)
Anglo American Australia Finance Limited (Australia)
Anglo American Australia Holdings Ltd (Australia)
Anglo American Australia Investments Limited (United Kingdom)(5)
Anglo American Australia Limited (Australia)
Anglo American Bokamoso Limited (Botswana)
Anglo American Capital Australia Limited (United Kingdom)
Anglo American Capital International Limited (United Kingdom)
Anglo American Capital Luxembourg (Luxembourg)
Anglo American Capital plc (United Kingdom)(5)
Anglo American Chile Inversiones S.A. (Chile)
Anglo American Chile Investments (UK) Limited (Cyprus)
Anglo American Chile Ltda (Chile)
Anglo American Clarent (UK) Limited (Cyprus)
Anglo American CMC Holdings Limited (United Kingdom)
Anglo American Colombia Exploration S.A. (Colombia)
Anglo American Consultoria em Minério de Ferro Ltda. (Brazil)
Anglo American Corporation Botswana (Services) Limited (Botswana)
Anglo American Corporation de Chile Holdings Limited (Liberia)
Anglo American Corporation de Chile Holdings Limited (Isle of Man)
Anglo American Corporation Mocambique Servicos Limitada (Mozambique)
Anglo American Corporation Mozambique Ltd (Mozambique)
Anglo American Corporation of South Africa (Pty) Ltd (South Africa)
Anglo American Corporation Zimbabwe Limited (Zimbabwe)
Anglo American Development LLC (Mongolia)
Anglo American Diamond Holdings Limited (United Kingdom)
Anglo American EMEA Shared Services (Pty) Ltd (South Africa)
Anglo American Exploration B.V. (Netherlands)
Anglo American Exploration (Australia) Pty Ltd (Australia)
Anglo American Exploration (Canada) Ltd. (Canada)
Anglo American Exploration (India) B.V. (Netherlands)
Anglo American Exploration (India) Pvt. Ltd (India)
Anglo American Exploration (Philippines) B.V. (Netherlands)
Anglo American Exploration (Philippines) Inc. (Philippines)
Anglo American Exploration (Singapore) Pte. Ltd (Singapore)
Anglo American Exploration (USA), Inc. (USA)
See page 168 for footnotes.
Anglo American Exploration Colombia (Luxembourg)
Anglo American Exploration Luxembourg (Luxembourg)
Anglo American Farms (Pty) Ltd (South Africa)
Anglo American Farms (UK) Limited (United Kingdom)
Anglo American Farms Investment Holdings (Pty) Ltd (South Africa)
Anglo American Farms Limited A (South Africa)
Anglo American Ferrous 2 (United Kingdom)
Anglo American Ferrous Investments (Luxembourg)
Anglo American Ferrous Investments Limited (United Kingdom)
Anglo American Finance (UK) Limited (United Kingdom)
Anglo American Finance Luxembourg (Luxembourg)(6)
Anglo American Finland Holdings 1 (Luxembourg)
Anglo American Finland Holdings 2 (Luxembourg)
Anglo American Fosfatos Brasil Ltda (Brazil)
Anglo American Global Finance Limited (United Kingdom)
Anglo American Group Employee Shareholder Nominees (Pty) Ltd (South Africa)
Anglo American Group Foundation (United Kingdom)
Anglo American Holdings Limited (United Kingdom)
Anglo American India Holdings B.V. (Netherlands)
Anglo American International (Luxembourg)
Anglo American International BV (Netherlands)
Anglo American International Holdings Limited (United Kingdom)
Anglo American Investimentos – Minério de Ferro Ltda. (Brazil)
Anglo American Investments (Australia) Limited (Australia)
Anglo American Investments (NA) Limited (United Kingdom)
Anglo American Investments (UK) Limited (United Kingdom)
Anglo American Italy Sarl (Italy)
Anglo American Kumba Exploration Liberia Ltd (Liberia)
Anglo American Liberia Holdings (Luxembourg)
Anglo American Luxembourg (Luxembourg)
Anglo American Marketing Limited (United Kingdom)
Anglo American Medical Plan Limited (United Kingdom)
Anglo American Metallurgical Coal Assets Eastern Australia Ltd (Australia)
Anglo American Metallurgical Coal Assets Pty Ltd (Australia)
Anglo American Metallurgical Coal Finance Ltd (Australia)
Anglo American Metallurgical Coal Holdings Ltd (Australia)
Anglo American Metallurgical Coal Pty Ltd (Australia)
Anglo American Mexico S.A. de C.V. (Mexico)
Anglo American Michiquillay Peru (Luxembourg)
Anglo American Michiquillay S.A. (Peru)
Anglo American Minerio de Ferro Brasil S.A (Brazil)
Anglo American Mongolia Holdings Pte. Ltd (Singapore)
Anglo American Netherlands B.V. (Netherlands)
Anglo American Nickel Marketing Limited (United Kingdom)
Anglo American Niobio Brasil Ltda. (Brazil)
Anglo American Niquel Brasil Ltda (Brazil)
Anglo American Participacoes Minerio de Ferro Ltda. (Brazil)
Anglo American Peru S.A. (Peru)
Anglo American PNG Holdings Limited (United Kingdom)
Anglo American Prefco Limited (United Kingdom)
Anglo American Properties Limited (South Africa)
Anglo American Prospecting Services (Pty) Ltd (South Africa)
Anglo American REACH Limited (United Kingdom)
Anglo American Representative Offices Limited (United Kingdom)
Anglo American SA Finance Limited (South Africa)
Anglo American Sebenza Fund (Pty) Ltd (South Africa)
Anglo American Services (International) Limited (British Virgin Islands)
Anglo American Services (UK) Ltd (United Kingdom)(5)
Anglo American Services India Private Limited (India)
Anglo American Services Overseas Limited (United Kingdom)
Anglo American Servicios Perú S.A. (Peru)
Anglo American South Africa Limited (South Africa)
Anglo American Thermal Coal (Australia) Pty Ltd (Australia)
Anglo American US (Pebble) LLC (USA)
Anglo American US (Utah) Inc (USA)
Anglo American US Holdings Inc (USA)
Anglo American Venezuela Holdings (Luxembourg)
Anglo American Venezuela C.A. (Venezuela)
Anglo American Zimele (Pty) Limited (South Africa)
Anglo American Zimele Community Fund (Pty) Ltd (South Africa)
Anglo American Zimele Green Fund (Pty) Ltd (South Africa)
Anglo Australia Investments (Luxembourg)
Anglo Base Metals Marketing Limited (United Kingdom)
Anglo Coal (Archveyor Management) Pty Ltd (Australia)
Anglo Coal (Callide Management) Pty Ltd (Australia)
Anglo Coal (Callide) Pty Ltd (Australia)
Anglo Coal (Callide) No 2 Pty Ltd (Australia)
Anglo Coal (Capcoal Management) Pty Ltd (Australia)
Anglo Coal (Contracting) Pty Ltd (Australia)
Anglo Coal (Dartbrook Management) Pty Ltd (Australia)
Anglo Coal (Dartbrook) Pty Ltd (Australia)
Anglo Coal (Dawson Management) Pty Ltd (Australia)
Anglo Coal (Dawson Services) Pty Ltd (Australia)
Anglo Coal (Dawson South Management) Pty Ltd (Australia)
Anglo Coal (Dawson South) Pty Ltd (Australia)
Anglo Coal (Dawson) Holdings Pty Ltd (Australia)
Anglo Coal (Dawson) Limited (Australia)
Anglo American plc Annual Report 2015
165
Financial statements
ADDITIONAL DISCLOSURES
40. RELATED UNDERTAKINGS OF THE GROUP continued
Anglo Coal (Drayton Management) Pty Ltd (Australia)
Anglo Coal (Drayton South Management) Pty Ltd (Australia)
Anglo Coal (Drayton South) Pty Ltd (Australia)
Anglo Coal (Drayton) No.2 Pty Limited (Australia)
Anglo Coal (Drayton) Pty Ltd (Australia)
Anglo Coal (Foxleigh Management) Pty Ltd (Australia)
Anglo Coal (Foxleigh Services) Pty Ltd (Australia)
Anglo Coal (Foxleigh) Pty Ltd (Australia)
Anglo Coal (German Creek) Pty Ltd (Australia)
Anglo Coal (Grasstree Management) Pty Ltd (Australia)
Anglo Coal (Grosvenor Management) Pty Ltd (Australia)
Anglo Coal (Grosvenor) Pty Ltd (Australia)
Anglo Coal (Jellinbah) Holdings Pty Ltd (Australia)
Anglo Coal (Monash Energy) Holdings Pty Ltd (Australia)
Anglo Coal (Moranbah North Management) Pty Limited (Australia)
Anglo Coal (Roper Creek) Pty Ltd (Australia)
Anglo Coal (Theodore South) Pty Ltd (Australia)
Anglo Coal Botswana (Pty) Ltd (Botswana)
Anglo Coal CMC 1 S.à r.l. (Luxembourg)
Anglo Coal Holdings Limited (United Kingdom)(5)
Anglo Coal International (Luxembourg)
Anglo Coal Investment Africa (Botswana) (Pty) Ltd (South Africa)
Anglo Coal Investment Africa (Botswana) (Pty) Ltd (Botswana)
Anglo Coal Overseas Services Limited (United Kingdom)
Anglo Corporate Enterprises (Pty) Ltd (South Africa)
Anglo Diamond Investments (Luxembourg)
Anglo Exploration (Zambia) Limited (Zambia)
Anglo Exploration GmbH (Germany)
Anglo Exploration Mocambique Ltda (Mozambique)
Anglo Ferrous Brazil Participações S.A. (Brazil)
Anglo Ferrous Metals Marketing Limited (United Kingdom)
Anglo Inyosi Coal Securityco Ltd (South Africa)
Anglo Iron Ore Investments (Luxembourg)
Anglo Loma Investments (Luxembourg)
Anglo Operations (Australia) Pty Ltd (Australia)
Anglo Operations (International) Limited (Luxembourg)
Anglo Operations (Netherlands) B.V. (Netherlands)
Anglo Operations Proprietary Limited (South Africa)
Anglo Peru Investments (Luxembourg)
Anglo Quellaveco (Luxembourg)
Anglo South Africa (Pty) Ltd (South Africa)
Anglo South Africa Capital (Pty) Ltd (South Africa)
Anglo South American Investments Limited (Mauritius)
Anglo UK Pension Trustee Limited (United Kingdom)
Anglo Venezuela Investments (Luxembourg)
Anglo Ventures (SA) (Pty) Ltd (South Africa)
Anglo Zimele Small Business Support Services (Pty) Ltd (South Africa)
Anmercosa Finance Limited (United Kingdom)
Anmercosa Pension Trustees Limited (United Kingdom)
Anmercosa Sales Limited (United Kingdom)
Anseld Holdings Proprietary Limited (South Africa)
Asociación Anglo American Perú (Peru)
Asociación Michiquillay (Peru)
Asociación Quellaveco (Peru)
Aval Holdings Sarl (Luxembourg)
Balgo Nominees (Pty) Ltd (South Africa)
Blue Lounge Trading 129 (Pty) Ltd (South Africa)
Broadlands Park Limited (Zimbabwe)
Buttercup Company (Luxembourg)
Callide Coalfields (Sales) (Pty) Ltd (Australia)
Camara de Comercio Repolublica Sul Africa (Brazil)
Chamfron Limited (South Africa)
Coromin Insurance (Ireland) Limited (Ireland)
Coromin Limited (Bermuda)
Coruripe Participações Ltda. (Brazil)
Cytobex (Pty) Ltd (South Africa)
Cytoblox (Pty) Ltd (South Africa)
Cytobuzz (Pty) Ltd (South Africa)
Dawson Coal Processing Pty Ltd (Australia)
Dawson Highwall Mining Pty Ltd (Australia)
De Beers Small Business Start Up Fund (Pty) Ltd (South Africa)
Dido Nominees Proprietary Limited (South Africa)
Drayton Coal (Sales) Pty Ltd (Australia)
Enanticept (Pty) Ltd (South Africa)
Fermain Nominees (Pty) Ltd (South Africa)
Ferro Nickel Marketing Limited (United Kingdom)
Firecrest Investments Limited (United Kingdom)
Gespa Gesso Paulista Ltda. (Brazil)
Golden Pond Trading 248 (Pty) Ltd (South Africa)
Grosvenor Sales Pty Ltd (Australia)
Hermitage (Luxembourg)
High Ground Investments Limited (South Africa)
Highbirch Ltd (British Virgin Islands)
Hoddle Investment Holdings 6 (Pty) Ltd (South Africa)
Holdac Limited (Bermuda)
See page 168 for footnotes.
