Anglo American announces FY12 results

RNS Number : 9472X

Anglo American PLC

15 February 2013

Anglo American announces underlying EBITDA⁽¹⁾ of $8.7 billion and underlying operating profit⁽²⁾ decrease to $6.2 billion

Financial results driven lower by commodity prices in weak global economic conditions

· Group underlying operating profit⁽²⁾ of $6.2 billion, decreased by 44%

· Underlying earnings⁽³⁾ of $2.8 billion and underlying EPS of $2.26

· Following one-off impairments, loss attributable to equity shareholders of $1.5 billion

· Net debt⁽⁴⁾ of $8.6 billion at 31 December 2012 (pro forma net debt of $9.3 billion)⁽⁵⁾

Safety

· It is regrettable that 13 employees lost their lives in work related incidents - safety programmes continuing to drive for zero harm with 70% reduction in fatalities since 2006

· 48% improvement in lost time injury frequency rate since 2006

Disciplined capital allocation

· Aiming to maintain a strong investment grade rating, with the Board's commitment to sustain the rebased dividend and return surplus cash to shareholders

· Final dividend increased by 15% to 53 US cents per share, bringing rebased total dividends for 2012 to 85 US cents per share, a 15% increase

Impairments recorded and Platinum review proposals announced

· Minas-Rio project cost and schedule review confirms FOOS end of 2014 and $8.8 billion expected capital expenditure (including $0.6 billion contingency) - $4.0 billion post-tax impairment

· Platinum industry currently facing challenging economic conditions- $0.6 billion post tax impairment in 2012 on projects. Platinum proposed restructuring to create a sustainable, competitive and profitable business

Solid production performance offsetting grade decline and illegal industrial action

· Production growth and record set at Kumba Iron Ore, export metallurgical coal, export thermal coal, Nickel and Phosphates as new operations ramp-up and productivity measures take effect

· Kumba Iron Ore - record production of 43.1 Mt, up 4% despite the unprotected strike at Sishen due to the ramp-up of Kolomela

· Metallurgical Coal - record production of export metallurgical coal of 17.7 Mt, up 24%

· Copper - 10% increase due to the ramp-up of the Los Bronces expansion despite disappointing performance at Collahuasi and in the Los Bronces mine

· Platinum - 8% decrease in equivalent refined production mainly due to illegal industrial action

New mining operations and expansions ramping-up - delivered $1.2 billion of underlying operating profit

· Kolomela iron ore - 8.5 Mt produced, ahead of its ramp-up schedule; on target for 9 Mt in 2013

· Los Bronces copper expansion - contributed 196 kt; full ramp-up achieved in August 2012

· Barro Alto nickel - production of 22 kt; progressing to full run rate

· Zibulo thermal coal - production of 5.0 Mt

Investment prioritised to most value accretive and lowest risk projects

· Cerrejón P40 8.0 Mtpa (100% basis) export thermal coal expansion (Colombia) - first coal in 2013

· Minas-Rio 26.5 Mtpa iron ore (Brazil) - injunctions lifted and FOOS end of 2014

· Grosvenor 5.0 Mtpa metallurgical coal (Australia) - longwall production in 2016

HIGHLIGHTS US$ million, unless otherwise stated	Year ended 31 Dec 2012	Year ended 31 Dec 2011	Change
Group revenue including associates⁽⁶⁾	32,785	36,548	(10)%
Underlying operating profit ⁽²⁾	6,164	11,095	(44)%
Underlying earnings⁽³⁾	2,839	6,120	(54)%
Underlying EBITDA⁽¹⁾	8,686	13,348	(35)%
Net cash inflows from operating activities	5,562	9,362	(41)%
(Loss)/profit before tax⁽⁷⁾⁽⁸⁾	(239)	10,782	(102)%
(Loss)/profit for the financial year attributable to equity shareholders⁽⁷⁾⁽⁸⁾	(1,493)	6,169	(124)%

Earnings per share (US$):
Basic (loss)/ earnings per share⁽⁸⁾	(1.19)	5.10	(123)%
Underlying earnings per share⁽³⁾	2.26	5.06	(55)%

⁽¹⁾Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is operating profit before special items, remeasurements, depreciation and amortisation in subsidiaries and joint ventures and includes attributable share of EBITDA of associates. See note 5 to the Condensed financial statements. ⁽²⁾Underlying operating profit includes attributable share of associates' operating profit (before attributable share of associates' interest, tax and non-controlling interests) and is before special items and remeasurements, unless otherwise stated, see notes 2 and 3 to the Condensed financial statements. For the definition of special items and remeasurements see note 4 to the Condensed financial statements. ⁽³⁾See note 9 to the Condensed financial statements for basis of calculation of underlying earnings. ⁽⁴⁾Net debt includes related hedges and net debt in disposal groups. See note 13 to the Condensed financial statements. ⁽⁵⁾Pro forma net debt is net debt adjusted for the estimated effect of the acquisition of a 58.9% interest in the Revuboè metallurgical coal project in Mozambique ($0.6 billion), the expected capital gains tax and withholding tax liabilities from the sale of the 25.4% interest in Anglo American Sur ($0.4 billion), the proceeds received from the disposal of a 16.8% effective interest in Palabora Mining Company Limited ($0.1 billion) and the disposal of certain Tarmac operations ($0.2 billion). ⁽⁶⁾Includes the Group's attributable share of associates' revenue of $4,024 million (2011: $5,968 million). See note 2 to the Condensed financial statements. ⁽⁷⁾Stated after special items and remeasurements. See note 4 to the Condensed financial statements. ⁽⁸⁾For the year ended 31 December 2012 special items and remeasurements, including associates, before tax and non-controlling interests, amounted to a loss of $5,845 million (2011: gain of $152 million), and after tax and non-controlling interests, amounted to a loss of $4,332 million (2011: gain of $49 million).

Cynthia Carroll, Chief Executive, said: "As a result of markedly weaker commodity prices, ongoing cost pressures and an operating loss in our platinum business, Anglo American reported an underlying operating profit of $6.2 billion, a 44% decrease. Underlying EBITDA decreased by 35% to $8.7 billion and underlying earnings decreased by 54% to $2.8 billion.

Our safety performance has always been my first priority and our efforts continue to build on the progress we have made since 2006, both in terms of lives lost and lost time injuries sustained. I am deeply saddened that 13 of our colleagues lost their lives in 2012 - a constant reminder that we must persevere to achieve zero harm.

Anglo American continued its drive for strong operational performance throughout 2012 in an environment of tough macroeconomic headwinds and a number of industry-wide and company specific challenges. Record volumes of metallurgical coal, achieving benchmark equipment performance levels, and of iron ore and increased volumes of export thermal coal and copper helped to offset the impact of illegal industrial action, declining grades and higher waste stripping.

The new mining operations and expansions delivered and commissioned during 2011 contributed to production growth and generated $1.2 billion of underlying operating profit. The Los Bronces expansion contributed 196kt of copper in 2012 and has achieved full ramp-up since August 2012, while Kumba's Kolomela mine exceeded expectations by producing 8.5 Mt for the year - both considerable achievements - while we have been slowly ramping up Barro Alto.

Beyond organic growth, we have completed our acquisition of the Oppenheimer family's 40% interest in De Beers, taking our holding to 85%. In Chile, our joint ownership of Anglo American Sur (AA Sur) with Codelco, Mitsubishi and Mitsui, while we retain control of the business, firmly aligns our interests in one of the most exciting producing and prospective copper ore bodies in the world - the Los Bronces district. During the year, we also increased our shareholding in Kumba Iron Ore, lifting our ownership by 4.5% to 69.7%, reflecting our view on the quality of the business and its highly attractive performance and growth profile. Our divestment programme has generated proceeds as announced of $4.0 billion on a debt and cash free basis, which excludes $7.4 billion cash generated from the sale of 49.9% of AA Sur. In line with our divestment programme of non-core businesses as set out in October 2009, I am delighted that Tarmac's UK joint venture with Lafarge was completed in January 2013, creating a leading UK construction materials company with significant synergies expected.

We are focused on delivering shareholder value and returns through the cycle by maintaining a prudent and disciplined approach to managing our businesses and capital allocation. Despite the macroeconomic headwinds and likely sustained higher capital and operating cost environment for the industry, we are committed to returning cash to shareholders and have recommended an increase to our final dividend of 15% to US 53 cents per share, bringing total dividends for the year to US 85 cents per share, a 15% increase. This reflects our confidence in the underlying business and completes the reinstatement journey to rebase our dividends to be competitive with our diversified peers.

We recorded impairments totalling $4.6 billion (post-tax) in relation to Minas-Rio and a number of platinum projects that are uneconomical, which is disappointing. In Platinum, we completed our review in January 2013 and have put forward proposals to create a sustainable, competitive and profitable platinum business. We, of course, regret the potential impact on jobs and communities and have designed an extensive social plan to more than offset any such impact. In Brazil, Minas-Rio is a world class iron ore project of rare magnitude and quality, representing one of the world's largest undeveloped resources. The published resource has increased more than fourfold since acquisition, of which we have subsequently converted 1.45 billion tonnes to Ore Reserves; we anticipate increases in the resource confidence and further conversion of resources to reserves through our on-going infill drilling program. Despite the difficulties we have faced that have caused a significant increase in capital expenditure, we continue to be confident of the medium and long term attractiveness and strategic positioning of Minas-Rio and we remain committed to the project. The first phase of the project will begin its ramp-up at the end of 2014, with operating costs expected to be highly competitive in the first quartile of the FOB cash cost curve, generating significant free cashflow for many decades to come.

We continue to sequence investment by prioritising capital to commodities with the most attractive market dynamics and projects with the lowest execution risks. The 5 Mtpa Grosvenor metallurgical coal project in Australia is under way and on schedule while, in Peru, successful completion of our community dialogue process at the Quellaveco copper project will allow us to target submission to the Board for approval in 2013.

Looking ahead, recent months have brought a degree of renewed optimism to the economic prospects. While European and Japanese economic activity remains weak, recent policy changes ought to stimulate growth in 2013. Alongside a continuing recovery in the US, we expect robust growth in the major emerging economies - especially China and India - as they benefit from continuing urbanisation. Rising living standards and an expanding middle class should support demand for our products across our diversified mix."

Review of 2012

Financial results

Anglo American reported underlying earnings of $2.8 billion, compared with $6.1 billion in 2011, with underlying operating profit of $6.2 billion, 44% lower than 2011.

This decrease in underlying operating profit was mainly driven by the Platinum, Metallurgical Coal, Iron Ore and Manganese and Copper business units, whose financial performance was affected by lower prices and higher costs, with the exception of Metallurgical Coal where costs decreased. There was a decline in realised prices across the majority of commodities produced by the Group.

Iron Ore and Manganese generated an underlying operating profit of $2,949 million, 33% lower. Within this commodity group, Kumba Iron Ore reported an underlying operating profit of $2,980 million, 34% lower than 2011, owing to lower average prices, the unprotected strike at Sishen and an increase in waste stripping, partially offset by the ramp-up of Kolomela mine. Samancor reported an underlying operating profit of $103 million, 38% lower, driven by lower ore prices, partially offset by lower costs.

Metallurgical Coal delivered an underlying operating profit of $405 million, a 66% decrease, primarily due to lower realised export selling prices, partially offset by record production and higher sales.

Thermal Coal's underlying operating profit of $793 million was 36% lower, mainly as a result of lower export thermal coal prices for both South African and Colombian coal and, in South Africa, above inflation cost increases. This was partially offset by increased sales volumes, mainly from the full incorporation of Zibulo as an operating asset, and despite the closure of high cost production sections.

Copper delivered an underlying operating profit of $1,687 million, 31% lower, as a result of lower realised sales prices, lower by-product quantities and higher operating, exploration and study costs, partly offset by increased sales volumes.

Nickel reported an underlying operating profit of $26 million, 54% lower, due to lower realised prices and an extended export ban imposed by the Venezuelan government from the beginning of June 2012 resulting in the cessation of production in September 2012, partially offset by a self insurance recovery of $59 million.

Platinum generated an underlying operating loss of $120 million, due to lower metal prices, higher unit costs and the illegal strike that significantly affected production and sales during the final four months of the year, partially offset by a $172 million positive stock adjustment.

Diamonds underlying operating profit (on a 100% basis) fell by $676 million to $815 million, 45% lower, reflecting the impact of difficult trading conditions brought about predominantly by weaker demand and changing product requirements from Sightholders. Anglo American's share of De Beers underlying operating profit totalled $496 million, a decrease of 25%, the overall reduction being partly offset by Anglo American's higher shareholding.

Other Mining and Industrial Core delivered a combined underlying operating profit of $169 million, a decrease of 8% compared to the prior year. This was driven by higher labour costs at both operations and lower phosphate prices, partially offset by an increase in sales volumes of both phosphates and niobium.

Other Mining and Industrial Non-Core underlying operating profit was $168 million, a $37 million increase, due to lower depreciation as a result of the transfer of Tarmac Quarry Materials and Scaw South Africa to 'held for sale' and the reversal of penalty provisions at Amapá which were in place at the end of 2011, partly off-set by lower realised iron ore prices at Amapá.

Exploration costs for the year were $206 million, a 70% increase, mainly driven by the inclusion of exploration costs at De Beers (following the acquisition of the additional 40% interest), increased drilling due to favourable weather conditions in Australia and Chile, and a ramp up in drilling activities at the Sakatti polymetallic project in Finland.

Corporate Costs (after cost allocations) of $203 million were incurred in 2012. In 2011, following the reassessment of estimates of likely outcomes of existing insurance claims, liabilities decreased significantly in the insurance captive, offsetting the unallocated corporate costs and resulting in an operating profit for 2011 of $15 million.

Production

Production increases were delivered at the Kumba Iron Ore, Metallurgical Coal, Thermal Coal, Copper, Nickel, Phosphates and Niobium business units.

Iron Ore and Manganese production of iron ore increased by 4% to 43.1 Mt due to the ramp-up of Kolomela, partially offset by the unprotected strike which resulted in lost production of approximately 5 Mt. Manganese ore production increased by 20% to 3.3 Mt.

Metallurgical Coal production increased by 11% to 30.6 Mt, with record metallurgical coal production of 17.7 Mt, benefiting from productivity improvements at both the open cut and underground operations and a reduction in weather related stoppages.

Thermal Coal production improved by 1% to 68.7 Mt, despite the closure of high cost production sections in South Africa, driven by the Zibulo ramp-up and strong operational performance supported by favourable weather conditions at Cerrejón.

Copper production increased by 10% to 659,700 tonnes, mainly owing to the ramp-up of the Los Bronces expansion project, partly offset by expected lower ore grades at Collahuasi and operational challenges at the Los Bronces mine and at Collahuasi.

Nickel production increased by 35% to 39,300 tonnes due to the ramp-up of Barro Alto, partially offset by the cessation of production at Loma de Níquel from September 2012.

Platinum equivalent refined production was 8% lower than 2011 mainly due to the illegal strike action that occurred between September and November 2012 at the Rustenburg, Amandelbult, Union and Bokoni mines and operational challenges in the first half of the year.

Diamonds production decreased by 11% to 27.9 million carats, with Debswana production impacted by the Jwaneng slope failure. In light of prevailing rough diamond market trends, and in keeping with De Beers' stated production strategy for 2012, operations continued to focus on maintenance and waste stripping backlogs.

Phosphates record production of 1.1 Mt of fertiliser, a 5% increase year-on-year, due to a number of asset optimisation initiatives which improved overall performance at Catalão and Cubatão.

Niobium production increased 13%, as declining ore quality was more than offset by improvements in both throughput and recoveries.

Capital structure

Net debt, including related hedges, of $8.6 billion was $7.2 billion higher than at 31 December 2011, and $5.5 billion higher than at 30 June 2012. This increase was principally due to the completion of the De Beers acquisition in the second half of 2012 and was partially offset by the proceeds received from the disposal of a 25.4% interest in Anglo American Sur in August 2012. Cash inflows from operating activities of $5.6 billion, funded capital investment (including related hedges) of $5.7 billion, including combined investment of $1.7 billion in the Los Bronces, Barro Alto, Minas-Rio and Kolomela projects.

During the period, the Group issued corporate bonds with a US$ equivalent value of $5.1 billion in the US, European and South African markets. In addition, 99% of the Group's $1.7 billion convertible bonds were converted into equity, resulting in the issue of 62.5 million new shares, a reduction in net debt of $1.5 billion, and an aggregate interest saving of $0.3 billion compared to the cost of holding the bonds to maturity.

Dividends

Anglo American's dividend policy will provide a base dividend that will be maintained or increased through the cycle. Consistent with the policy, the Board has recommended a final dividend of 53 US cents per share, giving a total rebased dividend of 85 US cents per share for the year, subject to shareholder approval at the Annual General Meeting to be held on 19 April 2013. This reflects confidence in the underlying business and completes the reinstatement journey to rebase the dividend to be competitive with diversified peers. This recommendation is consistent with the commitment to have a disciplined balance between the maintenance of a strong investment grade rating, returns to shareholders and sequencing of future investment in line with resulting funding capacity. From time to time any cash surplus to requirements will be returned to shareholders.

Exploration enabling Anglo American's growth

Anglo American's exploration team has been recognised widely for its copper and nickel discoveries over the past decade.

In 2012, the Group, through its different exploration teams has refocused its portfolio on copper, polymetallic (Cu-Ni-PGE), iron ore, diamonds and coal projects across 18 countries. An iron ore joint venture was commenced in Liberia, in participation with Kumba Iron Ore. In western Canada, regional exploration was initiated to support the Peace River metallurgical coal operations and in Finland, drilling continues to define and extend the Sakatti polymetallic discovery. New early-stage copper opportunities are being targeted in Argentina, Chile, Colombia, Greenland, Indonesia, Peru, USA and Zambia. The Group is committed to "safe discovery" in exploration.

Project delivery to continue to drive high quality production growth

Anglo American's objective is to maintain a strong investment grade rating, which demands prudent capital discipline. Anglo American will incur higher capital expenditure over the next two years as the development of Minas-Rio is completed, after which capital expenditure is expected to be moderated.

The Group's extensive portfolio of undeveloped world class resources and pipeline of growth options spans its chosen core commodities. It offers the Group flexibility to sequence investment in line with the Group's view of market dynamics and the geopolitical environment. Capital is prioritised to maximise value accretion whilst minimising risk exposure, taking into consideration the Group's resulting funding capacity.

The Group has a number of projects in the execution phase, as summarised below, and is progressing with the development of other growth projects, including the 225 ktpa Quellaveco greenfield copper project in Peru.

Given the greater challenges involved in developing greenfield sites, the Board will apply a highly disciplined approach to the allocation of capital, with smaller, lower-risk brownfield expansion projects more likely to find favour. Prior to Board approval of large and complex greenfield projects, the merits of partnerships will be explored.

Minas-Rio - first ore on ship by end of 2014, estimated capital expenditure increased to $8.8 billion

The Minas-Rio iron ore project in Brazil is expected to capture a significant part of the pellet feed market with its premium product featuring high iron content and low contaminants. Phase 1 of the Minas-Rio project is expected to produce 26.5 Mtpa, with potential optimisation to 29.8 Mtpa.

During the year, Anglo American completed a detailed cost and schedule review of the project. The review included third party input and examined the outstanding capital expenditure requirements in light of current development progress and the disruptive challenges faced by the project. The review included a detailed re-evaluation of all aspects of the outstanding schedule, with a focus on maximising value and mitigating risk.

Following completion of the review, estimated capital expenditure for the Minas-Rio project increased $8.8 billion, if a centrally held risk contingency of $600 million is utilised in full. On the basis of the revised capital expenditure requirements and assessment of the full potential of Phase 1 of the project (excluding at this stage the potential for future expansions up to 90 Mtpa), Anglo American will record an impairment charge of $4 billion at 31 December 2012, on a post-tax basis. The first phase of the project will begin its ramp-up at the end of 2014.

The published resource has increased more than fourfold since acquisition to 5.77 billion tonnes in 2011, of which we have recently converted 1.45 billion tonnes to Ore Reserves. We anticipate increases in the resource confidence and further conversion of resources to reserves through our ongoing infill drilling program.

Cerrejón P40 expansion - on track

In Colombia, the brownfield expansion project, P40, aims to increase value by increasing export thermal coal production capacity by 8 Mtpa to 40 Mtpa (100% basis), through additional mining equipment and the de-bottlenecking of key logistics infrastructure along the coal chain. The project was approved by Cerrejón's shareholders in the third quarter of 2011. The project is progressing well and is expected to be delivered on schedule, with first coal expected in 2013.

Grosvenor - under way

The greenfield Grosvenor metallurgical coal project is situated immediately to the south of Anglo American's Moranbah North metallurgical coal mine in the Bowen Basin of Queensland, Australia. The mine is expected to produce 5 Mtpa of high quality metallurgical coal from its underground longwall operation over a projected life of 26 years and to benefit from operating costs in the lower half of the cost curve.

Grosvenor forms a major part of the Group's strategy of tripling hard coking coal production from its Australian assets, using a standard longwall and coal handling and preparation plant (CHPP) design. In its first phase of development, Grosvenor will consist of a single new underground longwall mine, targeting the same well understood Goonyella Middle coal seam as Moranbah North, and will process its coal through the existing Moranbah North CHPP and train loading facilities. The Grosvenor project is currently in execution, with engineering work progressing to plan, construction under way and longwall production targeted to begin in 2016. A pre-feasibility study for expansion by adding a second longwall at Grosvenor is under way.

Quellaveco - critical permits secured following successful community dialogue process

Quellaveco is a greenfield copper project in the Moquegua region of southern Peru that has the potential to produce 225 ktpa of copper from an open pit over a mine life of approximately 28 years. The project is expected to operate in the lower half of the cash operating cost curve, benefiting from attractive ore grades, low waste stripping and molybdenum by-product production. Anglo American completed the feasibility study for the project in late 2010 and took the decision to suspend progress in order to engage more actively with the local communities through a formal dialogue table process, following requests from local stakeholders. The dialogue process reached agreement in early July 2012 in relation to water usage, environmental responsibility and Anglo American's social contribution over the life of the mine, and has been held as a model for stakeholder engagement in Peru. The project received three critical permits during the fourth quarter of 2012 and Anglo American is targeting submission to the Board for approval in 2013.

M&A update

De Beers

In November 2011, Anglo American agreed to acquire the Oppenheimer family's 40% interest in De Beers.

The transaction was a unique opportunity for Anglo American to consolidate control of the world's leading diamond company, marking the Group's commitment to an industry with highly attractive long term supply and demand fundamentals. Underpinned by the security of supply offered by a 10-year sales agreement with the Government of the Republic of Botswana (GRB), this formed a compelling proposition. The benefits brought by Anglo American's scale, technical, operational and exploration expertise and financial resources, combined with the unquestionable leadership of De Beers' business and iconic brand, will enable De Beers to enhance its position across the diamond pipeline and capture the potential presented by a rapidly evolving diamond market.

In August 2012, Anglo American completed the acquisition, thereby increasing Anglo American's shareholding in De Beers to 85%. Under the terms of the November 2011 agreement, Anglo American paid a total cash consideration of $5.2 billion, comprising the agreed purchase price of $5.1 billion and a number of adjustments as provided for under the agreement.

Anglo American Sur

In November 2011, Anglo American announced the completion of the sale of a 24.5% stake in Anglo American Sur (AA Sur), comprising a number of the Group's copper assets in Chile, to Mitsubishi Corporation LLC (Mitsubishi) for $5.4 billion in cash. This transaction highlighted the inherent value of AA Sur as a world class, tier one copper business with extensive reserves and resources and significant further growth options from its exploration discoveries.

In August 2012, Anglo American and Codelco announced their agreement in respect of AA Sur. Anglo American retains control of AA Sur, reducing its 75.5% shareholding to 50.1%. A Codelco and Mitsui joint venture company controlled by Codelco agreed to acquire a 29.5% interest in AA Sur through the following transactions which were completed by mid-September 2012:

• a 24.5% shareholding in AA Sur for net cash consideration of $1.7 billion, representing a consideration of $1.8 billion, adjusted for dividends paid in relation to the shareholding since 1 January 2012; and

• a 5.0% shareholding in AA Sur (comprising 0.9% from Anglo American and 4.1% from Mitsubishi) for total cash consideration of $1.1 billion.

Revuboè

In July 2012, Anglo American announced that it had agreed to acquire a 58.9% interest in the Revuboè metallurgical coal project in Mozambique from the Talbot Estate for a total cash consideration of A$540 million (approximately US$555 million). The Revuboè project is an incorporated joint venture and includes Nippon Steel Corporation (33.3% interest), and POSCO (7.8% interest). Revuboè comprises hard coking and thermal coal suitable for open cut mining, with the potential to support the export of six to nine million tonnes per annum on a 100% basis. The transaction remains subject to a number of conditions.

Divestment update

Anglo American's divestment programme, as set out in October 2009, has been completed, raising $4.0 billion of cumulative proceeds on a debt and cash free basis as announced.