166
Anglo American plc Annual Report 2015
Ingagane Colliery (Proprietary) Limited (South Africa)
Inglewood Holdings Limited (Mauritius)
Inglewood Minerals Pvt Limited (India)
Instituto Anglo American Brasil (Brazil)
Inversiones Anglo American Limitada (Chile)
Inversiones Anglo American Norte S.A (Chile)
Inversiones Anglo American Sur S.A (Chile)
Inversiones Minorco Chile S.A. (Chile)
Jena Pty Ltd (Australia)
Jena Unit Trust (Australia)
Joint Coal (Pty) Ltd (South Africa)
Lansan Investment Holdings (Pty) Ltd (South Africa)
Loma de Niquel Holdings BV (Netherlands)
Longboat (Pty) Ltd (South Africa)
Longboat Trading (Pty) Ltd (Namibia)
Longmeadow Home Farm (Pty) Ltd (South Africa)
Mallord Properties Limited (United Kingdom)
Maotsi Stone Crushers (Pty) Ltd (South Africa)
Marikana Ferrochrome Ltd (South Africa)
Marikana Minerals (Pty) Ltd (South Africa)
Midway Investment (Luxembourg)
Minera Anglo American Argentina S.A. (Argentina)
Mineração Barro Alto Ltda. (Brazil)
Mineração Itamaracá Ltda. (Brazil)
Mineral Venture Company (Pty) Ltd (South Africa)
Minorco (Luxembourg)
Minorco Exploration (Indonesia) B.V. (Netherlands)
Minorco Peru Holdings (Luxembourg)
Minpress Investment Holdings (Pty) Limited (Luxembourg)
Minpress Investments (Luxembourg)
Monash Energy Coal Ltd (Australia)
Moranbah North Coal (No2) Pty Ltd (Australia)
Moranbah North Coal Pty Ltd (Australia)
Morro do Níquel Ltda. (Brazil)
Neville Street Limited (United Kingdom)
Peace River Coal Inc (Canada)
Phakamisa Civil and Mining Contracting (Pty) Ltd (South Africa)
PT Anglo American Indonesia (Indonesia)
PT Minorco Services Indonesia (Indonesia)
Ravenswood House (Pty) Ltd (South Africa)
Refitlhile Drilling (Pty) Ltd (South Africa)
Resident Nominees (Pty) Ltd (South Africa)
Reunion Group Limited (United Kingdom)
Reunion Mining Limited (United Kingdom)
Rhoanglo Trustees Limited (United Kingdom)
Rietpoort Mining (Proprietary) Limited (South Africa)
Security Nominees Limited (United Kingdom)
Security Nominees Limited (Zimbabwe)
Sedgford Limited (British Virgin Islands)
Servicios Anglo American Mexico S.A. de C.V. (Mexico)
Silver Lake Trading 619 (Pty) Ltd (South Africa)
Southridge Limited (Zimbabwe)
Springfield Collieries Limited (South Africa)
Steppe Eagle (Pty) Ltd (South Africa)
Stockade Investments (Luxembourg)
Sunbali Flowers (Pty) Ltd (South Africa)
Tarmac International Holdings BV (Netherlands)
Tarmac Investments (International) Limited (United Kingdom)
Tenon Investment Holdings (Pty) Ltd (South Africa)
Tshipi Kwena Steel (Pty) Ltd (South Africa)
Vencorp Limited (Luxembourg)
Vergelegen Wine Estate (Pty) Ltd (South Africa)
Vergelegen Wines (Pty) Ltd (South Africa)
Viaduct Portfolio Management Limited (United Kingdom)
Zamanglo Prospecting Limited (Zambia)
Majority owned subsidiaries(1)(2)
4259785 Canada Inc (Canada, 85%)
Anglo American (India) Private Limited (India, 99%)
Anglo American Corporation De Portugal Limitada PTA (Portugal, 95%)
Anglo American Inyosi Coal (Pty) Limited (South Africa, 73%)
Anglo American Mocambique Limitada (Mozambique, 90%)
Anglo American Platinum Limited (South Africa, 78%)(7)
Anglo American Quellaveco S.A. (Peru, 82%)
Anglo Platinum Development Limited (South Africa, 78%)
Anglo Platinum International (Luxembourg, 78%)
Anglo Platinum International Brazil (Luxembourg, 78%)
Anglo Platinum Management Services (Pty) Ltd (South Africa, 78%)
Anglo Platinum Marketing Limited (United Kingdom, 78%)
Aurumar Alaska Holdings Ltd (UK) (United Kingdom, 85%)
Big Hill, LLC (USA, 55%)
Blinkwater Farms 244KR Proprietary Limited (South Africa, 78%)
Butsanani Energy Investment Holdings (Pty) Ltd (South Africa, 67%)
CAML Resources Pty Ltd (Australia, 67%)
Cencan S.A. (Luxembourg, 85%)
Charterhouse CAP Ltd (United Kingdom, 85%)
Cheviot Holdings Ltd (Cayman Islands, 85%)
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
40. RELATED UNDERTAKINGS OF THE GROUP continued
Colliery Training College (Pty) Limited (South Africa, 56%)
D.B.L.H. Limited (Liberia, 85%)
Dartbrook Coal (Sales) Pty Ltd (Australia, 83%)
Dawson Sales Pty Ltd (Australia, 51%)
Dawson South Sales Pty Ltd (Australia, 51%)
DB Investments (Netherlands) NV (Netherlands, 85%)
DB Investments S.A. (Luxembourg, 85%)
DBCM Holdings (Pty) Ltd (South Africa, 63%)
De Beers Angola Holdings S.A. (Angola, 85%)
De Beers Angola Investments Limited (British Virgin Islands, 68%)
De Beers Angola Prospecting Pty Ltd (British Virgin Islands, 68%)
De Beers Auction Sales Belgium NV (Belgium, 85%)
De Beers Auction Sales Holdings Ltd (Hong Kong, 85%)
De Beers Auction Sales Hong Kong Ltd (Hong Kong, 85%)
De Beers Auction Sales Israel Ltd (Israel, 85%)
De Beers Auction Sales Singapore Pte Ltd (Singapore, 85%)
De Beers Australia Exploration Limited (Australia, 85%)
De Beers BC Ltd (British Virgin Islands, 85%)
De Beers Botswana (Pty) Ltd (Botswana, 85%)
De Beers Canada Holdings Inc. (Canada, 85%)
De Beers Canada Inc. (Canada, 85%)
De Beers Centenary AG (Switzerland, 85%)
De Beers Centenary Angola Properties Ltd (British Virgin Islands, 85%)
De Beers Centenary Mauritius Limited (Mauritius, 85%)
De Beers Consolidated Mines (Pty) Ltd (South Africa, 63%)(8)
De Beers DRC Exploration sprl (Democratic Republic of Congo, 85%)
De Beers Exploration Holdings (Luxembourg, 85%)
De Beers Global Sightholder Sales (Pty) Ltd (Botswana, 85%)
De Beers Group Services (Pty) Ltd (South Africa, 85%)
De Beers Holdings Botswana (Pty) Ltd (Botswana, 85%)
De Beers Holdings Luxembourg (Luxembourg, 85%)
De Beers India Private Ltd (India, 85%)
De Beers Intangibles Ltd (United Kingdom, 85%)
De Beers Marine (Pty) Ltd (South Africa, 85%)
De Beers Matlafalang Business Development (Pty) Ltd (South Africa, 63%)
De Beers Mauritius Holdings Private Ltd (Mauritius, 85%)
De Beers Mauritius Private Ltd (Mauritius, 85%)
De Beers Namibia Holdings (Pty) Ltd (Namibia, 85%)
De Beers Namibia (Pty) Ltd (Namibia, 85%)
De Beers Sightholder Sales South Africa (Pty) Ltd (South Africa, 63%)
De Beers Société Anonyme (Luxembourg, 85%)
De Beers Trademarks Ltd (United Kingdom, 85%)
De Beers UK Ltd (United Kingdom, 85%)
De Beers Zimbabwe Prospecting Limited (Zimbabwe, 85%)
Delibes Holdings Limited (British Virgin Islands, 85%)
Diamdel (Hong Kong) Limited (Hong Kong, 85%)
Diamdel Diamonds Ltd (Israel, 85%)
Diamdel Holdings Limited (Hong Kong, 85%)
Diamond Trading Company Proprietary Ltd NV (Belgium, 85%)
Diapros Canada Inc. (Canada, 85%)
Drayton Coal Shipping Pty Ltd (Australia, 88%)
DTC Marketing India Private Limited (India, 85%)
DTC Valuations Namibia (Pty) Ltd (Namibia, 85%)
EL Ramsden Bleskop (Pty) Ltd (South Africa, 67%)
Element Six (Holdings) Limited (Ireland, 51%)
Element Six (Isle of Man) Corporate Trustee Limited (Isle of Man, 85%)
Element Six (Production) (Pty) Ltd (South Africa, 51%)
Element Six (Production) Ltd (United Kingdom, 51%)
Element Six (Pty) Ltd (South Africa, 51%)
Element Six (Trade Marks) (Ireland, 51%)
Element Six (UK) Ltd (United Kingdom, 51%)
Element Six AB (Sweden, 51%)
Element Six Abrasives SA (Luxembourg, 51%)
Element Six Abrasives Treasury Ltd (ESATL2) (Ireland, 51%)
Element Six BV (New NLTEC) (Netherlands, 85%)
Element Six GmbH (DECAR) (Germany, 51%)
Element Six GmbH (DEDOF) (Germany, 51%)
Element Six Hard Materials (Wuxi) Co. Ltd (China, 51%)
Element Six Industrial Diamonds (Suzhou) Ltd (China, 51%)
Element Six Ltd (United Kingdom, 85%)
Element Six Ltd (Hong Kong, 51%)
Element Six Ltd (Ireland, 51%)
Element Six Ltd (Isle of Man, 85%)
Element Six Ltd (Japan, 51%)
Element Six Ltda (Brazil, 51%)
Element Six NV (Netherlands, 85%)
Element Six S.A. (Lux) (Luxembourg, 85%)
Element Six SA (Switz) (Switzerland, 51%)
Element Six South Africa (Pty) Ltd (South Africa, 51%)
Element Six Technologies (Pty) Ltd (South Africa, 85%)
Element Six Technologies Holding Ltd (Malta, 85%)
Element Six Technologies Ltd (Malta, 85%)
Element Six Technologies Ltd (United Kingdom, 85%)
Element Six Technologies sarl (Luxembourg, 85%)
Element Six Technologies U.S. Corporation (USA, 85%)
See page 168 for footnotes.