In April 2012, Anglo American announced the final stage of the $1.4 billion Scaw Metals Group (Scaw) divestment with the sale of Scaw South Africa (Pty) Ltd (Scaw South Africa), a leading South Africa-based integrated steel maker, to an investment consortium led by the Industrial Development Corporation of South Africa (IDC) and Anglo American's partners in Scaw South Africa, being Izingwe Holdings (Pty) Limited, Shanduka Resources (Pty) Limited and the Southern Palace Group of Companies (Pty) Limited, for a total consideration of R3.4 billion ($440 million) on a debt and cash free basis as announced. This transaction was completed in November 2012 and follows the sale of Scaw's international businesses, Moly-Cop and AltaSteel, to OneSteel in December 2010 for a total consideration of $932 million on a debt and cash free basis as announced. In aggregate, the total consideration achieved from the sale of all Scaw's businesses has amounted to $1.4 billion on a debt and cash free basis as announced.

On 18 February 2011, Anglo American and Lafarge announced their agreement to combine their cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the United Kingdom: Tarmac Limited, Lafarge Cement UK, Lafarge Aggregates and Concrete UK. The 50:50 joint venture will create a leading UK construction materials company, with a portfolio of high quality assets drawing on the complementary geographical distribution of operations and assets, the skills of two experienced management teams and a portfolio of well-known and innovative brands. On 7 January 2013, following final clearance from the UK Competition Commission, Anglo American and Lafarge announced the completion of the transaction, creating an incorporated joint venture, known as Lafarge Tarmac.

In December 2012, Anglo American announced that it had reached an agreement to sell its 16.8% effective interest in Palabora Mining Company Limited ("Palabora") for R893 million (approximately $103 million). Anglo American participated in the sale process led by Rio Tinto which holds a 57.7% effective interest in Palabora. The purchaser is a consortium comprising South African and Chinese entities led by the Industrial Development Corporation of South Africa and Hebei Iron & Steel Group. The sale is subject to customary regulatory approvals in South Africa and China.

In January 2013, Anglo American announced an agreement to sell its 70% interest in the Amapá iron ore operation in Brazil to Zamin Ferrous Ltd. The terms of the transaction are confidential and the transaction is subject to regulatory approval. Anglo American has transformed the operational performance of Amapá since acquisition in 2008, increasing annual production from 1.2 Mt in 2008 to 6.1 Mt in 2012. The transaction is expected to complete in 2013.

Outlook

Economic indicators have improved over the last few months. In the US, the housing market is recovering, which is supporting a broad-based economic recovery. In China, infrastructure investment, exports and the real estate sector are boosting economic activity. While economic activity remains weak in Europe and Japan, there are encouraging signs that recent policy changes have mitigated downside risks and should stimulate a recovery in 2013.

In the medium term, most economies should return to more normal growth rates. In China and India, economic growth should remain robust as they benefit from continuing urbanisation, rising living standards and an expanding middle class, which should support demand for our products across our diversified mix.

Selected major projects

Approved
Sector	Project	Country	Greenfield/ Brownfield	First production date	Full production date	Capex $bn⁽¹⁾	Production volume⁽²⁾
Iron Ore and Manganese	Minas-Rio Phase1	Brazil	G	2014	2016	8.8⁽³⁾	26.5 Mtpa iron ore
	Groote Eylandt Expansion Project	Australia	B	2013	2013	<1	0.6 Mtpa manganese ore
Metallurgical Coal	Grosvenor Phase 1	Australia	G	2014	2016	<2	5.0 Mtpa metallurgical
Thermal Coal	Cerrejón P40	Colombia	B	2013	2015	<2	8.0 Mtpa thermal
Copper	Collahuasi expansion Phase 2	Chile	B	2013	2014	<1	20 ktpa copper
	Mantoverde desalination plant	Chile	B	2013	2013	<1	To sustain current Cu production plans
Platinum	Twickenham	South Africa	G	2016	2021	<2	180 kozpa refined platinum
	Bathopele Phase 4	South Africa	B	2013	2013	<1	65 kozpa refined platinum
	Bathopele Phase 5	South Africa	B	2013	2017	<1	139 kozpa refined platinum
Diamonds	Jwaneng - Cut 8	Botswana	B	2016	2018⁽⁴⁾	3⁽⁵⁾		approximately 10 million carats pa
	Venetia u/g	South Africa	B	2021	2024	<3	approximately 4 million carats pa
Other Mining and Industrial -Core	Boa Vista Fresh Rock	Brazil	B	2014	2015	<1⁽⁶⁾	6.5 ktpa total niobium production

Selected Unapproved
Sector	Project	Greenfield/ Brownfield	Country	Indicative Production volume⁽²⁾
Iron Ore and	Kolomela Expansion	B	South Africa	6.0 Mtpa iron ore
Manganese	Sishen Lower Grade	B	South Africa	6.0 Mtpa iron ore
	Sishen Concentrates (Phase 1)	B	South Africa	1.1 Mtpa iron ore
	Minas-Rio Phase 1 AO	B	Brazil	3.3 Mtpa iron ore
	Minas-Rio Expansion	B	Brazil	TBD
Metallurgical	Moranbah South	G	Australia	12.0 Mtpa metallurgical
Coal	Grosvenor Phase 2	B	Australia	6.0 Mtpa metallurgical
	Drayton South	B	Australia	4.0 Mtpa export thermal
Thermal Coal	New Largo	G	South Africa	11.0 Mtpa thermal
	Elders Multi-product	G	South Africa	3.1 Mtpa thermal
	Mafube	B	South Africa	4.3 Mtpa thermal
Copper	Quellaveco	G	Peru	225 ktpa copper
	Michiquillay	G	Peru	222 ktpa copper⁽⁷⁾
	Collahuasi Expansion Phase 3	B	Chile	469 ktpa copper
	Pebble	G	USA	187 ktpa copper⁽⁸⁾
	Los Bronces - District/Los Sulfatos	B/G	Chile	TBD⁽⁹⁾
Nickel	Jacaré	G	Brazil	TBD
	Morro Sem Boné	G	Brazil	TBD
Platinum	Tumela Central Shaft	B	South Africa	128 kozpa refined platinum
	Mogalakwena NC Debottlenecking	B	South Africa	70 kozpa refined platinum
	Mogalakwena Expansion Phase 2	B	South Africa	TBD
Diamonds	Gahcho Kué ⁽¹⁰⁾	G	Canada	4.5 million carats pa
Other Mining and Industrial -Core	Goiás II	B	Brazil	1.4 Mtpa phosphates concentrate

⁽¹⁾ Capital expenditure shown on 100% basis in nominal terms.

⁽²⁾ Represents 100% of average incremental or replacement production, at full production, unless otherwise stated.

⁽³⁾ Capital expenditure, post acquisition of Anglo American's shareholding in Minas-Rio, includes 100% of the mine and pipeline, and an attributable share of the port.

⁽⁴⁾ Waste stripping at Cut-8, an extension to Jwaneng Mine, began in 2010. Carat recovery will commence in 2016, with Cut-8 becoming the main ore source for Jwaneng from 2018.

⁽⁵⁾ Infrastructure expenditure of approximately $450 million has already been spent. Project expenditure, including infrastructure expenditure, is likely to total approximately $3 billion and is anticipated to create access to 95 million carats over the life of the mine.

⁽⁶⁾An extension to mine life by mining the un-weathered ore after oxides have been depleted. New processing plant (from crushing to leaching) required.

⁽⁷⁾Expansion potential to 300 ktpa.

⁽⁸⁾Pebble will produce molybdenum and gold by-products. Other Copper projects will produce molybdenum and silver by-products.

⁽⁹⁾ Projected underground mine.

⁽¹⁰⁾ Gahcho Kué has received De Beers Board approval subject to completion of the permitting process and receipt of certain regulatory clearances.

For further information, please contact:

Media

Investors

James Wyatt-Tilby

Tel: +44 (0)20 7968 8759

Leng Lau

Tel: +44 (0)20 7968 8540

Emily Blyth

Tel: +44 (0)20 7968 8481

Caroline Crampton

Tel: +44 (0)20 7968 2192

South Africa

Pranill Ramchander

Tel: +27 (0)11 638 2592

Sarah McNally

Tel: +44 (0)20 7968 8747

Anglo American is one of the world's largest mining companies, is headquartered in the UK and listed on the London and Johannesburg stock exchanges. Anglo American's portfolio of mining businesses spans bulk commodities - iron ore and manganese, metallurgical coal and thermal coal; base metals - copper and nickel; and precious metals and minerals - in which it is a global leader in both platinum and diamonds. Anglo American is committed to the highest standards of safety and responsibility across all its businesses and geographies and to making a sustainable difference in the development of the communities around its operations. The company's mining operations, extensive pipeline of growth projects and exploration activities span southern Africa, South America, Australia, North America, Asia and Europe. www.angloamerican.com

Webcast of presentation:

A live webcast of the results presentation, starting at 9.00am UK time on 15 February, can be accessed through the Anglo American website at www.angloamerican.com.

Note: Throughout this results announcement, '$' denotes United States dollars and 'cents' refers to United States cents; operating profit includes attributable share of associates' operating profit and is before special items and remeasurements, unless otherwise stated; special items and remeasurements are defined in note 4 to the Condensed financial statements. Underlying earnings, unless otherwise stated, is calculated as set out in note 9 to the Condensed financial statements. Earnings before interest, tax, depreciation and amortisation (EBITDA) is operating profit before special items and remeasurements, depreciation and amortisation in subsidiaries and joint ventures and includes attributable share of EBITDA of associates. EBITDA is reconciled to 'Total profit from operations and associates' and to 'Cash flows from operations' in note 5 to the Condensed financial statements. Tonnes are metric tons, 'Mt' denotes million tonnes and 'kt' denotes thousand tonnes, unless otherwise stated.

Forward-looking statements

This announcement includes forward-looking statements. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Anglo American's financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American's products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding Anglo American's present and future business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause Anglo American's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American's most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement. Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the "Takeover Code"), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Nothing in this announcement should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share.

Certain statistical and other information about Anglo American included in this announcement is sourced from publicly available third party sources. As such, it presents the views of those third parties, though these may not necessarily correspond to the views held by Anglo American.

Financial review of Group results

Underlying operating profit $ million	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Iron Ore and Manganese	2,949	4,400
Metallurgical Coal	405	1,189
Thermal Coal	793	1,230
Copper	1,687	2,461
Nickel	26	57
Platinum	(120)	890
Diamonds	496	659
Other Mining and Industrial	337	315
Exploration	(206)	(121)
Corporate Activities and Unallocated Costs	(203)	15
Operating profit including associates before special items and remeasurements	6,164	11,095

The main reason for the reduction in underlying operating profit was a decline in the realised prices of most of the commodities produced by the Group. These included falls in realised prices of 29% in the case of export metallurgical coal, 19% in South African export thermal coal and 23% in iron ore.

The Group's results are affected by currency fluctuations in the countries where the operations are based. The strengthening of the US dollar against the South African rand and the Brazilian real resulted in a $945 million positive exchange variance in underlying operating profit compared to 2011. CPI inflation had a negative $591 million impact on underlying operating profit compared to the prior year.

Sales volumes were higher than 2011 owing to increased production at Kolomela and Los Bronces as the expansion projects ramped up, offset by operational issues at the Los Bronces mine and Collahuasi, as well as the industrial action at Kumba and Platinum and the extended ban and subsequent loss of mining concessions at Loma de Níquel.

Industry-wide, above CPI cost pressures continued, particularly in South Africa and Australia, although mitigated by the continued positive performance of our asset optimisation and procurement programmes.

Group underlying earnings were $2,839 million, a 54% decrease on 2011, which reflects the operational results above and a reduction in our shareholding in AA Sur, partially offset by the increased holding in Kumba Iron Ore. Net finance costs, before remeasurements, excluding associates, were $288 million (2011: $20 million).

The effective rate of tax, before special items and remeasurements and including attributable share of associates' tax, increased from 28.3% in 2011 to 29.0%.

Group underlying earnings per share were $2.26 compared with $5.06 in 2011.

Reconciliation of (loss)/profit for the year to Underlying earnings $ million	Year ended 31 Dec 2012	Year ended 31 Dec 2011
(Loss)/profit for the financial year attributable to equity shareholders of the Company	(1,493)	6,169
Operating special items (including associates)	7,039	173
Operating remeasurements (including associates)	112	74
Non-operating special items	594	(203)
Non-operating remeasurement	(1,988)	-
Financing special items	-	9
Financing remeasurements	88	(205)
Special items and remeasurements tax	(1,110)	118
Non-controlling interests on special items and remeasurements	(403)	(15)
Underlying earnings⁽¹⁾	2,839	6,120
Underlying earnings per share ($)	2.26	5.06

⁽¹⁾See note 3 to the Condensed financial statements.

Summary income statement $ million	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Operating profit from subsidiaries and joint ventures before special items and remeasurements	5,405	9,668
Operating special items	(6,977)	(164)
Operating remeasurements	(116)	(65)
Operating (loss)/profit from subsidiaries and joint ventures	(1,688)	9,439
Non-operating special items and remeasurements	1,394	183
Share of net income from associates (see reconciliation below)	432	977
Total profit from operations and associates	138	10,599
Net finance costs before remeasurements	(288)	(20)
Financing remeasurements	(89)	203
(Loss)/profit before tax	(239)	10,782
Income tax expense	(375)	(2,860)
(Loss)/profit for the financial year	(614)	7,922
Non-controlling interests	(879)	(1,753)
(Loss)/profit for the financial period attributable to equity shareholders of the Company	(1,493)	6,169
Basic earnings per share ($)	(1.19)	5.10
Group operating profit including associates before special items and remeasurements⁽¹⁾	6,164	11,095
Operating profit from associates before special items and remeasurements	759	1,427
Operating special items and remeasurements	(58)	(18)
Net profit on disposals	-	20
Net finance costs (before special items and remeasurements)	(58)	(48)
Financing special items and remeasurements	1	(7)
Income tax expense (after special items and remeasurements)	(205)	(384)
Non-controlling interests (after special items and remeasurements)	(7)	(13)
Share of net income from associates	432	977

⁽¹⁾ Operating profit before special items and remeasurements from subsidiaries and joint ventures was $5,405 million (2011: $9,668 million) and attributable share from associates was $759 million (2011: $1,427 million). For special items and remeasurements see note 4 to the Condensed financial statements.

Special items and remeasurements

Operating special items

Minas-Rio

An impairment charge of $4,960 million has been recorded in relation to the Minas-Rio iron ore project (Iron Ore Brazil). Of this charge, $1,105 million has been recorded against goodwill and $3,855 million has been recorded against mining properties, with an associated deferred tax credit of $960 million. The post-tax impairment charge is $4,000 million.

Platinum operations

The impairment charge of $860 million relates to certain Platinum projects and other assets, not in use, that are not considered economically viable in the current market environment. The charge includes a write-off of fair value uplifts associated with these assets held at a Group level of $89 million.

Reversal of De Beers inventory uplift

Inventory held by De Beers at the date of the acquisition is required to be recognised at fair value under IFRS. This results in negligible margins being realised upon the subsequent sale of inventory held at the acquisition date. The reversal of fair value uplifts on inventory sold in 2012 of $421 million has been excluded from the Group's underlying earnings so as not to distort the operating margins of De Beers and to provide more useful information about the performance of the Group.

Other

A charge of $159 million has arisen at Loma de Níquel due to the cancellation of its mining concessions in November 2012. Other impairments and related charges of $230 million (2011: $70 million) relates to various impairments across the Group, including an impairment of $42 million of fixed assets relating to onerous contracts at Callide (Metallurgical Coal); an impairment of $44 million relating to Wesizwe, an available for sale asset held in Platinum where the fair value has had a significant and prolonged decline; and $50 million of asset impairments recognised in Samancor, an associate investment.

The charge of $386 million in relation to onerous contracts principally reflects a provision increase of $292 million for coal supply agreements inherited on acquisition of Callide in 2000.

Operating remeasurements

Operating remeasurements reflect a net loss of $112 million (2011: loss of $74 million) principally in respect of non-hedge derivatives related to capital expenditure in Iron Ore Brazil. Derivatives which have been realised during the period had a cumulative net gain since their inception of $71 million (2011: $383 million). The depreciation charge arising due to the fair value uplift on the pre-existing 45% shareholding of De Beers, which was required on acquisition of a controlling stake, is $41 million in 2012.

Non-operating special items

In May 2012, the Competition Commission approved the formation of a 50:50 joint venture between the Group and Lafarge combining their cement, aggregates, ready-mix concrete, asphalt and asphalt surfacing, maintenance services, and waste services businesses in the UK subject to a number of prior conditions. In July 2012, the Group accepted the conditions of the Competition Commission and consequently the associated assets of Tarmac Quarry Materials were classified as held for sale and recognised at fair value less costs to sell. This resulted in a loss being recognised of $135 million. In December 2012, the Group agreed the sale of its 70% interest in the Amapá iron ore mine. The net assets have been reclassified to held for sale and recognised at fair value less costs to sell. This resulted in a loss being recognised of $404 million.

Non-operating remeasurements

The non-operating remeasurement of $1,988 million (2011: nil) reflects the gain of $2,017 million, net of transaction costs, resulting from the remeasurement to fair value of the Group's existing 45% shareholding held in De Beers at the date a controlling stake was acquired. This includes a $2.7 billion uplift on depreciable assets which will unwind through operating remeasurements in the current and future years.

Financing remeasurements

Financing remeasurements reflect a net loss of $88 million (2011: gain of $205 million) and relates to an embedded interest rate derivative, non-hedge derivatives relating to debt and other financing remeasurements.

Special items and remeasurements tax

Special items and remeasurements tax amounted to a credit of $1,110 million (2011: charge of $118 million). This relates to a credit for one-off tax items of $922 million (2011: credit of $137 million), a tax remeasurement charge of $189 million (2011: charge of $230 million) and a tax credit on special items and remeasurements of $377 million (2011: charge of $25 million). The credit for one-off tax items of $922 million (2011: credit of $137 million) relates principally to the net deferred tax credit of $960 million at Minas-Rio and a net deferred tax credit of $70 million owing the reassessment of deferred tax assets as a result of changes in tax regimes within operating segments, partially offset by the write-off of the deferred tax asset in Amapá of $108 million following the decision to sell the mine.

Net finance costs

Net finance costs, before remeasurements, excluding associates, were $288 million (2011: $20 million). This increase was driven by a decrease in investment income of $71 million, owing to lower average levels of cash and a higher interest expense of $103 million, reflecting the increase in debt during the year. Foreign exchange losses on net debt also increased by $74 million compared with 2011.

Tax before special items and remeasurements

	Year ended 31 Dec 2012			Year ended 31 Dec 2011
$ million (unless otherwise stated)	Before special items and remeasurements	Associates' tax and non-controlling interests	Including associates	Before special items and remeasurements	Associates' tax and non-controlling interests	Including associates
Profit before tax	5,610	208	5,818	10,626	401	11,027
Tax	(1,488)	(202)	(1,690)	(2,741)	(385)	(3,126)
Profit for the financial year	4,122	6	4,128	7,885	16	7,901
Effective tax rate including associates (%)			29.0%			28.3%

The effective rate of tax before special items and remeasurements including attributable share of associates' tax for the year ended 31 December 2012 was 29.0%. The increase compared to the equivalent effective rate of 28.3% for the year ended 31 December 2011 is due to the reduced impact of certain non-recurring factors. The non-recurring factors in 2012 include further recognition of previously unrecognised tax losses and the reassessment of certain withholding tax provisions across the Group. In future periods it is expected that the effective tax rate, including associates' tax, will remain above the United Kingdom statutory tax rate.

Balance sheet

Equity attributable to equity shareholders of the Company was $37,657 million at 31 December 2012 (31 December 2011: $39,092 million). This decrease reflects the loss for the period of $1,493 million. Investments in associates were $2,177 million lower than at 31 December 2011, principally as a result of De Beers becoming a subsidiary following the acquisition of a further 40% shareholding. Property, plant and equipment increased by $4,540 million compared to 31 December 2011, as a result of ongoing investment in growth projects and the acquisition of De Beers, partially offset by an increase in depreciation, the transfer of Amapá and Tarmac Quarry Materials to 'held for sale' and the disposal of Scaw South Africa.

Cash flow

Net cash inflows from operating activities were $5,562 million (2011: $9,362 million). Underlying EBITDA was $8,686 million, a decrease of 35% from $13,348 million in the prior year, reflecting weaker prices across the Group's core commodities and changes in operational performance.

Net cash used in investing activities was $9,821 million (2011: $4,853 million). Purchases of property, plant and equipment, net of related derivative cash flows, amounted to $5,678 million, a decrease of $86 million, reflecting the Group's disciplined approach to capital allocation in the current economic environment while maintaining expenditure on strategic growth projects. Proceeds from disposals, principally the disposal of Scaw South Africa (net of cash and cash equivalents disposed), were $100 million (2011: $533 million). Movements in non-controlling interest during the year resulted in a cash inflow of $1,220 million, mainly $1,907 million from the disposal of 25.4% of AA sur, partly offset by the purchase of 4.5% of Kumba for $698 million.

Net cash inflow from financing activities was $1,950 million compared with $1,474 million in 2011. During the year the Group paid dividends of $970 million to company shareholders, and $1,267 million in dividends to non-controlling interests.

The completion of our acquisition of an additional 40% interest in De Beers in August 2012 resulted in a cash outflow of $4,816 million, net of cash acquired.

Liquidity and funding

Net debt, including related hedges, was $8,615 million, an increase of $7,241 million from $1,374 million at 31 December 2011. The increase in net debt reflects weaker operating cash flows owing to lower commodity prices in 2012 and the acquisition of 40% of De Beers, partially offset by the disposal of 25.4% in AA Sur.

Net debt at 31 December 2012 comprised $17,759 million of debt, partially offset by $9,312 million of cash and cash equivalents, and the current position of derivative liabilities related to net debt of $168 million. Net debt to total capital⁽¹⁾ at 31 December 2012 was 16.4%, compared with 3.1% at 31 December 2011.

At 31 December 2012, the Group had undrawn committed bank facilities of $9.3 billion.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, indicate the Group's ability to operate within the level of its current facilities for the foreseeable future.

Corporate activities and unallocated costs

Corporate costs which are considered to be value adding to the business units are allocated to each business unit. Costs reported externally as Group corporate costs only comprise costs associated with parental or direct shareholder related activities.

Dividends

Anglo American's dividend policy will provide a base dividend that will be maintained or increased through the cycle. Consistent with the policy, the Board has recommended a final dividend of 53 US cents per share, giving a total rebased dividend of 85 US cents per share for the year, subject to shareholder approval at the Annual General Meeting to be held on 19 April 2013. This reflects our confidence in the underlying business going forward and completes the reinstatement journey to rebase our dividend to be competitive with diversified peers. This recommendation is consistent with the commitment to have a disciplined balance between the maintenance of a strong investment grade rating, returns to shareholders and sequencing of future investment in line with resulting funding capacity. From time to time any cash surplus to requirements will be returned to shareholders.

Analysis of dividends US cents per share	2012	2011
Interim dividend	32	28
Recommended final dividend	53	46
Total dividends	85	74

^{________________

(1) Net debt to total capital is calculated as net debt divided by total capital. Total capital is net assets excluding net debt.}

The Board

Anne Stevens joined the Board on 15 May 2012. Mamphela Ramphele resigned from the Board with effect from 25 July 2012. Cynthia Carroll has resigned as CEO of the Company with effect from 3 April 2013 and as a director with effect from the closing of the Annual General Meeting (AGM) to be held on 19 April 2013. Mark Cutifani has been appointed CEO and a director with effect from 3 April 2013.

On 12 February 2013, the Board proposed the appointment of Dr Byron Grote as a non-executive director at the forthcoming AGM on 19 April 2013. It is intended that Dr Grote will join the Audit Committee of the Board on appointment and he will, after a period of induction, assume the role of Chairman of that committee from David Challen, who has rendered outstanding service in that role since 2003. In addition, Peter Woicke informed the Board of his intention to retire as a non-executive director, also with effect from the AGM. Peter Woicke will be succeeded as Chairman of the Safety and Sustainable Development Committee by Jack Thompson.

Related party transactions

Related party transactions are disclosed in note 18 to the Condensed financial statements.

Operations review 2012

In the operations review on the following pages, operating profit includes attributable share of associates' operating profit and is before special items and remeasurements unless otherwise stated. Capital expenditure relates to cash expenditure on property, plant and equipment including cash flows on related derivatives.

IRON ORE AND MANGANESE

$ million (unless otherwise stated)	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Underlying operating profit	2,949	4,400
Kumba Iron Ore	2,980	4,491
Iron Ore Brazil	(5)	(141)
Samancor	103	165
Projects and corporate	(129)	(115)
Underlying EBITDA	3,198	4,586
Net operating assets	9,356	12,427
Capital expenditure	2,077	1,659
Share of Group underlying operating profit	48%	40%
Share of Group net operating assets	18%	28%

Underlying operating profit decreased by 33% from $4,400 million to $2,949 million, principally as a result of weaker average export iron ore prices at Kumba and lower prices and alloy volumes at Samancor. This was partially offset by an increase in export iron ore at Kumba and record manganese ore volumes at Samancor.

Markets

Global crude steel production increased by 2% in 2012 to 1,550 Mt (2011: 1,526 Mt). This increase was driven primarily by China, where crude steel output increased by around 3% to 717 Mt (2011: 695 Mt). In the rest of the world, crude steel output was fairly flat at 833 Mt.

Seaborne iron ore supplies were subject to adverse weather conditions in both Brazil and Australia in the first quarter of 2012, and ongoing Indian supply disruptions following the ban on iron ore mining in Goa. For the year as a whole, seaborne supplies were 0.3% higher, reaching a level of 1,062 Mt.