Element Six Trading (Shanghai) Co. Ltd (SHDOF) (China, 51%)
Element Six Trading (Suzhou) Co. Ltd (China, 51%)
Element Six Treasury Limited (ESTL2-IRE) (Ireland, 85%)
Element Six US Corporation (USA, 51%)
Element Six Ventures Sarl (Luxembourg, 85%)
Erabas B.V (Netherlands, 78%)
Forevermark Diamonds Private Limited (India, 85%)
Forevermark Italy S.R.L (Italy, 85%)
Forevermark KK (Japan, 85%)
Forevermark Limited (United Kingdom, 85%)
Forevermark Limited (Hong Kong, 85%)
Forevermark Marketing Shanghai Co. Ltd (China, 85%)
Forevermark US Inc. (USA, 85%)
Foxleigh Land Pty Ltd (Australia, 70%)
Foxleigh Sales & Marketing Pty Ltd (Australia, 70%)
German Creek Coal Pty Ltd (Australia, 70%)
IIDGR (UK) Limited (United Kingdom, 85%)
Indiapro BV (Netherlands, 51%)
Ingagane Colliery (Pty) Ltd (South Africa, 98%)
International Institute of Diamond Grading & Research Holdings
(Luxembourg, 85%)
International Institute of Diamond Grading & Research India Private Limited
(India, 85%)
International Institute of Diamond Grading and Research (Belgium)
(Belgium, 85%)
International Institute of Diamond Valuation (USA, 85%)
Intersea Pension Services Ltd (Guernsey, 85%)
Kaymin Resources Limited (Canada, 78%)
KIO Exploration Liberia (Luxembourg, 70%)
KIO Investments Holdings (Pty) Ltd (South Africa, 70%)
Kumba BSP Trust (South Africa, 52%)
Kumba International BV (Netherlands, 70%)
Kumba International Trading Sarl (Luxembourg, 51%)
Kumba Iron Ore Holdings (Luxembourg, 52%)
Kumba Iron Ore Limited (South Africa, 70%)
Kumba Singapore (Pte) Ltd (Singapore, 51%)
Lexshell 688 Investments (Pty) Ltd (South Africa, 66%)
Loma de Niquel Holdings Limited (British Virgin Islands, 94%)
Mafube Coal Mining (Pty) Ltd (South Africa, 50%)
Main Street 1252 (Pty) Ltd (South Africa, 63%)
Main Street 576 (Pty) Ltd (South Africa, 70%)
Manganore Iron Mining (Pty) Ltd (South Africa, 52%)
Masa Chrome Company (Pty) Ltd (South Africa, 50%)
Matthey Rustenburg Refiners (Pty) Ltd (South Africa, 78%)
Micawber 146 (Pty) Ltd (South Africa, 78%)
Minera Loma de Níquel (Venezuela, 98%)
Mineração Tariana Ltda. (Brazil, 77%)
Mogalakwena Platinum Limited (South Africa, 78%)
Moranbah North Coal (Sales) Pty Ltd (Australia, 88%)
MR Iron Ore Marketing Services Pte Ltd (Singapore, 50.1%)
Ndowana Exploration (Pty) Ltd (South Africa, 42%)
Newshelf 480 (Pty) Ltd (South Africa, 55%)
Norsand Holdings (Pty) Ltd (South Africa, 78%)
Peruke (Pty) Ltd (South Africa, 51%)
PGI (Hong Kong) (Hong Kong, 78%)
PGI (Shanghai) Co. Limited (China, 78%)
PGI (United Kingdom) Limited (United Kingdom, 78%)
PGI (United States of America) Jewelry Inc. (USA, 78%)
PGI India (India, 78%)
PGI KK (Japan, 78%)
PGI SA (Switzerland, 78%)
PGM Investment Company (Pty) Ltd (South Africa, 78%)
Platinum Guild India OVT Limited (India, 78%)
Platmed Properties (Pty) Ltd (South Africa, 78%)
Platmed (Pty) Ltd (South Africa, 78%)
Ponahalo Investments (Pty) Ltd (South Africa, 0%)(9)
Prime Trading (Proprietary) Limited (Namibia, 85%)
RA Gilbert (Pty) Ltd (South Africa, 78%)
Rainbow Gas and Coal Exploration (Pty) Ltd (Botswana, 51%)
Rietvlei Mining Company (Pty) Ltd (South Africa, 40%)(10)
Riverbank Investments Ltd (United Kingdom, 85%)
Rustenburg Platinum Mines Ltd (South Africa, 78%)
SASA Gold Exploration (Pty) Ltd (South Africa, 63%)
Satijnduiker Holdings BV (Netherlands, 51%)
Scallion (British Virgin Islands, 85%)
Sibelo Resource Development (Pty) Ltd (South Africa, 26%)
Sishen Iron Ore Company (Pty) Ltd (South Africa, 54%)(11)
Spectrem Air Ltd (South Africa, 75%)
Tarmac Oman Minerals LLC (Oman, 99%)
The Diamond Trading Company Ltd England (United Kingdom, 85%)
The Village of Cullinan (Pty) Ltd (South Africa, 63%)
Unki Mines (Private) Limited (Zimbabwe, 78%)
Whiskey Creek Management Services (Pty) Ltd (South Africa, 78%)
Anglo American plc Annual Report 2015
167
Financial statements
Joint ventures(1)(2)
Birchall Gardens LLP (United Kingdom, 50%)
Copper Creek Project LLC (USA, 50%)
De Beers Diamond Jewellers (Hong Kong) Limited (Hong Kong, 43%)
De Beers Diamond Jewellers (Macau) Company Limited (Macau, 43%)
De Beers Diamond Jewellers Ltd (United Kingdom, 43%)
De Beers Diamond Jewellers Ltd (Japan) (Japan, 43%)
De Beers Diamond Jewellers Trade Mark Limited (United Kingdom, 43%)
De Beers Diamond Jewellers UK Ltd (United Kingdom, 43%)
De Beers Diamond Jewellers US, Inc (USA, 43%)
De Beers Jewellers Commercial (Shanghai) Co., LTD (China, 43%)
Ebbsfleet Property Limited (United Kingdom, 50%)
Electrolytical Metal Corporation (Pty) Limited (South Africa, 40%)(13)
Ferroport Logística Comercial Exportadora S.A. (Brazil, 50%)
Groote Eylandt Mining Company Pty Limited (GEMCO) (Australia, 40%)(13)
Guaporé Mineração Ltda. (Brazil, 49%)
Hotazel Manganese Mines (Pty) Ltd (South Africa, 40%)(13)
Middelplaats Manganese Limited (South Africa, 40%)(13)
Mineração Tanagra Ltda. (Brazil, 49%)
Minphil Exploration Co Inc (Philippines, 40%)
Northern Luzon Exploration & Mining Co Inc (Philippines, 40%)
Northfleet Property LLP (United Kingdom, 50%)
Peo Venture Capital (Pty) Ltd (Botswana, 21%)
Polokwane Iron Ore (Pty) Ltd (South Africa, 52%)
Samancor AG (Switzerland, 40%)(13)
Samancor Gabon (Gabon, 40%)(13)
Samancor Holdings (Pty) Ltd (South Africa, 40%)(13)
Samancor Holdings Proprietary Limited (South Africa, 40%)(13)
Samancor Manganese Pty Limited (South Africa, 40%)(13)
Swanscombe Developments LLP (United Kingdom, 50%)
Tasmanian Electro Metallurgical Company Pty Limited (TEMCO)
(Australia, 40%)(13)
Terra Nominees (Pty) Limited (South Africa, 40%)(13)
(1) All equity interests shown are ordinary shares.
(2) All entities are indirectly held, unless otherwise stated.
(3) 2% direct holding by Anglo American plc.
(4) 4% direct holding by Anglo American plc.
(5) 100% direct holding by Anglo American plc.
(6) 5% direct holding by Anglo American plc.
(7) The Group’s effective interest in Anglo American Platinum Limited is 79.6% (2014: 79.8%),
which includes shares issued as part of a community empowerment deal.
(8) A 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%.
(9) Ponahalo Investments (Pty) Ltd is deemed to be controlled due to the financing structure in
place and is therefore included as a majority owned subsidiary.
(10) 60% of Rietvlei Mining Company (Pty) Ltd is held by Butsanani Energy Investment Holdings
Ltd, in which the Group has an effective interest of 67%. The Group’s effective interest in
Rietvlei Mining Company Ltd is therefore 40%.
(11) The 73.9% interest in Sishen Iron Ore Company (Proprietary) Limited (SIOC) is held
indirectly through Kumba Iron Ore Limited, 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 Limited. Consequently the
effective interest in SIOC included in the Group’s results is 53.7%.
(12) 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%.
(13) These entities have a 30 June year end.
ADDITIONAL DISCLOSURES
40. RELATED UNDERTAKINGS OF THE GROUP continued
Joint operations(1)(2)
Anglo American SEFA Mining Fund (Pty) Ltd (South Africa, 50%)
Anglo American Sur S.A. (Chile, 50%)
Belcourt Saxon Coal Limited (Canada, 50%)
Belcourt Saxon Coal Limited Partnership (Canada, 50%)
Compania Minera Dona Ines De Collahuasi SCM (Chile, 44%)
Compañía Minera Westwall S.C.M (Chile, 50%)
De Beers Marine Namibia (Pty) Ltd (Namibia, 43%)
Debmarine Namdeb Foundation (Namibia, 43%)
Debswana ART Fund Trust (Botswana, 43%)
Debswana Diamond Company (Pty) Ltd (Botswana, 43%)(12)
Diamond Trading Company Botswana (Pty) Ltd (Botswana, 43%)
Exclusive Properties (Pty) Ltd (Namibia, 43%)
Godisa Supplier Development Fund (Pty) Ltd (South Africa, 50%)
HL & H Timber Processors (Pty) Ltd (South Africa, 50%)
Kroondal Unincorporated Joint Venture (South Africa, 50%)
Mafube Coal Mining (Proprietary) Limited (South Africa, 50%)
Marmora Mines and Estates Limited (Namibia, 28%)
Modikwa Mining Personnel Services (Pty) Ltd (South Africa, 50%)
Modikwa Platinum Mine (Pty) Limited (South Africa, 50%)
Modikwa Unincorporated Joint Venture (South Africa, 50%)
Monash Energy Pty Ltd (Australia, 50%)
Morupule Coal Mine Ltd (Botswana, 43%)
Mototolo Holdings (Pty) Ltd (South Africa, 50%)
Mototolo Unincorporated Joint Venture (South Africa, 50%)
Namdeb Diamond Corporation (Pty) Ltd (Namibia, 43%)
Namdeb Holdings (Pty) Ltd (Namibia, 43%)
Namdeb Hospital Pharmacy (Pty) Ltd (Namibia, 43%)
Namdeb Properties (Pty) Ltd (Namibia, 43%)
Namibia Diamond Trading Company (Pty) Ltd (Namibia, 43%)
Oranjemund Private Hospital (Pty) Limited (Namibia, 43%)
Oranjemund Town Management Company (Pty) Ltd (Namibia, 43%)
Phola Coal Processing Plant (Pty) Ltd (South Africa, 37%)
Sesiro Insurance Company (Proprietary) Limited (Botswana, 43%)
Tarmac Zawawi LLC (Oman, 49%)
The Diamond Trust (Botswana, 21%)
Associates(1)(2)
AEF Mining Services (Pty) Ltd (South Africa, 25%)
Atlatsa Resources Corporation (Canada, 23%)
AuruMar (Pty) Ltd (South Africa, 43%)
AuruMar SASA Holdings (Pty) Ltd (South Africa, 43%)
Bafokeng-Rasimone Platinum Mine (South Africa, 33%)
Blue Steam Investments (Pty) Ltd (South Africa, 37%)
Boikgantsho Platinum Mine (Pty) Ltd (South Africa, 49%)
Bokoni Platinum Holdings (Pty) Ltd (South Africa, 49%)
Bokoni Platinum Mines (Pty) Ltd (South Africa, 49%)
Bowen Basin Coal (Pty) Ltd (Australia, 23%)
Carbones Del Cerrejón LLC (Anguilla, 33%)
Cerrejon Zona Norte SA (Colombia, 33%)
CMC-Coal Marketing Company Ltd Ireland (Ireland, 33%)
Coal Marketing Company (USA) Inc. (USA, 33%)
Curtis Fitch Limited (United Kingdom, 21%)
Dalrymple Bay Coal Terminal Pty Ltd (Australia, 25%)
DMS Powders (Pty) Ltd (South Africa, 21%)
Elipsis Blue Trading 43 (Pty) Ltd (South Africa, 30%)
Ga-Phasha Platinum Mine (Proprietary) Limited (South Africa, 49%)
GD Empreendimentos Imobiliários S.A. (Brazil, 33%)
Hindustan Diamond Company Pvt Ltd (India, 43%)
Hydrogenious Technologies GmbH (Germany, 27%)
Ikhwezi Fleet Services (Pty) Ltd (South Africa, 30%)
Jellinbah Group Pty Ltd (Australia, 23%)(13)
Jellinbah Mining Pty Ltd (Australia, 23%)(13)
Jellinbah Resources Pty Ltd (Australia, 23%)(13)
JG Land Company Pty Ltd (Australia, 23%)
Kwanda Platinum Mine (Pty) Ltd (South Africa, 49%)
Lake Vermont Marketing Pty Ltd (Australia, 33%)
Lake Vermont Resources Pty Ltd (Australia, 33%)
Lebowa Platinum Mines Ltd (South Africa, 49%)
Lexshell 49 General Trading (Pty) Ltd (South Africa, 35%)
Main Place Holdings (Pty) Ltd (South Africa, 39%)
Pandora Unincorporated Associate (South Africa, 43%)
Peglerae Hospital (Pty) Ltd (South Africa, 40%)
QCMM (Lake Vermont Holdings) Pty Ltd (Australia, 33%)
QCMM Finance Pty Ltd (Australia, 33%)
Richards Bay Coal Terminal (Proprietary) Limited (South Africa, 23%)
Roodepoortjie Resources (Pty) Ltd (South Africa, 25%)
Sheba’s Ridge Platinum (Pty) Ltd (South Africa, 35%)
Societe Civille De Prospection De Nickel A Madagascar (Madagascar, 32%)
Spectrem Air (Pty) Ltd (South Africa, 21%)
Synova S.A. (Switzerland, 28%)
Tremell Pty Ltd (Australia, 33%)
Zimshelf Seven Investment Holdings (Pty) Ltd (South Africa, 50%)
168
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NOTES TO THE FINANCIAL STATEMENTS FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
FINANCIAL STATEMENTS OF THE PARENT COMPANY
Balance sheet of the Company, Anglo American plc, as at 31 December 2015
US$ million
Fixed assets
Investment in subsidiaries
Current assets
Amounts due from subsidiaries
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
Profit and loss account
Total shareholders’ funds (equity)
Note
2015
2014
1
15,125
15,071
15,067
15
15,082
(231)
–
(231)
14,851
29,976
29,976
772
4,358
115
1,955
22,776
29,976
13,908
3
13,911
(309)
(1)
(310)
13,601
28,672
28,672
772
4,358
115
1,955
21,472
28,672
2
2
2
2
2
The financial statements of Anglo American plc, registered number 03564138, were approved by the Board of directors on 15 February 2016 and signed on its
behalf by:
Mark Cutifani
Chief Executive
René Médori
Finance Director
Anglo American plc Annual Report 2015
169
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION FINANCIAL STATEMENTS OF THE PARENT COMPANY
1) Investment in subsidiaries
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 $78 million (2014: $6 million) of intra-group recharges.
2015
2014
15,088
54
–
15,142
(17)
15,125
13,295
142
1,651
15,088
(17)
15,071
Further information about subsidiaries is provided in note 40 to the Consolidated financial statements.