Considerable price volatility marked 2012, especially during the third quarter when prices fell by as much as 36%, as Chinese steel mills depleted stockpiles and reduced raw material inventory levels to as little as 17 days' worth of production requirements. Iron ore prices reached a high of $151/t (62% Fe CFR China) in April 2012, but fell to a low of $89/t in early September, before stabilising at around $130/t towards the end of the year. The market recovered at the end of 2012 with steel mills returning to the market, which was reflected in a marked increase in index iron ore prices. Overall, index prices averaged $130/t (CFR 62% Fe Platts) in 2012, 23% lower than the $169/t average achieved in 2011.

Operating performance

Kumba Iron Ore

Underlying operating profit decreased by 34% from $4,491 million to $2,980 million principally as a result of 23% weaker average export iron ore prices, partly offset by a 7% increase in export sales volumes. Total operating costs rose by 16%, driven primarily by a $254 million increase in operating costs at Kolomela mine owing to operating costs being capitalised in 2011, above inflation cost increases and the mining of 14.5 Mt of additional waste at Sishen mine.

Total production of iron ore increased by 4% to 43.1 Mt due to the ramp-up of Kolomela, partially offset by the impact of the unprotected strike which resulted in lost production of approximately 5 Mt. Total volume mined at Sishen rose by 4% to 171.6 Mt (2011: 165.0 Mt), of which waste mined amounted to 133.5 Mt, an increase of 12% (2011: 119.0 Mt). Iron ore production at Sishen, however, decreased by 13% to 33.7 Mt (2011: 38.9 Mt) mainly owing to the effects of an unprotected strike during the fourth quarter.

On 3 October, around 300 Sishen employees commandeered most of the mining equipment at the mine. The situation ended on 16 October and production recommenced on 20 October, though on a limited basis as attendance in the mining section remained low in the immediate aftermath of the strike. Operations are subsequently being ramped up. Operations are subsequently being ramped up. Production rates continue to improve and are expected to return to normal operating levels by the end of the first half of 2013.

Sishen lost around 5 Mt of production as a result of the industrial action and the subsequent ramp-up of operations. These losses exacerbated the production challenges experienced earlier in the year resulting from mining feedstock and quality constraints that affected the availability of material supplied to the mine's two processing plants.

Following successful commissioning in 2011, Kolomela continued its ramp up ahead of schedule and delivered an outstanding performance in 2012, producing 8.5 Mt. Production has exceeded monthly design capacity since July 2012, and reached record levels during the second half of the year. Total tonnage mined increased by 26% to 43.5 Mt (2011: 34.6 Mt), of which waste mined was 33.5 Mt, 11% higher than the prior year figure of 30.3 Mt.

Kumba's sales volumes were 2% higher at 44.4 Mt (2011: 43.5 Mt). Export sales volumes for the year increased by 7% to 39.7 Mt (2011: 37.1 Mt) as production losses at Sishen were offset by production from Kolomela and by sales from stock. The production losses caused by the unprotected strike reduced export stock levels across the value chain and impacted export spot sales volumes. Notwithstanding the impact of the strike, Kumba met all its export customer sales commitments for 2012. Domestic sales volumes to AMSA reduced by 27% to 4.7 Mt (2011: 6.4 Mt). Export sales volumes to China accounted for 69% of the company's total export volumes for the year, compared to 68% in 2011.

Iron Ore Brazil

Iron Ore Brazil generated an underlying operating loss of $5 million, reflecting the pre-operational state of the Minas-Rio project.

Samancor

Underlying operating profit declined by 38% to $103 million (2011: $165 million), driven by lower prices and lower alloy volumes, partly offset by lower costs and strong ore sales volumes. A slowdown in steel production weighed heavily on ore and alloy prices.

Production of ore increased by 20% from 2.8 Mt to a record 3.3 Mt (attributable basis) owing to a consistently strong operating performance and improved plant availability at both GEMCO in Australia and Hotazel in South Africa. Alloy production, however, decreased by 34% to 198,400 tonnes (attributable basis) following the termination of energy-intensive silica-manganese production at the Metalloys plant in South Africa and the temporary suspension of production at TEMCO in Australia during the first half of the year. TEMCO subsequently returned to full capacity during the third quarter.

Projects

The components of Kumba's growth include new developments, expansions at existing operations, and growth though technological advances that will allow the processing of lower grade ore.

Kumba is currently studying opportunities to expand Kolomela's production through a beneficiation process, which could add a further 6 Mtpa to its output. The project has progressed to pre-feasibility study and further decisions will be made in due course, depending on prevailing market conditions.

The SEP 1B commenced construction during the year, and is expected to be commissioned in 2013, within the $48 million capex budget.

The growth portfolio is constantly being reviewed taking into account the macroeconomic environment, the outcome of project studies and the status of the Iron Ore Export Channel expansion study.

Construction is under way at the first phase of the 26.5 Mtpa Minas-Rio iron ore project, with optimisation to 29.8 Mtpa. Anglo American announced in December 2012 that all three injunctions that had disrupted the project in the year, contributing to the delay of first ore on ship (FOOS) to the end of 2014, had been lifted. Construction progress is in line with the revised construction schedule announced in July 2012, namely:

· The mine and beneficiation plant are on track - 92% of the earthworks have been completed at the beneficiation plant, the first of two grinding mills has been installed and the civil works for the secondary crusher are complete;

· At the 525km slurry pipeline, almost 50% of the pipeline has been laid (approximately 247km), with 76% of the land cleared for earthworks and pipe installation to take place;

· The filtration plant is on schedule for completion by June 2013;

· The port's two stackers andreclaimer have been erected and the shiploader installation is under way.

The primary drivers of the capital expenditure increase from the previous estimate in 2011 relate to:

· The delay in FOOS from late 2013 to late 2014;

· Scope changes, including those agreed as part of the review process and taking into consideration additional land access costs and purchases, increased earth and civil works required following access to various sites along the pipeline and the increased costs of meeting licenceconditions;

· Construction inflation costs, including contract adjustments and mining equipment price increases;

· A centrally held risk contingency of $600 million to accommodate a number of potential factors to achieve the FOOS date of the end of 2014, including the potential for additional price escalation, productivity acceleration and finalisation of the extent of earth and civil works required on land that is yet to be accessed.

Following its approval in 2011, the $279 million GEEP2 project (Anglo American's 40% share: $112 million) will increase GEMCO's beneficiated product capacity from 4.2 Mtpa to 4.8 Mtpa through the introduction of a dense media circuit by-pass facility. The project is expected to be completed, on schedule and budget, in late 2013. The expansion will also address infrastructure constraints by increasing road and port capacity to 5.9 Mtpa, creating 1.1 Mtpa of latent capacity for future expansion.

The addition of a $91 million (on a 100% basis) high carbon ferro-manganese furnace at the Metalloys smelter in South Africa will add an additional 130,000 tonnes of capacity per year. Hot commissioning was completed, on schedule, in the fourth quarter of 2012, with full production expected in the second quarter of 2013.

Outlook

A similar level of growth in global crude steel production is expected for 2013 with China's crude steel production forecast to grow and reach 740Mt, whilst growth in crude steel production in other developing countries is expected to be counter balanced by reduced production in some of the developed markets. In 2013, Indian iron ore production is expected to remain under pressure as a result of domestic policy changes. However new supply capacity, primarily from Australia, is expected to partially offset this reduction in Indian supply.

The start of 2013 has seen a rapid recovery in iron ore prices. The consensus view is that this rally will not be sustained throughout the year, however some positive sentiment in relation to Chinese steel consumption growth has been restored and is expected to provide support to prices throughout the year. Seaborne iron ore supply growth may lead to iron ore prices softening in the second half of 2013, but on average prices are anticipated to be firmer than in 2012.

The knock-on effect of the 2012 unprotected strike at Sishen mine is expected to result in lower production volumes than originally planned in 2013. Sishen mine is anticipated to produce at least 37.0 Mt in 2013. The ramp-up in waste mining at Sishen mine continues and will continue to put upward pressure on the mine's cash unit costs. Kolomela mine remains on track to produce 9 Mt in 2013, in line with design capacity. Export sales volumes are expected to be in line with 2012.

Due to a weaker market, a supply side response provided price support for manganese ore in the latter part of 2012. The recovery in pricing is expected to continue into 2013, however, muted demand expectations are expected to limit the rate and extent of the recovery in the near term.

Kumba Iron Ore update

Sishen Supply Agreement Arbitration

A dispute arose between Sishen Iron Ore Company Proprietary Limited (SIOC) and ArcelorMittal South Africa Limited (AMSA) in February 2010, in relation to SIOC's contention that the contract mining agreement concluded between them in 2001 had become inoperative as a result of the fact that AMSA had failed to convert its old order mining rights. This dispute has been referred to arbitration. On 9 December 2011, SIOC and AMSA agreed to delay the arbitration proceedings in relation to the Sishen Supply Agreement until the final resolution of the mining rights dispute. This arbitration is only expected to commence in the fourth quarter of 2013, with possible resolution only expected in the third quarter of 2014 at the earliest.

An Interim Pricing Agreement (IPA 2) between SIOC and AMSA was in place until 31 July 2012 and was extended to 31 December 2012.

In December 2012 a further interim agreement was concluded, after negotiations which were facilitated by the Department of Trade and Industry (DTI). The further interim agreement will govern the sale of iron ore from the Sishen mine to AMSA for the period 1 January 2013 to 31 December 2013, or until the conclusion of the legal processes in relation to the 2001 Sishen Supply agreement (whichever is the sooner), at a weighted average price of $65/t. Of the total 4.8 Mt, about 1.5 Mt is anticipated to be railed to Saldanha Steel and the rest to AMSA's inland operations.

21.4% undivided share of the Sishen mine mineral rights

On 3 February 2012 both the Department of Mineral Resources (DMR) and Imperial Crown Trading 289 Proprietary Limited (ICT) submitted applications for leave to appeal against the High Court judgement. SIOC applied for leave to present a conditional cross-appeal, in order to protect its rights. The Supreme Court of Appeal (SCA) hearing will be held on 19 February 2013, and the SCA judgment is expected to be received early in the second half of 2013.

The High Court order did not affect the interim supply agreement between AMSA and SIOC, which was in place until 31 July 2012 and was extended to 31 December 2012. SIOC will continue to take the necessary steps to protect its shareholders' interests in this regard.

METALLURGICAL COAL

$ million (unless otherwise stated)	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Underlying operating profit⁽¹⁾	405	1,189
Underlying EBITDA	877	1,577
Net operating assets	5,219	4,692
Capital expenditure	1,028	695
Share of Group underlying operating profit	7%	11%
Share of Group net operating assets	10%	11%

Metallurgical Coal recorded an underlying operating profit of $405 million, 66% lower than the 2011 record of $1,189 million. This was driven by a 29% decrease in export metallurgical coal prices, partially offset by a 25% increase in metallurgical coal sales volumes. Productivity improvements at both the open cut and underground operations and a reduction in weather related stoppages, supported by the rigorous preparation for seasonal rain, led to a significant increase in metallurgical coal production and sales.

Year-on-year FOB cash unit costs improved, with a 10% reduction at the Australian export operations, and a 20% reduction achieved in the second half of the year.

Markets

Anglo American weighted average achieved sales prices ($/tonne)		2012	2011
Export metallurgical coal (FOB)	178		251
Export thermal coal (FOB Australia)	96		101
Domestic thermal coal	37		35

Attributable sales volumes ('000 tonnes)	2012	2011
Export metallurgical coal	17,413	13,983
Export thermal coal	6,043	6,274
Domestic thermal coal	6,921	7,455

Prices for seaborne metallurgical coal dropped sharply in the latter half of the year, resulting in the average 2012 hard coking coal price falling by 27% to $210/t from the 2011 average hard coking coal benchmark price of $289/t. Overall supply of metallurgical coal was ahead of 2011 levels, owing to increased exports from the US, while Australian hard coking coal supply remained below 2010 levels.

Hard coking coal prices fell, with lower quality PCI and semi-soft prices falling more significantly. The majority of Anglo American's metallurgical coal sales were placed against term contracts with quarterly negotiated price settlements.

Hard coking coal accounted for 67% of Metallurgical Coal's export metallurgical coal sales in 2012.

Operating performance

Attributable production ('000 tonnes)	2012	2011
Export metallurgical coal	17,664	14,190
Export thermal coal	6,046	6,064
Domestic thermal coal	6,925	7,362

Export metallurgical coal production increased by 24% to 17.7 Mt, with record production in the second half, and the full year, while thermal coal production was in line with the prior year at 13.0 Mt. Production improved at both underground and open cut operations by 29% and 22% respectively, with record run of mine production achieved at all of the export open cut operations. Increased production was driven by asset optimisation programmes and a reduction in rain-related stoppages, supported by rain mitigation initiatives implemented during 2011.