2) Reconciliation of movements in equity shareholders’ funds
US$ million
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 1 January 2015
Profit for the financial year
Dividends payable to Company shareholders(3)
Capital contribution to Group undertakings
Other
Balance at 31 December 2015
Called-up
share capital
772
–
–
–
–
–
772
–
–
–
–
772
Share
premium
account
4,358
–
–
–
–
–
4,358
–
–
–
–
4,358
Capital
redemption
reserve
115
–
–
–
–
Other
reserves(1)
1,955
–
–
–
–
Share-based
payment
reserve
1
–
–
–
–
–
115
–
–
–
–
115
–
1,955
–
–
–
–
1,955
(1)
–
–
–
–
–
–
Profit
and loss
account(2)
19,941
2,019
(620)
(17)
148
1
21,472
1,850
(684)
132
6
22,776
Total
27,142
2,019
(620)
(17)
148
–
28,672
1,850
(684)
132
6
29,976
(1) At 31 December 2015 other reserves of $1,955 million (2014: $1,955 million) were not distributable under the Companies Act 2006.
(2) At 31 December 2015 $2,685 million (2014: $2,685 million) of the Company profit and loss account of $22,776 million (2014: $21,472 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 no final dividend in respect
of the year ended 31 December 2015 (see note 10 of the Consolidated financial statements).
The audit fee in respect of the Company was $10,613 (2014: $7,807). 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.
170
Anglo American plc Annual Report 2015
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 under the historical cost convention and in accordance with Financial Reporting Standards
100 Application of Financial Reporting Requirements (FRS 100) and 101 Reduced Disclosure Framework (FRS 101).
A summary of the principal accounting policies is set out below.
The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to
exercise judgment in applying the Company's accounting policies.
As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the Company is not presented as part of these financial
statements. The profit after tax for the year of the Company amounted to $1,850 million (2014: $2,019 million).
First time application of FRS 100 and FRS 101
In the current year the Company has adopted FRS 100 and FRS 101. In previous years the financial statements were prepared in accordance with applicable
United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice (UK GAAP)).
The change in the basis of preparation has not materially altered the recognition and measurement requirements previously applied in accordance with UK
GAAP. Consequently the principal accounting policies are unchanged from the prior year. The change in basis of preparation has enabled the Company to take
advantage of all the available disclosure exemptions permitted by FRS 101 in the financial statements. There have been no other material amendments to the
disclosure requirements previously applied in accordance with UK GAAP.
Significant accounting policies
Investments
Investments represent equity holdings in subsidiaries and are measured at cost less accumulated impairment.
Financial Instruments
The Company recognises financial instruments when it becomes a party to the contractual arrangements of the instrument. Financial instruments are
de-recognised when they are discharged or when the contractual terms expire.
Dividends
Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Share-based payments
The Company has applied the requirements of IFRS 2 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.
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 2015.
Anglo American plc Annual Report 2015
171
Financial statements
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
SUMMARY BY BUSINESS OPERATION
Marketing activities are allocated to the underlying operation to which they relate.
US$ million
Platinum
Mogalakwena
Amandelbult
Other operations
Projects and corporate
De Beers
Mining
Debswana
Namdeb Holdings
South Africa
Canada
Trading
Other(4)
Projects and corporate
Copper
Los Bronces
Collahuasi
Other operations
Projects and corporate
Nickel
Codemin
Loma de Níquel
Barro Alto
Projects and corporate
Niobium and Phosphates(5)
Niobium
Phosphates
Projects and corporate
Iron Ore and Manganese
Kumba Iron Ore
Iron Ore Brazil
Samancor
Projects and corporate
Coal
Australia and Canada
South Africa
Colombia
Projects and corporate
Corporate and other
Other Mining and Industrial
Exploration
Corporate activities and unallocated costs
Underlying EBITDA(2)
Underlying EBIT(3)
Underlying earnings
2015
2014
2015
2014
2015
2014
2015
4,900
1,092
712
3,096
–
Revenue(1)
2014
5,396
1,271
593
3,532
–
718
496
97
177
(52)
527
504
(37)
118
(58)
263
368
36
(89)
(52)
32
371
(96)
(185)
(58)
4,671
7,114
990
1,818
571
1,363
n/a
n/a
n/a
n/a
n/a
n/a
–
3,539
1,852
971
716
–
146
100
–
46
–
544
111
433
–
3,390
2,876
–
514
–
4,888
2,374
1,893
621
–
925
921
–
4
23,003
n/a
n/a
n/a
n/a
n/a
n/a
–
4,827
2,497
1,311
1,019
–
142
142
–
–
–
666
180
486
–
5,176
4,388
–
788
–
5,808
2,970
2,083
755
–
1,859
1,854
–
5
30,988
379
147
282
154
107
(30)
(49)
942
622
381
55
(116)
(3)
20
3
(14)
(12)
146
40
111
(5)
1,026
1,011
(20)
104
(69)
1,046
586
345
168
(53)
(11)
110
(152)
31
4,854
604
207
344
178
579
(50)
(44)
1,902
1,173
707
138
(116)
28
43
22
(25)
(12)
152
75
88
(11)
2,286
2,162
(29)
251
(98)
1,207
543
463
255
(54)
(88)
162
(180)
(70)
7,832
352
120
174
65
100
(191)
(49)
228
240
167
(63)
(116)
(22)
12
3
(25)
(12)
119
33
91
(5)
671
739
(21)
22
(69)
457
190
230
90
(53)
(64)
64
(154)
26
2,223
579
177
243
77
572
(241)
(44)
1,193
822
495
(8)
(116)
21
37
22
(26)
(12)
124
69
66
(11)
1,957
1,911
(34)
178
(98)
458
(1)
350
163
(54)
(215)
62
(181)
(96)
4,933
168
n/a
n/a
n/a
n/a
258
n/a
n/a
n/a
n/a
n/a
n/a
n/a
67
n/a
77
n/a
(89)
(19)
10
3
(21)
(11)
48
7
45
(4)
25
n/a
n/a
n/a
n/a
923
n/a
n/a
n/a
n/a
n/a
n/a
n/a
493
n/a
207
n/a
(84)
6
23
22
(25)
(14)
65
31
39
(5)
98
280(6)
(61)
(54)
(67)(6)
292
123
174
44
(49)
(85)
52
(142)
5
827
717
747(6)
(32)
78
(76)(6)
296
(30)
271
105
(50)
(308)
44
(163)
(189)
2,217
(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) Other includes Element Six, downstream activities and the purchase price allocation (PPA) adjustment.
(5) Niobium and Phosphates are now aggregated, having previously been presented separately. Refer to note 3 of the Consolidated financial statements.
(6) Of the projects and corporate expense, which includes a corporate cost allocation, $42 million (2014: $54 million) relates to Kumba Iron Ore. The total contribution from Kumba Iron Ore to the
Group’s underlying earnings is $238 million (2014: $693 million).
172
Anglo American plc Annual Report 2015
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
KEY FINANCIAL DATA
US$ million (unless otherwise stated)
Income statement measures
Group revenue including associates and joint ventures
Underlying EBIT(3)
Underlying EBITDA(4)
Group revenue (statutory measure)
Net finance costs (before special items and remeasurements)
(Loss)/profit before tax
(Loss)/profit for the financial year
Non-controlling interests
(Loss)/profit attributable to equity shareholders of the Company
Underlying earnings(5)
Balance sheet measures
Total capital employed(6)
Net assets
Non-controlling interests
Equity attributable to equity shareholders of the Company
Cash flow measures
Cash flow from operations
Capital expenditure(7)
Net debt(8)
Metrics and ratios
Underlying earnings per share (US$)
(Loss)/earnings per share (statutory basis) (US$)
Ordinary dividend per share (US cents)
Ordinary dividend cover (based on underlying earnings per share)
Underlying EBIT margin
Underlying EBIT interest cover(9)
Effective tax rate(10)
Gearing (net debt to total capital)(11)
2015
2014
2013
2012
restated(1)
2011
2010
2009
2008
2007
2006(2)
4,933
7,832
6,620
9,520
2,223
4,854
9,763
6,253 11,095
8,860 13,348 11,983
23,003 30,988 33,063 32,785 36,548 32,929 24,637 32,964 30,559 29,404
8,888
4,957 10,085
6,930 11,847 12,132 12,197
20,455 27,073 29,342 28,680 30,580 27,960 20,858 26,311 25,470 24,991
(110)
8,443
6,922
(736)
6,186
5,471
(299)
(244)
(20)
(171) 10,782 10,928
8,119
7,922
(564)
(1,575)
(1,753)
(906)
6,544
6,169
(1,470)
4,976
6,120
2,860
(256)
(458)
(259)
(5,454)
(5,842) (1,524)
(989)
(5,624) (2,513)
2,217
(276)
1,700
426
(1,387)
(961)
2,673
(452)
8,571
6,120
(905)
5,215
5,237
(273)
4,029
2,912
(487)
2,425
2,569
(137)
8,821
8,172
(868)
7,304
5,761
9,590
218
827
32,842 43,782 46,551 49,757 41,667 42,135 36,623 29,808 24,401 28,285
21,342 32,177 37,364 43,738 43,189 37,971 28,069 21,756 24,330 27,127
(4,773) (5,760)
(2,856)
16,569 26,417 31,671 37,611 39,092 34,239 26,121 20,221 22,461 24,271
(5,693)
(1,948)
(1,535)
(3,732)
(6,127)
(4,097)
(1,869)
6,949
4,240
(4,177) (6,018)
7,729
(6,075)
(12,901) (12,871) (10,652)
7,370 11,498
(5,672)
(5,947)
(1,374)
(8,510)
9,579
4,904
9,924
(4,902)
(5,282)
(4,707)
(7,384) (11,280) (11,340)
9,845 10,057
(3,575)
(4,002)
(3,131)
(4,851)
1.73
(1.96)
85
2.0
2.28
(1.17)
85
2.7
2.09
(0.75)
85
2.5
0.64
(4.36)
32
2.0
3.73
4.21
108
3.5
9.7% 15.9% 20.0% 19.1% 30.4% 29.6% 20.1% 30.6% 28.4% 25.4%
33.2
10.1
31.0% 29.8% 32.0% 29.0% 28.3% 31.9% 33.1% 33.4% 31.8% 33.0%
37.7% 28.6% 22.2% 16.3% 3.1% 16.3% 28.7% 34.3% 16.6% 10.3%
2.14
2.02
–
–
5.06
5.10
74
6.8
4.13
5.43
65
6.4
4.36
4.34
44
9.9
4.40
5.58
124
3.5
24.1
30.1
33.2
34.2
35.8
36.8
19.6
n/a
(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 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 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.
(5) 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.
(6) Total capital employed is net assets excluding net debt (including related hedges and net debt in disposal groups) and financial asset investments.
(7) Capital expenditure is defined as cash expenditure on property, plant and equipment including related derivatives, proceeds from disposal of property, plant and equipment and direct funding for capital
expenditure from non-controlling interests.
(8) Net debt is calculated as total borrowings less cash and cash equivalents (including related hedges and net debt in disposal groups).
(9) Underlying EBIT interest cover is underlying EBIT 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.
(10) The effective tax rate is presented before special items and remeasurements and includes the Group’s attributable share of associates’ and joint ventures’ tax.
(11) Net debt to total capital is calculated as net debt (including related hedges and net debt in disposal groups) divided by total capital.
Anglo American plc Annual Report 2015
173
Financial statements
2015
2014
15.47
3.96
0.68
1.37
0.92
709
11.25
12.78
3.34
0.65
1.33
0.90
655
10.12
2015
868
555
644
213
393
43
46
49
50
89
1,051
691
932
249
536
56
67
57
59
102
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
1,206
811
1,230
288
677
72
82
66
65
119
1,385
803
1,173
311
765
97
112
72
71
125
US$/oz
US$/oz
US$/oz
US cents/lb
US cents/lb
US$/tonne
US$/tonne
US$/tonne
US$/tonne
US$/tonne
US$/oz
US$/oz
US$/oz
US cents/lb
US cents/lb
US$/tonne
US$/tonne
US$/tonne
US$/tonne
US$/tonne
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
EXCHANGE RATES AND COMMODITY PRICES
US$ exchange rates
Year end spot rates
South African rand
Brazilian real
Sterling
Australian dollar
Euro
Chilean peso
Botswana pula
Average rates for the year
South African rand
Brazilian real
Sterling
Australian dollar
Euro
Chilean peso
Botswana pula
Commodity prices
Year end spot prices
Platinum(1)
Palladium(1)
Rhodium(2)
Copper(3)
Nickel(3)
Iron ore (62% Fe CFR)(4)
Iron ore (66% Fe Concentrate CFR)(5)
Thermal coal (FOB South Africa)(6)
Thermal coal (FOB Australia)(7)
Hard coking coal (FOB Australia)(8)
Average market prices for the year
Platinum(1)
Palladium(1)
Rhodium(2)
Copper(3)
Nickel(3)
Iron ore (62% Fe CFR)(4)
Iron ore (66% Fe Concentrate CFR)(5)
Thermal coal (FOB South Africa)(6)
Thermal coal (FOB Australia)(7)
Hard coking coal (FOB Australia)(9)
(1) Source: London Platinum and Palladium Market (LPPM).