Record coal production was achieved at the Capcoal open cut mine, with a 28% increase compared to the prior year, driven by best in class rates on large capacity shovels and optimal alignment of equipment to pit conditions.

Dawson delivered a notable turnaround in performance with total production increasing by 18% to a record of 4.6 Mt. This was due to improved equipment performance and the optimisation of the terrace mine design that was implemented in 2012.

Peace River Coal in Canada significantly lifted its coal production by 47%, underpinned by productivity improvements and upgrades to the coal handling and preparation plant.

At the underground operations in Australia, production increased by 29%, driven by improved longwall performance. Moranbah delivered a 45% increase in volumes as a result of a recovery from the partial drift failure and a 47% increase in cutting hours in the second half of the year compared to the first half.

Thermal coal production was impacted by wet weather in New South Wales and industrial action in the first quarter at Drayton.

Projects

Phase 1 of our wholly-owned Grosvenor project continues to be developed on schedule. All key permits and licences are in place and engineering and procurement activities are progressing to plan. Construction has commenced on site, with the access road complete and bulk earthworks well under way. Production of longwall coal is forecast to commence in 2016.

Studies for the next phase of our investment programme include Grosvenor Phase 2, a 6 Mtpa second longwall; and Moranbah South, a 12 Mtpa (on a 100% basis), 50%-owned joint venture, comprising two longwalls. Exploration and environmental approval activities to support these projects are in progress. Concept studies are also under way to develop options to further expand our operations in Australia and British Columbia. The Drayton South project is planned to replace export thermal capacity for the Drayton mine in New South Wales.

Outlook

Strong production from Australia combined with exports from the US led to oversupply into the weakened market during 2012, resulting in substantially lower spot and monthly settlement prices in the third and fourth quarters. It is anticipated that there will be a rebalancing of the market during the first half of 2013, with demand recovery from China and idling of some high cost US and Australian production. Price differentiation between premium and lower quality products is expected to remain, with continued supply of second tier products from the US.

Metallurgical Coal is positioned to take advantage of any future coal price increases as a result of the focus on delivering high margin, low cost capacity, and the demonstrated benefits of asset optimisation initiatives.

THERMAL COAL

$ million (unless otherwise stated)	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Underlying operating profit	793	1,230
South Africa	482	779
Colombia	358	482
Projects and corporate	(47)	(31)
Underlying EBITDA	972	1,410
Net operating assets	1,965	1,886
Capital expenditure	266	190
Share of Group underlying operating profit	13%	11%
Share of Group net operating assets	4%	4%

Thermal Coal generated an underlying operating profit of $793 million, a 36% decrease, mainly driven by lower average export thermal coal prices and above-inflation cost pressures. This was partly offset by the closure of high cost sections, a weaker South African rand and increased sales volumes from the full incorporation of Zibulo as an operating asset, supported by record production at Cerrejón.

Markets

Anglo American weighted average achieved sales prices ($/tonne)	2012	2011
RSA export thermal coal (FOB)	92	114
RSA domestic thermal coal	21	21
Colombian export thermal coal (FOB)	89	101

Attributable sales volumes ('000 tonnes)	2012	2011
RSA export thermal coal⁽¹⁾	17,151	16,532
RSA domestic thermal coal⁽¹⁾⁽²⁾	40,110	40,454
Colombian export thermal coal	10,926	10,685

⁽¹⁾ Includes capitalised sales from Zibulo mine of 1,580,800 (export) and 632,200 (domestic) tonnes for the year ended 31 December 2011.

⁽²⁾ Includes domestic metallurgical coal of 91,800 tonnes for the year ended 31 December 2012 (year ended 31 December 2011: 318,000 tonnes).

The international seaborne market experienced an overall decline in prices during the year owing to oversupply. The average API4 index price fell by 20% to $93/t (2011: $116/t) and closed the year at $90/t (2011: $105/t).

Although international seaborne demand grew by 14% to 910 Mt, it remained below supply growth as a result of unprecedented US export volumes, strong production growth and fewer weather-related supply disruptions from the major supply regions of Indonesia, Australia, Colombia and South Africa. Cheap US natural gas displaced a significant volume of US domestic thermal coal in 2012, as utility companies switched from coal to gas.

For the South African thermal coal industry, exports into Asia continued to increase, principally driven by India. Asia accounted for 66% of South African thermal shipments (2011: 64%). South African thermal coal exports increased by 4% to 68.3 Mt (2011: 65.7 Mt), supported by a more stable performance by Transnet Freight Rail (TFR) and drawdown from stockpiles. TFR railed 68.5 Mt to the RBCT, a 4% increase over 2011.

Operating performance

Attributable production ('000 tonnes)	2012	2011
South Africa export thermal coal⁽¹⁾⁽²⁾	17,132	16,328
Colombia export thermal coal	11,549	10,752
South Africa Eskom coal⁽¹⁾	33,706	35,296
South Africa domestic other⁽²⁾	6,293	5,383

⁽¹⁾ Includes capitalised production from Zibulo mine of 1,521,800 (export) and 633,400 (domestic) tonnes for the year ended 31 December 2011.

⁽²⁾ Includes domestic metallurgical coal of 74,100 tonnes for the year ended 31 December 2012 (year ended 31 December 2011: 323,400 tonnes).

South Africa

Underlying operating profit from South African operations decreased by 38% to $482 million, driven by lower average export thermal coal prices and above-inflation cost increases in labour, power and fuel. This was partly offset by the incorporation of Zibulo as an operating asset, a weaker South African rand and higher sales volumes, supported by a more stable TFR rail performance.

Export production increased by 5% as a result of Zibulo's continued ramp-up and a change to include lower calorific value coals, resulting in higher yielding products at Zibulo and Goedehoop, partly offset by the planned closure of high-cost sections at Goedehoop, Greenside and pits at Kleinkopje.

Colombia

At Cerrejón, underlying operating profit of $358 million was 26% down on 2011 owing to the impact of lower thermal coal prices, compensated to some extent by a strong operational performance and drier weather conditions, with record production and sales.

Projects

Feasibility studies on the New Largo project were completed in 2012. There are two stages to the project: Stage 1 comprises a 23 kilometre overland conveyor, which will run from an existing coal processing plant to Eskom's Kusile power station, transporting a secondary product as well as other third-party coal. Stage 2 entails the construction of a new opencast colliery and associated infrastructure. The project is expected to be presented for board approval once all environmental permits have been obtained for both stages of the project and the coal supply and other commercial agreements have been concluded.

The Cerrejón expansion project (P40), to increase the port and logistics chain capacity to handle a total mine output of 40 Mtpa (currently 32 Mtpa), is being implemented and is expected to be delivered on schedule.

Outlook

The international seaborne thermal coal market is expected to remain oversupplied into 2013. Pricing pressure, therefore, is expected to remain. Thermal coal production cuts are already taking effect to some extent and producers around the globe continue to review operations and growth projects which could favourably impact prices. Global seaborne demand is expected to continue to grow in 2013, driven mainly by China and India. The Chinese domestic market price and the high US break-even price for producers should act, respectively, as a natural floor and ceiling to seaborne thermal coal prices.

COPPER

$ million (unless otherwise stated)	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Underlying operating profit	1,687	2,461
Underlying EBITDA	2,179	2,750
Net operating assets	8,536	7,643
Capital expenditure	996	1,570
Share of Group underlying operating profit	27%	22%
Share of Group net operating assets	17%	17%

Copper generated an underlying operating profit of $1,687 million, a 31% decrease. Higher sales volumes from the Los Bronces expansion were more than offset by the lower average copper price and higher operating, exploration and study costs. Lower grade profiles impacted production, and consequently unit costs, at Collahuasi, Los Bronces, and Mantos Blancos.

Markets

Average prices	2012	2011
Average prices (LME cash, c/lb)	361	400
Average realised prices (c/lb)	364	378

The copper price rose in the early part of 2012, from 343 c/lb at the start of the year to 387 c/lb by May. As Europe's sovereign debt crisis took hold and Chinese economic growth slowed, concerns grew over the outlook for the world economy and the price softened into the second half of the year. Yet despite an environment of macroeconomic uncertainty, which continues to have an impact on demand, the price recovered in September, held up on the back of supply-side shortfalls, and ended the year at 359 c/lb. For the full year, the realised price averaged 364 c/lb, a decrease of 4% compared with 2011. This included a positive provisional price adjustment for 2012 of $47 million versus a net negative adjustment in the prior year of $278 million.

Operating performance

	2012	2011
Attributable copper production (tonnes)	659,700	599,000

Total copper production (including our share of the Collahuasi joint venture) of 659,700 tonnes was 10% higher than in 2011. This was mainly due to the increased contribution from the Los Bronces expansion, offset by lower production at the established Los Bronces operation and at Collahuasi and Mantos Blancos.

Production at Los Bronces was 65% higher at 365,300 tonnes, with the mine benefiting from the 196,100 tonnes (2011: 19,000 tonnes) achieved from the expansion as it ramped up to full production. The new processing plant reached throughput design capacity ahead of expectations in August 2012. This increase in output was partially offset by lower grades accessed during the year. Production at the established Los Bronces operation was impacted by reduced pit flexibility, lower stock piles, and safety-driven reductions in slope angles.

Production at El Soldado increased by 15% to 53,800 tonnes, owing to improved plant performance, expected higher ore grades and better recoveries. Production at Mantoverdealso increased, by 6%, to 62,300 tonnes, driven by improved crushing performance. Mantos Blancos' production of 54,200 tonnes decreased by 25%, affected by an incident involving a loader necessitating a change in mine plan, resulting in a lower ore grade area being mined.

Our share of production at Collahuasi fell by 38% to 124,100 tonnes, partly owing to anticipated lower grades being mined during the year. This was exacerbated by lower recoveries, adverse weather conditions in the early months, safety stoppages and a ball mill failure.

In response to the performance issues at Collahuasi, the joint venture partners put in place a business improvement plan, with an Anglo American and Xstrata joint management team assuming leadership from July. The team has implemented a number of improvement plans aimed at delivering improved operating performance in 2013. A new CEO was appointed at Collahuasi with effect from 19 December 2012.

Projects

In Peru, the Quellaveco project received three critical permits in the fourth quarter: an amendment to the environmental impact assessment, the beneficiation concession and the key water permit. Community engagement continued through the dialogue-table process, where agreement was reached in July in relation to water usage, environmental responsibility and Anglo American's social contribution over the life of the mine. Anglo American is targeting submission of the project to its Board for approval in 2013. The concept level study for the Michiquillay project was completed and is under review.

Activity at the Pebble project in Alaska continues, with the focus on completing a pre-feasibility study and preparing to commence permitting. The draft Bristol Bay Watershed Assessment was released by the Environmental Protection Agency (EPA) in May 2012. The EPA has announced that it has revised the draft watershed assessment to take account of feedback and it intends to have the revised assessment peer reviewed and commented on publicly with a view to finalising the assessment in 2013.

At Collahuasi, the project to increase concentrator plant throughput to 160,000 tonnes of ore per day was reduced in scope, and the pre-feasibility study on the further expansion potential was put on hold, both pending restoring operational stability of current operations.

Outlook

Production levels in 2013 are expected to benefit from the expanded Los Bronces operation running at full capacity for the full year. Mine development and improving mine flexibility will be a continued focus at Los Bronces which will also impact cost. Increased production is also expected at Collahuasi following implementation of the improvement plans put in place during 2012, as well as the No. 3 ball mill coming back in operation from November 2012, and planned mining of higher ore grade phases.

Challenges remain in managing continuing industry-wide input cost pressures, and this will be a key focus for the business in 2013. Ongoing market concerns arising from uncertainties over the near term outlook for the global economy may lead to short term volatility in the copper price. The medium to long term fundamentals for copper, however, remain strong, predominantly driven by robust demand from the emerging economies and supply constraints owing to ageing mines and steadily declining average grades.

NICKEL

$ million (unless otherwise stated)	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Underlying operating profit	26	57
Underlying EBITDA	50	84
Net operating assets	2,509	2,535
Capital expenditure	100	398
Share of Group underlying operating profit	0.4%	1%
Share of Group net operating assets	5%	6%

Underlying operating profit for the year was $26 million (net of $32 million project evaluation operating costs), 54% lower than in 2011. It included a self-insurance recovery of $59 million (offset at Anglo American Group) and an amount of $12 million in terms of the favourable settlement of an outstanding tax claim with the Brazilian government. The results, however, were affected significantly by a 23% decline in the London Metal Exchange (LME) nickel price and by an extended export ban imposed by the Venezuelan government from the beginning of June, resulting in the cessation of production in September. The underlying operating result for Barro Alto was capitalised throughout 2012.