(2) Source: Comdaq.
(3) Source: London Metal Exchange (LME).
(4) Source: Platts.
(5) Source: Metal Bulletin.
(6) Source: McCloskey.
(7) Source: globalCOAL.
(8) Source: Represents the quarter four benchmark.
(9) Source: Represents the average quarterly benchmark.
174
Anglo American plc Annual Report 2015
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 (CPs) along with their Recognised Professional
Organisation (RPO) affiliation and years of relevant experience are listed in
the Ore Reserve and Mineral Resource Report 2015.
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 detailed Ore Reserve and Mineral Resource estimates,
Reserve and Resource Reconciliation Overview, Definitions and Glossary
are contained in the separate Ore Reserves and Mineral Resources Report 2015
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 2015. The figures in the tables have been rounded and,
if used to derive totals and averages, minor differences with stated results
could occur.
The Ore Reserves and Mineral Resources Report 2015, of which this
section of the Annual Report is a summary, 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 Ownership (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
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Anglo American plc Annual Report 2015
175
ORE RESERVES AND MINERAL RESOURCES
ESTIMATED ORE RESERVES(1)
as at 31 December 2015
Detailed Proved and Probable estimates appear on the referenced pages in the Ore Reserves and Mineral Resources Report 2015.
Proved + Probable
PLATINUM(2) OPERATIONS
(See page 10 in R&R Report for details)
Merensky Reef
Ownership
%
78.0
Mining
Method
UG
Reserve Life(4)
(years)
n/a
Contained Metal
(4E Moz)
11.1
UG2 Reef
Platreef
Main Sulphide Zone
DIAMOND(3) OPERATIONS – DBCi
(See page 14 in R&R Report for details)
Snap Lake
Kimberlite
Victor
Kimberlite
DIAMOND(3) OPERATIONS – DBCM
(See page 16 in R&R Report for details)
Venetia (OP)
Kimberlite
Venetia (UG)
Voorspoed
Kimberlite
Kimberlite
DIAMOND(3) OPERATIONS – Debswana
(See pages 18–19 in R&R Report for details)
Damtshaa
Kimberlite
Jwaneng
Letlhakane
Orapa
Kimberlite
Kimberlite
TMR
Kimberlite
DIAMOND(3) OPERATIONS – Namdeb
(See page 20 in R&R Report for details)
Elizabeth Bay
Aeolian and Marine
Beaches
Mining Area 1
Orange River
Fluvial Placers
UG
OP
UG
Ownership
%
85.0
Mining
Method
UG
85.0
OP
Ownership
%
62.9
Mining
Method
OP
62.9
UG
OP
Ownership
%
42.5
Mining
Method
OP
42.5
42.5
42.5
OP
OP
OP
Ownership
%
42.5
Mining
Method
OC
42.5
42.5
OC
OC
Atlantic 1
Marine Placers
42.5
MM
ROM Tonnes
(Mt)
73.1
408.4
1,295.8
47.7
Grade
(4E g/t)
4.71
3.99
2.79
3.34
52.4
116.0
5.1
LOM(4)
(years)
15
3
LOM(4)
(years)
31
6
LOM(4)
(years)
17
20
2
24
14
Saleable Carats
(M¢)
7.2
Treated Tonnes
(Mt)
5.7
Recovered Grade
(cpht)
126.0
0.7
4.3
16.8
Saleable Carats
(M¢)
28.7
Treated Tonnes
(Mt)
25.8
Recovered Grade
(cpht)
111.3
71.8
1.1
92.9
5.6
77.2
19.4
Saleable Carats
(M¢)
4.7
Treated Tonnes
(Mt)
25.1
Recovered Grade
(cpht)
18.7
149.2
0.1
8.5
151.4
113.0
0.5
34.9
171.9
132.0
17.2
24.2
88.0
LOM(4)
(years)
4
Saleable Carats
(k¢)
152
Treated Tonnes
(kt)
2,280
Recovered Grade
(cpht)
6.67
20
8
20
129
272
Saleable Carats
(k¢)
3,933
3,337
28,901
Area
(k m2)
43,866
COPPER OPERATIONS
(See page 22 in R&R Report for details)
Collahuasi
Heap Leach
Ownership
%
44.0
Mining
Method
OP
Reserve Life(4)
(years)
70
Contained Copper
(kt)
204
ROM Tonnes
(Mt)
30.0
Flotation – direct feed
Flotation – low grade stockpile
El Soldado
Los Bronces
Flotation
Flotation
Dump Leach
NICKEL OPERATIONS
(See page 25 in R&R Report for details)
Barro Alto
Saprolite
Niquelândia
Saprolite
NIOBIUM OPERATIONS
(See page 26 in R&R Report for details)
Boa Vista
Oxide
Fresh Rock
50.1
50.1
OP
OP
12
25
Ownership
%
100
Mining
Method
OP
100
OP
Reserve Life(4)
(years)
20
23
Ownership
%
100
Tailings
Phosphate Tailings
100
PHOSPHATE OPERATIONS
(See page 28 in R&R Report for details)
Chapadão
Oxide
KUMBA IRON ORE OPERATIONS
(See page 30 in R&R Report for details)
Kolomela
Hematite
Sishen
Thabazimbi
Hematite
Hematite
Ownership
%
100
Ownership
%
51.5
51.5
51.5
IRON ORE BRAZIL OPERATIONS
(See page 32 in R&R Report for details)
Serra do Sapo
Friable Itabirite and Hematite
Ownership
%
100
Reserve Life(4)
(years)
2
16
16
Reserve Life(4)
(years)
35
Reserve Life(4)
(years)
21
15
1
Reserve Life(4)
(years)
45
Mining
Method
OP
OP
Mining
Method
OP
Mining
Method
OP
OP
OP
Mining
Method
OP
OP
Itabirite
SAMANCOR MANGANESE OPERATIONS
(See page 33 in R&R Report for details)
ROM + Sand Tailings
GEMCO(7)
Mamatwan
Wessels
Ownership
%
40.0
Mining
Method
OP
29.6
29.6
OP
UG
Reserve Life(4)
(years)
9
17
49
176
Anglo American plc Annual Report 2015
20,569
5,563
728
7,006
1,272
Contained Nickel
(kt)
529
104
Contained Product
(kt)
6
230
118
1,965.2
1,127.6
88.8
1,210.1
387.5
ROM Tonnes
(Mt)
35.5
8.3
ROM Tonnes
(Mt)
0.6
26.0
17.1
ROM Tonnes
(Mt)
214.1
Saleable Product
(Mt)
212
496
1
Saleable Product(6)
(Mt)
678
566
ROM Tonnes
(Mt)
84.9
58.3
73.4
3.87
0.94
Recovered Grade
(cpm2)
0.09
Grade
(%TCu)(5)
0.68
1.05
0.49
0.82
0.58
0.33
Grade
(%Ni)
1.49
1.25
Grade
(%Nb2O5)
0.87
0.89
0.69
Grade
(%P2O5)
12.5
Grade
(%Fe)
64.3
65.1
63.4
Grade(6)
(%Fe)
67.5
67.5
Grade
(%Mn)
44.3
37.3
42.2
ORE RESERVES AND MINERAL RESOURCES
Estimated Ore Reserves continued
COAL OPERATIONS – Australia
(See page 34 & 38 in R&R Report for details)
Thermal – Domestic
Callide
Ownership
%
100
Mining
Method
OC
Capcoal (OC)*
Metallurgical – Coking
77.6
OC
Reserve Life(4)
(years)
30
17
Metallurgical – Other
Thermal – Export
Capcoal (UG)*
Metallurgical – Coking
Dawson
Metallurgical – Coking
Drayton
Thermal – Export
Thermal – Export
Metallurgical – Other
Foxleigh
Moranbah North Metallurgical – Coking
Metallurgical – Coking
Grosvenor
70.0
51.0
88.2
70.0
88.0
100
UG
OC
OC
OC
UG
UG
3
13
1
13
16
28
Proved + Probable
Saleable Tonnes(8)
(Mt)
194.3
31.7
46.6
8.2
17.4
45.8
38.8
1.8
13.9
94.6
130.4
Saleable Quality
4,440 kcal/kg
5.5 CSN
6,830 kcal/kg
6,190 kcal/kg
8.5 CSN
7.5 CSN
6,530 kcal/kg
6,400 kcal/kg
7,040 kcal/kg
8.0 CSN
8.5 CSN
Reserve Life(4)
Saleable Tonnes(8)
COAL OPERATIONS– Canada
(See page 34 in R&R Report for details)
Trend
Roman Mountain Metallurgical – Coking
Metallurgical – Coking
Ownership
%
100
Mining
Method
OC
100
OC
(years)
7
15
COAL OPERATIONS – Colombia
(See page 35 in R&R Report for details)
Thermal – Export
Cerrejón
COAL OPERATIONS – South Africa
(See page 35 in R&R Report for details)
Thermal – Export
Goedehoop
Ownership
%
33.3
Ownership
%
100
Mining
Method
OC
Mining
Method
UG
Reserve Life(4)
(years)
16
Reserve Life(4)
(years)
11
Greenside
Isibonelo
Kleinkopje
Kriel
Landau
Mafube
Thermal – Export
Synfuel
Thermal – Export
Thermal – Domestic
Thermal – Domestic
Thermal – Export
Thermal – Domestic
Thermal – Export
Thermal – Domestic
New Denmark
Thermal – Domestic
New Vaal
Zibulo
Thermal – Domestic
Thermal – Export
Thermal – Domestic
100
100
100
UG
OC
OC
73.0 UG&OC
100
50.0
100
100
OC
OC
UG
OC
73.0 UG&OC
12
12
9
5
8
18
24
16
20
(Mt)
8.3
25.8
Saleable Quality
7.0 CSN
7.0 CSN
Saleable Tonnes(8)
(Mt)
611.0
Saleable Quality
6,090 kcal/kg
Saleable Tonnes(8)
(Mt)
28.3
35.1
53.9
13.3
3.1
20.9
10.9
6.3
53.1
22.8
104.5
252.2
51.1
16.2
Saleable Quality
6,010 kcal/kg
6,060 kcal/kg
4,690 kcal/kg
6,210 kcal/kg
4,630 kcal/kg
4,850 kcal/kg
6,210 kcal/kg
4,750 kcal/kg
6,050 kcal/kg
5,070 kcal/kg
4,940 kcal/kg
3,660 kcal/kg
6,100 kcal/kg
4,830 kcal/kg
Mining method: OP = Open Pit, UG = Underground, OC = Open Cast/Cut, MM = Marine Mining. TMR = Tailings Mineral Resource. Operations = Mines in steady-state or in ramp-up phase.
* Capcoal comprises opencast operations at Lake Lindsay and Oak Park, with an underground longwall operation at Grasstree.
(1) Estimated Ore Reserves are the sum of Proved and Probable Ore Reserves (on an exclusive basis, i.e. Mineral Resources are reported as additional to
Ore Reserves unless otherwise stated). Please refer to the detailed Ore Reserve estimates tables in the AA plc R&R Report for the individual Proved and
Probable Reserve estimates. The Ore Reserve estimates are reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, 2012) as a minimum standard. Ore Reserve estimates for operations in South Africa are reported 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. Anglo American plc ownership is stated separately. Rounding of figures may cause
computational discrepancies.
(2) Estimates reported represent 100% of the Ore Reserves attributable to Anglo American Platinum unless otherwise noted. Details of the individual operations
appear in the Anglo American Platinum Annual Report.
4E is the sum of Platinum, Palladium, Rhodium and Gold.
(3) DBCi = De Beers Canada, DBCM = De Beers Consolidated Mines, Debswana = Debswana Diamond Company, Namdeb = Namdeb Holdings.
k¢ = thousand carats. M¢ = million carats. k m² = thousand square metres.
Grade is quoted as carats per hundred metric tonnes (cpht) or as carats per square meter (cpm²).
Reported Diamond Reserves are based on a Bottom Cut-Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm
(nominal square mesh). Specific BCO’s applied to derive estimates are included in the detailed Diamond Reserve tables in the AA plc R&R Report.
Snap Lake and Damtshaa have been placed on Care & Maintenance.
(4) Reserve Life = The scheduled extraction period in years for the total Ore Reserves in the approved Life of Mine Plan.
LOM = Life of Mine (years) is based on scheduled Probable Reserves including some Inferred Resources considered for Life of Mine planning.
(5) TCu = Total Copper.
(6) Saleable Product tonnes are on a wet basis (average moisture content is 9.0 wt% of the wet mass) with quality stated on a dry basis.
(7) GEMCO Manganese grades are given as per washed ore samples and should be read together with their respective yields, see page 33 in the AA plc R&R Report.
(8) Total Saleable Tonnes represents the product tonnes produced quoted as metric tonnes on a Product moisture basis. 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. CV is rounded to the nearest 10 kcal/kg and CSN to the nearest 0.5 index.
Metallurgical – Coking: High-, medium- or low-volatile semi-soft, soft or hard coking coal primarily for blending and use in the steel industry.
Metallurgical – Other: 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.
Thermal – Export: Low- to high-volatile thermal coal primarily for export in the use of power generation; quality measured by calorific value (CV).
Thermal – Domestic: Low- to high-volatile thermal coal primarily for domestic consumption for power generation.
Synfuel: Coal specifically for the domestic production of synthetic fuel and chemicals.
Peace River Coal (Trend and Roman Mountain Mines) has been placed on Care & Maintenance.
Anglo American plc Annual Report 2015
177
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
ESTIMATED MINERAL RESOURCES(1)
as at 31 December 2015
Detailed Measured, Indicated and Inferred estimates appear on the referenced pages in the Ore Reserves and Mineral Resources Report 2015.
Measured + Indicated
PLATINUM(3) OPERATIONS
(See page 11 in R&R Report for details)
Merensky Reef
Ownership
%
78.0
Mining
Method
UG
Contained Metal
(4E Moz)
102.5
UG2 Reef
Platreef
Main Sulphide Zone
DIAMOND(4) OPERATIONS – DBCi
(See page 14 in R&R Report for details)
Snap Lake
Kimberlite
Victor
Kimberlite
DIAMOND(4) OPERATIONS – DBCM
(See page 16 in R&R Report for details)
Beach Placers
Namaqualand
Kimberlite
Venetia (OP)
Venetia (UG)
Voorspoed
Kimberlite
Kimberlite
DIAMOND(4) OPERATIONS – Debswana
(See pages 18–19 in R&R Report for details)
Damtshaa
Kimberlite
Jwaneng
Kimberlite
TMR
Letlhakane
Kimberlite
Orapa
TMR
Kimberlite
DIAMOND(4) OPERATIONS – Namdeb
(See pages 20–21 in R&R Report for details)
Bogenfels
Douglas Bay
Elizabeth Bay
Mining Area 1
Pocket Beach/Deflation
Aeolian/Deflation
Aeolian/Marine/Deflation
Beaches
Orange River
Fluvial Placers
UG
OP
UG
Ownership
%
85.0
Mining
Method
UG
85.0
OP
Ownership
%
62.9
Mining
Method
OC
62.9
62.9
OP
UG
OP
Ownership
%
42.5
Mining
Method
OP
42.5
42.5
42.5
OP
OP
OP
Ownership
%
42.5
Mining
Method
OC
42.5
42.5
42.5
42.5
OC
OC
OC
OC
Atlantic 1
Marine Placers
42.5
MM
229.9
102.0
18.7
Carats
(M¢)
7.3
0.1
Carats
(M¢)
0.8
0.1
–
0.5
Carats
(M¢)
1.1
138.8
–
6.4
–
298.8
Carats
(k¢)
–
160
199
255
180
Carats
(k¢)
7,302
COPPER OPERATIONS
(See page 23 in R&R Report for details)
Collahuasi
Heap Leach
Ownership
%
44.0
Mining
Method
OP
Contained Copper
(kt)
359
Flotation – direct feed
Flotation – low grade stockpile
El Soldado
Los Bronces
Flotation
Flotation
Dump Leach
NICKEL OPERATIONS
(See page 25 in R&R Report for details)
Barro Alto
Saprolite
Ferruginous Laterite
50.1
50.1
OP
OP
13,069
1,836
758
10,718
–
Ownership
%
100
Mining
Method
OP
Contained Nickel
(kt)
347
Niquelândia
Saprolite
100
OP
83
32
Tonnes
(Mt)
587.2
1,373.0
1,318.4
138.6
Tonnes
(Mt)
4.1
0.4
Tonnes
(Mt)
12.7
0.1
–
1.7
Tonnes
(Mt)
4.3
129.5
–
19.6
–
292.4
Tonnes
(kt)
–
2,269
3,188
25,890
68,204
Area
(k m2)
108,175
Tonnes
(Mt)
53.3
1,464.0
462.0
127.7
2,527.5
–
Tonnes
(Mt)
27.1
6.8
2.5
Grade
(4E g/t)
5.43
Contained Metal
(4E Moz)
89.0
Total Inferred(2)
Tonnes
(Mt)
557.7
Grade
(4E g/t)
4.96
5.21
2.41
4.19
Grade
(cpht)
177.9
23.8
Grade
(cpht)
6.5
148.6
–
26.9
Grade
(cpht)
25.0
107.2
–
32.3
–
102.2
Grade
(cpht)
–
7.05
6.24
0.98
0.26
Grade
(cpm2)
0.07
97.2
63.1
6.7
Carats
(M¢)
29.4
0.6
Carats
(M¢)
0.6
3.4
59.6
3.5
Carats
(M¢)
5.0
68.7
16.5
0.6
14.1
66.2
Carats
(k¢)
752
1
2,869
3,100
177
Carats
(k¢)
551.7
1,095.1
48.6
Tonnes
(Mt)
16.6
2.8
Tonnes
(Mt)
39.5
20.3
69.9
18.2
Tonnes
(Mt)
19.0
85.7
35.8
2.9
53.6
77.6
Tonnes
(kt)
10,955
127
42,829
192,578
47,554
Area
(k m2)
88,226
1,080,989
Grade
(%TCu)(5)
0.67
Contained Copper
(kt)
136
0.89
0.40
0.59
0.42
–
Grade
(%Ni)
1.28
1.22
1.27
32,502
6,568
88
6,350
129
Contained Nickel
(kt)
533
24
–
Tonnes
(Mt)
25.2
3,397.2
1,453.5
18.4
1,639.3
46.1
Tonnes
(Mt)
39.0
2.0
–
5.48
1.79
4.30
Grade
(cpht)
176.7
22.8
Grade
(cpht)
1.4
16.9
85.3
19.4
Grade
(cpht)
26.2
80.3
46.0
21.6
26.3
85.3
Grade
(cpht)
6.86
0.79
6.70
1.61
0.37
Grade
(cpm2)
0.08
Grade
(%TCu)(5)
0.54
0.96
0.45
0.48
0.39
0.28
Grade
(%Ni)
1.37
1.21
–
NIOBIUM OPERATIONS
(See page 26 in R&R Report for details)
Boa Vista
Oxide
Fresh Rock
PHOSPHATE OPERATIONS
(See page 28 in R&R Report for details)
Chapadão
Oxide
KUMBA IRON ORE OPERATIONS
(See page 30 for details)
Kolomela
Hematite
Sishen
Thabazimbi
Hematite
Hematite
IRON ORE BRAZIL OPERATIONS
(See page 32 in R&R Report for details)
Serra do Sapo
Friable Itabirite and Hematite
Itabirite
Ownership
%
Mining
Method
Contained Product
(kt)
Tonnes
(Mt)
Grade
(%Nb2O5)
Contained Product
(kt)
Tonnes
(Mt)
Grade
(%Nb2O5)
100
100
OP
OP
Ownership
%
Mining
Method
100
OP
Ownership
%
51.5
Mining
Method
OP
51.5
51.5
OP
OP
Ownership
%
100
Mining
Method
OP
–
17
–
1.8
Tonnes
(Mt)
30.1
Tonnes
(Mt)
90.2
425.6
8.0
Tonnes(6)
(Mt)
409.4
1,441.6
–
0.91
Grade
(%P2O5)
13.2
Grade
(%Fe)
61.6
61.0
62.3
Grade(6)
(%Fe)
32.5
30.8
11
140
1.3
13.3
Tonnes
(Mt)
105.6
Tonnes
(Mt)
98.1
106.9
0.4
Tonnes(6)
(Mt)
96.0
556.6
0.83
1.05
Grade
(%P2O5)
10.4
Grade
(%Fe)
63.8
57.0
58.9
Grade(6)
(%Fe)
35.7
31.1
178
Anglo American plc Annual Report 2015
ORE RESERVES AND MINERAL RESOURCES
Estimated Mineral Resources continued
SAMANCOR MANGANESE OPERATIONS
(See page 33 in R&R Report for details)
GEMCO(7)(8)
Mamatwan(7)
Wessels(7)
ROM + Sand Tailings
COAL OPERATIONS – Australia
(See page 36 & 38 in R&R Report for details)
Callide
Capcoal (OC)*
Capcoal (UG)*
Dawson
Drayton
Foxleigh
Moranbah North
Grosvenor
COAL OPERATIONS – Canada
(See page 36 in R&R Report for details)
Trend
Roman Mountain
COAL OPERATIONS – Colombia
(See pages 37 in R&R Report for details)
Cerrejón
COAL OPERATIONS – South Africa
(See pages 37 in R&R Report for details)
Goedehoop
Greenside
Isibonelo
Kleinkopje
Kriel
Landau
Mafube
New Denmark
Zibulo
Ownership
%
40.0
Mining
Method
OP
29.6
29.6
OP
UG
Ownership
%
100
Mining
Method
OC
77.6
70.0
51.0
88.2
70.0
88.0
100
OC
UG
OC
OC
OC
UG
UG
Ownership
%
100
Mining
Method
OC
100
OC
Ownership
%
33.3
Ownership
%
100
100
100
100
Mining
Method
OC
Mining
Method
UG
UG
OC
OC
73.0 UG&OC
100
50.0
100
OC
OC
UG
73.0 UG&OC
Measured + Indicated
Total Inferred(2)
Tonnes
(Mt)
142.9
101.9
143.6
Grade
(%Mn)
42.7
35.1
42.5
MTIS(9)
(Mt)
262.2
Coal Quality
(kcal/kg)
4,890
166.3
90.4
353.9
–
2.7
72.0
194.4
6,920
6,730
6,770
–
7,240
6,670
6,580
MTIS(9)
(Mt)
26.5
Coal Quality
(kcal/kg)
6,980
4.3
7,910
MTIS(9)
(Mt)
3,447.8
Coal Quality
(kcal/kg)
6,560
MTIS(9)
(Mt)
197.8
Coal Quality
(kcal/kg)
5,350
20.3
16.8
28.6
99.4
84.9
50.1
70.3
324.7
5,630
5,400
5,010
4,850
5,230
5,190
5,790
4,980
Tonnes
(Mt)
36.8
0.4
–
Grade
(%Mn)
41.2
35.0
–
MTIS(9)
(Mt)
77.6
Coal Quality
(kcal/kg)
4,700
197.3
6.3
207.9
0.0
32.5
2.2
37.3
6,840
6,470
6,730
5,640
7,090
6,710
6,650
MTIS(9)
(Mt)
2.6
Coal Quality
(kcal/kg)
6,370
2.2
7,950
MTIS(9)
(Mt)
791.9
Coal Quality
(kcal/kg)
6,560
MTIS(9)
(Mt)
7.9
Coal Quality
(kcal/kg)
4,770
0.5
5,390
–
–
–
18.1
2.1
–
197.5
–
–
–
5,500
4,770
–
4,770
Mining method: OP = Open Pit, UG = Underground, OC = Open Cast/Cut, MM = Marine Mining. TMR = Tailings Mineral Resource. Operations = Mines in steady-state or in ramp-up phase.
Tonnes = In Situ tonnes.
* Capcoal comprises opencast operations at Lake Lindsay and Oak Park, with an underground longwall operation at Grasstree.
(1) Estimated Mineral Resources are presented on an exclusive basis, i.e. Mineral Resources are reported as additional to Ore Reserves unless otherwise stated.
Please refer to the detailed Mineral Resource estimates tables in the AA plc R&R Report for the detailed Measured, Indicated and Inferred Resource estimates.
The Mineral Resource estimates are reported 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 Mineral Resource estimates for operations in South Africa are reported 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 Mineral Resources. Anglo American plc ownership is stated separately. Rounding of figures may cause
computational discrepancies.
(2) Total Inferred is the sum of ‘Inferred (in LOM Plan)’, the Inferred Resources within the scheduled Life of Mine Plan (LOM Plan) and ‘Inferred (ex. LOM Plan)’, the
portion of Inferred Resources with reasonable prospects for eventual economic extraction not considered in the Life of Mine Plan (LOM Plan) as relevant.
(3) The figures reported represent 100% of the Mineral Resources attributable to Anglo American Platinum unless otherwise noted. Details of the individual
operations appear in the Anglo American Platinum Annual Report. Merensky Reef and UG2 Reef Mineral Resources are estimated over a practical minimum
mining width suitable for the deposit (the ‘Resource Cut’). The ‘Resource Cut’ width takes cognisance of the mining method and geotechnical aspects in the
hangingwall or footwall of the reef.
4E is the sum of Platinum, Palladium, Rhodium and Gold.
(4) DBCi = De Beers Canada, DBCM = De Beers Consolidated Mines, Debswana = Debswana Diamond Company, Namdeb = Namdeb Holdings.
Estimated Diamond Resources are presented on an exclusive basis, i.e. Diamond Resources are quoted as additional to Diamond Reserves.
k¢ = thousand carats. M¢ = million carats. k m² = thousand square metres.