Markets

Average price

(c/lb)

2012

2011

Average market price (LME, cash)

794

1,035

Average realised price

765

1,015

Despite LME nickel price strengthening at the start of 2012, with the nickel price reaching 983 c/lb at the end of January, prices dropped to a low of 689 c/lb in August owing to the worsening macroeconomic environment which affected stainless steel production and nickel demand.

The nickel market recorded a surplus of 50,000 tonnes for the year compared with a surplus of 32,000 tonnes in 2011. Nickel consumption increased by 4.9% to 1.7 million tonnes (Mt), but supply also rose following the ramping-up of a number of new nickel plants. The growth in supply was lower than expected as a result of problems at many new operations.

Operating performance

	2012	2011
Attributable nickel production (tonnes)	39,300	29,100

Nickel production increased by 35% to 39,300 tonnes, with the increasing production profile from Barro Alto offsetting the lower output from Loma de Níquel.

Barro Alto, which produced its first metal in March 2011, delivered around 21,600 tonnes of nickel in 2012. Production at the new operation, and the ramp-up schedule was, however, affected by three major stoppages during the year in order to address kiln performance issues and to rebuild the side-walls in line 1's electric furnace, following a partial collapse. Since the end of the final stoppage, with the furnace returning to a temperature which can support normal operations in mid-December, line 1 has achieved a feed rate averaging 85% of nominal capacity. As a preventative measure, line 2's electric furnace sidewalls are now also being rebuilt and following this, the operation is expected to complete ramp up to nominal capacity.

Issues in the furnace hearths were discovered during the year. The situation is being closely monitored by the operation, together with the supplier, and since discovery has not worsened. With continued close monitoring this is not expected to alter the ability to reach nominal capacity.

In Venezuela, Nickel's three remaining mining concessions expired in November. In spite of Nickel's attempts to obtain concession and permit renewal to enable a continuation of Nickel's operations, the application for renewal was refused and the concessions and permits granted by the government expired. As a result, mining and production activities at Loma de Níquel ceased permanently as of 10 November 2012. Production from Loma de Níquel totalled 8,100 tonnes in the year, 40% lower than 2011, as a result of the cessation of operations, exacerbated by the extended export ban.

Codemin's production was stable at around 9,600 tonnes, with a decline in grade being offset by a series of asset optimisation initiatives.

Projects

The unapproved projects in the pipeline, Jacaré and Morro Sem Boné have the potential to significantly increase the Group's total nickel production. The pre-feasibility study of Jacaré was completed in the year and we will be focused on obtaining environmental licences during 2013.

Outlook

Production in 2013 is expected to be higher than 2012 as the increasing contribution from Barro Alto more than offsets the loss of Loma de Níquel. Barro Alto is targeting to reach full capacity during 2013.

Both demand and supply are expected to increase further in 2013 and a surplus of 13,000 tonnes is forecast. The market is expected to remain relatively challenging owing to the prevailing macroeconomic environmentand ramp-up of new nickel supply, including nickel pig iron - though any further under achievement in terms of the ramping up of new nickel supply could provide some upside to current forecasts.

PLATINUM

$ million (unless otherwise stated)	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Underlying operating (loss)/profit	(120)	890
Underlying EBITDA	580	1,672
Net operating assets	10,419	11,191
Capital expenditure	822	970
Share of Group underlying operating profit	(2)%	8%
Share of Group net operating assets	20%	25%

Platinum recorded an underlying operating loss of $120 million in 2012, compared with $890 million underlying operating profit in 2011. This was primarily due to lower sales volumes, the impact of higher mining inflation on costs and lower average realised prices. Platinum sales volumes for the period were lower owing to the two month illegal industrial action experienced at most of the mining operations in the fourth quarter. This was compensated in part by a weaker average rand against the dollar and a positive stock adjustment of $172 million. Cash operating costs per equivalent refined platinum ounce increased by 21% to R16,364 (2011: R13,552), primarily due to the impact of the strike and increases in the costs of labour, electricity, diesel and key inputs of processing operations. Productivity decreased by 4% to 6.05m² (2011: 6.32m²).

Refined platinum production and sales decreased by 6% and 17% respectively.

Markets

Gross platinum demand declined by 140,000 ounces, or 2%, in 2012, as a result of weaker demand forautocatalystand industrial applications, more than offsetting increases in jewellery demand initiated by lower platinum pricing. Primary supply of platinum was negatively affected by labour stoppages and mine closures in South Africa. In addition, autocatalyst recycling decreased by 16% in the year, in response to lower platinum prices.

The palladium market moved from a surplus in 2011 to a significant deficit in 2012. South African output was lower for the same reasons as for platinum, while less metal was sold from Russian stockpiles. Gross demand for palladium rose by 15%, or 900,000 ounces, in 2012, following an increase in demand from the autocatalyst sector and a return of investor interest.

Following a prolonged surplus, the rhodium market moved into balance in 2012, with reductions in supply balancing increased demand from the autocatalyst and chemical sectors.

Autocatalysts

Global light vehicle sales grew by 5% in 2012 to 81 million units reflecting, for vehicles lighter than 3.5 tonnes, growth in North America, Japan and the BRIC nations (Brazil, Russia, India and China). This growth was offset by weakness in Europe and other regions. Ongoing economic uncertainty in Europe, for example, continued to impact demand for new vehicles there, with sales approximately 8% below those in 2011.

Increased substitution of palladium for platinum, together with a rise in the production of gasoline vehicles in North America and China, resulted in a 7% increase in demand for palladium. Higher output of gasoline vehicles in 2012 also underpinned a 6% increase in rhodium demand.

Supplies of PGMs from recycling of spent catalysts decreased by 12% to 2.8 million ounces.

Jewellery

Gross platinum demand for the fabrication of jewellery rose by 10% to 2.7 million ounces, as strong demand from China and India balanced generally weaker economic conditions across the globe. With platinum trading at a discount to gold throughout the year, manufacturers were able to receive higher margins, encouraging the use of platinum in China, while demand in India continues to grow faster than other markets in percentage terms.

Gross demand for platinum for the fabrication of jewellery in China rose by 14% in 2012, to approximately 1.9 million ounces, of which recycled platinum jewellery represented half a million ounces. Platinum purchases by manufacturers increased by 16% to 1.4 million ounces.

Industrial

Following record demand for platinum in 2011, as purchasers addressed delayed consumption, platinum offtake for industrial applications decreased by 16% to 1.7 million ounces.

Investment

Investment demand for platinum was flat at 460,000 ounces in 2012, although the performance during the year was erratic. Japanese buyers of large bars were active when the price was lower than Yen 4000/gram ($1 550/ounce). The release of the Canadian Platinum Maple Leaf and the Australian Platinum Platypus bullion coins also boosted interest in demand.

After significant liquidation in palladium ETFs in 2011, positive sentiment resulted in a 16% increase in net holdings in 2012 to 2.04 million ounces.

Operating performance

Production

Platinum's own mines, including Western Limb Tailings Retreatment, produced 1.46 million of equivalent refined platinum ounces, a decrease of 9%.

The illegal strike action at our mining operations from 18 September to 15 November 2012 resulted in a loss of platinum production of 306,000 ounces, of which 82,000 ounces were lost during the subsequent ramp-up period.

Equivalent refined platinum production for the year totalled 2.22 million ounces, 8% down on 2011. Production at the Western Limb operations (Rustenburg, Union and Amandelbult mines) was negatively affected by the industrial action during the second half of 2012. Production at the Rustenburg Complex mines decreased by 43,300 ounces, or 8%, while Union and Amandelbult mines' production decreased by 13% and 23% respectively.

Mogalakwena mine output decreased by 2% to 300,200 ounces, following lower throughput at the concentrators and lower head grade. The fall in production was partly compensated by higher volumes from Unki mine. Equivalent refined platinum production at Unki increased by 20% to 62,100 ounces as the mine exceeded its ramp-up schedule, reaching steady state production levels ahead of schedule.

The new nickel tank house at the Base Metal Refinery continues to experience some operational challenges and this is expected to impact production in 2013.

Refined platinum production decreased by 6% to 2.38 million ounces as the processing of pipeline stocks into refined ounces in the second half of 2012 reduced the impact of the industrial action.

Projects

Several projects were halted during the year owing to the current difficult economic and operating environment, including the Thembelani 2 shaft, Tumela 4 shaft, and slag cleaning furnace 2 projects. The subsequent write-down for Thembelani 2 shaft project was ZAR 2.2 billion ($251 million) while the write-down for Tumela 4 shaft, slag cleaning furnace 2 and other projects was ZAR 4.4 billion ($579 million).

Outlook

Despite the lacklustre outlook for global economic growth, Platinum believes that global platinum demand is likely to be balanced in the short term. Overall platinum demand is expected to grow marginally in 2013, despite the lack of economic growth in the European market. Tightening emissions legislation in all markets, and the overall global increase in vehicle production, especially in China and India, is expected to offset lower volumes in Japan, North American and Europe. Jewellery demand is expected to grow, primarily owing to the continuing growth in the popularity of platinum jewellery in China and India, and the expansion of retail outlets in China by Hong Kongjewellers.

Primary supply challenges are expected to continue during 2013, with higher mining inflation exerting margin pressure and the increased risk of supply disruptions from industrial action in South Africa. The ongoing constraint on capital investment posed by low prices continues to limit South African output. However, supplies of metal from the recycling of spent autocatalyst are expected to rise as pipeline stocks are processed.

Palladium demand is expected to grow in 2013, supported by global vehicle production growth, particularly in China, and tightening emissions legislation. Primary supply is also expected to be constrained by the same factors as those affecting platinum production. As a result, the palladium market is expected to remain in deficit in 2013.

The rhodium market is expected to remain in balance during 2013. Modest growth in autocatalyst and new industrial demand is likely to be balanced by an increase in recycled supply.

Following the conclusion of the recent portfolio review, Platinum expects to produce between 2.1 and 2.3 million ounces of refined platinum in 2013.

Cost inflation challenges are likely to continue in 2013, with mining inflation expected to remain above the average inflation rate in South Africa. In spite of the difficult inflationary environment, Platinum aims to contain cash unit costs to between ZAR 16,000 and ZAR16,500 per equivalent refined platinum ounce.The unit cost target excludes the cost of implementing the portfolio review proposals.

Platinum's project portfolio has been aligned with the proposals of the portfolio review, with the capital expenditure target reduced by 25% to ZAR100 billion over the next decade. Capital allocation will continue to focus on the highest return and lowest risk opportunities.

Strategic portfolio review

Anglo American Platinum announced the recommendations of its portfolio review on 15 January 2013. The key objective of the portfolio review was to thoroughly assess the structural changes that had eroded the profitability of the company and thus identify the changes required to create a sustainable, competitive and profitable Anglo American Platinum. The review considered the entire value chain, from resources to marketing and commercial strategy, as well as direct costs, overheads and the shape and size of portfolio best suited to leveraging our industry-leading resource base. The ongoing consultation with stakeholders and subsequent implementation of agreed proposals is now Platinum's strategic focus.

The main recommendation of the portfolio review is the plan to reduce Platinum's production to between 2.1 and 2.3 million ounces per annum and to more closely align output with expected demand, while retaining the flexibility to meet potential increased demand. This recommendation may be achieved through theproposals made within the consultation process embarked upon in terms of the requirements of the Labour Relations Act 66 of 1995, i.e. the closure of Khuseleka and Khomanani mines (four shafts) and placing them on long term care, and maintenance and through consolidating Rustenburg into three operating mines. Should these proposals ultimately be implemented, production at Rustenburg mines would reduce to a sustainable level of between 320,000 and 350,000 ounces a year.

While Platinum's production profile remains flat, production from high cost assets will be replaced with that from low-cost, high-quality assets over the next decade. The production profile indicates excess smelting and refining capacity in the short to medium term and provides an opportunity to improve capital efficiency. Options are being evaluated to fill capacity and reduce costs.

The cost base will also be reduced to align with the revised production levels, with a focus on labour and organisational structure. Our asset optimisation and supply chain activities are well entrenched and continue to deliver value.

DIAMONDS

$ million (unless otherwise stated)		Year ended 31 Dec 2012		Year ended 31 Dec 2011
	De Beers (100%)	Anglo American share⁽¹⁾	De Beers (100%)⁽²⁾	Anglo American share⁽¹⁾
Underlying operating profit	815	496	1,491	659
Underlying EBITDA	1,075	711	1,763	794
Net operating assets	12,944	12,944
Capital expenditure	249	94
Share of Group underlying operating profit	n/a	8%
Share of Group net operating assets	n/a	25%
Group's associate investment in De Beers⁽³⁾	n/a	n/a	n/a	2,230

⁽¹⁾Amounts based on the Group's 45% shareholding to 16 August 2012 and a 100% basis thereafter. Underlying earnings from 16 August 2012 excludes the 15% non-controlling interest.