Grade is quoted as carats per hundred metric tonnes (cpht) or as carats per square meter (cpm²).
Reported Diamond Resources are based on a Bottom Cut-Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm
(nominal square mesh). Specific BCO’s applied to derive estimates are included in the detailed Diamond Resource tables in the AA plc R&R Report.
(5) TCu = Total Copper.
(6) Tonnes and grades are on a dry basis.
(7) Mineral Resources are quoted as inclusive of those used to calculate Ore Reserves and must not be added to the Ore Reserves.
(8) GEMCO Manganese grades are given as per washed ore samples and should be read together with their respective yields, see page 33 in the AA plc R&R Report.
(9) Coal Resources are quoted on a Mineable Tonnes In Situ (MTIS) basis in million tonnes, which are in addition to those Coal Resources that have been modified to
produce the reported Coal Reserves. Coal Resources are reported on an in situ moisture basis. The coal quality for Coal Resources is quoted on an in situ heat
content as kilo-calories per kilogram (kcal/kg), representing Calorific Value (CV) on a Gross As Received (GAR) basis. CV is rounded to the nearest 10 kcal/kg.
Anglo American plc Annual Report 2015
179
ORE RESERVES AND MINERAL RESOURCESOre Reserves and Mineral Resources
OTHER INFORMATION
GLOSSARY OF TERMS AND PERFORMANCE MEASURES
Ore Reserves
An ‘Ore Reserve’ is the economically mineable part of a Measured and/or
Indicated Mineral Resource. It includes diluting materials and allowances
for losses, which may occur when the material is mined. Appropriate
assessments and studies have been carried out, and include consideration
of and modification by realistically assumed mining, metallurgical, economic,
marketing, legal, environmental, social and governmental factors. These
assessments demonstrate at the time of reporting that extraction could
reasonably be justified. Ore Reserves are sub-divided in order of increasing
confidence into Probable Ore Reserves and Proved Ore Reserves.
A ‘Proved Ore Reserve’ is the economically mineable part of a Measured
Mineral Resource. It includes diluting materials and allowances for losses
which may occur when the material is mined. Appropriate assessments
and studies have been carried out, and include consideration of and
modification by realistically assumed mining, metallurgical, economic,
marketing, legal, environmental, social and governmental factors. These
assessments demonstrate at the time of reporting that extraction could
reasonably be justified.
A ‘Probable Ore Reserve’ is the economically mineable part of an Indicated,
and in some circumstances, a Measured Mineral Resource. It includes diluting
materials and allowances for losses which may occur when the material is
mined. Appropriate assessments and studies have been carried out, and
include consideration of and modification by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social and
governmental factors. These assessments demonstrate at the time of
reporting that extraction could reasonably be justified.
Mineral Resources
A ‘Mineral Resource’ is a concentration or occurrence of solid material of
economic interest in or on the Earth’s crust in such form, grade (or quality),
and quantity that there are reasonable prospects for eventual economic
extraction. The location, quantity, grade (or quality), continuity and other
geological characteristics of a Mineral Resource are known, estimated or
interpreted from specific geological evidence and knowledge, including
sampling. Mineral Resources are sub-divided, in order of increasing
geological confidence, into Inferred, Indicated and Measured categories.
A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which
quantity, grade (or quality), densities, shape, and physical characteristics are
estimated with confidence sufficient to allow the application of Modifying
Factors to support detailed mine planning and final evaluation of the
economic viability of the deposit. Geological evidence is derived from
detailed and reliable exploration, sampling and testing gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes, and is sufficient to confirm geological and grade
(or quality) continuity between points of observation where data and samples
are gathered.
A Measured Mineral Resource has a higher level of confidence than that
applying to either an Indicated Mineral Resource or an Inferred Mineral
Resource. It may be converted to a Proved Ore Reserve or under certain
circumstances to a Probable Ore Reserve.
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which
quantity, grade (or quality), densities, shape and physical characteristics are
estimated with sufficient confidence to allow the application of Modifying
Factors in sufficient detail to support mine planning and evaluation of the
economic viability of the deposit. Geological evidence is derived from
adequately detailed and reliable exploration, sampling and testing gathered
through appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes, and is sufficient to assume geological and grade
(or quality) continuity between points of observation where data and samples
are gathered.
An Indicated Mineral Resource has a lower level of confidence than that
applying to a Measured Mineral Resource and may only be converted to
a Probable Ore Reserve.
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which
quantity and grade (or quality) are estimated on the basis of limited geological
evidence and sampling. Geological evidence is sufficient to imply but not
verify geological and grade (or quality) continuity. It is based on exploration,
sampling and testing information gathered through appropriate techniques
from locations such as outcrops, trenches, pits, workings and drill holes.
An Inferred Mineral Resource has a lower level of confidence than that
applying to an Indicated Mineral Resource and must not be converted to
an Ore Reserve. It is reasonably expected that the majority of Inferred
Mineral Resources could be upgraded to Indicated Mineral Resources with
continued exploration.
Life of Mine Plan (LOM Plan)
A design and costing study of an existing operation in which appropriate
assessments have been made of realistically assumed geological, mining,
metallurgical, economic, marketing, legal, environmental, social,
governmental, engineering, operational and all other Modifying Factors,
which are considered in sufficient detail to demonstrate at the time of
reporting that extraction is reasonably justified.
Reserve Life
The scheduled extraction period in years for the total Ore Reserves in the
approved LOM Plan.
Inferred (in LOM Plan)
Inferred Resources within the scheduled LOM Plan.
Inferred (ex. LOM Plan)
The portion of Inferred Resources with reasonable prospects for eventual
economic extraction not considered in the LOM Plan.
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.
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.
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 38 of
this report excludes the Group’s attributable share of associates’ and joint
ventures’ EBITDA.
180
Anglo American plc Annual Report 2015
OTHER INFORMATION GLOSSARY OF TERMS AND PERFORMANCE MEASURES
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 based on long term
consensus prices/Fx. 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. Copper equivalent production has been normalised for the disposal
of AA Norte.
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.
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.
Anglo American plc Annual Report 2015
181
OTHER INFORMATION Other information
OTHER INFORMATION GLOSSARY OF TERMS AND PERFORMANCE MEASURES
Return on capital employed (ROCE)
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 average capital employed.
Attributable ROCE
Attributable ROCE is the primary return measure used in the Group. It is defined as the return on the 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 operations, associates and joint ventures are included in their proportionate
interest and in line with appropriate accounting treatment. It is calculated based on achieved prices and foreign exchange.
The previous ROCE measure, used to track the Driving Value programme, incorporated a number of adjustments, principally to reverse the impact of certain
impairments and acquisition fair value adjustments. The new attributable ROCE measure has been developed to allow a clearer link to the published financial
statements. Comparatives have been restated to align with the current year presentation, and capital employed by segment is disclosed in note 3 to the
Consolidated financial statements.
US$ billion
Attributable EBIT(1)
Average attributable capital employed
Attributable ROCE
2015
1.6
32.6
5%
2014
3.4
38.7
9%
2013
4.4
41.5
10%
2012
4.1
40.0
10%
(1) For periods of less than one year EBIT for the period is annualised, with the exception of De Beers which is based on the last 12 months of performance due to seasonal sales and EBIT profile.
Driving Value ROCE
Driving Value ROCE is an adjusted measure of Attributable ROCE for the measurement of 2014 LTIP only. It is calculated using Attributable ROCE based on
realised prices and foreign exchange rates and includes the following adjustments:
• Impairments announced after 10 December 2013 are added back to total capital employed (unless the impairment resulted from the asset being taken out
of service).
• Earnings and return impacts from impairments (due to reduced depreciation or amortisation expense) are excluded from underlying EBIT.
• 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.
• Structural adjustments for the De Beers acquisition assuming ownership of 85% of De Beers from 1 January 2012 (actual acquisition date: 16 August 2012)
and disposals from Anglo American Sur assuming ownership of 50.1% from the start of 2012 (actual disposal date: 23 August 2012) have been included.
ROCE used for LTIP metrics
50% of the Executives’ annual LTIP award is predicated upon the achievement of ROCE targets over a three year performance period. The target range for the
2014 LTIP award, 12-16%, was based on ‘Driving Value ROCE at achieved prices’, set at a level designed to support the aspiration of achieving a ROCE of 15%
by the end of 2016. Although the subsequent steep decline in prices since that award has made the target range very stretching, it is not intended that the LTIP
outcomes will be adjusted for the impact of prices. In 2015 Driving Value ROCE at achieved prices was 4%.
The target range for the 2015 LTIP award was set at 10–14%(1), consistent with the lower commodity price expectations at the time. In order to provide a clearer
link to the financial statements for investors and participants, the simplified Attributable ROCE, as set out above, will be used for the 2015 LTIP award onwards.
The original range of 10–14% will be adjusted for impairments taken after 31 December 2014 until 31 December 2017 and will be restated at the point of
vesting to assess performance. 2015 Attributable ROCE was 5%.
The range for 2016 LTIP has been increased to reflect the volatility Anglo American experiences due to commodity price and foreign exchange movements.
It has been set at 5–15%. Given the announced portfolio review, the ranges for all LTIP awards will be restated in the year of vesting, for changes to the
portfolio that take place between setting the target and assessing performance.
(1)
Initial target set at 9–13% for Driving Value ROCE, subsequently updated to 10-14% for Attributable ROCE. The two targets are identical on a like-for-like basis.
182
Anglo American plc Annual Report 2015
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.
Platinum
Refined production
Platinum (troy oz)
Palladium (troy oz)
Rhodium (troy oz)
Copper refined (tonnes)(1)
Copper matte (tonnes)(1)
Nickel refined (tonnes)(1)
Nickel matte (tonnes)(1)
Gold (troy oz)
Produced ounces
Platinum (troy oz)
4E built-up head grade (g/tonne milled)(2)
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
Copper (tonnes) on a contained metal basis unless stated otherwise(3)
Collahuasi
100% basis (Anglo American share 44%)
Ore mined
Ore processed – Oxide
Ore processed – Sulphide
Ore grade processed – Oxide (% ASCu)(4)
Ore grade processed – Sulphide (% TCu)(5)
Production – Copper cathode
Production – Copper in concentrate
Total copper production for Collahuasi
Anglo American’s share of copper production for Collahuasi(6)
Anglo American Sur
Los Bronces mine(7)
Ore mined
Marginal ore mined
Ore processed – Sulphide
Ore grade processed – Sulphide (% TCu)
Production – Copper cathode
Production – Copper in concentrate
Production total
El Soldado mine(7)
Ore mined
Ore processed – Sulphide
Ore grade processed – Sulphide (% TCu)
Production – Copper cathode
Production – Copper in concentrate
Production total
Chagres Smelter(7)
Ore smelted
Production
Total copper production for Anglo American Sur
2015
2014
2,458,800
1,594,900
305,200
16,800
300
25,400
400
113,000
1,889,500
1,225,400
229,400
12,500
6,200
20,500
7,700
95,600
2,337,300
3.23
1,869,900
3.00
9,877,000
506,000
221,000
9,764,000
20,368,000
494,000
1,270,000
1,764,000
837,000
3,132,000
704,000
4,673,000
1,243,000
644,000
1,887,000
28,692,000
79,573,500
4,653,900
43,790,600
0.63
1.15
22,200
433,100
455,300
200,300
50,258,500
39,252,600
45,396,900
0.92
35,000
366,700
401,700
5,208,100
5,965,400
0.77
200
35,800
36,000
149,100
145,100
437,700
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
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
(1) Nickel and copper refined through third parties is shown as production of nickel matte and copper matte.
(2) 4E: the grade measured as the combined content of the four most valuable precious metals: platinum, palladium, rhodium and gold.
(3) Excludes Anglo American Platinum’s copper production.
(4) ASCu = acid soluble copper.
(5) TCu = total copper.
(6) Anglo American’s share of Collahuasi production is 44%.
(7) 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 2015
183
OTHER INFORMATION Other information
OTHER INFORMATION 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
Third party sales – Mantos Copper(2)
Nickel (tonnes) unless stated otherwise(3)
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 and Phosphates(4)
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
High analysis fertiliser
Low analysis fertiliser
Dicalcium phosphate (DCP)
Fertiliser sales volumes
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(5)
Manganese alloys(5)(6)
Samancor sales volume
Manganese ore
Manganese alloys
(1) Difference between total copper production and attributable copper production arises from Anglo American’s 44% interest in Collahuasi.
(2) Relates to sales made on behalf of Mantos Copper (previously Mantos Blancos and Mantoverde mines).
(3) Excludes Anglo American Platinum’s nickel production.
(4) Refer to note 3 of the Consolidated financial statements for changes in reporting segments.
(5) Saleable production.
(6) Production includes medium carbon ferro-manganese.
184
Anglo American plc Annual Report 2015
2015
2014
2,835,500
0.76
20,400
18,100
38,500
6,605,300
5,944,800
0.52
0.21
32,300
70,800
963,800
708,800
686,900
705,600
683,500
41,400
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
–
2,943,600
1,472,800
1.78
21,300
2,510,400
1,827,400
1.81
28,300
8,600
591,100
1.69
9,000
30,300
32,000
6,800
593,600
1.67
8,900
37,200
36,100
2,131,700
2,231,300
0.96
6,300
5,100
1,341,400
36.8
265,100
1,110,800
172,700
938,100
147,300
1,060,100
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
29,003,100
15,875,100
44,878,200
31,392,800
12,054,400
1,431,000
44,878,200
31,268,800
16,927,700
48,196,500
35,540,600
11,568,100
1,087,800
48,196,500
43,560,000
4,276,800
40,467,700
4,819,800
9,174,200
687,700
8,467,600
239,600
3,111,600
213,600
3,308,600
286,100
3,084,700
203,300
3,382,100
294,800
OTHER INFORMATION
OTHER INFORMATION PRODUCTION STATISTICS
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(1)
Thermal – Export
Thermal – Domestic
South Africa
Thermal – Export
Thermal – Domestic
Colombia
Thermal – Export
Sales volumes
Australia and Canada
Metallurgical – Export(2)
Thermal – Export
Thermal – Domestic
South Africa
Thermal – Export
Thermal – Domestic
Colombia
Thermal – Export
Coal by mine (tonnes)
Australia
Callide
Capcoal (incl. Grasstree)
Dawson
Drayton
Foxleigh
Grosvenor
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
2015
2014
15,907,900
5,300,300
21,208,200
5,280,500
7,051,600
12,332,100
13,442,300
5,990,800
19,433,100
5,173,900
7,114,600
12,288,500
–
–
–
1,393,600
79,000
1,472,600
17,403,600
26,021,200
6,843,900
50,268,700
11,074,300
11,074,300
21,208,200
33,758,400
39,916,700
94,883,300
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
90
55
28
55
19
55
111
72
35
70
19
67
21,093,400
5,904,200
7,049,300
20,568,200
5,966,200
7,293,100
19,919,800
31,691,600
17,572,800
37,217,300
11,189,300
11,314,000
7,930,400
8,689,700
4,314,500
2,122,000
1,860,600
499,800
3,201,500
4,921,800
33,540,300
7,557,000
7,642,800
4,240,200
3,104,800
2,034,500
–
2,923,700
4,218,600
31,721,600
–
–
1,472,600
1,472,600
4,287,200
3,876,600
4,531,800
3,152,300
6,158,200
4,268,700
1,442,500
2,838,300
14,148,100
5,565,000
50,268,700
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
11,074,300
11,074,300
94,883,300
11,227,000
11,227,000
100,217,700
(1) Within export coking and export PCI coals there are different grades of coal with different weighted average prices compared to benchmark.
(2)
Includes both hard coking coal and PCI sales volumes.
Anglo American plc Annual Report 2015
185
OTHER INFORMATION Other information
OTHER INFORMATION
QUARTERLY PRODUCTION STATISTICS
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)
Produced ounces platinum (troy oz)
De Beers (diamonds recovered – carats)
100% basis
Diamonds
Copper (tonnes)(1)(2)
Nickel (tonnes)(3)
Niobium and Phosphates
Niobium (tonnes)
Phosphates (tonnes)
Concentrate
Phosphoric Acid
Fertiliser
Dicalcium phosphate (DCP)
Iron Ore and Manganese (tonnes)
Iron ore – Kumba
Iron ore – Minas-Rio
Manganese ore(4)
Manganese alloys(4)(5)
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
31 December
2015
30 September
2015
30 June
2015
31 March
2015
31 December
2014
31 December 2015 v
30 September 2015
31 December 2015 v
31 December 2014
Quarter ended
% Change (Quarter ended)
744,900
468,400
85,700
4,700
–
7,300
–
29,500
598,000
610,900
390,700
77,600
4,200
–
6,400
–
23,000
614,300
560,600
387,700
76,900
4,000
–
6,000
–
30,400
580,900
542,400
348,100
65,000
3,900
300
5,700
400
30,100
544,100
573,700
357,700
71,700
2,600
1,400
4,800
1,800
28,900
602,900
7,052,000
6,012,000
7,963,000
7,665,000
8,366,000
181,400
171,100
184,500
171,800
174,800
10,500
6,800
6,300
6,700
6,700
22%
20%
10%
12%
0%
14%
0%
28%
(3)%
17%
6%
54%
1,600
1,800
1,600
1,300
1,300
(11)%
355,700
63,900
303,400
38,700
363,100
75,600
294,400
33,700
303,300
62,400
274,200
38,700
319,300
63,200
238,800
36,200
355,600
78,600
284,900
44,800
10,935,200
3,252,500
596,000
43,500
11,390,900
2,918,800
923,200
43,700
10,384,700
1,826,200
805,700
53,600
12,167,400
1,176,700
786,700
72,800
12,431,600
687,700
882,100
80,400
5,484,300
1,154,300
1,978,800
5,475,500
1,366,400
1,800,500
5,252,600
1,326,600
1,622,400
4,995,700
1,433,200
1,649,900
4,760,200
1,871,600
1,966,300
(2)%
(15)%
3%
15%
(4)%
11%
(35)%
0%
0%
(16)%
10%
30%
31%
20%
81%
(100)%
52%
(100)%
2%
(1)%
(16)%
4%
57%
23%
0%
(19)%
6%
(14)%
(12)%
373%
(32)%
(46)%
15%
(38)%
1%
–
–
–
–
171,400
(100)%
(100)%
3,878,000
5,533,500
1,821,500
4,887,200
6,763,000
1,730,400
4,296,700
6,774,000
1,590,000
4,341,700
6,950,700
1,702,000
4,782,800
7,434,600
1,761,400
2,628,100
2,526,800
2,944,400
2,975,000
3,002,300
(21)%
(18)%
5%
4%
(19)%
(26)%
3%
(12)%
(1) Excludes Anglo American Platinum’s copper production.
(2) Copper segment attributable production.
(3) Excludes Anglo American Platinum’s nickel production.
(4) Saleable production.
(5) Production includes medium carbon ferro-manganese.
186
Anglo American plc Annual Report 2015
OTHER INFORMATION OTHER INFORMATION
NON-FINANCIAL DATA
Safety(1)
Work-related fatalities
Fatal-injury frequency rate (FIFR)(2)
Total recordable case frequency rate (TRCFR)(2)
Lost time injury frequency rate (LTIFR)(2)
Occupational health(1)
New cases of occupational disease (NCOD)(2)
Occupational disease incidence rate (per 200,000 hours) (ODIR)
Environment(1)
Total CO2 emissions (Mt CO2e)
Total energy consumed (million GJ)(2)
Total new water consumed (million m3)(2)
Human Resources(1)(3)
Women in management (%)(4)
Historically Disadvantaged South Africans in management (%)(5)
Resignations (%)(6)
Redundancies (%)(7)
Dismissals (%)(8)
Other reasons for leaving (%)(9)
Social(1)
CSI spend (total in US$ million)(10)
CSI spend (% of underlying EBIT)(10)
Procurement: BEE spend (rand billion)
Businesses supported through enterprise development initiatives
Jobs created/maintained through enterprise development programmes
2015
2014
2013
2012
2011
6
0.004
0.93
0.47
163
0.177
18
106
222
25
60
1.9
3.5
1.4
4.2
124
6
36.3
62,661
108,423
6
0.003
0.80
0.35
175
0.175
17
108
196
24
60
2.0
0.9
1.0
1.9
136
3
39.3
58,257
96,873
15
0.008
1.08
0.49
209
0.217
17
106
201
23
64
2.0
4.1
1.5
2.7
127
2
32.4
48,111
76,543
13
0.007
1.29
0.58
174
0.185
18
113
156
23
62
2.4
0.6
1.4
2.4
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
(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 included from September 2012. Divested businesses are included up until the point of divestment.
(2) See page 181 for definitions.
(3) Excludes Other Mining and Industrial.
(4) Women in management is the number of female managers as a percentage of all managers in the workforce excluding contractors.
(5) Historically Disadvantaged South Africans in management is the percentage of managers at Anglo American in South Africa who are ‘Historically Disadvantaged South Africans’.
(6) The number of people who resigned as a percentage of the total workforce excluding contractors.
(7) The number of people who have been retrenched as a percentage of total workforce excluding contractors.
(8) The number of people who have been dismissed or have resigned to avoid dismissal, as a percentage of total workforce excluding contractors.
(9) 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.
(10) 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 2015 is expenditure relating to Zimele ($15.9 million, 2014: $10.1 million).
Anglo American plc Annual Report 2015
187
Other information
THE BUSINESS – AN OVERVIEW
as at 31 December 2015
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
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%
Overall ownership:
100%
81.9%
Overall ownership:
100%
Copper
Chile
Chagres
El Soldado
Los Bronces
Collahuasi
Nickel
100% owned
Brazil
Codemin
Barro Alto
Peru
50.1% Quellaveco
50.1%
50.1%
44%
(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. 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%.
188
Anglo American plc Annual Report 2015
OTHER INFORMATION OTHER INFORMATION THE BUSINESS – AN OVERVIEW
Niobium and Phosphates
100% owned
Brazil
Anglo American Nióbio Brasil Limitada
Anglo American Fosfatos Brasil Limitada
Iron Ore and Manganese
Kumba Iron Ore (South Africa)
Sishen Iron Ore Company(1) (South Africa)
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
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
Corporate and other
100% owned
Vergelegen (South Africa)
Other interests
Aggregates and building materials
Exxaro Resources (southern Africa and Australia)
69.7%
73.9%
100%
50%
40%
70%
83.3%
51%
88.2%
70%
88%
23.3%
25.4%
17.6%
19.2%
50%
50%
73%
73%
23.2%
33.3%
9.8%
(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%.
Anglo American plc Annual Report 2015
189
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 2015 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
on page 156
• 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 157
• 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 financial review on pages 36–39.
Further details of our policy on financial risk management are set out in note
38 to the financial statements. The Group’s net debt at 31 December 2015
was $12.9 billion (2014: $12.9 billion), representing a gearing level of 37.7%
(2014: 28.6%). 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 2017. 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 period assessed. 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
17 September 2015. The directors are not recommending a final dividend.
Share capital
The Company’s issued share capital as at 31 December 2015, together
with details of share allotments and issue of treasury shares during the year,
is set out in note 32 on page 153.
The Company was authorised by shareholders at the AGM held on
23 April 2015, to purchase its own shares in the market. No shares were
purchased under this authority during 2015. This authority will expire at
the 2016 AGM and, in accordance with usual practice, a resolution to renew
it for another year will be proposed.
Company
Public Investment Corporation (PIC)
Coronation Asset Management (Pty) Ltd
Silchester International Investors LLP
Genesis Asset Managers, LLP
Tarl Investment Holdings Limited(1)
Epoch Two Investment Holdings Limited(1)
Number
of shares
116,355,956
87,175,679
70,110,363
55,426,734
47,275,613
42,166,686
Percentage
of voting rights
8.30%
6.22%
5.00%
3.95%
3.37%
3.01%
(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 129
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 153
See note 32, page 153
Not applicable
Sustainable development
The Sustainability Report 2015 will be published online on 14 March 2016.
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
190
Anglo American plc Annual Report 2015
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 2015. 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 2015
191
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.
192
Anglo American plc Annual Report 2015
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 2015, 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 23 April 2015, authority was given for the Company to
purchase, in the market, up to 209.3 million Ordinary Shares of 5486⁄91
US cents each. The Company did not purchase any of its own shares under
this authority during 2015.
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
15 February 2016
OTHER INFORMATION
SHAREHOLDER INFORMATION
Annual General Meeting
Will be held at 14:30 on Thursday 21 April 2016, 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: 0371 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.
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 0345 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 0371 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 2015
193
Other information
OTHER ANGLO AMERICAN PUBLICATIONS
• Sustainability Report 2015
• Notice of 2016 AGM
• Business Unit Sustainable Development Reports (2015)
• 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
Financial and sustainable development reports may be found at:
www.angloamerican.com/reportingcentre
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 2015:
194
Anglo American plc Annual Report 2015
OTHER INFORMATION Designed and produced by
SALTERBAXTER MSLGROUP
This document is printed
on Amadeus 50 Silk and
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has been independently certified
according to the rules of the
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3
4
Back cover images
1. Global Safety Day
demonstration
attended by Anglo
American Platinum’s
senior management
team underground at
Tumela platinum mine
in South Africa.
2. Building a new road
to the campsite at the
Quellaveco copper
project in southern Peru.
3. Loading overburden
at Platinum’s huge open
pit at Mogalakwena in
South Africa.
4. Sorter Kay Modise
at the De Beers Global
Sightholder Sales
diamond sorting facility
in Gaborone, Botswana.
5. The 12,000 tonne
exploration and
sampling vessel,
SS Nujoma, the latest
vessel to join the
Debmarine Namibia
fleet in the search
for offshore diamonds,
at its launch in Norway
in January 2016.
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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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