⁽²⁾Underlying operating profit and underlying EBITDA for 2011 on a 100% basis provided for information.

⁽³⁾Excludes outstanding loans owed by De Beers, including accrued interest of $301 million in 2011.

De Beers' underlying operating profit (on a 100% basis) fell by $676 million to $815 million, 45% lower, reflecting the impact of difficult trading conditions brought about predominantly by weaker demand and changing product requirements from Sightholders and reduced availability of some goods. Anglo American's share of underlying operating profit from De Beers totalled $496 million, a decrease of 25%, the overall reduction being partly offset by Anglo American's higher shareholding.

Markets

Demand for diamond jewellery in the key markets of the US, China and Japan grew, albeit at a slower pace than in 2011. This, together with higher polished stock levels, resulted in a decline in polished prices particularly in third quarter of the year. Although rough diamond prices remained broadly stable in the first half of 2012, a combination of weaker polished prices, high levels of cutting centre stock and tightening liquidity in the mid-stream, resulted in a price correction during the third quarter. By the end of 2012, rough diamond prices stabilised, reflecting a modest improvement in consumer demand during the holiday sales season in most major diamond jewellery markets.

Operating performance

Mining and manufacturing

De Beers' full-year production declined by 11% to 27.9 million carats (2011: 31.3 million carats). In light of prevailing diamond market trends as well as operational challenges, the company's stated strategy of producing to demand has been maintained. Operations continue to focus on maintenance and waste stripping backlogs, while a number of factors impacted production at specific sites. At Debswana, this included the Jwaneng slope failure in June. De Beers Consolidated Mines saw lower grades from Venetia and production was also impacted by the disposal of Finsch in September 2011. Canada's Snap Lake showed significant improvement during 2012 as work continues on optimising the mine to enable economic access to the promising, though challenging, ore-body. Debmarine Namibia's Grand Banks mining vessel was re-commissioned in 2012 and Namdeb's Elizabeth Bay mining area in Northern Bay was brought back into operation during the year.

Element Six experienced a challenging year, with weakness in a number of key end-markets, particularly in the second half of the year. In response, Element Six focused on cost containment and improved operational performance and made significant progress on a number of its strategic milestones, including improved customer service and innovation. Element Six was awarded the prestigious Queen's Award for Enterprise and Innovation in the UK.

Sales

De Beers' total sales (on 100% basis) decreased to $6.1 billion, primarily as a result of diminished demand for rough diamonds, changing product requirements from Sightholders and reduced availability of some goods.

Brands

Forevermark continued to grow strongly in 2012, particularly in the core markets of China, Japan, India and the US, and was launched in South Africa, Canada and the UAE. It is now available in more than 900 retail partners in 12 markets. Since the launch of Forevermark, more than 500,000 diamonds have been inscribed with a unique identification number, showing that they have met the brand's high standards of quality, ethical integrity and provenance.

De Beers Diamond Jewellers (DBDJ) faced the challenging market conditions experienced by most high-end jewellers in 2012, but continued to focus on expanding its store network in China, a market of significant opportunity for high-end jewellery brands. New stores were opened in Shanghai and Nanjing, giving DBDJ five stores in China, with an additional store scheduled to open in 2013. Franchise partners will open further stores in Kuala Lumpur, Baku and Vancouver in 2013. DBDJ currently has 43 stores in leading diamond consumer markets around the world.

Other

The agreement entered into by De Beers in the US in 2006, to settle all outstanding class actions against it became unconditional and effective in May. The $295 million settlement, plus interest, held in escrow since 2006 is now being distributed in accordance with the court ordered plan.

Projects

In Botswana, construction of the infrastructure at Jwaneng's Cut-8 project is largely complete. Cut-8 will provide access to approximately 95 million carats of mainly high quality diamonds and extend the life of the mine world's richest diamond mine to at least 2028.

In South Africa, the Venetia underground project was approved by the De Beers and Anglo American Boards. Environmental authorisation was granted in July and the Environmental Management Plan was approved by the Department of Mineral Resources in October. The final outstanding regulatory clearances were obtained in February 2013 and the project will commence shortly. De Beers will invest approximately $2 billion to build the new underground mine, which will extend the life of the resource until 2042 and replace the open pit as South Africa's largest diamond mine.

In Canada, the Environmental Impact Review documentation for the Gahcho Kué project has been submitted for review, and the Review Panel is expected to issue a decision report in 2013.

Outlook

De Beers expects moderate growth in diamond jewellery demand in 2013. This will be supported primarily by a more positive picture emerging from China and India compared to 2012. Some upside is possible in the US, while trading conditions in other markets are likely to be challenging. The rough diamond manufacturing sector closed 2012 with high levels of inventory, particularly in the higher-end categories of diamonds, and faces continued pressure in terms of liquidity. In the medium to long term, industry fundamentals are expected to strengthen as diamond production plateaus and demand continues to increase.

OTHER MINING AND INDUSTRIAL

$ million (unless otherwise stated)	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Underlying operating profit	337	315
Phosphates	91	134
Niobium	81	52
Amapá	54	120
Tarmac	73	(38)
Scaw Metals	49	37
Zinc	-	20
Corporate	(11)	(10)
Underlying EBITDA	485	540
Net operating assets	786	3,843
Capital expenditure	260	225
Share of Group underlying operating profit	5%	3%
Share of Group net operating assets	2%	9%

Note: In 2012, Amapá has been reclassified from Iron Ore and Manganese to the Other Mining and Industrial segment to align with internal management reporting. Comparatives have been reclassified to align with current presentation.

Other Mining and Industrial - Phosphates and Niobium

Markets

Phosphates

Fertiliser demand in Brazil rose around 4% in 2012, reflecting the strong fundamentals of the Brazilian agricultural sector. Brazilian fertiliser consumption has been growing faster than the global average and this performance is expected to continue in future years, supported by favourable weather conditions, plentiful access to water and the widespread use of advanced farming techniques by Brazilian farmers. Continued high prices of soybean and corn have also incentivised farmers to increase grain production through more intensive fertiliser application.

This favourable market scenario resulted in Phosphates reporting a record fertiliser sales performance of 1.2 Mt for the year.

Niobium

Global steel mill activity was subdued in 2012, with producers reluctant to resume idle operations, replenish stocks, and to commit to further investment in their businesses. Despite the challenging environment, however, increased production of high strength steel alloys (HSSA) in both emerging and developed countries, ensured that niobium demand remained strong for the year.

Operating performance

Phosphates

Despite record fertiliser sales, underlying operating profit decreased by 32% to $91 million, driven mainly by unfavourable international fertiliser prices, coupled with increased labour costs and general inflationary pressures. DCP sales were also adversely affected by difficulties in the cattle industry, which had a negative impact on the operating results.

Phosphates production increased by 5% to a record of 1.1 Mt, due to a number of asset optimisation initiatives which improved overall performance at Catalão and Cubatão.

Niobium

Niobium generated an underlying operating profit of $81 million, a 56% increase over 2011. Sales volumes of niobium rose by 15%, mainly due to an increase in production arising from a better performance at the tailings plant and improvements in the concentration process at the Boa Vista mine. Unit production costs declined owing to lower aluminium and power prices and more efficient use of consumables, combined with the impact of higher production.

Projects

Niobium

The Boa Vista Fresh Rock (BVFR) project continued to make progress, with additional capital expenditure approved in June 2012. The existing plant will be adapted to process new rock instead of oxide ore, leading to an increase in production capacity to approximately 6,500 tonnes of niobium per year (2012: 4,400 tonnes).

Outlook

Phosphates

Strong grain prices continue to support fertiliser demand, and fertiliser prices are expected to remain high during 2013. The market expects farmers to expand the area given over to agriculture, as the current ratio between fertiliser and grain prices remains positive.

In addition, the high level of corn prices will be a motivating factor for an aggressive 'mini crop' (a smaller secondary crop, mainly corn, grown in the first half of the year) in the first quarter of 2013.

Niobium

Demand is expected to remain subdued in Europe and in Pacific Rim/East Asian countries, such as Japan, South Korea and, to a lesser degree, China.

Production is expected to decline in 2013, owing to lower grades and recoveries as lower quality ore is extracted from Boa Vista mine as it approaches the end of the weathered ore and encounters lower grades and higher contaminants. Tailings production is also expected to decrease as a result of lower niobium grades contained in phosphate tailings.

Other Mining and Industrial - Amapá, Tarmac and Scaw

Amapá

Amapá generated an underlying operating profit of $54 million, a decrease of $66 million on the prior year.

Production increased significantly, in line with planned ramp-up and also due to higher mass recovery in the beneficiation plant as a result of the plant's improved stability. The operation is now at design production capacity. Higher sales were also achieved following fewer delays associated with transportable moisture limits. Transhipment at Trinidad and Tobago from smaller capacity Handymax to the larger capacity Capesize vessels for onward shipment to the Middle and Far East was successfully implemented in the second half of 2012.

The favourable impact of improved production and higher sales, however, was more than offset by a sharp decrease in prices during 2012, though tight cost control and improved operating efficiencies, partly compensated their effect. Underlying operating profit also benefited from the reversal of penalty provisions, which were in place at the end of 2011, as a result of contract re-negotiations.

On 4 January 2013, Anglo American announced an agreement to sell its 70% interest in Amapá to Zamin Ferrous Ltd. The transaction is subject to regulatory approval and is expected to complete in 2013. We have always maintained that we did not envisage holding our interest in Amapá over the long term and, in July 2012, reported that we had transferred responsibility for Amapá to our Other Mining and Industrial business unit and stated that we were exploring the possibility of divesting our interest.

Anglo American has transformed the operational performance of Amapá since acquisition in 2008, increasing annual production from 1.2 Mt in 2008 to 6.1 Mt in 2012.

Tarmac

Tarmac reported an underlying operating profit of $73 million, compared with a loss of $38 million in 2011. Tarmac's underlying EBITDA was $148 million, 44% higher than in 2011.

Quarry materials

The business' profitability was at higher levels than last year, mainly as a result of the operation being treated as 'held for sale' from the end of July 2012, and the subsequent cessation of recorded depreciation. There has been a decline in asphalt volumes, with few major road schemes commencing in 2012 as a result of the UK government's austerity measures. Private-sector growth remained muted throughout the year, thus keeping pressure on ready-mix concrete prices and volumes, but was offset in part by the resilient central London market. A continued focus on maximising the use of substitute fuel and recycled asphalt materials is helping to mitigate the impact of rising hydrocarbon costs and to support margins.

On 7 January 2013, Anglo American and Lafarge announced the completion of their 50:50 joint venture which will combine their cement, aggregates, ready-mix concrete, asphalt and asphalt surfacing, maintenance services, and waste services businesses in the UK. The joint venture will be known as Lafarge Tarmac. Completion of the Lafarge Tarmac joint venture followed final clearance from the UK Competition Commission, predicated on the completed sale of a portfolio of Tarmac and Lafarge construction materials operations in the UK, which also occurred on 7 January 2013.

Building products

Performance was affected by the continued general economic downturn, compounded by disruption to building activity following unseasonal wet weather during the summer months.

The weak building products market resulted in a highly competitive pricing environment affecting sales volumes, although cost reduction projects and improvements in operating efficiencies are helping to mitigate some of the impact.

A number of initiatives continue to be developed to ensure improved longer term performance, but the short term remains difficult owing to the prevailing weak market conditions.

Scaw Metals

Scaw Metals experienced a 32% increase in underlying operating profit to $49 million for the 11 months to the end of November 2012 compared with the full year 2011, mainly as a result of the company being treated as 'held for sale' from 24 April 2012, and the subsequent cessation of recorded depreciation.

Cast Products showed a marked improvement, owing to firm demand across all segments and a reduction in costs following the closure of a loss-making foundry in the prior year.

Grinding Media reported a decrease in underlying operating profit as a result of lower demand from the mining sector owing to industrial action in the second half of 2012. This business is expected to recover as mining operations revert to full production.

The performance of Wire Rod Products suffered as a consequence of a decline in mining activity, but nevertheless reported stable earnings. Demand for construction products remained weak, but in spite of this, the Rolled Products business, through cost containment measures and operational improvements, was able to minimise its losses.

Total production of steel products was 611,600 tonnes for the 11 months to end November 2012, a decrease of 9.7% over the full year 2011.

On 24 April 2012, Anglo American announced the sale of its interest in Scaw South Africa to an investment consortium led by the Industrial Development Corporation of South Africa and the Group's partners in Scaw South Africa, being Izingwe Holdings (Pty) Limited, Shanduka Resources (Pty) Limited and the Southern Palace Group of Companies (Pty) Limited. On 23 November, the sale of Scaw South Africa and related companies completed for a total consideration of ZAR3.4 billion ($440 million) on a cash and debt free basis as announced.

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